00-7642. Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 Certificate and Voucher Programs; Housing Choice Voucher Program; Correction

AGENCY:

Office of the Secretary, HUD.

ACTION:

Correction.

SUMMARY:

This document makes various corrections to HUD's October 21, 1999 final rule implementing the statutory merger of the Section 8 tenant-based certificate and voucher programs into the new Housing Choice Voucher program. Additionally, this document corrects several regulatory provisions of the new Section 8 merger program that were not part of the October 21, 1999 final rule. These technical, non-substantive amendments will help to ensure that, once codified, the regulations for the Housing Choice Voucher program are free of error and consistent with other HUD program requirements.

DATES:

Effective date: November 22, 1999.

FOR FURTHER INFORMATION CONTACT:

Gerald J. Benoit, Director, Real Estate and Housing Performance Division, Office of Public and Indian Housing, Department of Housing and Urban Development, Room 4220, 451 Seventh Street, SW, Washington, DC 20410; telephone [phone], extension 4069 (this is not a toll-free number). Hearing or speech impaired individuals may access this number via TTY by calling the toll-free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION

I. Background

On October 21, 1999 (64 FR 56894), HUD published a final rule implementing the Section 8 tenant-based program provisions of the Quality Housing and Work Responsibility Act of 1998 (Title V of the FY 1999 HUD Appropriations Act; Pub.L. 105-276, approved October 21, 1998) (referred to as the “Public Housing Reform Act”). Of particular significance, the October 21, 1999 final rule implemented section 545 of the Public Housing Reform Act. Section 545 provides for the complete merger of the Section 8 tenant-based certificate and voucher programs. HUD's regulations for the new Section 8 merger program (known as the “Housing Choice Voucher program”) are located at 24 CFR part 982.

The October 21, 1999 final rule became effective on November 22, 1999. The final rule was preceded by HUD's publication of an interim rule on May 14, 1999 (64 FR 56894). The October 21, 1999 final rule adopted without change the provisions of the interim rule. The final rule also took into consideration of the public comments received on the interim rule, and most of the changes made at the final rule stage were in response to public comment.

II. This Document

This document makes several corrections to the October 21, 1999 final rule. Additionally, this document corrects several regulatory provisions of the Housing Choice Voucher program that were not part of the October 21, 1999 final rule. These technical revisions correct typographical errors and inconsistencies with other HUD program requirements. These corrections are non-substantive, and do not modify or create any new program requirements. The corrections will help to ensure that, once codified in title 24 of the Code of Federal Regulations, the regulations for the new Section 8 merger program are free of error and consistent with other HUD program requirements.

For the convenience of readers, the following discussion of the corrections made by this document is organized in the order of the regulatory section being corrected.

1. Definitions (§ 982.4). This document corrects § 982.4, which sets forth the definitions applicable to the Housing Choice Voucher program. Currently, part 982 refers readers to section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)) for the definitions of several terms applicable to the merger program. This document replaces the cross-reference to section 3(b) with a cross-reference to HUD's regulations at 24 CFR part 5, subpart D. HUD established 24 CFR part 5 to set forth the definitions and other program requirements that are generally applicable to HUD's programs. The definitions provided in part 5 are substantively identical to those located in section 3(b).

2. How applicants are selected: General requirements (§ 982.202). This document corrects § 982.202 to conform with § 982.207 of the October 21, 1999 final rule, since HUD approval is no longer required for the public housing agency (PHA) to adopt a residency preference. This document also corrects an erroneous regulatory citation contained in § 982.202.

3. Waiting list: Administration of waiting list (§ 982.204). This document corrects § 982.204 by removing paragraph (b)(5), which merely repeats the language of paragraph (b)(4).

4. Waiting list: Different programs (§ 982.205). This document corrects § 982.205(b)(1) to clarify the definition of “other housing assistance.” This document also removes § 982.205(b)(3), which incorrectly refers to a PHA offer of assistance under “both the certificate program and the voucher program.” As noted above, the new Housing Choice Voucher program merges the Section 8 tenant-based certificate and voucher programs into a single voucher program. Accordingly, PHAs no longer have two forms of Section 8 tenant-based assistance to offer families.

