[Federal Register Volume 60, Number 68 (Monday, April 10, 1995)]
[Rules and Regulations]
[Pages 18174-18291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8346]
[[Page 18173]]
_______________________________________________________________________
Part II
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Assistant Secretary for Public and Indian Housing
_______________________________________________________________________
24 CFR Parts 905 and 950
Indian Housing Program: Amendments; Final Rule
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules
and Regulations
[[Page 18174]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing
24 CFR Parts 905 and 950
[Docket No. R-95-1742; FR-3646-F-02]
RIN 2577-AB43
Indian Housing Program: Amendments
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This final rule adds a new part 950 to HUD's regulations. New
part 950 contains the Indian Housing consolidated regulations that were
previously set forth in 24 CFR part 905. In addition to moving the
Indian Housing consolidated regulations from part 905 to part 950, the
final rule amends a number of the Indian Housing consolidated
regulations to simplify program processes, reduce the number of
regulatory requirements, and provide more flexibility to local tribal
and Indian housing authority officials in the administration of the
Indian Housing program.
EFFECTIVE DATE: May 10, 1995.
FOR FURTHER INFORMATION CONTACT: Dominic Nessi, Director, Office of
Native American Programs, Public and Indian Housing, Room 4140,
Department of Housing and Urban Development, 451 Seventh Street SW,
Washington, DC 20410, telephone (202) 755-0032. Hearing- or speech-
impaired persons may use the TDD number (202) 708-0850. (These are not
toll-free numbers.)
SUPPLEMENTARY INFORMATION:
I. Paperwork Burden
The information collection requirements contained in this final
rule have been submitted to the Office of Management and Budget (OMB)
for review. These information collection requirements are not effective
until such time that OMB grants its approval. The approval number will
be published in the Federal Register through separate notice.
II. Background
On August 1, 1994 (59 FR 39072), HUD published a proposed rule that
would add a new part 950 to title 24 of the Code of Federal Regulations
to contain the Indian Housing consolidated regulations. The proposed
rule would also make simplifying amendments to these regulations, in
order to accomplish the primary goal of giving Indian Housing
Authorities (IHAs) greater discretion and responsibility in
administering their programs. The preamble to the proposed rule
described HUD's consultation with its six Native American Program Area
Offices, the National American Indian Housing Council, regional IHA
associations, and other IHA representatives. The preamble also
described HUD's four-year trend to provide IHAs with administrative
flexibility through regulatory revisions (59 FR 39072).
Consistent with the principles of Executive Order 12866, HUD has
reviewed the existing Indian Housing regulations and the public
comments received on the proposed rule, and with this final rule
modifies the regulations to make them more effective, consistent,
understandable, and sensible.
III. Comments on the August 1, 1994 Proposed Rule
HUD solicited public comments on the proposed rule amending the
Indian Housing program. By the expiration of the public comment period
on September 30, 1994, HUD had received 15 comments, all from IHAs and
tribal leaders. This final rule contains several changes to the
proposed rule in response to these comments, as further described in
the following section, which summarizes the comments according to their
relevant subparts and provides HUD's responses to those comments.
A. Subpart A--General
1. Applicability and Scope (Sec. 950.101)
One commenter stated that Sec. 950.101(a)(1) should expressly
acknowledge that this rule applies to operations and funds arising from
HUD programs. The current language states that HUD provides financial
assistance (funds) to IHAs for the development and operation
(operation) of low-income housing projects in Indian areas. This part
is applicable to such projects developed or operated by an IHA in an
Indian area. HUD was unclear what additional language was requested and
believes that the current language adequately addresses the comment.
2. Definitions (Sec. 950.102)
One commenter requested that the definition of Allowable Utilities
Consumption Level (AUCL) and Heating Degree Days (HDD) should be
adjusted. The commenter requested that Cooling Degree Days be added, as
HDD is irrelevant to Indian country.
Section 508 of the Cranston-Gonzalez National Affordable Housing
Act (Pub. L. 101-625, approved November 28, 1990) directed HUD to
incorporate into the Performance Funding System (PFS) a methodology to
adjust utility consumption to account for Cooling Degree Days that was
the same as the methodology used to account for Heating Degree Days.
The impetus for this legislation was that IHAs in the sunbelt that had
to pay higher utility bills for air conditioning during hot summers
wanted an adjustment in their PFS payments to account for the increased
utility consumption. HUD published a proposed rule, and based on the
comments received, HUD implemented an approach to greatly simplify the
PFS by dropping all heating and cooling degree day adjustments. The
final rule implementing this action was published in the Federal
Register on October 13, 1994 (59 FR 51852). Additional information on
this change can be found in the preamble of that rule.
There were a number of comments concerning the definitions of
Adjusted Income and Annual Income. These suggestions included an
increase in deductions, lowering the 30 percent rule, counting only the
income from the head of household, counting only the income of head of
household and spouse, and using net income rather than gross income.
Also, a commenter requested that both child care and travel expenses be
eligible deductions.
HUD appreciates the many comments received on the definition of
Adjusted Income and Annual Income. In response to the comment to allow
both travel and child care as deductions, section 103(a)(2) of the
Housing and Community Development Act of 1992 (Pub. L. 102-550,
approved October 28, 1992) amended section 3(b)(5) of the United States
Housing Act of 1937 (42 U.S.C. 1437 et seq.) to allow for both
deductions. HUD implemented this change by PIH Notice 93-23 dated May
19, 1993. The proposed rule included this revision, and the same
language appears in this final rule. With regard to the other comments
on Adjusted Income and Income, these terms are defined in the United
States Housing Act of 1937. Section 3(b)(4) of that Act defines
``income'' as ``income from all sources of each member of the
household.'' Section 3(b)(5) contains the statutory definition of
``adjusted income.'' The Office of Native American Programs is
developing a legislation package for the program, and it will carefully
review all comments as it prepares this proposal.
One commenter stated that the definition of disposition should
exclude references to real estate, since the IHAs do not transfer any
interest in the ``real [[Page 18175]] estate.'' The commenter stated
that the most that IHAs transfer by a quit claim deed is the remaining
portion of the leasehold interest in the underlying land, together with
the improvements. HUD agrees with the comment as it relates to trust
and allotted land. However, there are many cases in Indian areas in
which interest in the real estate is transferred. Due to these
situations, HUD has not changed the definition.
One commenter requested that the tribal government and not HUD
define low-income family based on a determination of tribal median
income and adjustments to income due to family size, construction
costs, or other local variations. Another commenter stated that IHAs
should be able to establish their own income limits based on the
tribes' economies, not on the local communities.
The definitions of low- and very low-income are found in the United
States Housing Act of 1937. By statute, the definition of very low-
income is tied to ``50 per centum of median family income'' for an
area, and the definition of low-income is tied to ``80 per centum of
the median family income'' for the area (42 U.S.C. 1427a). As required
by statute, the meaning of the term ``area'' is affected by whether the
local median family income is less than the respective State's
nonmetropolitan median family income. In addition, the statute provides
for adjustments to income limits for areas with unusually high or low
incomes in relation to housing costs. Income limits are published
annually by HUD. If an IHA or tribe feels that the median income for
its area is not appropriate, they should contact the local HUD Office
to obtain information on how to proceed with a request for a change.
3. Applicability of Civil Rights Requirements (Sec. 950.115).
A commenter stated that the civil rights quotation in
Sec. 950.115(a) in the proposed rule is misleading and the definition
should additionally explain that these equal protection and due process
rights do not apply if they violate customs, traditions, and practices
of the tribe. HUD agrees with this comment and has adjusted the
definition in the final rule to include this statement.
A commenter suggested that HUD should strike the reference to
handbooks in Sec. 950.115(a)(3) of the proposed rule. This commenter
also requested that the reference to Title VI, the Fair Housing Act,
and the Americans with Disabilities Act in Sec. 950.115(b) of the
proposed rule be removed if they are not applicable to IHAs established
by exercise of a tribe's power of self-government. HUD agrees with both
of these comments. HUD has removed the reference to handbooks and the
language regarding the nonapplicability of those statutes in this
section.
4. Displacement, Relocation, and Acquisition (Sec. 950.117)
One commenter stated that upon the request of a resident, an IHA
should be allowed to relocate a resident temporarily to his or her
traditional home even if it is not decent, safe, and sanitary, and the
family should be eligible for relocation assistance. HUD agrees with
this comment and has revised the language in Sec. 950.117(b) for
temporary relocation.
A commenter stated that in Sec. 950.117(c)(2), the word
``comparable'' should be removed since it is subject to many
interpretations, and that the IHA should be allowed to use any
available Indian housing unit as a replacement. The commenter also
requested that HUD add the following language: ``Houses that do not
meet Section 8 fair market rent would be allowed for comparable housing
units.'' HUD is unable to eliminate the term ``comparable'' in this
section of the rule. This term is defined in the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42
U.S.C. 4601-4605), as amended. The use of ``comparable'' is also
required by the Department of Transportation's government-wide rule
implementing the URA (49 CFR part 24). The 1987 amendments to the URA
specify that the Federal agencies covered by the URA no longer have
independent statutory authority to promulgate their own separate URA
regulations, and in implementing the URA they must follow the
regulations published by the lead agency, which is the Department of
Transportation.
5. Compliance With Other Federal Requirements (Sec. 950.120)
Multiple commenters suggested that the wage rate requirements of
the Davis-Bacon Act (Sec. 950.120(c)) should be waived for Indian
housing. However, the applicability of the Davis-Bacon Act to Indian
housing is required under Section 12 of the United States Housing Act
of 1937, as amended, and is not subject to waiver by HUD.
6. Establishment of IHAs by Tribal Ordinance (Sec. 950.126).
Several commenters agreed with Sec. 950.126(b) of the proposed
rule, which allows a tribe to determine the form of ordinance. However,
one commenter objected to leaving ordinance terms and wording up to
tribes. Another commenter felt that HUD was leaving the ordinance up to
the tribe, and therefore approval by the Department of Interior (DOI)
should not be necessary. As stated previously, the intent of the
revised regulation is to provide greater flexibility and control to
IHAs and tribes in the administration of housing programs. This is the
reason for allowing tribes the ability to determine the form of
ordinance that is applicable for its area. However, HUD agrees with the
comment regarding DOI approval and has removed the language regarding
the need for such approval.
A commenter stated that Sec. 950.126(d) of the proposed rule should
be revised to require only those documents that demonstrate that an
authority has been properly established. HUD agrees with this comment
and has revised this section accordingly.
7. IHA Commissioners Who Are Tenants or Homebuyers (Sec. 950.130)
One commenter stated that they agreed that the change in the rule
that explains the role of a commissioner when he or she faces a
decision that affects them personally is an excellent idea. HUD
appreciates the comment regarding this section.
8. Administrative Capability (Sec. 950.135)
One commenter agreed that the Administrative Capability Assessment
(ACA) should be used with other tools to evaluate the need for
technical assistance. Two commenters stated that there should be
another appeal level, and one commenter requested that all appeals
should go to HUD Headquarters. One commenter stated that the reference
to HUD handbooks and other program requirements should be deleted since
these do not constitute statutory or regulatory authority that is
binding on the IHAs. One commenter stated that sanctions should be
clearly defined in Sec. 950.135(f)(2), and limitation on appeals should
be eliminated from Sec. 950.135(g)(2).
HUD agrees with the comment suggesting the removal of the handbook
references in this section and has revised this section in the final
rule. In response to the comments on the appeal process, HUD finds that
the current appeal process will provide IHAs with the ability to appeal
any decision regarding funding. All other appeals will not affect any
funding. Furthermore, without limits to the appeal process, HUD would
not be able to initiate corrective action when it finds a serious
deficiency. [[Page 18176]]
B. Subpart B--Procurement
1. General Comments.
Several commenters suggested minor changes in wording throughout
the subpart to improve the readability and clarity of the language. For
the most part, HUD agrees with these comments and has incorporated the
suggested wording.
2. Procurement Standards (Sec. 950.160)
One commenter wrote that the $25,000 limit on small purchases
created additional costs for IHAs. Since the publication of the
proposed rule on August 1, 1994, Federal procurement regulations have
increased the small purchase limit to $100,000. HUD has adjusted this
section accordingly.
Another commenter wrote that HUD should allow open market purchases
from petty cash for commonly used supplies or purchases of less than
$500. Such purchases are allowed within existing regulations that are
not changed by this rule.
3. Methods of Procurement (Sec. 950.165)
One commenter suggested the addition of language in Sec. 950.165(c)
that specifically states that an IHA may reject all proposals for
soundly documented reasons and has the right to waive certain
irregularities. General procurement methods currently allow these
practices, and therefore they have not been added to this rule.
4. Other Requirements Applicable to Development Contracts
(Sec. 950.170)
One commenter suggested that the bonding alternative allowing a 25
percent letter of credit should be deleted. HUD disagrees with this
suggestion. Each of the options for surety other than 100 percent
performance and payment bonds are included in the rule to enable IHAs
to assist small or disadvantaged contractors that have the ability to
perform but do not have the resources to pay for a performance and
payment bond. IHAs have the option but are not obligated to use this
option in their procurement.
Another commenter suggested that the rule should clarify that
performance and payment surety continue through a contract's warranty
period. The term of the surety is contained in individual contract
provisions, and therefore HUD does not believe it should be added to
this rule.
5. Indian Preference Requirements (Sec. 950.175)
HUD received a general comment that the revised Indian preference
requirements are not simplified from the previous rule. In these
revised regulations, HUD has tried to accomplish two objectives. The
first objective was to make the Indian Preference requirements less
prescriptive, enabling IHAs and their tribes to determine the best
methods for providing Indian preference in their programs. The second
objective was to make HUD's Indian preference requirements identical
across its programs to remove confusion for participating tribes. HUD
is also revising the Indian Community Development Block Grant and
Indian HOME program regulations to mirror the Indian Housing
regulations. HUD believes it has met both these objectives but is
receptive to any additional suggestions that would improve the Indian
preference requirements.
6. Insurance (Sec. 950.190)
One commenter suggested that this section is unnecessarily complex
and long. The contents of this section provide the basic requirements
for insurance coverage, however, and therefore HUD has decided not to
make any reductions at this time.
C. Subpart C--Development
1. General Comments
Several commenters suggested minor changes throughout the subpart
to improve the readability and clarity of the language. For the most
part, HUD agrees with these comments and has incorporated the suggested
wording.
2. Allocation (Sec. 950.205)
One commenter suggested the conversion of the allocation method
from a competitive nature to a formula funding. This commenter wrote
that this would enable IHAs to better anticipate funding, thereby
allowing for better long-range planning. HUD is investigating the
potential for formula funding for development allocations; however, a
change to a formula funding basis may require statutory authority.
3. Eligibility (Sec. 950.207)
In response to general comments on clarity within the rule, HUD has
added a new section that specifies the eligibility requirements to
apply for new Indian Housing development. Included in this section are
performance thresholds not previously specified in the regulation but
relied upon by HUD in determining eligibility.
4. Authority for Proceeding Without HUD Approval (Sec. 950.210)
Several commenters suggested that the rule would provide HUD great
latitude in requiring an IHA to obtain HUD approval of processing
steps. In reviewing this section, HUD agrees that its wording is too
broad and not fully consistent with administrative capability remedies
contained in Sec. 950.135. Accordingly, HUD has clarified this section
to require HUD to follow the provisions of Sec. 950.135 in its
determination of performance deficiencies and remedies. Additionally,
HUD has removed the examples of performance deficiencies.
This final rule consolidates time constraints on development in
this section from throughout Subpart C. In response to several
comments, the time constraints contained in the regulation are: (1) 24
months from program reservation to construction start, (2) 30 months
from program reservation before HUD can recapture funds, and (3) six
years from program reservation to closeout of development.
5. Production Methods (Sec. 950.215)
HUD received several comments that questioned the clarity of the
production method descriptions. Upon review, HUD has determined that
descriptions of production methods are more appropriately contained in
program guides or handbooks. Accordingly, HUD has deleted the brief
descriptions of production methods in this section.
Several comments were received concerning the definition of an IHA
attachable asset required as security for force account construction
approval and the need for IHAs to provide such security. Attachable
assets are those assets that are unencumbered by restrictions on their
use and that can be liquidated to pay for any overruns in the
development of the project. HUD has reevaluated the risk associated
with force account construction and has modified the surety
requirements in this final rule. The final rule (Sec. 950.215(b))
allows Area Offices of Native American Programs (Area ONAPs) to approve
the force account method without requiring the tribe or IHA to provide
specific security to cover excess costs if the IHA agrees to construct
the project in small stages with additional HUD oversight.
6. Total Development Cost (Sec. 950.220)
One commenter suggested that the $1,500 Mutual Help contribution
and development funded counseling should be deleted from the program.
However, the $1,500 Mutual Help contribution is required by the
statute. HUD has modified the counseling provision to make it optional
for IHAs.
One commenter suggested that the rule should include a detailed
description of how total development [[Page 18177]] cost (TDC)
standards are computed. By statute, HUD is required to establish TDC
standards using two national cost indices, which are multiplied by 1.6
for elevator type structures and 1.75 for nonelevator structures. Total
development cost standard requirements are published periodically in a
departmental notice. HUD believes that such a notice is the appropriate
vehicle for conveying TDC requirements, and therefore HUD has not
adopted this suggestion.
One commenter suggested that the rule should require all projects
to be funded at the full TDC standard. The TDC standard establishes the
maximum allowable cost for a development and is not intended to provide
a prescribed amount required to develop a project. Accordingly, HUD has
not adopted this comment.
One commenter suggested that the rule should require HUD Area ONAPs
to obtain the input of tribes in the determination of the adequacy of
TDC areas. The TDC notice provides for IHAs to request a HUD assessment
of the adequacy of TDC areas within their jurisdiction. HUD believes
that this provision of the notice serves to obtain tribal input.
Therefore, HUD has not adopted this suggestion.
HUD has significantly reduced Sec. 950.220 of the proposed rule by
deleting process items that are included in periodic TDC Notices, the
discussion of the program reservation, and HUD cost review
requirements. Additionally, HUD has rewritten the resident training and
insurance subsections, and has added a separate subsection that
includes the exception of donations and off-site water and sanitation
facility infrastructure costs from the TDC calculation. HUD has
modified the 30 month for construction cost and moved it to
Sec. 950.207.
7. Application (Sec. 950.225)
To provide greater clarity in section titles, the Application
section has been divided, with items involving program reservation and
annual contributions contract (ACC) execution moved to a new section
950.227. HUD has deleted from the rule process activities that are
included in the annual Notice of Funding Availability. HUD has also
added a new paragraph (c), which clarifies the criteria under which HUD
may approve new units for state-created IHAs.
8. Program Reservation and ACC Execution (Sec. 950.227)
HUD received several comments supporting the elimination of the 3
percent limitation on initial planning funds.
One commenter suggested that the limitation on planning funds was
too vague. Upon review, HUD has determined that since such limitations
are included in the ACC, they are unnecessary in this rule.
To further clarify the change to a grant program, HUD has changed
the term ``program reservation'' to ``development grant approval''
throughout the rule.
To streamline the development process, HUD has modified subpart C
to remove the two-step process for executing the ACC for development.
This final rule provides for execution of the ACC (or amendment) in the
full amount of the grant upon approval of the grant. Amendments to the
ACC would only be required if the character of the development were
changed by the IHA.
This final rule also adds a new section 950.229 to address the
process for establishing limits on the IHA's ability to incur
obligations under the ACC. This section consolidates requirements for
submittal of development cost budgets and contains the existing
provision for comprehensive housing plans.
9. Project Coordination (Sec. 950.230)
One commenter suggested that HUD should participate in project
planning in order to provide technical assistance if requested by the
IHA. The current wording does not prohibit HUD staff from participating
in planning activities if the IHA requests, and HUD has sufficient
staff resources available to provide such assistance. The decision to
provide voluntary technical assistance is a joint decision of the IHA
and HUD. HUD does not find that additional clarifying language is
needed.
10. Site Selection Criteria (Sec. 950.235)
HUD received several comments supporting the removal of the one
acre limitation on site size. One commenter objected to prohibiting the
cost of access roads as a project expense. With the exception of off-
site water and sanitary facility infrastructure that Congress includes
in Indian Housing appropriations, infrastructure development outside
the boundaries of the IHA site(s) are not eligible project expenses. In
the case of off-site access roads, Congress provides funding through
the Bureau of Indian Affairs (BIA) to construct off-site roads.
Accordingly, HUD has retained the restrictions on off-site access roads
in this rule.
11. Types of Interest in Land (Sec. 950.240)
Several commenters objected to the requirement for HUD approval of
the form of lease. Because of the period of affordability requirements
contained in the statute and in the ACC, HUD has a continuing interest
in the availability of dwelling units for occupancy by eligible
participants. It is in HUD's best interest to assure that the
provisions contained in site leases provide sufficient protection for
the government in this area. Therefore, HUD has retained the
requirement for a HUD approved form of lease.
Another commenter objected to allowing leases of unrestricted fee
simple land in lieu of outright purchase. In most instances, an IHA
will prefer to purchase fee simple land instead of entering into a
long-term lease. However, prohibiting leasing of unrestricted fee
simple property would, according to HUD, unduly restrict IHA options in
securing building sites.
Another commenter suggested that HUD allow tribes to build off
tribal lands. There is no specific prohibition against an IHA using
non-tribal sites. IHAs must operate within the jurisdiction of the
tribe, which is generally within the tribe's reservation boundaries. If
the IHA wishes to use sites not within the jurisdiction of the tribe
that are subject to property taxes, they must obtain the cooperation of
the taxing body.
12. Environment (Sec. 950.247)
The Multifamily Housing Property Disposition Reform Act of 1994
(Pub. L. 103-233, approved April 11, 1994) provided for tribes or local
governments to assume the responsibilities for environmental
assessments of public and Indian housing sites. To implement this
requirement, HUD is revising its environmental review regulations at 24
CFR part 58 to include the Indian Housing program. HUD is also adding a
new section 950.247, Environment, in this rule to provide for local
completion of the environmental assessment.
13. Site Approval (Sec. 950.250)
HUD has decided to remove Sec. 950.250(b)(3) from the final rule.
This section had required IHA cooperation to enable HUD to complete the
environmental assessment. Under the final rule, the tribe or local
governing body will complete the environmental assessment.
One commenter suggested that there may be unnecessary duplication
in the review of sites, and that HUD and the BIA should adopt a single
environmental assessment procedure. [[Page 18178]] HUD and the BIA have
made continuing efforts to coordinate environmental review procedures
to minimize duplication of efforts. With the transfer of environmental
review responsibility, the tribe or local government will work with the
BIA in this regard.
One commenter suggested that sites should be inspected only when
the IHA deems it appropriate. HUD finds that it is impossible to
approve a site for inclusion in a development without first making an
on-site visit to determine the suitability for development.
Accordingly, HUD has not adopted this suggestion.
Another commenter suggested that environmental reviews should be
limited to sites larger than 10 acres. The National Environmental
Policy Act of 1969 (42 U.S.C. 4332) requires an environmental
assessment for any development action regardless of the size of the
site.
14. Design Criteria (Sec. 950.255)
HUD received a number of comments objecting to requiring newly
constructed Indian housing units to comply with specific building
codes. This requirement is not new. Due to the investment of public
funds and the long-term association between HUD and the IHA during the
operating period, HUD finds that it is necessary to require minimum
building standards. National building codes, such as the Uniform
Building Code or the Uniform Plumbing Code, provide minimum standards
for such development. HUD encourages tribes to develop and adopt
building codes that reflect the needs of their areas. In the absence of
adopted tribal codes, IHAs must rely on local, state, or national
codes.
HUD has added a new subsection to specify that the IHA must perform
a life cycle cost analysis in the IHA's selection of utility
combinations.
15. IHA Development Program (Sec. 950.260)
Several commenters stated that HUD's suggestion in the proposed
rule (Sec. 950.260(a)(2)) that a development program should be
submitted within 18 months of program reservation date was
inappropriate since IHAs rely on schedules prepared at the project
coordination meeting to reach development program submission. HUD
agrees with these comments and has removed the subsection containing
this suggestion.
In response to general comments for further streamlining of the
process, and in order to recognize program evolution to a grant basis,
HUD has removed the requirement for a development program from the
rule. In its place, HUD has specified the documents that are actually
required prior to the IHA proceeding with final planning, bid/proposal
solicitation, and construction start. These documents include a
development cost budget reflecting the anticipated cost of constructing
the project, certifications of compliance with program requirements,
and project characteristics that were previously gleaned from the
development program documents (Sec. 950.260(a) of the final rule).
16. Construction and Inspections (Sec. 950.265)
One commenter suggested replacing the term ``program requirements''
with ``all ACC, statutory, and regulatory requirements.'' HUD agrees
and has made the modification.
Several commenters suggested that HUD should not monitor project
construction if it was unwilling to perform project inspections.
Congress has charged HUD with the oversight of appropriated funds. To
properly perform this duty, HUD must monitor IHA compliance with all
ACC, statutory, and regulatory requirements of the program, including
the IHA's administration of its construction contracts.
Several commenters suggested that HUD should either do away with
the 30 month requirement for reaching construction start or reduce the
time to 24 months. The final rule has consolidated in Sec. 950.210 all
references to this 30 month period. HUD has changed the wording of the
30 month requirement to more closely follow the language of the
statute, which limits HUD's ability to cancel a project before the end
of the 30 month period. HUD has also adopted the suggestion that
construction start should occur within 24 months after the program
reservation date, and has added language that requires HUD, subject to
the availability of resources, to provide technical assistance to an
IHA that has not reached construction start within the 24 month time-
frame.
In response to numerous suggestions for overall streamlining of the
rule, HUD has rewritten this section to simplify the requirements.
17. Correcting Deficiencies (Sec. 950.280)
HUD received a number of comments suggesting that HUD should be
required to fund the correction of any design or construction
deficiencies. HUD does not agree that it is obligated to fund the
correction of all design or construction deficiencies. Under program
requirements, IHAs are required to have in place adequate systems to
assure new developments are properly designed and constructed. As HUD
attempts to remove its controls over IHA decisionmaking by conveying
the authority to manage its developments, it would be inconsistent not
to convey the responsibility to adequately manage those developments,
as well. HUD does maintain the option of funding design or construction
deficiency corrections when it believes it is appropriate to provide
such funding.
One commenter suggested that the requirement for HUD approval to
spend existing funds to correct design or construction deficiencies
should be deleted. HUD agrees that, along with the responsibility to
assure such corrections are made, the rule should provide the authority
to spend existing funds appropriately, including remaining project
development funds, operating receipts, or other funds available to the
IHA. Therefore, HUD has removed the requirement for its prior approval.
18. Fiscal Closeout (Sec. 950.285)
HUD has added language to this section emphasizing the importance
of completing development grants in a timely manner. Under the limited
oversight procedures now in effect for Indian Housing development, it
is critical that grants be completed and the accounts audited as soon
as possible after the date of full availability (DOFA).
19. Reformulation
HUD received several comments suggesting that a new section be
added authorizing IHAs to reformulate project funds at any time for any
purpose without prior HUD approval. HUD provides funds to an IHA to
develop a specified project. Consistent with other grant programs, if
an IHA wishes to redirect project funds, a program modification must be
proposed and approved before such reformulation can proceed. HUD has
delegated the authority to approve reformulations to its Area ONAPs,
which will expedite processing of requests by IHAs.
D. Subpart D--Operation
1. Admission Policies (Sec. 950.301)
One commenter stated that Sec. 950.301(a)(2)(iii) of the proposed
rule needs to be strengthened to read ``participants or the physical,
financial or environmental aspects of the project'' to help deal with
applicants with a history of nonpayment or unit damage. Each IHA has
the ability to develop admission policies that address the needs in its
area. HUD's goal is to provide greater discretion to the IHAs
[[Page 18179]] administering the housing program. Therefore, HUD does
not feel that these additional regulatory requirements should be added
for all IHAs. However, each IHA is encouraged to develop admissions
policies to address individual needs, such as the ability to deal with
applicants with a history of nonpayment or unit damage.
A commenter stated that the proposed language ``for not less than
70 percent of the units'' in Sec. 950.301(a)(2)(iv) is a marked change
from the earlier draft figure of 30 percent of the units. The commenter
stated that the 30 percent figure seems high enough considering that
others have been on the waiting list for years. The language in the
current Indian housing regulation states that only 10 percent of non-
Federal preference holders are eligible for admission in a given year.
Section 501 of the National Affordable Housing Act amended the
percentage to allow for 30 percent of non-Federal preference holders to
be eligible for admission. The language in the proposed rule stated
that the IHA shall develop tenant and homebuyer selection criteria
designed: ``(iv) For not less than 70 percent of the units made
available for occupancy in a given fiscal year, to give a preference in
the selection of participants who at the time they are seeking housing
assistance, are involuntary displaced, living in substandard housing,
or paying more than 50 percent of family income for rent'' (Federal
preference).
In the final rule, HUD will handle differently the issue of
counting Federal preferences. The final rule on Preferences for
Admission to Assisted Housing, published in the Federal Register on
July 18, 1994 (59 FR 36616) revised the tenant selection preference
provisions. The rule implements a statutory change that decreases the
number of families that must be admitted on the basis of qualifying for
a Federal selection preference, and specifically authorizes the
adoption of local selection preferences by IHAs to be used in admitting
some applicants. Because of several comments regarding how to count
admissions, the language in the final rule frames the ``counting'' of
admissions in terms of a limit on the number of ``local preference''
admissions that can be made during a one-year period. Only 30 percent
of annual admissions may be families selected on the basis of local
preference. Under that rule, a family that qualifies for a ``Federal
preference'' is not precluded from being admitted on the basis of its
``local preference,'' but the admission would be counted against the
IHA's local preference limit, and the selection is made without regard
to that Federal preference. A more detailed discussion of these
preferences can be found in the preamble to that final rule. Changing
the percentage would require Congress changing the statute.
Another commenter recommended that the language in
Sec. 950.301(a)(2)(iv) ``at the time they are seeking housing
assistance'' be changed to ``at the time an appropriate housing unit
becomes available for their use,'' since these two events could occur
at different times. It would be difficult to justify attaching a
Federal preference to an applicant and then carrying that applicant for
several months until a unit becomes available, if the applicant had
found decent, safe, sanitary, and affordable housing in the interim.
The reference to which this commenter refers has been revised in
the final rule regarding Preferences for Admission to Assisted Housing
(59 FR 36616, July 18, 1994). That rule amended Sec. 905.301, and
included a section on verification of preference at Sec. 905.304(c)(3).
HUD believes that rule addresses the commenter's concern regarding the
timing of applicant verification.
Another commenter stated that admission requirements continue to
get too complex and difficult to administer. The commenter stated that
the final rule regarding Preferences for Admission to Assisted Housing
was clear, but that additional clarification is needed. HUD understands
the concern of this commenter and has tried to simplify the regulation
while implementing statutory provisions for admission.
One commenter stated that income limits should be abolished.
Another commenter requested that HUD reduce the definitional age for an
elderly person from 62 to 55. However, the provisions for admission of
low-income families and the age definition for an elderly person are
statutory, and therefore HUD cannot change them in this rule. HUD will
consider both of these comments as HUD develops its legislative
proposal for Indian housing.
2. Initial Determination, Verification, and Reexamination of Family
Income and Composition (Sec. 950.315)
One commenter stated that recertifications should only be done once
for elderly. Another commenter stated that recertification of
participants should be every three years. However, the United States
Housing Act of 1937 states that reviews of family income shall be made
at least annually. Amending this provision would require a statutory
change.
3. Total Tenant Payment--Rental and Turnkey III Programs (Sec. 950.325)
Many commenters objected to the 30 percent of monthly adjusted
income provision in Sec. 950.325(a)(i) of the proposed rule. Both
tribes and IHAs submitted resolutions objecting to this provision.
Commenters stated that this provision causes an unreasonable burden on
tenants and does not provide an incentive to seek gainful employment.
One commenter stated that the rule promotes dependency on the Federal
Government for welfare assistance and destroys the initiative for self-
sufficiency. Several commenters objected that automatically charging 30
percent, regardless of the quality of the unit, would have a
discriminatory effect, in that it perpetuates poverty, is a
disincentive for viable employment, and penalizes tribal members who
are struggling to achieve economic sufficiency.
Many commenters requested a change in the total tenant payment from
30 percent to 20 percent. Some commenters requested that the percentage
be lowered for the elderly only. Another commenter requested that a
flat rent be charged or the IHA be allowed to charge minimum rents.
Another commenter requested that no rent be charged for welfare
families.
One commenter stated that Sec. 950.325(a) should be changed to read
as follows: ``Total tenant payment shall be the highest of the
following, up to the IHA's established ceiling rent (calculated using
local income levels, rents, and economic conditions) rounded to the
nearest dollar.''
Many commenters recommended a change to the current ceiling rent
policy. These commenters further stated that IHAs should be allowed to
establish ceiling rates using local economic conditions to provide
housing for the working poor at reasonable rates. Another commenter
requested that ceiling rents be based on fair market rents for the
particular reservation or a rent ceiling equal to the administrative
fee for Mutual Help housing. The commenter stated that this would not
conflict with the United States Housing Act of 1937, as the Mutual Help
administrative fee generally represents the average monthly amount of
debt service and operating expenses attributed to a dwelling unit.
HUD received many comments on the definitions of adjusted income
and annual income. Several commenters stated that rent should be
calculated based on net income; deductions should be changed to be
comparable to IRS deductions because of the cost of living
[[Page 18180]] increases; medical deductions should apply to everyone
and there should be a secondary wage earner deduction; child support
payments should be deducted from the person paying; elderly families
should have a deduction of $2,500; only one income should be used when
calculating rent; more deductions should be given for child care;
deductions should be allowed for child support; an inflation factor
should be built into the deductions; no raises in payments if income
increases; and deductions should be provided for investments.
HUD understands that the 30 percent rule and the definition of
annual and adjusted income are of major concern in the Indian housing
rental program. The United States Housing Act of 1937 establishes the
amount of payment for rental housing and defines the term ``income''
and ``adjusted income.'' Therefore, without a statutory change, HUD
cannot address any of these requested changes. As indicated in other
parts of this preamble, HUD is considering other regulatory changes for
the public and Indian housing programs, and is preparing a legislative
proposal for the Indian housing program. HUD will consider all of the
comments above as it develops the proposal.
4. Rent and Homebuyer Payment Collection Policy (Sec. 950.335)
A commenter stated that payment and collection policies should
comply with ACC, statutory, and regulatory requirements, and not HUD
guidelines. HUD agrees with this comment and has revised the language
in this section of the final rule.
5. Grievance Procedures and Leases (Sec. 950.340)
A commenter stated that (a)(iii) of the proposed rule should be
struck, or HUD should at least explain that such a party may be an
official or employee of the IHA. The reference from the commenter was
incorrect, and therefore HUD is unable to determine the nature of the
commenter's concerns. HUD would like to note that the language in
Sec. 950.340(a)(1) is statutory.
A commenter stated that Sec. 950.340(a)(3)(ii) should be changed.
The basic elements of due process should recognize Indian Civil Rights
Act (ICRA) exceptions for tribal customs and practices. HUD finds it
unnecessary to amend the rule to recognize exceptions from the Indian
Civil Rights Act (ICRA) (25 U.S.C. 1301-1303), because the rule
currently states in Sec. 950.340(a)(1) that each IHA shall adopt
grievance procedures that are appropriate to local circumstances and
that comply with the ICRA, if applicable.
A commenter stated that the phrase ``related to the termination''
in Sec. 950.340(a) and (b) should be changed to ``used'' in the
termination or eviction. HUD could not locate this phrase in subsection
(a). HUD is unable to change the wording in subsection (b)(6) because
it is a statutory requirement.
One commenter stated that this section attempts to give HUD the
authority to determine whether tribal and state termination or eviction
procedures provide the basic elements of due process. The commenter
continued that since HUD has no authority over tribal sovereignty
rights to determine its own eviction and termination procedures, this
section should be removed from the rule. However, HUD's ability to
determine the basic elements of due process is statutory, and therefore
this section remains unchanged.
A commenter found a typographical error in Sec. 950.340(b)(6) in
the proposed rule. The provision should read ``Specify that with
respect to any notice.'' HUD has corrected the typographical error in
the final rule.
6. Fire Safety (Sec. 950.346)
A commenter recommended that this section be revised to change
references to ``hard-wire smoke detectors'' to ``hard-wire with battery
back-up smoke detectors,'' and that this section should reflect the
need for fire extinguishers in each unit. The commenter indicated that
many Mutual Help homes have only battery operated smoke detectors, and
that many of them are inoperable. The commenter stated that IHAs should
be allowed to receive funding to bring such units up to code.
HUD received a second comment regarding the benefits of a
residential range top suppression system that is capable of detecting a
cooking grease fire originating on the range top, extinguishing the
fire, and preventing reignition. The commenter provided sample
specifications for the product for inclusion in the rule. The Fire
Administration Authorization Act of 1992 (the Act) (Pub. L. 102-522,
approved October 26, 1992) established applicable Federal standards for
fire safety, and these standards are reflected in this rule. HUD
considers it appropriate to reflect the minimum Federal requirements
mandated by the Act and does not plan to establish more stringent
requirements in this rule. To the extent that the State, tribal, or
local jurisdiction in which the units are located has more stringent
fire prevention and control standards, the more stringent State,
tribal, or local standards will govern. Further, HUD wishes to point
out that funding is available under both the CIAP and CGP programs for
fire safety needs. Under the competitive CIAP application process, work
items related to fire safety are prioritized for funding along with
emergency work items.
E. Subpart E--Mutual Help Homeownership Opportunity Program
1. Scope and Applicability (Sec. 950.401)
One commenter asked what regulations exist for Mutual Help (MH)
units placed under ACC before March 9, 1976. There are no regulations
for the MH units placed under ACC prior to March 9, 1976. The document
governing that program is the Mutual Help and Occupancy (MHO)
Agreement.
2. Special Provisions for Development of an MH Project (Sec. 950.413)
One commenter stated that paragraph (d) in this section of the
proposed rule should be revised since it allows HUD to decide not to
proceed with the development of a MH project. The commenter stated that
this provision is inconsistent with the goal of the rule--HUD is giving
IHAs greater responsibility, yet it is still reserving control and
discretion as to how IHAs carry out the housing program. In response to
this comment, HUD has removed this entire section. The provisions of
Sec. 950.135, Administrative capability, will apply prior to an action
that would result in cancellation of a development by HUD, and the IHA
would be involved and given every opportunity to respond and appeal if
necessary.
3. Selection of MH Homebuyers (Sec. 950.416)
One commenter requested that the Federal preference mentioned in
Sec. 950.416(d) be removed from this section because IHAs should select
homebuyers with the ability to meet the obligations of the program, and
Federal preference is in conflict with the ability to meet homebuyer
obligations. However, as the commenter recognized, the Federal
preference is a statutory requirement that HUD is unable to remove at
this time. As mentioned previously in this preamble, the Office of
Native American Programs is developing a legislative proposal and will
consider this comment at that time.
One commenter requested that HUD revise Sec. 950.416(e) on
principal residency to emphasize that the determination of whether the
home is necessary for the family's livelihood or [[Page 18181]] for
cultural preservation be solely that of the IHA. In response to this
comment, HUD has changed the wording on the principal residency as
requested.
One commenter asked HUD to streamline this section and handle many
of these requirements in a handbook or by Board policy. HUD has
reviewed this section and streamlined where possible; however, many of
the requirements in this section are statutorily based and therefore
HUD cannot change them.
One commenter requested the inclusion of a discretionary preference
that the local IHA would apply to handle unique situations in their
area. On July 18, 1994 (59 FR 36616), HUD published a final rule in the
Federal Register on Preferences for Admission to Assisted Housing. That
rule specifically authorizes the adoption of local selection
preferences by housing authorities in admitting some applicants. This
rule permits IHAs to adopt preferences that respond to local housing
needs and priorities after conducting public hearings. See
Secs. 950.301 and 950.303 of this final rule.
4. MH Contribution (Sec. 950.419)
One commenter suggested that the MH contribution requirement should
be at the option of the IHA. Another commenter requested that land cost
be determined individually by each tribe through an appraisal with a
cap of $2500. The requirement for a MH contribution of at least $1500
is statutory, and therefore HUD cannot remove the requirement from the
rule. In response to these comments, however, HUD has revised this
section to reflect the statutory requirement that the MH contribution
be at least $1500, rather than a maximum of $1500, to allow for
additional MH contributions by the homebuyer.
One commenter requested that a subsequent homebuyer be given credit
for land donated by the tribe. HUD has recently provided guidance to
the Area ONAPs that clarifies this section of the rule. A subsequent
homebuyer can be given credit for a land contribution by a tribe and
not be required to provide an additional MH contribution.
5. Inspections, Responsibility for Items Covered by Warranty
(Sec. 950.425)
One commenter recommended that Secs. 950.425(a) (1) and (2) be
revised to clarify that latent defects would be covered even after the
warranty period. In response to this comment, HUD has streamlined this
section, and this issue is now covered under the development section
(Sec. 950.270(a)), in which HUD believes the language is clearer.
6. Homebuyer Payments--Post-1976 Projects (Sec. 950.426)
One commenter requested that the percentage of income used for
determining homebuyer payments be changed from 15 percent to 12
percent. Another commenter requested that the percentage for elderly be
changed to 10 percent. Another commenter stated that MH should have
fixed payments, which would eliminate the need for recertification. The
requirement to charge MH participants 15 to 25 percent of income is
statutory, and HUD cannot change it through regulation. However, as
mentioned above, HUD's Office of Native American Programs will consider
these comments when it develops its legislative proposal for Native
American Programs.
7. Maintenance, Utilities, and Use of Home (Sec. 950.428)
HUD received two comments regarding Sec. 950.428(c) on inspections.
One commenter requested that HUD eliminate the need for inspections.
Another commenter stated that inspections should be based on the amount
of equity in a homebuyer's account. In response to these comments, HUD
has changed the requirement in the final rule for MH inspections. The
language in the final rule states that the IHA shall conduct
inspections of each home on a schedule developed by the IHA that
ensures that the home is maintained in a decent, safe, and sanitary
condition.
One commenter requested that the language in Sec. 950.428(d) of the
proposed rule be revised since the correction of warranty items is not
the same as providing maintenance, and the two concepts should be
distinct. HUD agrees, and in response to this comment HUD has revised
this language.
HUD received two comments on Sec. 950.428(g). One commenter stated
that an IHA should be able to use Monthly Equity Payments Account
(MEPA) funds for improvements without a waiver. Another commenter
stated that the IHA, not HUD, should determine how MEPA funds can be
used. This rule does not require an IHA to obtain approval or a waiver
from HUD in order to allow a homebuyer to use MEPA funds for
betterments and additions. The IHA also has the ability to determine
whether the homebuyer needs to replenish the MEPA. Therefore, HUD has
made no changes.
8. Operating Subsidy (Sec. 950.434)
One commenter requested a change in the operating subsidy for
collection losses so that the IHA could have funds in advance to repair
vacant units because of the lack of reserves. While HUD never intended
to provide funds for needed repairs to a vacant unit after the repairs
were completed, that was often the case due to the budget process and
the need for the IHA to follow through on all collection efforts prior
to receiving funds. HUD has modified the language in the final rule and
will provide additional guidance on the process to the Area ONAPs so
that funds can be provided to the IHA as soon as possible.
Two commenters requested additional subsidy in the MH program. One
commenter requested operating subsidy for units converted for self-
sufficiency or anti-drug programs. Another requested subsidy to pay for
administrative costs involved with using the MEPA for low-income
housing purposes. However, HUD finds that the administrative charge in
the MH program should be used to cover the minimal costs associated
with the programs mentioned above.
One commenter requested that operating subsidy be provided for
counseling in the rental program and that all subsidy be provided at
100 percent. HUD provides operating subsidy for the rental program
through the Performance Funding System, and the IHA can budget for
staff to provide counseling in the rental program if the budget can
support this service. HUD recognizes the difficulty that IHAs
experience when subsidy is provided at less than 100 percent. However,
the amount of subsidy is subject to annual congressional
appropriations, and therefore HUD is unable to guarantee funding at 100
percent.
Several commenters requested that HUD take into account logistical
concerns and IHA size when developing a formula for counseling and
training funds. HUD agrees with the comments and will take these
factors into account when developing the plan for providing operating
subsidy funding for counseling and training. HUD will consult IHAs
prior to implementation.
9. Homebuyer Reserves and Accounts (Sec. 950.437)
Several commenters stated their support for the change to use MEPA
funds for low-income housing purposes. HUD received several other
comments on this regulatory change. One commenter suggested that the
use of MEPA in Sec. 950.437(b)(2)(ii) should be limited based on home
inspections. This commenter stated that if there are maintenance items
that need to be addressed, the IHA should not be allowed to use the
MEPA. Another [[Page 18182]] commenter requested that the IHA be able
to use MEPA funds for alternative types of housing aimed at middle-
income Indian families. Another commenter requested more independence
from HUD rules in Sec. 950.437(b), but this commenter provided no
additional information. HUD also received comments requesting
clarification of the requirements for resident notification, eligible
uses, and developing a formula for the percentage that can be used, as
well as a request to change the definition of MEPA.
HUD appreciates the comments received on this major regulatory
change. HUD developed this section of the proposed rule based on public
comment during the Native American consultation process in order to
give flexibility to IHAs that wish to use the MEPA. IHAs will be
required to obtain approval for use of the MEPA and to maintain a
sufficient reserve of equity for homebuyers in need of maintenance.
Hopefully, this will address the concerns of the commenters regarding
which IHAs will be eligible to use the MEPA for other low-income
housing purposes.
With regard to the comment on expanding the use of the MEPA to
middle-income families, HUD has determined that the use of MEPA funds
must be limited to low-income housing purposes as long as the
development is under the Annual Contributions Contract.
HUD plans to address many of the issues such as eligible uses in
ONAP guidebooks. In streamlining the regulation, HUD found that it was
best to handle policy questions in this way. It is also HUD's goal to
give IHAs the ability to make decisions on the amount of MEPA available
for use and the amount needed for homebuyer maintenance if they permit
homebuyers to use the reserve.
One commenter stated that IHAs should not be required to pay
interest on MEPA accounts if the funds are being used for other low-
income housing purposes. The commenter requested clarification on how
the IHA would earn or pay interest to homebuyers. The current Mutual
Help and Occupancy Agreement between the IHA and the homebuyer states
that interest on equity accounts will be provided annually. Due to this
provision, HUD has not changed the regulation as requested.
One commenter requested that the first $5,000 of MH equity be used
as a nonrefundable downpayment. HUD believes that a requirement for a
downpayment other than the $1,500 MH contribution would violate the
intent of the United States Housing Act of 1937.
One commenter requested that HUD retain the Voluntary Equity
Payment Account (VEPA). However, HUD removed the requirement for the
VEPA to streamline the MH program. IHAs had indicated that the account
was seldom used. If an IHA wants to continue to use a voluntary
account, they have the ability to do so. However, without a VEPA, a
homebuyer could continue to make additional monthly payments that would
be deposited in the Monthly Equity Payment Account and be used to pay
off a home in a shorter period of time, similar to the current VEPA.
10. Purchase of Home (Sec. 950.440).
Several commenters indicated that they supported the change that
allows the IHA to establish the purchase price schedule. One commenter
requested national uniformity based on development cost. Another
commenter requested clarification on whether the new regulations
regarding purchase price would apply to existing homes. In response to
the comments received, HUD will implement the provisions of
Sec. 950.440(b) of the proposed rule, which provides for the IHA to set
the purchase price for initial and subsequent homebuyers, in the final
rule. In response to whether the rule is retroactive, the IHA can
implement the changes in the final rule for current homebuyers with
their consent. The current MHO Agreement may differ on several topics.
Since this is the contract between the homebuyer and the IHA, homebuyer
consent would be required.
HUD received several other comments regarding Sec. 950.440. One
commenter requested that an IHA be allowed to convey a unit and still
perform modernization after that unit is conveyed, if prior to
conveyance that unit was on a comprehensive improvement assistance
program (CIAP) or 5 year Comp Grant comprehensive plan. Another
commenter requested that IHAs be allowed to perform only emergency work
on a paid-off unit if there was a repayment plan for the delinquency.
Another commenter stated that they agree with the changes, but they are
concerned about the operating cost once the unit is paid off.
In response to these comments, HUD's Office of General Counsel
(OGC) was asked to review the issue once more. OGC stated that they
believe that the statute can be read to allow modernization work to be
done on units, title to which have been conveyed, but which were
approved for modernization funding prior to conveyance. However, once
conveyed, the unit is not eligible for future assistance. The language
in the regulations at 950.440 and 950.602 will be revised accordingly.
In response to the comment that IHAs be allowed to perform only
emergency work on a paid-off unit if there is a repayment plan for a
delinquency, HUD believes that modernization may be required, either by
statute or regulation, for these units, and therefore HUD has not
changed the language in the rule. However, the IHA does have the
ability to determine its priorities with respect to modernization work
for all units and could limit the work to emergency items. In response
to the comment regarding operating costs, until a unit is conveyed, the
homebuyer is responsible for monthly payments in accordance with the
Mutual Help and Occupancy Agreement. Therefore, the administration
charge should still be collected to cover operating costs until the
unit is conveyed.
One commenter requested that zero interest be applied to rental,
Turnkey III, and Old Mutual Help. HUD issued guidance in Notice PIH 91-
29, dated June 18, 1991, which provides for zero interest in the Old
Mutual Help Program. HUD has also modified the Turnkey III rule at
Sec. 950.525 to provide for zero interest. It is not necessary to
change the interest in the rental program, since all debt relating to
the rental program has been forgiven through the loan forgiveness
legislation, and since tenants are not charged interest with their
housing payments.
One commenter requested that Sec. 940.440(e)(6) be changed to allow
an IHA to use proceeds from the sale for middle-income families.
Recently, HUD's Office of General Counsel stated that there are no
statutory restrictions that would prohibit the amendment of an
Administrative Use Agreement to allow proceeds from the sale of
homeownership units to be used for other housing purposes, including
purposes other than for lower income housing. However, any proceeds of
sale must still be used in connection with low- and very low-income
persons. Therefore, HUD has not changed the language in the rule.
11. Termination of MHO Agreement (Sec. 950.446)
One commenter stated that Sec. 950.446(f)(3) suggests that the IHA
is the entity that evicts. This commenter recommended that this section
should instead indicate that the IHA initiates an eviction action. HUD
agrees with this comment and has made the change. [[Page 18183]]
12. Succession (Sec. 950.449)
One commenter stated that this is perhaps the most important and
significant change to the Indian Housing regulations. Another commenter
supported this change and stated it was in agreement with the IHA.
Another commenter stated that ``at the very least, there should be a
provision that provides that the designation of a successor by the
homebuyer must be approved by tribal government.'' Although HUD
supports tribal involvement in the program, HUD believes that the
homebuyer should determine the successor to their unit whenever
possible, subject to any restrictions by the tribe on succession to the
land.
13. Conversion (Secs. 950.445 and 950.458)
HUD received several comments on the conversion process. One
commenter requested that the requirement for an actual development cost
certificate (ADCC) be eliminated, since this is a lengthy process and
holds up conversions. Another commenter requested that HUD eliminate
the requirement that a conversion application be in a form required by
HUD. Another commenter requested that the MH contribution not be
required in a conversion and that the lease process should not hold up
a conversion. There was a general comment that HUD does not allow
conversion.
In response to these comments, HUD has eliminated the need for an
ADCC prior to conversion and the requirement that the conversion
package be in a form required by HUD. HUD has not changed the
requirement for a MH contribution, since it is a statutory requirement
for every MH unit. However, the contribution can be in the form of
land. HUD encourages the use of the conversion process whenever it is
beneficial for an IHA. If an IHA is having difficulty with the
conversion process, it should contact the Office of Native American
Programs in Washington, D.C., at the address specified in the ``For
Further Information Contact'' section, above.
F. Subpart F--Self-Help Development in the Mutual Help Homeownership
Opportunity Program
HUD received no comments on this subpart. However, HUD has made
additional revisions in the final rule to streamline this program.
G. Subpart G--Turnkey III Program
HUD only received one comment on the Turnkey III subpart of the
rule. This commenter requested that a zero interest rate apply to this
program, as it does with Mutual Help Homeownership Opportunity Program.
HUD had made this change in the proposed rule at Sec. 950.525, and this
change is included in this final rule.
Due to the fact that there are currently only 18 IHAs managing the
Turnkey III Program, and in response to general public support for
additional streamlining of the entire regulation, HUD has attempted to
further reduce the regulatory requirements of this program.
H. Subpart H--Lead-Based Paint Poisoning Prevention
With this final rule, HUD makes no changes to the existing
regulations for lead-based paint poisoning prevention, other than to
move them from part 905 to new part 950. However, HUD is republishing
the existing regulations in this rule in an effort to consolidate all
the Indian housing regulations.
I. Subpart I--Modernization
1. Comprehensive Improvement Assistance Program and Comprehensive Grant
Program
HUD received many comments regarding the changes proposed for the
Comprehensive Improvement Assistance Program (CIAP) and Comprehensive
Grant Program (CGP). The comments were overwhelmingly supportive of
HUD's efforts to simplify the programs. Many of the changes requested
on CGP were implemented in the Public and Indian Housing Amendments to
the CGP final rule, which was published in the Federal Register on
August 30, 1994 (59 FR 44810).
One commenter indicated that CIAP should be an entitlement based on
age and number of units, and that the formula must take into account
small IHAs. However, the United States Housing Act of 1937 specifically
provides for two different modernization programs based on housing
authority size: a formula funded program for those with 250 or more
units, and a discretionary application program for those with fewer
than 250 units. Therefore, HUD could not implement this recommendation
without a legislative amendment.
Another commenter recommended that CIAP have a five-year plan, like
CGP. However, as stated above, funding of a CIAP is made through a
competitive application process that does not allow forecasting funding
availability for future years, as does the CGP. Although HUD encourages
IHAs to plan for modernization needs, a five-year plan would not serve
the same purpose as in the CGP.
One commenter indicated that CIAP funds for IHAs should be a
separate set-aside from Public Housing. Currently, there is only one
appropriation for Public and Indian Housing. Therefore, implementing
this recommendation would require a legislative change.
A commenter suggested that the process of moving CIAP/CGP funds to
resident organizations should be in regulations. However, HUD finds
that regulating a process for transferring funds to resident
organizations would decrease local flexibility, and therefore HUD has
not implemented this recommendation.
2. Special requirements for Turnkey III and Mutual Help developments
(Sec. 950.602)
Many commenters made recommendations regarding this section of
Subpart I and a cross reference in the Mutual Help Homeownership
Opportunity Program, Subpart E, Sec. 950.440. Both references discuss
the use of modernization funds for paid-off and conveyed units. In the
final CGP rule (published in the Federal Register on August 30, 1994
(59 FR 44810)), HUD removed the regulatory prohibition against
modernizing Mutual Help units that are paid off but not conveyed. The
preamble to that rule stated:
The Department believes that the only regulatory restrictions on
the modernization of paid-off Mutual Help units should be that:
title has not been conveyed to the homebuyer; where the homebuyer
has a delinquency at the end of the amortization period, non-
emergency modernization work shall not be done until all
delinquencies are repaid; and, the units shall be identified in the
Comprehensive Plan (including the Physical Needs Assessments and
Five-Year Action Plan). The prohibition against performing
modernization work on conveyed units is based on a determination by
the Department's Office of General Counsel that statutory authority
for the expenditure of modernization funds is limited to existing
public housing units. Once title is conveyed and the unit is no
longer covered by the ACC, the unit is no longer a public housing
unit and there is no legal authority for the expenditure of
modernization funds provided under section 14 of the Act. IHAs that
wish to modernize conveyed Mutual Help units must obtain funding
from another source; e.g., proceeds from the sale of homeownership
units or Bureau of Indian Affairs Housing Improvement Program funds.
(59 FR 44811).
A group of IHAs consolidated their comments and offered two
alternative recommendations for this rule's provisions on conveyed
units at [[Page 18184]] Sec. Sec. 950.602 and 950.440. They recommended
that IHAs be allowed to convey a unit and still perform modernization
after the unit is conveyed, if prior to conveyance the work was in an
approved CIAP application or CGP Five-Year Plan, and the work is done
within five years. Alternatively, they recommended that IHAs have the
option to delay conveyance for up to five years to conduct
modernization, but only with the written consent of the homebuyer.
Another IHA commented that conveyed units should be eligible for
modernization work. The IHA argued that first priority should go to
homebuyers who have shown good faith by paying for their homes and now
have the deeds to the homes, and not to those who, because of a
delinquent status, have not received their conveyance documents. The
IHA recommended that in the renovation of paid-off units, IHAs should
have the discretion to decide which units to modernize, whether the
unit has been conveyed or not.
Two IHAs recommended that HUD allow old Mutual Help and Turnkey III
units that have been conveyed to be brought back into the programs for
the purpose of comprehensive modernization. The IHAs considered the
proposed change to be unfair to homebuyers in paid-off units that were
not included in the Comprehensive Plans because paid-off units were
ineligible under the original regulation. Many of those units were
conveyed before the proposed rule was published, which provided that
units that are paid off but not conveyed are eligible for
modernization. The IHAs argued that the conveyed units deserve the same
consideration and have the same physical improvement needs, such as
handicapped accessibility, lead-based paint testing, and meeting
current codes.
As discussed in the preamble language for Subpart E, the Office of
General Counsel (OGC) has advised that the statute can be read to allow
modernization work to be done on units, title to which have been
conveyed, but which were approved for modernization funding prior to
conveyance. Therefore, HUD has revised the rule in response to the
comments submitted on this issue. Although title can be conveyed once
the unit has been approved for modernization funding, OGC recommends
that IHAs delay conveyance until modernization work is completed on a
Mutual Help unit.
In response to the comments requesting that modernization be
eligible for a Mutual Help unit that has been conveyed but not approved
for modernization funding prior to conveyance, the prohibition is based
on the determination that statutory authority for the expenditure of
funds is limited to existing public housing units. Once title is
conveyed and the unit is no longer owned by an IHA and covered by the
ACC, the unit is no longer a public housing unit, and there is no legal
authority for the expenditure of modernization funds provided under
section 14 of the United States Housing Act of 1937.
Two commenters recommended that when units become paid off, the
operating costs should be charged to the Comprehensive Grant Program.
Another commenter recommended that the rule be revised to specify
clearly that during the period after a unit becomes paid off, until it
is modernized and title is conveyed, the homebuyer is responsible for
the administration charge. In response to the first two comments, the
United States Housing Act of 1937 requires that the homebuyer make
monthly payments of at least an administration charge to cover monthly
operating expenses on the dwelling. The second commenter was correct in
the statement that the administration charge shall be made by a
homebuyer until conveyance. HUD has included language to clarify this
requirement in Sec. 950.440 of the rule.
3. Contracting Requirements (CIAP) (Sec. 950.642) and Conduct of
Modernization Activities (CGP) (Sec. 950.681)
One commenter stated that in order to assist new contractors in
getting established an IHA should be allowed to give preference to new
contractors and pay their licensing and bonding fees. A change to the
contracting requirements would conflict with 24 CFR part 85, which
contains the government-wide administrative requirements for grants.
Paying licensing and bonding fees would give an unfair advantage to new
contractors and would not provide fair and open competition as required
by Part 85.
4. Eligible Costs (Sec. 950.666)
One commenter agreed with the increase from 10 percent to 20
percent in the cost limitation on management improvements in
Sec. 950.666(m)(2), but indicated that the cost limitation on
administrative costs should also be increased from 7 percent to 10
percent. HUD appreciates the comment in support of the change in the
cost limitation for management improvement. The cost limitation on
administrative costs was increased from 7 percent to 10 percent of the
annual grant in the CGP final rule published in the Federal Register on
August 30, 1994 (59 FR 44810), and effective September 29, 1994. That
change is also reflected in this rule.
One commenter stated that the proposed rule is too restrictive with
respect to room additions needed for handicapped accessibility. Three
commenters recommended that the rule include additions to the living
space in a dwelling unit as an eligible work item under CGP and CIAP.
HUD implemented this recommendation for the CGP final rule cited above
at Sec. 905.666(c). That rule provides that ``[a]dditional dwelling
space may be added to existing units.'' A similar change has been made
in this CIAP final rule at Sec. 950.615(b).
5. Allocation of Assistance (Sec. 950.669)
A regional association of IHAs commended the proposed rule for
allowing IHAs to hold public hearings earlier in the year using the
prior year's formula amount for planning purposes. HUD appreciates the
comment in support of this change.
6. Comprehensive Plan (Including Five-Year Action Plan) (Sec. 950.672).
One commenter anticipated a problem with unrealistically raising
expectations by consulting with the residents on all five years of the
Comprehensive Plan. The commenter recommended limiting resident
participation to years when funds are available. However, section 14 of
the United States Housing Act of 1937 requires that residents affected
by the planned activities be given the opportunity to review and
provide their input. This rule (Sec. 950.672(b)(5)) requires that at
the annual Public Hearing the IHA present ``information on the
Comprehensive Plan/Annual Submission and the status of prior approved
programs.''
7. HUD Review and Approval of Comprehensive Plan (Including Five-Year
Action Plan) (Sec. 950.675).
One commenter wanted to be able to maintain flexibility to move
work items between years of the CGP Action Plan and have the ability to
switch line items within the original scope of work. HUD has included
the ability to undertake any of the work identified in any of the other
four years of the latest approved Five-Year Action Plan, current Annual
Statement, or previously approved CIAP budgets in Sec. 950.675(c) of
the CGP final rule cited above. [[Page 18185]]
J. Subpart J--Operating Subsidy
1. General Comments.
One commenter requested that the calculation for the PFS be changed
because it is too complicated. Another commenter stated that the PFS
should be designed specifically for IHAs. This commenter suggested that
HUD should initiate a national study on PFS and how to redesign it. HUD
recognizes the concerns regarding the PFS and how it relates to the
Indian Housing program. However, any change in the PFS would require
statutory and/or regulatory changes. At this time, HUD is studying the
entire Indian Housing program. In this process, HUD will address any
recommendation for change in this area.
Another commenter stated that IHAs should be provided with
additional subsidy to cover the costs of implementing part 85. However,
the PFS is designed to cover administrative costs of a well-managed
IHA. In the Mutual Help program, the administration charge is used to
cover an IHA's administrative expenses. There are no additional
congressional appropriations to cover these costs, and therefore HUD
cannot change the rule to accommodate this request.
2. Other Costs (Sec. 950.720).
A commenter stated that additional operating subsidy should be
provided for user fees for the Mutual Help program. Section 122(c) of
the Housing and Community Development Act of 1992 amended Section 203
of the Indian Housing Act of 1988 (Pub. L. 100-358, approved June 29,
1988) to provide user fees to municipalities specifically for each
rental housing unit. The amendment did not include Mutual Help, and a
legislative change would be necessary to provide this funding.
3. Operating Reserves (Sec. 950.740)
One commenter requested that HUD maintain the requirement for a
maximum operating reserve in the rental program. However, HUD is making
efforts to streamline regulations and give control of project
operations to IHAs. This includes the determination by an IHA of the
amount of reserves needed for efficient program operation. For that
reason, HUD has eliminated the requirement for the maximum operating
reserve in both the rental and Turnkey III programs.
4. Operating Budget Submission and Approval (Sec. 950.745)
A commenter recommended that HUD revise the Handbook early in
Fiscal Year (FY) 1995 to implement the budget submission change. On
October 4, 1994, HUD issued HUD Notice 94-72, which implemented the
revised procedures regarding operating budget submission. HUD has also
modified this rule slightly to reflect the budget submission changes.
K. Subpart K--Energy Audits, Energy Conservation Measures, and Utility
Allowances General Changes
1. General Comment
HUD received a comment suggesting that this entire section should
be simplified, and it should reflect less HUD reviews and approvals. In
response to this comment, HUD has reviewed the section and streamlined
when possible. HUD has also removed many of the reviews and approvals
mentioned by the commenter.
2. Energy Performance Contracts (Sec. 950.825)
One commenter requested that the word ``shall'' in the following
sentence of Sec. 950.825(a) be removed: ``Energy performance
contracting shall be conducted using one of the following methods of
procurement * * *.'' However, removal of the word ``shall'' would
eliminate the need to conduct energy audits. HUD finds that its
policies in this section support national energy conservation goals,
and the elimination of the audits would not meet HUD's goals of
reducing energy consumption or operating costs.
L. Subpart L--Operation of Projects After Expiration of Initial ACC
Term
With this final rule, HUD makes no changes to the existing
regulations for the operation of projects after the expiration of the
initial ACC term, other than to move them from part 905 to new part
950. However, HUD is republishing the existing regulations in this rule
in an effort to consolidate all the Indian housing regulations.