5. Waiting list: Local preferences in admission to program (§ 982.207). This document corrects § 982.207 to eliminate unnecessary redundancy. Specifically, paragraph (a)(1) of this section provides that the “system of local preferences must be consistent with the PHA plan . . . and with the consolidated plans for local governments in the jurisdiction.” Preferences are already covered under HUD's PHA Plan regulations, which require consistency with the Consolidated Plan (see 24 CFR part 903). Accordingly, it is unnecessary to include the quoted provision in part 982.

This document also corrects a typographical error contained in § 982.207(b)(5) of the October 21, 1999 final rule. Specifically, this document adds a phrase to the end of paragraph (b)(5) that clarifies that single persons who are elderly, displaced, homeless, or persons with disabilities may be granted an admissions preference over other single persons. The phrase “over other single persons” was inadvertently omitted from the October 21, 1999 final rule. This correction will also clarify that a PHA may continue to have a selection preference that was statutorily mandated prior to the enactment of the Public Housing Reform Act.

6. PHA disapproval of owner (§ 982.306) and Owner breach of contract (§ 982.453). This document corrects a typographical error contained in these two sections. Specifically, it replaces the phrase “housing assistance payments contract” with the phrase “HAP contract.”

7. Table of contents for Subpart K—Rent and Housing Assistance Payment. This document corrects several typographical errors contained in the table of contents for part 982, subpart K. As corrected by this document, the table of contents now accurately reflects the sections contained in subpart K.

8. Conversion to voucher program (§ 982.502). This document corrects § 982.502(c) to clarify the elimination of the so-called “shopping incentive.” Under the post-merger voucher subsidy formula (42 U.S.C. 1437f(o)(2), as amended by section 545 of the Public Housing Reform Act), the maximum subsidy for a family may not exceed the actual gross rent of the unit (rent to owner plus tenant-paid utilities) (§ 982.505(b)(2)). This change eliminates the old “shopping incentive” for a family that rents a unit below the applicable payment standard.

For a pre-merger voucher tenancy, the May 14, 1999 interim rule (which was adopted without change by the October 21, 1999 final rule) provides that the elimination of the shopping incentive (by application of § 982.505(b)(2) in the new voucher subsidy calculations) does not apply for calculation of the housing assistance payment prior to the second regular reexamination of family income on or after the merger date—but does not state explicitly that the elimination of the shopping incentive does apply in calculation of subsidy for such pre-merger voucher tenancies from that point on. The rule is now corrected to state positively, as originally intended, that the elimination of the shopping incentive (by application of § 982.505(b)(2)) is applicable for each interim or regular examination effective on or after the effective date of the second regular reexamination of family income and composition on or after the merger date.

9. Voucher tenancy: Payment standard amount and schedule (§ 982.503). This document makes two corrections to § 982.503. Under the Housing Choice Voucher program, the PHA adopts a “payment standard schedule” that sets “payment standard amounts” that are used to calculate the amount of subsidy for families assisted in the PHA's voucher program. This document corrects § 982.503(a)(3) to specify that the PHA schedule may set a single payment standard amount for a whole Fair Market Rent (FMR) area, or may establish a separate payment standard amount for each “designated part” of the FMR area.

The PHA voucher payment standard schedule establishes a single payment standard amount for each unit size. For each unit size, the PHA may establish a single payment standard amount for the whole FMR area, or may establish a separate payment standard amount for each designated part of the FMR area.

Under the terms of the May 14, 1999 interim rule (which was adopted by the October 21, 1999 final rule without change), a PHA may apply for HUD approval to set a payment standard amount—for a part of the FMR area—that is higher than the “basic range” (i.e., the range from 90 percent to 110 percent of the published FMR). However, the October 21, 1999 final rule failed to specify that the PHA may set a payment standard amount for part of an FMR area within or below the basic range.

As corrected by this document, the final rule now provides that the PHA may set payment standard amounts for designated parts of the FMR area. The PHA may establish such payment standard amounts above, within or below the basic range. However, as provided in the May 14, 1999 interim rule, the PHA must request HUD approval to set any payment standard amount that is higher or lower than the basic range. The correction does not change the regulatory requirement for HUD approval of a payment standard amount higher than the basic range (called a “exception payment standard amount”).

The October 21, 1999 final rule is also corrected by deleting § 982.503(b)(1)(iii) concerning authority to establish a higher payment standard if required as a reasonable accommodation for a family that includes a person with disabilities. This subject is now moved to § 982.505(d), since § 982.505 covers establishment of the payment standard for an individual family (whereas § 982.503 concerns the establishment of the PHA payment standard schedule for families in the PHA program).

10. Rent to owner: Effect of rent control (§ 982.509). This document corrects the section heading of § 982.509. The May 14, 1999 interim rule provided an incorrect designation for this section (“Rent to owner in subsidized projects”). The incorrect section heading was adopted by the October 21, 1999 final rule. As corrected, the section heading for § 982.509 reads: “Rent to owner: Effect of rent control.”

11. Distribution of housing assistance payment (§ 982.514). This document corrects § 982.514, to clarify that if the PHA elects to pay the utility supplier directly, the PHA must notify the family of the amount paid to the utility supplier.

12. Family income and composition: Regular and interim examinations (§ 982.516). This document corrects a typographical error contained in § 982.516(g)(1) of the October 21, 1999 final rule. Specifically, this document replaces an incorrect citation to 24 CFR part 760 with the correct citation to 24 CFR 5.230.

13. Rent to owner in subsidized project (§ 982.521). This document corrects § 982.521, by reinserting regulatory language that was accidentally deleted from the pre-merger regulations (at § 982.512).

14. PHA denial or termination of assistance for family (§ 982.552). This document corrects a typographical error contained in § 982.552(x) of the October 21, 1999 final rule. The final rule provides that a PHA may deny or terminate assistance to a welfare-to-work (WTW) family, if the family fails to fulfill its obligations under the WTW voucher program. The final rule inadvertently failed to include the necessary qualifier that a family must “willfully and persistently” fail to fulfill its WTW obligations in order for the PHA to deny or terminate assistance to the WTW family. This document makes the necessary correction.

15. Informal hearing for participant (§ 982.555). This document corrects two typographical errors contained in § 982.555. First, it corrects the paragraph (b)(5) to provide that a PHA is not required to provide a hearing if the PHA determines not to approve a unit or “tenancy” (rather than “lease”). Secondly, this document corrects the title of paragraph (e)(2) to read “Discovery” (rather than “Discover”).

16. Correction to 24 CFR part 983. In addition to the corrections to the part 982 regulations, this document makes a correction to HUD's regulations at 24 CFR part 983. The part 983 regulations establish the requirements governing the Section 8 Project-Based Certificate program. This document removes an outdated statutory citation contained in § 983.1(a).

Accordingly, in the final rule entitled “Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 Certificate and Voucher Programs; Housing Choice Voucher Program,” FR Document 99-27519, beginning at 64 FR 56894, in the issue of Thursday, October 21, 1999, the following corrections are made:

1. On page 56911, in the second column, correct amendatory instruction 4 and the regulatory text to read as follows:

4. Amend § 982.4 as follows:

a. Remove paragraph (a)(1);

b. Redesignate paragraphs (a)(2), (a)(3), and (a)(4) as paragraphs (a)(1), (a)(2), and (a)(3), respectively;

c. Revise newly designated paragraphs (a)(2) and (a)(3);

d. In paragraph (b), add, in alphabetical order, definitions of the terms “family rent to owner”, “utility reimbursement”, and “welfare-to-work (WTW) families”;

e. In paragraph (b), in the definition of “public housing agency” remove from the end of paragraph (1) of this definition the word “or” and add in its place the word “and”, and remove from paragraph (2)(i) of this definition the word “consortia” and add in its place the word “consortium”.

The revisions and additions read as follows:

§ 982.4

Definitions.