M. Subpart M--Disposition or Demolition of Projects
HUD received no comments on this subpart. HUD had taken steps to
streamline this subpart in the proposed rule, and has made no
additional changes in this final rule.
N. Subpart N--Miscellaneous
Subpart N was incorporated into subpart J (Sec. 950.772) of the
final rule.
O. Subpart O--Resident Participation and Opportunities General
Provisions
A final rule for the Public and Indian Housing Amendment to the
Tenant Participation and Tenant Opportunities in Public and Indian
Housing was published in the Federal Register on August 24, 1994 (59 FR
43622). With today's final rule, HUD makes no changes to the Resident
Participation and Opportunities regulations, other than to move them
from part 905 to new part 950. However, HUD is republishing the
existing regulations in today's rule in an effort to consolidate all
the Indian housing regulations.
P. Subpart P--Section 5(h) Homeownership Program
A final rule for the Section 5(h) Homeownership Program for Public and
Indian Housing was published in the Federal Register on November 10,
1994 (59 FR 56354). With today's final rule, HUD makes no changes to
the Section 5(h) Homeownership regulations for Indian housing, other
than to move them from part 905 to new part 950. However, HUD is
republishing the existing regulations in today's rule in an effort to
consolidate all the Indian housing regulations.
Q. Subpart R--Family Self-Sufficiency
HUD received no comments on this subpart. As stated in the proposed
rule, HUD made very few changes to the regulation implementing the FSS
program because the current regulation reflects the statutory
provisions of section 23 of the United States Housing Act of 1937. HUD
has revised the final rule to eliminate definitions that are included
in Sec. 950.102.
IV. Other Matters
Finding of No Significant Impact
At the time of the development of the proposed rule, a Finding of
No Significant Impact with respect to the environment was made in
accordance with HUD regulations at 24 CFR part 50 that implement
section 102(2)(C) of the National Environmental Policy Act of 1969 (42
U.S.C. 4332). The Finding of No Significant Impact remains applicable
to this final rule and is available for public inspection and copying
during regular business hours (7:30 a.m. to 5:00 p.m. weekdays) in the
Office of the Rules Docket Clerk, Room 10272, 451 Seventh Street, S.W.,
Washington, D.C. 20410.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule does not have a significant
economic impact on a substantial number of small entities. The rule
makes a number of amendments to the Indian Housing Consolidated Program
regulations to simplify program [[Page 18186]] processes, reduce the
number of regulatory requirements, and to provide more flexibility to
local tribal and Indian housing authority officials in the
administration of the Indian Housing program.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule will not have substantial direct effects on
States or their political subdivisions, or the relationship between the
Federal Government and the States, or on the distribution of power and
responsibilities among the various levels of government. As a result,
the rule is not subject to review under the order.
Executive Order 12606, the Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being, and thus is not subject to review under the Order.
No significant change in existing HUD policies or programs will result
from promulgation of this rule, as those policies and programs relate
to family concerns.
Regulatory Agenda
This rule was listed as sequence number 1894 in HUD's Semiannual
Regulatory Agenda published on November 14, 1994 (59 FR 57632, 57638)
in accordance with Executive Order 12866 and the Regulatory Flexibility
Act.
Catalog of Domestic Assistance
The Catalog of Domestic Assistance numbers for the programs
affected by this rule are 14.146, 14.147, 14.850, 14.851, 14.852, and
15.141.
List of Subjects
24 CFR Part 905
Aged, Energy conservation, Grant programs--housing and community
development, Grant programs--Indians, Indians, Homeownership,
Individuals with disabilities, Lead poisoning, Loan programs--housing
and community development, Loan programs--Indians, Low and moderate
income housing, Public housing, Reporting and recordkeeping
requirements.
24 CFR Part 950
Aged, Grant programs--housing and community development, Grant
programs--Indians, Disability, Homeownership, Indians, Low and moderate
income housing, Public housing, Reporting and recordkeeping
requirements.
Accordingly, and under the authority of 42 U.S.C. 3535(d), title 24
of the Code of Federal Regulations is amended as follows:
PART 905--[REMOVED AND RESERVED]
1. Part 905 is removed and reserved.
2. Part 950 is added to read as follows:
PART 950--INDIAN HOUSING PROGRAMS
Subpart A--General
Sec.
950.101 Applicability and scope.
950.102 definitions.
950.110 Assistance from Indian Health Service and Bureau of Indian
Affairs.
950.115 Applicability of civil rights requirements.
950.117 Displacement, relocation, and acquisition.
950.120 Compliance with other Federal requirements.
950.125 Establishment of IHAs pursuant to State law.
950.126 Establishment of IHAs by tribal ordinance.
950.130 IHA Commissioners who are tenants or homebuyers.
950.135 Administrative capability.
Subpart B--Procurement
950.160 Procurement standards.
950.165 Methods of procurement.
950.170 Other requirements applicable to development contracts.
950.172 Wage rates.
950.175 Indian preference requirements.
950.190 Insurance.
950.195 Lead-based paint liability insurance coverage.
Subpart C--Development
950.200 Roles and responsibilities of Federal agencies.
950.205 Allocation.
950.207 Eligibility.
950.210 Authority for proceeding without HUD approval.
950.215 Production methods.
950.220 Total development cost.
950.225 Application.
950.227 Initial development grant approval and ACC execution.
950.229 Expenditure of funds.
950.231 Project coordination.
950.235 Site selection criteria.
950.240 Types of interest in land.
950.245 Appraisals.
950.247 Environment.
950.250 Site approval.
950.255 Design criteria.
950.260 Construction stage development cost budget and
certifications.
950.265 Construction and inspections.
950.270 Construction completion and settlement.
950.275 Warranty inspections and enforcement.
950.280 Correcting deficiencies.
950.285 Fiscal closeout.
Subpart D--Operation
950.301 Admission policies.
950.303 Selection preferences.
950.304 Federal preferences: general.
950.305 Federal preferences: involuntary displacement.
950.306 Federal preference: substandard housing.
950.307 Federal preference: rent burden.
950.308 Exemption from eligibility requirements for police officers
and other security personnel.
950.310 Restrictions on assistance to noncitizens.
950.315 Initial determination, verification, and reexamination of
family income and composition.
950.320 Determination of rents and homebuyer payments.
950.325 Total tenant payment--Rental and Turnkey III programs.
950.335 Rent and homebuyer payment collection policy.
950.340 Grievance procedures and leases.
950.345 Maintenance and improvements.
950.346 Fire safety.
950.360 IHA employment practices.
Subpart E--Mutual Help Homeownership Opportunity Program
950.401 Scope and applicability.
950.416 Selection of MH homebuyers.
950.419 MH contribution.
950.422 Commencement of occupancy.
950.425 Inspections, responsibility for items covered by warranty.
950.426 Homebuyer payments before March 9, 1976.
950.427 Homebuyer payments for projects under ACC on or after March
9, 1976.
950.428 Maintenance, utilities, and use of home.
950.431 Operating reserve.
950.432 Operating budget submission and approval.
950.434 Operating subsidy.
950.437 Homebuyer reserves and accounts.
950.440 Purchase of home.
950.443 IHA homeownership financing.
950.446 Termination of MHO Agreement.
950.449 Succession.
950.452 Miscellaneous.
950.453 Counseling of homebuyers.
950.455 Conversion of rental projects.
950.458 Conversion of Mutual Help projects to rental program.
Subpart F--Self-Help Development in the Mutual Help Homeownership
Opportunity Program
950.470 Purpose and applicability.
950.475 Basic requirements.
950.480 Self-Help agreement.
950.485 Application.
950.490 Development program.
950.495 Default of Self-Help agreement.
Subpart G--Turnkey III Program
950.501 Introduction.
950.503 Conversion of Turnkey III developments. [[Page 18187]]
950.505 Eligibility and selection of Turnkey III homebuyers.
950.507 Homebuyer Ownership Opportunity Agreements (HOOA).
950.509 Responsibilities of homebuyer.
950.511 Homebuyers' association (HBA).
950.512 Homeowners' association (HOA).
950.513 Break-even amount and application of monthly payments.
950.515 Monthly operating expense.
950.517 Earned Home Payments Account (EHPA).
950.519 Nonroutine Maintenance Reserve (NRMR).
950.521 Operating reserve.
950.523 Operating subsidy.
950.525 Purchase price and methods of purchase.
950.529 Termination of Homebuyer Ownership Opportunity Agreement.
Subpart H--Lead-Based Paint Poisoning Prevention
950.551 Purpose and applicability.
950.553 Testing and abatement applicable to development.
950.555 Testing and abatement applicable to modernization.
950.560 Notification.
950.565 Maintenance obligation; defective paint surfaces.
950.570 Procedures involving EBLs.
950.575 Compliance with tribal, State, and local laws.
950.580 Monitoring and enforcement.
950.585 Insurance coverage.
Subpart I--Modernization Program General Provisions
950.600 Purpose and applicability.
950.601 Allocation of funds under section 14.
950.602 Special requirements for Turnkey III and Mutual Help
developments.
950.603 Modernization and energy conservation standards.
Comprehensive Improvement Assistance Program (For IHAs That Own or
Operate Fewer than 250 Indian Housing Units)
950.609 Purpose.
950.615 Eligible costs.
950.618 Procedures for obtaining approval of a modernization
program.
950.624 Resident and homebuyer participation.
950.635 Initiation of modernization activities.
950.639 Fund requisitions.
950.642 Contracting requirements.
950.645 On-site inspections.
950.648 Budget revisions.
950.651 Progress reports.
950.654 HUD review of IHA performance.
950.657 Fiscal closeout.
Comprehensive Grant Program (For IHAs That Own or Operate 250 or More
Indian Housing Units)
950.660 Purpose.
906.666 Eligible costs.
950.667 Reserve for emergencies and disasters.
950.669 Allocation of assistance.
950.672 Comprehensive Plan (including Five-Year Action Plan).
950.675 HUD review and approval of Comprehensive Plan (including
action plan).
950.678 Annual Submission of activities and expenditures.
950.681 Conduct of modernization activities.
950.684 IHA Performance and Evaluation Report.
950.687 HUD review of IHA performance.
Subpart J--Operating Subsidy
950.701 Purpose and applicability.
950.705 Determination of amount of operating subsidy under PFS.
950.710 Computation of Allowable Expense Level.
950.715 Computation of Utilities Expense Level.
950.720 Other costs.
950.725 Projected operating income level.
950.730 Adjustments.
950.735 Transition funding for excessive high-cost IHAs.
950.740 Operating reserves.
950.745 Operating budget submission and approval.
950.750 Payment procedure for operating subsidy under PFS.
950.755 Payments of operating subsidy conditioned upon
reexamination of income of families in occupancy.
950.760 Determining actual occupancy percentage.
950.770 Comprehensive Occupancy Plan (COP) requirements.
950.772 Financial management systems, monitoring and reporting.
950.774 Operating subsidy eligibility for projects owned by IHAs in
Alaska.
Subpart K--Energy Audits, Energy Conservation Measures, and Utility
Allowances
950.801 Purpose and applicability.
Energy Audits and Energy Conservation Measures
950.805 Requirements for energy audits.
950.810 Order of funding.
950.812 Funding.
950.815 Energy conservation equipment and practices.
950.822 Compliance schedule.
950.825 Energy performance contracts.
Individual Metering of Utilities
950.840 Individually metered utilities.
950.842 Benefit/cost analysis.
950.844 Funding.
950.845 Order of conversion.
950.846 Actions affecting residents.
950.849 Waivers for similar projects.
950.850 Reevaluations of mastermeter systems.
Resident Utility Allowances
950.860 Applicability.
950.865 Establishment of utility allowances by IHAs.
950.867 Categories for establishment of allowances.
950.869 Period for which allowances are established.
950.870 Standards for allowances for utilities.
950.872 Surcharges for excess consumption of IHA-furnished
utilities.
950.874 Review and revision of allowances.
950.876 Individual relief.
Subpart L--Operation of Projects After Expiration of Initial ACC Term
950.901 Purpose and applicability.
950.903 Continuing eligibility for operating subsidy; ACC
extension.
950.905 ACC extension in absence of current operating subsidy.
950.907 HUD approval of disposition or demolition.
Subpart M--Disposition or Demolition of Projects
950.921 Purpose and applicability.
950.923 General requirements for HUD approval of disposition or
demolition.
950.925 Resident organization opportunity to purchase.
950.927 Specific criteria for HUD approval of disposition requests.
950.928 Specific criteria for HUD approval of demolition requests.
950.931 IHA application for HUD approval.
950.933 Use of proceeds.
950.935 Replacement housing plan.
Subpart N--[Reserved]
Subpart O--Resident Participation and Opportunities General Provisions
950.960 Purpose.
950.961 Applicability and scope.
950.962 Definitions.
950.963 HUD's role in activities under this subpart.
950.964 Resident participation requirements.
950.965 Funding resident participation.
Tenant Opportunities Program
950.966 General.
950.967 Eligible TOP activities.
950.968 Technical assistance.
950.969 Resident management requirements.
950.970 Management specialist.
950.971 Operating subsidy, preparation of operating budget,
operating reserves, and retention of excess revenues.
950.972 TOP Audit and administrative requirements.
Family Investment Centers (FIC) Program
950.980 General.
950.982 Eligibility.
950.983 FIC activities.
950.984 IHA role in activities under this part.
950.985 HUD Policy on training, employment, contracting, and
subcontracting of Indian housing residents.
950.986 Grant set-aside assistance.
950.987 Resident compensation.
950.988 Administrative requirements.
Subpart P--Section 5(h) Homeownership Program
950.1001 Purpose.
950.1002 Applicability.
950.1003 General authority for sale.
950.1004 Fundamental criteria for HUD approval. [[Page 18188]]
950.1005 Resident consultation and involvement.
950.1006 Property that may be sold.
950.1007 Methods of sale and ownership.
950.1008 Purchaser eligibility and selection.
950.1009 Counseling, training, and technical assistance.
950.1010 Nonpurchasing residents.
950.1011 Nonroutine maintenance reserve.
950.1012 Purchase prices and financing.
950.1013 Protection against fraud and abuse.
950.1014 Limitation on resale profit.
950.1015 Use of sale proceeds.
950.1016 Replacement housing.
950.1017 Records, reports, and audits.
950.1018 Submission and review of homeownership plan.
950.1019 HUD approval and IHA-HUD implementing agreement.
950.1020 Content of homeownership plan.
950.1021 Supporting documentation.
Subpart Q--[Reserved]
Subpart R--Family Self-Sufficiency
950.3001 Purpose, scope, and applicability.
950.3002 Program objectives.
950.3003 Definitions.
950.3004 Basic requirements of the FSS program.
950.3011 Action Plan.
950.3012 Program Coordinating Committee (PCC).
950.3013 FSS family selection procedures.
950.3014 On-site facilities.
950.3020 Program implementation.
950.3021 Administrative fees.
950.3022 Contract of participation.
950.3024 Total tenant payment and increases in family income.
950.3025 FSS account.
950.3030 Reporting.
Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437aa-1437ee and
3535(d).
Subpart A--General
Sec. 950.101 Applicability and scope.
(a) General. (1) Under title II of the United States Housing Act of
1937, as added by the Indian Housing Act of 1988 (42 U.S.C. 1437aa, et
seq.), the Department of Housing and Urban Development (HUD) provides
financial and technical assistance to Indian Housing Authorities
(IHAs), for the development and operation of low-income housing
projects in Indian areas. This part is applicable to such projects
developed or operated by an IHA in an Indian area, as defined in
Sec. 950.102.
(2) If assistance under this part is not available to a low-income
family because the family desires housing in an area within which no
IHA is authorized to provide housing, or if for any other reason a
family desires housing assistance other than under this part, a family
may seek housing assistance under other HUD programs. (See 24 CFR part
203, chapter VIII of this title, as well as the remainder of chapter IX
of this title.)
(b) Other HUD regulations and requirements. The provisions of this
part are a complete statement of HUD regulations affecting the
development and operation of low-income housing by IHAs except as
supplemented by parts in other chapters of this title that are
referenced in this part.
Sec. 950.102 Definitions.
Act. The United States Housing Act of 1937 (42 U.S.C. 1437-1440).
Action plan. A plan of the actions to be funded by an IHA over a
period of five years (including an IHA's proposed allocation of its
modernization funds to a reserve established under Sec. 950.666(a)(3))
to make the necessary physical and management improvements identified
in the IHA's comprehensive plan under subpart I of this part. The plan
shall be based upon HUD's and the IHA's best estimates of the funding
reasonably expected to become available over the next five-year period.
The action plan is updated annually to reflect a rolling five-year
base.
Adjusted income. Annual income less the following allowances,
determined in accordance with HUD instructions:
(1) $480 for each dependent;
(2) $400 for any elderly family;
(3) For any family that is not an elderly family but has a
handicapped or disabled member other than the head of household or
spouse, handicapped assistance expenses in excess of three percent of
annual income, but this allowance may not exceed the employment income
received by family members who are 18 years of age or older as a result
of the assistance to the handicapped or disabled person;
(4) For any elderly family--
(i) That has no handicapped assistance expenses (as defined in
paragraph 3 of this definition), an allowance for medical expenses (as
defined in this section) equal to the amount by which the medical
expenses exceed three percent of annual income;
(ii) That has handicapped assistance expenses greater than or equal
to three percent of annual income, an allowance for handicapped
assistance expenses computed in accordance with paragraph (3) of this
definition, plus an allowance for medical expenses that is equal to the
family's medical expenses; and
(iii) That has handicapped assistance expenses that are less than
three percent of annual income, an allowance for combined handicapped
assistance expenses and medical expenses that is equal to the amount by
which the sum of these expenses exceeds three percent of annual income;
(5) Child care expenses, as defined in this section; and
(6) Excessive travel expenses, not to exceed $25 per family per
week, for employment- or education-related travel.
Administration charge. In Mutual Help projects, the amount budgeted
per-unit per-month for operating expense, exclusive of the cost of HUD-
approved expenditures for which operating subsidy is being provided in
accordance with Sec. 950.434 (see Sec. 950.427(b)).
Allowable expense level. In rental projects, the per-unit per-month
dollar amount of expenses (excluding utilities and expenses allowed
under Sec. 950.720) computed in accordance with Sec. 950.710, which is
used to compute the amount of operating subsidy.
Allowable utilities consumption level (AUCL). In rental projects,
the amount of utilities expected to be consumed per-unit per-month by
the IHA during the requested budget year, which is equal to the average
amount consumed per-unit per-month during the rolling base period.
Annual contributions contract (ACC). A contract under the Act
between HUD and the IHA containing the terms and conditions under which
HUD assists the IHA in providing decent, safe, and sanitary housing for
low-income families. The ACC shall be in a form prescribed by HUD under
which HUD agrees to provide assistance in the development,
modernization, and/or operation of a low-income housing project under
the Act, and the IHA agrees to develop, modernize, and operate the
project in compliance with all provisions of the ACC and the Act, and
all HUD regulations and implementing requirements and procedures.
Annual income. Annual income is the anticipated total income from
all sources received by the family head and spouse (even if temporarily
absent) and by each additional member of the family, including all net
income derived from assets, for the 12-month period following the
effective date of the initial determination or reexamination of income,
exclusive of certain types of income as provided in paragraph (2) of
this definition.
(1) Annual income includes, but is not limited to:
(i) The full amount, before any payroll deductions, of wages and
salaries, overtime pay, commissions, fees, tips and bonuses, and other
compensation for personal services;
(ii) The net income from operation of a business or profession.
Expenditures [[Page 18189]] for business expansion or amortization of
capital indebtedness shall not be used as deductions in determining net
income. An allowance for depreciation of assets used in a business or
profession may be deducted, based on straight line depreciation, as
provided in Internal Revenue Service regulations. Any withdrawal of
cash or assets from the operation of a business or profession will be
included in income, except to the extent the withdrawal is
reimbursement of cash or assets invested in the operation by the
family;
(iii) Interest, dividends, and other net income of any kind from
real or personal property. Expenditures for amortization of capital
indebtedness shall not be used as deductions in determining net income.
An allowance for depreciation is permitted only as authorized in
paragraph (1)(ii) of this definition. Any withdrawal of cash or assets
from an investment will be included in income, except to the extent the
withdrawal is reimbursement of cash or assets invested by the family.
Where the family has net family assets in excess of $5,000, annual
income shall include the greater of the actual income derived from all
net family assets or a percentage of the value of such assets based on
the current passbook savings rate as determined by HUD;
(iv) The full amount of periodic payments received from social
security, annuities, insurance policies, retirement funds, pensions,
disability, or death benefits and other similar types of periodic
receipts, including a lump-sum payment for the delayed start of a
periodic payment (but see paragraph (2)(xii) of this definition);
(v) Payments in lieu of earnings, such as unemployment and
disability compensation, worker's compensation, and severance pay (but
see paragraph (2)(iii) of this definition);
(vi) Welfare assistance. If the welfare assistance payment includes
an amount specifically designated for shelter and utilities that is
subject to adjustment by the welfare assistance agency in accordance
with the actual cost of shelter and utilities, the amount of welfare
assistance income to be included as income shall consist of:
(A) The amount of the allowance or grant exclusive of the amount
specifically designated for shelter or utilities; plus
(B) The maximum amount that the welfare assistance agency could, in
fact, allow the family for shelter and utilities. If the family's
welfare assistance is ratably reduced from the standard of need by
applying a percentage, the amount calculated under paragraph (1)(vi)(B)
of this definition shall be the amount resulting from one application
of the percentage;
(vii) Periodic and determinable allowances, such as alimony and
child support payments, and regular contributions or gifts received
from persons not residing in the dwelling; and
(viii) All regular pay, special pay, and allowances of a member of
the Armed Forces (but see paragraph (2)(vii) of this definition).
(2) Annual income does not include the following:
(i) Income from employment of children (including foster children)
under the age of 18 years;
(ii) Payments received for the care of foster children;
(iii) Lump-sum additions to family assets, such as inheritances,
insurance payments (including payments under health and accident
insurance and worker's compensation), capital gains, and settlement for
personal or property losses (but see paragraph (1)(v) of this
definition);
(iv) Amounts received by the family that are specifically for, or
in reimbursement of, the cost of medical expenses for any family
member;
(v) Income of a live-in aide;
(vi) Amounts of educational scholarships paid directly to the
student or to the educational institution, and amounts paid by the
Government to a veteran, for use in meeting the costs of tuition, fees,
books, equipment, materials, supplies, transportation, and
miscellaneous personal expenses of the student. Any amount of such
scholarship or payment to a veteran that is made available for
subsistence is to be included in income;
(vii) The special pay to a family member serving in the Armed
Forces who is exposed to hostile fire;
(viii) (A) Amounts received under training programs funded by HUD;
(B) Amounts received by a disabled person that are disregarded for
a limited time for purposes of Supplemental Security Income eligibility
and benefits because they are set aside for use under a Plan for
Achieving Self-Support (PASS);
(C) Amounts received by a participant in other publicly assisted
programs that are specifically for or in reimbursement of out-of-pocket
expenses incurred (special equipment, clothing, transportation, child
care, etc.) and that are made solely to allow participation in a
specific program; or
(D) A resident stipend, but only if the resident stipend does not
exceed $200 per month per officer to resident organization officers.
Stipends are intended to cover costs related to officers' volunteer
efforts and include but are not limited to the following items: child
care, transportation, special equipment, and special clothing.
(ix) Temporary, nonrecurring, or sporadic income (including gifts);
(x) For all initial determinations and reexaminations of income
carried out on or after April 23, 1993, reparation payments paid by a
foreign government pursuant to claims filed under the laws of that
government by persons who were persecuted during the Nazi era;
(xi) The earnings and benefits to any resident resulting from the
participation in a program providing employment training and supportive
services in accordance with the Family Support Act of 1988, section 22
of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), or
any comparable Federal, State, tribal, or local law during the
exclusion period. For purposes of paragraph (2)(xi) of this definition,
the following definitions apply:
(A) Comparable Federal, State, tribal, or local law means a program
providing employment training and supportive services that--
(1) Is authorized by Federal, State, tribal, or local law;
(2) Is funded by Federal, State, tribal, or local government;
(3) Is operated or administered by a public agency; and
(4) Has as its objective to assist participants in acquiring job
skills.
(B) Exclusion period means the period during which the resident
participates in a program described in this section, plus 18 months
from the date the resident begins the first job acquired by the
resident after completion of such program that is not funded by public
housing assistance under the United States Housing Act of 1937. If the
resident is terminated from employment without good cause, the
exclusion period shall end.
(C) Earnings and Benefits means the incremental earnings and
benefits resulting from a qualifying employment training program or
subsequent job;
(xii) Any amounts that would be eligible for exclusion under
section 1613(a)(7) of the Social Security Act (deferred periodic
payments received in a lump sum from SSI and social security); or
(xiii) Amounts specifically excluded by any other Federal statute
from consideration as income for purposes of determining eligibility or
benefits under a category of assistance programs that includes
assistance under the United States Housing Act of 1937. A notice is
published from time to time in the Federal Register and distributed to
IHAs identifying the benefits that [[Page 18190]] qualify for this
exclusion. Updates will be published and distributed when necessary.
(3) If it is not feasible to anticipate a level of income over a
12-month period, the income anticipated for a shorter period may be
annualized subject to a redetermination at the end of the shorter
period.
(4) Any family receiving the reparation payments referred to in
paragraph (2)(x) of this definition that has been requested to repay
assistance under this part as a result of receipt of such payments
shall not be required to make further repayments on or after April 23,
1993.
Annual Statement. A work statement covering the first year of the
Five-Year Action Plan and setting forth the major work categories and
costs by development or IHA-wide for the current Federal Fiscal Year
(FFY) grant, as well as a summary of costs by development account and
implementation schedules for obligation and expenditure of the funds.
Annual Submission. A collective term for all documents that the IHA
shall submit to HUD for review and approval before accessing the
current FFY grant funds. Such documents include the Annual Statement,
Work Statements for years two through five of the Five-Year Action
Plan, local government statement, IHA Board Resolution, materials
demonstrating the partnership process, and any other documents as
prescribed by HUD.
Applicable surface. All intact and nonintact interior and exterior
painted surfaces of a residential structure.
Area Office of Native American Programs (ONAP). The HUD Offices in
Chicago (Eastern/Woodlands), Oklahoma City (Southern Plains), Denver
(Northern Plains), Phoenix (Southwest), Seattle (Northwest), and
Anchorage (Alaska), which have been delegated authority to administer
programs under the United States Housing Act of 1937 for the areas in
which the IHAs are located.
Base year. The IHA's fiscal year immediately preceding its first
fiscal year under the performance funding system (PFS).
Base year expense level. The expense level (excluding utilities,
audits, and certain other items) for the year, computed as provided in
Sec. 950.710(a).
Benefit/cost analysis. For purposes of subpart K of this part, a
direct comparison of the present worth of any savings generated by a
given system during the expected useful life of the system or the
estimated remaining life of the project, whichever is the shortest
number of years, to the cost of the change.
BIA. The Bureau of Indian Affairs in the Department of the
Interior.
Checkmeter. A device for measuring utility consumption of each
individual dwelling unit where the utility service is supplied through
a mastermeter system. The IHA pays the utility supplier on the basis of
the mastermeter readings and uses the checkmeters to determine whether
and to what extent utility consumption of each dwelling unit is in
excess of the allowance for IHA-furnished utilities, established in
accordance with subpart K of this part.
Chewable surface. All chewable protruding painted surfaces up to
five feet from the floor or ground, that are readily accessible to
children under seven years of age, such as protruding corners,
windowsills and frames, doors and frames, and other protruding
woodwork.
Chief executive officer (CEO). The CEO of a unit of general local
government means the elected official or the legally designated
official who has the primary responsibility for the conduct of that
entity's governmental affairs.
Child. A member of the family, other than the family head or a
spouse, who is under 18 years of age.
Child care expenses. Amounts anticipated to be paid by the family
for the care of children under 13 years of age during the period for
which annual income is computed, but only where such care is necessary
to enable a family member to be gainfully employed or to further his or
her education only to the extent such amounts are not reimbursed. The
amount deducted shall reflect reasonable charges for child care, and,
in the case of child care necessary to permit employment, the amount
deducted shall not exceed the amount of income received from such
employment.
Citizen. A citizen or national of the United States.
Common property. The nondwelling structures and equipment, common
areas, community facilities, and in some cases certain component parts
of dwelling structures, that are contained in the development. It also
may include common property as defined in a cooperative form of
ownership, as determined by the IHA.
Comprehensive grant number. A grant number that is unique to each
work statement (under subpart I of this part) covering the improvements
to one or more existing Indian housing projects.
Comprehensive Plan. A plan prepared by an IHA, and approved by HUD,
under the Comprehensive Grant Program setting forth all of the physical
and management improvement needs of the IHA and its Indian housing
developments, indicating the relative urgency of needs, and including
the IHA's action plan, cost estimates, and required local government
and IHA certifications. The Comprehensive Plan may be revised, as
necessary, but shall be revised at least every sixth year. (See subpart
I of this part.)
Cooperation agreement. An agreement between an IHA and a local
governing (taxing) body that assures exemption from real and personal
property taxes and provides for payments in lieu of taxes by the IHA,
and that provides for cooperation with respect to the development and
operation of low-income housing owned by the IHA.
Current budget year. The IHA fiscal year in which the IHA is
operating.
Defective lead-based paint surface. Paint on applicable surfaces
having a lead content of greater than or equal to 1 mg/cm2, that is
cracking, scaling, chipping, peeling, or loose.
Defective paint surface. Paint on applicable surfaces that is
cracking, scaling, chipping, peeling, or loose.
Demolition. The razing in whole, or in part, of one or more
permanent buildings of an Indian housing project.
Dependent. A member of the family household (excluding foster
children) other than the family head or spouse, who is under 18 years
of age, or is a disabled person or handicapped person, or is a full-
time student.
Deprogramming. Removal from the IHA's inventory under the ACC,
pursuant to the IHA's formal request and HUD's approval, of a dwelling
unit no longer used for dwelling purposes or a nondwelling structure or
a unit used for nondwelling purposes that the IHA has determined will
no longer be used for IHA purposes.
Development. Any or all undertakings necessary for planning, land
acquisition, demolition, construction, or equipment, in connection with
a low-income housing project.
Development grant. The grant that provides IHAs, in response to an
application for housing, funds to enable the IHA to plan and construct
either rental or mutual help housing. The development grant is for a
fixed amount of funding and ends when the housing development is
through the warranty period (normally six years from initial
development grant approval).
Disabled person. A person who is under a disability as defined in
section 223 of the Social Security Act (42 U.S.C. 423), or who has a
developmental disability as defined in section 102(7) of the
Developmental Disabilities [[Page 18191]] Assistance and Bill of Rights
Act (42 U.S.C. 6001(7)).
Displaced person. A person displaced by governmental action, or a
person whose dwelling has been extensively damaged or destroyed as a
result of a disaster declared or otherwise formally recognized under
Federal disaster relief laws.
Disposition. The conveyance or other transfer by the IHA, by sale
or other transaction, of any interest in the real estate of an Indian
housing project, excluding transfers of property described in
Sec. 950.921(b)(1)(i) through (vii).
Earned home payments account (EHPA). In the Turnkey III program
(subpart G of this part), this account is established and maintained
pursuant to Sec. 950.517 by the IHA based on a portion of the
homebuyer's required monthly payment. The EHPA should equal the IHA's
estimate of the monthly cost for routine maintenance of the home.
Elderly family. A family whose head or spouse (or sole member) is
an elderly, disabled, or handicapped person, as defined in this
section. It may include two or more elderly, disabled, or handicapped
persons living together, or one or more of these persons living with
one or more live-in aides, as defined in this section.
Elderly person. A person who is at least 62 years of age.
Elevated blood lead level or EBL. Excessive absorption of lead,
that is, a confirmed concentration of lead in whole blood of 25 ug/dl
(micrograms of lead per deciliter of whole blood) or greater.
Emergency modernization (CIAP). A type of modernization program for
a development that is limited to physical work items of an emergency
nature, posing an immediate threat to the health or safety of residents
or related to fire safety, which shall be corrected within one year of
CIAP funding approval.
Emergency work. Physical work items of an emergency nature, posing
an immediate threat to the health or safety of residents, which shall
be completed within one year of funding. Under the Comprehensive Grant
program, management improvements are not eligible as emergency work,
and therefore shall be covered by the Comprehensive Plan (including the
action plan), before the IHA may carry them out. (See subpart I of this
part.)
Energy audit. A process carried out in accordance with subpart K of
this part, that identifies and specifies the energy and cost savings
that are estimated to result from installing or accomplishing an energy
conservation measure.
Energy conservation measures (ECMs). Physical improvements or
modifications that, if undertaken for a building or facility, or its
equipment, are likely to reduce the cost of energy in an amount
sufficient to recover the installation costs in a period no longer than
the useful life of the measure. (See subpart K of this part.)
Evidence of citizenship or eligible immigration status. The
documents which must be submitted to evidence citizenship or eligible
immigration status (see Sec. 950.310(e)).
Family. Family includes but is not limited to:
(1) An elderly family or single person as defined in this part;
(2) The remaining member of a tenant family; and
(3) A displaced person.
Family project. Any project assisted under section 9 of the Act (42
U.S.C. 1437g) that is not an elderly project. For this purpose, an
elderly project is one that was designated for occupancy by the elderly
at its inception (and has retained that character) or, although not so
designated, for which the IHA gives preference in tenant selection
(with HUD approval) for all units in the project to elderly families. A
building within a mixed-use project that meets these qualifications
shall, for purposes of this definition, be excluded from any family
project, as shall zero bedroom units.
Federally recognized tribe. Any Indian tribe, band, nation, or
other organized group or community, including any Alaska Native village
or regional corporation or village as defined in or established
pursuant to the Alaska Native Claims Settlement Act, that is recognized
as eligible for the special programs and services provided by the
United States to Indians because of their status as Indians.
FFY. Federal Fiscal Year (starting with October 1, and ending with
September 30, and designated by the calendar year in which it ends).
Force account labor. Labor directly employed by the IHA on either a
permanent or a temporary basis.
Formula. The formula prescribed by HUD to be used in the
Performance Funding System to estimate the cost of operating an average
unit in an IHA's inventory. (See subpart J of this part.)
Formula expense level. The per-unit per-month dollar amount of
expenses (excluding utilities and audits) computed under the formula,
in accordance with Sec. 950.710.
Full-time student. A person who is carrying a subject load that is
considered full-time for day students under the standards and practices
of the educational institution attended. An educational institution
includes a vocational school with a diploma or certificate program, as
well as an institution offering a college degree.
Fungibility. Fungibility is a concept that permits an IHA to
substitute any work item from the latest approved Five-Year Action Plan
to any previously approved CIAP budget or CGP Annual Statement and to
move work items among approved budgets without prior HUD approval.
Handicapped assistance expenses. Reasonable expenses that are
anticipated, during the period for which annual income is computed, for
attendant care and auxiliary apparatus for a handicapped or disabled
family member and that are necessary to enable a family member
(including the handicapped or disabled member) to be employed, provided
that the expenses are neither paid to a member of the family nor
reimbursed by an outside source.
Hard costs. The physical improvement costs in development accounts
1450 through 1475 of the Low-Rent Housing Accounting Handbook, 7510.1,
as revised, that include: Account 1450 Site Improvements; Account 1460
Dwelling Structures; Account 1465.1 Dwelling Equipment--Nonexpendable;
Account 1470 Nondwelling Structures; and Account 1475 Nondwelling
Equipment.
Head of household. The adult member of the family who is the head
of the household for purposes of determining income eligibility and
rent.
High risk. See 24 CFR 85.12 and Sec. 950.135.
Homebuyer. The member or members of a low-income family who have
executed a homebuyer agreement with the IHA and who have not yet
achieved homeownership.
Homebuyer agreement. A Mutual Help and Occupancy Agreement or a
Turnkey III Homebuyer's Ownership Opportunity Agreement.
Homebuyer Association. In the Turnkey III program this means an
incorporated organization (as defined in Sec. 950.511) composed of all
of the families who are entitled to occupancy pursuant to a Homebuyer
Ownership Opportunity Agreement or who are homeowners.
Homeowner. A former homebuyer who has achieved ownership of his or
her home and acquired title to the home.
HUD. The Department of Housing and Urban Development.
IHA homeownership financing. IHA financing for purchase of a home
by an eligible homebuyer who gives the IHA [[Page 18192]] a promissory
note and mortgage for the balance of the purchase price.
IHS. The Indian Health Service in the Department of Health and
Human Services.
Indian. Any person recognized as being an Indian or Alaska Native
by an Indian tribe, the Federal Government, or any State.
Indian area. The area within which an Indian Housing Authority is
authorized to provide low-income housing.
Indian Housing Authority (IHA). An entity that is authorized to
engage in or assist in the development or operation of low-income
housing for Indians that is established either:
(1) By exercise of the power of self-government of an Indian tribe
independent of State law; or
(2) By operation of State law providing specifically for housing
authorities for Indians, including regional housing authorities in the
State of Alaska.
Indian tribe. Any tribe, band, pueblo, group, community, or nation
of Indians or Alaska Natives.
INS. The U.S. Immigration and Naturalization Service.
Interdepartmental agreement. The agreement among HUD, the
Department of Health and Human Services, the Department of Interior,
and other appropriate agencies, concerning assistance to projects
developed and operated under the Act.
Latent defect. A design or construction deficiency that could not
reasonably have been foreseen by the IHA or the Office of Native
American Programs.
Lead-based paint. A paint surface, whether or not defective,
identified as having a lead content greater than or equal to 1.0 mg/
cm2, or .5 percent by weight.
Live-in aide. A person who resides with an elderly, disabled, or
handicapped person or persons and who:
(1) Is determined by the IHA to be essential to the care and well-
being of the person(s);
(2) Is not obligated for support of the person(s); and
(3) Would not be living in the unit except to provide necessary
supportive services. (See definition of annual income for treatment of
a live-in aide's income.)
Local inflation factor. The weighted average percentage increase in
local government wages and salaries for the area in which the IHA is
located and non-wage expenses based upon the implicit price deflator
for State and local government purchases of goods and services. This
weighted average percentage will be supplied by HUD. HUD anticipates
that it will update the local inflation factor each year.
Low-income family. A family whose annual income does not exceed 80
percent of the median income for the area, as determined by HUD with
adjustments for smaller and larger families. HUD may establish income
limits higher or lower than 80 percent of the median income for an
Indian area on the basis of its finding that such variations are
necessary because of the prevailing levels of construction costs or
unusually high or low family incomes.
Management improvement plan. A document developed by the IHA in
accordance with Sec. 950.135 that specifies the actions to be taken,
including timetables, to correct deficiencies identified as a result of
a management assessment.
Mastermeter system. A utility distribution system in which an IHA
is supplied utility service by a utility supplier through a meter or
meters and the IHA then distributes the utility to its tenants.
Medical expenses. Those medical expenses, including medical
insurance premiums, that are anticipated during the period for which
annual income is computed, and that are not covered by insurance.
MH Contribution. Land, labor, cash, materials, or equipment--or a
combination of these--contributed toward the development cost of a
project in accordance with a homebuyer's MHO Agreement, credit for
which is to be used toward purchase of a home.
MH Program. The Mutual Help Homeownership Opportunity Program.
MHO Agreement. A Mutual Help and Occupancy Agreement between an IHA
and a homebuyer.
Mixed family. A family whose members include those with citizenship
or eligible immigration status, and those without citizenship or
eligible immigration status.
Modernization capability. An IHA has modernization capability for
CIAP if it is capable of effectively carrying out the proposed
modernization improvements. Where an IHA does not have a funded
modernization program in progress, HUD will determine whether the IHA
has a reasonable prospect of acquiring modernization capability through
hiring staff or contracting for assistance. (See Sec. 950.135.)
Modernization funds. Funds derived from an allocation of budget
authority for the purpose of funding physical and management
improvements.
Modernization program. An IHA's program for carrying out
modernization, as set forth in the approved CIAP budget for
modernization funds. (See subpart I (CIAP) of this part.)
Modernization project. The improvement of one or more existing
Indian housing developments under a new number designated for that
modernization program (CIAP). For each modernization project, HUD and
the IHA shall enter into an ACC amendment, requiring low-income use of
the housing for not less than 20 years from the date of the ACC
amendment (subject to sale of homeownership units in accordance with
the terms of the ACC).
Monthly adjusted income. One twelfth of adjusted income.
Monthly Equity Payments Account (MEPA). A homebuyer account in the
Mutual Help Homeownership Opportunity program credited with the amount
by which each required monthly payment exceeds the administration
charge.
Monthly income. One twelfth of annual income.
National. A person who owes permanent allegiance to the United
States, for example, as a result of birth in a United States territory
or possession.
Near elderly family. A family whose head or spouse (or sole member)
is at least 50 years of age but below the age of 62 years.
Net family assets. Net cash value after deducting reasonable costs
that would be incurred in disposing of real property, savings, stocks,
bonds, and other forms of capital investment, excluding interests in
Indian trust land and excluding equity accounts in HUD homeownership
programs. The value of necessary items of personal property such as
furniture and automobiles are excluded, and, in the case of a family in
which any member is actively engaged in a business or farming
operation, the assets that are a part of the business or farming
operation are excluded. In cases where a trust fund, such as individual
Indian monies held by the BIA, has been established and the trust is
not revocable by, or under the control of, any member of the family or
household, the value of the trust fund will not be considered an asset
so long as the fund continues to be held in trust. In determining net
family assets, IHAs shall include the value of any business or family
assets disposed of by an applicant or tenant for less than fair market
value (including a disposition in trust, but not in a foreclosure or
bankruptcy sale) during the two years preceding the date of application
for the [[Page 18193]] program or reexamination, as applicable, in
excess of the consideration received therefor. In the case of a
disposition as part of a separation or divorce settlement, the
disposition will not be considered to be for less than fair market
value if the applicant or tenant receives important consideration not
measurable in dollar terms.
Noncitizen. A person who is neither a citizen nor national of the
United States.
Nonroutine maintenance. (1) For purposes of the Turnkey III Program
(Nonroutine Maintenance Reserve), nonroutine maintenance refers to
infrequent and costly items of maintenance and replacement, including
dwelling equipment such as a range or refrigerator, or major components
such as heating or plumbing systems or a roof. Specifically excluded
are maintenance expenses attributable to homebuyer negligence or to
defective materials or workmanship.
(2) For purposes of the CIAP and Comprehensive Grant Modernization
Programs under subpart I of this part and the applicability of wage
rates, nonroutine maintenance refers to work items that ordinarily
would be performed on a regular basis in the course of upkeep of a
property, but have become substantial in scope because they have been
put off, and that involve expenditures that would otherwise materially
distort the level trend of maintenance expenses. Replacement of
equipment and materials rendered unsatisfactory because of normal wear
and tear by items of substantially the same kind does qualify, but
reconstruction, substantial improvement in the quality or kind of
original equipment and materials, or remodeling that alters the nature
or type of housing units does not qualify.
NRMR. The nonroutine maintenance reserve account in the Turnkey III
program established and maintained in accordance with Sec. 950.519.
Office of Native American Programs (ONAP). The Office of HUD that
has been delegated authority to administer programs under this part.
Operating budget. The IHA's operating budget (HUD form 52564) and
all related documents, required by HUD to be submitted pursuant to the
ACC.
Operating subsidy. Annual contributions for IHA operations made by
HUD under the authority of section 9 of the Act. (See subpart J of this
part with respect to rental projects. See also Sec. 950.434 (Mutual
Help Operating Subsidy) and Sec. 950.523 (Turnkey III Operating
Subsidy).)
Other income. Income to the IHA other than dwelling rental income
and income from investments, except that, for purposes of determining
operating subsidy eligibility, the following items are excluded: Grants
and gifts for operations, other than for utility expenses, received
from Federal, State, and local governments, individuals or private
organizations; amounts charged to tenants for repairs for which the IHA
incurs an offsetting expense; and legal fees in connection with
eviction proceedings, when those fees are lawfully charged to tenants.
Other modernization (modernization other than emergency). A type of
modernization program under the Comprehensive Improvement Assistance
Program (CIAP) for a development that includes one or more physical
work items, where HUD determines that the physical improvements are
necessary and sufficient to extend substantially the useful life of the
development, and/or one or more management work items (including
planning costs), and/or testing, professional risk assessments, interim
containment, and abatement of lead-based paint.
Partnership process. A specific and ongoing process that is
designed to ensure that residents, resident groups, and the IHA work in
a cooperative and collaborative manner to develop, implement and
monitor the CIAP or Comprehensive Grant Program. At a minimum, an IHA
shall ensure that the partnership process incorporates full resident
participation in each of the required program components.
Pay-back period. The number of years required to accumulate net
savings to equal the cost of an energy conservation measure.
Performance funding system (PFS). The standards, policies, and
procedures established by HUD for determining the amount of operating
subsidy an IHA is eligible to receive for its owned rental projects,
based on the costs of operating a comparable well-managed project.
PILOT. Payment in lieu of taxes. Includes all payments made by an
IHA to the local governing body (or other taxing jurisdiction) for the
provision of certain municipal services, including that portion of
payments in lieu of taxes that is to be applied as a reimbursement of
payments of off-site utilities. The amount charged is determined by the
cooperation agreement, which is generally defined as 10 percent of
shelter rent. Shelter rent is defined as dwelling rentals less total
utility expenses.
Program reservation. A written notification by HUD to an IHA, that
is not a legal obligation, but that expresses HUD's determination,
subject to fulfillment by an IHA of all legal and administrative
requirements within a stated time, that HUD will enter into a new or
amended ACC covering the stated number of housing units, or such other
number as is consistent with funding reserved by HUD for the project.
Project. Housing developed, acquired, or assisted by an IHA under
the Act, and the improvement of this housing.
Project for elderly families. A rental project or portion of a
rental project assisted under the United States Housing Act of 1937
that was designated for occupancy by the elderly at its inception (and
that has retained that character) or, although not so designated, for
which the IHA gives preference in tenant selection (with HUD approval)
for all units in the project, or for a portion of the units in the
project, to elderly families.
Project units. All dwelling units of an IHA's projects. Projected
operating income level. The per-unit per-month dollar amount of
dwelling rental income plus nondwelling income, computed as provided in
Sec. 950.725.
Reasonable cost. Total unfunded hard cost needs for a development
that do not exceed 90 percent of the computed total development cost
limit for a new development with the same structure type and number and
size of units in the market area.
Requested budget year. The budget year (fiscal year) of an IHA
following the current budget year.
Resident groups. Democratically elected resident groups such as
IHA-wide resident groups, area-wide resident groups, single development
resident groups, or resident management corporations (RMCs).
Retail service. Purchase of utility service by IHA tenants directly
from the utility supplier.
Rolling base period. The 36-month period that ends 12 months before
the beginning of the IHA requested budget year, which is used to
determine the allowable utilities consumption level used to compute the
utilities expense level.
Section 214. Section 214 of the Housing and Community Development
Act of 1980, as amended (42 U.S.C. 1436a). Section 214 restricts HUD
from making financial assistance available for noncitizens unless they
meet one of the categories of eligible immigration status specified in
Section 214.
Section 214 covered programs. Programs to which the restrictions
imposed by Section 214 apply are programs that make available financial
[[Page 18194]] assistance pursuant to the United States Housing Act of
1937 (42 U.S.C. 1437-1440), Section 235 or Section 236 of the National
Housing Act (12 U.S.C. 1715z and 1715z-1) and Section 101 of the
Housing and Urban Development Act of 1965 (12 U.S.C. 1701s).
Single person. A person who lives alone or intends to live alone,
and who does not qualify as:
(1) An elderly family;
(2) A displaced person (as defined in this section); or
(3) The remaining member of a tenant family.
Soft costs. The nonphysical improvement costs, that exclude any
costs in development accounts 1450 through 1475.
State. Any of the several States of the United States of America,
the District of Columbia, the Commonwealth of Puerto Rico, the
territories and possessions of the United States, the Trust Territory
of the Pacific Islands, and Indian tribes.
Subsequent homebuyer. Any homebuyer other than the homebuyer who
first occupies a home pursuant to a Mutual Help and Occupancy (MHO)
agreement.
Substantial rehabilitation. A modernization program for a project
that provides for all physical and management improvements needed to
meet the modernization and energy conservation standards and to ensure
long-term physical and social viability.
Successor homebuyer. A person eligible to become a homebuyer who
has been designated by a current homebuyer to succeed to an interest
under a homeownership agreement in the event of the current homebuyer's
death or mental incapacity.
Surcharge. The amount charged by the IHA to a tenant, in addition
to the Tenant Rent, for consumption of utilities in excess of the
allowance for IHA-furnished utilities or for estimated consumption
attributable to tenant-owned major appliances or to optional functions
of IHA-furnished equipment. Surcharges calculated pursuant to subpart K
of this part, based on estimated consumption where checkmeters have not
been installed, are referred to as ``scheduled surcharges.''
Tenant-purchased utilities. Utilities purchased by the tenant
directly from a utility supplier.
Tenant rent. The amount payable monthly by the family as rent to
the IHA. Where all utilities (except telephone) and other essential
housing services are supplied by the IHA, tenant rent equals total
tenant payment. Where some or all utilities (except telephone) and
other essential housing services are not supplied by the IHA and the
cost thereof is not included in the amount paid as rent, tenant rent
equals total tenant payment less the utility allowance.
Total development cost. The sum of all HUD-approved costs for a
project including all undertakings necessary for administration,
planning, site acquisition, demolition, construction or equipment and
financing (including the payment of carrying charges), and for
otherwise carrying out the development of the project. The maximum
total development cost excludes off-site water and sewer facilities
development costs; costs normally paid for by other entities, but
included in the development cost budget for the project for contracting
or accounting convenience; and any donations received from public or
private sources.
Total tenant payment. The monthly amount calculated under subpart D
of this part. Total tenant payment does not include any surcharge for
excess utility consumption or other miscellaneous charges (see subpart
K of this part).
Unit approved for deprogramming. (1) A dwelling unit for which HUD
has approved the IHA's formal request to remove the dwelling unit from
the IHA's inventory and the Annual Contributions Contract but for which
removal, i.e. deprogramming, has not yet been completed; or
(2) A nondwelling structure or a dwelling unit used for nondwelling
purposes that the IHA has determined will no longer be used for IHA
purposes and that HUD has approved for removal from the IHA's inventory
and Annual Contributions Contract.
Unit months available. Project units multiplied by the number of
months the project units are expected to be available for occupancy
during a given IHA fiscal year. Except as provided in the following
sentence, for purposes of this part, a unit is considered available for
occupancy from the date on which the end of the initial operating
period for the project is established until the time it is approved by
HUD for deprogramming and is vacated or approved for nondwelling use.
On or after July 1, 1991, a unit is not considered available for
occupancy in any IHA Requested Budget Year if the unit is located in a
vacant building in a project that HUD has determined is nonviable.
Utilities. For purposes of determining utility allowances,
utilities include electricity, gas, heating fuel, water, sewerage
service, septic tank pumping/maintenance, sewer system hookup charges
(after development), and trash and garbage collection. Telephone
service is not included as a utility. For purposes of IHA accounting,
PFS and non-PFS, trash and garbage collection and maintenance and
repair of any systems are considered maintenance expenses and not
utility expenses.
Utilities expense level. The per-unit per-month dollar amount of
utilities expense used in calculation of operating subsidy, as provided
in Sec. 950.715.
Utility allowance. An allowance for IHA-furnished utilities
represents the maximum consumption units (e.g., kilowatt hours of
electricity), that may be used by a dwelling unit without a surcharge
against the tenant for excess consumption. An allowance for tenant-
purchased utilities is a fixed dollar amount that is deducted from the
total tenant payment otherwise chargeable to a tenant who has retail
service, whether the charges are more or less than the amounts of the
allowance. (See Secs. 950.865 and 950.870.)
Utility reimbursement. The amount, if any, by which the utility
allowance for tenant-purchased utilities for the unit, if applicable,
exceeds the family's total tenant payment.
Very low-income family. A low-income family whose annual income
does not exceed 50 percent of the median income for the area, as
determined by HUD, with adjustments for smaller and larger families.
HUD may establish income limits higher or lower than 50 percent of the
median income for an Indian area on the basis of its finding that such
variations are necessary because of unusually high or low family
incomes.
Welfare assistance. Welfare or other payments to families or
individuals, based on need, that are made under programs funded,
separately or jointly, by Federal, State, or local governments.
Work item. Any separately identifiable unit of work constituting a
part of a modernization program.
Work Statements. Work Statements cover the second through fifth
years of the Five-Year Action Plan and set forth the major work
categories and costs, by development or IHA-wide, that the IHA intends
to undertake in each year of years two through five. In preparing these
Work Statements, the IHA shall assume that the current FFY formula
amount will be available in each year of years two through five.
Sec. 950.110 Assistance from Indian Health Service and Bureau of
Indian Affairs.
Because HUD assistance under this part is not limited to IHAs of
Federally recognized tribes, provisions in this part relating to
assistance from BIA or IHS, or to required approvals, actions, or
determinations by these agencies in connection with such assistance,
are [[Page 18195]] applicable only to projects undertaken by IHAs of
Federally recognized tribes or by regional housing authorities created
by Alaska state law. These projects shall be developed promptly and
operated in accordance with the provisions of this part and the
Interdepartmental Agreement.
Sec. 950.115 Applicability of civil rights requirements.
(a) Indian Civil Rights Act. (1) The Indian Civil Rights Act (ICRA)
(title II of the Civil Rights Act of 1968, 25 U.S.C. 1301-1303)
provides, among other things, that no Indian tribe in exercising powers
of self-government shall deny to any person within its jurisdiction the
equal protection of its laws or deprive any person of liberty or
property without due process of law. The ICRA also states these equal
protection and due process rights do not apply if they violate customs,
traditions, and practices of the tribe. The ICRA applies to any tribe,
band, or other group of Indians subject to the jurisdiction of the
United States in the exercise of recognized powers of self-government.
The ICRA is applicable in all cases in which an IHA has been
established by exercise of tribal powers of self-government.
(2) For IHAs established pursuant to State law, HUD will determine
the applicability of the ICRA on a case-by-case basis. Factors
considered may include the existence of recognized powers of self-
government; the scope and jurisdiction of such powers; and the
applicability of such powers to the area of operation of a particular
IHA. Generally, determinations by HUD of the existence of recognized
powers of self-government and the jurisdiction of such powers will be
made in consultation with the Department of Interior-Bureau of Indian
Affairs, and may be based on applicable legislation, treaties, and
judicial decisions. The area of operation of an IHA may be determined
by the jurisdiction of the governing body creating the IHA, any
limitations within the enabling legislation, and judicial decisions.
(3) Projects of IHAs subject to the ICRA shall be developed and
operated in compliance with its provisions and all HUD regulations
thereunder.
(b) Applicability of Title VI, the Fair Housing Act; and Title II
of the Americans with Disabilities Act. Title VI of the Civil Rights
Act of 1964 (42 U.S.C. 2000d), which prohibits discrimination on the
basis of race, color, or national origin in federally assisted
programs; the Fair Housing Act (42 U.S.C. 3601-3619), which prohibits
discrimination based on race, color, religion, sex, or national origin
in the sale or rental of housing; and Title II of the Americans with
Disabilities Act (42 U.S.C. 12131) apply to those IHAs created by State
law for which HUD has determined that the ICRA is inapplicable. Actions
taken by an IHA to implement the statutory admission restriction in
favor of Indian families in the MH program, as set forth in
Sec. 950.416, shall not be considered a violation of any provision of
either Title VI, the Fair Housing Act, or Title II of the Americans
with Disabilities Act.
(c) Indian Housing Act of 1988--Mutual Help program admissions. For
provisions generally limiting admission to the Mutual Help
Homeownership Opportunity program to Indians and requiring findings of
need for admission of non-Indians, see Sec. 950.416.
(d) Disability. (1) Under section 504 of the Rehabilitation Act of
1973 (29 U.S.C. 794), as amended, HUD is required to assure that no
otherwise-qualified disabled person is excluded from participation,
denied benefits, or discriminated against under any program or activity
receiving Federal financial assistance, solely by reason of his or her
disability. IHAs shall comply with implementing instructions in 24 CFR
part 8.
(2) The IHA shall comply with the Architectural Barriers Act of
1968 (42 U.S.C. 4151-4157), and HUD implementing regulations (24 CFR
part 40).
(e) Minority Business Enterprise Development and Women's Business
Enterprise Policy. Executive Orders 12432 (3 CFR, 1983 Comp., p. 198)
and 12138 (3 CFR, 1979 Comp., p. 39), respectively, apply to Indian
Housing Authorities.
Sec. 950.117 Displacement, relocation, and acquisition.
(a) Minimizing displacement. Consistent with the other goals and
objectives of this part, IHAs shall assure that they have taken all
reasonable steps to minimize the displacement of persons (families,
individuals, businesses, nonprofit organizations, and farms) as a
result of a project assisted under this part.
(b) Temporary relocation. Residents who will not be required to
move permanently, but who must relocate temporarily (e.g., to permit
rehabilitation), shall be provided:
(1) Reimbursement for all reasonable out-of-pocket expenses
incurred in connection with the temporary relocation, including the
cost of moving to and from the temporary housing and any increase in
monthly rent/utility costs.
(2) Appropriate advisory services, including reasonable advance
written notice of:
(i) The date and approximate duration of the temporary relocation;
(ii) The location of the housing, which may include a traditional
home, to be made available for the temporary period;
(iii) The terms and conditions under which the resident may lease
and occupy a suitable, decent, safe, and sanitary dwelling in the
development following its completion; and
(iv) The provisions of paragraph (b)(1) of this section.
(c) Relocation assistance for displaced persons. (1) A displaced
person (defined in paragraph (g) of this section) shall be provided
relocation assistance at the levels described in, and in accordance
with the requirements of, the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C.
4601-4655) and implementing regulations at 49 CFR part 24.
(2) A comparable Indian housing unit, project-based Section 8
housing, or a privately-owned dwelling made affordable by a Section 8
Rental Certificate or Rental Voucher, may qualify as a comparable
replacement dwelling for a person displaced from an Indian housing
unit.
(d) Real property acquisition requirements. The acquisition of real
property for a development is subject to the URA and the requirements
described in 49 CFR part 24, subpart B, whether the acquiring entity is
organized under State law or tribal law.
(e) Appeals. A person who disagrees with the IHA's determination
concerning whether the person qualifies as a displaced person, or the
amount of relocation assistance for which the person is eligible, may
file a written appeal of that determination with the IHA. A lower-
income person who is dissatisfied with the IHA's determination on his
or her appeal may submit a written request for review of that
determination to the HUD Area ONAP.
(f) Responsibility of IHA. (1) The IHA shall certify (i.e., provide
assurance of compliance, as required by 49 CFR part 24) that it will
comply with the URA, the regulations at 49 CFR part 24, and the
requirements of this section, and shall ensure such compliance
notwithstanding any third party's contractual obligation to the IHA to
comply with the requirements in 49 CFR part 24.
(2) The cost of required relocation assistance is an eligible
project cost in the same manner and to the same extent
[[Page 18196]] as other project costs. However, such assistance also
may be paid from funds available from other sources.
(3) The IHA shall maintain records in sufficient detail to
demonstrate compliance with the requirements of this section.
(g) Definition of displaced person. (1) For purposes of this
section, the term ``displaced person'' means a person (family,
individual, business, nonprofit organization, or farm) that moves from
real property, or moves personal property from real property,
permanently, as a direct result of acquisition, rehabilitation,
demolition, or conversion of a unit to homeownership (Mutual Help
Homeownership Opportunity (MH) Program) for a project assisted under
this part or as a direct result of disposition in accordance with
subpart M of this part. This includes any permanent, involuntary move
for an assisted project including any permanent move from the
development that is made:
(i) After notice to the person by the IHA or property owner to move
permanently from the property, if the move occurs on or after:
(A) For the comprehensive improvement assistance program (CIAP) and
the comprehensive grant program (CGP) under subpart I of this part, 45
calendar days from before:
(1) The IHA issues the invitation for bids for the project, or
(2) The start of force account work, whichever is applicable; or
(B) For the disposition or demolition of Indian housing under
subpart M of this part, the date of HUD approval of the IHA's proposal;
or
(C) For other projects subject to this section, the date HUD
approves the site for the project; or, if HUD site approval is not
required, the date the IHA approves the site for the project;
(ii) Before the date described in paragraph (g)(1)(i) of this
section, if the IHA or HUD determines that the displacement resulted
directly from acquisition, rehabilitation, demolition, or conversion
for the assisted project; or
(iii) By a resident of a dwelling unit, if any one of the following
three situations occurs:
(A) The resident moves after the initiation of negotiations (as
defined in paragraph (h) of this section) and the move occurs before
the resident is provided written notice offering him or her the
opportunity to lease and occupy a suitable, decent, safe, and sanitary
dwelling in the same development, under reasonable terms and
conditions, upon its completion. Such reasonable terms and conditions
include a monthly rent and estimated average monthly utility costs that
do not exceed the amount determined in accordance with Sec. 950.325; or
(B) The resident is required to relocate temporarily, does not
return to the development, and either:
(1) The resident is not offered payment for all reasonable out-of-
pocket expenses incurred in connection with the temporary relocation;
or
(2) Other conditions of the temporary relocation are not
reasonable; or
(C) The resident is required to move to another dwelling unit in
the same development but is not offered reimbursement for all
reasonable out-of-pocket expenses incurred in connection with the move,
or other conditions of the move are not reasonable.
(2) Notwithstanding the provisions of paragraph (g)(1) of this
section, a person does not qualify as a displaced person (and is not
eligible for relocation assistance under the URA or this section), if:
(i) The person has been evicted for serious or repeated violation
of the terms and conditions of the lease or occupancy agreement,
violation of applicable Federal, State, tribal, or local law, or other
good cause, and HUD determines that the eviction was not undertaken for
the purpose of evading the obligation to provide relocation assistance;
(ii) The person moved into the property after the date described in
paragraph (g)(1)(i) of this section and, before commencing occupancy,
was provided written notice of the project, its possible impact on the
person (e.g., the person may be displaced, temporarily relocated, or
suffer a rent increase) and the fact that he or she will not qualify as
a displaced person (or for assistance under this section) as a result
of the project:
(iii) The person is ineligible under 49 CFR 24.2(g)(2); or
(iv) HUD determines that the person was not displaced as a direct
result of acquisition, rehabilitation, demolition, or conversion for
the project.
(3) The IHA may, at any time, ask HUD to determine whether a
displacement is or would be covered by this section.
(h) Definition of initiation of negotiations. For purposes of
determining the formula for computing the replacement housing
assistance to be provided to a resident, the term ``initiation of
negotiations'' means the following action:
(1) For the comprehensive improvement assistance program (CIAP) or
comprehensive grant program (CGP) under subpart I of this part, 45
calendar days before:
(i) The IHA's issuance of the invitation for bids for the project;
or
(ii) The start of force account work, whichever is applicable;
(2) For an IHA purchase through an arm's-length transaction as
described in 49 CFR 24.101(a)(1), the seller's acceptance of the IHA's
written offer to purchase the property;
(3) For an IHA purchase that does not qualify as an arm's-length
transaction, the delivery of the initial written purchase offer from
the IHA to the Owner of the property. However, if the IHA issues a
notice of intent to acquire the property, and a person moves after that
notice, but before the initial written purchase offer, the initiation
of negotiations is the actual move of the person from the property;
(4) For disposition or demolition of Indian housing under subpart M
of this part, HUD approval of the IHA's proposal; or
(5) For other programs under this part 950, the notice to the
occupant that he or she shall move permanently, or, if there is no
notice, the person's actual move from the property.
Sec. 950.120 Compliance with other Federal requirements.
(a) Environmental clearance. Before obligating or expending funds
for any physical improvements under a development or modernization
project, the IHA will comply with the requirements of 24 CFR part 58.
(b) Flood insurance protection. HUD will not approve financial
assistance for acquisition, construction, reconstruction, repair, or
improvement of a building located in an area that has been identified
by the Federal Emergency Management Agency (FEMA) as having special
flood hazards, unless the following conditions are met:
(1) Flood insurance on the building is obtained in compliance with
section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C.
4012a(a)); and
(2) The community in which the area is situated is participating in
the National Flood Insurance Program in accord with section 202(a) of
the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106(a)), or less
than a year has passed since FEMA notification regarding such flood
hazards. For this purpose, the ``community'' is the jurisdiction, such
as an Indian tribe or authorized tribal organization, an Alaska native
village, or authorized native organization, or a municipality or
county, that has authority to adopt and enforce flood plain management
regulations for the area. [[Page 18197]]
(c) Wage rates for laborers and mechanics. (1) With respect to
construction work on a project, including a modernization project
(except for nonroutine maintenance work, as described in paragraph (2)
of the definition of ``nonroutine maintenance'' in Sec. 950.102), the
IHA and its contractors shall pay not less than the wages prevailing in
the locality, as predetermined by the Secretary of Labor pursuant to
the Davis-Bacon Act (40 U.S.C. 276a through 276a-5), to all laborers
and mechanics who are employed by an IHA or its contractors for work or
contracts over $2,000.
(2) With respect to all maintenance work on a project, including
nonroutine maintenance work (as described in paragraph (2) of the
definition of ``nonroutine maintenance'' in Sec. 950.102) on a
modernization project, the IHA and its contractors shall pay not less
than the wages prevailing in the locality, as determined or adopted
(after a determination under State, tribal, or local law) by HUD
pursuant to section 12 of the United States Housing Act of 1937 (42
U.S.C. 1437j), to all laborers and mechanics who are employed by an IHA
or its contractors.
(3) Prevailing wage rates determined under State or tribal law are
inapplicable under the circumstances set out in Sec. 950.172(b).
(d) Professional and technical wage rates. All architects,
technical engineers, draftsmen, and technicians employed in the
development of a project shall be paid not less than the wages
prevailing in the locality, as determined or adopted (after a
determination under applicable State, tribal, or local law) by HUD.
(e) Access to records: audits. (1) HUD and the Comptroller General
of the United States shall have access to all books, documents, papers,
and other records that are pertinent to the activities carried out
under this part, in order to make audit examinations, excerpts, and
transcripts, in accordance with 24 CFR 85.42.
(2) IHAs that receive financial assistance under this part shall
comply with the audit requirements of 24 CFR part 44. If an IHA has
failed to submit an acceptable audit on a timely basis in accordance
with that part, HUD may arrange for, and pay the costs of, the audit.
In such circumstances, HUD may withhold, from assistance otherwise
payable to the IHA under this part, amounts sufficient to pay for the
reasonable costs of conducting an acceptable audit, including, when
appropriate, the reasonable costs of accounting services necessary to
place the IHA's books and records into auditable condition. The costs
to place the IHA's books and records into auditable condition do not
generate additional subsidy eligibility under this part.
(f) Uniform administrative requirements. The Uniform Administrative
Requirements for Grants and Cooperative Agreements to States, Local,
and Federally Recognized Indian Tribal Governments, as set forth in 24
CFR part 85, are applicable to grants under this part, except as
specified in this part. However, the provisions of 24 CFR 85.36 have
been incorporated in the procurement regulations (subpart B of this
part).
(g) Lead-based paint poisoning prevention. See 24 CFR part 35 and
subpart H of this part.
(h) Coastal barriers. In accordance with the Coastal Barriers
Resources Act (16 U.S.C. 3501), no financial assistance under this part
may be made available within the Coastal Barrier Resources System.
(i) Economic opportunities for low- and very low-income persons.
IHAs shall comply with section 3 of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701u) and the regulations in 24 CFR part 135,
as provided in part 135, to the maximum extent consistent with, but not
in derogation of, compliance with section 7(b) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450e(b)). See
also 24 CFR 950.170(c).
Sec. 950.125 Establishment of IHAs pursuant to State law.
An IHA may be established pursuant to a State law that provides for
the establishment of IHAs with all necessary legal powers to carry out
low-income housing projects for Indians.
Sec. 950.126 Establishment of IHAs by tribal ordinance.
(a) Legal capacity of tribe to establish IHA. Where an Indian tribe
has governmental police power to promote the general welfare, including
the power to create a housing authority, an IHA may be established by
tribal ordinance enacted by the governing body of the tribe.
(b) Form of ordinance. The form of tribal ordinance shall be
determined by the tribe and reviewed by the ONAP Administrator. The IHA
shall also demonstrate that it has the legal authority to develop, own,
and operate a public housing project under the Act. Unless an IHA is
created as part of the tribal government, ordinances shall include
language that allows the IHA to sue and be sued in its corporate name.
A sample format will be provided by HUD.
(c) Approval or review of ordinance. HUD shall not enter into an
undertaking for assistance to an IHA formed by tribal ordinance unless
such ordinance has been submitted to HUD.
(d) Submission to HUD of documents establishing IHA. (1) The tribal
ordinance shall be submitted to HUD prior to receiving financial
assistance.
(2) An IHA must certify that it has enacted the ordinance pursuant
to any constitutional law or practice and has the local cooperation
required by law.
Sec. 950.130 IHA Commissioners who are tenants or homebuyers.
(a) Tenant or homebuyer commissioners. No person shall be barred
from serving on an IHA's Board of Commissioners because he or she is a
tenant or homebuyer in a housing project of the IHA. A Commissioner who
is a tenant or homebuyer shall be entitled to participate fully in all
meetings concerning matters that affect all of the tenants or
homebuyers, even though such matters affect him or her as well.
However, no such Commissioner shall be entitled or permitted to
participate in or be present at any meeting (except in his or her
capacity as a tenant or homebuyer), or be counted or treated as a
member of the Board, concerning any matter involving his or her
individual rights, obligations, or status as a tenant or homebuyer.
(b) Commissioner as IHA employee. A member of the IHA's Board of
Commissioners shall not be eligible for employment by the IHA, except
under extremely unusual circumstances in which it is documented that no
one except the commissioner is qualified for the position and where the
HUD Area ONAP approves in advance of the hiring.
Sec. 950.135 Administrative capability.
(a) HUD determination. At least annually, HUD shall carry out such
reviews of the performance of each IHA, including remote reviews, on-
site limited and full reviews, audits, surveys, and a formal annual
review or risk analysis assessment, as may be necessary or appropriate
to make the determinations required by this section, taking into
consideration all available evidence. HUD will evaluate an IHA's
compliance in the areas of development, modernization, and operations,
including such functions as administration, financial management,
occupancy, and maintenance.
(b) Obligation to maintain. (1) An IHA shall maintain
administrative capability at all times throughout the term of the
[[Page 18198]] ACC. In order to be considered administratively capable,
an IHA shall administer the Indian housing program in accordance with
applicable statutory requirements, HUD regulations, and contracts with
no serious deficiencies. If any of the following conditions exist, it
shall be considered a serious deficiency:
(i) The IHA is not financially stable, based on the most recent
annual audit, technical assistance visit, or other reliable
information;
(ii) An audit, conducted in accordance with 24 CFR part 44 and
Sec. 950.120, or HUD reviews (including monitoring findings) reveal
deficiencies that HUD reasonably believes require corrective action
and/or that corrective actions are not taken in accordance with
established timeframes;
(iii) The IHA has management systems that do not meet the standards
as set forth in 24 CFR part 85, and the lack of such systems may result
in mismanagement or misuse of Federal funds;
(iv) The IHA has not conformed to the terms and conditions of
previous awards, including for new construction, the Comprehensive
Improvement Assistance Program, the Comprehensive Grant Program, or the
use of Operating Subsidies;
(v) The IHA lacks properly trained and competent personnel at key
management positions of the IHA; or
(vi) The IHA is in violation of the terms of applicable statutes,
regulations, or Annual Contributions Contracts.
(2) If an IHA has serious deficiencies, HUD shall take any or all
of the following actions:
(i) Issue a notice of deficiency;
(ii) Issue a corrective action order; or
(iii) Classify the IHA as ``high risk'' (see 24 CFR part 85).
(c) Notice of deficiency. Based on HUD reviews of IHA performance
and findings of any of the deficiencies in paragraph (b)(1) of this
section, HUD may issue to the IHA a notice of deficiency, stating the
specific program requirements that the IHA has violated and requesting
the IHA to take appropriate action. The notification shall be in
writing and contain the following:
(1) The deficiencies, i.e., the IHA actions and the statutory or
regulatory or other requirements that have been violated;
(2) Recommended actions that may be taken by the IHA and a
timeframe for completion;
(3) The documentation necessary for evidence that all actions have
been completed.
(d) Corrective action order. (1) Based on HUD reviews of IHA
performance and findings of any of the deficiencies described in
paragraph (b)(1) of this section, HUD may issue to the IHA a corrective
action order. An order may be issued, whether or not a notice of
deficiency previously has been issued with regard to the specific
deficiency on which the corrective action order is based. HUD may order
corrective action at any time by notifying the IHA of the specific
program requirements that the IHA has violated, and by specifying the
corrective actions that shall be taken. HUD shall design corrective
action to prevent a continuation of the deficiency, mitigate any
adverse effects of the deficiency to the extent possible, and prevent a
recurrence of the same or similar deficiencies.
(2) Before ordering corrective action, HUD will notify the IHA and
give it an opportunity to consult with HUD regarding the proposed
action unless HUD notifies the IHA that special circumstances exist
that warrant giving immediate effect to the announced HUD action.
(3) Any corrective action ordered by HUD shall become a condition
of the ACC grant agreement.
(4) The order shall be in writing and shall contain the following:
(i) The deficiencies, i.e., the IHA actions and the statutory or
regulatory or other requirements that have been violated;
(ii) The corrective action(s) that shall be taken by the IHA and
the time allowed for completing the corrective action(s);
(iii) The method of requesting reconsideration of the HUD action
and the documentation necessary to evidence that all corrective actions
have been completed.
(e) Management improvement plan (MIP). (1) When an IHA receives a
corrective action order, it shall respond to the determination, in
writing. This response shall include a management improvement plan to
correct existing deficiencies. The plan shall describe in detail the
method to be used and the time schedule to be maintained, shall be
approved by the IHA Board of Commissioners, and is subject to HUD
approval.
(2) After receiving the response from the IHA, HUD may direct the
IHA to take one or more of the following actions:
(i) Submit additional information:
(A) Concerning the IHA's administrative, planning, budgeting,
accounting, management, and evaluation functions, to determine the
cause for the IHA having deficiencies, as described in paragraph (b)(1)
of this section;
(B) Explaining any steps the IHA is taking to correct the
deficiencies;
(C) Documenting that IHA activities were not inconsistent with the
IHA's annual statement or other applicable statutes, regulations, or
program requirements;
(ii) Submit schedules for completing the work identified in the
MIP;
(iii) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's MIP;
(iv) Not incur financial obligations, or to suspend payments for
one or more activities;
(v) Reimburse, from non-HUD sources, one or more program accounts
for any amounts improperly expended; or
(vi) Take such other corrective actions as HUD determines
appropriate to correct the IHA deficiencies.
(3) HUD shall determine whether the IHA has satisfied, or has made
reasonable progress towards satisfying, the management improvement
plan.
(4) If the IHA does not satisfy the terms of the plan or does not
act in good faith to meet the timeframes included in its MIP, HUD may
impose additional restrictions. In addition, existing projects may be
terminated, or other action may be instituted, as appropriate.
(f) High risk determination. An IHA may be classified as ``high
risk'' and determined ineligible for certain types of future funding
related to the classification of risk, or may be determined eligible
for future funding but subject to special conditions or restrictions
corresponding to the high risk classification. A corrective action
order listing the specific violation shall accompany the high risk
designation.
(1) If an IHA is determined to be high risk, the conditions that
form the basis for that determination shall be sufficiently serious to
warrant a determination to exclude the IHA from future funding of a
particular type. The determination of high risk shall state the cause
for that finding.
(2) An IHA may continue to be eligible for funding despite a
finding that it is high risk--subject to special conditions and/or
restrictions corresponding to the deficiencies found--if it has
submitted a management improvement plan that was approved by HUD, and
it has exhibited substantial compliance with the plan or a good faith
effort to comply with the plan. If HUD determines that it is necessary
to impose special conditions or restrictions, it will notify the IHA in
writing of the applicable conditions or restrictions. One or more
[[Page 18199]] of the following special conditions or restrictions may
be imposed:
(i) Submission to HUD of additional documentation;
(ii) Submission to HUD of additional or more detailed financial
reports;
(iii) Additional project monitoring from the HUD Area ONAP;
(iv) Additional requirements for technical assistance, from HUD or
another entity approved by HUD;
(v) Establishing additional approvals by HUD;
(vi) Withholding some or all of the IHA's grant;
(vii) Declaring a breach of the ACC grant amendment with respect to
some or all of the IHA's functions; or
(viii) Any other sanction authorized by law or regulation.
(g) Appeals. (1) An IHA may appeal a corrective action order or a
determination of high risk status to the local HUD Administrator,
Office of Native American Programs (ONAP). All appeals shall be made in
writing within 30 calendar days of notice to the IHA of the HUD action
and shall state clearly any justification or evidence that the action
is unwarranted or too severe. If an appeal is filed concerning one or
more action(s), the action(s) shall not take effect until HUD makes a
final determination on the appeal or notifies the IHA that special
circumstances exist that warrant giving immediate effect to the
announced HUD action. The HUD Administrator shall respond to the appeal
within 30 days of receipt of the appeal.
(2) An IHA may appeal a decision of the Administrator to the ONAP,
Headquarters, only if the case involves actions related to a
determination of ineligibility of funding for the upcoming funding
cycle. An appeal of the Administrator's decision shall be made to ONAP,
Headquarters in writing, stating the justification or evidence, and
shall be received within 21 days of the date of the Administrator's
decision. Decisions reviewed by Headquarters will be evaluated based on
the facts as presented to the Administrator and on any aggravating or
extenuating circumstances.
(3) The IHA's Board of Commissioners shall notify the tribal
government of HUD's final determination to withhold or suspend funds or
declare a breach of the ACC grant agreement, as well as the basis for,
and consequences resulting from, such a determination.
Subpart B--Procurement
Sec. 950.160 Procurement standards.
(a) HUD standards. (1) Applicability. This subpart sets forth
Federal requirements to be followed by IHAs in the procurement of
services, supplies, and goods.
(2) Contracting authorization. An IHA may execute contracts without
HUD approval for the procurement of work, materials, equipment, and/or
professional services, in accordance with paragraph (a)(3)(ii) of this
section. Before the execution of contracts, the IHA Board of
Commissioners will ensure that procedures are in place to ensure all
ACC, statutory, and regulatory requirements are satisfied before the
execution of contracts. The IHA Board of Commissioners will
periodically review compliance with these procedures.
(3) Limitations. (i) An IHA shall not award a contract until the
prospective contractor has demonstrated, to the satisfaction of the
IHA, the technical, administrative, and financial capability to perform
contract work of the size and type involved and within the time
provided under the contract. The IHA shall not award a contract to a
person or firm on the List of Parties Excluded from Federal Procurement
and Nonprocurement Programs, which is compiled, maintained, and
distributed by the General Services Administration (GSA), or to a
person or firm that is subject to a limited denial of participation
issued by the HUD Office of Native American Programs. (See 24 CFR part
24.)
(ii) The IHA may execute or approve any agreement or contract for
personnel, management, legal, or other services with any person or firm
without the prior written approval of HUD, except under the following
circumstances:
(A) When the term of the agreement or contract (including renewal)
is in excess of two years; or
(B) When the amount of the agreement or contract is in excess of
the amount included for such purpose in the HUD-approved development
cost budget, Comprehensive Grant program budget, or operating budget,
or an amount specified from time to time by HUD, as the case may be; or
(C) When the agreement or contract is for legal or other services
in connection with litigation; or
(D) For contracts in excess of $100,000 in the aggregate when the
IHA proposes to award a contract based upon a single bid or proposal
received except when the procurement meets the requirements of 24 CFR
950.165(d).
(4) Records. An IHA shall maintain records sufficient to detail the
significant history of a procurement. The IHA shall maintain evidence
in its files:
(i) That the solicitation and award procedures were conducted in
compliance with State, tribal, or local laws and Federal requirements,
including requirements for Indian preference and wage rates;
(ii) That the award does not exceed the approved budget amount and
is not being made on the basis of a single bid or proposal; and
(iii) That the IHA reviewed the contractor's qualifications,
checked to ensure that the contractor is not listed on the GSA List of
Parties Excluded from Federal Procurement and Nonprocurement Programs,
and determined that the contractor has the capacity to successfully
complete the work or services under the terms and conditions of the
contract. This determination shall consider the contractor's record of
past performance, integrity, compliance with public policy, and
financial and technical resources.
(5) Contract administration. An IHA is responsible, in accordance
with good administrative practice and sound business judgment, for the
settlement of all contractual and administrative issues arising out of
procurement.
(6) Competition. All procurement transactions must be conducted in
a manner providing full and open competition.
(7) Contract cost and price. An IHA must perform a cost or price
analysis in connection with every procurement action, including
contract modifications.
(b) IHA standards. (1) IHA procedures. Each IHA shall adopt,
promulgate, and comply with rules or regulations for the procurement
and administration of supplies, materials, services, and equipment in
connection with the development and operation of projects. Upon
adoption or modification, the IHA will promptly furnish a copy of these
rules or regulations to HUD. These rules or regulations shall contain
provisions on at least the following subjects:
(i) Procedures to ensure that all procurement transactions are
conducted in a full and open competitive manner, consistent with the
standards of 24 CFR 85.36;
(ii) Identification (by position title) of IHA officials authorized
to enter into and approve contracts on a noncompetitive basis as
authorized by 24 CFR 85.36(d)(4);
(iii) Procedures for inventory control;
(iv) Procedures for storage and protection of goods and supplies;
(v) Procedures for issuance of, or other disposition of, supplies
and equipment; [[Page 18200]]
(vi) Procedures for implementing Indian preference requirements;
(vii) Procedures for handling complaints and protests regarding
procurement;
(viii) Standards of conduct governing IHA directors, board members,
officers, and employees; and
(ix) Conflict of interest provisions governing directors, officers,
employees, contractors/developers, and others doing business with the
IHA.
(2) Contract administration system. An IHA shall maintain a
contract administration system that ensures that contractors perform in
accordance with the terms, conditions, and specifications of their
contracts and purchase orders.
(c) Government-wide contract requirements. A HUD regulation found
at 24 CFR part 85 embodies government-wide administrative requirements
for grants to State, local, and federally recognized Indian tribal
governments (including grants received by IHAs). The contract
provisions listed in 24 CFR 85.36(i) of that regulation are to be
included in any IHA contracts.
Sec. 950.165 Methods of procurement.
(a) Small purchase procedures. Small purchase procedures are those
relatively simple and informal procurement methods for securing
services, supplies, or other property that do not cost more than
$100,000 in the aggregate. If small purchase procurements are used,
price or rate quotations will be obtained from an adequate number of
qualified sources.
(b) Procurement by sealed bids (Invitations for Bid (IFB)). Bids
are publicly solicited and a firm fixed price contract (lump sum or
unit price) is awarded to the responsible bidder whose bid, conforming
with all the material terms and conditions of the invitation for bids,
is the lowest in price. The sealed bid method is the preferred method
for procuring construction, if the conditions in Sec. 950.165(b)(1)
apply.
(1) In order for sealed bidding to be feasible, the following
conditions should be present:
(i) A complete, adequate, and realistic specification or purchase
description is available;
(ii) Two or more responsible bidders are willing and able to
compete effectively for the business; and
(iii) The procurement lends itself to a firm fixed price contract
and the selection of the successful bidder can be made principally on
the basis of price.
(2) If sealed bids are used, the following requirements apply:
(i) The invitation for bids will be publicly advertised and bids
shall be solicited from an adequate number of known suppliers,
providing them sufficient time prior to the date set for opening the
bids;
(ii) The invitation for bids, which will include any specifications
and pertinent attachments, shall define the items or services in order
for the bidder to properly respond;
(iii) All bids will be publicly opened at the time and place
prescribed in the invitation for bids;
(iv) A firm fixed price contract award will be made in writing to
the lowest responsive and responsible bidder; and
(v) Any or all bids may be rejected if there is a sound documented
reason.
(c) Procurement by competitive proposals (Request for Proposals
(RFP)). The technique of competitive proposals is normally conducted
with more than one source submitting an offer, and either a fixed price
or cost reimbursement type contract is awarded. It is generally used
when conditions are not appropriate for the use of sealed bids. If this
method is used, the following requirements apply:
(1) Requests for proposals will be publicized and identify all
evaluation factors and their relative importance. Any response to
publicized requests for proposals shall be honored to the maximum
extent practical;
(2) Proposals will be solicited from an adequate number of
qualified sources;
(3) IHAs will have a method for conducting technical evaluations of
the proposals received and for selecting awardees;
(4) Awards will be made to the responsible firm whose proposal is
most advantageous to the program, with price and other factors
considered; and
(5) IHAs may use competitive proposal procedures for
qualifications-based procurement of architectural/engineering (A/E)
professional services whereby competitors' qualifications are evaluated
and the most qualified competitor is selected, subject to negotiation
of fair and reasonable compensation. The method, when price is not used
as a selection factor, can only be used in procurement of A/E
professional services. It cannot be used to purchase other types of
services though A/E firms, even though they are a potential source to
perform the proposed effort.
(d) Procurement by noncompetitive proposals is procurement through
solicitation of a proposal from only one source, or where after
solicitation of a number of sources, competition is determined
inadequate.
(1) Procurement by noncompetitive proposals may be used only when
the award of a contract is infeasible under small purchase procedures,
sealed bids, or competitive proposals, and one of the following
circumstances applies:
(i) The item is available only from a single source;
(ii) The public exigency or emergency for the requirement will not
permit a delay resulting from competitive solicitation;
(iii) HUD authorizes noncompetitive proposals; or
(iv) After solicitation of a number of sources, competition is
determined inadequate.
(2) Cost analysis, i.e., verifying the proposed cost data, the
projections of the data, and the evaluation of the specific elements of
costs and profit, is required.
Sec. 950.170 Other requirements applicable to development contracts.
(a) Bonding requirements. For construction contracts for more than
$100,000, each contractor shall be required to provide bid guarantees
and adequate assurance of performance and payment acceptable to HUD in
accordance with 24 CFR 85.36(h). In the case of a Mutual Help project,
the term ``total contract price'' as used with respect to each of the
above assurance methods includes the value of all Mutual Help
contributions for work, materials, or equipment to be provided to the
contractor for use in performing the contract work. The following
methods may be used to provide performance and payment assurance:
(1) Performance and payment bonds for 100 percent of the total
contract price;
(2) Deposit with the IHA of a cash escrow of not less than 20
percent of the total contract price, subject to reduction during the
warranty period, commensurate with potential risk;
(3) Letter of credit for 25 percent of the total contract price,
unconditionally payable upon demand of the IHA, subject to reduction
during the warranty period commensurate with potential risk;
(4) Letter of credit for 10 percent of the total contract price
unconditionally payable upon demand of the IHA subject to reduction
during the warranty period commensurate with potential risk, and
compliance with the procedures for monitoring of disbursements by the
contractor.
(b) Executive Order 11246 (equal employment opportunity). Contracts
for construction work in connection with Projects under this part are
subject to Executive Order 11246 (3 CFR, 1964-65 Comp., p. 339), as
amended by Executive Order 11375 (3 CFR, 1966-70 Comp., p. 684), and to
applicable [[Page 18201]] implementing regulations (24 CFR part 130; 41
CFR chapter 60), rules, and orders of HUD and the Office of Federal
Contract Compliance Programs of the Department of Labor (DOL).
Executive Order 11246 prohibits discrimination and requires affirmative
action to ensure that employees or applicants for employment are
treated without regard to their race, color, religion, sex, or national
origin. Compliance with E.O. 11246, and related regulations, Orders,
and requirements shall be to the maximum extent consistent with, but
not in derogation of, compliance with section 7(b) of the Indian Self-
Determination and Education Assistance Act.
(c) Local area residents. In accordance with section 3 of the
Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and the
implementing regulations in 24 CFR part 135, IHAs and their contractors
and subcontractors shall make best efforts, consistent with existing
Federal, State, and local laws and regulations (including section 7(b)
of the Indian Self-Determination and Education Assistance Act) to give
low- and very low-income persons the training and employment
opportunities generated by section 3 covered assistance (as this term
is defined in 24 CFR 135.3(1)) and to give section 3 business concerns
the contracting opportunities generated by section 3 covered
assistance.
Sec. 950.172 Wage rates.
(a) Determination of prevailing wage rates. For the applicable
method of determination of the prevailing wage rates to be paid
laborers and mechanics, see Sec. 950.120(c).
(b) Preemption of prevailing wage rates. (1) A prevailing wage rate
determined under State or tribal law shall be inapplicable to a
contract or IHA-performed work item for the development, maintenance,
or modernization of a project whenever:
(i) The contract or the work item is otherwise subject to State or
tribal law requiring the payment of wage rates determined by a State,
local, or tribal government or agency to be prevailing and is for a
project assisted with funds for low-income housing under the Act; and
(ii) The wage rate (the basic hourly rate and any fringe benefits)
determined under State or tribal law to be prevailing with respect to
an employee in any trade or position employed in the development,
maintenance, or modernization of a project exceeds whichever of the
following Federal wage rates is applicable:
(A) The wage rate determined by the Secretary of Labor pursuant to
the Davis-Bacon Act (40 U.S.C. 276a, et seq.) to be prevailing in the
locality with respect to such trade;
(B) An applicable apprentice wage rate based thereon specified in
an apprenticeship program registered with the Department of Labor or a
DOL-recognized State Apprenticeship Agency;
(C) An applicable trainee wage rate based thereon specified in a
DOL-certified trainee program; or
(D) The wage rate determined by the Secretary of HUD to be
prevailing in the locality with respect to such trade or position.
(2) For the purpose of ascertaining whether a wage rate determined
under State or tribal law for a trade or position exceeds the Federal
wage rate:
(i) When a rate determined by the Secretary of Labor or an
apprentice or trainee wage rate based thereon is applicable, the total
wage rate determined under State or tribal law, including fringe
benefits (if any) and basic hourly rate, shall be compared to the total
wage rate determined by the Secretary of Labor or apprentice or trainee
wage rate; and
(ii) When a rate determined by the Secretary of HUD is applicable,
any fringe benefits determined under State or tribal law shall be
excluded from the comparison with the rate determined by the Secretary
of HUD.
(3) Whenever paragraph (b)(1)(i) of this section is applicable:
(i) Any solicitation issued by the IHA and any contract executed by
the IHA for development, maintenance, or modernization of the project
shall include a statement as prescribed in this paragraph, and failure
to include this statement may constitute grounds for requiring re-
solicitation. The statement that any prevailing wage rate (including
basic hourly rate and any fringe benefits) determined under State or
tribal law to be prevailing with respect to an employee in any trade or
position employed under the contract is inapplicable to the contract
and shall not be enforced against the contractor or any subcontractor
with respect to employees engaged under the contract must be included
whenever either of the following occurs:
(A) Such non-Federal prevailing wage rate exceeds:
(1) The applicable wage rate determined by the Secretary of Labor
pursuant to the Davis-Bacon Act (40 U.S.C. 276a, et seq.) to be
prevailing in the locality with respect to such trade;
(2) An applicable apprentice wage rate based thereon specified in
an apprenticeship program registered with the Department of Labor or a
DOL-recognized State Apprenticeship Agency; or
(3) An applicable trainee wage rate based thereon specified in a
DOL-certified trainee program; or
(B) Such non-Federal prevailing wage rate, exclusive of any fringe
benefits, exceeds the applicable wage rate determined by the Secretary
of HUD to be prevailing in the locality with respect to such trade or
position.
(ii) The IHA itself shall not be required to pay the basic hourly
rate or any fringe benefits comprising a prevailing wage rate
determined under State or tribal law and described in paragraph (b)(2)
of this section to any of its own employees who may be engaged in the
development, maintenance, or modernization of the project; and
(iii) Neither the basic hourly rate nor any fringe benefits
comprising a prevailing wage rate determined under State or tribal law
and described in paragraph (b)(2) of this section shall be enforced
against the IHA or any of its contractors or subcontractors with
respect to employees engaged in the contract or IHA-performed work item
for development, maintenance, or modernization of the project.
(4) Nothing in paragraph (b) of this section shall affect the
applicability of any wage rate established in a collective bargaining
agreement with an IHA or its contractors or subcontractors when such
wage rate equals or exceeds the applicable Federal wage rate referred
to in paragraph (b)(1)(ii) of this section, nor does paragraph (b) of
this section impose a ceiling on wage rates an IHA or its contractors
or subcontractors may choose to pay independent of State law.
(5) The provisions of paragraph (b) of this section shall apply to
work performed under any prime contract entered into as a result of a
solicitation of bids or proposals issued on or after October 6, 1988
and to any work performed by employees of an IHA on or after October 6,
1988.
Sec. 950.175 Indian preference requirements.
(a) Applicability. HUD has determined that grants under this part
are subject to section 7(b) of the Indian Self-Determination and
Education Assistance Act (25 U.S.C. 450e(b)), which requires that, to
the greatest extent feasible:
(1) Preference and opportunities for training and employment shall
be given to Indians; and
(2) Preference in the award of contracts and subcontracts shall be
given to Indian organizations and Indian-owned economic enterprises.
[[Page 18202]]
(b) Definitions. Indian organizations and Indian-owned economic
enterprises include either of the following:
(1) Any economic enterprise as defined in section 3(e) of the
Indian Financing Act of 1974 (25 U.S.C. 1452); that is, ``any Indian-
owned (as defined by the Secretary of Interior) commercial, industrial,
or business activity established or organized for the purpose of profit
provided that such Indian ownership and control shall constitute not
less than 51 percent of the enterprise''; and
(2) Any Tribal organization as defined in section 4(c) of the
Indian Self-Determination and Education Assistance Act (25 U.S.C.
450(b)(8)); that is, ``the recognized governing body of any Indian
Tribe; any legally established organization of Indians which is
controlled, sanctioned or chartered by such governing body or which is
democratically elected by the adult members of the Indian community to
be served by such organizations and which includes the maximum
participation of Indians in all phases of its activities.''
(c) Preference in employment and training. To the greatest extent
feasible, IHAs and their contractors and subcontractors shall give
preference and opportunities for training and employment in connection
with the administration of grants awarded under this part and in the
award of contracts funded under this part to Indians and Alaskan
natives. The Indian Self-Determination Act defines ``Indians'' to mean
persons who are members of an Indian tribe, and defines ``Indian
tribe'' to mean any Indian tribe, band, nation, or other organized
group or community, including any Alaska Native village or regional or
village corporation as defined in or established pursuant to the Alaska
Native Claims Settlement Act, which is recognized as eligible for the
special programs and services provided by the United States to Indians
because of their status as Indians.
(d) Preference in contracting. To the greatest extent feasible,
IHAs shall give preference in the award of contracts funded under this
part to Indian organizations and Indian-owned economic enterprises.
(1) Each IHA shall:
(i) Advertise for bids or proposals limited to qualified Indian
organizations and Indian-owned enterprises; or
(ii) Use a two-stage preference procedure, as follows:
(A) Stage 1. Invite or otherwise solicit Indian-owned economic
enterprises to submit a statement of intent to respond to a bid
announcement limited to Indian organizations and Indian-owned
enterprises;
(B) Stage 2. If responses to the solicitation of intent to bid
under Stage 1, above, are received from more than one Indian
organization or Indian-owned enterprise that is found to be qualified,
advertise for bids or proposals limited to Indian organizations and
Indian-owned economic enterprises (otherwise, bids may be solicited on
an open, competitive basis); or
(iii) Develop and incorporate into their procurement policy,
subject to HUD Area ONAP one-time approval, the IHA's method of
providing preference. In no instance shall HUD approve a method that
provides preference based upon affiliation or membership in a
particular tribe or group of tribes.
(2) If the IHA-selected method of providing preference under
paragraph (d)(1) of this section results in fewer than two responsible
qualified Indian organizations or Indian-owned enterprises submitting a
statement of intent, a bid, or a proposal to perform the contract at a
reasonable cost, then the IHA shall:
(i) Re-compete the contract, using any of the methods described in
paragraph (d)(1) of this section; or
(ii) Re-compete the contract without limiting the advertisement for
bids or proposals to Indian organizations and Indian-owned economic
enterprises; or
(iii) If only one bid or proposal is received, request Area ONAP
review and approval of the proposed contract and related procurement
documents, in accordance with 24 CFR 85.36, in order to award the
contract to the single bid or proposal.
(3) Procurements that are within the dollar limitations established
for small purchases under 24 CFR 85.36(d)(1) need not follow the formal
requirements for public announcement and advertising for bids or
proposals as provided in paragraph (d)(1) of this section. However, an
IHA small purchase procurement shall, to the greatest extent feasible,
provide Indian preference in the award of contracts.
(4) All preferences shall be publicly announced in the solicitation
and the contract documents.
(5) An IHA, at its discretion, may require information of
prospective contractors seeking to qualify as Indian organizations or
Indian-owned economic enterprises. IHAs may require prospective
contractors to submit information prior to submitting a bid or
proposal, or at the time of submission. Information requested by the
IHA may include but is not limited to the following:
(i) Evidence showing fully the extent of Indian ownership, control,
and interest;
(ii) Evidence of structure, management, and financing affecting the
Indian character of the enterprise, including major subcontracts and
purchase agreements; materials or equipment supply arrangements; and
management salary or profit-sharing arrangements; and evidence showing
the effect of these on the extent of Indian ownership and interest; and
(iii) Evidence sufficient to demonstrate to the satisfaction of the
IHA that the prospective contractor has the technical, administrative,
and financial capability to perform contract work of the size and type
involved.
(6) The IHA shall incorporate the following clause (referred to as
the Section 7(b) clause) in each contract awarded in connection with a
project funded under this part:
(i) The work to be performed under this contract is on a project
subject to Section 7(b) of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450e(b)) (Indian Act). Section 7(b) requires
that to the greatest extent feasible:
(A) Preferences and opportunities for training and employment shall
be given to Indians; and
(B) Preferences in the award of contracts and subcontracts shall be
given to Indian organizations and Indian-owned economic enterprises.
(ii) The parties to this contract shall comply with the provisions
of section 7(b) of the Indian Act.
(iii) In connection with this contract, the contractor shall, to
the greatest extent feasible, give preference in the award of any
subcontracts to Indian organizations and Indian-owned economic
enterprises, and preferences and opportunities for training and
employment to Indians and Alaskan natives.
(iv) The contractor shall include this Section 7(b) clause in every
subcontract in connection with the project, and shall, at the direction
of the IHA, take appropriate action pursuant to the subcontract upon a
finding by the IHA or HUD that the subcontractor has violated the
Section 7(b) clause of the Indian Act.
(e) Additional Indian preference requirements. An IHA may, subject
to applicable State, local, or tribal law, provide for additional
Indian preference requirements as conditions for the award of, or in
the terms of, any contract in connection with a project funded under
this part. The additional Indian preference requirements shall be
consistent with the objectives of the [[Page 18203]] Section 7(b)
clause of the Indian Act and shall not result in a significantly higher
cost or greater risk of nonperformance or longer period of performance.
The additional Indian preference requirements permitted by this part do
not include the imposition of geographic preferences or restrictions to
the procurement process.
(f) Complaint procedures. The following complaint procedures are
applicable to complaints arising out of any of the methods of providing
for Indian preference contained in this subpart, including alternate
methods enacted and approved in the manner described in this subpart B.
(1) Each complaint shall be in writing, signed, and filed with the
IHA.
(2) A complaint must be filed with the IHA no later than 20
calendar days from the date of the action (or omission) upon which the
complaint is based.
(3) Upon receipt of a complaint, the IHA shall promptly stamp the
date and time of receipt upon the complaint, and immediately
acknowledge its receipt.
(4) Within 20 calendar days of receipt of a complaint, the IHA
shall either meet, or communicate by mail or telephone, with the
complaining party in an effort to resolve the matter. The IHA shall
make a determination on a complaint and notify the complainant, in
writing, within 30 calendar days of submittal of the complaint to the
IHA. The decision of the IHA shall constitute final administrative
action on the complaint.
Sec. 950.190 Insurance.
(a) Purpose. This section implements policies concerning insurance
coverage required under the Annual Contributions Contract (ACC) or
Mutual Help Annual Contributions Contract (MHACC) between HUD and an
IHA. These contracts require (in section 305 of the ACC and Article IX
of the MHACC) that IHAs maintain specified insurance coverage for
property and casualty losses that would jeopardize the financial
stability of the IHAs. The insurance coverage is required to be
obtained under procedures that provide for open and competitive
bidding. The HUD Appropriations Act for Fiscal Year 1992 (Pub.L. 102-
368) provided that an IHA could purchase insurance coverage without
regard to competitive selection procedures when it purchases it from a
nonprofit insurance entity owned and controlled by IHAs approved by HUD
in accordance with standards established by regulation. This section
specifies the standards.
(b) Method of selection of insurance coverage. While 24 CFR part 85
requires that grantees solicit full and open competition for their
procurements, the HUD Appropriations Act for Fiscal Year 1992 (Pub.L.
102-368) provides an exception to this requirement. IHAs are authorized
to obtain any line of insurance from a nonprofit insurance entity that
is owned and controlled by IHAs and approved by HUD in accordance with
this section, without regard to competitive selection procedures.
Procurement of insurance from other entities is subject to competitive
selection procedures.
(c) Approval of a nonprofit insurance entity. Under the following
conditions, HUD will approve a nonprofit self-funded insurance entity
created by IHAs that limits participation to IHAs (and to nonprofit
entities associated with IHAs that engage in activities or perform
functions only for housing authorities or housing authority residents):
(1) An insurance company (including a risk retention group);
(i) The insurance company maintains a current license or is
authorized to do business in the State or tribal area by the State
Insurance Commissioner or Indian tribal governing body and has
submitted documentation of this authority to HUD; and
(ii) The insurance company has not been suspended from providing
insurance coverage in the State or tribal area or been suspended or
debarred from doing business with the Federal Government. The insurance
company is obligated to send to HUD a copy of any action taken by the
authorizing official to withdraw the license or authorization;
(2) An entity not organized as an insurance company.
(i) The entity has competent underwriting staff (hired directly or
engaged by contract with a third party), as evidenced by professionals
with an average of at least five years of experience in large risk
(exceeding $100,000 in annual premiums) commercial underwriting or at
least five years of experience in the underwriting of risks for public
entity risk pools. This standard may be satisfied by submission of
evidence of competent underwriting staff, including copies of resumes
of underwriting staff for the entity;
(ii) The entity has efficient and qualified management (hired
directly or engaged by contract with a third party), as evidenced by
the report submitted to HUD in accordance with paragraph (d)(3) of this
section and by having at least one senior staff person who has a
minimum of five years of experience:
(A) At the management level of Vice President of a property/
casualty insurance entity;
(B) As a senior branch manager of a branch office with annual
property/casualty premiums exceeding $5 million; or
(C) As a senior manager of a public entity risk pool. Documentation
for this standard must include copies of resumes of key management
personnel responsible for oversight and for the day-to-day operation of
the entity;
(iii) The entity maintains internal controls and cost containment
measures, as evidenced by an annual budget;
(iv) The entity maintains sound investments consistent with:
(A) The State insurance commissioner's requirements for licensed
insurance companies, or other State statutory requirements controlling
investments of public entities in the State in which the entity is
organized, investing only in assets that qualify as ``admitted
assets''; or
(B) Any applicable provisions of Indian tribal law concerning
investments, in the case of an IHA that is not subject to such State
law;
(v) The entity maintains adequate surplus and reserves for
undischarged liabilities of all types, as evidenced by a current
audited financial statement and an actuarial review conducted in
accordance with paragraph (d) of this section; and
(vi) Upon application for initial approval, the entity has proper
organizational documentation, as evidenced by copies of the articles of
incorporation, by-laws, business plans, copies of contracts with third
party administrators, and an opinion from legal counsel that
establishment of the entity conforms with all legal requirements under
Federal, State, or tribal law. Any material changes made to these
documents after initial approval must be submitted for review and
approval before becoming effective.
(d) Professional evaluations of performance. Audits and actuarial
reviews are required to be prepared and submitted annually to the HUD
Office of Public and Indian Housing, for review and appropriate action,
by nonprofit insurance entities that are not insurance companies
approved under paragraph (c)(1) of this section. Selection of entities
to perform such reviews shall comply with the competitive requirements
of 24 CFR 85.36. In addition, an evaluation of other management factors
is required to be performed by an insurance professional every three
years. For fiscal years ending on or after December 31, 1993, the
initial audit, actuarial review, and insurance management review
required for a nonprofit insurance entity must be
[[Page 18204]] submitted to HUD within 90 days after the end of the
entity's fiscal year.
(1) The annual financial statement prepared in accordance with
generally accepted accounting principles (including any supplementary
data required by GASB 10) is to be audited by an independent auditor
(see 24 CFR part 44), in accordance with generally accepted auditing
standards. The independent auditor shall express an opinion on whether
the entity's financial statement is presented fairly in accordance with
generally accepted accounting principles. A copy of this audit must be
submitted to HUD.
(2) The actuarial review must be done consistent with requirements
established by the National Association of Insurance Commissioners and
must be conducted by an independent property/casualty actuary who is an
Associate or Fellow of a recognized professional actuarial
organization, such as the Casualty Actuary Society. The report issued,
a copy of which must be submitted to HUD, must include an opinion on
any over or under reserving and the adequacy of the reserves maintained
for the open claims and for incurred but unreported claims.
(3) A review must be conducted, a copy of which must be submitted
to HUD, by an independent insurance consulting firm that has at least
one person on staff who has received the professional designation of
chartered property/casualty underwriter (CPCU), associate in risk
management (ARM), or associate in claims (AIC), of the following:
(i) Efficiency of any Third Party Administrator;
(ii) Timeliness of the claim payments and reserving practices; and
(iii) The adequacy of reinsurance coverage.
(e) Revocation of approval of a nonprofit insurance entity. HUD may
revoke its approval of a nonprofit insurance entity under this section
when it no longer meets the requirements of this section. The nonprofit
insurance entity will be notified in writing of the proposed revocation
of its approval, and the manner and time in which to request a hearing
to challenge the determination. The procedure to be followed is
specified in 24 CFR part 26.
Sec. 950.195 Lead-based paint liability insurance coverage.
(a) General. The purpose of this section is to specify what HUD
deems reasonable insurance coverage with respect to the hazards
associated with testing for and abatement of lead-based paint that the
IHA undertakes, in accordance with the IHA's ACC or MHACC with HUD. The
insurance coverage does not relieve the IHA of its responsibility for
assuring that lead-based paint testing and abatement activities are
conducted in a responsible manner.
(b) Insurance coverage requirements. When the IHA undertakes lead-
based paint testing and abatement, it must assure that it has
reasonable insurance coverage for itself for potential personal injury
liability associated with those activities. If the work is being done
by IHA employees, the IHA must obtain a liability insurance policy
directly to protect the IHA. If the work is being done by a contractor,
the IHA may obtain, from the insurer of the contractor performing this
type of work in accordance with a contract, a certificate of insurance
providing evidence of such insurance and naming the IHA as an
additional insured; or it may obtain such insurance directly. Insurance
must remain in effect during the entire period of testing and abatement
and must comply with the following requirements:
(1) Named insured. If purchased by the IHA, the policy shall name
the IHA as insured. If purchased by an independent contractor, the
policy shall name the contractor as insured and the IHA as an
additional insured, in connection with performing work under the IHA's
lead-based paint testing and abatement contract. If the IHA has
executed a contract with a Resident Management Corporation (RMC) to
manage a building/project on behalf of the IHA, the RMC shall also be
an additional insured under the policy in connection with the lead-
based paint testing and abatement contract. (The duties of the RMC are
similar to those of a real estate management firm.)
(2) Coverage limits. The minimum limit of liability shall be
$500,000 per occurrence written, with a combined single limit for
bodily injury and property damage.
(3) Deductible. A deductible, if any, may not exceed $5,000 per
occurrence.
(4) Supplementary payments. Payments for such supplementary costs
as the costs of defending against a claim must be in addition to, and
not as a reduction of, the limit of liability. However, it will be
permissible for the policy to have a limit on the amount payable for
defense costs. If a limit is applicable, it must not be less than
$250,000 per claim prior to such costs being deducted from the limit of
liability.
(5) Occurrence form policy. The form used must be an ``occurrence''
form, or a ``claims made'' form that contains an extended reporting
period of at least five years. (Under an occurrence form, coverage
applies to any loss if the policy was in effect when the loss occurred,
regardless of when the claim is made.)
(6) Aggregate limit. If the policy contains an aggregate limit, the
minimum acceptable limit is $1,000,000.
(7) Cancellation. In the event of cancellation, at least 30 days'
advance notice is to be given to the insured and any additional
insured.
(c) Exception to requirements. Insurance already purchased by the
IHA or contractor and in force on the date this rule is effective,
which provides coverage for the hazards involved in the testing for and
abatement of lead-based paint, shall be considered as meeting the
requirements of this rule until the expiration of the policy. This rule
is not applicable to architects, engineers, or consultants who do not
physically perform lead-based paint testing and abatement work.
(d) Insurance for the existence hazard. An IHA may also purchase
special liability insurance against the existence hazard of lead-based
paint, although it is not a required coverage. An IHA may purchase this
coverage if, in the opinion of the IHA, the policy meets the IHA's
requirements, the premium is reasonable, and the policy is obtained in
accordance with applicable procurement standards of this subpart B. If
this coverage is purchased, the premium must be paid from funds
available under the Performance Funding System or from reserves.
Subpart C--Development
Sec. 950.200 Roles and responsibilities of Federal agencies.
HUD, IHS, BIA, and other appropriate agencies shall coordinate
their functions in accordance with the Interdepartmental Agreement. HUD
shall take the lead role in the coordination of the construction of
Indian housing under this part.
Sec. 950.205 Allocation.
HUD will allocate funds to Area ONAPs using a systematic process
that considers the relative need for housing in each HUD area or other
geographic area, based on the most recent and reliable data available.
(See 24 CFR part 791, subpart D.)
Sec. 950.207 Eligibility.
(a) Basic criteria. An IHA is eligible to submit an application for
new housing development and to be considered for funding if it meets
the following criteria: [[Page 18205]]
(1) Has been established in accordance with the provisions of
Sec. 950.125 or Sec. 950.126; and
(2) Has not been determined to be administratively incapable, in
accordance with Sec. 950.135; and
(3) Meets all the performance thresholds contained in paragraph (b)
of this section.
(b) Performance thresholds. An IHA shall be in compliance with the
following requirements for all projects in development or operation to
be considered for additional new housing development funding. The ONAP
Administrator may waive performance thresholds for good cause.
(1) Environmental Review requirements of Sec. 950.247;
(2) Fiscal closeout requirements of Sec. 950.285;
(3) Final site approval and site control requirements of
Sec. 950.250(c);
(4) Firm commitments from utility suppliers in accordance with
Sec. 950.235(c) prior to the execution of a construction contract,
contract of sale, or start of construction; and
(5) Pre-construction certification requirements of Sec. 950.260.
Sec. 950.210 Authority for proceeding without HUD approval.
(a) IHA authority to proceed. An IHA shall proceed with development
functions without obtaining HUD approval except as otherwise specified
in this part. An IHA shall accomplish necessary planning and
administration activities to assure the timely completion of the
development grant (generally six years from the initial development
grant approval to development grant closeout).
(b) Rescinding authorization. At any time during the development
process, HUD may make a determination, subject to the procedures
specified under Sec. 950.135, that an IHA shall obtain HUD approval of
additional processing steps. If such a determination is made, HUD shall
explain in writing the reasons for the determination and specify any
processing steps that are subject to additional technical assistance
and prior approval by HUD.
(c) Time constraints. The IHA shall commence project planning so
that construction begins within 24 months of the initial development
grant approval date. HUD shall not recapture funds reserved for the
project during the 30-month period following the initial development
grant approval. Excluded from the computation of the 30-month period
shall be any delay caused by the failure of HUD to process such project
within a reasonable period of time, any environmental review
requirement (other than the failure to initiate the environmental
review process by the responsible entity), any legal action affecting
the project, or any other factor beyond the control of the IHA. If an
IHA fails to reach construction start for a project within 24 months of
the date of initial development grant approval, HUD shall analyze the
circumstances that have resulted in the failure to reach construction
start and, subject to the availability of resources, shall provide
assistance to the IHA to enable construction start within 30 months
after the date of initial development grant approval.
Sec. 950.215 Production methods.
(a) Choice and approval of production method. The IHA may utilize
any production method or combination of production methods as long as
the production method(s) is not in conflict with the procurement
requirements of 24 CFR 85.36 and subpart B of this part. The IHA shall
advise HUD on its application of its choice of production methods.
Prior HUD approval is required if the method selected is Force Account
or if the IHA proposes to utilize a noncompetitive procurement method.
If HUD disapproves the IHA's preferred development method, it shall
provide a justification to the IHA. Production methods utilized in the
Indian Housing program are Conventional, Turnkey, Modified Turnkey,
Self-Help, Acquisition, and Force Account.
(b) Special requirements for approval of Force Account method. The
Force Account method may be used only if approved by the Area ONAP. The
IHA shall demonstrate that it has the technical and administrative
capabilities to complete the project within the projected time and
budget. The Area ONAP shall require that a tribe or IHA agree in
writing:
(1) To cover any costs in excess of those included in the HUD-
approved development cost budget;
(2) Demonstrate that it has the financial resources to meet the
excess costs up to a specified amount; and
(3) Provide some form of security acceptable to HUD to cover excess
costs. For this purpose, an IHA may use attachable assets including
funds maintained in its reserve for replacements received from the sale
of Mutual Help units. The Area ONAP may approve the Force Account
method without requiring the IHA or tribe to provide security to cover
excess costs if the IHA agrees to develop the project in small stages
with additional HUD monitoring and oversight. Under such approval, the
IHA continues to be obligated to cover costs in excess of those
included in the HUD-approved development cost budget.
Sec. 950.220 Total development cost.
(a) Total development cost standard. Total development cost (TDC)
standards, which establish the maximum allowable cost for developing
Indian housing projects, are determined as a per unit cost for various
unit sizes, structure types, and geographic areas, and are published
annually by HUD.
(b) Resident training and insurance. The total development cost of
a project may include costs associated with a HUD-approved tenant or
homebuyer counseling program (in accordance with the provisions of
Sec. 950.453) and the insurance premiums for the first three years of
project operation with no obligation for reimbursement from operating
receipts. The anticipated cost of such insurance premiums may be
charged to the development and placed in escrow by the IHA to enable
closeout of the development grant.
(c) Costs excluded from TDC. The TDC standard for a project
includes all costs associated with the project except for off-site
water and sanitation facilities infrastructure and donations received
from any public or private source. Costs for off-site water and
sanitation facilities infrastructure and any donations received shall
be included in the project development cost budget but will be excluded
from the calculation of the project TDC limit.
Sec. 950.225 Application.
(a) Submission to HUD. (1) An eligible IHA may submit an
application for a project after HUD issues a notice of funding
availability (NOFA).
(2) The application shall be on the form prescribed by HUD and
shall be accompanied by all the legal and administrative attachments
required by the form.
(3) State-created IHAs for non-Federally recognized tribes shall
certify that sites selected shall be within the IHA's area of
operation. For purposes of this section ``area of operation'' is
defined as a land area with defined geographical boundaries, which has
a significant concentration of Indian families who are:
(i) Not served by a PHA or tribally-created IHA; and
(ii) Have a bona fide historic presence or connection with the
land, as recognized by the Federal Government or a State.
(b) Rating process. (1) Applications shall be rated and points
shall be awarded for at least the following categories: [[Page 18206]]
(i) Relative unmet need for housing;
(ii) Relative IHA occupancy rate compared to the occupancy rates of
other eligible IHAs submitting applications;
(iii) Length of time since the last development grant approval date
for each IHA compared to other eligible IHAs submitting applications;
(iv) Current IHA development pipeline activity; and
(v) Other factors identified in a NOFA.
(2) After the completion of the rating process, all applications
shall be combined into one list to produce an ordered ranking to be
used in determining applications to be funded.
Sec. 950.227 Initial development grant approval and ACC execution.
(a) Grant approval. (1) For those applications selected for
funding, the Area ONAP shall issue a development grant approval that
shall specify housing type, household type, development method, the
amount of funds reserved, the minimum and maximum number of total
units, and the number of units of each bedroom size to be developed.
The total project development cost is limited to the funds designated
in the development grant approval plus any donations to the project.
(2) As long as the total project development cost limit and the
funds reserved in the development grant approval are not exceeded, the
IHA may change any of the elements specified in the development grant
approval it determines necessary to complete the project. If an IHA
decides to change any of the elements specified in the development
grant approval, it shall submit to HUD a request to amend the
development grant approval, including documentation supporting the
request. HUD shall either approve the request or notify the IHA of the
reason the request is not approved. Amendment funds may not be used to
increase the project size.
(b) Execution of ACC. (1) Upon issuance of the development grant
approval by HUD, the IHA and HUD may execute an ACC to cover the
eligible costs of the project with respect to the number of units
covered by the development grant approval.
(2) The ACC must be amended, if required, upon completion of
project planning to correctly identify the number of units in the
development, program type, and production method.
Sec. 950.229 Expenditure of funds.
(a) Development Cost Budgets. The IHA shall submit for HUD review
and acceptance a development cost budget showing anticipated
expenditures and any needed supporting documentation before funds can
be obligated or expended.
(1) The IHA may submit a development cost budget for planning for
an amount that the IHA demonstrates is required for the planning of the
project. A development cost budget for planning may include costs for
comprehensive planning. (See paragraph (c) of this section.)
(2) The IHA shall submit a construction stage development cost
budget, in accordance with the procedures specified under Sec. 950.260.
(b) Limitations. (1) An IHA shall not incur any development cost in
excess of the amount identified on the ACC for that project.
(2) Obligation or expenditure of development funds is limited to
the amounts reviewed and accepted by HUD in the latest development cost
budget.
(3) Use of development funds of projects under ACC to cover costs
for another project is strictly prohibited except as provided for under
paragraph (c) of this section.
(c) Comprehensive housing plan. At the request of an IHA, HUD may
approve up to one percent of the development grant to establish and/or
update a master housing plan for the IHA's area of operation. The plan
shall contain such elements as proposed housing sites, existing and
proposed off-site roads, and existing and proposed water and sewer
facilities. In addition, the plan shall address geographical and
topographical features, as well as socio-economic and cultural factors,
such as employment opportunities, schools, and services, that have an
impact on the placement of residential housing. The plan shall be
approved by resolution of the tribal council. The one-percent cost for
the comprehensive housing plan may be charged to the development and
placed in an escrow or revolving fund account by the IHA to enable
closeout of the development program and/or pooling of planning
resources.
Sec. 950.231 Project coordination.
(a) Project coordination meeting. Upon notification of a
development grant approval, the IHA shall schedule a project
coordination meeting to plan and schedule the steps needed to develop
the project. The IHA shall invite to the project coordination meeting
the project designer (if known) and any tribal, State, or Federal
officials who will participate in the development of the project. At
the project coordination meeting, the IHA shall establish a schedule of
planning activities with target dates for completion of key activities,
including the submission to HUD of a construction stage development
cost budget and other requirements contained in Sec. 950.260. The
schedule, and any amendments thereto, shall be provided to meeting
participants and to HUD to be used in planning and monitoring
activities.
(b) Citizen participation. The IHA shall hold at least one public
meeting at which comments are solicited on the proposed sites and
project design from potential occupants, as well as from other
interested parties. The meeting may be held in conjunction with a
regularly scheduled board meeting or may be held separately. In either
case, adequate notice shall be provided to the public to enable full
participation. The IHA shall give maximum consideration to all public
comments in the design of the project. Failure to hold a public meeting
or failure to consider public comments in the design of the project
shall be grounds for HUD to rescind authorization, in accordance with
the procedures specified in Sec. 950.210(b).
Sec. 950.235 Site selection criteria.
(a) Relation to tribal, local, and regional plans. Selected sites
shall comply with all applicable tribal, local, and/or regional plans.
(b) Access roads. Access roads up to the boundaries of multi-unit
sites shall be provided by the BIA, the tribe, or other appropriate
agency and shall not be an eligible cost of the project. Access roads
up to the boundaries of individual homesites in a scattered site
project shall be provided by the homebuyer, the tribe, or other
appropriate agency and shall not be an eligible cost of the project.
Access roads shall be maintained by a responsible local entity to
provide safe and suitable vehicular access. No site shall be approved
unless such access roads exist, or a written assurance has been
obtained from the responsible entity that roads shall be constructed
before commencement of project construction.
(c) Utilities. Before final site approval, the IHA shall obtain
firm commitments from utility suppliers that all utility services
necessary for the operation of the project are available or will be
available at the time of project occupancy.
(d) Physical characteristics of site. The physical characteristics
of a site shall facilitate overall economy in site preparation,
construction, and management. Only reasonable costs for surveys,
planning, test borings, and test wells shall be included in the
development cost of the project. [[Page 18207]]
(e) Size of sites. An individual homesite, whether a scattered site
or included in a multi-unit site, shall not exceed the size determined
by the IHA or by tribal or local policy to be necessary for the use and
occupancy of the dwelling unit.
(f) Access to sites. For a Mutual Help unit, each homesite shall be
legally and practicably available for use by another homebuyer. If a
site is part of other land owned by the prospective homebuyer, the
lease or other conveyance to the IHA shall include the legal right of
access to the site by any substitute homebuyer.
Sec. 950.240 Types of interest in land.
(a) Trust or restricted land. Sites on tribally or individually
owned trust or restricted land (as defined in 25 CFR 151.2) shall be
leased to the IHA for a term of not less than 50 years (25 years,
automatically renewable for an additional term of 25 years) on a HUD-
approved form of lease, which shall provide that the lease cannot be
terminated before its expiration without the consent of the IHA, and
while the site remains under the ACC, by HUD.
(b) Unrestricted land. Sites on unrestricted land shall be either
conveyed to the IHA in fee or leased to the IHA on a HUD-approved form
of lease for a term of not less than 50 years.
(c) Tax exempt status. Notwithstanding the type of interest in
land, all project property shall be exempt from local or State imposed
real or personal property tax in accordance with section 6(d) of the
U.S. Housing Act of 1937 (42 U.S.C. 1437d(d)).
Sec. 950.245 Appraisals.
(a) When the cost of a site is to be charged to the IHA's
development cost and the cost of the site exceeds $1,500 per dwelling
unit, an appraisal shall be made in accordance with the requirements of
the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970, as amended (42 U.S.C. 4601-4655). Government-wide
implementing regulations are at 49 CFR part 24. The cost of donated
land may be assumed to be $1,500 per unit and no appraisal is required.
An appraisal of donated land shall be performed only if the IHA
determines that the value to be attributed to the site exceeds $1,500.
(b) When the interest to be appraised is a leasehold interest in
tribally or individually owned trust or restricted land and comparable
leasehold transactions are not available, the appraiser shall estimate
the value of the land as if alienable in fee, based on a comparison of
the land being valued with sales of fee interests in comparable land in
the same or competing market areas.
Sec. 950.247 Environment.
In order to assure that the policies of the National Environmental
Policy Act of 1969 and other provisions of Federal law that further the
purposes of that act are most effectively implemented in connection
with the expenditure of Indian housing funds, the IHA shall comply with
the Environmental Review Procedures specified under 24 CFR part 58.
Upon completion of the environmental review, the IHA shall submit a
certification and request for release of funds for particular projects
in accordance with 24 CFR part 58. Costs associated with completing the
environmental review are eligible project expenses.
Sec. 950.250 Site approval.
(a) IHA certification. Included in the IHA's certifications
pursuant to Sec. 950.260 shall be a certification to HUD that all
conditions that would prevent the site from being included in the
project have been satisfactorily addressed, and that there are no legal
or physical reasons that would interfere with the occupancy and use of
the site during the term of the ACC. Such certification shall be
conditioned only upon final acquisition or execution of a lease on the
property.
(b) Tentative site approval. (1) When a site is proposed for use,
the IHA shall inspect the property to ascertain its suitability for
development. When appropriate, the IHA shall request an inspection of
any proposed site by utility suppliers, the BIA, the IHS, and a
representative of the local governing body and shall include each
agency's comments in a list of potential site approval concerns.
Tentative approval of the site by the IHA occurs when the IHA
determines that:
(i) A site can be economically included in the project;
(ii) A site does not contain any legal or physical conditions that
cannot be adequately addressed that would exclude it from consideration
for acquisition; and
(iii) The environmental review of the site has been completed (see
Sec. 950.247) and a finding of no significant impact issued.
(2) Tentative site approval shall not be determined until the
requirements for compliance with local governmental approval have been
met. (See 24 CFR part 791.)
(c) Final site approval. (1) Final site approval occurs when all of
the conditions stated in the tentative approval have been appropriately
addressed and, with respect to trust land or restricted land over which
the BIA has authority, the BIA has given either unconditional
concurrence for final site approval or concurrence conditioned only on
subsequent execution of site leases or right-of-way easements. If the
BIA has given final site approval conditioned on subsequent execution
of site leases of right-of-way easements, the IHA shall obtain from the
BIA written assurance that a valid lease or easement, executed by all
the necessary parties, can be obtained within a reasonable time and
before start of construction.
(2) Final site approval on all sites for the project shall occur:
(i) Before any commitment is made to acquire or lease any site; and
(ii) Before construction is started, except for a project developed
under the acquisition method for restricted land sites, in accordance
with paragraph (c)(3) of this section. In addition, leases and
necessary rights-of-way shall be obtained before solicitation of
construction bids or before construction may begin on any units.
(3) With respect to trust or restricted land sites, construction
may start before final site approval of all sites only when the
following conditions have been met:
(i) All sites for the project have tentative site approval;
(ii) At least 50 percent of the sites have final site approval;
(iii) HUD is satisfied that the balance of the sites will meet the
requirements for final site approval no later than one year from
execution of the construction contract; and
(iv) The construction contract provides that if all sites, finally
approved and with executed leases, have not been delivered by the IHA
to the contractor/developer within one year from execution of the
construction contract (or HUD-approved extension), the construction
contract shall be reduced by the amount attributable to the units to be
developed on the undelivered sites.
Sec. 950.255 Design criteria.
(a) Building standards. (1) The IHA shall use tribal or, if
appropriate, local government building codes that meet or exceed
standards of national building codes. In the absence of tribal or local
government adopted building codes that meet the requirements of this
section, the IHA Board of Commissioners shall specify, by Resolution,
the building codes to be followed in the development of its housing.
(2) Codes used shall provide sufficient flexibility to permit the
use of different designs and materials; shall include
[[Page 18208]] standards for reasonable site designs; shall give proper
consideration to the needs of physically handicapped persons for ready
access to, and use of, housing assisted under this part (see 24 CFR
part 8); and shall be sufficient to produce a decent, safe, and
sanitary home.
(3) Modifications to model national building codes are authorized
if a tribe or, in the absence of tribally adopted codes, an IHA
determines to make special provisions in its codes for traditional and
culturally oriented design features.
(b) Fuel and energy consumption. (1) Newly constructed housing
shall meet or exceed the requirements of the latest Model Energy Code
published by the Council of American Building Officials. In selecting
from among design options for heating, cooking, and electrical systems,
maximum attention shall be given to cost, adequacy, maintenance of the
system, and the long-term reliability of fuel supplies. Where fuel is
not locally available at low cost, alternate systems such as wind,
solar, or coal may be used and included in the project cost.
(2) Life-cycle cost-effective energy performance standards
established by HUD to reduce the operating costs of Indian housing
developments over the estimated life of the buildings shall apply to
all new Indian housing developments under this part.
(c) Moderate housing design. The IHA shall select a moderate design
standard taking into consideration anticipated long-term operating
costs.
(d) Water provisions for Alaska. Alaska Native housing assisted
under this part shall be designed and constructed to include water
storage tanks when the housing is not served by or scheduled to be
served by piped utilities. These tanks shall be no less than 100
gallons in capacity and constructed to be accessed from outside the
house.
(e) Design approval. The IHA shall obtain the approval of project
designs by all local or tribal regulatory agencies, by the BIA for on-
site streets, and the IHS, where appropriate, for community water and/
or sewer facilities. The IHA shall assure the design meets applicable
building codes, that the project can be constructed within the amount
of funds reserved for the development, and that the project is
financially feasible including ongoing maintenance cost considerations.
Sec. 950.260 Construction stage development cost budget and
certifications.
(a) IHA submission. Upon completion of project planning, an IHA
shall submit to HUD a construction stage development cost budget,
certifications attesting to the completion of all preconstruction
requirements, and project characteristics information. Submission of
this information shall be in accordance with the schedule established
at the project coordination meeting. The IHA's timely submission of the
information specified in this paragraph, in the form prescribed by HUD,
shall be a factor in HUD's evaluation of an IHA's administrative
capability in accordance with Sec. 950.135. The information and
documentation submitted by the IHA shall demonstrate the financial
feasibility of the project, the legal sufficiency to proceed with
construction, and compliance with all ACC, statutory, and regulatory
requirements.
(b) HUD actions. HUD shall review the IHA submittals and shall
determine whether they meet the requirements specified in paragraph (a)
of this section. If the submittals meet the requirements of this
section, HUD will notify the IHA. If the submission does not meet the
requirements of this section, HUD shall notify the IHA of the reasons
and allow the IHA to amend and resubmit the documents.
Sec. 950.265 Construction and inspections.