(a) * * *

(2) Definitions under the 1937 Act. The terms “annual contributions contract (ACC),” “disabled family,” “displaced family,” “elderly family,” “family,” “live-in aide,” “near-elderly family” and “person with disabilities” are defined in part 5, subpart D of this title.

(3) Definitions concerning family income and rent. The terms “adjusted income,” “annual income,” “extremely low income family,” “tenant rent,” “total tenant payment,” “utility allowance,” and “utility reimbursement” are defined in part 5, subpart F of this title. The definitions of “tenant rent” and “utility reimbursement” in part 5, subpart F of this title, apply to the certificate program, but do not apply to the tenant-based voucher program under part 982.

(b) * * *

Family rent to owner. In the voucher program, the portion of rent to owner paid by the family. For calculation of family rent to owner, see § 982.515(b).

* * * * *

Utility reimbursement. In the voucher program, the portion of the housing assistance payment which exceeds the amount of the rent to owner. (See § 982.514(b)). (For the certificate program, “utility reimbursement” is defined in part 5, subpart F of this title.)

* * * * *

Welfare-to-work (WTW) families. Families assisted by a PHA with voucher funding awarded to the PHA under the HUD welfare-to-work voucher program (including any renewal of such WTW funding for the same purpose).

2. On page 56912, in the second column, add amendatory instruction 7a. to read as follows:

7a. In § 982.202(b)(1), revise the last sentence to read as follows:

§ 982.202

How applicants are selected: General requirements.

* * * * *

(b) * * *

(1) * * * However, the PHA may target assistance for families who live in public housing or other federally assisted housing, or may adopt a residency preference (see § 982.207).

* * * * *

3. On page 56912, in the second column, add amendatory instruction 7b. to read as follows:

7b. In § 982.204, remove paragraph (b)(5) and redesignate paragraph (b)(6) as paragraph (b)(5).

4. On page 56912, in the second column, add amendatory instruction 7c. to read as follows:

7c. In § 982.205, revise paragraph (b)(1) and remove paragraph (b)(3) to read as follows:

§ 982.205

Waiting list: Different programs.

* * * * *

(b) * * *

(1) For purposes of this section, “other housing subsidy” means a housing subsidy other than assistance under the voucher program. Housing subsidy includes subsidy assistance under a federal housing program (including public housing), a State housing program, or a local housing program.

* * * * *

5. On page 56912, in the second column, correct amendatory instruction 8. to read as follows:

8. Amend § 982.207 as follows:

a. Remove the last sentence of paragraph (a)(1);

b. Add paragraph (a)(4); and

c. Revise paragraphs (b) and (d) to read as set forth below:

6. On page 56912, in the third column, correct § 982.207(b)(5) to read as follows:

§ 982.207

Waiting list: Local preferences in admission to program.

* * * * *

(b) * * *

(5) Preference for single persons who are elderly, displaced, homeless, or persons with disabilities. The PHA may adopt a preference for admission of single persons who are age 62 or older, displaced, homeless, or persons with disabilities over other single persons.

* * * * *

7. On page 56913, in the first column, correct amendatory instruction 12. to read as follows:

§ 982.306

[Amended]

12. Amend § 982.306 as follows:

a. Revise the section heading;

b. In paragraph (c)(1), revise the phrase “housing assistance payments contract” to read “HAP contract”;

c. Amend the introductory paragraph of paragraph (c)(5) to add the words “engaged in” after the words “for activity”; and

d. Amend paragraph (d) to add a new final sentence to that paragraph to read as follows:

8. On page 56914, in the second column, correct amendatory instruction 19. to read as follows:

§ 982.543

[Amended]

19. Amend § 982.453 as follows:

a. In paragraph (a)(2), revise the phrase “housing assistance payments contract” to read “HAP contract”; and

b. Add paragraph (a)(6) to read as follows:

9. On page 56914, in the second column, add amendatory instruction 19a. to read as follows:

19a. Revise the table of contents for Subpart K to read as follows:

Subpart K—Rent and Housing Assistance Payment

982.501

Overview.

982.502

Conversion to voucher program.