(a) Construction start. Following HUD review and acceptance of the
IHA submittals, the IHA shall commence final preconstruction activities
and begin construction of the development.
(b) Notification. Upon award of construction contract, execution of
a contract of sale, or construction start, the IHA shall notify all
participating agencies. The notification to HUD shall include a revised
development cost budget, if appropriate, and a statement that the IHA
has met all ACC, statutory, and regulatory requirements for the
applicable development method. Upon request, the IHA shall submit to
HUD copies of the construction plans and specifications, the
construction contract or contract of sale, detailed plans for Force
Account construction management, the notice to proceed, or other
applicable contracting documents.
(c) Inspections and Monitoring. (1) Whatever the development method
used, the IHA shall be responsible for obtaining inspections throughout
the construction period including the frequency of inspections and the
procedures to be used to assure completion of quality housing in
accordance with the contract documents. Inspections shall be performed
by an architect, engineer, or other qualified person selected by the
IHA.
(2) The IHA shall coordinate inspections with tribal or local
regulatory agencies and, where applicable, the BIA and/or IHS, to
assure that all governing codes and other requirements are met.
(3) HUD representatives or agents may visit construction sites to
evaluate the IHA's contract administration. These visits are not
inspections of the quality of construction and shall not be construed
by the IHA as construction inspections.
Sec. 950.270 Construction completion and settlement.
(a) Final inspection. The IHA shall assure that all work is
satisfactorily completed, in accordance with the terms of the
construction contract, prior to scheduling a final inspection. The
final inspection shall be made jointly by the IHA and the contractor.
Where appropriate, the IHA shall notify tribal or local regulatory
agencies, the BIA, the IHS, and HUD before this inspection to provide
them with the opportunity to participate in the final inspection of all
or part of the work. In a MH project, homebuyers shall also be invited
to participate in the inspection of their homes, but acceptance shall
be by the IHA. Maximum consideration shall be given to all homebuyer
concerns.
(b) Contract settlement. (1) If the final inspection discloses no
deficiencies other than punch list items or seasonal completion items,
the IHA shall, as soon as practical, develop an interim Certificate of
Completion to enable partial settlement of the contract. The interim
Certificate shall detail the items remaining and set forth a schedule
for their completion, and shall allow the IHA to accept the units (or
stage) for occupancy. Upon completion of the interim Certificate and
receipt of the contractor's Certificate and Release, the IHA shall
release the monies due the contractor/developer less withholdings in
accordance with the construction contract.
(2) The contractor/developer shall complete the punch list items in
accordance with the time schedule contained in the interim Certificate.
The IHA may pay the contractor/developer for items that are completed
to the satisfaction of the IHA. If the IHA is satisfied that the
applicable requirements of the construction contract and the interim
Certificate have been met, the IHA shall prepare a final Certificate of
Completion and release the amounts withheld to the contractor/
developer.
(c) Notification to HUD. (1) Upon acceptance of the project or any
part thereof, the IHA shall notify HUD of [[Page 18209]] such action.
When all units within a project are accepted, the IHA shall provide a
notification to HUD of the date the project was fully available for
occupancy by residents.
(2) The IHA shall notify HUD when all units in the project are
occupied.
Sec. 950.275 Warranty inspections and enforcement.
(a) The construction contract shall specify the warranty periods
applicable to items completed as part of the contract. It shall also
provide for assignment to the IHA of manufacturers' and suppliers'
warranties covering equipment or supplies.
(b) The IHA shall conduct an inspection of each dwelling unit at
least once not later than six months after the start of the
contractor's warranty period. A separate or final warranty inspection
shall be made in time to exercise the IHA's rights before expiration of
the contractor's warranties. Each inspection shall cover all items
under warranty at the time of the inspection, including items covered
by manufacturers' and suppliers' warranties. At each inspection, the
IHA shall obtain a signed statement from the occupants as to any
deficiencies in the structure, equipment, grounds, etc., so that it may
enforce any rights under applicable warranties.
Sec. 950.280 Correcting deficiencies.
(a) Responsibility. The IHA shall pursue correction of any
deficiencies against the responsible party (e.g., architect,
contractor/developer or MH homebuyer) as soon as possible after
discovering the deficiencies. Where the costs of correcting
deficiencies cannot be recovered from the responsible party and/or the
deficiency requires immediate correction to protect life or safety or
to avoid further damage to the project unit(s), the IHA may apply to
HUD for amendment of the development budget to provide the funds
required. The IHA may also use operating receipts to cover such costs.
The IHA shall be responsible for correction of any deficiencies that
could have been detected and/or corrected during the warranty period if
the IHA had inspected at the appropriate time or had pursued correction
of deficiencies against the responsible parties.
(b) Amendments. (1) HUD may, but is not obligated to, provide
additional funding to the IHA to correct deficiencies. The ACC may be
amended to provide amounts needed to correct deficiencies (and any
resulting damage) in design, construction, and equipment only where
there is substantial evidence that it is not possible to obtain timely
correction or payment by the responsible parties, including the source
of the performance bond.
(2) In the case of a MH home, the additional cost for correcting
deficiencies in design, construction, or equipment (and any damage
resulting therefrom) shall not result in an increase in the homebuyer's
purchase price. If a homebuyer is not in compliance with the MHO
Agreement, the IHA shall reach agreement with the homebuyer to correct
the noncompliance before approving or beginning the corrective work.
Sec. 950.285 Fiscal closeout.
The IHA shall submit to HUD a certificate of actual development
cost within 24 months of the date of full availability (see
Sec. 950.270(c)(1)), or such later date as may be approved by HUD, in a
form prescribed by HUD. Audit verification of the actual development
costs shall be submitted to HUD within 36 months of the date of full
availability. The audit shall follow the requirements of 24 CFR part 44
(Single Audit Act of 1984). If the audit of the actual development
costs indicates that excess funds have been advanced to the IHA, the
IHA shall dispose of the excess as HUD directs. If the audited
development cost certificate discloses unauthorized expenditures, the
IHA shall take such corrective actions as HUD directs. If the IHA fails
to submit a certificate of actual development cost or audit within the
prescribed times, the Area ONAP may make a determination that all
development activities have been completed as of a specified date, and
inform the IHA that such action has been taken and that no additional
costs may be incurred for the development. The Area ONAP shall then
proceed with the fiscal close-out of the development.
Subpart D--Operation
Sec. 950.301 Admission policies.
(a) Admission policies. (1) The IHA shall establish and adopt
written policies for admission of participants. The policies shall
cover all programs operated by the housing authority and, as
applicable, will address the programs individually to meet their
specific requirements (i.e., Rental, MH, or Turnkey III). A copy of the
policies shall be posted prominently in the IHA's office for
examination by prospective participants. (See Sec. 950.416 with respect
to Mutual Help admission policies.)
(2) These policies shall be designed:
(i) To attain, to the maximum extent feasible, residency that
includes families with a broad range of incomes and that avoids
concentrations of the most economically deprived families with serious
social problems;
(ii) To preclude admission of applicants whose habits and practices
reasonably may be expected to have a detrimental effect on the
residents or the project environment;
(iii) To give a preference in selection of tenants and homebuyers
to applicants who qualify for a Federal preference, ranking preference,
or local preference, in accordance with Secs. 950.303 through 950.307;
and
(iv) To establish objective and reasonable policies for selection
by the IHA among otherwise eligible applicants.
(3) The IHA admission policies shall include the following:
(i) Requirements for applications and waiting lists;
(ii) Description of the policies for selection of applicants from
the waiting list that includes the following:
(A) How the Federal preferences (described in Sec. 950.303) will be
used;
(B) How any ranking preferences (described in Sec. 950.303) will be
used;
(C) How any local preferences (described in Sec. 950.303) will be
used; and
(D) How any residency preference will be used;
(iii) Policies for verification and documentation of information
relevant to acceptance or rejection of an applicant;
(iv) Policies for resident transfer between units, projects, and
programs. For example, an IHA could adopt a criterion for voluntary
transfer that the resident had met all obligations under the current
program, including payment of charges to the IHA and completion of
maintenance requirements;
(v) Policies for compliance with 24 CFR part 750, which requires
applicants and participants to disclose and verify social security
numbers at the time eligibility is determined and at later income
reexaminations; and
(vi) Policies for compliance with 24 CFR part 760, which requires
applicants and participants to sign and submit consent forms for the
obtaining of wage and claims information from State wage and
information collections agencies.
(4) These selection policies shall:
(i) Be duly adopted; and
(ii) Be publicized by posting copies thereof in each office where
applications are received and by furnishing copies to applicants or
residents upon request, free or at their expense, at the discretion of
the IHA.
(5) Such policies shall be submitted to the HUD Area ONAP upon
request from that office.
(6) ``Residency preference'' means a preference for admission of
families [[Page 18210]] living in the jurisdiction of the IHA.
Residency provisions are subject to the following:
(i) Residency requirements are not permitted;
(ii) A residency preference may not be based on how long the
applicant has resided in the jurisdiction; and
(iii) Applicants who are working or who have been notified that
they are hired to work in the jurisdiction shall be treated as
residents of the jurisdiction.
(b) Income limits. (1) A family shall be a low-income family, as
defined in Sec. 950.102, to be eligible for admission. (With respect to
eligibility for the Mutual Help program, see special provisions of
Sec. 950.416.)
(2) In extremely unusual circumstances, the IHA may request that
HUD increase or decrease income limits for low-income families or for
very low-income families in the Indian area because of unusually high
or low family incomes. Such a request can be granted only by joint
approval of HUD's Assistant Secretary for Housing and Assistant
Secretary for Public and Indian Housing, after consultation with the
Secretary of Agriculture (if the income limits are being established
for a ``rural area'' as defined in section 520 of the Housing Act of
1949 (42 U.S.C. 1490)).
(c) Standards for IHA tenant/homebuyer selection criteria. (1) The
criteria to be established and information to be considered shall be
reasonably related to individual attributes and behavior of an
applicant, and shall not be related to those that may be imputed to a
particular group or category of persons of which an applicant may be a
member. The IHA's tenant/homebuyer selection criteria shall be in
accordance with HUD guidelines and submitted to the HUD Area ONAP.
(With respect to the Mutual Help program, see special provisions of
Sec. 950.416.)
(2) In the event of any unfavorable information regarding an
applicant, the IHA shall take into consideration the time, nature, and
extent of the past occurrence and reasonable probability of future
favorable performance.
(d) Admission of single persons--priority to elderly and displaced
persons. An IHA shall extend preference to elderly families (including
disabled persons and handicapped persons), displaced families, and
displaced persons over single persons.
(e) Selection preference with respect to projects for elderly
families. (1) In determining priority for admission to projects for
elderly families, an IHA shall give a preference to elderly families.
When selecting applicants for admission from among elderly families, an
IHA shall follow its policies and procedures for applying the Federal
preferences, ranking preferences, and local preferences in accordance
with Secs. 950.303 through 950.307.
(2) An IHA may give a preference to near elderly families in
determining priority for admission to projects for elderly families
when the IHA determines that there are not enough eligible elderly
families to fill all the units that are currently vacant or expected to
become vacant in the next 12 months. In no event may an IHA admit a
near elderly family if there are eligible elderly families on the IHA's
waiting list that would be willing to accept an offer for a suitable
vacant unit in that project.
(3) Before electing the discretionary preference in paragraph
(e)(2) of this section, an IHA shall conduct outreach to attract
eligible elderly families, including, where appropriate, elderly
families residing in projects not designated as being for elderly
families.
(4) If an IHA elects the discretionary preference in paragraph
(e)(2) of this section, the IHA shall follow its policies and
procedures for applying the Federal preferences, ranking preferences,
and local preferences in accordance with Secs. 950.303 through 950.307
when selecting applicants for admission from among near elderly
families. Near elderly families that do not qualify for a Federal
preference and that are given preference for admission under this
section over other nonelderly families that qualify for such a Federal
preference are not subject to the 30 percent limitation on local
preference admissions. If a near elderly applicant is a single person,
the near elderly single person may be given a preference for admission
over other single persons to projects for the elderly.
(f) Verification of information and notification to applicants.
(1) Verification. Adequate procedures shall be developed to obtain
and verify information with respect to each applicant. Information
relative to the acceptance or rejection of an applicant shall be
documented and placed in the applicant's file.
(2) Notification to applicants. (i) If an IHA determines that an
applicant is ineligible for admission to a project, the IHA shall
promptly notify the applicant of the basis for such determination and
shall provide the applicant, upon request and within a reasonable time
after the determination is made, with an opportunity for an informal
hearing on such determination; and
(ii) When a determination has been made that an applicant is
eligible and satisfies all requirements for admission including the
tenant selection criteria, the applicant shall be notified of the
approximate date of occupancy insofar as that date can be reasonably
determined.
Sec. 950.303 Selection preferences.
(a) Types of preference. There are three types of admission
preferences.
(1) ``Federal preferences'' are preferences that are prescribed by
Federal law and required to be used in the selection process. See
Sec. 950.304(a).
(2) ``Ranking preferences'' are preferences that may be established
by the IHA to use in selecting among applicants that qualify for
Federal preferences. See Sec. 950.304(b).
(3) ``Local preferences'' are preferences that may be established
by the IHA for use in selecting among applicants without regard to
their Federal preference status.
(b) Use of preference in selection process. (1) Factors other than
preference. (i) Characteristics of the unit. The IHA may match other
characteristics of the applicant family with the type of unit
available, e.g., number of bedrooms. In selection of a family for a
unit that has special accessibility features, the IHA shall give
preference to families that include persons with disabilities who can
benefit from those features of the unit (see 24 CFR 8.27). Also, in
selection of a family for a unit in a project for elderly families, the
owner will give preference to elderly families and disabled families.
(ii) Singles preference. See Sec. 950.102.
(2) Local preference admissions. (i) If the IHA wants to use
preferences to select among applicants without regard to their Federal
preference status, it may adopt a preference system for this purpose.
These local preferences may only be adopted after the IHA has conducted
a public hearing to establish preferences that respond to local housing
needs and priorities. The IHA may only use local preferences in
selection for admission if the IHA has conducted the required public
hearing.
(ii) ``Local preference limit'' means 30 percent of total annual
admissions to the program. In any year, the number of families given
preference in admission pursuant to a local preference over families
with a Federal preference may not exceed the local preference limit.
(3) Prohibition of preference if applicant was evicted for drug-
related criminal activity. The IHA may not give a preference to an
applicant (Federal preference, local preference, or ranking preference)
if any member of the family is a person who was evicted during the
[[Page 18211]] past three years because of drug-related criminal
activity from housing assisted under a 1937 Housing Act program.
However, the IHA may give an admission preference in any of the
following cases:
(i) If the IHA determines that the evicted person has successfully
completed a rehabilitation program approved by the IHA;
(ii) If the IHA determines that the evicted person clearly did not
participate in or know about the drug-related criminal activity; or
(iii) If the IHA determines that the evicted person no longer
participates in any drug-related criminal activity.
(c) Informing applicants about admission preferences. (1) The IHA
shall inform all applicants about available preferences and shall give
applicants an opportunity to show that they qualify for available
preferences (Federal preference, ranking preference, or local
preference).
(2) If the IHA determines that the notification to all applicants
on a waiting list required by paragraph (d)(1) of this section is
impracticable because of the length of the list, the IHA may provide
this notification to fewer than all applicants on the list at any given
time. However, the IHA shall have notified a sufficient number of
applicants at any given time that, on the basis of the IHA's
determination of the number of applicants on the waiting list who
already claim a Federal preference and the anticipated number of
project admissions:
(i) There is an adequate pool of applicants who are likely to
qualify for a Federal preference; and
(ii) It is unlikely that, on the basis of the IHA's framework for
applying the preferences and the Federal preferences claimed by those
already on the waiting list, any applicant who has not been so notified
would receive assistance before those who have received notification.
(d) Nondiscrimination. (1) Any selection preference used by an IHA
shall be established and administered in a manner that is consistent
with HUD's affirmative fair housing objectives.
(2) The Indian Civil Rights Act may apply to operations of the IHA.
(3) In addition, the following nondiscrimination requirements may
apply:
(i) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) and
the implementing regulations at 24 CFR part 1;
(ii) The Fair Housing Act (42 U.S.C. 3601-19) and the implementing
regulations at 24 CFR parts 100, 108, 109, and 110;
(iii) Executive Order 11063 on Equal Opportunity in Housing and the
implementing regulations at 24 CFR part 107;
(iv) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794)
and the implementing regulations at 24 CFR part 8;
(v) The Age Discrimination Act of 1975 (42 U.S.C. 6101-07) and the
implementing regulations at 24 CFR part 146; and
(vi) The Americans with Disabilities Act (42 U.S.C. 12101-12213) to
the extent applicable.
(e) Notice and opportunity for a meeting if preference is denied.
(1) If the IHA determines that an applicant does not qualify for a
Federal preference, ranking preference, or local preference claimed by
the applicant, the IHA shall promptly give the applicant written notice
of the determination. The notice shall contain a brief statement of the
reasons for the determination, and state that the applicant has the
right to meet with a representative of the IHA to review the
determination. The meeting may be conducted by any person or persons
designated by the IHA, who may be an officer or employee of the IHA,
including the person who made or reviewed the determination or a
subordinate employee.
(2) The applicant may exercise other rights if the applicant
believes that the applicant has been discriminated against in violation
of requirements stated in paragraph (d) of this section.
Sec. 950.304 Federal preferences: general.
(a) Definition. A Federal preference is a preference under Federal
law for selection of families that are:
(1) Involuntarily displaced;
(2) Living in substandard housing (including families that are
homeless or living in a shelter for the homeless); or
(3) Paying more than 50 percent of family income for rent.
(b) Ranking preferences: selection among Federal preference
holders. The IHA's admission policy may provide for the use of a
ranking preference for selecting among applicants who qualify for a
Federal preference.
(1) The IHA could give preference to working families. (If an IHA
adopts such a preference, an applicant household shall be given the
benefit of the preference if the head and spouse, or sole member is age
62 or older or is receiving social security disability, supplemental
security income disability benefits, or any other payments based on an
individual's inability to work.) An IHA also could give preference to
graduates of, as well as active participants in, educational and
training programs that are designed to prepare individuals for the job
market. An IHA also could use its local preferences for the Section 8
Certificate and Voucher programs to rank Federal preference holders.
(2) The IHA may limit the number of applicants who may qualify for
any ranking preference.
(3) The system may give different weight to the Federal
preferences, through such means as:
(i) Aggregating the Federal preferences (e.g., provide that two
Federal preferences outweigh one);
(ii) Giving greater weight to holders of a particular Federal
preference (e.g., provide that an applicant living in substandard
housing has greater need for housing than--and, therefore, would be
considered for assistance before--an applicant paying more than 50
percent of family income for rent); or
(iii) Giving greater weight to a Federal preference holder who fits
a particular category of a single Federal preference (e.g., provide
that those living in housing that is dilapidated or has been declared
unfit for habitation by an agency or unit of government have a greater
need for housing than those whose housing is substandard only because
it does not have a usable bathtub or shower inside the unit for the
exclusive use of the family).
(c) Qualifying for a Federal preference. (1) Basis of Federal
preference. The IHA shall use the following definitions of the Federal
preferences (as elaborated upon in Secs. 950.305, 950.306, and 950.307)
unless it has received HUD approval of alternative definitions.
(i) Displacement. An applicant qualifies for Federal preference if:
(A) The applicant has been involuntarily displaced and is not
living in standard, permanent replacement housing (as defined in
Sec. 950.305(a)(2)), or
(B) The applicant will be involuntarily displaced within no more
than six months from the date of preference status certification by the
family or verification by the IHA.
(ii) Substandard housing. An applicant qualifies for a Federal
preference if the applicant is living in substandard housing. An
applicant that is homeless or living in a shelter for the homeless is
considered as living in substandard housing.
(iii) Rent burden. An applicant qualifies for a Federal preference
if the applicant is paying more than 50 percent of family income for
rent.
(2) Certification of preference. An applicant may claim
qualification for a Federal preference by certifying to the
[[Page 18212]] IHA that the family qualifies for Federal preference.
The IHA shall accept this certification, unless the IHA verifies that
the applicant is not qualified for Federal preference.
(3) Verification of preference. (i) Before admitting an applicant
on the basis of a Federal preference, the IHA shall require the
applicant to provide information needed by the IHA to verify that the
applicant qualifies for a Federal preference due to the applicant's
current status. The applicant's current status shall be determined
without regard to whether there has been a change in the applicant's
qualification for a Federal preference between the time of application
and selection for admission, including a change from one Federal
preference category to another.
(ii) Once the IHA has verified an applicant's qualification for a
Federal preference, the IHA need not require the applicant to provide
information needed by the IHA to verify such qualification again
unless:
(A) The IHA determines reverification is desirable because a long
time has passed since verification; or
(B) The IHA has reasonable grounds to believe that the applicant no
longer qualifies for a Federal preference.
(4) Effect of current residence in assisted housing. No applicant
is to be denied a Federal preference for which the family otherwise
qualifies on the basis that the applicant already resides in assisted
housing; for example, the actual condition of the housing unit shall be
considered, or the possibility of involuntary displacement resulting
from domestic violence shall be evaluated.
Sec. 950.305 Federal preference: involuntary displacement.
(a) How applicant qualifies for displacement preference. (1) An
applicant qualifies for a Federal preference on the basis of
involuntary displacement if either of the following apply:
(i) The applicant has been involuntarily displaced and is not
living in standard, permanent replacement housing; or
(ii) The applicant will be involuntarily displaced within no more
than six months from the date of preference status certification by the
family or verification by the IHA.
(2) (i) ``Standard, permanent replacement housing'' is housing:
(A) That is decent, safe, and sanitary;
(B) That is adequate for the family size; and
(C) That the family is occupying pursuant to a lease or occupancy
agreement.
(ii) ``Standard, permanent replacement housing'' does not include:
(A) Transient facilities, such as motels, hotels, or temporary
shelters for victims of domestic violence or homeless families; or
(B) In the case of domestic violence, the housing unit in which the
applicant and the applicant's spouse or other member of the household
who engages in such violence live.
(b) Meaning of involuntary displacement. An applicant is or will be
involuntarily displaced if the applicant has vacated or will have to
vacate the unit where the applicant lives because of one or more of the
following:
(1) Displacement by disaster. An applicant's unit is uninhabitable
because of a disaster, such as a fire or flood.
(2) Displacement by government action. Activity carried on by an
agency of the United States or by any State or local governmental body
or agency in connection with code enforcement or a public improvement
or development program.
(3) Displacement by action of housing owner. (i) Action by a
housing owner forces the applicant to vacate its unit.
(ii) An applicant does not qualify as involuntarily displaced
because action by a housing owner forces the applicant to vacate its
unit unless:
(A) The applicant cannot control or prevent the owner's action;
(B) The owner action occurs although the applicant met all
previously imposed conditions of occupancy; and
(C) The action taken by the owner is other than a rent increase.
(iii) To qualify as involuntarily displaced because action by a
housing owner forces the applicant to vacate its unit, reasons for an
applicant's having to vacate a housing unit include, but are not
limited to, conversion of an applicant's housing unit to nonrental or
nonresidential use; closing of an applicant's housing unit for
rehabilitation or for any other reason; notice to an applicant that the
applicant shall vacate a unit because the owner wants the unit for the
owner's personal or family use or occupancy; sale of a housing unit in
which an applicant resides under an agreement that the unit shall be
vacant when possession is transferred; or any other legally authorized
act that results or will result in the withdrawal by the owner of the
unit or structure from the rental market.
(iv) Such reasons do not include the vacating of a unit by a tenant
as a result of actions taken by the owner because the tenant refuses:
(A) To comply with HUD program policies and procedures for the
occupancy of underoccupied or overcrowded units; or
(B) To accept a transfer to another housing unit in accordance with
a court decree or in accordance with policies and procedures under a
HUD-approved desegregation plan.
(4) Displacement by domestic violence. (i) An applicant is
involuntarily displaced if:
(A) The applicant has vacated a housing unit because of domestic
violence; or
(B) The applicant lives in a housing unit with a person who engages
in domestic violence.
(ii) ``Domestic violence'' means actual or threatened physical
violence directed against one or more members of the applicant family
by a spouse or other member of the applicant's household.
(iii) To qualify as involuntarily displaced because of domestic
violence:
(A) The IHA shall determine that the domestic violence occurred
recently or is of a continuing nature; and
(B) The applicant shall certify that the person who engaged in such
violence will not reside with the applicant family unless the IHA has
given advance written approval. If the family is admitted, the IHA may
deny or terminate assistance to the family for breach of this
certification.
(5) Displacement to avoid reprisals. (i) An applicant family is
involuntarily displaced if:
(A) Family members provided information on criminal activities to a
law enforcement agency; and
(B) Based on a threat assessment, a law enforcement agency
recommends rehousing the family to avoid or minimize a risk of violence
against family members as a reprisal for providing such information.
(ii) The IHA may establish appropriate safeguards to conceal the
identity of families requiring protection against such reprisals.
(6) Displacement by hate crimes. (i) An applicant is involuntarily
displaced if:
(A) One or more members of the applicant's family have been the
victim of one or more hate crimes; and
(B) The applicant has vacated a housing unit because of such crime,
or the fear associated with such crime has destroyed the applicant's
peaceful enjoyment of the unit.
(ii) ``Hate crime'' means actual or threatened physical violence or
intimidation that is directed against a person or his or her property
and that is based on the person's race, color, religion, sex, national
origin, handicap, or familial status.
(iii) The IHA shall determine that the hate crime involved occurred
recently or is of a continuing nature. [[Page 18213]]
(7) Displacement by inaccessibility of unit. An applicant is
involuntarily displaced if:
(i) A member of the family has a mobility or other impairment that
makes the person unable to use critical elements of the unit; and
(ii) The owner is not legally obligated to make the changes to the
unit that would make critical elements accessible to the disabled
person as a reasonable accommodation.
(8) Displacement because of HUD disposition of multifamily project.
Involuntary displacement includes displacement because of disposition
of a multifamily rental housing project by HUD under section 203 of the
Housing and Community Development Amendments of 1978.
Sec. 950.306 Federal preference: substandard housing.
(a) When unit is substandard. A unit is substandard if it:
(1) Is dilapidated;
(2) Does not have operable indoor plumbing;
(3) Does not have a usable flush toilet inside the unit for the
exclusive use of a family;
(4) Does not have a usable bathtub or shower inside the unit for
the exclusive use of a family;
(5) Does not have electricity, or has inadequate or unsafe
electrical service;
(6) Does not have a safe or adequate source of heat;
(7) Should, but does not, have a kitchen; or
(8) Has been declared unfit for habitation by an agency or unit of
government.
(b) Other definitions. (1) Dilapidated unit. A housing unit is
dilapidated if:
(i) The unit does not provide safe and adequate shelter, and in its
present condition endangers the health, safety, or well-being of a
family; or
(ii) The unit has one or more critical defects, or a combination of
intermediate defects in sufficient number or extent to require
considerable repair or rebuilding. The defects may involve original
construction, or they may result from continued neglect, lack of
repair, or serious damage to the structure.
(2) Homeless family. (i) An applicant that is a ``homeless family''
is considered to be living in substandard housing.
(ii) A ``homeless family'' includes any person or family that:
(A) Lacks a fixed, regular, and adequate nighttime residence; and
also
(B) Has a primary nighttime residence that is:
(1) A supervised publicly or privately operated shelter designed to
provide temporary living accommodations (including welfare hotels,
congregate shelters, and transitional housing);
(2) An institution that provides a temporary residence for
individuals intended to be institutionalized; or
(3) A public or private place not designed for, or ordinarily used
as, a regular sleeping accommodation for human beings.
(iii) A ``homeless family'' does not include any person imprisoned
or otherwise detained pursuant to an Act of Congress or a State or
tribal law.
(3) Status of SRO housing. In determining whether an individual
living in single room occupancy (SRO) housing qualifies for Federal
preference, SRO housing is not considered substandard solely because it
does not contain sanitary or food preparation facilities.
Sec. 950.307 Federal preference: rent burden.
(a) ``Rent burden preference'' means the Federal preference for
admission of applicants that are required to pay more than 50 percent
of family income for rent.
(b) For purposes of determining whether an applicant qualifies for
the rent burden preference:
(1) ``Family income'' means Monthly Income, as defined in
Sec. 950.102.
(2) ``Rent'' means:
(i) The actual monthly amount due under a lease or occupancy
agreement between a family and the family's current landlord; and
(ii) For utilities purchased directly by tenants from utility
providers:
(A) The utility allowance for family-purchased utilities and
services that is used in the IHA's programs; or
(B) If the family chooses, the average monthly payments that the
family actually made for these utilities and services for the most
recent 12-month period or, if information is not obtainable for the
entire period, for an appropriate recent period.
(3) Amounts paid to or on behalf of a family under any energy
assistance program shall be subtracted from the otherwise applicable
rental amount, to the extent that they are not included in the family's
income.
(c) An applicant does not qualify for a rent burden preference if
either of the following is applicable:
(1) The applicant has been required to pay more than 50 percent of
income for rent for less than 90 days.
(2) The applicant is paying more than 50 percent of family income
to rent a unit because the applicant's housing assistance for occupancy
of the unit under any of the following programs has been terminated due
to the applicant's refusal to comply with applicable program policies
and procedures on the occupancy of underoccupied and overcrowded units:
(i) The Section 8 programs or public and Indian housing programs
under the United States Housing Act of 1937;
(ii) The rent supplement program under section 101 of the Housing
and Urban Development Act of 1965; or
(iii) Rental assistance payments under section 236(f)(2) of the
National Housing Act.
Sec. 950.308 Exemption from eligibility requirements for police
officers and other security personnel.
(a) Purpose and scope. The purpose of this section is to permit the
admission to Indian housing of police officers and other security
personnel who are not otherwise eligible for such housing under any
other admission requirements or procedures, under a plan submitted by
an Indian housing authority (IHA) and approved by the Department, and
to set forth standards and criteria for the approval of such plans. The
Department's objective in granting the exemption allowed by this
section is to permit long-term residence in Indian housing developments
by police officers and security personnel, whose visible presence is
expected to serve as a deterrent to criminal activity in and around
Indian housing.
(b) Definitions. For the purposes of this section:
Department means the U.S. Department of Housing and Urban
Development (HUD). For purposes of plan submission and approval,
Department refers to the local HUD Office of Native American Programs.
Eligible Families means families that are eligible for residence in
Indian housing assisted under the United States Housing Act of 1937.
Officer means a professional police officer or other professional
security provider. Police officers and other security personnel are
considered professional if they are employed full time, i.e., not less
than 35 hours per week, by a governmental unit or a private employer
and compensated expressly for providing police or security services. As
used in this section, ``Officer'' may refer to the Officer as so
defined or to the Officer and his or her family taken together,
depending on the context.
Plan means the written plan submitted by an IHA to the Department,
under which, if approved, the Department will exempt Officers from the
normal eligibility requirements for residence in Indian housing
developments and allow Officers who [[Page 18214]] are otherwise not
eligible to reside in Indian housing units. An IHA may have only one
plan in effect at any one time, which will govern exemptions under this
section for all housing developments managed by that IHA.
(c) Exemption from eligibility requirements; plan submission; plan
approval or disapproval.
(1) Conditions for exemption. The Department may exempt Officers
from the eligibility requirements for admission to Indian housing,
provided that:
(i) The Officers would not be eligible, under any other admission
requirements or procedures, for admission to the Indian housing
development without such an exemption; and
(ii) The exemption is given under a properly submitted plan that
satisfies the standards and criteria set forth in Sec. 950.308(d), and
accordingly has been approved by the Department.
(2) Plan submission. A plan is properly submitted when it is
received by the local HUD Office of Native American Programs with
jurisdiction over the IHA.
(3) Notification of plan approval or disapproval. The Department
will notify an IHA of the approval or disapproval of its plan within
thirty days of its submission. Plan approval by the Department
constitutes granting of the exemption for the purposes of this section.
(d) Plan standards and criteria. (1) Minimum requirements. To be
approved, a plan shall satisfy the following requirements:
(i) The plan shall identify the total number of units under
management by the IHA; the specific housing developments, and the
number of units they contain, where the IHA intends to place Officers;
and the particular units (stating number of bedrooms) within each
development that would be allocated to Officers. For each unit
identified, the plan shall state the amount of rent that the Officer
will pay and facts and circumstances (such as the rent that would
ordinarily be charged for the unit, the IHA's annual maintenance cost
for the unit, the degree of difficulty in attracting Officers to reside
in the unit, the extent of the crime problem in the development, and
the anticipated benefits of the Officer's presence) that demonstrate
the reasonableness of that amount, as required under
Sec. 950.308(e)(i).
(ii) The plan shall identify specifically the benefits to the
community and to the IHA that will result from the presence of Officers
in each affected development.
(iii) The plan shall describe the existing physical and social
conditions in and around each affected development, providing specific
evidence of criminal activity (such as frequency of telephone calls to
local police, number of arrests and types of offenses involved, and
data on drug abuse in the community) in order to permit the Department
to make an informed assessment of the level of need for increased
security.
(iv) The plan shall afford the Department a reasonable basis, which
necessarily includes the certifications required under
Sec. 950.308(d)(2), for determining that the use by Officers of the
identified dwelling units will:
(A) Increase security for other Indian housing residents;
(B) Result in a limited loss of income to the IHA; and
(C) Not result in a significant reduction of units available for
residence by Eligible Families.
(2) Certifications by IHA. Only upon making the determination
described in Sec. 950.308(d)(1)(iv) will the Department approve a plan.
Further, the Department will not make this determination unless the
plan contains a written statement, signed by an authorized officer or
other agent of the IHA, certifying that:
(i) The dwelling units proposed to be allocated to Officers are
situated so as to place the Officers in close physical proximity to
other residents;
(ii) No resident families will have to be transferred to other
dwelling units in order to make available the units proposed to be
allocated to Officers;
(iii) The dwelling units proposed to be allocated to Officers will
be rented under a lease that contains the terms described in
Sec. 950.308(e); and
(iv) The number of dwelling units proposed to be allocated to
Officers under the plan does not exceed the limits set forth in
Sec. 950.308(d)(3), or, in the alternative, any units so allocated in
excess of the applicable maximum number are vacant units for which
there are no Eligible Families. This certification on the part of the
IHA satisfies the requirements of Secs. 950.308(d)(1)(iv)(B) and (C).
(3) Unit allocation table. For purposes of the certification
required by Sec. 950.308(d)(2), the following table sets forth the
maximum number of units to be allocated to Officers as a function of
the total number of units under management by the IHA:
Unit Allocation Table
------------------------------------------------------------------------
Units to
Total units under management be
allocated
------------------------------------------------------------------------
500-999..................................................... 5
1000-4999................................................... 10
5000-9999................................................... 15
10,000 +.................................................... 20
------------------------------------------------------------------------
The maximum number of units to be allocated by IHAs with less than 500
units under management will be determined by the Office of Native
American Programs on a case by case basis.
(Approved by the Office of Management and Budget under OMB control
number 2577-0185.)
(e) Special rent requirements and other terms and conditions. The
IHA shall lease units to Officers under a lease agreement, which shall
be submitted as a part of the plan, containing terms that provide as
follows:
(1) Reasonable rent. The lease shall provide for a reasonable rent,
which may be a flat amount not related to the Officer's income. The IHA
should attempt to establish a rent that will provide an incentive to
Officers to reside in the units but that is also consistent with the
limited loss of income requirement of Sec. 950.308(d)(1)(iv)(B). As
required in Sec. 950.308(d)(1)(i), the plan shall state facts and
circumstances (such as the rent that would ordinarily be charged for
the unit, the IHA's annual maintenance cost for the unit, the degree of
difficulty in attracting Officers to reside in the unit, the extent of
the crime problem in the development, and the anticipated benefits of
the Officer's presence) that demonstrate the reasonableness of the rent
amount.
(2) Responsibility for damage and overall condition. The Officer
shall be responsible for physical damage to the interior of the leased
unit, hallway, and entrance, if any, and exterior area bordering the
unit. The lease also shall require the Officer to maintain the overall
condition of the leased unit, including control of litter in the area
of the development immediately around the unit.
(3) Responsibility for normal facility management. The lease shall
impose on the IHA responsibility for routine facility management
relating to the leased unit, including ongoing maintenance and repair
of equipment, trash collection, and similar areas of responsibility.
(4) Continued employment. The lease shall provide that the
Officer's right of occupancy is dependent on the continuation of
employment as an [[Page 18215]] Officer. The lease also shall provide
that the Officer will move out of the leased unit within a reasonably
prompt time, to be established by the lease, after termination of
employment as an Officer.
(5) Prohibition on subletting. The lease shall prohibit the Officer
from subletting the unit, and provide that the unit shall be the
Officer's primary residence.
(f) Applicability of the annual contributions contract; effect on
the performance funding system. (1) Annual contributions contract.
Except to the extent that an exemption from eligibility requirements is
provided under Sec. 950.308(c), Indian housing units occupied by
Officers in accordance with a plan submitted and approved under this
section will be subject to the terms and conditions of the annual
contributions contract (ACC) between the IHA and HUD. This section does
not override any of the terms and conditions of the ACC except insofar
as they are inconsistent with the provisions of this section.
(2) Performance Funding System. For purposes of the operating
subsidy under the Performance Funding System (PFS) described in subpart
J of this part, dwelling units allocated to Officers in accordance with
this section are excluded from the total unit months available, as
defined in Sec. 950.102. Also for purposes of the operating subsidy
under the PFS, the full amount of any rent paid by Officers in
accordance with this section is included in other income, as defined in
Sec. 950.102. IHAs may receive operating subsidy for one unit per
housing development to promote economic self-sufficiency services or
anti-drug programs, including housing police officers and security
personnel. An IHA may request consideration of such units in its
calculation of operating subsidy eligibility through the appropriate
local HUD Office of Native American Programs.
Sec. 950.310 Restrictions on assistance to noncitizens.
(a) Requirements concerning documents. For any notice or document
(decision, declaration, consent form, etc.) that this section requires
an IHA to provide to an individual, or requires that the IHA obtain the
signature of the individual, the IHA, where feasible, must arrange for
the notice or document to be provided to the individual in a language
that is understood by the individual if the individual is not
proficient in English. (See 24 CFR 8.6 of HUD's regulations for
requirements concerning communications with persons with disabilities.)
(b) Restrictions on assistance. Assistance provided under a Section
214 covered program is restricted to:
(1) Citizens; or
(2) Noncitizens who have eligible immigration status in one of the
following categories:
(i) A noncitizen lawfully admitted for permanent residence, as
defined by section 101(a)(20) of the Immigration and Nationality Act
(INA), as an immigrant, as defined by section 101(a)(15) of the INA (8
U.S.C. 1101(a)(20) and 1101(a)(15), respectively) [immigrants]. (This
category includes a noncitizen admitted under section 210 or 210A of
the INA (8 U.S.C. 1160 or 1161), [special agricultural worker], who has
been granted lawful temporary resident status);
(ii) A noncitizen who entered the United States before January 1,
1972, or such later date as enacted by law, and has continuously
maintained residence in the United States since then, and who is not
ineligible for citizenship, but who is deemed to be lawfully admitted
for permanent residence as a result of an exercise of discretion by the
Attorney General under section 249 of the INA (8 U.S.C. 1259);
(iii) A noncitizen who is lawfully present in the United States
pursuant to an admission under section 207 of the INA (8 U.S.C. 1157)
[refugee status]; pursuant to the granting of asylum (which has not
been terminated) under section 208 of the INA (8 U.S.C. 1158) [asylum
status]; or as a result of being granted conditional entry under
section 203(a)(7) of the INA (8 U.S.C. 1153(a)(7)) before April 1,
1980, because of persecution or fear of persecution on account of race,
religion, or political opinion or because of being uprooted by
catastrophic national calamity;
(iv) A noncitizen who is lawfully present in the United States as a
result of an exercise of discretion by the Attorney General for
emergent reasons or reasons deemed strictly in the public interest
under section 212(d)(5) of the INA (8 U.S.C. 1182(d)(5)) [parole
status];
(v) A noncitizen who is lawfully present in the United States as a
result of the Attorney General's withholding deportation under section
243(h) of the INA (8 U.S.C. 1253(h)) [threat to life or freedom]; or
(vi) A noncitizen lawfully admitted for temporary or permanent
residence under section 245A of the INA (8 U.S.C. 1255a) [amnesty
granted under INA 245A].
(c) Family eligibility for assistance. (1) A family shall not be
eligible for assistance unless every member of the family residing in
the unit is determined to have eligible status, as described in
paragraph (b) of this section;
(2) Despite the ineligibility of one or more family members, a
mixed family may be eligible for one of the three types of assistance
provided in paragraph (r) of this section. A family without any
eligible members and receiving assistance on June 19, 1995 may be
eligible for temporary deferral of termination of assistance as
provided in paragraph (r) of this section.
(d) Exemption of certain homebuyers from restrictions of this
section. A homebuyer who executed a Homeownership Opportunity Agreement
under the Turnkey III program or who executed a Mutual Help and
Occupancy Agreement under the Mutual Help Homeownership program before
June 19, 1995 is not subject to this citizenship or eligible
immigration status requirement for continued participation in the
program.
(e) Submission of evidence of citizenship or eligible immigration
status.
(1) General. Eligibility for assistance or continued assistance
under a Section 214 covered program is contingent upon a family's
submission to the IHA of the documents described in paragraph (e)(2) of
this section for each family member. If one or more family members do
not have citizenship or eligible immigration status, the members may
exercise the election not to contend to have eligible immigration
status as provided in paragraph (f) of this section, and the provisions
of paragraph (r) of this section shall apply.
(2) Evidence of citizenship or eligible immigration status. Each
family, regardless of age, must submit the following evidence to the
IHA:
(i) For citizens, the evidence consists of a signed declaration of
U.S. citizenship;
(ii) For noncitizens who are 62 years of age or older or who will
be 62 years of age or older and receiving assistance under a Section
214 covered program on June 19, 1995, the evidence consists of:
(A) A signed declaration of eligible immigration status; and
(B) Proof of age document.
(iii) For all other noncitizens, the evidence consists of:
(A) A signed declaration of eligible immigration status;
(B) The INS documents listed in paragraph (k)(2) of this section;
and
(C) A signed verification consent form.
(3) Declaration. For each family member who contends that he or she
is a U.S. citizen or a noncitizen with eligible immigration status, the
family must submit to the IHA a written [[Page 18216]] declaration,
signed under penalty of perjury, by which the family member declares
whether he or she is a U.S. citizen or a noncitizen with eligible
immigration status.
(i) For each adult, the declaration must be signed by the adult.
(ii) For each child, the declaration must be signed by an adult
residing in the assisted dwelling unit who is responsible for the
child.
(4) Verification consent form. (i) Who signs. Each noncitizen who
declares eligible immigration status, must sign a verification consent
form as follows:
(A) For each adult, the form must be signed by the adult;
(B) For each child, the form must be signed by an adult member of
the family residing in the assisted dwelling unit who is responsible
for the child.
(ii) Notice of release of evidence by IHA. The verification consent
form shall provide that evidence of eligible immigration status may be
released by the IHA, without responsibility for the further use or
transmission of the evidence by the entity receiving it, to:
(A) HUD as required by HUD; and
(B) The INS for purposes of verification of the immigration status
of the individual.
(iii) Notice of release of evidence by HUD. The verification
consent form also shall notify the individual of the possible release
of evidence of eligible immigration status by HUD. Evidence of eligible
immigration status shall only be released to the INS for purposes of
establishing eligibility for financial assistance and not for any other
purpose. HUD is not responsible for the further use or transmission of
the evidence or other information by the INS.
(f) Individuals who do not contend to have eligible immigration
status. If one or more members of a family elect not to contend that
they have eligible immigration status and the other members of the
family establish their citizenship or eligible immigration status, the
family may be considered for assistance under paragraphs (r) or (s) of
this section despite the fact that no declaration or documentation of
eligible status is submitted by one or more members of the family. The
family, however, must identify to the IHA, the family member (or
members) who will elect not to contend that he or she has eligible
immigration status.
(g) Notification of requirements of Section 214. (1) When notice is
to be issued. Notification of the requirement to submit evidence of
citizenship or eligible immigration status, as required by this
section, or to elect not to contend that one has eligible immigration
status as provided by paragraph (f) of this section, shall be given by
the IHA as follows:
(i) Applicant's notice. The notification described in paragraph
(g)(1) of this section shall be given to each applicant at the time of
application for financial assistance. Families whose applications are
pending on June 19, 1995 shall be notified of the requirements to
submit evidence of eligible status as soon as possible after June 19,
1995.
(ii) Notice to families already receiving assistance. For a family
in occupancy on June 19, 1995, the notification described in paragraph
(g)(1) of this section shall be given to each at the time of, and
together with, the IHA's notice of the first regular reexamination
after that date, but not later than one year following June 19, 1995.
(2) Form and content of notice. The notice shall:
(i) State that financial assistance is contingent upon the
submission and verification, as appropriate, of the evidence of
citizenship or eligible immigration status, as required by this
section;
(ii) Describe the type of evidence that must be submitted and state
the time period in which that evidence must be submitted (see paragraph
(h) of this section concerning when evidence must be submitted); and
(iii) State that assistance will be prorated, denied or terminated,
as appropriate, upon a final determination of ineligibility after all
appeals have been exhausted (see paragraph (n) of this section
concerning INS appeal, and paragraph (o) of this section concerning IHA
informal hearing process) or, if appeals are not pursued, at a time to
be specified in accordance with HUD requirements. Families already
receiving assistance also shall be informed of how to obtain assistance
under the preservation of families provisions of paragraph (r) of this
section.
(h) When evidence of eligible status is required to be submitted.
The IHA shall require evidence of eligible status to be submitted at
the times specified in paragraph (h) of this section subject to any
extension granted in accordance with paragraph (i) of this section.
(1) Applicants. For applicants, the IHA must ensure that evidence
of eligible status is submitted not later than the date the IHA
anticipates or has knowledge that verification of other aspects of
eligibility for assistance will occur (see paragraph (l) of this
section).
(2) Families already receiving assistance. For a family already
receiving the benefit of assistance in a covered program on June 19,
1995, the required evidence shall be submitted at the first regular
reexamination after June 19, 1995, in accordance with program
requirements.
(3) New occupants of assisted units. For any new family members,
the required evidence shall be submitted at the first interim or
regular reexamination following the person's occupancy.
(4) Changing participation in a HUD program. Whenever a family
applies for admission to a Section 214 covered program, evidence of
eligible status is required to be submitted in accordance with the
requirements of this part unless the family already has submitted the
evidence to the IHA for a covered program.
(5) One-time evidence requirement for continuous occupancy. For
each family member, the family is required to submit evidence of
eligible status only one time during continuously assisted occupancy
under any covered program.
(i) Extensions of time to submit evidence of eligible status. (1)
When extension must be granted. The IHA shall extend the time, provided
in paragraph (h) of this section, to submit evidence of eligible
immigration status if the family member:
(i) Submits the declaration required under paragraph (e)(3) of this
section certifying that any person for whom required evidence has not
been submitted is a noncitizen with eligible immigration status; and
(ii) Certifies that the evidence needed to support a claim of
eligible immigration status is temporarily unavailable, additional time
is needed to obtain and submit the evidence, and prompt and diligent
efforts will be undertaken to obtain the evidence.
(2) Prohibition on indefinite extension period. Any extension of
time, if granted, shall be for a specific period of time. The
additional time provided should be sufficient to allow the family the
time to obtain the evidence needed. The IHA's determination of the
length of the extension needed, shall be based on the circumstances of
the individual case.
(3) Grant or denial of extension to be in writing. The IHA's
decision to grant or deny an extension as provided in paragraph (i)(1)
of this section shall be issued to the family by written notice. If the
extension is granted, the notice shall specify the extension period
granted. If the extension is denied, the notice shall explain the
reasons for denial of the extension.
(j) Failure to submit evidence or establish eligible immigration
status. If the family fails to submit required [[Page 18217]] evidence
of eligible immigration status within the time period specified in the
notice, or any extension granted in accordance with paragraph (i) of
this section, or if the evidence is timely submitted but fails to
establish eligible immigration status, the IHA shall proceed to deny,
prorate or terminate assistance, or provide continued assistance or
temporary deferral of termination of assistance, as appropriate, in
accordance, respectively with the provisions of paragraph (m) of this
section or paragraph (r) of this section.
(k) Documents of eligible immigration status. (1) General. An IHA
shall request and review original documents of eligible immigration
status. The IHA shall retain photocopies of the documents for its own
records and return the original documents to the family.
(2) Acceptable evidence of eligible immigration status. The
original of one of the following documents is acceptable evidence of
eligible immigration status, subject to verification in accordance with
paragraph (l) of this section:
(i) Form I-551, Alien Registration Receipt Card (for permanent
resident aliens);
(ii) Form I-94, Arrival-Departure Record, with one of the following
annotations:
(A) ``Admitted as Refugee Pursuant to Section 207'';
(B) ``Section 208'' or ``Asylum'';
(C) ``Section 243(h)'' or ``Deportation stayed by Attorney
General'';
(D) ``Paroled Pursuant to Sec. 212(d)(5) of the INA'';
(iii) If Form I-94, Arrival-Departure Record, is not annotated,
then accompanied by one of the following documents:
(A) A final court decision granting asylum (but only if no appeal
is taken);
(B) A letter from an INS asylum officer granting asylum (if
application is filed on or after October 1, 1990) or from an INS
district director granting asylum (if application filed before October
1, 1990);
(C) A court decision granting withholding or deportation; or
(D) A letter from an INS asylum officer granting withholding of
deportation (if application filed on or after October 1, 1990).
(iv) Form I-688, Temporary Resident Card, which must be annotated
``Section 245A'' or ``Section 210'';
(v) Form I-688B, Employment Authorization Card, which must be
annotated ``Provision of Law 274a.12(11)'' or ``Provision of Law
274a.12'';
(vi) A receipt issued by the INS indicating that an application for
issuance of a replacement document in one of the above-listed
categories has been made and the applicant's entitlement to the
document has been verified; or
(vii) If other documents are determined by the INS to constitute
acceptable evidence of eligible immigration status, they will be
announced by notice published in the Federal Register.
(l) Verification of eligible immigration status. (1) When
verification is to occur. Verification of eligible immigration status
shall be conducted by the IHA simultaneously with verification of other
aspects of eligibility for assistance under a Section 214 covered
program. (See paragraph (h) of this section.) The IHA shall verify
eligible immigration status in accordance with the INS procedures
described in this section.
(2) Primary verification. (i) Automated verification system.
Primary verification of the immigration status of the person is
conducted by the IHA through the INS automated system (INS Systematic
for Alien Verification for Entitlements (SAVE)). The INS SAVE system
provides access to names, file numbers and admission numbers of
noncitizens.
(ii) Failure of primary verification to confirm eligible
immigration status. If the INS SAVE system does not verify eligible
immigration status, secondary verification must be performed.
(3) Secondary verification. (i) Manual search of INS records.
Secondary verification is a manual search by the INS of its records to
determine an individual's immigration status. The IHA must request
secondary verification, within 10 days of receiving the results of the
primary verification, if the primary verification system does not
confirm eligible immigration status, or if the primary verification
system verifies immigration status that is ineligible for assistance
under a covered Section 214 covered program.
(ii) Secondary verification initiated by IHA. Secondary
verification is initiated by the IHA forwarding photocopies of the
original INS documents listed in paragraph (k)(2) of this section
(front and back), attached to the INS document verification request
form G-845S (Document Verification Request), or such other form
specified by the INS, to a designated INS office for review. (Form G-
845S is available from the local INS Office.)
(iii) Failure of secondary verification to confirm eligible
immigration status. If the secondary verification does not confirm
eligible immigration status, the IHA shall issue to the family the
notice described in paragraph (m)(4) of this section, which includes
notification of appeal to the INS of the INS finding on immigration
status (see paragraph (m)(4)(iv) of this section).
(4) Exemption from liability for INS verification. The IHA shall
not be liable for any action, delay, or failure of the INS in
conducting the automated or manual verification.
(m) Delay, denial, or termination of assistance. (1) Restrictions
on delay, denial, or termination of assistance. Assistance to an
applicant shall not be delayed or denied, and assistance to a tenant
shall not be delayed, denied, or terminated, on the basis of ineligible
immigration status of a family member if:
(i) The primary and secondary verification of any immigration
documents that were timely submitted has not been completed;
(ii) The family member for whom required evidence has not been
submitted has moved from the tenant's dwelling unit;
(iii) The family member who is determined not to be in an eligible
immigration status following INS verification has moved from the
tenant's dwelling unit;
(iv) The INS appeals process under paragraph (n) of this section
has not been concluded;
(v) For a tenant, the IHA hearing process under paragraph (o) of
this section has not been concluded;
(vi) Assistance is prorated in accordance with paragraph (s) of
this section;
(vii) Assistance for a mixed family is continued in accordance with
paragraph (r) of this section; or
(viii) Deferral of termination of assistance is granted in
accordance with paragraph (r) of this section.
(2) When delay of assistance to applicant is permissible.
Assistance to an applicant may be delayed after the conclusion of the
INS appeal process, but not denied until the conclusion of the IHA
informal hearing process, if an informal hearing is requested by the
family.
(3) Events causing denial or termination of assistance. Assistance
to an applicant shall be denied, and a tenant's assistance shall be
terminated, in accordance with the procedures of this section, upon the
occurrence of any of the following events:
(i) Evidence of citizenship (i.e., the declaration) and eligible
immigration status is not submitted by the date specified in paragraph
(h) of this section, or by the expiration of any extension granted in
accordance with paragraph (i) of this section; or [[Page 18218]]
(ii) The evidence of citizenship and eligible immigration status is
timely submitted, but INS primary and second verification does not
verify eligible immigration status of a family member; and
(A) The family does not pursue INS appeal (as provided in paragraph
(n) of this section) or IHA informal hearing rights (as provided in
paragraph (o) of this section); or
(B) INS appeal and informal hearing rights are pursued, but the
final appeal or hearing decisions are decided against the family
member.
(4) Notice of denial or termination of assistance. The notice of
denial or termination of assistance shall advise the family:
(i) That financial assistance will be denied or terminated, and
provide a brief explanation of the reasons for the proposed denial or
termination of assistance;
(ii) That the family may be eligible for proration of assistance as
provided in paragraph (s) of this section;
(iii) In the case of a tenant, the criteria and procedures for
obtaining relief under the preservation of families provisions in
paragraph (r) of this section;
(iv) That the family has a right to request an appeal to the INS of
the results of the secondary verification of immigration status, and to
submit additional documentation or a written explanation in support of
the appeal, in accordance with the procedures of paragraph (n) this
section;
(v) That the family has a right to request an informal hearing with
the IHA either upon completion of the INS appeal or in lieu of the INS
appeal, as provided in paragraph (n) of this section;
(vi) For applicants, the notice shall advise that assistance may
not be delayed until the conclusion of the INS appeal process, but
assistance may be delayed during the pendency of the IHA informal
hearing process.
(n) Appeal to the INS. (1) Submission of request for appeal. Upon
receipt of notification by the IHA that INS secondary verification
failed to confirm eligible immigration status, the IHA shall notify the
family of the results of the INS verification, and the family shall
have 30 days from the date of the IHA's notification, to request an
appeal of the INS results. The request for appeal shall be made by the
family communicating that request in writing directly to the INS. The
family must provide the IHA with a copy of the written request for
appeal and proof of mailing. For good cause shown, the IHA shall grant
the family an extension of time within which to request an appeal.
(2) Documentation to be submitted as part of appeal to INS. The
family shall forward to the designated INS office any additional
documentation or written explanation in support of the appeal. This
material must include a copy of the INS document verification request
form G-845S (used to process the secondary verification request) or
such other form specified by the INS, and a cover letter indicating
that the family is requesting an appeal of the INS immigration status
verification results. (Form G-845S is available from the local INS
Office.)
(3) Decision by INS. (i) When decision will be issued. The INS will
issue to the family, with a copy to the IHA, a decision within 30 days
of its receipt of documentation concerning the family's appeal of the
verification of immigration status. If, for any reason, the INS is
unable to issue a decision within the 30 day time period, the INS will
inform the family and the IHA of the reasons for the delay.
(ii) Notification of INS decision and of informal hearing
procedures. When the IHA receives a copy of the INS decision, the IHA
shall notify the family of its right to request an informal hearing on
the IHA's ineligibility determination in accordance with the procedures
of paragraph (o) of this section.
(4) No delay, denial or termination of assistance until completion
of INS appeal process; direct appeal to INS. Pending the completion of
the INS appeal under this section, assistance may not be delayed,
denied or terminated on the basis of immigration status.
(o) Informal hearing. (1) When request for hearing is to be made.
After notification of the INS decision, or in lieu of request of appeal
to the INS, the family may request that the IHA provide a hearing. This
request must be made either within 14 days of the date the IHA mails or
delivers the notice under paragraph (m)(4) of this section, or within
14 days of the mailing of the INS appeal decision issued in accordance
with paragraph (n)(4) of this section (established by the date of
postmark).
(2) Extension of time to request hearing. The IHA shall extend the
period of time for requesting a hearing (for a specified period) upon
good cause shown.
(3) Informal hearing procedures. (i) For tenants, the procedures
for the hearing before the IHA are set forth in Sec. 950.340.
(ii) For applicants, the procedures for the informal hearing before
the IHA are as follows:
(A) Hearing before an impartial individual. The applicant shall be
provided a hearing before any person(s) designated by the IHA
(including an officer or employee of the IHA), other than a person who
made or approved the decision under review, and other than a person who
is a subordinate of the person who made or approved the decision;
(B) Examination of evidence. The applicant shall be provided the
opportunity to examine and copy, at the applicant's expense and at a
reasonable time in advance of the hearing, any documents in the
possession of the IHA pertaining to the applicant's eligibility status,
or in the possession of the INS (as permitted by INS requirements),
including any records and regulations that may be relevant to the
hearing;
(C) Presentation of evidence and arguments in support of eligible
status. The applicant shall be provided the opportunity to present
evidence and arguments in support of eligible status. Evidence may be
considered without regard to admissibility under the rules of evidence
applicable to judicial proceedings;
(D) Controverting evidence of the project owner. The applicant
shall be provided the opportunity to controvert evidence relied upon by
the IHA and to confront and cross-examine all witnesses on whose
testimony or information the IHA relies;
(E) Representation. The applicant shall be entitled to be
represented by an attorney, or other designee, at the applicant's
expense, and to have such person make statements on the applicant's
behalf;
(F) Interpretive services. The applicant shall be entitled to
arrange for an interpreter to attend the hearing, at the expense of the
applicant or the IHA, as may be agreed upon by both parties;
(G) Hearing to be recorded. The applicant shall be entitled to have
the hearing recorded by audiotape (a transcript of the hearing may, but
is not required to, be provided by the IHA); and
(H) Hearing decision. The IHA shall provide the applicant with a
written final decision, based solely on the facts presented at the
hearing within 14 days of the date of the informal hearing. The
decision shall state basis for the decision.
(p) Judicial relief. A decision against a family member under the
INS appeal process or the IHA informal hearing process does not
preclude the family from exercising the right, that may otherwise be
available, to seek redress directly through judicial procedures.
[[Page 18219]]
(q) Retention of documents. The IHA shall retain for a minimum of 5
years the following documents that may have been submitted to the IHA
by the family or provided to the IHA as part of the INS appeal or the
IHA informal hearing process:
(1) The application for financial assistance;
(2) The form completed by the family for income re-examination;
(3) Photocopies of any original documents (front and back),
including original INS documents;
(4) The signed verification consent form;
(5) The INS verification results;
(6) The request for an INS appeal;
(7) The final INS determination;
(8) The request for an IHA informal hearing; and
(9) The final hearing decision.
(r) Preservation of mixed families and other families. (1)
Assistance available for mixed families. (i) Assistance available for
tenant mixed families. For a mixed family assisted under a Section 214
covered program on June 19, 1995, and following the appeals and
informal hearing procedures provided in paragraphs (n) and (o) of this
section if utilized by the family, one of the following three types of
assistance may be available to the family:
(A) Continued assistance (see paragraph (r)(2) of this section);
(B) Temporary deferral of termination of assistance (see paragraph
(r)(3) of this section); or
(C) Prorated assistance (see paragraph (s) of this section; a mixed
family must be provided prorated assistance if the family so requests).
(ii) Assistance available for applicant mixed families. Prorated
assistance is also available for mixed families applying for
assistance, as provided in paragraph (s) of this section.
(iii) Assistance available to other families in occupancy. For
families receiving assistance under a Section 214 covered program on
the June 19, 1995 and who have no members with eligible immigration
status, the IHA may grant the family temporary deferral of termination
of assistance.
(2) Continued assistance. A mixed family may receive continued
housing assistance if all of the following conditions are met:
(i) The family was receiving assistance under a Section 214 covered
program on June 19, 1995;
(ii) The family's head of household or spouse has eligible
immigration status as described in paragraph (b)(2) of this section;
and
(iii) The family does not include any person (who does not have
eligible immigration status) other than the head of household, any
spouse of the head of household, any parents of the head of household,
any parents of the spouse, or any children of the head of household or
spouse.
(3) Temporary deferral of termination of assistance. (i)
Eligibility for this type of assistance. If a mixed family qualifies
for prorated assistance (and does not qualify for continued
assistance), but decides not to accept prorated assistance, or if a
family has no members with eligible immigration status, the family may
be eligible for temporary deferral of termination of assistance if
necessary to permit the family additional time for the orderly
transition of those family members with ineligible status, and any
other family members involved, to other affordable housing. Other
affordable housing is used in the context of transition of an
ineligible family from a rent level that reflects HUD assistance to a
rent level that is unassisted; the term refers to housing that is not
substandard, that is of appropriate size for the family and that can be
rented for an amount not exceeding the amount that the family pays for
rent, including utilities, plus 25 percent.
(ii) Time limit on deferral period. If temporary deferral of
termination of assistance is granted, the deferral period shall be for
an initial period not to exceed six months. The initial period may be
renewed for additional periods of six months, but the aggregate
deferral period shall not exceed a period of three years.
(iii) Notification requirements for beginning of each deferral
period. At the beginning of each deferral period, the IHA must inform
the family of its ineligibility for financial assistance and offer the
family information concerning, and referrals to assist in finding,
other affordable housing.
(iv) Determination of availability of affordable housing at end of
each deferral period. Before the end of each deferral period, the IHA
must:
(A) Make a determination of the availability of affordable housing
of appropriate size based on evidence of conditions which when taken
together will demonstrate an inadequate supply of affordable housing
for the area in which the project is located, the consolidated plan (if
applicable, as described in 24 CFR part 91), the IHA's own knowledge of
the availability of affordable housing, and on evidence of the tenant
family's efforts to locate such housing; and
(B) Notify the tenant family in writing, at least 60 days in
advance of the expiration of the deferral period, that termination will
be deferred again (provided that the granting of another deferral will
not result in aggregate deferral periods that exceed three years), and
a determination was made that other affordable housing is not
available; or
(C) Notify the tenant family in writing, at least 60 days in
advance of the expiration of the deferral period, that termination of
financial assistance will not be deferred because either granting
another deferral will result in aggregate deferral periods that exceed
three years, or a determination has been made that other affordable
housing is available.
(v) Option to select proration of assistance at end of deferral
period. A family who is eligible for, and receives temporary deferral
of termination of assistance, may request, and the IHA shall provide,
proration of assistance at the end of the deferral period if the family
has made a good faith effort during the deferral period to locate other
affordable housing.
(vi) Notification of decision on family preservation assistance. An
IHA shall notify the family of its decision concerning the family's
qualification for assistance under this section. If the family is
ineligible for assistance under this section, the notification shall
state the reasons, which must be based on relevant factors. For tenant
families, the notice also shall inform the tenant family of any appeal
rights.
(s) Proration of assistance. (1) Applicability. This section
applies to a mixed family other than a family receiving continued
assistance under paragraph (r)(2) of this section, or other than a
family who is eligible for and requests temporary deferral of
termination of assistance under paragraph (r)(3) of this section. The
IHA must provide an eligible mixed family prorated assistance if the
family request prorated assistance.
(2) Method of prorating assistance. The IHA shall prorate the
family's assistance by:
(i) Step 1. Determining total tenant payment in accordance with
Sec. 950.325 (annual income includes income of all family members,
including any family member who has not established eligible
immigration status).
(ii) Step 2. Subtracting the total tenant payment from a HUD-
supplied ``Indian housing maximum rent'' applicable to the unit or the
housing authority. (``Indian housing maximum rent'' shall be determined
by HUD using the 95th percentile rent for the housing authority.) The
result is the maximum subsidy for which the family could
[[Page 18220]] qualify if all members were eligible (``family maximum
subsidy'').
(iii) Step 3. Dividing the family maximum subsidy by the number of
persons in the family (all persons) to determine the maximum subsidy
per each family member who has citizenship or eligible immigration
status (``eligible family member''). The subsidy per eligible family
member is the ``member maximum subsidy''.
(iv) Step 4. Multiplying the member maximum subsidy by the number
of family members who have citizenship or eligible immigration status
(``eligible family members'').
(v) Step 5. The product of steps 1 through 4, as set forth in
paragraph (s)(2) of this section is the amount of subsidy for which the
family is eligible (``eligible subsidy''). The family's rent is the
``public housing maximum rent'' minus the amount of the eligible
subsidy.
(t) Prohibition of assistance to noncitizen students. (1) General.
The provisions of this section permitting continued assistance,
prorated assistance or temporary deferral of termination of assistance
for certain families, do not apply to any person who is determined to
be a noncitizen student, as defined in paragraph (t)(2) of this
section, or the family of the noncitizen student, as described in
paragraph (t)(3) of this section.
(2) Noncitizen student. For purposes of this part, a noncitizen
student is defined as a noncitizen who:
(i) Has a residence in a foreign country that the person has no
intention of abandoning;
(ii) Is a bona fide student qualified to pursue a full course of
study; and
(iii) Is admitted to the United States temporarily and solely for
purposes of pursuing such a course of study at an established
institution of learning or other recognized place of study in the
United States, particularly designated by such person and approved by
the Attorney General after consultation with the Department of
Education of the United States, which institution or place of study
shall have agreed to report to the Attorney General the termination of
attendance of each nonimmigrant student (and if any such institution of
learning or place of study fails to make such reports promptly the
approval shall be withdrawn).
(3) Family of noncitizen student. The prohibition on providing
assistance to a noncitizen student as described in paragraph (t)(1) of
this section also extends to the noncitizen spouse of the noncitizen
student and minor children of any noncitizen student if the spouse or
children are accompanying the student or following to join such
student. The prohibition on providing assistance to a noncitizen
student does not extend to the citizen spouse of the noncitizen student
and the children of the citizen spouse and noncitizen student.
(u) Protection from liability for IHAs, State, Tribal, and local
government agencies and officials. (1) Protection from liability for
IHAs. HUD will not take any compliance, disallowance, penalty, or other
regulatory action against an IHA with respect to any error in its
determination of eligibility for assistance based on citizenship or
immigration status:
(i) If the IHA established eligibility based upon verification of
eligible immigration status through the verification system described
in paragraph (l) of this section;
(ii) Because the IHA was required to provide an opportunity for the
applicant or family to submit evidence in accordance with paragraphs
(h) and (i) of this section;
(iii) Because the IHA was required to wait for completion of INS
verification of immigration status in accordance with paragraph (l) of
this section;
(iv) Because the IHA was required to wait for completion of the INS
appeal process provided in accordance with paragraph (n) of this
section; or
(v) Because the IHA was required to provide an informal hearing in
accordance with paragraph (o) of this section.
(2) Protection from liability for State, Tribal and local
government agencies and officials. State, Tribal, and local government
agencies and officials shall not be liable for the design or
implementation of the verification system described in paragraph (l) of
this section and the IHA informal hearing provided under paragraph (o)
of this section, so long as the implementation by the State, Tribal, or
local government agency or official is in accordance with prescribed
HUD rules and requirements.
Sec. 950.315 Initial determination, verification, and reexamination of
family income and composition.
(a) Income, family composition, and eligibility. The IHA is
responsible for determination of annual income and adjusted income, for
determination of eligibility for admission and total tenant payment or
homebuyer required monthly payment; and for reexamination of family
income and composition at least annually for all tenants and
homebuyers. The ``effective date'' of an examination or reexamination
refers to:
(1) In the case of an examination for admission, the effective date
of initial occupancy; and
(2) In the case of a reexamination of an existing tenant or
homebuyer, the effective date of any change in tenant payment or
required monthly payment resulting from the reexamination.
(3) If there is no change, the effective date is the date a change
would have taken place if the reexamination had resulted in a change in
payment.
(b) Verification. As a condition of admission to, or continued
occupancy of, any assisted unit, the IHA shall require the family head
and other such family members as it designates to execute a HUD-
approved release and consent form (including any release and consent as
required under 24 CFR part 760) authorizing any depository or private
source of income, or any Federal, State, or local agency, to furnish or
release to the IHA and to HUD such information as the IHA or HUD
determines to be necessary. The IHA also shall require the family to
submit directly the documentation determined to be necessary, including
any information required under 24 CFR part 750. Information or
documentation shall be determined to be necessary if it is required for
purposes of determining or auditing a family's eligibility to receive
housing assistance; for determining the family's adjusted income,
tenant rent, or required monthly payment; for verifying related
information; or for monitoring compliance with equal opportunity
requirements. The use or disclosure of information obtained from a
family or from another source pursuant to this release and consent
shall be limited to purposes directly connected with administration of
this part or an application for assistance.
(c) Rent and homebuyer payment adjustments. After consultation with
the family and upon verification of the information, the IHA shall make
appropriate adjustments in the rent or homebuyer payment amount. The
tenant or homebuyer shall comply with the IHA's policy regarding
required interim reporting of changes in the family's income.
(d) Implementation of verification of citizenship or eligible
immigration status. The IHA shall follow the procedures required by
Sec. 950.310 for determining citizenship or eligible immigration status
before initial occupancy, and, for tenants admitted before June 19,
1995, at the first reexamination of family income and composition after
that date. Thereafter, at the annual reexaminations of family income
and composition, the IHA shall [[Page 18221]] follow the requirements
of Sec. 950.310 concerning verification of the immigration status of
any new family member. The family shall comply with the IHA's policy
regarding required interim reporting of changes in the family's income
and composition. If the IHA is informed of a change in the family
income or other circumstances between regularly scheduled
reexaminations, the IHA, upon consultation with the family and
verification of the information, shall promptly make any adjustments
appropriate in the rent or Homebuyer payment amount or take appropriate
action concerning the addition of a family member who is a noncitizen
with ineligible immigration status.
(e) See 24 CFR part 908 for requirements for transmission of data
to HUD.
Sec. 950.320 Determination of rents and homebuyer payments.
(a) Rental and Turnkey III projects. The amount of rent required of
a tenant in a rental project or the Turnkey III homebuyer payment
amount for a homebuyer in a Turnkey III project for Turnkey III
contracts executed after August 1, 1982, shall be equal to the total
tenant payment as determined in accordance with Sec. 950.325. For
Turnkey III contracts executed on or before August 1, 1982, the Turnkey
III homebuyer payment is determined in accordance with the contract. If
the utility allowance exceeds the rent or required monthly payment, the
IHA will pay the utility reimbursement as provided in Sec. 950.325(b).
In the case of a Turnkey III homebuyer, payment of a utility
reimbursement may affect the IHA's evaluation of the Turnkey III
homebuyer's homeownership potential. (See Sec. 950.529 regarding loss
of homeownership potential and Sec. 950.523 regarding funds to cover
such reimbursements.)
(b) MH projects. The amount of the required monthly payment for a
homebuyer in an MH project is determined in accordance with subpart E
of this part.
Sec. 950.325 Total tenant payment--Rental and Turnkey III programs.
(a) Total tenant payment. Total tenant payment shall be the highest
of the following, rounded to the nearest dollar:
(1) 30 percent of monthly adjusted income;
(2) 10 percent of monthly income; or
(3) If the family receives welfare assistance from a public agency
and a part of such payments, adjusted in accordance with the family's
actual housing costs, is specifically designated by such agency to meet
the family's housing costs, the monthly portion of such payments that
is so designated. If the family's welfare assistance is ratably reduced
from the standard of need by applying a percentage, the amount
calculated under paragraph (a)(3) of this section shall be the amount
resulting from one application of the percentage.
(b) Utility reimbursement. If the utility allowance exceeds the
total tenant payment, the difference (the utility reimbursement) shall
be due to the family. If the utility company consents, an IHA may, at
its discretion, pay the utility reimbursement directly to the utility
company.
Sec. 950.335 Rent and homebuyer payment collection policy.
Each IHA shall establish and adopt, and use its best efforts to
obtain compliance with, written policies sufficient to assure the
prompt payment and collection of rent and homebuyer payments. A copy of
the written policies shall be posted prominently in the IHA office and
shall be provided upon request. Such policies shall be in accordance
with the ACC and HUD statutory and regulatory requirements.
Sec. 950.340 Grievance procedures and leases.
(a) Grievance procedures. (1) General. Each IHA shall adopt
grievance procedures that are appropriate to local circumstances. These
procedures shall comply with the Indian Civil Rights Act, if
applicable, and section 6(k) of the Act, as applicable, and shall
assure that tenants and homebuyers will:
(i) Be advised of the specific grounds of any proposed adverse
action by the IHA;
(ii) Have an opportunity for a hearing before an impartial party
upon timely request;
(iii) Have a reasonable opportunity to examine any documents,
records, or regulations related to the proposed action before the
hearing (or trial in court);
(iv) Be entitled to be represented by another person of their
choice at any hearing;
(v) Be entitled to ask questions of witnesses and have others make
statements on their behalf; and
(vi) Be entitled to receive a written decision by the IHA on the
proposed action.
(2) Expedited grievance procedure. An IHA may establish an
expedited grievance procedure for any grievance concerning a
termination of tenancy or eviction that involves:
(i) Any criminal activity that threatens the health, safety, or
right to peaceful enjoyment of the Indian housing development by other
residents or employees of the IHA; or
(ii) Any drug-related criminal activity on or near the premises.
(3) Exclusion of certain grievances. (i) General. An IHA may pursue
termination of tenancy or eviction without offering a grievance
procedure if the termination or eviction is based on one of the grounds
stated in paragraph (a)(2) of this section, so long as applicable
tribal or State law requires that, before eviction, a tenant (including
a homebuyer under a homeownership agreement) be given a hearing in
court, and HUD has determined that the tribal or State procedures
provide the basic elements of due process.
(ii) Basic elements of due process. The elements of due process
against which the jurisdiction's procedures are measured by HUD are the
following:
(A) Adequate notice to the tenant of the grounds for terminating
the tenancy and for eviction;
(B) Right of the tenant to be represented by counsel;
(C) Opportunity for the tenant to refute the evidence presented by
the IHA, including the right to confront and cross-examine witnesses
and to present any affirmative legal or equitable defense that the
tenant might have; and
(D) A decision on the merits.
(4) Notice to post office of certain evictions. When an IHA evicts
an individual or family from a dwelling unit for engaging in criminal
activity, including drug-related criminal activity, the IHA shall
notify the local post office serving that dwelling unit that the
evicted individual or family is no longer residing in the dwelling unit
(so that the post office will terminate delivery of mail for such
persons at the unit, and that such persons will not return to the unit
to pick up mail).
(5) Notice of procedures. A copy of the grievance procedures shall
be posted prominently in the IHA office, and shall be provided to any
tenant, homebuyer, or applicant upon request.
(b) Leases. Each IHA shall use leases that:
(1) Do not contain unreasonable terms and conditions;
(2) Obligate the IHA to maintain the project in a decent, safe, and
sanitary condition;
(3) Require the IHA to give adequate written notice of termination
of the lease that shall not be less than--
(i) A reasonable time, but not to exceed 30 days, when the health
or safety of other tenants or IHA employees is threatened;
(ii) Fourteen days in the case of nonpayment of rent; and
[[Page 18222]]
(iii) Thirty days in any other case;
(4) Require that the IHA may not terminate the tenancy except for
serious or repeated violation of the terms or conditions of the lease
or for other good cause;
(5) Provide that any criminal activity that threatens the health,
safety, or right to peaceful enjoyment of the premises by other
tenants, or any drug-related criminal activity on or near the premises,
engaged in by an Indian housing tenant, any member of the tenant's
household, or any guest or other person under the tenant's control,
shall be cause for termination of tenancy. For purposes of this
section, the term ``drug-related criminal activity'' means the illegal
manufacture, sale, distribution, use, or possession with intent to
manufacture, sell, distribute, or use, of a controlled substance (as
defined in section 102 of the Controlled Substances Act (21 U.S.C.
802)); and
(6) Specify that with respect to any notice of termination of
tenancy or eviction, notwithstanding any applicable tribal or State
law, an Indian housing tenant shall be informed of the opportunity,
before any hearing or trial, to examine any relevant documents,
records, or regulations directly related to the termination or
eviction.
Sec. 950.345 Maintenance and improvements.
(a) General. Each IHA shall adopt written policies to assure full
performance of the respective maintenance responsibilities of the IHA
and tenants. A copy of such policies shall be posted prominently in the
IHA office, and shall be provided to an applicant or tenant upon entry
into the program and upon request.
(b) Provisions for rental projects. For rental projects, the
maintenance policies shall contain provisions on at least the following
subjects:
(i) The responsibilities of tenants for normal care and maintenance
of their dwelling units, and of the common property, if any;
(ii) Procedures for handling maintenance service requests from
tenants;
(iii) Procedures for IHA inspections of dwelling units and common
property;
(iv) Special arrangements, if any, for obtaining maintenance
services from outside workers or contractors; and
(v) Procedures for charging tenants for damages for which they are
responsible.
Sec. 950.346 Fire safety.
(a) Applicability. This section applies to all IHA-owned or leased
housing, including Mutual Help and Turnkey III.
(b) Smoke detectors. (1) After October 30, 1992, each unit shall be
equipped with at least one battery-operated or hard-wired smoke
detector, or such greater number as may be required by applicable
State, local, or tribal codes, in working condition, on each level of
the unit. In units occupied by hearing-impaired residents, smoke
detectors shall be hard-wired.
(2) After October 30, 1992, the public areas of all housing covered
by this section shall be equipped with a sufficient number, but not
less than one for each area, of battery-operated or hard-wired smoke
detectors to serve as adequate warning of fire. Public areas include,
but are not limited to, laundry rooms, community rooms, day care
centers, hallways, stairwells, and other common areas.
(3) The smoke detector for each individual unit shall be located,
to the extent practicable, in a hallway adjacent to the bedroom or
bedrooms. In units occupied by hearing-impaired residents, hard-wired
smoke detectors shall be connected to an alarm system designed for
hearing-impaired persons and installed in the bedroom or bedrooms
occupied by the hearing-impaired residents. Individual units that are
jointly occupied by both hearing and hearing-impaired residents shall
be equipped with both audible and visual types of alarm devices.
(4) If needed, battery-operated smoke detectors, except in units
occupied by hearing-impaired residents, may be installed as a temporary
measure where no detectors are present in a unit. Temporary battery-
operated smoke detectors shall be replaced with hard-wired electric
smoke detectors in the normal course of an IHA's planned CIAP or CGP
program to meet the HUD Modernization Standards of applicable State,
local, or tribal codes, whichever standard is stricter. Smoke detectors
for units occupied by hearing-impaired residents shall be installed in
accordance with the acceptability criteria in paragraph (b)(3) of this
section.
(5) IHAs shall use operating funds to provide battery-operated
smoke detectors in units that do not have any smoke detectors in place.
If operating funds or reserves are insufficient to accomplish this,
IHAs may apply for emergency CIAP funding. IHAs may apply for CIAP or
CGP funds to replace battery-operated smoke detectors with hard-wired
smoke detectors in the normal course of a planned modernization
program.
Sec. 950.360 IHA employment practices.
(a) Indian preference. Each IHA shall adopt written policies with
respect to the IHA's own employment practices, which shall be in
compliance with its obligations under section 7(b) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450e(b)), and
E.O. 11246 (3 CFR, 1964-65 comp., p. 339), as amended by E.O. 11375 (3
CFR, 1966-70 comp., p. 684), as applicable. A copy of these policies
shall be posted in the IHA office. (Title VII of the Civil Rights Act
of 1964 (42 U.S.C. 2000e), as amended, which prohibits discrimination
in employment by making it unlawful for employers to engage in certain
discriminatory practices, excludes Indian tribes from the
nondiscrimination requirements of Title VII. See also Sec. 950.175(c).)
(b) Wage rates. See Sec. 950.120 (c) and (d) with respect to the
wage rates applicable to IHA employees.
Subpart E--Mutual Help Homeownership Opportunity Program
Sec. 950.401 Scope and applicability.
(a) Scope. This subpart sets forth the requirements for the Mutual
Help (MH) Homeownership Opportunity Program. For any matter not covered
in this subpart, see other subparts contained in this part. Projects
developed under the Self-Help development method shall comply with the
requirements of subparts E and F of this part.
(b) Applicability. The provisions of this subpart are applicable to
all MH projects placed under ACC on or after March 9, 1976, and to
projects converted in accordance with Secs. 950.455 or 950.503.
Sec. 950.416 Selection of MH homebuyers.
(a) Admission policies. (1) Low-income families. An IHA's written
admission policies for the MH program, adopted in accordance with
Sec. 950.301, shall limit admission to low-income families.
(i) An IHA may provide for admission of applicants whose family
income exceeds the levels established for low-income families if the
IHA demonstrates to HUD's satisfaction that there is a need to house
such families that cannot reasonably be met except under this program.
(ii) The number of dwelling units in any project assisted under the
MH program that may be occupied by or reserved for families whose
incomes exceed the levels established for low-income families (i.e.,
applicants admitted under paragraph (a)(1)(i) of this section) may not
exceed whichever of the following is higher:
(A) Ten percent of the dwelling units in the project; or
(B) Five dwelling units.
(2) An IHA may establish criteria in its Admissions and Occupancy
Policy [[Page 18223]] for admission of a non-Indian applicant in
circumstances where the IHA determines the presence of the family is
essential to the well-being of Indian families and the need for housing
for the family cannot reasonably be met except under this program.
(3) Different standards for MH program. The IHA's admission
policies for MH projects should be different from those for its rental
or Turnkey III projects. The policies for the MH program should provide
standards for determining a homebuyer's:
(i) Ability to provide maintenance for the unit;
(ii) Potential for maintaining at least the current income level;
(iii) Successor to a unit at the time of an ``event `` (``event''
should also be defined by the IHA in its policy; see Sec. 950.449(a));
and
(iv) Initial purchase price and the purchase price for a subsequent
homebuyer.
(b) Ability to meet homebuyer obligations. A family shall not be
selected for MH housing unless, in addition to meeting the income
limits and other requirements for admission (see Sec. 950.301), the
family is able and willing to meet all obligations of an Mutual Help
and Occupancy (MHO) Agreement, including the obligations to perform or
provide the required maintenance, to provide the required MH
Contribution, and to pay for utilities and the administration charge.
(c) MH waiting list. (1) Families who wish to be considered for MH
housing shall apply specifically for such housing. A family on any
other IHA waiting list, or a tenant in a rental project of the IHA,
shall also submit an application in order to be considered for an MH
project; and
(2) The IHA shall maintain a waiting list, separate from any other
IHA waiting list, of families that have applied for MH housing and meet
the admission requirements. The IHA shall maintain an MH waiting list
in accordance with requirements prescribed by HUD and shall make
selections in the order in which they appear on the list.
(d) Making the selections. Within 30 days after HUD approval of the
application for a project, the IHA shall proceed with preliminary
selection of as many homebuyers as there are homes in the project.
Preliminary selection of homebuyers shall be made from the MH waiting
list in accordance with the date of application; qualification for a
Federal preferences, ranking preferences, and local preferences, in
accordance with Secs. 950.303 through 950.307; other pertinent factors
under the IHA's admissions policies established in accordance with
Sec. 950.301; and 24 CFR part 750. Final selection of a homebuyer will
be made only after the site for that homebuyer has received final site
approval, and the form of MH contribution has been determined.
(e) Principal residence. A condition for selection as a homebuyer
is that the family agrees to use the home as their principal residence
during the term of the MHO Agreement. Ownership or use of an additional
residence that is decent, safe, and sanitary at the time of occupancy
or acquisition during occupancy would disqualify a family from the MH
program. However, there are two situations that do not violate the
principal residence requirement. First, ownership or use of a secondary
home that is necessary for the family's livelihood or for cultural
preservation, as solely determined by the IHA and described in the
IHA's admission and occupancy policy, is acceptable. Second, a family's
temporary absence from its MH home, and related subleasing of it, is
acceptable if it is done for reasons and time periods prescribed in the
IHA's admission and occupancy policy.
(f) Notification of applicants. The IHA shall give families prompt
written notice of selection for a MH home.
Sec. 950.419 MH contribution.
(a) Amount and form of contribution. As a condition of occupancy,
the MH homebuyer will be required to provide an MH contribution.
Contributions other than labor may be made by an Indian tribe on behalf
of a family.
(1) The value of the contribution shall not be less than $1500.
(2) The MH contribution may consist of land, labor, cash,
materials, equipment, or any combination thereof. Land contributed to
satisfy this requirement shall be owned in fee simple by the homebuyer
or shall be assigned or allotted to the homebuyer for his or her use
before application for an MH unit. Contributions of land donated by
another person on behalf of the homebuyer will satisfy the requirement
for an MH contribution. A homebuyer may provide cash to satisfy the MH
contribution requirement where the cash is used for the purchase of
land, labor, materials, or equipment for the homebuyer's home.
(3) The amount of credit for an MH contribution in the case of
land, labor, materials, or equipment shall be based upon the market
value at the time of the contribution. In the case of labor, materials,
or equipment, market value shall be determined by the contractor and
the IHA. In the case of land, market value shall be determined by the
IHA. (See Sec. 950.245). The use of labor, materials, or equipment as
MH contributions shall be reflected by a reduction in the Total
Contract Price stated in the Construction Contract.
(b) Execution of Agreements. For projects other than Self-Help
development projects, MHO Agreements should be signed for all units
before execution of the construction contract for the project. Land
leases for trust land shall be signed and approved by BIA before
construction start.
(c) Total contribution to be furnished before occupancy. The
homebuyer cannot occupy the unit until the entire MH contribution is
provided to the IHA. If the homebuyer is unable or unwilling to provide
the MH contribution before occupancy of the project, the MHO Agreement
for the homebuyer shall be terminated and the IHA shall select a
substitute homebuyer from its waiting list.
(d) MH contribution in event of substitution of homebuyer. If an
MHO Agreement is terminated and a substitute homebuyer is selected, the
amount of MH contribution to be provided by the substitute homebuyer
shall be in accordance with paragraph (a) of this section. The
substitute homebuyer may not occupy the unit until the complete MH
contribution has been made.
(e) Disposition of contribution. If an MHO Agreement is terminated
by the IHA or the homebuyer before the date of occupancy, the homebuyer
may receive reimbursement of the value of the MH contribution made plus
other amounts contributed by the homebuyer, in accordance with
Sec. 950.446.
Sec. 950.422 Commencement of occupancy.
(a) Notice. (1) Upon acceptance of the home by the IHA from the
contractor, the IHA shall determine whether the homebuyer has met all
requirements for occupancy, including satisfaction in full of the MH
contribution, and fulfillment of mandatory homebuyer counseling
requirements. (See Sec. 950.453.) The IHA shall notify the homebuyer in
writing that the home is available for occupancy as of a date specified
in the notice.
(2) If the IHA determines that the homebuyer has not met any of the
other conditions for occupancy by the date of occupancy, the IHA shall
send the homebuyer a notice in writing. This notice shall specify the
date by which all requirements shall be satisfied and shall advise the
homebuyer that the MHO Agreement will be terminated and a substitute
homebuyer selected for the [[Page 18224]] unit if the requirements are
not satisfied.
(b) Credits to MH accounts and reserves. Promptly after the date of
occupancy, the IHA shall credit the amount of the MH contribution to
the homebuyer's accounts and reserves in accordance with Sec. 950.437
and shall give the homebuyer a statement of the amounts so credited.
Sec. 950.425 Inspections, responsibility for items covered by
warranty.
(a) Inspection before move-in and identification of warranties. (1)
To establish a record of the condition of the home on the date of
occupancy, the IHA shall include the homebuyer in all inspection
activities (See Sec. 950.270).
(2) Within 30 days of commencement of occupancy of each home, the
IHA shall furnish the homebuyer with a list of applicable contractors',
manufacturers', and suppliers' warranties, indicating the items covered
and the periods of the warranties, and stating the homebuyer's
responsibility for notifying the IHA of any deficiencies that would be
covered under the warranties.
(b) Inspections during contractors' warranty periods,
responsibility for items covered by contractors', manufacturers', or
suppliers' warranties. It is the responsibility of the homebuyer during
the period of the applicable warranties, to promptly inform the IHA in
writing of any deficiencies arising during the warranty period
(including manufacturers' and suppliers' warranties) so that the IHA
may enforce any rights under the applicable warranties. If a homebuyer
fails to furnish such a written report in time, and the IHA is
subsequently unable to obtain redress under the warranty, correction of
the deficiency shall be the responsibility of the homebuyer.
(c) Inspection upon termination of Agreement. If the MHO Agreement
is terminated for any reason after commencement of occupancy, the IHA
shall inspect the home after notifying the homebuyer of the time for
inspection and shall give the homebuyer a written statement of the cost
of any maintenance work required to put the home in satisfactory
condition for the next occupant (see Sec. 950.446).
(d) Homebuyer permission for inspections; participation in
inspections. The homebuyer shall permit the IHA to inspect the home at
reasonable hours and intervals during the period of the MHO Agreement
in accordance with rules established by the IHA. The homebuyer shall be
notified of the opportunity to participate in the inspection made in
accordance with this section.
Sec. 950.426 Homebuyer payments before March 9, 1976.
The amount of the required monthly payment for a homebuyer in an MH
project placed under ACC before March 9, 1976 is determined in
accordance with the MHO Agreement and provisions of Secs. 950.315 and
950.102 concerning income. Utility reimbursements are not applicable to
the Mutual Help program.
Sec. 950.427 Homebuyer payments for projects under ACC on or after
March 9, 1976.
(a) Establishment of payment. (1) Each homebuyer shall be required
to make a monthly payment (required monthly payment) as determined by
the IHA. The minimum required monthly payment shall equal the
administration charge.
(2) Subject to the requirement for payment of at least the
administration charge, each homebuyer shall pay an amount of required
monthly payment computed by:
(i) Multiplying adjusted income (determined in accordance with
Sec. 950.102) by a specified percentage. The specific percentage shall
be no less than 15 percent and no more than 30 percent, as determined
by the IHA; and
(ii) Subtracting from that amount the utility allowance determined
for the unit.
(3) The IHA shall provide that the required monthly payment may not
be more than a maximum amount. The maximum shall not be less than the
sum of:
(i) The administration charge; and
(ii) The monthly debt service amount shown on the homebuyer's
purchase price schedule.
(4) If the required monthly payment exceeds the administration
charge, the amount of the excess shall be credited to the homebuyer's
monthly equity payments account (see Sec. 950.437(b)).
(b) Administration charge. The administration charge may be based
on differences in expenses attributable to different sizes or types of
units.
(c) Adjustments in the amount of the required monthly payment. (1)
After the initial determination of a homebuyer's required monthly
payment, the IHA shall increase or decrease the amount of such payment
in accordance with HUD regulations to reflect changes in adjusted
income (pursuant to a reexamination by the IHA in accordance with
Sec. 950.315), adjustments in the administration charge, or in any of
the other factors affecting computation of the homebuyer's required
monthly payment.
(2) In order to accommodate wide fluctuations in required monthly
payments due to seasonal conditions, an IHA may agree with the
homebuyer for payments to be made in accordance with a seasonally
adjusted schedule that assures full payment of the required amount for
each year.
(d) Homebuyer payment collection policy. Each IHA shall establish
and adopt written policies to obtain prompt payment and collection of
required homebuyer payments. A copy of the policies shall be posted
prominently in the IHA office, and shall be provided to a homebuyer
upon request.
Sec. 950.428 Maintenance, utilities, and use of home.
(a) General. Each IHA shall establish and adopt written policies to
assure full performance of the respective maintenance responsibilities
of the IHA and homebuyers. A copy of such written policies shall be
posted prominently in the IHA office, and shall be provided to an
applicant or homebuyer upon entry into the program and upon request.
(b) Provisions for MH projects. The written maintenance policies
shall contain provisions on at least the following subjects:
(1) The responsibilities of homebuyers for maintenance and care of
their dwelling units and common property;
(2) Procedures for providing advice and technical assistance to
homebuyers to enable them to meet their maintenance responsibilities;
(3) Procedures for IHA inspections of homes and common property;
(4) Procedures for IHA performance of homebuyer maintenance
responsibilities (if homebuyers fail to satisfy such responsibilities),
including procedures for charging the homebuyer's proper account for
the cost thereof;
(5) Special arrangements, if any, for obtaining maintenance
services from outside workers or contractors; and
(6) Procedures for charging homebuyers for damage for which they
are responsible.
(c) IHA responsibility in MH projects. The IHA shall enforce the
provisions of a MHO Agreement for homebuyer maintenance of the home.
Failure of a homebuyer to meet the obligations for maintenance shall
not relieve the IHA of responsibility in this respect. The IHA shall
conduct a complete interior and exterior examination of each home on a
schedule developed by the IHA that ensures that the home is maintained
in decent, safe, and sanitary condition and shall furnish a copy of the
inspection report to the homebuyer. The IHA shall [[Page 18225]] take
appropriate action, as needed, to remedy conditions shown by the
inspection, including steps to assure performance of the homebuyer's
obligations under the homebuyer's Agreement.
(d) Homebuyer responsibility in MH program. (1) The homebuyer shall
be responsible for routine and nonroutine maintenance of the home,
including all repairs and replacements (including those resulting from
damage from any cause). The IHA shall not be obligated to pay for or
provide any maintenance of the home, except as determined necessary in
paragraph (d)(2) of this section.
(2) Homebuyer's failure to perform maintenance. (i) Failure of the
homebuyer to perform maintenance obligations constitutes a breach of
the MHO Agreement and grounds for its termination.
(ii) If the IHA determines that the condition of the property
creates a hazard to the life, health, or safety of the occupants, or if
there is a risk of damage to the property if the condition is not
corrected, the corrective work shall be done promptly by the IHA with
such use of the homebuyer's accounts as the IHA may determine to be
necessary, or by the homebuyer with a charge of the cost to the
homebuyer's accounts in accordance with Sec. 950.437.
(iii) Any maintenance work performed by the IHA shall be accounted
for through a work order stating the nature of and charge for the work.
The IHA shall give the homebuyer copies of all work orders for the
home.
(e) Homebuyer's responsibility for utilities. The homebuyer is
responsible for the cost of furnishing utilities. The IHA shall have no
obligation for the utilities. If the IHA determines that the homebuyer
is unable to pay for the utilities for the home the IHA may pay for the
utilities on behalf of the homebuyer and charge the homebuyer's
accounts for the costs. When the homebuyer's accounts have been
exhausted, the IHA shall pursue termination of the homebuyer Agreement
and may offer the homebuyer a transfer into the rental program if a
unit is available.
(f) Obligations with respect to home and other persons and
property. (1) The homebuyer shall agree to abide by all provisions of
the MHO Agreement concerning homebuyer responsibilities, occupancy, and
use of the home.
(2) The homebuyer may request IHA permission to operate a small
business in the unit. An IHA may determine when permission will be
given.
(g) Structural changes. (1) A homebuyer shall not make any
structural changes in or additions to the home unless the IHA has
determined that such changes are acceptable.
(2) If the homebuyer is in compliance with the terms of the MHO
Agreement, the IHA may agree to allow the homebuyer to use the funds in
the MEPA for betterments and additions to the MH home. The IHA shall
determine whether the homebuyer will be required to replenish the MEPA
or if the funds are to be loaned to the homebuyer at an interest rate
determined by the IHA. The homebuyer cannot use MEPA funds for luxury
items, as determined by the IHA.
Sec. 950.431 Operating reserve.
The IHA shall maintain an operating reserve in an amount sufficient
for working capital purposes, estimated future nonroutine maintenance
requirements for IHA-owned administrative facilities and common
property, payment of advance premiums for insurance, unanticipated
project requirements, and other eligible uses as determined by the IHA.
The amount of a contribution to this reserve shall be determined by the
IHA and included in the administration charge. The amount of this
contribution shall be increased or decreased annually to reflect the
needs of the IHA for working capital and for reserves for anticipated
future expenditures, and it shall be included in the operating budget.
Sec. 950.432 Operating budget submission and approval.
(a) Required documentation. (1) An IHA shall prepare an operating
budget each fiscal year in a manner prescribed by HUD. The board of
commissioners shall review and approve the budget by resolution. Each
fiscal year, the IHA shall submit to the Area ONAP the approved board
resolution and any necessary supporting documentation for operating
subsidy as prescribed by HUD.
(2) The Area ONAP may direct an IHA to submit a complete operating
budget if the IHA has been issued a corrective action order with
respect to financial management. If such action is necessary, the Area
ONAP will notify the IHA prior to the beginning of the fiscal year.
(b) HUD operating budget review. (1) A detailed review will be
performed on IHA operating budgets that are subject to HUD review and
approval. If the HUD Area ONAP finds that an operating budget is
incomplete, includes illegal or ineligible expenditures, mathematical
errors, errors in the application of accounting procedures, or is
otherwise unacceptable, the HUD Area ONAP may at any time require the
submission by the IHA of further information regarding an operating
budget or operating budget revision.
(2) When the IHA no longer is operating in a manner that threatens
the future serviceability, efficiency, economy, or stability of the
housing, HUD will notify the IHA that it no longer is required to
submit an operating budget to HUD for review and approval.
Sec. 950.434 Operating subsidy.
(a) Scope. This section authorizes the use of operating subsidy for
Mutual Help projects and establishes eligible costs.
(b) Eligible costs. Operating subsidy may be paid to cover proposed
expenditures approved by the Area ONAP for the following purposes:
(1) The reasonable cost of an annual independent audit;
(2) Administration charges for vacant units when the IHA submits
evidence to the Area ONAP's satisfaction that it is making every
reasonable effort to fill the vacancies;
(3) Collection losses due to payment delinquencies on the part of
homebuyer families whose MHO Agreements have been terminated and who
have vacated the home, and the cost of any maintenance (including
repairs and replacements) necessary to put the vacant home in a
suitable condition for a subsequent homebuyer family. Operating subsidy
may be made available for these purposes only after the IHA has
previously used all available homebuyer credits;
(4) An amount for the cost of a HUD-approved counseling program;
(5) An amount for training and related travel of IHA staff and
Commissioners;
(6) The costs of a HUD-approved professional management contract;
and
(7) Operating costs resulting from other unusual circumstances
justifying payment of operating subsidy, if approved by HUD.
(8) Subject to appropriations, and in accordance with the
provisions of subpart O of this part and procedures determined by HUD,
each IHA with a duly elected resident organization (RO) shall receive
$25 per unit per year for resident participation activities. Of this
amount, $15 per unit per year shall fund resident participation
activities of the RO. Ten dollars per unit per year shall fund IHA
costs incurred in carrying out resident participation activities.
(c) Ineligible costs. No operating subsidy shall be paid for
utilities, maintenance, or other items for which the homebuyer is
responsible except, as necessary, to put a vacant home in condition for
a subsequent family as [[Page 18226]] provided in paragraph (b)(2) of
this section.
Sec. 950.437 Homebuyer reserves and accounts.
(a) Refundable and nonrefundable MH reserves. The IHA shall
establish separate refundable and nonrefundable reserves for each
homebuyer effective on the date of occupancy.
(1) The refundable MH reserve represents a homebuyer's interest in
funds that may be used to purchase the home at the option of the
homebuyer. The IHA shall credit this account with the amount of the
homebuyer's cash MH contribution or the value of the labor, materials,
or equipment MH contribution.
(2) The nonrefundable MH reserve also represents a homebuyer's
interest in funds that may be used to purchase the home at the option
of the homebuyer. The IHA shall credit this account with the amount of
the homebuyer's share of any credits for land contributed to the
project and the homebuyer's share of any credit for non-land
contributions by a terminated homebuyer.
(b) Equity accounts. (1) Monthly equity payments account (MEPA).
The IHA shall maintain a separate MEPA for each homebuyer. The IHA
shall credit this account with the amount by which each required
monthly payment exceeds the administration charge. Should the homebuyer
fail to pay the required monthly payment, the IHA may elect to reduce
the MEPA by the amount owed each month towards the administration
charge, until the MEPA has been fully expended. The MEPA balance shall
be comprised of an amount backed by cash actually received in order for
any such reduction to be made.
(2) Investment of equity funds. (i) Funds held by the IHA in the
equity accounts of all the homebuyers in the project shall be invested
in HUD-approved investments. Income earned on the investments of such
funds shall periodically, but at least annually, be prorated and
credited to each homebuyer's equity account in proportion to the amount
in each such account on the date of proration. If HUD determines that
accounts are not properly managed it may ultimately remove
responsibility of the IHA for managing such accounts to a HUD-approved
escrow agent.
(ii) Notwithstanding other provisions of this subpart and subject
to Area ONAP approval, an IHA may use a portion of the homebuyer's
equity account for low-income housing purposes provided that a reserve
of homebuyer's MEPA is maintained. The reserve shall be at a percentage
established by the IHA and approved by the Area ONAP. (Interest shall
continue to be credited to the homebuyer's account based on the MEPA
balance and the rate of interest that would have been earned if the
funds were invested.)
(c) Charges for maintenance. (1) If the IHA has maintenance work
done, the cost thereof shall be charged to the homebuyer's MEPA.
(d) Use of reserves and accounts; nonassignability. The homebuyer
shall have no right to receive or use the funds in any reserve or
account except as provided in the MHO Agreement, and the homebuyer
shall not, without approval of the IHA and HUD, assign, mortgage, or
pledge any rights in the MHO Agreement or to any reserve or account.
Sec. 950.440 Purchase of home.
(a) General. The IHA provides the family an opportunity to purchase
the dwelling under the MHO Agreement (a lease with an option to
purchase), under which the purchase price is amortized over the period
of occupancy, in accordance with a purchase price schedule. If a
homebuyer wants to acquire ownership in a shorter period than that
shown on the purchase price schedule, the homebuyer may exercise his or
her option to purchase the home on or after the date of occupancy, but
only if the homebuyer has met all obligations under the MHO Agreement.
The homebuyer may obtain financing, from the IHA or an outside source,
at any time to cover the remaining purchase price.
(b) Purchase price and purchase price schedule. (1) Initial
purchase price. The initial purchase price of a home for a homebuyer
shall be determined by the IHA.
(2) Purchase price schedule. Promptly after execution of the
construction contract, the IHA shall furnish to the homebuyer a
statement of the initial purchase price of the home, and a purchase
price schedule that will apply, based on amortizing the balance
(purchase price less the MH contribution) over a period, not less than
15 years or more than 25 as determined by the IHA, at an interest rate
determined by the IHA. The IHA may choose to forego charging interest
and calculate the payment with an interest rate of zero.
(c) Purchase price schedule for subsequent homebuyer. (1) Initial
purchase price. When a subsequent homebuyer executes the MHO Agreement,
the purchase price for the subsequent homebuyer shall be determined by
the IHA.
(2) Purchase price schedule. Each subsequent homebuyer shall be
provided with a purchase price schedule, showing the monthly declining
purchase price over a period, not less than 15 years or more than 25
years as determined by the IHA, at an interest rate determined by the
IHA.
(d) [Reserved].
(e) Conveyance of home. (1) Purchase procedure. In accordance with
the MHO Agreement, the IHA shall convey title to the homebuyer when the
balance of the purchase price can be covered from the amount in the
equity account. The homebuyer may supplement the amount in the equity
account with reserves or any other funds of the homebuyer.
Notwithstanding the requirement for prompt conveyance, an IHA may delay
conveyance long enough for modernization of a paid-off unit in
accordance with its Comprehensive Plan or CIAP application. Until title
is conveyed, the homebuyer is responsible to make monthly payments to
cover the monthly operating expenses for the unit.
(2) Amounts to be paid. The purchase price shall be the amount
shown on the purchase price schedule for the month in which the
settlement date falls.
(3) Settlement costs. Settlement costs shall be paid by the
homebuyer, who may use equity accounts or reserves available for the
purchase in accordance with paragraph (e)(4) of this section.
(4) Disposition of homebuyer accounts and reserves. When the
homebuyer purchases the home, the net credit balances in the
homebuyer's equity account (as described in Sec. 950.437), supplemented
by the nonrefundable MH reserve and then the refundable MH reserve,
shall be applied in the following order:
(i) For the initial payment for fire and extended coverage
insurance on the home after conveyance, if the IHA finances purchase of
the home in accordance with Sec. 950.443;
(ii) For settlement costs, if the homebuyer so directs;
(iii) For the purchase price; and
(iv) The balance, if any, for refund to the homebuyer.
(5) Settlement. A home shall not be conveyed until the homebuyer
has met all the obligations under the MHO Agreement, except as provided
in Sec. 950.440(e)(8). The settlement date shall be mutually agreed
upon by the parties. On the settlement date, the homebuyer shall
receive the documents necessary to convey to the homebuyer the IHA's
right, title, and interest in the home, subject to any applicable
restrictions or covenants as expressed in such documents. The required
documents shall be approved by the [[Page 18227]] attorneys
representing the IHA, and by the homebuyer or the homebuyer's attorney.
(6) IHA investment and use of purchase price payments. After
conveyance, all homebuyer funds held or received by the IHA from the
sale of a unit in a project financed with grants shall be held separate
from other project funds, and shall be used for purposes related to
low-income housing use. Homebuyer funds held or received by the IHA
from the sale to a homebuyer of a unit in a project financed by loans
are subject to loan forgiveness.
(7) Removal of home from MH program. When a home has been conveyed
to the homebuyer, whether or not with IHA financing, the unit is
removed from the IHA's MH project under its ACC with HUD.
(8) Homebuyers with delinquencies. (i) If a homebuyer has a
delinquency at the end of the amortization period, the unit is no
longer available for assistance from HUD.
(ii) Notwithstanding the above requirements, an IHA may complete
emergency work and modernization work required by statute or regulation
on a unit that is paid off but not conveyed, during the term of the
repayment schedule.
(iii) Upon repayment of the total delinquency, the IHA may, in
accordance with Sec. 950.602(b)(2), complete nonemergency modernization
work on a unit prior to conveyance.
Sec. 950.443 IHA homeownership financing.
The IHA may offer a form of homeownership financing, similar to a
purchase money mortgage. The IHA shall set standards for determining
eligibility and developing promissory notes, mortgages, and other
financial instruments necessary to carry out the transaction.
Sec. 950.446 Termination of MHO Agreement.
(a) Termination upon breach. (1) In the event the homebuyer fails
to comply with any of the obligations under the MHO Agreement, the IHA
may terminate the MHO Agreement by written notice to the homebuyer,
enforced by eviction procedures applicable to landlord-tenant
relationships.
(2) Misrepresentation or withholding of information when applying
for admission or in connection with any subsequent reexamination of
income and family composition constitutes a breach of the homebuyer's
obligations under the MHO Agreement. ``Termination,'' as used in the
MHO Agreement, does not include acquisition of ownership by the
homebuyer.
(b) Notice of termination of MHO Agreement by the IHA, right of
homebuyer to respond. Termination of the MHO Agreement by the IHA for
any reason shall be by written notice of termination. Such notice shall
be in compliance with the terms of the MHO Agreement and, in all cases,
shall afford a fair and reasonable opportunity to have the homebuyer's
response heard and considered by the IHA. Such procedures shall comply
with the Indian Civil Rights Act, if applicable, and shall incorporate
all the steps and provisions needed to comply with State, local, or
tribal law, with the least possible delay. (See Sec. 950.340.)
(c) Termination of MHO Agreement by homebuyer. The homebuyer may
terminate the MHO Agreement by giving the IHA written notice in
accordance with the Agreement. If the homebuyer vacates the home
without notice to the IHA, the homebuyer shall remain subject to the
obligations of the MHO Agreement, including the obligation to make
monthly payments, until the IHA terminates the MHO Agreement in
writing. Notice of the termination shall be communicated by the IHA to
the homebuyer to the extent feasible and the termination shall be
effective on the date stated in the notice.
(d) Disposition of funds upon termination of the MHO Agreement. If
the MHO Agreement is terminated, the balances in the homebuyer accounts
and reserves shall be disposed of as follows:
(1) The MEPA shall be charged with:
(i) Any maintenance and replacement cost incurred by the IHA to
prepare the home for the next occupant;
(ii) Any amounts the homebuyer owes the IHA, including required
monthly payments;
(iii) The required monthly payment for the period the home is
vacant, not to exceed 60 days from the date of receipt of the notice of
termination, or if the homebuyer vacates the home without notice to the
IHA, for the period ending with the effective date of termination by
the IHA; and
(iv) The cost of securing a vacant unit, the cost of notification
and associated termination tasks, and the cost of storage and/or
disposition of personal property.
(2) If, after making the charges in accordance with paragraph
(d)(1) of this section, there is a debit balance in the MEPA, the IHA
shall charge that debit balance first to the refundable MH reserve, and
second to the nonrefundable MH reserve, to the extent of the credit
balances in these reserves and account. If the debit balance in the
MEPA exceeds the sum of the credit balances in these reserves and
account, the homebuyer shall be required to pay to the IHA the amount
of the excess.
(3) If, after making the charges in accordance with paragraph
(d)(1) of this section, there is a credit balance in the MEPA, this
amount shall be refunded.
(4) Any credit balance remaining in the refundable MH reserve after
making the charges described in paragraph (d)(2) of this section shall
be refunded to the homebuyer.
(5) Any credit balance remaining in the nonrefundable MH reserve
after making the charges described in paragraph (d)(2) of this section
shall be retained by the IHA for use by the subsequent homebuyer.
(e) Settlement upon termination; time for settlement. Settlement
with the homebuyer following a termination shall be made as promptly as
possible after all charges provided in paragraph (d) of this section
have been determined and the IHA has given the homebuyer a statement of
such charges. The homebuyer may obtain settlement before determination
of the actual cost of any maintenance required to put the home in
satisfactory condition for the next occupant, if the homebuyer is
willing to accept the IHA's estimate of the amount of such cost. In
such cases, the amounts to be charged for maintenance shall be based on
the IHA's estimate of the cost thereof.
(f) Responsibility of IHA to terminate. (1) The IHA is responsible
for taking appropriate action with respect to any noncompliance with
the MHO Agreement by the homebuyer. In cases of noncompliance that are
not corrected as provided further in this paragraph (f), it is the
responsibility of the IHA to terminate the MHO Agreement in accordance
with the provisions of this section and to institute eviction
proceedings against the occupant.
(2) As promptly as possible after a noncompliance comes to the
attention of the IHA, the IHA shall discuss the matter with the
homebuyer and give the homebuyer an opportunity to identify any
extenuating circumstances or complaints that may exist. A plan of
action shall be agreed upon that will specify how the homebuyer will
come into compliance, as well as any actions by the IHA that may be
appropriate. This plan shall be in writing and signed by both parties.
(3) Compliance with the plan shall be checked by the IHA not later
than 30 days from the date thereof. In the event of refusal by the
homebuyer to agree to such a plan or failure by the homebuyer to comply
with the plan, the IHA shall issue a notice of termination of the MHO
Agreement and institute eviction procedures against the homebuyer in
[[Page 18228]] accordance with the provisions of this section on the
basis of the noncompliance with the MHO Agreement.
(4) A record of meetings with the homebuyer, written plans of
action agreed upon, and all other related steps taken in accordance
with paragraph (f) of this section shall be maintained by the IHA for
inspection by HUD.
(g) Subsequent use of unit. After termination of a homebuyer's
interest in the unit, it remains as part of the MH project under the
ACC. The IHA shall follow its policies for selection of a subsequent
homebuyer for the unit under the MH program. (See Sec. 950.449(g) for
use of unit if no qualified subsequent homebuyer is available.)
Sec. 950.449 Succession.
(a) Definition of ``event.'' ``Event'' means the death, mental
incapacity, or other conditions as determined by the IHA, of all of the
persons who have executed the MHO Agreement as homebuyers.
(b) Designation of successor by homebuyer. A homebuyer may
designate a successor who, at the time of the event, would assume the
status of homebuyer, provided that at the time of the event, the
successor meets the conditions established by the IHA.
(c) Succession by persons designated by homebuyer. Upon occurrence
of an event, the person designated as the successor shall succeed to
the former homebuyer's rights and responsibilities under the MHO
Agreement if the designated successor meets the criteria established by
the IHA.
(d) Designation of successor by IHA. If at the time of the event
there is no successor designated by the homebuyer, the IHA may
designate another family member, in accordance with its occupancy
policy.
(e) Occupancy by appointed guardian. If at the time of the event
there is no qualified successor designated by the homebuyer or by the
IHA, and a minor child or children of the homebuyer are living in the
home, the IHA may, in order to protect their continued occupancy and
opportunity for acquiring ownership of the home, approve as occupant of
the home an appropriate adult who has been appointed legal guardian of
the children with a duty to perform the obligations of the MHO
Agreement in their interest and behalf.
(f) Succession and occupancy on trust land. In the case of a home
on trust land, a person who is prohibited by law from succeeding to the
IHA's interest on such land may, nevertheless, continue in occupancy
with all the rights, obligations, and benefits of the MHO Agreement,
modified to conform to restrictions on succession to the land.
(g) Termination in absence of qualified successor. If there is no
qualified successor in accordance with the IHA's approved Admissions
and Occupancy policy, the IHA shall terminate the MHO Agreement and
select a subsequent homebuyer from the top of the waiting list to
occupy the unit under a new MHO Agreement. If a new homebuyer is
unavailable or if the home cannot continue to be used for low-income
housing in accordance with the Mutual Help program, the IHA may submit
an application to HUD to convert the unit to the rental program in
accordance with Sec. 950.458 or to approve a disposition of the home,
in accordance with subpart M of this part.
Sec. 950.452 Miscellaneous.
(a) Annual statement to homebuyer. The IHA shall provide an annual
statement to the homebuyer that sets forth the credits and debits to
the homebuyer's equity accounts and reserves during the year and the
balance in each account at the end of each IHA fiscal year. The
statement shall also set forth the remaining balance of the purchase
price.
(b) Insurance before transfer of ownership, repair, or rebuilding.
(1) Insurance. The IHA shall carry all insurance prescribed by HUD,
including fire and extended coverage insurance upon the home.
(2) Repair or rebuilding. In the event the home is damaged or
destroyed by fire or other casualty, the IHA shall consult with the
homebuyers as to whether the home shall be repaired or rebuilt. The IHA
shall use the insurance proceeds to have the home repaired or rebuilt
unless there is good reason for not doing so. In the event the IHA
determines that the home should not be repaired or rebuilt and the
homebuyer disagrees, the matter shall be submitted to the Area ONAP for
final determination. If the final determination is that the home should
not be repaired or rebuilt, the IHA shall terminate the MHO Agreement,
and the homebuyer's obligation to make required monthly payments shall
be deemed to have terminated as of the date of the damage or
destruction.
(3) Suspension of payments. In the event of termination of a MHO
Agreement because of damage or destruction of the home, or if the home
must be vacated during the repair period, the IHA will use its best
efforts to assist in relocating the homebuyer. If the home must be
vacated during the repair period, required monthly payments shall be
suspended during the vacancy period.
(c) Notices. Any notices by the IHA to the homebuyer required under
the MHO Agreement or by law shall be delivered in writing to the
homebuyer personally or to any adult member of the homebuyer's family
residing in the home, or shall be sent by certified mail, return
receipt requested, properly addressed, postage prepaid. Notice to the
IHA shall be in writing and either delivered to an IHA employee at the
office of the IHA, or sent to the IHA by certified mail, return receipt
requested, properly addressed, postage prepaid.
Sec. 950.453 Counseling of homebuyers.
(a) General. (1) The IHA shall provide counseling to homebuyers in
accordance with this section. The purpose of the counseling program
shall be to develop:
(i) A full understanding by homebuyers of their responsibilities as
participants in the MH Project;
(ii) Ability on their part to carry out these responsibilities; and
(iii) A cooperative relationship with the other homebuyers.
(2) All homebuyers shall be required to participate in and
cooperate fully with all official preoccupancy and postoccupancy
counseling activities. Failure without good cause to participate in the
program shall constitute a breach of the MHO Agreement.
(b) The IHA shall submit to the HUD Area ONAP a copy of its
counseling program with its request for funding for approval.
(c) Progress reports. An IHA shall submit an annual progress report
to the Area ONAP within 45 days of the end of its fiscal year or such
later date as may be approved by the Area ONAP.
Sec. 950.455 Conversion of rental projects.
(a) Applicability. Notwithstanding other provisions of this part,
an IHA may apply to the HUD Area ONAP for approval to convert any or
all of the units in an existing rental project to the MH program.
(b) Minimum requirements. (1) In order to be eligible for
conversion, the units shall have individually metered utilities and be
in decent, safe, and sanitary condition. If the units are not decent,
safe, and sanitary, the IHA shall submit a plan to correct unit
deficiencies.
(2) Tenants or other applicants to be homebuyers of the proposed
conversion units shall qualify for the program under Sec. 950.416(b).
The entire MH contribution required of the homebuyer
[[Page 18229]] shall be made before the rental unit occupied by a
tenant can be converted to the MH program.
(3) In the case of conversion of apartments or row houses to
condominium or cooperative ownership, all units in a structure shall be
converted, with all occupants at the time of the application qualified,
in accordance with paragraph (b)(2) of this section. Any occupants who
do not qualify or desire to convert shall be satisfactorily relocated
and replaced with qualified occupants before application for conversion
of the structure.
(c) Application process. The IHA shall submit a request for
conversion to the HUD Area ONAP. The HUD Area ONAP shall review the
application for legal sufficiency; tribal acceptance; demonstration of
family interest; evidence that units are habitable, safe, and sanitary;
family qualifications as discussed in paragraph (b)(2) of this section;
and financial feasibility. If the IHA does not propose to convert all
units in a project, the IHA's ability to operate the remaining rental
units shall not be adversely affected.
Sec. 950.458 Conversion of Mutual Help projects to rental program.
(a) Applicability. Notwithstanding other provisions of this part,
an IHA may apply to the HUD Area ONAP for approval to convert any or
all Mutual Help project units to the rental program, whenever a
homebuyer or homebuyers have lost the potential for ownership due to
the inability to meet the cost of their homebuyer responsibilities.
(b) Minimum requirements. (1) The remaining balances in any reserve
accounts shall be accounted for individually for each unit converted in
a manner prescribed by HUD.
(2) The balance remaining in the MEPA, if any, is applied first to
outstanding tenant accounts receivable, then to repair of homebuyer
maintenance items, and finally returned to the homebuyer.
(c) Application process. The IHA shall submit a request for
conversion to the HUD Area ONAP. The HUD Area ONAP shall review the
application for legal sufficiency, tribal acceptance, demonstration of
family interest, and financial feasibility. If the IHA does not propose
to convert all units in a project, the IHA's ability to operate the
remaining units shall not be adversely affected.
Subpart F--Self-Help Development in the Mutual Help Homeownership
Opportunity Program
Sec. 950.470 Purpose and applicability.
(a) Purpose. The purpose of the Self-Help (SH) program is to
provide an alternate method of developing units that will be less
costly than other methods of development, will engender community pride
and cooperation, and will provide training in construction skills that
will have lasting value to participants. If an IHA is interested in
pursuing SH development, it organizes a small group of families (six to
ten) to build a substantial portion of the homes for all the families
in the group, with technical assistance, supervision, and materials
provided by the IHA, augmented by skilled labor obtained under
contract. The participants are families who qualify for participation
in the Mutual Help Homeownership Opportunity (MH) program, who have the
ability to furnish their share of the required labor and who agree to
participate in the cooperative effort to build homes for all members of
the group.
(b) Applicability. Any IHA eligible for development funds may
submit an application for a SH MH project.
Sec. 950.475 Basic requirements.
(a) Contracts. A SH MH project also involves three basic contracts
in a form approved by HUD: an ACC for a MH project executed by HUD and
the IHA after approval of the SH project application and after HUD
approval of the development program, an SH agreement executed by the
participating families and the IHA before construction begins, and a
Mutual Help and Occupancy Agreement executed by the participating
families and the IHA after construction completion.
(b) Family participation. Each family shall show the desire to work
with other families in building their own homes and shall have the time
to contribute the labor necessary to perform a substantial number of
the tasks required in the construction of the homes. Each family shall
sign an SH agreement with the IHA.
(c) IHA capacity. The IHA shall have the capacity to provide for
the financial, legal, administrative, and technical responsibilities of
the program. The IHA is required to provide assurance that the project
will be completed, in the form of a letter of credit or its equivalent
in an amount equal to 10 percent of the estimated Total Development
Cost Standard.
(d) Funding. The funding for technical training and supervision of
participating families will be provided through development funds, and
the cost will be included in the Total Development Cost (TDC) of the
project. The cost of construction supervision and technical assistance
shall generally be no more than 15 percent, but may not exceed 20
percent of the TDC of these SH homes.
(e) Applicability of Indian preference. In the selection of
contractors to perform construction supervision, skilled labor, or
other work under this program, the provisions concerning preference for
Indians (Sec. 950.175) apply. In the selection of participating
families, the provisions of Sec. 950.416 apply.
(f) Building code. The building code used by the IHA in accordance
with Sec. 950.255 will apply to the homes constructed under this
program.
Sec. 950.480 Self-Help agreement.
(a) Timing. The obligations under the Self-Help agreement, executed
by the IHA and the families in a group selected by the IHA to
participate in a Self-Help program, will be contingent upon HUD's
approval of the development program. Each family will be obligated to
be available to commence work at a time that fits the IHA's schedule
for completion of prior tasks by skilled labor, but generally within
120 days of HUD's approval of the IHA's SH project development program,
and to complete the work within a period not to exceed two years.
(b) Pre-construction period. The SH agreement will provide that,
before construction begins, the participating families will be required
to organize themselves, with the assistance of the IHA, and to
participate in construction skills training.
(c) Labor contribution. (1) The SH agreement will specify the
construction tasks to be performed by the participating families as
their labor contribution, and the construction tasks to be performed
under contract by skilled laborers. The number of tasks to be performed
by the participating families shall constitute the vast majority of the
tasks.
(2) The labor performed is not subject to the labor standards
specified in section 12 of the United States Housing Act of 1937 (42
U.S.C. 1437j).
(3) The SH agreement will specify the circumstances under which it
may be terminated.
(d) Insurance requirements. The SH agreement will provide that the
families waive any liability claim against the IHA for any injury that
might occur during the development of the project.
(e) Standard provisions. The SH agreement will include provisions
[[Page 18230]] prohibiting kickbacks and conflicts of interest.
(f) Completion. The SH agreement will provide that upon successful
completion of the family's obligations under it, the family and the IHA
will execute a Mutual Help and Occupancy Agreement.
Sec. 950.485 Application.
(a) General. The application for a SH development method of Mutual
Help project shall comply with the general requirements of
Sec. 950.225.
(b) Need for Self-Help housing. Evidence of the need for SH housing
shall be submitted, including the following:
(1) The names, addresses, and number of persons in the household,
and annual incomes of the families selected to participate;
(2) The SH agreement;
(3) Certification by the IHA that the participating families are
believed to have the time and ability to fulfill their obligations
under the SH agreement; and
(4) Such information as the incomes and sizes of other interested
families who appear to be eligible.
(c) Ability of IHA to administer SH housing. The IHA shall
demonstrate its ability to administer the program by identifying the
staff members who will supervise construction and provide technical
assistance, and describing their experience. If the IHA plans to
contract with an outside entity to perform these functions, it shall
follow the requirements concerning Indian preference. Regardless of the
identity of the firm selected to perform this function, the IHA should
identify the firm and briefly describe its experience. The IHA also
shall demonstrate its capacity to administer the program, in accordance
with Sec. 950.475.
Sec. 950.490 Development program.
(a) In addition to complying with the requirements of Sec. 950.260,
the IHA's development program for a SH project submitted to HUD shall
include the following:
(1) IHA coordination plan. The plan for organizing and implementing
the development, including elements comparable to those covered in the
standard Mutual Help construction contract, and the method of
coordinating work of participating families and skilled contractors.
(2) Difference in cost. A description of how the development cost
differs from the cost for a project constructed under a construction
contract. This difference should reflect the labor contribution, after
considering the construction supervision cost.
(3) Special provisions for acquisition with rehabilitation
projects. A description of the repair or rehabilitation work needed on
each home to be acquired. The work needed on all the homes should be
reasonably comparable in the amount of labor exchange that is required.
The estimated number of hours of labor and a description of the work to
be done shall be provided.
(4) Certification of participation. Certification by the IHA that
the participating families have signed the SH agreement and remain able
to fulfill their obligations under the SH agreement.
(5) Changes since application stage. Statement of any changes in
the data submitted in the application.
(b) HUD will review the development program submitted by an IHA for
a SH project with particular attention to the elements listed in
paragraph (a) of this section.
Sec. 950.495 Default of Self-Help agreement.
(a) If the IHA determines that a participating family is failing to
provide its labor contribution, as required in accordance with its SH
agreement, it shall counsel the family about its obligations and
encourage fulfillment of its responsibilities. If the failure of the
family is jeopardizing the progress of the project, the IHA shall
declare the family in default and terminate its participation in the
project. Upon termination of the participation of one family, the IHA
shall move expeditiously to select an alternate family to take over the
responsibilities of the terminated family. If another qualified family
cannot be found to assume the responsibilities of the terminated
family, the unit may be converted to some other development method
(e.g., force account, conventional bid, etc.) under the MH program.
(b) If the IHA determines that an entire group is unable to
continue its work to completion of construction, the IHA shall first
counsel the group about its obligations and encourage fulfillment of
its responsibilities. If counseling is unsuccessful in bringing about
satisfactory progress toward completion, the IHA shall declare the
families in default and convert the project to a regular MH project.
The IHA's plan for completing the project shall be submitted to HUD for
review and counsel prior to terminating the Self-Help project.
Availability of additional HUD funding for this purpose is not assured.
Subpart G--Turnkey III Program
Sec. 950.501 Introduction.
(a) Purpose. This subpart sets forth the requirements of the
Turnkey III Homeownership Opportunities Program, which is administered
by HUD as part of the Indian Housing Program under the United States
Housing Act of 1937. This part covers the management, operation,
conversion, and sale of existing Turnkey III homes that remain in
Indian housing authority (IHA) ownership.
(b) Program framework. (1) All Turnkey III projects shall be
operated in accordance with an executed Annual Contributions Contract
(ACC), which includes the ``Special Provisions for Turnkey III
Homeownership Opportunity Project'' and Homebuyer Ownership Opportunity
Agreements (Homebuyer Agreement) between the IHA and the Homebuyer.
(2) A Turnkey III development may only include units that are to be
operated for the purpose of providing homeownership opportunities for
eligible low-income families pursuant to this part and the special
Turnkey III provisions of the ACC, including units occupied temporarily
by former homebuyers who, as a result of losing homeownership
potential, have been transferred to rental status in place, pending the
availability of a suitable rental unit. When a homebuyer is converted
to rental status while remaining in the same unit, pending availability
of a satisfactory rental unit or approval of a request to convert the
unit in accordance with Sec. 950.503, the unit remains under the
Turnkey III project.
(3) An IHA may establish any policies, procedures, and requirements
that are not contrary to the ACC, this part, other applicable Federal,
State, and local statutes and regulations, and the rights of homebuyers
under existing homebuyer agreements.
(c) Program overview. The Turnkey III Program provides
homeownership opportunities for eligible low-income families. The
program uses a lease-purchase arrangement, whereby the homebuyer family
initially takes occupancy of a rental basis, under a homebuyer
agreement which constitutes a lease with an option to purchase. The
purchase price is set at the time of initial occupancy. During the
period of rental tenancy, the homebuyer makes monthly rental payments
based on a percentage of family income and is responsible for routine
maintenance. A portion of the homebuyer monthly payment is used to
establish an Earned Home Payments Account (EHPA) and a
[[Page 18231]] Nonroutine Maintenance Reserve (NRMR). To the extent
that these funds are not used by the IHA to perform maintenance
relating to the home, the funds will be available to apply to the
purchase price at the time the homebuyer is in a position to exercise
the option to purchase. At closing, the homebuyer pays the IHA the
balance of the purchase price due (or may be permitted by the IHA to
finance all or a portion of that amount through a purchase money
mortgage) and the IHA deeds the home to the homebuyer.
(d) Contracts, agreements, other documents. All contracts,
agreements, and other documents referred to in this subpart shall be in
a form approved by HUD, and changes shall be made with the approval of
the Area ONAP.
Sec. 950.503 Conversion of Turnkey III developments.
(a) Applicability. Notwithstanding other provisions of this part,
an IHA may apply to the Area ONAP for approval to convert any or all of
the units in an existing Turnkey III development to the rental or MH
program.
(b) Minimum requirements. (1) In order to be eligible for
conversion, the units shall have individually metered utilities and be
in decent, safe, and sanitary condition. If the units are not decent,
safe, and sanitary, the IHA shall submit a plan to correct unit
deficiencies.