982.503

Voucher tenancy: Payment standard amount and schedule.

982.504

Voucher tenancy: Payment standard for family in restructured subsidized multifamily project.

982.505

Voucher tenancy: How to calculate housing assistance payment.

982.506

Negotiating rent to owner.

982.507

Rent to owner: Reasonable rent.

982.508

Rent to owner: Maximum family share at initial occupancy.

982.509

Rent to owner: Effect of rent control.

982.510

Other fees and charges.

982.514

Distribution of housing assistance payment.

982.515

Family share: Family responsibility.

982.516

Family income and composition: Regular and interim reexaminations.

982.517

Utility allowance schedule.

982.518

Regular tenancy: How to calculate housing assistance payment.

982.519

Regular tenancy: Annual adjustment of rent to owner.

982.520

Regular tenancy: Special adjustment of rent to owner.

982.521

Rent to owner in subsidized project.

10. On page 56914, in the second column, correct § 982.502(c)(2) to read as follows:

§ 982.502

Conversion to voucher program.

* * * * *

(c) * * *

(2) The payment standard for the family as calculated in accordance with § 982.505, except that § 982.505(b)(2) shall not be applicable until the effective date of the second regular reexamination of family income and composition on or after the merger date.

* * * * *

11. On page 56914, in the second column, correct regulatory instruction 21. and the regulatory text to read as follows:

21. Amend § 982.503 as follows:

a. Revise paragraph (a)(3);

b. Revise paragraph (b)(1)(ii);

c. Remove paragraph (b)(1)(iii)

d. Revise paragraph (d); and

e. Add paragraph (e):

§ 982.503

Voucher tenancy: Payment standard amount and schedule.

(a) * * *

(3) The PHA voucher payment standard schedule shall establish a single payment standard amount for each unit size. For each unit size, the PHA may establish a single payment standard amount for the whole FMR area, or may establish a separate payment standard amount for each designated part of the FMR area.

(b) * * *

(1) * * *

(ii) The PHA may establish a separate payment standard amount within the basic range for a designated part of an FMR area.

* * * * *

(d) HUD approval of payment standard amount below the basic range. HUD may consider a PHA request for approval to establish a payment standard amount that is lower than the basic range. At HUD's sole discretion, HUD may approve PHA establishment of a payment standard lower than the basic range. In determining whether to approve the PHA request, HUD will consider appropriate factors, including rent burden of families assisted under the program. HUD will not approve a lower payment standard if the family share for more than 40 percent of participants in the PHA's voucher program exceeds 30 percent of adjusted monthly income. Such determination may be based on the most recent examinations of family income.

(e) HUD review of PHA payment standard schedules. (1) HUD will monitor rent burdens of families assisted in a PHA's voucher program. HUD will review the PHA's payment standard for a particular unit size if HUD finds that 40 percent or more of such families occupying units of that unit size currently pay more than 30 percent of adjusted monthly income as the family share. Such determination may be based on the most recent examinations of family income.

(2) After such review, HUD may, at its discretion, require the PHA to modify payment standard amounts for any unit size on the PHA payment standard schedule. HUD may require the PHA to establish an increased payment standard amount within the basic range.

12. On page 56914, in the third column, correct amendatory instruction 22. and the regulatory text to read as follows:

22. Amend § 982.505 as follows:

a. Amend paragraph (b)(1) by removing the phrase “payment standard” and inserting instead the phrase “payment standard for the family”;

b. Revise paragraph (c)(1) introductory text;

c. Revise paragraph (c)(2);

d. Amend paragraph (c)(3) by inserting “first 24 months of the” after the words “During the”;

e. Redesignate paragraph (c)(4) as paragraph (c)(5);

f. Add new paragraph (c)(4); and

g. Add new paragraph (d).

The revisions and additions read as follows:

§ 982.505

Voucher tenancy: How to calculate housing assistance payment.