(2) For conversion to MH, applicants shall qualify for the program
under Sec. 950.416(b). The entire MH contribution required of the
homebuyer shall be made before the Turnkey III unit occupied by a
tenant can be converted to the MH program. In determining the purchase
price and term, the homebuyer may receive credit for the period of time
they have been residing in a Turnkey III homeownership unit.
(c) Application process. The IHA shall submit a request for
conversion to the HUD Area ONAP. The HUD Area ONAP shall review the
application for legal sufficiency, tribal acceptance, demonstration of
family interest, and financial feasibility. If the IHA does not propose
to convert all units in a development, the IHA's ability to operate the
remaining Turnkey III units shall not be adversely affected.
Sec. 950.505 Eligibility and selection of Turnkey III homebuyers.
(a) Applications. Families who wish to be considered for Turnkey
III shall apply specifically for that program, and a separate list of
eligible applicants for Turnkey III shall be maintained. Applications
shall be dated as received. The submission of an application for
Turnkey III by a family that is also an applicant for conventional
rental housing or that is an occupant of such housing shall in no way
affect its status with regard to such rental housing. A family shall
not lose its place on the waiting list until it is selected for Turnkey
III and shall not receive any different treatment or consideration with
respect to other rental housing programs due to having applied for
Turnkey III. In order to be considered for selection, a family shall be
determined to meet at least all of the following standards of potential
for homeownership:
(1) Sufficient income to cover the EHPA, NRMR, and the estimated
cost of utilities with its required monthly payment (see Sec. 950.315);
and
(2) Ability to meet all obligations under the Homebuyer Agreement.
(b) Selection and notification of homebuyers. Homebuyers shall be
selected from those families determined to have potential for
homeownership. Such selection shall be made in sequence from the
waiting list.
Sec. 950.507 Homebuyer Ownership Opportunity Agreements (HOOA).
(a) General. The HOOA shall be executed between the IHA and the
homebuyer as a condition for occupancy of a Turnkey III unit.
(b) Pre-Existing Agreements. (1) Turnkey III Projects in operation
on the effective date of this subpart shall be governed by this
subpart, except to the extent that the terms of any pre-existing
Homebuyer Agreements shall govern the relationship of an IHA and
occupant until the termination or cancellation of such agreement(s). If
the agreement establishes a maximum or a minimum monthly payment, the
terms of the agreement shall govern. However, in no event will the
monthly payment charged exceed the Total Tenant Payment determined in
accordance with subpart D of this part.
(2) Pre-existing Homebuyer Agreements that determined the required
monthly payment in accordance with a ``Schedule'' developed by the IHA
and approved by HUD should continue to determine the monthly payment in
accordance with the schedule. This schedule is determined as follows:
(i) The operating budget for the project is based on estimated
expenses for a given period of time. The amount needed to operate a
particular project is called the break-even amount (see
Sec. 950.513(a)). This is comprised of the Operating Expenses, the
total amount needed for EHPA, and the total amount needed for NRMR.
(ii) The aggregate of all homebuyers' incomes is determined. (If no
definition of income is stated in the homebuyer's contract, the
definition in subpart A of this part is used.)
(iii) The percentage of aggregated income needed to cover 110
percent of the break-even amount is determined. This percentage is the
one that appears in the schedule.
Sec. 950.509 Responsibilities of homebuyer.
(a) Repair, maintenance, and use of home. The homebuyer shall be
responsible for the routine maintenance of the home to the satisfaction
of the homebuyers' association (HBA) and the IHA.
(b) Repair of damage. In addition to the obligation for routine
maintenance, the homebuyer shall be responsible for repair of any
damage caused by the homebuyer, other occupants, or visitors.
(c) Care of home. A homebuyer shall keep the home in a sanitary
condition; cooperate with the IHA and the HBA in keeping and
maintaining the common areas and property, including fixtures and
equipment, in good condition and appearance; and follow all rules of
the IHA and the HBA concerning the use and care of the dwellings and
the common areas and property.
(d) Inspections. A homebuyer shall agree to permit officials,
employees, or agents of the IHA and the HBA to inspect the home at
reasonable hours and intervals in accordance with rules established by
the IHA and the HBA.
(e) Use of home. (1) A homebuyer shall not:
(i) Sublet the home without the prior written approval of the IHA;
(ii) Use or occupy the home for any unlawful purpose; or
(iii) Provide accommodations (unless approved by the HBA and the
IHA) to boarders or lodgers.
(2) The homebuyer shall agree to use the home primarily as a place
to live for the family (as identified in the initial application or by
subsequent amendment with the approval of the IHA).
(f) Obligations with respect to other persons and property. Neither
the homebuyer nor any other member of the family shall interfere with
the rights of other occupants of the development, damage the common
property or the property of others, or create physical hazards.
(g) Structural changes. A homebuyer shall not make any structural
changes in or additions to the home unless the IHA has determined that
such change would not: [[Page 18232]]
(1) Impair the value of the unit, the surrounding units, or the
development as a whole; or
(2) Affect the use of the home for residential purposes;
(h) Statements of condition and repair. When each homebuyer moves
in, the IHA shall inspect the home and shall give the homebuyer a
written statement, to be signed by the IHA and the homebuyer, of the
condition of the home and the equipment in it. Should the homebuyer
vacate the home, the IHA shall inspect it and give the homebuyer a
written statement of the repairs and other work, if any, required to
put the home in good condition for the next occupant. The homebuyer or
the homebuyer's representative and a representative of the HBA may join
in any inspections by the IHA.
(i) Maintenance of common property. The homebuyer may participate
in nonroutine maintenance of the home and in maintenance of common
property.
(j) Assignment and survivorship. Until such time as the homebuyer
obtains title to the home, the following conditions apply:
(1) A homebuyer shall not assign any right or interest in the home
or any interest under the Homebuyer Ownership Opportunity Agreement
without the prior written approval of the IHA;
(2) In the event of death, mental incapacity, or other condition as
determined by the IHA, the person designated as the successor in the
Homebuyer Ownership Opportunity Agreement shall succeed to the rights
and responsibilities under the agreement if that person meets the
conditions established by the IHA. Such person shall be designated by
the homebuyer. If there is no such designation, or the designee does
not meet the standards of potential for homeownership, the IHA may
consider as the homebuyer any family member who meets the standards of
potential for homeownership;
(3) If there is no qualified successor in accordance with paragraph
(j)(2) of this section, and no minor child of the homebuyer's family is
in occupancy, the IHA shall terminate the agreement and select another
family. Where a minor child or children of the homebuyer's family is in
occupancy, and an appropriate adult(s) who has been appointed legal
guardian of the children is able and willing to perform the obligations
of the Homebuyer Ownership Opportunity Agreement in their interest and
on their behalf, then in order to protect continued occupancy and
opportunity for acquisition of ownership of the home, the IHA may
approve the guardian(s) as occupants of the unit with a duty to fulfill
the homebuyer obligations under the agreement.
Sec. 950.511 Homebuyers' association (HBA).
(a) General. (1) The homebuyers' association (HBA) is an
incorporated organization composed of all homebuyers and homeowners.
Each Turnkey III development shall have an HBA, unless the homes are on
scattered sites (noncontiguous lots throughout a multi-block area with
no common property), or the number of homes in the development may be
too few to support an HBA. For such cases, a modified form of
homebuyers association or a less formal organization may be desirable.
This decision shall be made jointly by the IHA and the homebuyers.
(2) The functions of the HBA shall be set forth in its articles of
incorporation and by-laws. The IHA shall assist the HBA in its
organization and operation to the extent possible.
(b) Funding. The IHA may provide noncash contributions to the HBA,
such as office space, as well as cash contributions, which shall be
provided for in the annual operating budgets of the IHA. The cash
contributions shall be in an amount provided for in the IHA budget and
shall be subject to any HUD restrictions on funding.
Sec. 950.512 Homeowner's association (HOA).
A ``homeowners' association'' means an association comprised of
homeowners, to which the IHA conveys ownership of common property, and
which thereafter has responsibilities with respect to the common
property. Only residents who have acquired title to their homes are
members of the HOA.
Sec. 950.513 Break-even amount and application of monthly payments.
(a) Definition. The term ``break-even amount'' as used herein means
the minimum average monthly amount required to provide funds for the
amounts budgeted for operating expenses, the EHPA, and the NRMR. A
separate break-even amount is established for each size and type of
dwelling unit, as well as for the project as a whole. The break-even
amount for EHPA and NRMR will vary by size and type of dwelling unit.
Similar variations may occur for operating expenses. The break-even
amount does not include the monthly allowance for utilities that the
homebuyer pays directly.
(b) Application of monthly payments. The IHA shall apply the
homebuyer's monthly payment as follows:
(1) To the credit of the homebuyer's EHPA;
(2) To the credit of the homebuyer's NRMR; and
(3) For payment of monthly operating expense, including
contributions to the operating reserve.
(c) Excess over break-even. When the homebuyer's required monthly
payment exceeds the applicable break-even amount, the excess shall
constitute additional project income and shall be deposited and used in
the same manner as other project income.
(d) Deficit in monthly payment. When the homebuyer's required
monthly payment is less than the applicable break-even amount, the
deficit shall be applied as a reduction of that portion of the monthly
payment designated for operating expense (i.e., as a reduction of
project income). In all cases, the homebuyer payment shall be
sufficient to cover the EHPA and the NRMR, which shall be credited with
the amount included in the break-even amount for these accounts.
Sec. 950.515 Monthly operating expense.
(a) Definition and categories of monthly operating expense. The
term ``monthly operating expense'' means the monthly amount needed for
the following purposes:
(1) Administration. Administrative salaries, travel, legal
expenses, office supplies, etc.;
(2) Homebuyer services. IHA expenses in the achievement of social
goals, including costs such as salaries, publications, payments to the
HBA to assist its operation, contracts, and other costs;
(3) Utilities. Those utilities (such as water), if any, to be
furnished by the IHA as part of operating expense;
(4) Routine maintenance of common property. For community building,
grounds, and other common areas, if any. The amount required for
routine maintenance of common property depends upon the type of common
property included in the development and the extent of the IHA's
responsibility for maintenance;
(5) Protective services. The cost of supplemental protective
services paid by the IHA for the protection of persons and property;
(6) General expense. Premiums for fire and other insurance,
payments in lieu of taxes to the local taxing body, collection losses,
payroll taxes, etc.;
(7) Nonroutine maintenance of common property (contribution to
operating reserve). Extraordinary maintenance of equipment applicable
to the community building and grounds, [[Page 18233]] and unanticipated
items for nondwelling structures.
(b) Monthly operating expense rate. (1) The monthly operating
expense rate to be included in the break-even amount for each fiscal
year shall be established on the basis of the IHA's operating budget
for that fiscal year. The operating budget may be revised during the
course of the fiscal year in accordance with HUD regulations,
contracts, and handbooks.
(2) If it is subsequently determined that the actual operating
expense for a fiscal year was more or less than the amount provided by
the monthly operating expense established for that fiscal year, the
rate of monthly operating expenses to be established for the next
fiscal year may be adjusted to account for the differences.
(c) Posting of monthly operating expense statement. A statement
showing the budgeted monthly amount allocated in the current operating
expense category shall be provided to the HBA, and copies shall be
provided to homebuyers upon request.
Sec. 950.517 Earned Home Payments Account (EHPA).
(a) Credits to the account. The IHA shall establish and maintain a
separate EHPA for each homebuyer. Since the homebuyer is responsible
for maintaining the home, a portion of the required monthly payment
equal to the IHA's estimate of the monthly cost for such routine
maintenance, taking into consideration the relative type and size of
the homeowner's home, shall be set aside in the EHPA. In addition, this
account shall be credited with:
(1) Any voluntary payments made pursuant to paragraph (f) of this
section; and
(2) Any amount earned through the performance of maintenance as
provided in paragraph (c) of this section.
(b) Charges to the account. (1) If for any reason the homebuyer is
unable or fails to perform any item of required maintenance, the IHA
shall arrange to have the work done in accordance with the procedures
established by the IHA and the HBA, and the cost thereof shall be
charged to the homebuyer's EHPA. Inspections of the home shall be made
jointly by the IHA and HBA.
(2) To the extent NRMR expense is attributable to the negligence of
the homebuyer as determined by the HBA and approved by the IHA (see
Sec. 950.519), the cost thereof shall be charged to the EHPA.
(c) Additional equity through maintenance of common property.
Homebuyers may earn addition EHPA credits by providing in whole or
in part any of the maintenance necessary to the common property of the
development. When such maintenance is to be provided by the homebuyer,
this may be done and credit earned therefore only pursuant to a prior
written agreement between the homebuyer and the IHA (or the homeowners'
association, depending on who has responsibility for maintenance of the
property involved), covering the nature and scope of the work and the
amount of credit the homebuyer is to receive. In such cases, the agreed
amount shall be charged to the appropriate maintenance account and
credited to the homebuyer's EHPA upon completion of the work.
(d) Investment of excess. (1) When the aggregate amount of all EHPA
balances exceeds the estimated reserve requirements for 90 days, the
IHA shall notify the HBA and shall invest the excess in Federally
insured savings accounts, Federally insured credit unions, and/or
securities approved by HUD, and in accordance with any recommendations
made by the HBA. If the HBA wishes to participate in the investment
program, it should submit periodically to the IHA a list of HUD-
approved securities, bonds, or obligations that the association
recommends for investment by the IHA of the funds in the EHPAs.
Interest earned on the investment of such funds shall be prorated and
credited to each homebuyer's EHPA in proportion to the amount in each
such reserve account.
(2)(i) Periodically, but not less often than annually, the IHA
shall prepare a statement showing:
(A) The aggregate amount of all EHPA balances,
(B) The aggregate amount of investments (savings accounts and/or
securities) held for the account of all the homebuyers' EHPAs, and
(C) The aggregate uninvested balance of all the homebuyers' EHPAs.
(ii) This statement shall be made available to any authorized
representative of the HBA.
(e) Voluntary payments. To enable the homebuyer to acquire title to
the home within a shorter period, the homebuyer may make payments over
and above the required monthly payments. Such voluntary payments shall
be credited to the homebuyer's EHPA.
(f) Delinquent monthly payments. Under exceptional circumstances as
determined by the HBA and the IHA, a homebuyer's EHPA may be used to
pay the delinquent required monthly payments, provided the amount used
for this purpose does not seriously deplete the account and provided
that the homebuyer agrees to cooperate in such counseling as may be
made available by the IHA or the HBA.
(g) Annual statement to homebuyer. The IHA shall provide an annual
statement to each homebuyer specifying the amounts in the EHPA and the
NRMR. Any maintenance or repair done on the dwelling by the IHA that is
chargeable to the EHPA or to the NRMR shall be accounted for through a
work order, a copy of which shall be sent to the homebuyer.
(h) Withdrawal and assignment. The homebuyer shall have no right to
assign, withdraw, or in any way dispose of the funds in its EHPA except
as provided in this section or in Sec. 950.525.
(i) Application of EHPA upon vacating of dwelling. (1) In the event
a homebuyer agreement is terminated the IHA shall charge against the
homebuyer's EHPA the amounts required to pay:
(i) The amount due the IHA, including the monthly payments the
homebuyer is obligated to pay up to the date the homebuyer vacates;
(ii) The monthly payment for the period the home is vacant, not to
exceed 60 days from the date of notice of intention to vacate, or if
the homebuyer fails to give notice of intention to vacate, 60 days from
the date the home is put in good condition for the next occupant; and
(iii) The cost of any routine maintenance, and of any nonroutine
maintenance attributable to the negligence of the homebuyer, required
to put the home in good condition for the next occupant.
(2) If the EHPA balance is not sufficient to cover all of these
charges, the IHA shall require the homebuyer to pay the additional
amount due. If the amount in the account exceeds these charges, the
excess shall be paid to the homebuyer.
(3) Settlement with the homebuyer shall be made promptly after the
actual cost of repairs to the dwelling has been determined, provided
that the IHA shall make every effort to make such settlement within 30
days from the date the homebuyer vacates.
Sec. 950.519 Nonroutine Maintenance Reserve (NRMR).
(a) Purpose of reserve. The IHA shall establish and maintain a
separate NRMR for each home, using a portion of the homebuyer's monthly
payment. The purpose of the NRMR is to provide funds for the nonroutine
maintenance of the home, which consists of the infrequent and costly
items of maintenance and replacement shown on the Nonroutine
Maintenance Schedule [[Page 18234]] for the home. The NRMR shall not be
used for nonroutine maintenance of common property, or for nonroutine
maintenance relating to the home to the extent such maintenance is
attributable to the homebuyer's negligence or to defective materials or
workmanship.
(b) Amount of reserve. The amount of the monthly payments to be set
aside for NRMR shall be determined by the IHA, on the basis of the
Nonroutine Maintenance Schedule showing the amount likely to be needed
for nonroutine maintenance of the home during the term of the Homebuyer
Ownership Opportunity Agreement, taking into consideration the type of
construction and dwelling equipment. The IHA shall prepare this
schedule and reexamine it annually.
(c) Charges to NRMR. (1) The IHA shall provide the nonroutine
maintenance necessary for the home, and the cost thereof shall be
funded as provided in paragraph (c)(2) of this section. Such
maintenance may be provided by the homebuyer but only pursuant to a
prior written agreement with the IHA covering the nature and scope of
the work and the amount of credit the homebuyer is to receive. The
amount of any credit shall, upon completion of the work, be credited to
the homebuyer's EHPA and charged as provided in paragraph (c)(2) of
this section.
(2) The cost of nonroutine maintenance shall be charged to the NRMR
for the home except that:
(i) To the extent such maintenance is attributable to the fault or
negligence of the homebuyer, the cost shall be charged to the
homebuyer's EHPA after consultation with the HBA if the homebuyer
disagrees; and
(ii) To the extent such maintenance is attributable to defective
materials or workmanship not covered by the warranty, or even though
covered by the warranty if not paid for thereunder through no fault or
negligence of the homebuyer, the cost shall be charged to the
appropriate operating expense account of the Project.
(3) In the event the amount charged against the NRMR exceeds the
balance therein, the difference (deficit) shall be made up from
continuing monthly credits to the NRMR based upon the homebuyer's
monthly payments. If there is still a deficit when the homebuyer
acquires title, the homebuyer shall pay such deficit at settlement (see
paragraph (d)(2) of this section).
(d) Transfer of NRMR. (1) In the event the homebuyer agreement is
terminated, the homebuyer shall not receive any balance or be required
to pay any deficit in the NRMR. When a subsequent homebuyer moves in, a
credit balance in the NRMR shall continue to be applicable to the home
in the same amount as if the preceding homebuyer had continued in
occupancy.
(2) In the event the homebuyer purchases the home, and there
remains a balance in the NRMR, the IHA shall pay such balance to the
homeowner at settlement. In the event the homebuyer purchases and there
is a deficit in the NRMR, the homebuyer shall pay such deficit to the
IHA at settlement.
(e) Investment of excess. (1) When the aggregate amount of the NRMR
balances for all the homes exceeds the estimated reserve requirements
for 90 days, the IHA shall invest the excess in Federally insured
savings accounts, Federally insured credit unions, and/or securities
approved by HUD. Income earned on the investment of such funds shall be
prorated and credited to each homebuyer's NRMR in proportion to the
amount in each reserve account.
(2) (i) Periodically, but not less often than annually, the IHA
shall prepare a statement showing:
(A) The aggregate amount of all NRMR balances,
(B) The aggregate amount of investments (savings accounts and/or
securities) held for the account of the NRMRs, and
(C) The aggregate uninvested balance of the NRMRs.
(ii) The IHA shall make a copy of this statement available to any
authorized representative of the HBA.
Sec. 950.521 Operating reserve.
(a) Purpose of the reserve. To the extent that total operating
receipts (including subsidies for operations) exceed total operating
expenditures of the project, the IHA shall establish an operating
reserve in connection with its annual operating budgets for the
project. The purpose of this reserve is to provide funds for:
(1) The infrequent but costly items of nonroutine maintenance and
replacements of common property, taking into consideration the types of
items that constitute common property, such as nondwelling structures
and equipment, and in certain cases, common elements of dwelling
structures;
(2) Nonroutine maintenance for the homes to the extent such
maintenance is attributable to defective materials or workmanship not
covered by warranty;
(3) Working capital, including funds to cover a deficit in a
homebuyer's NRMR until such deficit is offset by future monthly
payments by the homeowner or a settlement in the event the homebuyer
should purchase;
(4) A deficit in the operation of the project for a fiscal year,
including any deficit resulting from monthly payments totaling less
than the break-even amount for the project;
(5) Nonroutine maintenance of vacated homes with insufficient NRMR
balances to put them in suitable condition for reoccupancy by
subsequent homeowners; and
(6) The cost of utilities on a temporary basis for an individual
unit by way of a utility reimbursement when a homebuyer has
insufficient tenant income to cover even the utilities.
(b) Nonroutine maintenance of common property (contribution to
operating reserve. The amount under this heading to be included in
operating expense (and in the break-even amount) established for the
fiscal year shall be determined by the IHA, on the basis of estimates
of the monthly amount needed to accumulate an adequate reserve for the
items described in paragraph (a)(1) of this section. This contribution
to the operating reserve shall be made only during the period the IHA
is responsible for the maintenance of any common property; during such
period, the amount shall be determined on the basis of the requirements
of all common property in the development.
(c) Transfer to homeowners' association. Where a Turnkey III
development includes common property, the IHA shall be responsible for
and shall retain custody of the operating reserve until the homeowners
acquire voting control of the homeowners' association. When the
homeowners acquire voting control, the homeowners' association shall
then assume full responsibility for management and maintenance of
common property under a plan, agreed upon by the IHA and the homeowners
association, and the IHA shall transfer to the homeowners' association
a portion of the operating reserve then held by the IHA. This provision
shall not apply when there is no common property or when there is no
duly organized and functioning homeowners association.
(d) Disposition of reserve. Following the end of the fiscal year in
which the last home has been conveyed by the IHA, the balance of the
operating reserve held by the IHA shall be retained by the IHA in a
replacement reserve if an ACC amendment has been executed implementing
loan forgiveness, provided that the aggregate amount of payments by the
IHA under this paragraph (d) shall not exceed the aggregate amount of
annual [[Page 18235]] contributions paid by HUD with respect to the
development.
Sec. 950.523 Operating subsidy.
HUD may pay operating subsidy, subject to the availability of funds
for this purpose and at HUD's sole discretion, to cover an operating
deficit in an operating budget. However, operating subsidy or project
funds may not be used to establish or maintain the homebuyer reserve
accounts.
Sec. 950.525 Purchase price and methods of purchase.
(a) Purchase price. The purchase price for the initial and
subsequent homebuyer shall be determined by the IHA.
(b) Purchase price schedule. On the date when the homebuyer
agreement is signed, the IHA shall provide the homebuyer with a
Purchase Price Schedule, showing the monthly declining purchase price
over the term of the HOOA agreement (a period not less than 15 years or
more than 25 as determined by the IHA, at an interest rate determined
by the IHA). The IHA may choose to forego charging interest and
calculate the payment with an interest rate of zero.
(c) Methods of purchase. (1) The homebuyer may achieve ownership
when the amount in the EHPA, plus such portion of the NRMR as the
homebuyer wishes to use for the purchase, is equal to the unamortized
balance purchase price as shown at that time on the homebuyer's
purchase price schedule plus all incidental costs (the costs incidental
to acquiring ownership, including but not limited to the costs for a
credit report, field survey, title examination, title insurance,
inspections, the fees for attorneys other than the IHA's attorney,
mortgage application, closing and recording, and the transfer taxes and
loan discount payment, if any). If for any reason title to the home is
not conveyed to the homebuyer during the month in which the combined
total in the EHPA and designated portion of the NRMR equals the
purchase price, the balance of the purchase price shall be fixed as the
amount specified for that month, and the homebuyer shall be refunded:
(i) The net additions, if any, credited to the EHPA after that
month; and
(ii) Such part of the monthly payments made by the homebuyer after
the balance of the purchase price has been fixed that exceeds the
break-even amount attributable to the unit.
(2) Where the sum of the unamortized balance of the purchase price
and incidental costs is greater than the amounts in the homebuyer's
EHPA and NRMR, the homebuyer may achieve ownership by obtaining
financing for or otherwise paying the excess amount. The unamortized
balance of the purchase price shall be the amount shown on the
homebuyer's purchase price schedule for the month in which the
settlement date for the purchase occurred.
(3) Period required to achieve ownership. The maximum period for
achieving ownership shall be 30 years, but depending upon increases in
the homebuyer's income and the amount of credit the homebuyer can
accumulate in the EHPA and NRMR, the period may be shortened
accordingly.
(4) Residual receipts. After payment in full of the IHA's debt, if
there are any subsequent homebuyers who have not acquired ownership of
their homes, the IHA shall retain all residual receipts from the
operation of the development in a replacement reserve.
(5) IHA financing. The IHA may, at its discretion, provide
financing for purchases by homebuyers, or assist with financing, by
such methods and on such terms and conditions as may agreeable to the
IHA and the homebuyer
(6) Transfer of title to homebuyer. When the homebuyer is to obtain
ownership, the parties shall mutually agree upon a closing date. On the
closing date, the homebuyer shall pay the required amount of money to
the IHA and receive a deed for the home.
Sec. 950.529 Termination of Homebuyer Ownership Opportunity Agreement.
(a) Termination by IHA. (1) In the event the homebuyer should
breach the Homebuyer Ownership Opportunity Agreement by failure to make
the required monthly payment, by misrepresentation or withholding
information in applying for admission or in connection with any
subsequent reexamination of income and family composition, by failure
to comply with any of the other homebuyer obligations under the
agreement, by loss of homeownership potential (beyond a temporary,
unforeseen change in circumstances), an income that requires outright
purchase, the IHA may terminate the agreement 30 days after giving the
homebuyer notice of its intention to do so in accordance with paragraph
(a)(2) of this section.
(2) Notice of termination by the IHA shall be in writing. Such
notice shall state:
(i) The reason for termination;
(ii) That the homebuyer may respond to the IHA, in writing or in
person, within a specified reasonable period of time regarding the
reason for termination;
(iii) That in such response the homebuyer may be represented by the
HBA;
(iv) That the IHA will consult the HBA concerning this termination;
(v) That unless the IHA rescinds or modifies the notices, the
termination shall be effective at the end of the 30-day notice period;
and
(vi) That, in the case of termination as a result of loss of
homeownership potential when the homebuyer is otherwise in compliance
with the agreement, the family will be offered a transfer to a rental
unit (whether or not in concert with a conversion of that unit to the
rental program). If a rental unit of appropriate size is available, the
family will be notified of a transfer to that unit. If no other unit is
then available and the homebuyer's current unit is not to be converted
to rental, the family will be notified that it may remain in place
until an appropriate rental unit becomes available (in which case the
unit remains under the Turnkey III project). Otherwise, the notice
shall state that the transfer shall occur as soon as a suitable rental
unit is available for occupancy, but no earlier than 30 days from the
date of the notice. The notice shall also state that if the homebuyer
should refuse to move under such circumstances, the family may be
required to vacate the homebuyer unit, without further notice.
(b) Termination by the homebuyer. The homebuyer may terminate the
Homebuyer Ownership Opportunity Agreement by giving the IHA 30 days
notice in writing of the intention to terminate and vacate the home. In
the event that the homebuyer vacates the home without notice to the
IHA, the agreement shall be terminated automatically, and the IHA may
dispose of, in any manner deemed suitable by it, any items of personal
property left by the homebuyer in the home.
(c) Transfer to the rental program. In the event of termination of
the Homebuyer Ownership Opportunity Agreement by the IHA or by the
homebuyer with adequate notice, the homebuyer may be transferred to a
suitable unit in the rental program, in accordance with Sec. 950.503 or
terminated from occupancy. If the homebuyer is transferred to the
rental program, the amount in the homeowner's EHPA shall be paid in
accordance with Sec. 950.517(i).
Subpart H--Lead-Based Paint Poisoning Prevention
Sec. 950.551 Purpose and applicability.
The purpose of this subpart is to implement the provisions of the
Lead-Based Paint Poisoning Prevention Act, 42 U.S.C. 4821-4846, by
establishing [[Page 18236]] procedures to eliminate as far as
practicable the immediate hazards from the presence of paint which may
contain lead in IHA-owned housing assisted under the United States
Housing Act of 1937. This subpart applies to IHA-owned low-income
housing projects, including Turnkey III, Mutual Help, and conveyed
Lanham Act and Public Works Administration projects, and to section 23
Leased Housing Bond-Financed projects. This subpart does not apply to
projects under the section 23 Leased Housing Non-Bond-Financed Program,
the section 10(c) Leased Housing Program, or the section 23 and section
8 Housing Assistance Payments programs. This subpart is promulgated in
accordance with the authorization granted in 24 CFR 35.24(b)(4) and
supersedes, with respect to all housing to which it applies, the
requirements prescribed by subpart C of 24 CFR part 35.
Sec. 950.553 Testing and abatement applicable to development.
(a) Pre-acquisition testing. With respect to development, all
existing properties constructed before 1978 (or substantially
rehabilitated before 1978) and proposed to be acquired for family
projects (whether or not they will need rehabilitation) shall be tested
for lead-based paint on applicable surfaces (as defined in subpart A of
this part).
(b) Pre-occupancy abatement. If units containing lead-based paint
are acquired, compliance with parts 35 and this subpart is required,
and abatement shall be completed before occupancy.
(c) Compliance with guidelines. It is strongly encouraged, but not
required, that all such properties be tested in accordance with the
Lead-Based Paint Interim Guidelines for Hazard Identification and
Abatement in Public and Indian Housing (hereafter Lead-Based Paint
Interim Guidelines), which were published at 55 FR 14555 and 55 FR
39874 (1990), as periodically amended or updated, and other future
official departmental issuances related to lead-based paint, before any
irrevocable commitment is made to acquire the property. Properties that
have already been tested in accordance with the Lead-Based Paint
Poisoning Prevention Act as amended by the Housing and Community
Development Act of 1987 need not be tested again. If lead-based paint
is found in a property to be acquired, the cost of testing and
abatement shall be considered when making the cost comparison to
justify new construction, as well as when meeting maximum total
development cost limitations.
Sec. 950.555 Testing and abatement applicable to modernization.
(a) Applicability of requirements--(1) General. With respect to
modernization, the IHA shall comply with the Lead-Based Paint Poisoning
Prevention Act (42 U.S.C. 4821-4846) and HUD implementing regulations
(24 CFR part 35 and this subpart H). The five-year funding request plan
for CIAP (as described in Sec. 950.610) shall be amended to include the
schedule for lead-based paint testing and abatement. Random testing
shall be completed by December 6, 1994 (42 U.S.C. 4822(d)(2)(B)).
Testing and abatement shall be completed with respect to all family
projects constructed or substantially rehabilitated before 1978
approved for (or applications for) comprehensive and homeownership
modernization; other pre-1978 family projects not undergoing
comprehensive and homeownership modernization; and special purpose
modernization. Any previous testing or abatement work that was done in
accordance with HUD's implementing regulations, effective June 6, 1988,
or the Lead-Based Paint Poisoning Prevention Act as amended by the
Housing and Community Development Act of 1987 shall not be redone to
comply with the requirements of this section.
(2) Special Purpose. The requirements for lead-based paint testing
and abatement apply to the following three categories of special
purpose modernization: vacant unit reduction; accessibility for
handicapped (for any dwelling in such housing in which any child who is
less than 7 years of age resides or is expected to reside); and cost
effective energy efficiency measures. In the case of funding for
accessibility for the handicapped and cost-effective energy efficiency
measures, LBP testing and abatement shall be performed only when the
rehabilitation involves removal of walls, doors, and windows. The HUD
Area ONAP may determine on a case-by-case basis whether lead-based
paint testing and abatement should be allowed for an IHA requesting
special purpose modernization for physical improvements to replace or
repair major equipment systems or structural elements (such as, the
exterior of buildings). With regard to lead-based paint testing for
special purpose modernization, if the project has already been randomly
sampled before May 15, 1991, using the criteria found in the June 6,
1988 regulations (see paragraph (a)(1) of this section) or after May
15, 1991, using the criteria outlined in paragraph (b) of this section.
If lead-based paint is found as a result of previous random testing or
current testing, it must be abated.
(b) Which standards apply--(1) Comprehensive, special purpose, and
homeownership modernization in progress. With respect to family
projects approved for comprehensive, special purpose, and homeownership
modernization (assisted under section 14 of the Act) that may contain
lead-based paint for which funds were reserved by HUD by May 15, 1991,
the following standards apply:
(i) IHAs that awarded any construction contract (including
architectural and engineering (A&E) contracts) before April 1, 1990,
are subject to the provisions regarding random testing and abatement in
effect at the time of award.
(ii) IHAs that advertise for bid or award a construction contract
(including A&E contracts) or plan to start force account work on or
after April 1, 1990, excluding those contracts solely for emergency
work items, shall not execute these contracts until random testing as
described in this section has taken place and any necessary abatement
as described in this section is included in the modernization budget.
(2) Applications for comprehensive, special purpose, and
homeownership modernization projects. With respect to applications for
family projects for comprehensive, special purpose, and homeownership
modernization (assisted under section 14 of the Act) that may contain
lead-based paint, no construction contracts awarded on or after April
1, 1990 (including A&E contracts and force account work), excluding
those contracts solely for emergency work items, shall be executed
until random testing as described in this section has taken place and
any necessary abatement as described in this section is included in the
modernization budget.
(3) Lead-based paint modernization; other family projects not
undergoing comprehensive, special purpose, or homeownership
modernization. Any pre-1978 family project (assisted under section 14
of the Act) not undergoing comprehensive, special purpose, or
homeownership modernization (as covered in paragraphs (b)(1) and (2) of
this section) including a pre-1978 family project that previously has
been modernized with comprehensive, special purpose, or homeownership
modernization grants under previous regulations shall be randomly
tested as described in this section, and abated as described in this
section if lead-based paint is found, unless testing and abatement was
previously done in [[Page 18237]] accordance with paragraph (a) of this
section.
(c) Testing--(1) Random testing. Random testing as described in
this paragraph (c)(1) is an eligible cost under lead-based paint
modernization and is a planning cost as described in Sec. 950.605(d).
Interior common areas to be sampled include IHA-owned or operated child
care facilities.
(i) Initial random test. IHAs shall use random testing on family
projects (including homeownership units) constructed or substantially
rehabilitated before 1978. It is strongly recommended, but not
required, that IHAs use the random testing methodology set forth in the
lead-based paint interim guidelines, as periodically amended or
upgraded, and other future outstanding departmental issuances in effect
at the time of testing. Random testing shall be scheduled or
prioritized by age of the family projects and whether the family
projects are known to have lead-based paint or the presence of previous
elevated blood levels (EBLs).
(ii) Followup. If evidence of lead-based paint is found in units
that were in the random sample, the IHA is required to:
(A) Test the corresponding surfaces where lead-based paint was
found in other units of the universe being tested; or
(B) Abate all like surfaces in that universe without further
testing.
(2) Universal testing. For scattered site family projects involving
single-unit structures that are not contiguous or were built and/or
rehabilitated at different times, the IHA shall cause each unit to be
tested for lead-based paint.
(d) Abatement. Abatement shall be performed in accordance with
Sec. 950.570. Abatement within a comprehensive and homeownership
modernization project should be prioritized in relation to the
immediacy of the hazards to children under seven years of age.
(Information collection requirements contained in this section
were approved by the Office of Management and Budget under control
number 2577-0090).
Sec. 950.560 Notification.
(a) General LBP Hazard Notification for all Residents. Tenants in
IHA-owned low-income public housing projects constructed before 1978
shall be notified:
(1) That the property was constructed before 1978;
(2) That the property may contain lead-based paint;
(3) Of the hazards of lead-based paint;
(4) Of the symptoms and treatment of lead-based paint poisoning;
(5) Of the precautions to be taken to avoid lead-based paint
poisoning (including maintenance and removal techniques for eliminating
such hazards); and
(6) Of the advisability and availability of blood lead level
screening for children under seven years of age. Tenants shall be
advised to notify the IHA if a child is identified as having an
elevated lead blood level (EBL) condition.
(b) Lead-Based Paint Hazard Notification for Applicants and
prospective purchasers. A notice of the dangers of lead-based paint
poisoning and a notice of the advisability and availability of blood
lead level screening for children under seven years of age shall be
provided to every applicant family at the time of application. The
applicant family shall be advised, if screening is utilized and an EBL
condition identified, to notify the IHA.
(c) Notification of Positive Lead-Based Paint Test Results. In the
event that an IHA-owned project constructed or substantially
rehabilitated before 1978 is tested and the test results using an x-ray
fluorescence analyzer (XRF) are identified as having a lead content
greater than or equal to 1.0 mg/cm2, or is tested by laboratory
chemical analysis (atomic absorption spectroscopy (AAS)) and found to
contain .5% lead by weight or more, the IHA shall provide written
notification of such result to the current residents, applicants,
prospective purchasers, and homebuyers of such units in a timely
manner. The IHA shall retain written records of the notification.
Sec. 950.565 Maintenance obligation; defective paint surfaces.
In family projects constructed or substantially rehabilitated
before 1978, the IHA shall visually inspect units for defective paint
surfaces as part of routine periodic unit inspections. If defective
paint surfaces are found, covering or removal of the defective paint
spots as described in Sec. 35.24(b)(2) shall be required. Treatment
shall be completed within a reasonable period of time.
Sec. 950.570 Procedures involving EBLs.
(a) Procedures where a current resident child has an EBL. When a
child residing in an IHA-owned low-income housing project has been
identified as having an EBL, the IHA shall:
(1) Test all surfaces in the unit and applicable surfaces of any
IHA-owned and operated child care facility if used by the EBL child for
lead-based paint and abate the surfaces found to contain lead-based
paint. Testing of exteriors and interior common areas (including non-
dwelling IHA facilities that are commonly used by the EBL child under
seven years of age) will be done as considered necessary and
appropriate by the IHA and HUD; or
(2) Transfer the family with an EBL child to a post-1978 or to a
previously tested unit that was found to be free of lead-based paint
hazards or in which such hazards have been abated as described in this
section.
(b) Procedures where a non-resident child using an IHA-owned or
operated child care facility has an EBL. When a non-resident child
using an IHA-owned or operated child care facility has been identified
as having an EBL, the IHA shall test all applicable surfaces of the
IHA-owned or operated child care facility and abate the surfaces found
to contain lead-based paint.
(c) Testing. Testing shall be completed within five days after
notification to the IHA of the identification of the EBL child. A
qualified inspector or laboratory shall certify in writing the precise
results of the inspection. Testing services available from State,
local, or tribal health or housing agencies or an organization
recognized by HUD shall be utilized to the extent available. If the
results equal or exceed a level of 1 mg/cm2 or .5% by weight, the
results shall be provided to the tenant or the family of the EBL child
using the IHA-owned or operated child care facility. Testing will be
considered an eligible modernization cost under subpart I of this part
only upon IHA certification that testing services are otherwise
unavailable.
(d) Hazard abatement requirements--(1) Abatement actions. Hazard
abatement actions shall be carried out in accordance with the following
requirements and order of priority:
(i) Unit housing a child with an EBL. Any surface in the unit found
to contain lead-based paint shall be treated. Where full treatment of a
unit housing an EBL child cannot be completed within five days after
positive testing, emergency intervention actions (including removing
defective lead-based paint and scrubbing surfaces after such removal
with strong detergents) shall be taken within such time. Full treatment
of a unit housing an EBL child shall be completed within 14 days after
positive testing, unless funding sources are not immediately available.
In such event, the IHA may use its operating reserves and, when
necessary, may request reimbursement from the current fiscal year CIAP
funds, or request the reprogramming of previously approved CIAP
funds. [[Page 18238]]
(ii) IHA-owned or operated child care facility used by a child with
an EBL. Any applicable surface found to contain lead-based paint shall
be treated.
(iii) Interior common areas (including nondwelling IHA facilities
that are commonly used by EBL children under seven years of age) and
exterior surfaces of projects in which children with EBLs reside.
Abatement shall be provided to all surfaces containing lead-based
paint.
(2) Abatement methods. IHAs shall select a safe and cost effective
treatment for surfaces found to contain lead-based paint, including
clean-up procedures, and are strongly encouraged, but not required, to
follow those methods specified in the Lead-Based Paint Interim
Guidelines, and other future official departmental issuances relating
to lead-based paint abatement in effect at the time the surfaces are to
be abated. Certain prohibited abatement methods are set forth in
Sec. 35.24(b)(2)(ii) of this title. Final inspection and certification
after treatment shall be made by a qualified inspector, industrial
hygienist, or local health official based on clearance levels specified
in HUD departmental issuances and guidelines.
(3) Tenant protection. The IHA shall take appropriate action to
protect tenants including children with EBLs, other children, and
pregnant women, from hazards associated with abatement procedures, and
is strongly encouraged, but not required, to take actions more fully
outlined in the Lead-Based Paint Interim Guidelines and other future
official departmental issuances related to tenant protection in effect
at the time the abatement procedure is undertaken. Tenant relocation
may be accomplished with CIAP assistance.
(4) Disposal of lead-based paint debris. The IHA shall dispose of
lead-based paint debris in accordance with applicable local, State, or
Federal requirements. Additional information covering disposal
practices is contained in the Lead-Based Paint Interim Guidelines and
other future official departmental issuances relating to lead-based
paint. In any event, the Environmental Protection Agency (EPA) has
primary responsibility for waste disposal regulations and procedures.
(see, e.g., 40 CFR parts 260 through 271.)
(e) Records. The IHA shall maintain records on which units, common
areas, exteriors, and IHA child care facilities have been tested,
results of the testing, and the condition of painted surfaces by
location in or on the unit, interior common area, exterior surface, or
IHA child care facility. The IHA shall report information regarding
such testing, in accordance with such requirements as shall be
prescribed by HUD. The IHA shall also maintain records of abatement
provided under this subpart, and shall report information regarding
such abatement, and its compliance with the requirements of 24 CFR part
35 and Sec. 950.555, in accordance with such requirements as shall be
prescribed by HUD. If records establish that a unit, an IHA child care
facility, an exterior or interior common area was tested or treated in
accordance with the standards prescribed in this subpart, that unit,
child care facility, exterior or interior common area is not required
to be re-tested or re-treated.
(Information collection requirements contained in paragraph (e) were
approved by the Office of Management and Budget under control number
2577-0090)
Sec. 950.575 Compliance with tribal, State and local laws.
(a) IHA responsibilities. Nothing in this subpart is intended to
relieve an IHA of any responsibility for compliance with tribal, State,
or local laws, ordinances, codes, or regulations governing lead-based
paint testing or hazard abatement. The IHA shall maintain records
evidencing compliance with applicable tribal, State, or local
requirements, and shall report information concerning such compliance,
in accordance with such requirements as shall be prescribed by HUD.
(b) HUD responsibility. If HUD determines that a tribal, State, or
local law, ordinance, code, or regulation provides for lead-based paint
testing or hazard abatement in a manner that provides a comparable
level of protection from the hazards of lead-based paint poisoning to
that provided by the requirements of this subpart and that adherence to
the requirements of this subpart would be duplicative or otherwise
cause inefficiencies, HUD may modify or waive the requirements of this
subpart in such a manner as may be appropriate to promote efficiency
while ensuring such comparable level or protection.
(Information collection requirements contained in this section were
approved by the Office of Management and Budget under OMB Control
Number 2577-0090).
Sec. 950.580 Monitoring and enforcement.
IHA compliance with the requirements of this subpart H will be
included in the scope of HUD monitoring of IHA operations.
Noncompliance with any requirement of this subpart may subject an IHA
to sanctions provided under the Annual Contributions Contract or to
enforcement by other means authorized by law.
Sec. 950.585 Insurance coverage.
For the requirements concerning an IHA's obligation to obtain
reasonable insurance coverage with respect to the hazards associated
with testing for and abatement of lead-based paint, see Sec. 950.195.
Subpart I--Modernization Program
General Provisions
Sec. 950.600 Purpose and applicability.
(a) Purpose. The purpose of this section is to set forth the
policies and procedures for the Modernization program, authorizing HUD
to provide financial assistance to Indian Housing Authorities (IHAs)
to:
(1) Improve the physical condition and upgrade the management and
operation of existing Indian housing developments;
(2) Assure that such developments continue to be available to serve
low-income families;
(3) Assess the risks of lead-based paint poisoning through the use
of professional risk assessments that include dust and soil sampling
and laboratory analysis in all developments constructed before 1980
that are, or will be occupied by families; and
(4) Take effective interim measures to reduce and contain the risks
of lead-based paint poisoning recommended in such professional risk
assessments.
(b) Applicability. (1) The sections under the undesignated heading
``General Provisions'' applies to all modernization under this subpart.
The sections under the undesignated heading ``Comprehensive Improvement
Assistance Program'' (CIAP) set forth the requirements and procedures
for the CIAP for IHAs that own or operate fewer than 250 Indian housing
units. An IHA that qualifies for participation in the Comprehensive
Grant Program (CGP) is not eligible to participate in the CIAP. The
sections under the undesignated heading ``Comprehensive Grant program
(CGP)'' set forth the requirements and procedures for the CGP for IHAs
that own or operate 250 or more Indian housing units. For purposes of
the 250 or more unit threshold for participation in the CGP, and for
the formula allocation under Sec. 950.601, an existing rental, Mutual
Help, or section 23 bond-financed unit under the ACC shall count as one
unit; and a unit under the Turnkey III program shall count as one-
fourth of a unit. An IHA that has already qualified to participate in
the CGP because it owns or operates 250 or more units may elect to
continue to [[Page 18239]] participate in the CGP so long as it owns or
operates at least 200 units.
(2) This subpart applies to IHA-owned low-income Indian housing
developments (including developments managed by a Resident Management
Corporation pursuant to a contract with the IHA), and to Section 23
Leased Housing Bond-Financed developments, for which IHAs request
assistance under the CIAP or CGP. This subpart also applies to the
implementation of modernization programs which were approved before FFY
1992. Rental developments that are planned for conversion to
homeownership under sections 5(h), 21, or 301 of the Act, but that have
not yet been sold by an IHA, continue to qualify for assistance under
this part. This subpart does not apply to developments under the
Section 23 Leased Housing Non-Bond Financed program, the Section 10(c)
Leased program, or the Section 23 or Section 8 Housing Assistance
Payments programs.
(c) Transition. Any amount that HUD has obligated to an IHA under
CIAP shall be used for the purposes for which the funding was provided,
or for purposes consistent with an approved action plan submitted by
the IHA under the CGP, as the IHA determines to be appropriate.
(d) Other. See subpart A of this part for applicable requirements,
other than the Act, that apply to modernization under this subpart I.
Sec. 950.601 Allocation of funds under section 14.
(a) General. This section describes the process for allocating
modernization funds to the aggregate of IHAs and PHAs participating in
the CIAP (i.e., agencies that own or operate fewer than 250 units), and
to individual IHAs and PHAs participating in the CGP (i.e., agencies
that own or operate 250 or more units). The program requirements
governing PHA participation in the CIAP and CGP are contained in 24 CFR
part 968.
(b) Set-aside for emergencies and disasters. For each FFY, HUD
shall reserve from amounts approved in the appropriation act for grants
under this part and part 968 of this title, $75 million (which shall
include unused reserve amounts carried over from previous FFYs), which
shall be made available to IHAs and PHAs for modernization needs
resulting from natural and other disasters, and from emergencies. HUD
shall replenish this reserve at the beginning of each FFY so that it
always begins with a $75 million balance. Any unused funds from
previous years will remain in the reserve until allocated. The
requirements governing the reserve for disasters and emergencies and
the procedures by which an IHA may request such funds are set forth in
Sec. 950.667.
(c) Set-aside for credits for mod troubled PHAs under 24 CFR part
968, subpart C. (1) General. After deducting amounts for the reserve
for natural and other disasters and for emergencies under paragraph (b)
of this section, HUD shall set aside no more than five percent of the
remaining amount for the purpose of providing credits to PHAs under 24
CFR part 968, subpart C that were formerly designated as mod troubled
agencies under the Public Housing Management Assessment Program (PHMAP)
at 24 CFR part 901. The purpose of this set-aside is to compensate such
PHAs for amounts previously withheld by HUD because of their prior
designation as a mod troubled agency.
(2) Nonapplicability to IHAs. Since the PHMAP performance
indicators under 24 CFR part 901 do not apply to IHAs, these agencies
cannot be deemed mod troubled for purposes of the CGP. Hence, IHAs are
not subject to any reduction in funding under section 14(k)(5)(a) of
the Act, nor do they participate in the set-aside of credits
established under paragraph (c)(1) of this section.
(d) Formula allocation based on relative needs. After determining
the amounts to be reserved under paragraphs (b) and (c) of this
section, HUD shall allocate the amount remaining pursuant to the
formula set forth in paragraphs (e) and (f) of this section, which are
designed to measure the relative backlog and accrual needs of IHAs and
PHAs.
(e) Allocation for backlog needs. HUD shall allocate half of the
formula amount under paragraph (d) of this section based on the
relative backlog needs of IHAs and PHAs, as follows:
(1) Determination of backlog need. (i) Statistically reliable data.
Where HUD determines that the data concerning the categories of backlog
need identified under paragraph (e)(4) of this section are
statistically reliable for individual IHAs and PHAs with 250 or more
units, or the aggregate of IHAs and PHAs with fewer than 250 units not
participating in the formula funding portion of the modernization
program, it will base its allocation on direct estimates of the
statutory categories of backlog need, based on the most recently
available, statistically reliable data.
(ii) Statistically reliable data are unavailable. Where HUD
determines that statistically reliable data concerning the categories
of backlog need identified under paragraph (e)(4) of this section are
not available for individual IHAs and PHAs with 250 or more units, it
will base its allocation of funds under this section on estimates of
the categories of backlog need using:
(A) The most recently available data on the categories of backlog
need under paragraph (e)(4) of this section;
(B) Objectively measurable data concerning the following IHA or
PHA, community, and development characteristics:
(1) The average number of bedrooms in the units in a development
(Weighted at 2858.7);
(2) The proportion of units in a development available for
occupancy by very large families (Weighted at 7295.7);
(3) The extent to which units for families are in high-rise
elevator developments (Weighted at 5555.8);
(4) The age of the developments, as determined by the DOFA date
(date of full availability). In the case of acquired developments, HUD
will use the DOFA date unless the IHA provides HUD with the actual date
of construction, in which case HUD will use the age of the development
(or for scattered sites, the average age of all the buildings), subject
to a 50 year cap. (Weighted at 206.5);
(5) In the case of a large agency, the number of units with 2 or
more bedrooms (Weighted at .433);
(6) The cost of rehabilitating property in the area (Weighted at
27544.3);
(7) For family developments, the extent of population decline in
the unit of general local government determined on the basis of the
1970 and 1980 censuses (Weighted at 759.5); and
(C) An equation constant of 1412.9.
(2) Calibration of backlog need for developments constructed prior
to 1985. The estimated backlog need, as determined under either
paragraphs (e)(1)(i) or (e)(1)(ii) of this section, shall be adjusted
upward for developments constructed prior to 1985 by a constant ratio
of 1.5 to more accurately reflect the costs of modernizing the
categories of backlog need under paragraph (e)(4) of this section, for
the Indian housing stock as of 1991.
(3) Deduction for prior modernization. HUD shall deduct from the
estimated backlog need, as determined under either paragraphs (e)(1)(i)
or (e)(1)(ii) of this section, amounts previously provided to an IHA or
PHA for modernization, using one of the following methods:
(i) Standard deduction for prior CIAP and MROP. HUD shall deduct 60
percent of the CIAP funds made available on an IHA-wide or PHA-wide
basis from FFY 1984 to 1991, and 40 percent of the funds made available
on [[Page 18240]] a development-specific basis for the Major
Reconstruction of Obsolete Projects (MROP) (not to exceed the estimated
formula need for the development), subject to a maximum 50 percent
deduction of an IHA's or PHA's total need for backlog funding;
(ii) Newly constructed units. Units with a DOFA date of October 1,
1991 or thereafter will be considered to have a zero backlog; or
(iii) Acquired developments. Developments acquired by an IHA with
major rehabilitation, with a DOFA date of October 1, 1991 or
thereafter, will be considered to have a zero backlog.
(4) Categories of backlog need. The most recently available data to
be used under either paragraphs (e)(1)(i) or (e)(1)(ii) of this section
shall pertain to the following categories of backlog need:
(i) Backlog of needed repairs and replacements of existing physical
systems in Indian housing developments;
(ii) Items that shall be added to developments to meet HUD's
modernization standards under Sec. 950.603, and State, local and tribal
codes; and
(iii) Items that are necessary or highly desirable for the long-
term viability of a development, in accordance with HUD's modernization
standards.
(f) Allocation for accrual needs. HUD shall allocate the other half
remaining under the formula allocation under paragraph (d) of this
section based upon the relative accrual needs of IHAs and PHAs,
determined as follows:
(1) Statistically reliable data. If HUD determines that
statistically reliable data are available concerning the categories of
need identified under paragraph (f)(3) of this section for individual
IHAs and PHAs with 250 or more units and for the aggregate of IHAs and
PHAs with fewer than 250 units, it shall base its allocation of
assistance under this section on the needs that are estimated to have
accrued since the date of the last objective measurement of backlog
needs under paragraph (e)(1)(i) of this section; or
(2) Statistically reliable data are unavailable. If HUD determines
that statistically reliable data concerning the categories of need
identified under paragraph (f)(3) of this section are not available for
individual IHAs and PHAs with 250 or more units, it shall base its
allocation of assistance under this section on estimates of accrued
need using:
(i) The most recently available data on the categories of backlog
need under paragraph (f)(3) of this section;
(ii) Objectively measurable data concerning the following IHA or
PHA, community, and development characteristics:
(A) The average number of bedrooms in the units in a development
(Weighted at 100.1);
(B) The proportion of units in a development available for
occupancy by very large families (Weighted at 356.7);
(C) The age of the developments (Weighted at 10.4);
(D) The extent to which the buildings in developments of an agency
average fewer than 5 units (Weighted at 87.1.);
(E) The cost of rehabilitating property in the area (Weighted at
679.1);
(F) The total number of units of each IHA or PHA that owns or
operates 250 or more units (Weighted at .0144); and
(iii) An equation constant of 602.1.
(3) Categories of need. The data to be provided under either
paragraph (f)(1) or (f)(2) of this section shall pertain to the
following categories of need:
(i) Backlog of needed repairs and replacements of existing physical
systems in Indian housing developments; and
(ii) Items that shall be added to developments to meet HUD's
modernization standards under Sec. 950.603, and State, local, and
tribal codes.
(g) Allocation for CIAP. The formula amount determined under
paragraphs (e) and (f) of this section for IHAs and PHAs with fewer
than 250 units shall be allocated to IHAs in accordance with the
requirements under the undesignated heading of this subpart
``Comprehensive Improvement Assistance Program'' (CIAP) and to PHAs in
accordance with the requirements of 24 CFR part 968, subpart B.
(h) Allocation for CGP. The formula amount determined under
paragraphs (e) and (f) of this section for IHAs with 250 or more units
shall be allocated in accordance with the requirements under the
undesignated heading of this subpart ``Comprehensive Grant Program,''
and for PHAs in accordance with the requirements of 24 CFR part 968,
subpart C. An IHA that is eligible to receive a grant under the CGP may
appeal the amount of its formula allocation under this section in
accordance with the requirements set forth in Sec. 950.669(b). An IHA
that is eligible to receive modernization funds under the CGP because
it owns or operates 250 or more units, is disqualified from receiving
assistance under the CIAP under this part.
(i) Use of formula allocation. Any amounts allocated to an IHA
under paragraphs (e) and (f) of this section may be used for any
eligible activity under this subpart, notwithstanding that the
allocation amount is determined by allocating half based on the
relative backlog needs and half based on the relative accrual needs of
IHAs and PHAs.
(j) Calculation of number of units. For purposes of determining
under this section the number of units owned or operated by an IHA or
PHA, and the relative modernization needs of IHAs and PHAs, HUD shall
count as one unit each existing rental, Mutual Help, and section 23
Bond-Financed unit under the ACC, except that it shall count as one-
fourth of a unit each existing unit under the Turnkey III program. New
development units that are added to an IHA's or PHA's inventory will be
added to the overall unit count so long as they are under ACC amendment
and have reached DOFA by the first day in the FFY in which the formula
is being run. Any increase in units (reaching DOFA and under ACC
amendment) as of the beginning of the FFY shall result in an adjustment
upwards in the number of units under the formula. New units reaching
DOFA after this date will be counted for formula purposes as of the
following FFY.
(k) Demolition, disposition, and conversion of units. (1) General.
Where an existing unit under an ACC is demolished, disposed of, or
converted into a larger or smaller unit, HUD shall not adjust the
amount the IHA or PHA receives under the formula, unless more than one
percent of the units are affected on a cumulative basis. Where more
than one percent of the existing units are demolished, disposed of, or
converted, HUD shall reduce the formula amount for the IHA or PHA over
a 3-year period to reflect removal of the units from the ACC.
(2) Determination of one percent cap. In determining whether more
than one percent of the units are affected on a cumulative basis, HUD
will compare the units eligible for funding in the initial year under
formula funding with the number of units eligible for funding for the
current year under formula funding, and shall base its calculations on
the following:
(i) Increases in the number of units resulting from the conversion
of existing units will be added to the overall unit count so long as
they are under ACC amendment by the first day in the FFY in which the
formula is being run;
(ii) Units that are lost as a result of demolition, disposition, or
conversion shall not be offset against units subsequently added to an
IHA's or PHA's inventory;
(iii) For purposes of calculating the number of converted units,
HUD shall regard the converted size of the unit as [[Page 18241]] the
appropriate unit count (e.g., a unit that originally was counted as one
unit under paragraph (j) of this section, but which later was converted
into two units, shall be counted as two units under the ACC).
(3) Phased-in reduction of units. (i) Reduction less than one
percent. If HUD determines that the reduction in units under paragraph
(k)(2) of this section is less than one percent, the IHA or PHA will be
funded as though no change had occurred.
(ii) Reduction greater than one percent. If HUD determines that the
reduction in units under paragraph (k)(2) of this section is greater
than one percent, the number of units on which formula funding is based
will be the number of units reported as eligible for funding for the
current program, plus two-thirds of the difference between the initial
year and the current year in the first year, plus one-third of the
difference in the second year, and at the level of the current year in
the third year.
(iii) Exception. A unit that is conveyed under the Mutual Help or
Turnkey III programs will result in an automatic (rather than a phased-
in) reduction in the unit count. Paid-off Mutual Help or Turnkey III
units continue to be counted until they are conveyed.
(4) Subsequent reductions in unit count. (i) Once an IHA's or PHA's
unit count has been fully reduced under paragraph (k)(3)(ii) of this
section to reflect the new number of units under the ACC, this new
number of units will serve as the base for purposes of calculating
whether there has been a one percent reduction in units on a cumulative
basis.
(ii) A reduction in formula funding, based upon additional
reductions to the number of an IHA's or PHA's units, will also be
phased in over a 3-year period, as described in paragraph (k)(2) of
this section.
Sec. 950.602 Special requirements for Turnkey III and Mutual Help
developments.
(a) Modernization costs. Modernization work on a Mutual Help or
Turnkey III unit shall not increase the purchase price or amortization
period of the home.
(b) Eligibility of paid-off and conveyed units for assistance. (1)
Paid-off units. A Mutual Help or Turnkey III unit, which is paid off
but has not been conveyed at the time work is included for it in the
CIAP application or CGP Annual Statement, is eligible for any physical
improvements provided under Sec. 950.615 or Sec. 950.666. However, in
accordance with the provisions of Sec. 950.440(e)(8), an IHA may
perform nonemergency work on a paid-off Mutual Help unit only after all
delinquencies are repaid.
(2) Conveyed units. Where modernization work has been approved
prior to conveyance, the IHA may complete the work even if title to the
unit is subsequently conveyed before the work is completed. However,
once conveyed, the unit is not eligible for additional or future
assistance. An IHA shall not use funds provided under this subpart for
the purpose of modernizing units if the modernization work was not
approved before conveyance of title.
(c) Other. The homebuyer family shall be in compliance with its
financial obligations under its homebuyer agreement in order to be
eligible for nonemergency physical improvements, with the exception of
work necessary to meet statutory and regulatory requirements, (e.g.,
accessibility for disabled persons, lead-based paint testing, interim
containment, professional risk assessment, and abatement) and the
correction of development deficiencies. Notwithstanding the above
requirement, an IHA may, with prior HUD approval, complete nonemergency
physical improvements on any homeownership unit if the IHA demonstrates
that, due to economies of scale or geographic constraints, substantial
cost savings may be realized by completing all necessary work in a
development at one time.
Sec. 950.603 Modernization and energy conservation standards.
(a) All improvements funded under this subpart, which may include
alterations, betterments, additions, replacements, or nonroutine
maintenance, shall meet the HUD modernization standards, described in
paragraph (b) of this section; comply with lead-based paint testing and
abatement requirements in subpart H of this part; and provide decent,
safe, and sanitary living conditions in IHA-owned and IHA-operated
housing. All improvements funded under this part shall meet the HUD
energy conservation standards for cost-effective energy conservation
measures in such developments, described in paragraphs (c) and (d) of
this section.
(b) The modernization standards are comprised of both mandatory and
development-specific standards. The mandatory standards are intended to
provide decent, safe, and sanitary living conditions in Indian housing,
including corrections of violations of basic health and safety codes,
and to address all deficiencies, including those related to deferred
maintenance. The development-specific standards permit an IHA to
undertake improvements that are necessary or highly desirable for the
long-term physical and social viability of a development, which
includes site and building security. The modernization standards are
contained in HUD Handbook 7485.2, as revised, Public and Indian Housing
Modernization Standards, and in other documents cited in the Handbook.
(c) The energy conservation standards are standards for the
installation of cost-effective energy conserving improvements,
including solar energy systems. The energy conservation standards
provide for the conducting or updating of energy audits, including
cost-benefit analyses of energy saving opportunities, in order to
determine which measures will be cost effective in conserving energy.
The energy conservation standards are contained in the HUD Workbook,
Energy conservation for Housing, and in other documents cited in the
Workbook.
(d) Life-cycle cost-effective energy performance standards
established by HUD to reduce the operating costs of Indian housing
developments over the estimated life of the buildings shall apply to
developments modernized under this subpart. These standards are
contained in HUD Handbook 7418.1, as revised, Life-Cycle Cost Analysis
for Utility Combinations.
Comprehensive Improvement Assistance Program (For IHAs that Own or
Operate Fewer than 250 Indian Housing Units)
Sec. 950.609 Purpose.
The purpose of these sections under the undesignated heading
``Comprehensive Improvement Assistance Program'' (CIAP) is to set forth
the policies and procedures for the CIAP under which IHAs that own or
operate fewer than 250 units of Indian housing may receive financial
assistance for the modernization of Indian housing developments,
including Emergency and Other Modernization. Funding for this program
is provided under section 5(c) of the Act (42 U.S.C. 1437c(c)),
pursuant to section 14(k) of the Act (42 U.S.C. 1437l(k)) (see
Sec. 950.601 for the formula allocation process for the aggregate of
CIAP agencies under this subpart I).
Sec. 950.615 Eligible costs.
(a) Demonstration of viability. Except in the case of emergency
work, an IHA shall only expend funds on a development for which the IHA
has determined, and HUD agrees, that the completion of the improvements
and replacements will reasonably ensure the long-term physical and
social viability [[Page 18242]] of the development at a reasonable
cost, as defined in Sec. 950.102.
(b) Physical improvement costs for rental and Mutual Help
developments. Eligible costs include alterations, betterments,
nondwelling additions, replacements, and nonroutine maintenance that
are necessary to meet the modernization and energy conservation
standards prescribed in Sec. 950.603. The modernization standards
include mandatory and development specific work. The mandatory
standards may be exceeded only when the IHA and HUD determine that it
is necessary or highly desirable for the long-term physical and social
viability of the individual development. If demolition or disposition
is proposed, the IHA shall comply with subpart M of this part.
Additional dwelling space may be added to existing units.
(c) Turnkey III developments. (1) General. Eligible physical
improvement costs for existing Turnkey III developments are limited to
work items under Emergency Modernization or Other Modernization that
are not the responsibility of the homebuyer families, and that are
related to health and safety, correction of development deficiencies,
physical accessibility, energy audits and cost-effective energy
conservation measures, or lead-based paint testing, interim
containment, professional risk assessment, and abatement. In addition,
eligible costs include management improvements under the modernization
type of Other Modernization.
(2) Ineligible costs. Nonroutine maintenance or replacements,
dwelling additions, and items that are the responsibility of the
homebuyer families are ineligible costs.
(3) Exception for vacant or non-homebuyer-occupied Turnkey III
units. (i) Notwithstanding the requirements of paragraph (c)(1) of this
section, an IHA may carry out Other Modernization in a Turnkey III
development, whenever a Turnkey III unit becomes vacant or is occupied
by a nonhomebuyer family. An IHA that intends to use funds under this
paragraph shall identify in its CIAP application the estimated number
of units proposed for Other Modernization and subsequent sale. In
addition, an IHA shall certify that the IHA has homebuyers who are both
eligible for homeownership, in accordance with the requirements of this
part, and who have demonstrated their intent to be placed into each of
the Turnkey III units proposed for Other Modernization.
(ii) Before an IHA may be approved for Other Modernization of a
unit under this paragraph, it shall first deplete any Earned Home
Payments Account (EHPA), or Non-Routine Maintenance Reserve (NRMR)
pertaining to the unit, and request the maximum operating subsidy. Any
increase in the value of a unit caused by its Other Modernization under
this paragraph shall be reflected solely by its subsequent appraised
value, and not by an automatic increase in its purchase price.
(d) Demolition and conversion costs. Eligible costs include:
(1) Demolition of dwelling units or nondwelling facilities, for
which HUD has approved the demolition under subpart M of this part, and
related costs, such as clearing and grading the site after demolition
and subsequent site improvement to benefit the remaining portion of the
existing development; and
(2) Conversion of existing dwelling units to different bedroom
sizes or to nondwelling use.
(e) Management improvement costs. (1) General. Management
improvements that are development-specific or IHA-wide in nature are
eligible costs if needed to upgrade the operation of the IHA's
developments, sustain physical improvements at those developments, or
correct management deficiencies. Management improvements and planning
costs may be funded as a single modernization project.
(2) Ineligible costs. An IHA's ongoing operating expenses,
including direct provision of social services through either contract
or force account labor, are ineligible management improvement costs. In
addition, if an approved modernization program includes management
improvements that involve ongoing costs, HUD is not obligated to
provide continued funding or additional operating subsidy after the end
of the implementation period of the management improvements. An IHA is
responsible for finding other funding sources, reducing its ongoing
management costs, or terminating the management activities.
(3) Eligible costs. Eligible costs include:
(i) General management costs. Eligible general management costs
include, but are not limited to: management, financial, and accounting
control systems of the IHA, rent collection, and maintenance.
(ii) Economic development costs. Economic development activities,
such as job training and resident employment, for the purpose of
carrying out activities related to the eligible management and physical
improvements are eligible costs, as approved by HUD. HUD encourages
IHAs, to the greatest extent feasible, to hire residents as trainees,
apprentices, or employees to carry out the modernization program under
this subpart I.
(iii) Resident management costs. Technical assistance to a resident
council or resident management corporation (RMC), as defined in subpart
O of this part, in order to determine the feasibility of the resident
management entity or assist in its formation is an eligible cost.
(iv) Resident homeownership costs. The study of the feasibility of
converting rental to homeownership units, as well as the preparation of
an application for conversion to homeownership, is an eligible cost.
(f) Drug elimination costs. Drug elimination activities involving
management or physical improvements are eligible costs, as specified by
HUD.
(g) Administrative costs. Administrative costs necessary for the
planning (planning costs can be funded as a single modernization
project), design, implementation, and monitoring of the physical and
management improvements are eligible costs, and include the following:
(1) The salaries of nontechnical and technical IHA personnel
assigned full-time or part-time to modernization are eligible costs
only if the scope and volume of the work are beyond that which could
reasonably be expected to be accomplished by such personnel in the
performance of their nonmodernization duties. An IHA shall properly
apportion to the appropriate program budget any direct charges for the
salaries of assigned full- or part-time staff (e.g., to the CIAP or
operating budget);
(2) IHA contributions to employee benefit plans on behalf of
nontechnical and technical IHA personnel are eligible costs in direct
proportion to the amount of salary charged to the CIAP; and
(3) Other administrative costs, such as telephone and facsimile, as
specified by HUD.
(h) Architectural/engineering and consultant fees. Fees for
planning, preparation of needs assessments, and other required
documents, detailed design work, assistance in the preparation of
construction and bid documents, lead-based paint professional risk
assessments and testing are eligible costs.
(i) Relocation and moving costs. Relocation and other relocation
assistance for permanent and temporary relocation are eligible costs,
when this assistance is required by Sec. 950.117.
(j) Cost limitations. (1) Management improvements. Management
improvement costs shall not exceed 10 [[Page 18243]] percent of the
CIAP funds available to an Area ONAP in a particular FFY.
(2) Planning costs. Planning costs are costs incurred before HUD
approval of the CIAP application and that are related to developing the
CIAP application or carrying out eligible modernization planning, such
as detailed design work, preparation of solicitations, and lead-based
paint professional risk assessment and testing. Planning costs may be
funded as a single modernization project. If an IHA incurs planning
costs without prior HUD approval, an IHA does so with the full
understanding that the costs may not be reimbursed upon approval of the
CIAP application. Planning costs shall not exceed five percent of the
CIAP funds available to an Area ONAP in a particular FFY.
(3) Program benefit. If the physical or management improvement will
benefit programs other than Indian Housing, such as Section 8, local
renewal, eligible costs are limited to the amount directly attributable
to the Indian Housing Program.
(k) Ineligible costs. An IHA shall not make luxury improvements, or
carry out any other ineligible activities, as specified by HUD.
Sec. 950.618 Procedures for obtaining approval of a modernization
program.
(a) HUD notification. After modernization funds for a particular
FFY become available, HUD shall publish in the Federal Register a
notice of funding availability (NOFA) and the time frame for submission
of applications.
(b) IHA consultation with local officials and residents/homebuyers.
An IHA shall develop the application in consultation with local
officials, residents, and homebuyers, as set forth in Sec. 950.624.
(c) IHA application. An IHA shall submit to HUD an application, in
a form prescribed by HUD, which shall include:
(1) A general description of IHA development(s) (including the
current physical condition, for each development for which the IHA is
requesting funds, or for all the IHA's developments) and physical and
management improvement needs (to meet the Secretary's standards in
Sec. 950.603), general description of major work categories (e.g.,
kitchens, bathrooms) required to correct identified deficiencies and
estimated costs, including a statement concerning consultation with
local officials and residents and viability of the development(s). The
application will also identify a cost estimate for the equipment
systems or structural elements that would normally be replaced over the
remaining period of the annual contributions contract or during the 30-
year period beginning on the date of submission of the application.
(2) For management improvements, the application shall identify the
management improvement need, including a general description of the
work required for correction and an estimated cost. Management areas
for which needs should be identified include, but are not limited to,
the following:
(i) The management, financial, and accounting control systems of
the IHA;
(ii) The adequacy and qualifications of personnel employed by such
IHA (in the management and operation of such developments) for each
category of employment; and
(iii) The adequacy and efficacy of resident programs and services
in such developments, the security of each such development and its
residents, policies and procedures of the IHA for the selection and
eviction of residents in such developments, and other policies and
procedures of such IHA relating to such developments, as specified by
the Secretary; and
(3) Any other documents, as may be required by HUD.
(d) Completeness review. To be eligible for selection, an
application shall be received by the Area ONAP within the time period
specified in the NOFA and shall be complete. In order to determine
whether an application is complete, responsive to the NOFA, and
acceptable for technical processing, the Area ONAP shall perform an
initial completeness review upon receipt of the application. To make
the above determination, the Area ONAP shall use the following
criteria:
(1) The application was received by HUD at the appropriate address
by the date and time specified in the NOFA and was complete and
responsive (excluding exhibits that are certifications); or
(2) If an application is determined to be incomplete or to have
missing certifications, the IHA shall be advised in writing of any
deficiencies or any inconsistencies. The missing information is to be
submitted within a specified period of time from the date of HUD's
written notification. This is not additional time to substantially
revise the application. Deficiencies that may be corrected at this time
are those such as inadvertently omitted documents, clarifications of
previously submitted material, and other changes that are not of such a
nature as to improve the competitive position of the application. The
IHA shall acceptably correct deficiencies (including furnishing missing
certifications) within the time specified in the NOFA.
(e) Eligibility review. (1) Eligibility for processing. To be
eligible for processing, based on the general description of its
developments' condition and general statement of physical and
management improvement needs, and the Area ONAP's knowledge of the
development's conditions, the work items, particularly emergency work
items, shall appear to be eligible and needed.
(2) Eligibility review on reduced scope. When the following
conditions exist, the IHA will be reviewed on a reduced scope:
(i) Where the IHA owes funds to HUD as a result of excess
development, modernization, or operating funds previously provided, and
the IHA has not repaid the funds or has not entered into a repayment
agreement, or is not meeting its obligations under a repayment
agreement, the IHA is eligible for processing for Emergency
Modernization only.
(ii) Where the IHA has not complied with Fair Housing and Equal
Opportunity (FHEO) requirements as set forth in Sec. 950.115, as
evidenced by an action, finding, or determination as described in
paragraphs (e)(2)(ii)(A) through (E) of this section, unless the IHA is
implementing a voluntary compliance agreement or settlement agreement
designed to correct the area(s) of noncompliance, the IHA is eligible
for processing only for Emergency Modernization or for work needed to
remedy civil rights deficiencies.
(A) A pending proceeding against the IHA based upon a charge of
discrimination issued under the Fair Housing Act. A charge of
discrimination is a charge under section 810(g)(2) of the Fair Housing
Act (42 U.S.C. 3610(g)(2)), issued by HUD's General Counsel or legally
authorized designee;
(B) A pending civil rights suit against the IHA, referred by HUD's
General Counsel and instituted by the Department of Justice;
(C) Outstanding HUD findings of IHA noncompliance with civil rights
statutes and executive orders under Sec. 950.115, or implementing
regulations, as a result of formal administrative proceedings, unless
the IHA is implementing a HUD-approved resident selection and
assignment plan or compliance agreement designed to correct the area(s)
of noncompliance;
(D) A deferral of the processing of applications from the IHA
imposed by [[Page 18244]] HUD under title VI of the Civil Rights Act of
1964 (42 U.S.C. 2000d) and Sec. 950.115, the Attorney General's
Guidelines (28 CFR 50.3) and HUD's title VI regulations (24 CFR 1.8)
and procedures (HUD Handbook 8040.1), or under section 504 of the
Rehabilitation Act of 1973 (29 U.S.C. 794) and HUD's implementing
regulations (24 CFR 8.57); or
(E) An adjudication of a violation under any of the authorities
under Sec. 950.115 in a civil action filed against the IHA by a private
individual, unless the IHA is implementing a HUD-approved resident
selection and assignment plan or compliance agreement designed to
correct the area(s) of noncompliance.
(3) FHEO Division review. The processing office shall request the
appropriate FHEO Division of the Regional Office to identify any IHAs
with equal opportunity-related problems. After consulting with Regional
FHEO, as appropriate, and reviewing its own files, the FHEO Division
shall identify each IHA by the following categories and provide any
other relevant information within the requested time frame:
(i) There are no known equal opportunity-related problems;
(ii) There are known equal opportunity-related problems, as
identified; or
(iii) There are circumstances as set forth in paragraph (e)(2) of
this section.
(f) Technical processing. When an application is determined to be
complete and responsive to the NOFA and eligible for processing,
technical processing, consisting of the following, shall be
accomplished:
(1) The Area ONAP shall categorize the eligible IHAs and their
developments into two processing groups: Group 1 for Emergency
Modernization, and Group 2 for Other Modernization. IHA developments
may be included in both groups, and the same development may be in each
group. The IHA only needs to submit one application that includes needs
that the Area ONAP will process under Group 1 or Group 2. However, the
IHA can submit Emergency Modernization applications whenever needed.
Group 2 developments are subject to the long-term viability and
reasonable cost analysis. Preference will be given to IHAs that request
assistance for developments having conditions that threaten the health
or safety of the residents or having a significant number of vacant,
substandard units; and that have demonstrated a capability of carrying
out the activities proposed. Within Group 2, the Secretary may give
priority to compliance with statutory, regulatory, and court-ordered
deadlines.
(2) The Area ONAP will evaluate the Group 2 IHAs and developments
to determine eligibility and acceptability based on the technical
review factors in paragraph (g) of this section. Based on these
factors, the Area ONAP shall determine the applications that, in its
judgment, are approvable. Selections then shall be made in accordance
with paragraph (h) of this section.
(g) Technical review factors. The technical review factors for
assistance include:
(1) Extent and urgency of need, including need to comply with
statutory, regulatory, or court-ordered deadlines;
(2) Extent of vacancies;
(3) IHA's modernization capability;
(4) IHA's management capability;
(5) Degree of resident involvement in IHA operations;
(6) Degree of IHA activity in resident initiatives, including
resident management, economic development, and drug elimination
efforts;
(7) Degree of resident employment;
(8) Local government support for proposed modernization; and
(9) Such additional factors as the Secretary determines necessary
and appropriate.
(h) Rating and ranking. The Area ONAP shall rate and rank each
application in Group 2 on the basis of its assessment of the
application using the technical review factors set forth in paragraph
(g) of this section and in the NOFA. The Area ONAP shall identify for
joint review selection the highest IHA ranking applications in Group 2
in descending order and other Group 2 IHAs with lower ranking
applications but with high priority needs, which most reasonably
approximate the amount of modernization which can be funded. High
priority needs are nonemergency needs, but related to: health or
safety; vacant, substandard units; structural or system integrity; or
compliance with statutory, regulatory, or court-ordered deadlines. All
Group 1 applications would be automatically selected for joint review.
(i) Joint review. HUD shall notify each IHA whose application has
been selected for further processing as to whether the joint review
will be conducted on-site or off-site (e.g., by telephone or in-office
meeting). The purpose of the joint review is to discuss the proposed
modernization program, as set forth in the application, and determine
the size of the grant, if any, to be awarded. If the IHA has not
included all its developments in the CIAP application, HUD may not, as
a result of joint review, consider funding any nonemergency work at
excluded developments or subsequently approve use of leftover funds at
excluded developments. An IHA shall prepare for the joint review by
preparing a draft CIAP budget, and reviewing the other items to be
covered during the joint review, as prescribed by HUD. If conducted on-
site, the joint review may include an inspection of the proposed
physical work. IHAs not selected for joint review will be advised in
writing of the reasons for nonselection.
(j) HUD awards. Upon completion of the joint review, HUD shall
adjust the amounts to be awarded, as necessary, based on information
obtained at Joint Review, including the information received as a
result of the FHEO review and completion of the environmental review,
and announce the IHAs selected for CIAP grants (subject to their
submission of an approvable CIAP budget and any other required
documents). HUD would request the funded IHA to submit a CIAP budget,
including an implementation schedule, a resolution by the IHA Board of
Commissioners (approving the CIAP budget and containing certifications
required by HUD), and any other necessary documents.
(k) ACC amendment. After HUD approval of the CIAP budget, HUD and
the IHA shall enter into an ACC amendment in order for the IHA to
requisition modernization funds. The ACC amendment shall require low-
income use of the housing for not less than 20 years from the date of
the ACC amendment (subject to sale of homeownership units in accordance
with the terms of the ACC). HUD has the authority to condition an ACC
amendment (e.g., to require an IHA to hire a modernization coordinator
or contract administrator to a administer its modernization program).
(l) Declaration of trust. An IHA shall execute and file for record
a Declaration of Trust as provided under the ACC to protect the rights
and interests of HUD throughout the 20-year period during which the IHA
is obligated to operate its developments in accordance with the ACC,
the Act, and HUD regulations and requirements. A Declaration of Trust
is not required for Mutual Help units.
Sec. 950.624 Resident and homebuyer participation.
(a) Resident participation. For a rental development only, the IHA
shall establish a Partnership Process, as defined in Sec. 950.102, to
develop, implement, and monitor the CIAP. Before submission of the
application, an IHA shall consult with the residents, the
[[Page 18245]] resident organization, or the RMC (see subpart O of this
part) of the development being proposed for modernization regarding its
intent to submit an application for CIAP funds. An IHA shall give
residents a reasonable opportunity to present their views on the
proposed modernization program and alternatives to it, and give full
and serious consideration to resident recommendations. An IHA shall
respond in writing to the residents, the resident organization, or the
RMC, indicating its acceptance or rejection of resident
recommendations, consistent with HUD requirements and the IHA's own
determination of efficiency, economy, and need. After HUD approval of
the modernization program, an IHA shall inform the residents, the
resident organization, or the RMC of the approved work items and its
progress during implementation. If HUD does not approve the
modernization program, an IHA shall so inform the residents, the
resident organization, or the RMC.
(b) Homebuyer participation: Turnkey III and Mutual Help. For a
homeownership development only, before submission of the application,
an IHA shall consult with the homebuyer families of the development
proposed for modernization regarding its intent to submit an
application for CIAP funds. An IHA shall give the homebuyer families a
reasonable opportunity to present their views on the proposed
modernization program and alternatives to it, and give full and serious
consideration to their recommendations. An IHA shall respond in writing
to the homebuyer families, indicating its acceptance or rejection of
their recommendations, consistent with HUD requirements and the IHA's
own determination of efficiency, economy, and need. After HUD approval
of the modernization program, an IHA shall inform the homebuyer
families of the approved work items and its progress during
implementation. If HUD does not approve the modernization program, an
IHA shall so inform the homebuyer families.
Sec. 950.635 Initiation of modernization activities.
After HUD has approved the modernization program and entered into
an ACC amendment with the IHA, an IHA shall undertake the modernization
activities and expenditures set forth in its approved CIAP budget in a
timely, efficient, and economical manner, subject to the following
requirement. An IHA shall ensure that there is no duplication between
the activities carried out with CIAP funds and the activities carried
out with other funds.
Sec. 950.639 Fund requisitions.
An IHA shall requisition modernization funds against the approved
CIAP budget in accordance with procedures prescribed by HUD.
Sec. 950.642 Contracting requirements.
An IHA shall comply with the prevailing wage rate requirements in
Secs. 950.120 and 950.172, as well as the Indian Preference
requirements in Sec. 950.175. In addition, an IHA shall comply with
State, tribal, and local laws and Federal requirements, as set forth in
24 CFR part 85, except as follows:
(a) Architect/engineer and other professional services contracts.
Notwithstanding 24 CFR 85.36(g), an IHA shall comply with HUD
requirements to either:
(1) If the proposed contract amount exceeds the HUD-established
threshold, submit the contract for prior HUD approval before execution
or issuance; or
(2) If the proposed contract amount does not exceed the HUD-
established threshold, certify that the scope of work is consistent
with any agreements reached with HUD, and that the amount is
appropriate and does not exceed the HUD-approved CIAP budget amount.
(b) Assurance of completion. For each construction contract over
$25,000, the contractor shall furnish a performance and payment bond
for 100 percent of the contract price or, notwithstanding 24 CFR
85.36(h), a 20 percent cash escrow, or a 25 percent letter of credit
or, as may be required by law, separate performance and payment bonds,
each for 50 percent or more of the contract price.
(c) Construction solicitations. Notwithstanding 24 CFR 85.36(g), an
IHA shall comply with HUD requirements to either:
(1) If the estimated contract amount exceeds the HUD-established
threshold, submit a complete construction solicitation for prior HUD
approval before issuance; or
(2) If the estimated contract amount does not exceed the HUD-
established threshold, certify receipt of the required architect's/
engineer's certification that the construction documents accurately
reflect HUD-approved work and meet the modernization and energy
conservation standards and that the construction solicitation is
complete and includes all mandatory items.
(d) Contract awards. An IHA shall obtain HUD approval of the
proposed award of a contract if the award exceeds the HUD-approved CIAP
budget amount or if the procurement meets the criteria set forth in 24
CFR 85.36(g)(2)(i) through (iv). In all other instances, an IHA shall
make the award without HUD approval after the IHA has certified that:
(1) The solicitation and award procedures were conducted in
compliance with State, tribal, and local laws and Federal requirements;
(2) The award does not exceed the approved CIAP budget amount and
does not meet the criteria in 24 CFR 85.36(g)(2) (i) through (iv) for
prior HUD approval; and
(3) The contractor is not on the Lists of Parties Excluded from the
Federal Procurement or Nonprocurement Programs.
(e) Contract modifications. Notwithstanding 24 CFR 85.36(g), except
in an emergency endangering life or property, an IHA shall comply with
HUD requirements to either:
(1) If the proposed contract modification exceeds the HUD-
established threshold, submit the proposed modification for prior HUD
approval before issuance; or
(2) If the proposed contract modification does not exceed the HUD-
established threshold, certify that the proposed modification is within
the scope of the contract and that any additional costs are within the
latest HUD-approved CIAP budget or otherwise approved by HUD.
(f) Construction requirements. An IHA may be required to submit to
HUD periodic progress reports and construction completion documents for
prior HUD approval above a HUD-specified amount.
(g) Previous participation. An IHA shall ensure that the contractor
is not on the GSA List of Parties Excluded from Federal Procurement and
Nonprocurement Programs.
Sec. 950.645 On-site inspections.
It is the responsibility of the IHA, not HUD, to provide, by
contract or otherwise, adequate and competent supervisory and
inspection personnel during modernization, whether work is performed by
contract or force account labor, and with or without the services of an
architect/engineer, to assure work quality and progress.
Sec. 950.648 Budget revisions.
An IHA shall not incur any modernization cost in excess of the
total HUD-approved CIAP budget. An IHA shall submit a budget revision,
in a form prescribed by HUD, if the IHA plans (within the total
approved CIAP budget) to incur modernization costs in excess of the
approved CIAP budget amount for any development. An IHA also shall
comply with HUD requirements to either:
(a) Submit the proposed CIAP budget revision for prior HUD approval
if the [[Page 18246]] IHA plans to delete or substantially revise
approved work items, add new work items, or incur modernization costs
in excess of the HUD-established threshold; or
(b) Certify that the revisions are necessary to carry out the
approved work and do not result in the approved CIAP budget amount for
any development being exceeded.
Sec. 950.651 Progress reports.
For each six-month period, beginning October 1, until completion of
the modernization program or expenditure of all funds, an IHA shall
submit a report, in a form prescribed by HUD, to the HUD Area ONAP.
Where HUD determines that an IHA is having implementation problems, HUD
may require more frequent reporting. The report shall include:
(a) Modernization fund obligations and expenditures and progress
against the approved implementation schedule(s); and
(b) Management improvement progress, as applicable.
Sec. 950.654 HUD review of IHA performance.
HUD shall periodically review IHA performance in carrying out its
approved modernization program to determine compliance with HUD
requirements, the quality of an IHA's inspections as evidenced by the
quality of work, and the timeliness of the work. Where deficiencies are
noted, an IHA shall take corrective action, as directed by HUD.
Sec. 950.657 Fiscal closeout.
Upon completion or termination of a modernization program, the IHA
shall submit the actual modernization cost certificate, in a form
prescribed by HUD, to HUD for review, audit verification, and approval.
An IHA shall immediately remit any excess funds provided by HUD. The
audit shall follow the guidelines prescribed in 24 CFR part 44, Non-
Federal Government Audit Requirements. If the audited modernization
cost certificate indicates that there are still excess funds, an IHA
shall immediately remit the excess funds as directed by HUD. If the
audited modernization cost certificate discloses unauthorized or
ineligible expenditures, an IHA shall take such corrective actions as
HUD may direct.
Comprehensive Grant Program (For IHAs That Own or Operate 250 or
More Indian Housing Units)
Sec. 950.660 Purpose.
(a) The purpose of the Comprehensive Grant Program (CGP) under this
subpart I is:
(1) To provide modernization assistance to IHAs that own or operate
a total of 250 or more units of Indian Housing on a reliable and more
predictable basis; to enable them to operate, upgrade, modernize, and
rehabilitate Indian housing developments; to ensure their continued
availability for low-income families as decent, safe, and sanitary
housing;
(2) To provide considerable discretion to IHAs to decide the
specific improvements, the manner of their execution, and the timing of
the expenditure of funds;
(3) To simplify significantly the program of Federal assistance for
capital improvements in Indian housing developments;
(4) To provide increased opportunities and incentives for more
efficient management of Indian housing developments; and
(5) To give IHAs greater control in planning and expending funds
for modernization, rehabilitation, maintenance, and improvement of
Indian housing developments to benefit low-income families.
(b) The purpose of the sections under the undesignated heading
``Comprehensive Grant Program'' (CGP) is to set forth the policies and
procedures for the CGP under which IHAs that own and operate a total of
250 or more units of Indian housing receive financial assistance on a
formula grant basis in accordance with Sec. 950.601(e) and (f) for the
modernization of Indian housing developments.
Sec. 950.666 Eligible costs.
(a) General. An IHA may use financial assistance received under the
CGP for the following eligible costs:
(1) Undertaking activities described in its approved Five-Year Plan
under Sec. 950.672(d)(5);
(2) Carrying out emergency work, whether or not the need is
indicated in the IHA's approved Comprehensive Plan (including Five-Year
Action Plan) or Annual Submission;
(3) Funding a replacement reserve to carry out eligible activities
in future years, subject to the restrictions set forth in paragraph (f)
of this section;
(4) Preparing the Comprehensive Plan and Action Plan under
Sec. 950.672, including reasonable costs necessary to assist residents
to participate in a meaningful way in the planning, implementation, and
monitoring process; and
(5) Carrying out an audit, in accordance with 24 CFR part 44 and
Sec. 950.120.
(b) Demonstration of viability. Except in the case of emergency
work, an IHA shall only expend funds on a development for which the IHA
has demonstrated that completion of the improvements and replacements
identified in the Comprehensive Plan will reasonably ensure the long-
term physical and social viability of the development at a reasonable
cost or for essential nonroutine maintenance needed to keep the
property habitable until residents are relocated.
(c) Physical improvement costs. Eligible costs include alterations,
betterments, additions, replacements, and nonroutine maintenance that
are necessary to meet the modernization and energy conservation
standards prescribed in Sec. 950.603. These mandatory standards may be
exceeded only when the IHA determines that it is necessary or highly
desirable for the long-term physical and social viability of the
individual development. If demolition or disposition is proposed, the
IHA shall comply with subpart M of this part. Additional dwelling space
may be added to existing units.
(d) Costs for Turnkey III developments. (1) General. Eligible
physical improvement costs for existing Turnkey III developments are
limited to work items that are not the responsibility of the homebuyer
families and that are related to health and safety, correction of
development deficiencies, physical accessibility, energy audits and
cost-effective energy conservation measures, and lead-based paint
testing and abatement. In addition, management improvements are
eligible modernization costs for existing Turnkey III developments.
(2) Ineligible costs. Nonroutine maintenance or replacements,
additions, and items that are the responsibility of the homebuyer
families are ineligible costs.
(3) Exception for vacant or non-homebuyer-occupied Turnkey III
units. (i) Notwithstanding the requirements of paragraph (d)(1) of this
section, an IHA may substantially rehabilitate a Turnkey III unit
whenever the unit becomes vacant or is occupied by a non-homebuyer
family. An IHA that intends to use funds under this paragraph shall
identify in its needs assessment the estimated number of units that the
IHA is proposing for substantial rehabilitation and subsequent sale. In
addition, an IHA shall demonstrate in its needs assessment that the IHA
has homebuyers who are both eligible for homeownership, in accordance
with the requirements of 24 CFR part 950, Subpart G, and who have
demonstrated their intent to be placed into each of the Turnkey III
units proposed to be substantially rehabilitated; [[Page 18247]]
(ii) Before an IHA may be approved for the substantial
rehabilitation of a unit under this paragraph, it shall first deplete
any Earned Home Payments Account (EHPA) or Non-Routine Maintenance
Reserve (NRMR) pertaining to the unit, and request the maximum amount
of operating subsidy. Any increase in the value caused by its
substantial rehabilitation under this paragraph shall be reflected
solely by its subsequent appraised value, and not by an automatic
increase in its selling price.
(e) Demolition and conversion costs. Eligible costs include:
(1) Demolition of dwelling units or nondwelling facilities approved
by HUD under subpart M of this part, and related costs, such as
clearing and grading the site after demolition and subsequent site
improvement to benefit the remaining portion of the existing
development; and
(2) Conversion of existing dwelling units to different bedroom
sizes.
(f) Replacement reserve costs. (1) Funding a replacement reserve to
carry out eligible activities in future years is an eligible cost,
subject to the following restrictions:
(i) Annual CGP funds are not needed for existing needs, as
identified by the IHA in its needs assessments;
(ii) A physical improvement requires more funds than the IHA would
receive under its annual formula allocation; or
(iii) A management improvement requires more funds than the IHA may
use under its 20 percent limit for management improvements (except as
provided in paragraph (m)(1) of this section), and the IHA needs to
save a portion of its annual grant in order to combine it with a
portion of subsequent year(s) grants, to fund the work item;
(2) The IHA shall invest replacement reserve funds so as to
generate a return equal to or greater than the average 91-day Treasury
bill rate;
(3) Interest earned on funds in the replacement reserve will not be
added to the IHA's income in the determination of an IHA's operating
subsidy eligibility, but shall be used for eligible modernization
costs;
(4) To the extent that its annual formula allocation and any
unobligated balances of modernization funds are not adequate to meet
emergency needs, an IHA shall first use its replacement reserve, if
funded, to meet emergency needs, before requesting funds from the $75
million reserve. An IHA is not required to use its replacement reserve
for natural and other disasters.
(g) Management improvement costs. Management improvements that are
needed to upgrade the operation of the IHA's developments, sustain
physical improvements at those developments, or correct management
deficiencies identified by the IHA in its Comprehensive Plan are
eligible costs. An IHA's ongoing operating expenses, including direct
provision of social services through either contract or force account
labor, are ineligible management improvement costs.
(1) Economic development activities costs. Economic development
activities such as job training, resident employment, and resident
businesses, for the purpose of carrying out activities related to the
eligible management and physical improvements are eligible costs, as
approved by HUD. HUD encourages IHAs, to the greatest extent feasible,
to hire residents as trainees or employees to carry out the
modernization program under this subpart, and to contract with
resident-owned businesses for modernization work.
(2) Resident management costs. Technical assistance to a resident
organization or resident management corporation (RMC), as defined in
Sec. 950.962, in order to determine the feasibility of the resident
management entity or assist in its formation is an eligible cost.
(3) Resident homeownership costs. The study of the feasibility of
converting rental to homeownership units, as well as the preparation of
an application for conversion to homeownership, is an eligible cost.
(h) Drug elimination costs. Drug elimination activities involving
management or physical improvements are eligible costs, as specified by
HUD.
(i) Administrative costs. Administrative costs necessary for the
planning, design, implementation, and monitoring of the physical and
management improvements are eligible costs and include the following:
(1) The salaries of nontechnical and technical IHA personnel
assigned full-time or part-time to modernization are eligible costs
only if the scope and volume of the work are beyond that which could be
reasonably expected to be accomplished by such personnel in the
performance of their nonmodernization duties. The IHA shall properly
apportion to the appropriate program budget any direct charges for the
salaries of assigned full- or part-time staff (e.g., to the CIAP, CGP,
or operating budgets);
(2) IHA contributions to employee benefit plans on behalf of
nontechnical and technical IHA personnel are eligible costs in direct
proportion to the amount of salary charged to the CGP; and
(3) Other administrative costs, such as telephone and facsimile, as
specified by HUD.
(j) Audit costs.
(k) Architectural/engineering and consultant fees. Fees for
planning, preparation of needs assessments and required documents,
detailed design work, preparation of construction and bid documents,
lead-based paint testing, etc., are eligible costs.
(l) Relocation costs. Relocation costs as a direct result of
rehabilitation, demolition, or acquisition for a CGP-funded activity
are eligible costs, as required by Sec. 950.117.
(m) Cost limitation. (1) Notwithstanding the full fungibility of
work items in Sec. 950.675(c), an IHA shall not use more than a total
of 20 percent of its annual grant for management improvement costs in
account 1408, unless specifically approved by HUD.
(2) Notwithstanding the full fungibility of work items in
Sec. 950.675(c), an IHA shall not use more than a total of 10 percent
of its annual grant on administrative costs in account 1410, excluding
any costs related to lead-based paint or asbestos testing (whether
conducted by force account employees or by a contractor), in-house
architectural/engineering (A/E) work, or other special administrative
costs required by State, tribal, or local law, unless specifically
approved by HUD;
(3) When the physical or management improvement will benefit
programs other than Indian Housing, such as Section 8, local renewal,
etc., eligible costs are limited to the amount directly attributable to
the Indian Housing Program.
(n) Ineligible costs. An IHA (or an RMC acting on behalf of an IHA)
shall not make luxury improvements, or carry out any other ineligible
activities, as specified by HUD.
Sec. 950.667 Reserve for emergencies and disasters.
(a) Emergencies. (1) Eligibility for assistance. An IHA (including
an IHA that is determined to be high risk under Sec. 950.135) may
obtain funds at any time, for any eligible emergency work item as
defined in Sec. 950.102 (for IHAs participating in CGP) or for any
eligible emergency work item (described as emergency modernization in
Sec. 950.102) (for IHAs participating in CIAP), from the reserve
established under Sec. 950.601(b). However, emergency reserve funds may
not be provided to an IHA participating in CGP that has the necessary
funds available from any other source, including its annual formula
allocation under Sec. 950.601(e) and (f), other unobligated
modernization [[Page 18248]] funds, and its replacement reserves under
Sec. 950.666. An IHA is not required to have an approved Comprehensive
Plan under Sec. 950.672 before it can request emergency assistance from
this reserve. Emergency reserve funds may not be provided to an IHA
participating in CIAP unless it does not have the necessary funds
available from any other source, including unobligated CIAP, and no
CIAP modernization funding is available from HUD for the remainder of
the fiscal year.
(2) Procedure. To obtain emergency funds, an IHA shall submit a
request, in a form to be prescribed by HUD, that demonstrates that
without the requested funds from the set-aside under this section, the
IHA does not have adequate funds available to correct the conditions
that present an immediate threat to the health or safety of the
residents. HUD will immediately process a request for such assistance,
and if it determines that the IHA's request meets the requirements of
paragraph (a)(1) of this section, it shall approve the request, subject
to the availability of funds in the reserve.
(3) Repayment. A CGP IHA that receives assistance for its emergency
needs from the reserve under Sec. 950.601(b) shall repay such
assistance from its future allocations of assistance, as available. For
IHAs participating in the CGP, HUD shall deduct up to 50 percent of an
IHA's succeeding year's formula allocation under Sec. 950.601(e) and
(f) to repay emergency funds previously provided by HUD to the IHA. The
remaining balance, if any, shall be deducted from an IHA's succeeding
years' formula allocations.
(b) Natural and other disasters. (1) Eligibility for assistance. An
IHA (including an IHA that has been determined by HUD not to be
administratively capable under Sec. 950.135) may request assistance at
any time from the reserve under Sec. 950.601(b) for the purpose of
permitting the IHA to respond to a natural or other disaster. To
qualify for assistance, the disaster shall pertain to an extraordinary
event affecting only one or a few IHAs, such as an earthquake or
hurricane. Any disaster declared by the President (or that HUD
determines would qualify for a Presidential declaration if it were on a
larger scale) qualifies for assistance under this paragraph. An IHA may
receive funds from the reserve regardless of the availability of other
modernization funds or reserves, but only to the extent its needs are
in excess of its insurance coverage. An IHA is not required to have an
approved Comprehensive Plan under Sec. 950.672 before it can request
assistance from the reserve under Sec. 950.601(b).
(2) Procedure. To obtain funding for natural or other disasters
under Sec. 950.601(b), an IHA shall submit a request, in a form
prescribed by HUD, that demonstrates that it meets the requirements of
paragraph (b)(1) of this section. HUD will immediately process a
request for such assistance, and if it determines that the request
meets the requirements under paragraph (b)(1) of this section, it will
approve the request, subject to the availability of funds in the
reserve.
(3) Repayment. Funds provided to an IHA under paragraph (b)(1) of
this section for natural and other disasters shall be in the form of a
grant, and are not required to be repaid.
Sec. 950.669 Allocation of assistance.
(a) Submission of formula characteristics report. In its first year
of participation in the CGP, each IHA shall verify and provide data to
HUD, in a form and at a time to be prescribed by HUD, concerning IHA
and development characteristics, so that HUD can develop the IHA's
annual funding allocation under the CGP in accordance with
Sec. 950.601(e) and (f). If an IHA fails to submit to HUD the formula
characteristics report by the prescribed deadline, HUD will use the
data that it has available concerning IHA and development
characteristics for purposes of calculating the IHA's formula share.
After its first year of participation in the CGP, an IHA is required to
respond to data transmitted by HUD if there have been changes to its
inventory from that previously reported, or when requested by HUD. On
an annual basis, HUD will transmit to the IHA the formula
characteristics report that reflects the data that will be used to
determine the IHA's formula share. The IHA will have 30 days to review
and advise HUD of errors in this HUD report. Necessary adjustments will
be made to the IHA's data before the formula is run for the current
FFY. On an annual basis, HUD will transmit to the IHA the formula
characteristics report that reflects the data that will be used to
determine the IHA's formula share. The IHA will have at least 30
calendar days to review and advise HUD of errors in this HUD report.
Necessary adjustments will be made to the IHA's data before the formula
is run for the current FFY.
(b) HUD notification of formula amount; appeal rights. (1) Formula
amounts notification. After HUD determines an IHA's formula allocation
under Sec. 950.601(e) and (f) based upon the IHA, development, and
community characteristics, it shall notify the IHA of its formula
amount and provide instructions on the Annual Submission in accordance
with Secs. 950.672(a) and 950.678;
(2) Appeal based upon unique circumstances. An IHA may appeal in
writing HUD's determination of its formula amount within 60 calendar
days of the date of HUD's determination on the basis of ``unique
circumstances.'' The IHA shall indicate what is unique, specify the
manner in which it is different from all other IHAs participating in
the CGP, and provide any necessary supporting documentation. HUD shall
render a written decision on an IHA's appeal under this paragraph
within 60 calendar days of the date of its receipt of the IHA's request
for an appeal. HUD shall publish in the Federal Register a description
of the facts supporting any successful appeals based upon ``unique
circumstances.'' Any adjustments resulting from successful appeals in a
particular FFY under this paragraph shall be made from the subsequent
years' allocation of funds under this part;
(3) Appeal based upon error. An IHA may appeal in writing HUD's
determination of its formula amount within 60 calendar days of the date
of HUD's determination on the basis of an error. The IHA may appeal on
the basis of error the correctness of data in the formula
characteristics report. The IHA shall describe the nature of the error
and provide any necessary supporting documentation. HUD shall respond
to the IHA's request within 60 calendar days of the date of its receipt
of the IHA's request for an appeal. Any adjustment resulting from
successful appeals in a particular FFY under this paragraph shall be
made from subsequent years' allocation of funds under this part;
(c) IHAs determined to be high risk. If an IHA is determined to
have serious deficiencies in accordance with Sec. 950.135, or if the
IHA fails to meet, or to make reasonable progress toward meeting, the
goals previously established in its management improvement plan under
Sec. 950.135, HUD may designate the IHA as high risk. If HUD designates
the IHA as high risk with respect to modernization, HUD may withhold
some or all of the IHA's annual grant; HUD may declare a breach of the
grant agreement with respect to all or some of the IHA's functions, so
that the IHA or a particular function of the IHA may be administered by
another entity; or HUD may take other sanctions authorized by law or
regulation. [[Page 18249]]
(d) Obligation of formula funding. All formula funding should be
obligated within two years of approval. However, due to the size of the
grant, complexity of the work, and other factors, the IHA may propose,
and HUD may approve, a longer time period.
Sec. 950.672 Comprehensive Plan (including Five-Year Action Plan).
(a) Submission. As soon as possible after modernization funds first
become available for allocation under this subpart, HUD shall notify
IHAs in writing of their formula amount. For planning purposes, IHAs
may use the amount they received under CGP in the prior year in
developing their Comprehensive Plan, or they may wait for the annual
HUD notification of formula amount under Sec. 950.669(b)(1).
(b)(1) Resident participation. An IHA is required to develop,
implement, monitor, and annually amend portions of its Comprehensive
Plan in consultation with residents of the developments covered by the
Comprehensive Plan, and with democratically elected resident groups. In
addition, the IHA shall also consult with resident management
corporations (RMCs) to the extent that an RMC manages a development
covered by the Comprehensive Plan. The IHA, in partnership with the
residents, shall develop and implement a process for resident
participation that ensures that residents are involved in a meaningful
way in all phases of the CGP. Such involvement shall include
implementing the Partnership Process as a critical element of the CGP.
(2) Establishment of Partnership Process. The IHA, in partnership
with the residents of the developments covered by the plan, and with
democratically elected resident groups, shall establish a Partnership
Process to develop and implement the goals, needs, strategies, and
priorities identified in the Comprehensive Plan. After residents have
organized to participate in the CGP, they may decide to establish a
volunteer advisory group of experts in various professions to assist
them in the CGP Partnership Process. The Partnership Process shall be
designed to achieve the following:
(i) To assure that residents are fully briefed and involved in
developing the content of, and monitoring the implementation of, the
Comprehensive Plan including, but not limited to, the physical and
management needs assessments, viability analysis, Five-Year Action
Plan, and Annual Statement. If necessary, the IHA shall develop and
implement capacity building strategies to ensure meaningful resident
participation in CGP. Such technical assistance efforts for residents
are eligible management improvement costs under CGP;
(ii) To enable residents to participate, on an IHA-wide or area-
wide basis, in ongoing discussions of the Comprehensive Plan and
strategies for its implementation, and in all meetings necessary to
ensure meaningful participation.
(3) Public notice. Within a reasonable amount of time before the
advance meeting for residents and duly elected resident organizations
under paragraph (b)(4) of this section, and the public hearing under
paragraph (b)(5) of this section, the IHA shall provide public notice
of the advance meeting and the public hearing in a manner determined by
the IHA and which ensures notice to all duly elected resident
organizations;
(4) Advance meeting for residents and duly elected resident
organizations. The IHA shall hold, within a reasonable amount of time
before the public hearing under paragraph (b)(5) of this section, a
meeting for residents and duly elected resident organizations at which
the IHA shall explain the components of the Comprehensive Plan. The
meeting shall be open to all residents and duly elected resident
organizations;
(5) Public Hearing. The IHA shall hold at least one public hearing,
and any appropriate number of additional hearings, to present
information on the Comprehensive Plan/Annual Submission and the status
of prior approved programs. The public hearing shall provide ample
opportunity for residents, duly elected resident organizations, local
government officials, and other interested parties to express their
priorities and concerns. The IHA shall give full consideration to the
comments and concerns of residents, local government officials, and
other interested parties.
(c) Local government participation. An IHA shall consult with
appropriate local government officials with respect to the development
of the Comprehensive Plan. In the case of an IHA with developments in
multiple jurisdictions, the IHA may meet this requirement by consulting
with an advisory group representative of all the jurisdictions. At a
minimum, such consultation shall include providing such officials with:
(1) Advance written notice of the public hearing required under
paragraph (b)(5) of this section;
(2) A copy of the summary of total preliminary estimated costs to
address physical needs by each development and management/operations
needs IHA-wide, a specific description of the IHA's process for
maximizing the level of participation by residents, a summary of the
general issues raised on the plan by residents and others during the
public comment process, and the IHA's response to the general issues.
IHA records, such as minutes of planning meetings or resident surveys,
shall be maintained in the IHA's files and made available to residents,
resident organizations, and other interested parties upon request.
(d) Contents of Comprehensive Plan. The Comprehensive Plan shall
identify all of the physical and management improvements needed for an
IHA and all of its developments, and that represent needs eligible for
funding under Sec. 950.666. The plan shall also include preliminary
estimates of the total cost of these improvements. The plan shall set
forth general strategies for addressing the identified needs, and
highlight any special strategies, such as major redesign or partial
demolition of a development, that are necessary to ensure the long-term
physical and social viability of the development. Each Comprehensive
Plan shall contain the following elements:
(1) Summaries. An IHA shall include as part of its Comprehensive
Plan the following summaries:
(i) A summary of total preliminary estimated costs to address
physical needs by each development and management needs IHA-wide; and
(ii) A specific description of the IHA's process for maximizing the
level of participation by residents during the development,
implementation, and monitoring of the Comprehensive Plan, a summary of
the general issues raised on the plan by residents and others during
the public comment process, and the IHA's response to the general
issue. IHA records, such as minutes of planning meetings or resident
surveys, shall be maintained in the IHA's files and made available to
residents, duly elected resident organizations, and other interested
parties, upon request.
(2) Physical needs assessment. (i) Requirements. The physical needs
assessment identifies all of the work that an IHA would need to
undertake to bring each of its developments up to the modernization and
energy conservation standards, as required by section 14(e)(1)(A)(ii)
of the Act, to comply with lead-based paint testing and abatement
requirements under Sec. 950.120(g), and to comply with other program
requirements under Sec. 950.120. The physical needs assessment is
completed without regard to the availability of funds, and shall
include the following information with respect to each of an IHA's
developments: [[Page 18250]]
(A) A brief summary of the physical improvements necessary to bring
each development to a level at least equal to the modernization
standards contained in HUD Handbook 7485.2 (Public and Indian Housing
Modernization Standards), and to the energy conservation and life-cycle
cost-effective performance standards, as required in Sec. 950.603, to
comply with the Lead-Based Testing and Abatement requirements under
Sec. 950.120(g). The IHA should also indicate the relative urgency of
need. If the IHA has no physical improvement needs at a particular
development at the time it completes its Comprehensive Plan, it shall
so indicate. Similarly, if the IHA intends to demolish, partially
demolish, convert, or dispose of a development (or units within a
development), it shall so indicate in the summary of physical
improvements;
(B) The replacement needs of equipment systems and structural
elements that will be required to be met (assuming routine and timely
maintenance is performed) during the period covered by the action plan;
(C) A preliminary estimate of the cost to complete the physical
work;
(D) The projected FFY in which the IHA anticipates that the
development will meet the modernization and energy conservation
standards;
(E) In addition, the IHA shall provide with respect to vacant or
non-homebuyer-occupied Turnkey III units, the estimated number of units
that the IHA is proposing for substantial rehabilitation and subsequent
sale, in accordance with Sec. 950.666(d)(3).
(ii) Sources of data. The IHA shall identify in its needs
assessment the sources from which it derived data to develop the
physical needs assessment under this paragraph (d)(3), and shall retain
such source documents in its files.
(3) Management needs assessment. (i) Requirements. The plan shall
include a comprehensive assessment of the improvements needed to
upgrade the management and operation of the IHA and of each viable
development, so that decent, safe, and sanitary living conditions will
be provided. The management needs assessment shall include the
following, with the relative urgency of need indicated:
(A) An identification of the most current needs related to the
following areas (to the extent that any of these needs is addressed in
a HUD-approved management improvement plan, the IHA may simply include
a cross-reference to these documents):
(1) The management, financial, and accounting control systems of
the IHA;
(2) The adequacy and qualifications of personnel employed by the
IHA in the management and operation of its developments, for each
significant category of employment;
(3) The adequacy and efficacy of:
(i) Resident programs and services;
(ii) Resident and development security;
(iii) Resident selection and eviction;
(iv) Occupancy;
(v) Maintenance;
(vi) Resident management and resident capacity building programs;
(vii) Resident opportunities for employment and business
development and other self-sufficiency opportunities for residents; and
(viii) Homeownership opportunities for residents.
(B) Any additional deficiencies identified through audits and HUD
monitoring reviews that are not addressed under paragraph (d)(3)(i)(A)
of this section. To the extent that any of these is addressed in a HUD-
approved management improvement plan, the IHA may include a cross-
reference to these documents;
(C) Any other management and operations needs that the IHA wants to
address at the IHA-wide or development level;
(D) An IHA-wide preliminary cost estimate for addressing all the
needs identified in the management needs assessment, without regard to
the availability of funds; and
(E) The projected FFY in which the IHA anticipates that all
identified management deficiencies will be corrected.
(ii) Sources of data. The IHA shall identify in its needs
assessment the sources from which it derived data to develop the
management needs assessment under this paragraph, and shall retain such
source documents in its files.
(4) Demonstration of long-term physical and social viability. (i)
General. The plan shall include, on a development-by-development basis,
an analysis of whether completion of the improvements and replacements
identified under paragraphs (d)(2) and (d)(3) of this section will
reasonably ensure the long-term physical and social viability,
including achieving structural/system soundness and full occupancy of
the development at a reasonable cost. For cost reasonableness, the IHA
may choose to use the 90 percent of Total Development Cost (TDC)
approach (the preliminary estimate of hard costs for work proposed at
the development is 90 percent or less of TDC) or a cost reasonableness
approach related to the cost of individual work items as indicated by
National cost indices, adjusted by local conditions and the IHA's own
recent procurement experience. The IHA shall keep documentation in its
files to support its reasonable cost determinations of each major work
item (e.g., kitchen cabinets, exterior doors). HUD will review cost
reasonableness as part of its review of the Annual Submission and the
Performance and Evaluation Report. As necessary, HUD will review the
IHA's documentation in support of its cost reasonableness;
(ii) Determination of non-viability. When an IHA's analysis of a
development, under paragraph (d) of this section, establishes that
completion of the identified improvements and replacements will not
result in the long-term physical and social viability of the
development at a reasonable cost, the IHA shall not expend CGP funds
for the development, except for emergencies and essential nonroutine
maintenance necessary to maintain habitability until residents can be
relocated. The IHA shall specify in its Comprehensive Plan the actions
it proposes to take with respect to the nonviable development (e.g.,
demolition or disposition under 24 CFR part 950, subpart M).
(5) Five-Year Action Plan. (i) General. The Comprehensive Plan
shall include a rolling Five-Year Action Plan to carry out the
improvements and replacements (or a portion thereof) identified under
paragraphs (d)(2) and (d)(3) of this section. In developing its Five-
Year Action Plan, the IHA shall assume that the current year funding or
formula amount will be available for each year of its Five-Year Action
Plan, whichever the IHA is using for planning purposes, plus the IHA's
estimate of the funds that will be available from other sources, such
as State, local, and tribal governments. All activities specified in an
IHA's Five-Year Action Plan are contingent upon the availability of
funds.
(ii) Requirements. Under the action plan, an IHA shall indicate how
it intends to use the funds available to it under the CGP to address
the deficiencies, or a portion of the deficiencies, identified under
its physical and management needs assessments, as follows:
(A) Physical condition. With respect to the physical condition of
an IHA's developments, an IHA shall indicate in its action plan how it
intends to address, over a five-year period, the deficiencies (or a
portion of the deficiencies) identified in its physical needs
assessment so as to bring each of its developments up to a level at
least equal to the modernization and energy [[Page 18251]] conservation
standards. This would include specifying the work to be undertaken by
the IHA in major work categories (e.g., kitchens, electrical systems,
etc.); establishing priorities among the major work categories by
development and year based upon the relative urgency of need; and
estimating the cost of each of the identified major work categories. In
addition, an IHA shall estimate the FFY in which it anticipates that
the development will meet the modernization and energy conservation
standards. In developing its action plan, an IHA shall give priority to
the following:
(1) Activities required to correct emergency conditions;
(2) Activities required to meet statutory (or other legally
mandated) requirements;
(3) Activities required to meet the needs identified in the Section
504 needs assessment within the regulatory timeframes; and
(4) Activities required to complete lead-based paint testing and
abatement requirements.
(B) Management and operations. An IHA shall address in its action
plan the management and operations deficiencies (or a portion of the
deficiencies) identified in its management needs assessment, as
follows:
(1) With respect to the management and operations needs of the IHA,
the IHA shall identify how it intends to address with CGP funds, if
necessary, the deficiencies (or a portion thereof) identified in its
management needs assessment, including work identified through audits,
HUD monitoring reviews, and self-assessments (this would include
establishing priorities based upon the relative urgency of need);
(2) A preliminary IHA-wide cost estimate, by major work category.
(iii) Procedure for maintaining current Five-Year Action Plan. The
IHA shall maintain a current Five-Year Action Plan by annually amending
its Five-Year Action Plan, in conjunction with the Annual Submission;
(6) Local government statement. The Comprehensive Plan shall
include a statement signed by the chief executive officer of the
appropriate governing body (or in the case of an IHA with developments
in multiple jurisdictions, from the CEO of each such jurisdiction),
certifying as to the following:
(i) The IHA developed the Comprehensive Plan/Five-Year Action Plan
or amendments thereto in consultation with officials of the appropriate
governing body and with development residents covered by the
Comprehensive Plan/Five-Year Action Plan, in accordance with the
requirements of Sec. 950.672(b) and (c);
(ii) The Comprehensive Plan/Five-Year Action Plan or amendments
thereto are consistent with the appropriate governing body's assessment
of its low-income housing needs and that the appropriate governing body
will cooperate in providing resident programs and services; and
(iii) The IHA's proposed drug elimination activities are
coordinated with, and supportive of, local drug elimination strategies
and neighborhood improvement programs, if applicable.
(7) IHA resolution. The plan shall include a resolution adopted by
the IHA Board of Commissioners, and signed by the Board Chairman of the
IHA, approving the Comprehensive Plan or any amendments thereto and
certifying that:
(i) The IHA will comply with all policies, procedures, and
requirements prescribed by HUD for modernization, including
implementation of the modernization in a timely, efficient, and
economical manner;
(ii) IHA has established controls to assure that any activity
funded by the CGP is not also funded by any other HUD program, thereby
preventing duplicate funding of any activity;
(iii) The IHA will not provide to any development more assistance
under the CGP than is necessary to provide affordable housing, after
taking into account other government assistance provided;
(iv) The proposed physical work will meet the modernization and
energy conservation standards under Sec. 950.603;
(v) The proposed activities in the Five-Year Action Plan/Annual
Statement are consistent with the proposed or approved Comprehensive
Plan of the IHA;
(vi) The IHA will comply with applicable civil rights requirements
under Sec. 950.115, and, when applicable, will carry out the
Comprehensive Plan in conformity with title VI of the Civil Rights Act
of 1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601-3619),
and section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794);
(vii) The IHA will, to the greatest extent feasible, give
preference to the award of modernization contracts to Indian
organizations and Indian-owned economic enterprises under Sec. 950.175;
(viii) The IHA has provided to HUD any documentation that HUD has
requested to carry out its review under the National Environmental
Policy Act (NEPA) and other related authorities in accordance with 24
CFR 950.120(a) and (b), and will not obligate, in any manner, the
expenditure of CGP funds, or otherwise undertake the activities
identified in its Comprehensive Plan/Annual Statement, until the IHA
receives written notification from HUD indicating that HUD has complied
with its responsibilities under NEPA and other related authorities;
(ix) The IHA will comply with the wage rate requirements under
Sec. 950.120(c) and (d);
(x) The IHA will comply with the relocation assistance and real
property acquisition requirements under Sec. 950.117;
(xi) The IHA will comply with the requirements for physical
accessibility under Sec. 950.115(d);
(xii) The IHA will comply with the requirements for access to
records and audits under Sec. 950.120(e);
(xiii) The IHA will comply with the uniform administrative
requirements under Sec. 950.120(f);
(xiv) The IHA will comply with lead-based paint testing and
abatement requirements under Sec. 950.120(g);
(xv) The IHA has complied with the requirements governing tribal
government and resident participation in accordance with
Secs. 950.672(b), 950.678(d), and 950.684, and has given full
consideration to the priorities and concerns of tribal government and
residents, including comments that were ultimately not adopted, in
preparing the Comprehensive Plan/Five-Year Action Plan and any
amendments thereto;
(xvi) The IHA will comply with the special requirements of
Sec. 950.666(d) with respect to a homeownership development; and
(xvii) The IHA will comply with section 3 of the Housing and Urban
Development Act of 1968, as amended, and make best efforts, consistent
with existing Federal, State, and local laws and regulations, to give
low- and very low-income persons, training and employment opportunities
generated by CGP assistance, and to make best efforts, consistent with
existing Federal, State, and local laws and regulations, to award
contracts for work to be performed in connection with CGP assistance to
business concerns that provide economic opportunities for low- and very
low-income persons.
(e) Amendments to the Comprehensive Plan. (1) Extension of time for
performance. An IHA shall have the right to amend its Comprehensive
Plan (including the action plan) to extend the time for performance
whenever HUD has not provided the amount of assistance set
[[Page 18252]] forth in the Comprehensive Plan or has not provided the
assistance in a timely manner.
(2) Amendments to needs assessments. The IHA shall amend its plan
by revising its needs assessments whenever it proposes to carry out
activities in its Five-Year Action Plan or Annual Statement that are
not reflected in its current needs assessments (except in the case of
emergencies). The IHA may propose an amendment to its needs
assessments, in connection with the submission of its Annual Submission
(see Sec. 950.678(b)), or at any other time. These amendments shall be
reviewed by HUD in accordance with Sec. 950.675;
(3) Six-year revision of Comprehensive Plan. Every sixth year
following the initial year of participation, the IHA shall submit to
HUD, with its Annual Submission, a complete update of its Comprehensive
Plan. An IHA may elect to revise some or all parts of the Comprehensive
Plan more frequently.
(4) Annual revision of Five-Year Action Plan. Annually, the IHA
shall submit to HUD, with its Annual Submission, an update of its Five-
Year Action Plan, eliminating the previous year and adding an
additional year. The IHA shall identify changes in work categories
(other than those included in the new fifth year) from the previous
year Five-Year Action Plan when making this Annual Submission.
(5) Required submissions. Any amendments to the Comprehensive Plan
under this section shall be submitted with the IHA resolution under
Sec. 950.672(d)(7).
(f) Prerequisite for receiving assistance. (1) Prohibition of
assistance. No financial assistance, except for emergency work to be
funded under Secs. 950.601(b) and 950.666(a)(2), and for modernization
needs resulting from disasters under Sec. 950.601(b), may be made
available under this subpart unless HUD has approved a Comprehensive
Plan submitted by the IHA that meets the requirements of Sec. 950.672.
An IHA that has failed to obtain approval of its Comprehensive Plan by
the end of the FFY shall have its formula allocation for that year
(less any formula amounts provided to the IHA for emergencies) added to
the subsequent year's appropriation of funds for grants under this
part. HUD shall allocate such funds to IHAs and PHAs participating in
the CGP in accordance with the formula under Sec. 950.601(e) and (f) in
the subsequent FFY. An IHA that elects in any FFY not to participate in
the CGP under this subpart may participate in the CGP in subsequent
FFYs.
(2) Requests for emergency assistance. An IHA may receive funds
from its formula allocation to address emergency modernization needs if
HUD has not approved an IHA's Comprehensive Plan. To request such
assistance, an IHA shall submit to HUD a request for funds in such form
as HUD may prescribe, including any documentation necessary to support
its claim that an emergency exists. HUD shall review the request and
supporting documentation to determine if it meets the definition of
``emergency work,'' as set forth in Sec. 950.102.
Sec. 950.675 HUD review and approval of Comprehensive Plan (including
action plan).
(a) Submission of Comprehensive Plan. (1) Upon receipt of a
Comprehensive Plan from an IHA, HUD shall determine whether:
(i) The plan contains each of the required components specified at
Sec. 950.672(d); and
(ii) If applicable, the IHA has submitted any additional
information or assurances required as a result of HUD monitoring,
findings of inadequate IHA performance, audit findings, or civil rights
compliance findings.
(2) Acceptance for review. If the IHA has submitted a Comprehensive
Plan (including the action plan) that meets the criteria specified in
paragraph (a)(1) of this section, HUD shall accept the Comprehensive
Plan for review, within 14 calendar days of its receipt in the Area
ONAP. The IHA shall be notified in writing that the plan has been
accepted by HUD, and that the 75-day review period is proceeding.
(3) Time period for review. A Comprehensive Plan that is accepted
by HUD for review shall be considered to be approved unless HUD
notifies the IHA in writing, postmarked within 75 calendar days of the
date of HUD's receipt of the Comprehensive Plan for review, that HUD
has disapproved the plan. HUD shall not disapprove a Comprehensive Plan
on the basis that it cannot complete its review within the 75-day
deadline.
(4) Rejection of Comprehensive Plan. If an IHA has submitted a
Comprehensive Plan (including the action plan) that does not meet the
requirements of paragraph (a)(1) of this section, HUD shall notify the
IHA within 14 calendar days of its receipt that HUD has rejected the
plan for review. In such case, HUD shall indicate the reasons for
rejection, the modifications required to qualify the Comprehensive Plan
for HUD review, and the deadline date for receipt of any modifications.
(b) HUD approval of Comprehensive Plan (including action plan). (1)
A Comprehensive Plan (including the action plan) that is accepted by
HUD for review in accordance with paragraph (a) of this section shall
be considered to be approved, unless HUD notifies the IHA in writing,
postmarked within 75 days of the date of HUD's receipt of the
Comprehensive Plan for review, that HUD has disapproved the plan,
indicating the reasons for disapproval, and the modifications required
to make the Comprehensive Plan approvable. The IHA shall re-submit the
Comprehensive Plan to HUD, in accordance with the deadline established
by HUD, which may allow up to 75 calendar days before the end of the
FFY for HUD review. If the revised plan is disapproved by HUD following
its resubmission, or the IHA fails to resubmit the plan by the deadline
established by HUD, any funds that would have been allocated to the IHA
shall be added to the subsequent year's appropriation of funds for
grants under this subpart. HUD shall allocate such funds to IHAs and
PHAs participating in the CGP in accordance with the formula under 24
CFR 950.601 and 968.103. HUD shall not disapprove a Comprehensive Plan
on the basis that HUD cannot complete its review under this section
within the 75-day deadline.
(2) HUD shall approve the Comprehensive Plan except where it makes
a determination in accordance with one or more of the following:
(i) The Comprehensive Plan is incomplete in significant matters.
HUD determines that the IHA has failed to include all required
information or documentation in its Comprehensive Plan, e.g, the
physical needs assessment does not provide all of the information
required by HUD concerning all of its developments; or the IHA has
supplied incomplete data on the current condition and other
characteristics of its developments;
(ii) Identified needs are plainly inconsistent with facts and data.
On the basis of available significant facts and data pertaining to the
physical and operational condition of the IHA's developments or the
management and operations of the IHA, HUD determines that the IHA's
identification of modernization needs (see Sec. 950.672(d)(2) and (3))
is plainly inconsistent with such facts and data. HUD will take into
account facts and data such as those derived from recent HUD
monitoring, audits, and resident comments and will disapprove a
Comprehensive Plan based on such findings as: [[Page 18253]]
(A) Identified physical improvements and replacement are
inadequate. The completion of the identified physical improvements and
replacements will not bring all of an IHA's developments to a level at
least equal to the modernization and energy conservation and life-cycle
cost-effective standards in Sec. 950.603 (except that a development
shall meet the energy conservation standards under Sec. 950.603 only
when they are applicable to the work being performed);
(B) Identified management improvements are inadequate. The
identified management and operations improvement needs do not address
all of an IHA's areas of deficiency, or the completion of those
improvements would not result in each area of deficiency under an IHA's
management improvement plan under Sec. 950.135 being brought up to an
acceptable level of performance; and
(C) Proposed physical and management improvements fail to address
identified needs. The proposed physical and management improvements in
the action plan are not related to the identified needs in the needs
assessments portion of the Comprehensive Plan, e.g., a heating plant
renovation is in the action plan, but it was not included in the needs
assessment for that development.
(iii) Action plan is plainly inappropriate to meeting identified
needs. On the basis of the Comprehensive Plan, HUD determines that the
action plan (see Sec. 950.672(d)(5)) is plainly inappropriate to meet
the needs identified in the Comprehensive Plan, e.g., the proposed work
item will not correct the need identified in the needs assessment. HUD
will take into account the availability of funds. In addition, HUD will
take into account whether the action plan fails to address work items
that are needed to correct known emergency conditions or that are
otherwise needed to meet statutory or other legally mandated
requirements, as identified by the IHA in its Comprehensive Plan.
(iv) Inadequate demonstration of long-term viability at reasonable
cost. HUD determines that the IHA has failed to demonstrate that
completion of improvements and replacements identified in the
Comprehensive Plan, as required by Sec. 950.672(d)(2) and (3), will
reasonably ensure long-term viability of one or more Indian housing
developments to which they relate at a reasonable cost, as required by
Sec. 950.672(d)(4).
(v) Contradiction of local government statement or IHA resolution.