* * * * *

(c) * * *

(1) The payment standard for the family is the lower of:

* * * * *

(2) If the PHA has established a separate payment standard amount for a designated part of an FMR area in accordance with § 982.503 (including an exception payment standard amount as determined in accordance with § 982.503(b)(2) and § 982.503(c)), and the dwelling unit is located in such designated part, the PHA must use the appropriate payment standard amount for such designated part to calculate the payment standard for the family. The payment standard for the family shall be calculated in accordance with this paragraph and paragraph (c)(1) of this section.

* * * * *

(4) After the first 24 months of the HAP contract term, the payment standard for a family is the payment standard for the family as determined in accordance with paragraphs (c)(1) and (c)(2) of this section, as determined at the effective date of the most recent regular reexamination of family income and composition effective after the beginning of the HAP contract term.

* * * * *

(d) PHA approval of higher payment standard for the family as a reasonable accommodation. If the family includes a person with disabilities and requires a higher payment standard for the family, as a reasonable accommodation for such person, in accordance with part 8 of this title, the PHA may establish a higher payment standard for the family within the basic range.

13. On page 56914, in the third column, add amendatory instruction 23a. to read as follows:

23a. Revise the section heading of § 982.509 to read as follows:

§ 982.509

Rent to owner: Effect of rent control.

* * * * *

14. On page 56914, in the third column, correct amendatory instruction 24. to read as follows:

24. Revise § 982.514(b) to read as follows:

§ 982.514

Distribution of housing assistance payment.

* * * * *

(b) If the housing assistance payment exceeds the rent to owner, the PHA may pay the balance of the housing assistance payment (“utility reimbursement”) either to the family or directly to the utility supplier to pay the utility bill on behalf of the family. If the PHA elects to pay the utility supplier directly, the PHA must notify the family of the amount paid to the utility supplier.

§ 982.516

[Corrected]

15. On page 56915, in the first column, correct § 982.516(g)(1) by revising the phrase “under part 760 of this title” to read “under § 5.230 of this title.”

16. On page 56915, in the second column, add amendatory instruction 26a. to read as follows:

26a. Revise § 982.521 to read as follows:

§ 982.521

Rent to owner in subsidized project.

(a) Applicability to subsidized project. This section applies to a program tenancy in any of the following types of federally subsidized project:

(1) An insured or non-insured Section 236 project;

(2) A Section 202 project;

(3) A Section 221(d)(3) below market interest rate (BMIR) project; or

(4) A Section 515 project of the Rural Development Administration.

(b) How rent to owner is determined. The rent to owner is the subsidized rent as determined in accordance with requirements for the applicable federal program listed in paragraph (a) of this section. This determination is not subject to the prohibition against increasing the rent to owner during the initial lease term (see § 982.309).

(c) Certificate tenancy—Rent adjustment. Rent to owner for a certificate tenancy is not subject to provisions governing annual adjustment (§ 982.519) or special adjustment (§ 982.520) of rent to owner.

17. On page 56915, in the second column, correct § 982.552(c)(1)(x) to read as follows:

§ 982.552

PHA denial or termination of assistance for family.

* * * * *

(c) * * *

(1) * * *

(x) If a welfare-to-work (WTW) family fails, willfully and persistently, to fulfill its obligations under the welfare-to-work voucher program.

* * * * *

§ 982.555

[Amended]

18. On page 56915, in the third column, add amendatory instruction 27a. to read as follows:

27a. Amend § 982.555 as follows:

a. In paragraph (b)(5), revise the reference to “or lease” to read “or tenancy”;

b. Revise the heading for paragraph (e)(2) to read “Discovery.”

19. On page 56915, in the third column, add amendatory instructions 29. and 30. to read as follows:

PART 983—SECTION 8 PROJECT-BASED CERTIFICATE PROGRAM

29. The authority citation continues to read as follows:

Authority: 42 U.S.C. 1437f and 3535(d).

§ 983.1

[Amended]

30. Amend § 983.1(a) by removing the phrase “, authorized under section 8(d)(2) of the 1937 Act ( 42 U.S.C. 1437f(d)(2))”.

Dated: March 22, 2000.

Harold Lucas,

Assistant Secretary for Public and Indian Housing.