HUD has evidence that tends to challenge, in a substantial manner, the
appropriate governing body's statement or IHA resolution contained in
the Comprehensive Plan, as required in Sec. 950.672(d)(6) and (7). Such
evidence may include, but is not necessarily limited to:
(A) Evidence that the IHA failed to implement the Partnership
Process and to meet the requirements for resident participation, as set
forth in Sec. 950.672(b). In such cases, HUD shall review the IHA's
resident participation process and any supporting documentation to
determine whether the standards for participation under Sec. 950.672(b)
were met;
(B) With respect to an IHA established under State law and
determined to be subject to the requirements of title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d) and the Fair Housing Act (42
U.S.C. 3601-3619), HUD shall also consider as such evidence the
following:
(1) A pending proceeding against the IHA based upon a charge of
discrimination pursuant to the Fair Housing Act. (For purposes of this
provision, ``a charge of discrimination'' means a charge, pursuant to
section 810(g)(2) of the Fair Housing Act (42 U.S.C. 3610(g)(2)),
issued by the HUD General Counsel, or his or her legally authorized
designee.);
(2) A pending civil rights suit against the IHA instituted by the
Department of Justice;
(3) Outstanding HUD findings, under Sec. 950.120, of IHA
noncompliance with civil rights statutes and executive orders or
implementing regulations, as a result of formal administrative
proceedings, unless the IHA is implementing a HUD-approved resident
selection and assignment plan or compliance agreement designed to
correct the area(s) of noncompliance;
(4) A deferral of the processing of applications from the IHA
imposed by HUD under title VI of the Civil Rights Act of 1964 (42
U.S.C. 2000d), the Attorney General's Guidelines (28 CFR 50.3), and
HUD's title VI regulations (24 CFR 1.8) and procedures (HUD Handbook
8040.1), or under section 504 of the Rehabilitation Act of 1973 (29
U.S.C. 794) and HUD's section 504 regulations (24 CFR 8.57); or
(5) An adjudication of a violation under any of the authorities
under Sec. 950.120(a) in a civil action filed against the IHA by a
private individual, unless the IHA is implementing a HUD-approved
resident selection and assignment plan or compliance agreement designed
to correct the area(s) of noncompliance.
(c) Effect of HUD approval of Comprehensive Plan. After HUD
approves the Comprehensive Plan (including the Five-Year Action Plan),
or any amendments to the plan, it shall be binding upon HUD and the
IHA, until such time as the IHA submits, and HUD approves, an amendment
to its plan. The IHA is expected to undertake the work set forth in the
Annual Statement. However, the IHA may undertake any of the work
identified in any of the other four years of the latest approved Five-
Year Action Plan, current approved Annual Statement or previously
approved CIAP budgets, without further HUD approval. Actual uses of the
funds are to be reflected in the IHA Annual Performance and Evaluation
Report for each grant. See Sec. 950.684. HUD encourages the IHA to
inform the residents of significant changes (such as changes in scope
of work or whenever it moves work items within the approved Five-Year
Action Plan). The IHA shall retain documentation of that information in
its files. If HUD determines as a result of an audit or monitoring
findings that an IHA has provided false or substantially inaccurate
data in its Comprehensive Plan/Annual Submission or has circumvented
the intent of the program, HUD may condition the receipt of assistance,
in accordance with Sec. 950.687. Moreover, in accordance with 18 U.S.C.
1001, any individual or entity who knowingly and willingly makes or
uses a document or writing containing any false, fictitious, or
fraudulent statement or entry, in any matter within the jurisdiction of
any department or agency of the United States, shall be fined not more
than $10,000 or imprisoned for not more than five years, or both.
Sec. 950.678 Annual Submission of activities and expenditures.
(a) General. The Annual Submission is a collective term for all
documents that the IHA shall submit to HUD for review and approval
before accessing the current FFY grant funds. Such documents include
the Annual Statement, Work Statements for years two through five of the
Five-Year Action Plan, local government statement, IHA Board
Resolution, materials demonstrating the partnership process, and any
other documents as prescribed by HUD. For planning purposes, an IHA may
use either the amount of funding received in the current year or the
actual formula amount provided in HUD's notification under
Sec. 950.669(b)(1) in developing the Five-Year Action Plan for
presentation at the resident meetings and public hearing. Work
Statements cover the second through the fifth years of the Five-Year
Action Plan and set [[Page 18254]] forth the major work categories and
costs, by development or IHA-wide, that the IHA intends to undertake in
each year of years two through five. In preparing these Work
Statements, the IHA shall assume that the current FFY formula amount
will be available in each year of years two through five. The Work
Statements for all five years will be at the same level of detail so
that the IHA may interchange work items as discussed in
Sec. 950.672(d)(5)(i). An IHA may budget up to 8 percent of its annual
grant in a contingency account for cost overruns.
(b) Submission. After receiving HUD notification of the formula
amount estimating how much funding will be available from other
sources, such as State and tribal governments, and determining its
activities and costs based on the current FFY formula amount, the IHA
shall submit its Annual Submission.
(c) Acceptance for review. (1) Upon receipt of an Annual Submission
from an IHA, HUD shall determine whether:
(i) The Annual Submission contains each of the required components;
and
(ii) The IHA has submitted any additional information or assurances
required as a result of HUD monitoring, findings of inadequate IHA
performance, audit findings, and civil rights compliance findings.
(2) If the IHA has submitted a complete Annual Submission and all
required information and assurances, HUD will accept the submission for
review, as of the date of receipt. If the IHA has not submitted all
required material, HUD will promptly notify the IHA that it has
disapproved the submission, indicating the reasons for disapproval, the
modifications required to qualify the Annual Submission for HUD review,
and the date by which such modifications shall be received by HUD.
(d) Resident and local government participation. An IHA is required
to develop its Annual Submission, including any proposed amendments to
its Comprehensive Plan as provided in Sec. 950.672(e), in consultation
with officials of the appropriate governing body (or in the case of an
IHA with developments in multiple jurisdictions, in consultation with
the CEO of each such jurisdiction or with an advisory group
representative of all jurisdictions) and with residents and duly
elected resident organizations of the developments covered by the
Comprehensive Plan, as follows:
(1) Public notice. Within a reasonable amount of time before the
advance meeting for residents under paragraph (d)(2) of this section,
and the public hearing under paragraph (d)(3) of this section, the IHA
shall annually provide public notice of the advance meeting and the
public hearing in a manner determined by the IHA and that ensures
notice to all duly elected resident organizations;
(2) Advance meeting with residents. The IHA shall at least annually
hold a meeting open to all residents and duly elected resident
organizations. The advance meeting shall be held within a reasonable
amount of time before the public hearing under paragraph (d)(3) of this
section. The IHA will provide residents with information concerning the
contents of the IHA's Five-Year Action Plan (and any proposed
amendments to the IHA's Comprehensive Plan to be submitted with the
Annual Submission) so that residents can comment adequately at the
public hearing on the contents of the Five-Year Action Plan and any
proposed amendments to the Comprehensive Plan.
(3) Public hearing. The IHA shall annually hold at least one public
hearing, and any appropriate number of additional hearings, to present
information on the Annual Submission and the status of prior approved
programs. The public hearing shall provide ample opportunity for
residents of the developments covered by the Comprehensive Plan,
officials of the appropriate governing body, and other interested
parties, to express their priorities and concerns. The IHA shall give
full consideration to the comments and concerns of residents, local
government officials, and other interested parties in developing its
Five-Year Action Plan, or any amendments to its Comprehensive Plan.
(4) Expedited scheduling. IHAs are encouraged to hold the meeting
with residents and duly elected resident organizations under paragraph
(d)(2) of this section, and the public hearing under paragraph (d)(3)
of this section, between July 1 (i.e., after the end of the program
year--June 30) and September 30, using the formula amount for the
current FFY. If an IHA elects to use such expedited scheduling, it
shall explain at the meeting with residents and duly elected resident
organizations and at the public hearing that the current FFY amount is
not the actual grant amount for the subsequent year, but is rather the
amount used for planning purposes. It shall also explain that the Five-
Year Action Plan will be adjusted when HUD provides notification of the
actual formula amount, and explain which major work categories at which
developments may be added or deleted to adjust for the actual formula
amount and that any added work categories/developments will come from
the Comprehensive Plan.
(e) Contents of Annual Submission. The Annual Statement for each
year shall include, for each development or on an IHA-wide basis for
management improvements or certain physical improvements for which work
is to be funded out of that year's grant:
(1) A list of development accounts with an identification of major
work categories;
(2) The cost for each major work category, as well as a summary of
cost by development account;
(3) The IHA-wide or development-specific management improvements to
be undertaken during the year;
(4) For each development and for any management improvements not
covered by a HUD-approved management improvement plan, a schedule for
the use of current year funds, including target dates for the
obligation and expenditure of the funds. In general, HUD expects that
an IHA will obligate its current year's allocation of CGP funds (except
for its funded replacement reserves) within two years, and expend such
funds within three years, of the date of HUD approval, unless longer
time-frames are approved by HUD due to the size of the grant, the
complexity of the work, and other factors;
(5) A summary description of the actions to be taken with non-CGP
funds to meet physical and management improvement needs that have been
identified by the IHA in its needs assessments;
(6) Documentation supporting the IHA's actions in carrying out its
responsibilities under the National Environmental Policy Act and other
related authorities in accordance with Sec. 950.120(a) and (b);
(7) Other information, as specified by HUD and approved by OMB
under the Paperwork Reduction Act; and
(8) An IHA resolution approving the Annual Submission or any
amendments thereto, as set forth in Sec. 950.672(d)(7).
(f) Additional submissions with Annual Submission. An IHA shall
submit with the Annual Submission any amendments to the Comprehensive
Plan, as set forth in Sec. 950.672(e), and such additional information
as may be prescribed by HUD. HUD shall review any proposed amendments
to the Comprehensive Plan in accordance with review standards under
Sec. 950.675(b).
(g) HUD review and approval of Annual Submission. (1) General. An
Annual Submission accepted in accordance with paragraph (a) of this
section shall be considered to be approved, unless HUD notifies the IHA
[[Page 18255]] in writing, postmarked within 75 calendar days of the
date that HUD receives the Annual Submission for review under paragraph
(c) of this section, that HUD has disapproved the Annual Submission,
indicating the reasons for disapproval, the modifications required to
make the Annual Submission approvable, and the date by which such
modifications shall be received by HUD. HUD may request additional
information (e.g., for eligibility determinations) to facilitate review
and approval of the Annual Submission during the 75-day review period.
HUD shall not disapprove an Annual Submission on the basis that HUD
cannot complete its review under this section within the 75-day
deadline;
(2) Bases for disapproval for Annual Submission. HUD shall approve
the Annual Submission, except when:
(i) Plainly inconsistent with Comprehensive Plan. HUD determines
that the activities and expenditures proposed in the Annual Submission
are plainly inconsistent with the IHA's approved Comprehensive Plan;
(ii) Contradiction of IHA resolution. HUD has evidence that tends
to challenge, in a substantial manner, the certifications contained in
the board resolution, as required by Sec. 950.672(d)(7).
(h) Amendments to Annual Statement. The IHA shall advise HUD of all
changes to the IHA's approved Annual Statement in its Performance and
Evaluation Report submitted under Sec. 950.684. The IHA shall submit to
HUD for prior approval any additional work categories (except for
emergency work) that are not within the IHA's approved Five-Year Action
Plan.
(i) Failure to obligate formula funding and extension of time for
performance. (1) Failure to obligate formula funds. If the IHA fails to
obligate formula funds within the approved or extended time period, the
IHA may be subject to an alternative management strategy, which may
involve third-party oversight or administration of the modernization
function. HUD would only require such action after a corrective action
order had been issued under Sec. 950.687 and the IHA failed to comply
with the order. HUD could then require an alternative management
strategy in a corrective action order. An IHA may appeal in writing the
corrective action order requiring an alternative management strategy
within 30 calendar days of that order. HUD Headquarters shall render a
written decision on an IHA's appeal within 30 calendar days of the date
of its receipt of the IHA's appeal.
(2) Extension of time for performance. An IHA may extend the target
dates for fund obligation and expenditure in the approved Annual
Statement whenever any delay outside the IHA's control occurs, as
specified by HUD, and the extension is made in a timely manner. Such
revision is subject to HUD review under Sec. 950.687(a)(2) as to the
IHA's continuing capacity. HUD shall not review as to an IHA's
continuing capacity any revisions to an IHA's Comprehensive Plan and
related statements when the basis for the revision is that HUD has not
provided the amount of assistance set forth in the Annual Submission,
or has not provided such assistance in a timely manner.
(j) ACC Amendment. After HUD approval of each year's Annual
Submission, HUD and the IHA shall enter into an ACC amendment to obtain
modernization funds. The ACC amendment shall require low-income use of
housing for not less than 20 years from the date of the ACC amendment
(subject to sale of homeownership units in accordance with the terms of
the ACC).
(k) Declaration of Trust. As HUD may require, the IHA shall execute
and file for record a Declaration of Trust as provided under the ACC to
protect the rights and interests of HUD throughout the 20-year period
during which the IHA is obligated to operate its developments in
accordance with the ACC, the Act, and HUD regulations and requirements.
A Declaration of Trust is not required for Mutual Help units.
Sec. 950.681 Conduct of modernization activities.
(a) Initiation of activities. After HUD has approved a Five-Year
Action Plan and entered into an ACC amendment with the IHA, the IHA
shall undertake in a timely, efficient, and economical manner the
modernization activities and expenditures set forth in its approved
Annual Statement or substitute work categories from within the approved
Five-Year Action Plan, subject to the following requirements:
(1) The IHA may undertake the activities using force account or
contract labor, including contracting with an RMC. If the entirety of
modernization activity (including the planning and architectural design
of the rehabilitation) is administered by an RMC, the IHA shall not
retain for any administrative or other reason, any portion of the CGP
funds provided, unless the IHA and the RMC provide otherwise by
contract; and
(2) All activities shall be monitored by resident groups within the
framework and intent of the Partnership Process.
(b) Fund requisitions. To request modernization funds against the
approved Annual Statement for year one, the IHA shall comply with
requirements prescribed by HUD.
(c) Contracting requirements. The IHA shall comply with the wage
rate requirements in Sec. 950.120. In addition, the IHA shall comply
with the requirements set forth in subpart B of this part, except as
follows:
(1) Assurance of completion. For each construction or equipment
contract over $25,000, the contractors shall furnish a performance and
payment bond for 100 percent of the contract price, or, notwithstanding
24 CFR 85.36(h) and Sec. 950.170, a 20 percent cash escrow, or a 25
percent letter of credit, or, as may be required by law, separate
performance and payments bonds, each for 50 percent or more of the
contract price.
(2) Previous participation. An IHA shall ensure that the contractor
is not on the GSA List of Parties Excluded from Federal Procurement and
Nonprocurement Programs.
(d) Assurance of nonduplication. The IHA shall ensure that there is
no duplication between the activities carried out pursuant to the CGP,
and activities carried out with other funds.
(e) Fiscal closeout of a comprehensive grant. Upon expenditure by
an IHA of all funds, or termination by HUD of the activities funded by
each annual grant, the IHA shall submit the actual modernization cost
certificate, in a form prescribed by HUD, to HUD for review, audit
verification, and approval. The audit shall follow the guidelines
prescribed by 24 CFR part 44, Non-Federal Government Audit
Requirements. If the audited modernization cost certificate discloses
unauthorized expenditures, the IHA shall take such corrective actions
as HUD may direct.
Sec. 950.684 IHA Performance and Evaluation Report.
(a) Submission. For any FFY in which an IHA has received assistance
under this subpart, the IHA shall submit a Performance and Evaluation
Report, in a form and at a time to be prescribed by HUD, describing its
use of assistance in accordance with the approved Annual Statement. The
IHA shall make reasonable efforts to notify residents and officials of
the appropriate governing body of the availability of the draft report,
make copies available to residents in the development office, and
provide residents with at least 30 calendar days in which to comment on
the report.
(b) Content. The report shall include the following:
[[Page 18256]]
(1) An explanation of how the IHA has used other funds, such as
Community Development Block Grant program assistance, State or tribal
assistance, and private funding, for the needs identified in the IHA's
Comprehensive Plan and for the purposes of this subpart I;
(2) An explanation of how the IHA has used the CGP funds to address
the needs identified in its Comprehensive Plan and to carry out the
activities identified in its approved Five-Year Action Plan, and shall
specifically address:
(i) Any funds used for emergency needs not set forth in its Five-
Year Action Plan; and
(ii) Any changes to the Annual Statement under Sec. 950.678(h);
(3) The results of the IHA's process for consulting with residents
on the implementation of the plan;
(4) The current status of the IHA's obligations and expenditures,
specifying how the IHA is performing with respect to its implementation
schedules, and an explanation of any necessary revision to the planned
target dates;
(5) A summary of resident, tribal, or local government comments
received on the report; and
(6) A resolution by the IHA Board of Commissioners approving the
Performance and Evaluation Report and containing a certification that
the IHA has made reasonable efforts to notify residents in the
development(s) and local government officials of the opportunity to
review the draft report and to comment on it before its submission to
HUD, and that copies of the report were provided to residents in the
development office and to local government officials, or furnished upon
their request.
Sec. 950.687 HUD review of IHA performance.
(a) HUD determination. At least annually, HUD shall carry out such
reviews of the performance of each IHA as may be necessary or
appropriate to make the determinations required by this paragraph,
taking into consideration all available evidence.
(1) Conformity with Comprehensive Plan. HUD will determine whether
the IHA has carried out its activities under this subpart in a timely
manner and in accordance with its Comprehensive Plan.
(i) In making this determination, HUD will review the IHA's
performance to determine whether the modernization activities
undertaken during the period under review conform substantially to the
activities specified in the approved Five-Year Action Plan. HUD will
also review an IHA's progress against the implementation schedules for
purposes of determining whether the IHA has carried out its
modernization activities in a timely manner;
(ii) HUD will review an IHA's performance to determine whether the
activities carried out comply with the requirements of the Act,
including the requirement that the work carried out meets the
modernization and energy conservation standards in Sec. 950.603, this
part, and other applicable laws and regulations.
(2) Continuing capacity. HUD will determine whether the IHA has a
continuing capacity to carry out its Comprehensive Plan in a timely
manner. After the first full operational year of CGP, CIAP experience
will not be taken into consideration except when the IHA has not yet
had comparable experience under the CGP.
(i) The primary factors to be considered in arriving at a
determination that a recipient has a continuing capacity are those
described in paragraphs (a)(1) and (a)(3) of this section as they
relate to carrying out the Comprehensive Plan. HUD generally will
consider an IHA to have a continuing capacity if it determines that the
IHA has:
(A) Carried out its activities under the CGP program, as well as
the CIAP, in a timely manner, taking into account the level of funding
available and whether the IHA obligates its modernization funds within
two years from the execution of the ACC amendment and expends such
modernization funds within three years of ACC amendment execution, or
such longer period as approved by HUD or as extended by the IHA for
reasons outside of its control;
(B) Adequately inspected the funded modernization to assure that
the physical work is being carried out in accordance with the plans and
specifications and the modernization and energy conservation standards
(or in the case of an IHA's performance under CIAP, whether the IHA has
carried out the physical work in accordance with the HUD-approved
budget and in conformance with the modernization and energy
conservation standards) and that any HUD monitoring findings relating
to the quality of the physical work have been, or are being, resolved);
(C) Established and maintained internal controls for its
modernization program in accordance with HUD requirements for financial
management and accounting, as determined by the fiscal audit;
(D) Administered its modernization contracts in accordance with a
HUD-approved procurement policy, which meets the requirements of 24 CFR
85.36(a) and Sec. 950.160;
(E) Carried out its activities in accordance with its Comprehensive
Plan and HUD requirements; and
(F) Has satisfied, or made reasonable progress toward satisfying,
the performance standards prescribed in paragraph (a)(3) of this
section as they relate to activities under the CGP program;
(ii) HUD will give particular attention to IHA efforts to
accelerate the progress of the program and to prevent the recurrence of
past deficiencies or noncompliance with applicable laws and
regulations.
(3) Reasonable progress. HUD shall determine whether the IHA has
satisfied, or has made reasonable progress towards satisfying, the
following performance standards:
(i) With respect to the physical condition of each development,
whether the work items being carried out by the IHA are in conformity
with the modernization and energy conservation standards in
Sec. 950.603, and whether the IHA has brought, or is making reasonable
progress toward bringing, all of its developments to these standards,
in accordance with its physical needs assessment; and
(ii) With respect to the management condition of the IHA, whether
the IHA has achieved, or is making reasonable progress in implementing,
the work items (specified in its Annual Statement and Five-Year Action
Plan) that are designed to address deficiencies identified in its
management needs assessment or through audits or HUD reviews; and
(iii) In determining whether the IHA has made reasonable progress,
HUD will take into account the level of funding available and whether
the IHA obligates its modernization funds within two years from the
execution of the ACC amendment and expends such modernization funds
within three years of ACC amendment execution, or such longer period if
approved by HUD or extended by the IHA for reasons outside of its
control in an implementation schedule. The IHA shall demonstrate to
HUD's satisfaction that any lack of timeliness (beyond the time periods
specified in this paragraph or date specified in a HUD-approved
implementation schedule) has resulted from factors beyond the IHA's
control. If the IHA fails to obligate formula funds within the approved
or extended time period, the IHA may be subject to an alternative
management strategy which may involve third-party oversight or
administration of the modernization function. HUD would only require
such [[Page 18257]] action after a corrective action order had been
issued under this section and the IHA failed to comply with the order.
HUD could then require an alternative management strategy in a
correction action order. An IHA may appeal in writing the corrective
action order requiring an alternative management strategy within 30
calendar days of that order. HUD Headquarters shall render a written
decision on an IHA's appeal within 30 calendar days of the date of its
receipt of the IHA's appeal.
(b) Notice of deficiency. Based on HUD reviews of IHA performance
and findings of any of the deficiencies in paragraph (d) of this
section, HUD may issue to the IHA a notice of deficiency stating the
specific program requirements that the IHA has violated and requesting
the IHA to take any of the actions in paragraph (e) of this section.
(c) Corrective action order. (1) Based on HUD reviews of IHA
performance and findings of any of the deficiencies in paragraph (d) of
this section, HUD may issue to the IHA a corrective action order,
whether or not a notice of deficiency has previously been issued in
regard to the specific deficiency on which the corrective action order
is based. HUD may order corrective action at any time by notifying the
IHA of the specific program requirements that the IHA has violated, and
specifying that any of the corrective actions listed in paragraph (e)
of this section shall be taken. HUD shall design corrective action to
prevent a continuation of the deficiency, mitigate any adverse effects
of the deficiency to the extent possible, or prevent a recurrence of
the same or similar deficiencies.
(2) Before ordering corrective action, HUD will notify the IHA and
give it an opportunity to consult with HUD regarding the proposed
action.
(3) Any corrective action ordered by HUD shall become a condition
of the grant agreement.
(4) If HUD orders corrective action by an IHA in accordance with
this section, the IHA's Board of Commissioners shall notify affected
residents of HUD's determination, the bases for the determination, the
conditioning requirements imposed under this paragraph (c), and the
consequences to the IHA if it fails to comply with HUD's requirements.
(d) Basis for corrective action. HUD may order an IHA to take
corrective action only if HUD determines:
(1) The IHA has not submitted a performance and evaluation report,
in accordance with Sec. 950.684;
(2) The IHA has not carried out its activities under the CGP
program in a timely manner and in accordance with its Comprehensive
Plan or HUD requirements, as described in paragraph (a)(1) of this
section;
(3) The IHA does not have a continuing capacity to carry out its
Comprehensive Plan in a timely manner or in accordance with its
Comprehensive Plan or HUD requirements, as described in paragraph
(a)(2) of this section;
(4) The IHA has not satisfied, or has not made reasonable progress
towards satisfying, the performance standards specified in paragraph
(a)(3) of this section;
(5) An audit conducted in accordance with 24 CFR part 44 and
Sec. 950.120, or pursuant to other HUD reviews (including monitoring
findings) reveals deficiencies that HUD reasonably believes require
corrective action;
(6) The IHA has failed to repay HUD for amounts awarded under the
CGP program that were improperly expended; or
(7) The IHA has been determined to be high risk, in accordance with
Sec. 950.135.
(e) Types of corrective action. HUD may direct an IHA to take one
or more of the following corrective actions:
(1) Submit additional information:
(i) Concerning the IHA's administrative, planning, budgeting,
accounting, management, and evaluation functions, to determine the
cause for an IHA not meeting the standards in paragraphs (a)(1), (2),
or (3) of this section;
(ii) Explaining any steps the IHA is taking to correct the
deficiencies;
(iii) Documenting that IHA activities were not inconsistent with
the IHA's annual statement or other applicable laws, regulations, or
program requirements; and
(iv) Demonstrating that the IHA has a continuing capacity to carry
out the Comprehensive Plan in a timely manner;
(2) Submit detailed schedules for completing the work identified in
its Annual Statements and report periodically on its progress on
meeting the schedules;
(3) Notwithstanding 24 CFR 85.36(g), submit to HUD the following
documents for prior approval, which may include, but are not limited
to:
(i) Proposed agreement with the architect/engineer (prior to
execution);
(ii) Complete construction and bid documents (prior to soliciting
bids);
(iii) Proposed award of contracts, including construction and
equipment contracts and management contracts; or
(iv) Proposed contract modifications prior to issuance, including
modifications to construction and equipment contracts, and management
contracts.
(4) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's Comprehensive Plan, Five-Year Action Plan, or Performance and
Evaluation Report;
(5) Submit additional material in support of one or more of the
statements, resolutions, and certifications submitted as part of the
IHA's Comprehensive Plan, Five-Year Action Plan, or Performance and
Evaluation Report;
(6) Reimburse, from non-HUD sources, one or more program accounts
for any amounts improperly expended;
(7) Take such other corrective actions HUD determines appropriate
to correct IHA deficiencies;
(8) Submit to an alternative management strategy which may involve
third-party oversight or administration of the modernization function
(see Sec. 950.669(d)); and
(9) Take such other corrective actions HUD determines appropriate
to correct IHA deficiencies.
(f) Failure to take corrective action. In cases in which HUD has
ordered corrective action and the IHA has failed to take the required
actions within a reasonable time, as specified by HUD, HUD may take one
or more of the following steps:
(1) Withhold some or all of the IHA's grant;
(2) Declare a breach of the ACC grant amendment with respect to
some or all of the IHA's functions; or
(3) Any other sanction authorized by law or regulation.
(g) Reallocation of funds that have been withheld. If HUD has
withheld for a prescribed period of time some or all of an IHA's annual
grant, HUD may reallocate such amounts to other IHAs/PHAs under the CGP
program, subject to approval in appropriations acts. The reallocation
shall be made to IHAs that HUD has determined to be administratively
capable under Sec. 950.135, and to PHAs under the CGP program that are
not designated as either troubled or mod troubled under the PHMAP at 24
CFR part 901, based upon the relative needs of these IHAs and PHAs, as
determined under the formula at Sec. 950.601.
(h) Right to appeal. Before withholding some or all of the IHA's
annual grant, declaring a breach of the ACC grant amendment, or
reallocating funds that have been withheld, HUD will notify the IHA and
give it an opportunity, within a prescribed period [[Page 18258]] of
time, to present to ONAP Headquarters, in writing, any arguments or
additional facts and data concerning the proposed action.
(i) Notification of residents. The IHA's Board of Commissioners
shall notify affected residents of HUD's final determination to
withhold funds, declare a breach of the ACC grant amendment, or
reallocate funds, as well as the basis for, and the consequences
resulting from, such a determination.
(j) Recapture. In addition, HUD may recapture for good cause any
grant amounts previously provided to an IHA, based upon a determination
that the IHA has failed to comply with the requirements of the CGP
program. Before recapturing any grant amounts, HUD will notify the IHA
and give it an opportunity to appeal in accordance with
Sec. 950.687(h). Any reallocation of recaptured amounts will be in
accordance with Sec. 950.687(g). The IHA's board of Commissioners shall
notify affected residents of HUD's final determination to recapture any
funds.
Subpart J--Operating Subsidy
Sec. 950.701 Purpose and applicability.
(a) Implementation of section 9(a). (1) The purpose of this
subpart is to establish standards and policies for the distribution of
operating subsidy in accordance with section 9(a) of the United States
Housing Act of 1937 (42 U.S.C. 1437g(a)). Section 9(a) authorizes the
Secretary of Housing and Urban Development (HUD) to make annual
contributions for the operation of IHA-owned rental housing (operating
subsidy).
(2) This subpart establishes standards for the cost of providing
comparable services as determined in accordance with a formula
representing the operations of a prototype well-managed project, taking
into account the character and location of the project and the
characteristics of the families served. These standards, policies, and
procedures are called the Performance Funding System (PFS), as
described in this subpart J. The provisions of PFS are intended to
recognize and give an incentive for efficient and economical management
and to avoid the expenditure of federal funds to compensate for
excessive costs attributable to poor or inefficient management. PFS is
intended to provide the incentive and financial discipline for
excessively high-cost IHAs to improve their management efficiency.
(b) Applicability. This subpart is applicable to all IHA-owned
rental units under Annual Contributions Contracts. This subpart J is
not applicable to the Section 23 Leased Housing Program, the Section 23
Housing Assistance Payments Program, the Section 8 Housing Assistance
Payments Program, the Mutual-Help Program, or the Turnkey III
Homeownership Opportunity Program. Provisions regarding an operating
subsidy for the homeownership programs are found in the applicable
subpart of this rule (subpart E of this part for Mutual Help, and
subpart G of this part for Turnkey III).
Sec. 950.705 Determination of amount of operating subsidy under PFS.
The amount of operating subsidy for which each IHA is eligible
shall be determined as follows: The projected operating income level is
subtracted from the total expense level (Allowable Expense Level plus
Utilities Expense Level). These amounts are per-unit per-month dollar
amounts, and shall be multiplied by the Unit Months Available.
Transition funding, if applicable, and other costs as specified in
paragraphs (b) through (e) of Sec. 950.720 are then added to this total
in order to determine the total amount of operating subsidy for the
requested budget year, exclusive of consideration of the cost of an
independent audit. As an independent operating subsidy eligibility
factor, an IHA may receive operating subsidy in an amount, approved by
HUD, equal to the actual or estimated cost of the independent audit to
be prorated to operations of the IHA-owned rental housing (under
Sec. 950.720(a)). (See Sec. 950.730 regarding adjustments.)
Sec. 950.710 Computation of Allowable Expense Level.
The IHA shall compute its Allowable Expense Level (AEL) using forms
prescribed by HUD, as follows:
(a) Computation of Base Year Expense Level. The Base Year Expense
Level includes payments in lieu of taxes (PILOT) required by a
Cooperation Agreement, even if PILOT is not included in the approved
operating budget for the base year because of a waiver of the
requirements by the local taxing jurisdiction(s). The Base Year Expense
Level includes all other operating expenditures as reflected in the
IHA's operating budget for the base year approved by HUD except the
following:
(1) Utilities expense;
(2) Cost of an independent audit;
(3) Adjustments applicable to budget years before the base year;
(4) Expenditures supported by supplemental subsidy payments
applicable to budget years before the base year;
(5) All other expenditures that are not normal fiscal year
expenditures as to amount or as to the purpose for which expended; and
(6) Expenditures that were funded from a nonrecurring source of
income.
(b) Adjustment. In compliance with the six exclusions set forth in
paragraph (a) of this section, the IHA shall adjust the AEL by
excluding any of these items from the Base Year Expense Level, if this
has not already been accomplished. If such adjustment is made in the
second or some later fiscal year of the PFS, the AEL shall be adjusted
in the year in which the adjustment is made, but the adjustment shall
not be applied retroactively. If the IHA does not make these
adjustments, the HUD Area ONAP shall compute the adjustments.
(c) Computation of ``Formula Expense Level.'' The IHA shall compute
its Formula Expense Level (FEL) in accordance with a HUD-prescribed
formula that estimates the cost of operating an average unit in a
particular IHA's inventory. The formula takes into account such data as
the number of two or more bedroom units, ratio of two or more bedroom
units in high-rise family projects, ratio of units with three or more
bedrooms, local government wage rates, and number of pre-1940 rental
units occupied by poor households. It uses weights and a local
inflation factor assigned each year to derive a Formula Expense Level
for the current year and the requested budget year. The weights of the
formula and the formula are subject to updating by HUD.
(d) Computation of Allowable Expense Level. The IHA shall compute
its Allowable Expense Level as follows:
(1) Allowable Expense Level for first budget year under PFS if Base
Year Expense Level does not exceed the top of the range. The top of the
range is defined as: FEL plus $10.31 for fiscal years starting before
April 1, 1992, and FEL multiplied by 1.15 for fiscal years starting on
or after April 1, 1992. Every IHA whose Base Year Expense Level is less
than the top limit of the range shall compute its AEL for the first
budget year under PFS by adding the following to its Base Year Expense
Level (before adjustment under Sec. 950.730);
(i) Any increase approved by HUD in accordance with
Sec. 950.730(a);
(ii) The increase (decrease) between the Formula Expense Level for
the base year and the Formula Expense Level for the first budget year
under PFS; and
(iii) The sum of the Base Year Expense Level and any amounts
described in paragraphs (d)(1)(i) and (ii) [[Page 18259]] of this
section multiplied by the local inflation factor.
(2) Allowable Expense Level for first budget year under PFS if Base
Year Expense Level exceeds the top of the range. The top of the range
is defined as: FEL plus $10.31 for fiscal years starting before April
1, 1992, and FEL multiplied by 1.15 for fiscal years starting on or
after April 1, 1992. Every IHA whose Base Year Expense Level exceeds
the top of the range shall compute its AEL for the first budget year
under PFS by adding the following to the top of the range (not to its
Base Year Expense Level, as in paragraph (d)(1) of this section):
(i) The increase (decrease) between the Formula Expense Level for
the base year and the Formula Expense Level or the first budget year
under PFS;
(ii) The sum of the figure equal to the top of the range and the
increase (decrease) described in paragraph (d)(2)(i) of this section,
multiplied by the local inflation factor. (If the Base Year Expense
Level is above the allowable expense level, computed as provided in
paragraph (d) of this section, the IHA may be eligible for transition
funding under Sec. 950.735.)
(3) Allowable Expense Level for first budget year under PFS for a
new project. A new project of a new IHA or a new project of an existing
IHA that the IHA decides to place under a separate ACC, which did not
have a sufficient number of units available for occupancy in the base
year to have a level of operations representative of a full fiscal year
of operation is considered to be a ``new project.'' The AEL for the
first budget year under PFS for a ``new project'' will be based on the
AEL for a comparable project, as determined by the HUD Area ONAP. The
IHA may suggest a project or projects it believes to be comparable.
(4) Allowable Expense Level for budget years after the first budget
year under PFS that begins on or after April 1, 1986 and before April
1, 1992. For each budget year after the first budget year under PFS
that begin on or after April 1, 1986 and before April 1, 1992, the AEL
shall be computed as follows:
(i) The Allowable Expense Level shall be increased by any increase
to the AEL approved by HUD under Sec. 950.720(c);
(ii) The AEL for the current budget year also shall be increased
(or decreased) by either:
(A) If the IHA has not experienced a change in the number of its
units in excess of 5 percent or 1,000 units, whichever is less, since
the last adjustment to the AEL based on paragraph (d)(4)(ii)(B) of this
section, the AEL shall be increased by one-half of one percent (.5
percent); or
(B) If the IHA has experienced a change in the number of units in
excess of 5 percent or 1,000 units, whichever is less, since the last
adjustment to the AEL based on this paragraph (d)(4)(ii)(B) of this
section, it shall use the increase (decrease) between the Formula
Expense Level for the current budget year and the Formula Expense Level
for the requested budget year. The IHA characteristics that shall be
used to compute the Formula Expense Level for the current budget year
shall be the same as those that were used for the requested budget year
when the last adjustment to the AEL was made based on this paragraph
(d)(4)(ii)(B) of this section, except that the number of interim years
in which the .5 percent adjustment was made under paragraph
(d)(4)(ii)(A) of this section shall be added to the average age that
was used for the last adjustment; and
(iii) The amount computed in accordance with paragraphs (d)(4)(i)
and (ii) of this section shall be multiplied by the local inflation
factor.
Example:
FY 1987. Assume that: (1) The IHA has experienced no change in
the number of its units;
(2) The AEL for the IHA's FY 1986 is $64.00; and
(3) The applicable local inflation factor is 6 percent
(expressed as 1.06). The AEL for FY 1987 is $68.18, computed as
follows:
1. Allowable Expense Level for FY 1986......................... $64.00
2. Delta: Increase (or Decrease) in Formula Expense Level
($64.00 x .5 percent)....................................... .32
--------
3. Sum (line 1 plus line 2).................................... 64.32
4. Local Inflation Factor...................................... 1.06
--------
5. Allowable Expense Level for FY 1987 (line 3 multiplied by
line 4)....................................................... 68.18
FY 1988. Assume that the IHA has deprogrammed (e.g., demolished
or sold) a project that represents seven percent of its units, and
that the last time an adjustment to the AEL was made based on
paragraph (d)(4)(ii)(B) of this section was in its FY 1985, at which
time the IHA had the following characteristics for its requested
budget year: average age of 10 years, average project height of 5
stories, and average unit size of 4 bedrooms. The Formula Expense
Level for the current budget year is calculated using 12 years (10
years plus two years in which the standard .5 percent adjustment was
used), 5 stories, and 4 bedrooms.
Also assume that Formula Expense Level calculated based on these
characteristics is $70.00 and that the IHA average characteristics
for the requested budget year are now an average age of 8 years,
average project height of 4 stories and average unit size of 2
bedrooms, resulting in a Formula Expense Level for the requested
budget year of $68.00. The Formula Expense Level for the requested
budget year, therefore, decreases by $2.00. Assuming that the local
inflation factor is 4.5 percent (expressed as 1.045), the AEL for FY
1988 is $69.16, computed as follows:
1. Allowable Expense Level for FY 1987......................... $68.18
2. Delta (or Decrease) in Formula Expense Level................ (2.00)
--------
3. Sum (line 1 plus line 2).................................... 66.18
4. Local Inflation Factor...................................... 1.045
--------
5. Allowable Expense Level for FY 1988 (line 3 multiplied by
line 4)....................................................... 69.16
It should be noted that the Delta in line 2 of the example
reflects the application of the formula weights, constant, and local
inflation factor for the requested budget year applied first to the
IHA characteristics for the current budget year and then to the IHA
characteristics for the requested budget year, to determine the
respective Formula Expense Levels. The local inflation factor shown
on line 4 of the example is the same one used in determining the
Formula Expense Levels.
(5) Allowable Expense Level for budget years after the first budget
year under PFS that begins on or after April 1, 1992. For each budget
year after the first budget year under PFS that begins on or after
April 1, 1992, the AEL shall be computed as follows:
(i) The Allowable Expense Level shall be increased by any increase
to the AEL approved by HUD under Sec. 950.720(c);
(ii) The AEL for the Current Budget Year also shall be adjusted as
follows:
(A) Increased by one-half of one percent (.5 percent); and
(B) If the IHA has experienced a change in the number of units in
excess of 5 percent or 1,000 units, whichever is less, since the last
adjustment to the AEL based on this paragraph (d)(5)(ii)(B) of this
section, it shall use the increase (decrease) between the Formula
Expense Level for the Current Budget Year and the Formula Expense Level
for the Requested Budget Year. The IHA's characteristics that shall be
used to compute the Formula Expense Level for the Current Budget Year
shall be the same as those that applied to the Requested Budget Year
when the last adjustment to the AEL was made based on this paragraph
(d)(5)(ii)(B) of this section, except that the number of interim years
in which the .5 percent adjustment was made under paragraph
(d)(5)(ii)(A) of this section shall be added to the average age that
was used for the last adjustment.
(iii) The amount computed in accordance with paragraphs (d)(5)(i)
and (ii) of this section shall be multiplied by the Local Inflation
Factor.
[[Page 18260]]
(6) Adjustment of Allowable Expense Level for budget years after
the first budget year under PFS. HUD may adjust the AEL of budget years
after the first year under PFS under the provisions of Secs. 950.710(b)
or 950.720(c).
Sec. 950.715 Computation of Utilities Expense Level.
(a) General. In recognition of the rapid rises that occur in
utilities costs, the wide diversity among IHAs as to types of utilities
services used, the manner in which utilities payments are allocated
between IHAs and tenants, and the fact that utilities rates charged by
suppliers are beyond the control of the IHA, the PFS treats utilities
expenses separately from other IHA expenses. Utilities expenses are,
therefore, excluded from the IHA's Allowable Expense Level, and the PFS
provides for computation of the amount of operating subsidy for
utilities costs based upon a calculated utilities expense of each IHA.
Accordingly, the IHA's Utilities Expense Level for the requested budget
year shall be computed by multiplying the Allowable Utilities
Consumption Level (AUCL) per-unit per-month for each utility,
determined as provided in paragraph (c) of this section, by the
projected utility rate determined as provided in paragraph (b) of this
section.
(b) Utilities rates. (1) The currently applicable rates, with
consideration of adjustments and pass-throughs, in effect at the time
the operating budget is submitted to HUD will be used as the utilities
rates for the requested budget year, except that when the appropriate
utility commission has, before the date of submission of the operating
budget to HUD, approved and published rate changes to be applicable
during the requested budget year, the future approved rates may be used
as the utilities rates for the entire requested budget year.
(2) If an IHA takes action, such as a well-head purchase of natural
gas, or administrative appeals or legal action beyond normal public
participation in rate-making proceedings to reduce the rate it pays for
utilities (including water, fuel oil, electricity, and gas), then the
IHA will be permitted to retain one-half of the cost savings during the
first 12 months attributable to its actions. Upon determination that
the action was cost-effective in the first year, the IHA may be
permitted to retain one-half the annual cost savings for an additional
period not to exceed six years, if the actions continue to be cost-
effective. See also paragraph (f) of this section and Sec. 950.730(c).
(c) Computation of ``Allowable Utilities Consumption Level.'' The
Allowable Utilities Consumption Level (AUCL) used to compute the
Utilities Expense Level of an IHA for the requested budget year
generally will be based upon the availability of consumption data. For
project utilities for which consumption data are available for the
entire rolling base period, the computation will be in accordance with
paragraph (c)(1) of this section. If data are not available for the
entire period, the computation will be in accordance with paragraph
(c)(2) of this section, unless the project is a new project, in which
case the computation will be in accordance with paragraph (c)(3) of
this section. For a project for which the IHA has taken special energy
conservation measures that qualify for special treatment in accordance
with paragraph (f)(1) of this section, the computation of the AUCL may
be made in accordance with paragraph (c)(4) of this section. The AUCL
for all of an IHA's projects is the sum of the amounts determined using
all of the paragraphs in this paragraph (c), as appropriate.
(1) Rolling Base Period System. For project utilities with
consumption data for the entire rolling base period, the AUCL is the
average amount consumed per unit per month during the rolling base
period, adjusted in accordance with paragraph (d) of this section. The
IHA shall determine the average amount of each of the utilities
consumed during the rolling base period (i.e., the 36-month period
ending 12 months prior to the first day of the requested budget year).
(i) IHA fiscal years affected. The rolling base period shall be
used to compute the AUCL submitted with the operating budgets. (ii) An
example of a rolling base is as follows:
------------------------------------------------------------------------
IHA fiscal year (affected fiscal year) Rolling base period
------------------------------------------------------------------------
Beginning Ending Begins Ends
------------------------------------------------------------------------
1-1-92................... 12-31-92 (1st year)..... 1-1-88 12-31-90
1-1-93................... 12-31-93 (2nd year)..... 1-1-89 12-31-91
------------------------------------------------------------------------
(2) Alternative method if data is not available for the entire
rolling base period:
(i) If the IHA has not maintained or cannot recapture consumption
data regarding a particular utility from its records for the whole
rolling base period mentioned in paragraph (c)(1) of this section, it
shall submit consumption data for that utility for the last 24 months
of its rolling base period to the HUD Area ONAP for approval. If this
is not possible, it shall submit consumption data for the last 12
months of its rolling base period. The IHA also shall submit a written
explanation of the reasons that data for the whole rolling base period
is unavailable.
(ii) In those cases when an IHA has not maintained or cannot
recapture consumption data for a utility for the entire rolling base
period, comparable consumption for the greatest of either 36, 24, or 12
months, as needed, shall be used for the utility for which the data is
lacking. The comparable consumption shall be estimated based upon the
consumption experienced during the rolling base period of comparable
project(s) with comparable utility delivery systems and occupancy. The
use of actual and comparable consumption by each IHA, other than those
IHAs defined as new projects in paragraph (c)(3) of this section, will
be determined by the availability of complete data for the entire 36-
month rolling base period. Appropriate utility consumption records,
satisfactory to HUD, shall be developed and maintained by all IHAs so
that a 36-month rolling average utility consumption per unit per month
under paragraph (c)(1) of this section can be determined.
(iii) If an IHA cannot develop the consumption data for the rolling
base period or for 12 or 24 months of the rolling base period, either
from its own project(s) data, or by using comparable consumption data
the actual per-unit per-month utility expenses stated in paragraph (d)
of this section shall be used as the Utilities Expense Level.
(3) Computation of Allowable Utilities Consumption Levels for New
Projects. (i) A new project, for the purpose of establishing the
rolling base period and the Utilities Expense Level, is defined as
either:
(A) A project that had not been in operation during at least 12
months of the rolling base period, or a project that enters management
after the rolling base period and before the end of the requested
budget year; or
(B) A project that during or after the rolling base period, has
experienced conversion from one energy source to another, interruptible
service, deprogrammed units, a switch from tenant-purchased to IHA-
supplied utilities, or a switch from IHA-supplied to tenant-purchased
utilities.
(ii) The actual consumption for new projects shall be determined so
as not to distort the rolling base period in accordance with a method
prescribed by HUD.
(4) Freezing the Allowable Utilities Consumption Level (AUCL). (i)
[[Page 18261]] Notwithstanding the provisions of paragraphs (c)(1) and
(c)(2) of this section, if an IHA undertakes energy conservation
measures that are approved by HUD under paragraph (f) of this section,
the AUCL for the project and the utilities involved may be frozen
during the contract period. Before the AUCL is frozen, it shall be
adjusted to reflect any energy savings resulting from the use of any
HUD funding. The AUCL is then frozen at the level calculated for the
year during which the conservation measures initially will be
implemented, as determined in accordance with paragraph (g) of this
section.
(ii) If the AUCL is frozen during the contract period, the annual
three-year rolling base procedures for computing the AUCL shall be
reactivated after the IHA satisfies the conditions of the contract. The
three years of consumption data to be used in calculating the AUCL
after the end of the contract period will be as follows:
(A) First year: The energy consumption during the year before the
year in which the contract ended and the energy consumption for each of
the two years before installation of the energy conservation
improvements;
(B) Second year: The energy consumption during the year the
contract ended, energy consumption during the year before the contract
ended, and energy consumption during the year before installation of
the energy conservation improvements;
(C) Third year: The energy consumption during the year after the
contract ended, energy consumption during the year the contract ended,
and energy consumption during the year before the contract ended.
(d) Utilities Expense Level when consumption data for the full
rolling base period is unavailable. If an IHA does not obtain the
consumption data for the entire rolling base period, or for 12 or 24
months of the rolling base period, either for its own project(s) or by
using comparable consumption data as required in paragraph (c)(2) of
this section, it shall request HUD Area ONAP approval to use actual
per-unit per-month utility expenses. These expenses shall exclude
utilities labor and other utilities expenses. The actual per-unit per-
month utility expenses shall be taken from the year-end statement of
operating receipts and expenditures Form HUD-52599 (Office of
Management and Budget approval number 2577-0067), prepared for the IHA
fiscal year that ended 12 months before the beginning of the IHA
requested budget year (e.g., for an IHA fiscal year beginning January
1, 1983, the IHA would use data from the fiscal year ended December 31,
1981). Subsequent adjustments will not be approved for a budget year
for which the utility expense level is established based upon actual
per-unit per-month utility expenses.
(e) Adjustments. IHAs shall request adjustments of utilities
expense levels in accordance with Sec. 950.730(c), which requires an
adjustment based upon a comparison of actual experience and estimates
of consumption and of utility rates.
(f) Incentives for energy conservation improvements. If an IHA
undertakes energy conservation measures (including measures to save
water, fuel oil, electricity , and gas) that are financed by an entity
other than the Secretary, such as physical improvements financed by a
loan from a utility or governmental entity, management of costs under a
performance contract, or a shared savings agreement with a private
energy service company, the IHA may qualify for one of two possible
incentives under this part. For an IHA to qualify for these incentives,
it shall obtain HUD approval. Approval will be based upon a
determination that payments under the contract can be funded from the
reasonably anticipated energy cost savings, and the contract period
does not exceed 12 years.
(1) If the contract allows the IHA's payments to be dependent on
the cost savings it realizes, the IHA shall use at least 50 percent of
the cost savings to pay the contractor. With this type of contract, the
IHA may take advantage of a frozen AUCL under paragraph (c)(4) of this
section, and it may use the full amount of the cost savings, as
described in Sec. 950.730(c)(2)(ii).
(2) If the contract does not allow the IHA's payments to be
dependent on the cost savings it realizes, then the AUCL will continue
to be calculated in accordance with paragraphs (c)(1) through (c)(3) of
this section, as appropriate; the IHA will be able to retain part of
the cost savings, in accordance with Sec. 950.730(c)(2)(i); and the IHA
will qualify for additional operating subsidy eligibility (above the
amount based on the allowable expense level) to cover the cost of
amortizing the improvement loan during the term of the contract, in
accordance with Sec. 950.730(f).
Sec. 950.720 Other costs.
(a) Costs of independent audits. (1) Eligibility to receive
operating subsidy for independent audits is considered separately from
the PFS. However, the IHA shall not request, nor will HUD approve, an
operating subsidy for the cost of an independent audit if the audit has
been funded by subsidy in a prior year. The IHA's estimate of cost of
the independent audit is subject to adjustment by HUD. If the IHA
requires assistance in determining the amount of cost to be estimated,
it should contact the HUD Area ONAP.
(2) An IHA that is required by the Single Audit Act (31 U.S.C.
7501-7507) (see 24 CFR part 44) to conduct a regular independent audit
may receive operating subsidy to cover the cost of the audit. The
amount shall be prorated between the IHA's development cost budget and
one or all of its operating budgets, as appropriate. The estimated cost
of an independent audit, applicable to the operations of IHA-owned
rental housing, is not included in the Allowable Expense Level, but it
is allowed in full in computing the amount of operating subsidy under
Sec. 950.705.
(3) An IHA that is exempt from the audit requirements of the Single
Audit Act (31 U.S.C. 7501-7507) (see 24 CFR part 44) may receive
operating subsidy to offset the cost of an independent audit chargeable
to operations (after the end of the initial operating period) if the
IHA chooses to have an audit.
(b) Costs attributable to units approved for deprogramming and
vacant. (1) Units approved for deprogramming are those for which the
IHA's formal request has been approved by HUD but for which
deprogramming has not been completed. Costs for these units may be
eligible for inclusion, but shall be limited to the minimum services
and protection necessary to protect and preserve the units until the
units are deprogrammed. Costs attributable to units temporarily
unavailable for occupancy because they are utilized for IHA-related
activities are not eligible for inclusion. In determining the PFS
operating subsidy, these units shall not be included in the calculation
of unit months available. Units approved for deprogramming shall be
listed by the IHA and supporting documentation regarding direct costs
attributable to such units shall be included as part of the operating
budget in which the IHA requests operating subsidy for these units. If
the IHA requires assistance in this matter, it should contact the HUD
Area ONAP.
(2) Units approved for nondwelling use to promote economic self-
sufficiency services and anti-drug activities are eligible for
operating subsidy under the conditions provided in this paragraph
(b)(2), and the costs attributable to them are to be included in the
operating budget. If a unit [[Page 18262]] satisfies the conditions
stated in paragraphs (b)(2) (i) through (v) of this section, it will be
eligible for subsidy at the rate of the AEL for the number of months
the unit is devoted to such use. Approval will be given for a period of
no more than three years. Renewal of the approval to allow payments
after that period may be made only if the IHA can demonstrate that no
other sources for paying the nonutility operating costs of the unit are
available:
(i) The unit shall be used for either economic self-sufficiency
activities directly related to maximizing the number of employed
residents or for anti-drug programs directly related to ridding the
development of illegal drugs and drug-related crime. The activities
shall be directed toward and for the benefit of residents of the
development.
(ii) The IHA shall demonstrate that space for the service or
program is not available elsewhere in the locality and that the space
used is safe and suitable for its intended use or that resources are
committed to make the space safe and suitable.
(iii) The IHA shall demonstrate satisfactorily that other funding
is not available to pay for the nonutility operating costs. All rental
income generated as a result of the activity shall be reported as
income in the operating subsidy calculation.
(iv) Operating subsidy may be approved for only one site (involving
one or more contiguous units) per Indian housing development for
economic self-sufficiency services or anti-drug programs, and the
number of units involved should be the minimum necessary to support the
service or program. Operating subsidy for any additional sites per
development can only be approved by HUD Headquarters.
(v) The IHA shall submit a certification with its Performance
Funding System calculation that the units are being used for the
purpose for which they were approved and that any rental income
generated as a result of the activity is reported as income in the
operating subsidy calculation. The IHA shall maintain specific
documentation of the units covered. Such documentation should include a
listing of the units and project/management control numbers.
(c) Costs attributable to changes in Federal law or regulation. In
the event that HUD determines that enactment of a Federal law or
revision in HUD or other Federal regulations have caused or will cause
a significant increase in expenditures of a continuing nature above the
Allowable Expense Level and Utilities Expense Level, and upon a
determination that sufficient other funds are not available to cover
the required expenditures, HUD may in HUD's sole discretion decide to
prescribe a procedure under which the IHA may apply for or may receive
an increase in operating subsidy.
(d) Costs beyond the control of the IHA. Costs attributable to
unique circumstances that are beyond the control of the IHA and were
not reflected in the IHA's Base Year Expense Level may be considered
for supplemental operating subsidy funding. When costs were reflected
in the IHA's Base Year Expense Level, but the rate of increase for such
costs is greater than the prescribed PFS inflation rate(s), then the
increase in excess of that provided by the inflation rate may be
considered for supplemental operating subsidy funding. The IHA shall
submit to the HUD Area ONAP complete documentation relating to those
cost items that it claims to be beyond its control. Such documentation
shall not be submitted as part of the requested operating budget, but
shall be submitted separately as an addendum to the budget. The IHA
also shall show that these additional costs cannot be funded from its
own resources. In the event that excess funds are available after
making all payments approvable under Secs. 950.705 and 950.720 of this
chapter, HUD may, in HUD's sole discretion, solicit, evaluate, and
approve or disapprove, in full or in part, these requests for
additional operating subsidy for costs beyond the control of the IHA.
(e) Costs resulting from combination of two or more units. When an
IHA redesigns or rehabilitates a project and combines two or more units
into one larger unit, and the combination of units results in a unit
that houses at least the same number of people as were previously
served, the AEL for the requested year shall be multiplied by the
number of unit months not included in the requested year's unit months
available as a result of these combinations that have occurred since
the Base Year. The number of people served in a unit will be based on
the formula [(2 x No. of bedrooms) minus 1], which yields the average
number of people that would be served. An efficiency unit will be
counted as a one bedroom unit for purposes of this calculation.
(f) User fee. Additional operating subsidy will be provided to IHAs
for payment of an annual User Fee separate from the PFS. An IHA
operating a rental program shall pay an annual User Fee to
municipalities, which may include tribal, city, county governments or
other political subdivisions that provide any roads, water supply,
sewage facilities, electrical systems, or fuel distribution systems.
The annual User Fee will be paid in an amount equal to 10 percent of
the applicable shelter rent, minus the utility allowance; or $150,
whichever is greater, for each rental housing unit covered by this
section.
(g) Funding for resident organization expenses. In accordance with
the provisions of 24 CFR Part 950, subpart O, and procedures determined
by HUD, each IHA with a duly elected resident organization shall
include in the operating subsidy eligibility calculation $25 per unit
per year (subject to appropriations) for each unit represented by a
duly-elected resident organization in support of the duly elected
resident organization's activities.
Sec. 950.725 Projected operating income level.
(a) Policy. PFS determines the amount of operating subsidy for a
particular IHA based in part upon a projection of the actual dwelling
rental income and other income for the particular IHA. The projection
of dwelling rental income is obtained by computing the average monthly
dwelling rental charge per unit for the IHA, and projecting this amount
for the requested budget year by applying an upward trend factor
(subject to updating) of three percent, and multiplying this amount by
the projected occupancy percentage for the requested budget year.
Nondwelling income is projected by the IHA subject to adjustment by
HUD. There are special provisions for projection of dwelling rental
income for new projects.
(b) Computation of projected average monthly dwelling rental
income. The projected average monthly dwelling rental income per unit
for the IHA is computed as follows:
(1) Average monthly dwelling rental charge per unit. The dollar
amount of the average monthly dwelling rental charge per unit shall be
computed on the basis of the total dwelling rental charges (total of
the adjusted rent roll amounts) for all project units, as shown on the
rent roll control and analysis of dwelling rent charges, which the IHA
is required to maintain, for the first day of the month that is six
months before the first day of the requested budget year, except that
if a change in the total of the rent rolls has occurred in a subsequent
month that is before the beginning of the requested budget year and
before the submission of the requested budget year operating budget,
the IHA shall use the latest changed rent roll for the purpose of the
computation. This aggregate dollar amount shall be divided by the
[[Page 18263]] number of occupied dwelling units as of the same date.
(2) Three percent increase. The average monthly dwelling rental
charge per unit, computed under paragraph (b)(1) of this section, is
increased by three percent to obtain the projected average monthly
dwelling rental charge per unit of the IHA for the requested budget
year.
(3) Projected occupancy percentage. The IHA shall determine its
projected percentage of occupancy for all project units (projected
occupancy percentage) as follows:
(i) High occupancy IHAs. If the IHA's actual occupancy percentage
(see Sec. 950.760) is equal to or greater than 97 percent, the IHA's
projected occupancy percentage is 97 percent.
(ii) High occupancy IHAs exclusive of scheduled modernization. If
the IHA's actual occupancy percentage (see Sec. 950.760) is less than
97 percent solely because of vacant, on-schedule modernization units
described in paragraph (b)(3)(v) of this section, the IHA's projected
occupancy percentage is its actual occupancy percentage. An IHA may
also use its actual occupancy percentage as its projected occupancy
percentage if the IHA has five or fewer vacant units other than vacant,
on-schedule modernization units described in paragraph (b)(3)(v) of
this section.
(iii) Low occupancy IHAs with an approved Comprehensive Occupancy
Plan (COP). If the IHA has an actual occupancy percentage (see
Sec. 950.760) less than 97 percent and more than five vacant units, not
solely because of vacant, on-schedule modernization units described in
paragraph (b)(3)(v) of this section, and if the IHA has a HUD-approved
COP, the IHA's projected occupancy percentage is determined under
Sec. 950.770(g).
(iv) Low Occupancy IHAs without an approved COP. (A) The IHA shall
use 97 percent as its projected occupancy percentage, if the IHA:
(1) Has an actual occupancy percentage (see Sec. 950.760) less than
97 percent and has more than five vacant units, not solely because of
vacant, on-schedule modernization units described in paragraph
(b)(3)(v) of this section; and the IHA:
(2)(i) Has completed the term of its approved COP but has not
achieved a 97 percent actual occupancy percentage or has not had five
or fewer vacant units other than vacant, on-schedule modernization
units described in paragraph (b)(3)(v) of this section; or
(ii) Is authorized to submit a COP but elects not to submit one; or
(iii) Submits a COP that is disapproved by HUD.
(B) Notwithstanding the requirement in paragraph (b)(3)(iv)(A) of
this section that 97 percent be the projected occupancy percentage, a
low occupancy IHA that satisfies all the conditions described in
paragraph (b)(3)(iv)(A)(2)(i) of this section, may adjust the 97
percent projected occupancy percentage to discount units that are
vacant for reasons beyond its control, as provided in Sec. 950.770(h).
(v) Vacant, on-schedule modernization units. Vacant, on-schedule
modernization units are vacant units in an otherwise occupiable project
that has received funding for modernization through the Comprehensive
Improvement Assistance Program (subpart I of this part) or other
sources; and for which:
(A) It is expected that the vacant units will be occupied on
completion of modernization work;
(B) The IHA has a schedule for carrying out the modernization that
is acceptable to HUD; and
(C) The modernization work is on schedule.
(4) Projected average monthly dwelling rental income. The projected
occupancy percentage under paragraph (b)(3) of this section shall be
multiplied by the projected average monthly dwelling rental charge
under paragraph (b)(2) of this section to obtain the projected monthly
dwelling rental income per unit.
(c) Projected average monthly dwelling rental charge per unit for
new projects. The projected average monthly dwelling rental charge for
new projects that were not available for occupancy during the budget
year before the requested budget year and that will reach the end of
the initial operating period (EIOP) within the first nine months of the
requested budget year, shall be calculated as follows:
(1) If the IHA has another project or projects under management
that are comparable in terms of elderly and nonelderly tenant
composition, the IHA shall use the projected average monthly dwelling
rental charge for such project or projects.
(2) If the IHA has no other projects that are comparable in terms
of elderly and nonelderly tenant composition, the HUD Area ONAP will
provide the projected average monthly dwelling rental charge for such
project or projects, based on comparable projects located in the area.
(d) Estimate of additional dwelling rental income. After
implementation of the provisions of any legislation enacted or any HUD
administrative action taken after the effective date of these
regulations, which affects rent paid by tenants of projects, each IHA
shall submit a revision of its annual operating budget showing an
estimate of any change in rental income that it anticipates as the
result of the implementation of said provisions. HUD shall have
complete discretion to adjust the projected average monthly dwelling
rental charge per unit to reflect the IHA's estimate of change, or in
the absence of this submission, to reflect HUD's estimate of such
change. HUD also shall have complete discretion to reduce or increase
the operating subsidy approved for the IHA current fiscal year in an
amount equivalent to the change in the rental income.
(e) IHA's estimate of income other than dwelling rental income. (1)
Investment income. IHAs with an estimated average cash balance of less
than $20,000, excluding investment income earned from a funded
replacement reserve under Sec. 950.666(f), shall make a reasonable
estimate of investment income for the Requested Budget Year. IHAs with
an estimated average cash balance of $20,000 or more, excluding
investment income earned from a funded replacement reserve under
Sec. 950.666(f), shall estimate interest on general fund investments
based on the estimated average yield for 91-day Treasury bills for the
IHA's Requested Budget Year (yield information will be provided by
HUD). The determination of average cash balance will allow a deduction
of $10,000, plus $10 per unit for each unit over 1,000, subject to a
total maximum deduction of $250,000. In all cases, the estimated
investment income amount shall be subject to HUD approval. (See
Sec. 950.730(b)).
(2) Other income. All IHAs shall estimate other income based on
past experience and a reasonable projection for the requested budget
year, which estimate shall be subject to HUD approval.
(3) Total. The estimated total amount of income from investments
and other income, as approved, shall be divided by the number of unit
months available to obtain a per-unit per-month amount. Such amount
shall be added to the projected average dwelling rental income per unit
to obtain the projected operating income level. This amount shall not
be subject to the provisions regarding program income in 24 CFR 85.25.
(f) Required adjustments to estimates. The IHA shall submit year-
end adjustments of projected operating income levels in accordance with
Sec. 950.730(b), which covers investment income. [[Page 18264]]
Sec. 950.730 Adjustments.
Adjustment information submitted to HUD under this section shall be
accompanied by an original or revised operating budget.
(a) Adjustment of Base Year Expense Level. (1) Eligibility. An IHA
with projects that have been in management for at least one full fiscal
year, for which operating subsidy is being requested under the formula
for the first time, may, during its first budget year under PFS,
request HUD to increase its Base Year Expense Level. Included in this
category are existing IHAs requesting subsidy for a project or projects
in operation at least one full fiscal year under separate ACC for which
operating subsidy has never been paid, except for IPA audit costs. This
request may be granted by HUD, in its discretion, only when the IHA
establishes to HUD's satisfaction that the Base Year Expense Level
computed under Sec. 950.710(a) will result in operating subsidy at a
level insufficient to support a reasonable level of essential services.
The approved increase cannot exceed the per-unit per-month amount by
which the top of the range exceeds the Base Year Expense Level or
$10.31.
(2) Procedure. An IHA that is eligible for an adjustment under
paragraph (a)(1) of this section may only make a request for such
adjustment once for projects under a particular ACC, at the time it
submits the operating budget for the first budget year under PFS. Such
request shall be submitted to the HUD Area ONAP, which will review,
modify as necessary, and approve or disapprove the request. A request
under this paragraph shall include a calculation of the amount per-unit
per-month of requested increase in the Base Year Expense Level, and
shall show the requested increase as a percentage of the Base Year
Expense Level.
(b) Adjustments to estimated investment income. An IHA that has an
estimated average cash balance of at least $20,000 shall submit a year-
end adjustment to the estimated amount of investment income that was
used to determine subsidy eligibility at the beginning of the IHA's
fiscal year. The amount of the adjustment will be the difference
between the estimate and a target investment income amount based on the
actual average yield on 91-day Treasury bills for the IHA's fiscal year
being adjusted and the actual average cash balance available for
investment during the IHA's fiscal year, computed in accordance with
HUD requirements. HUD will provide the IHA with the actual average
yield on 91-day Treasury bills for the IHA's fiscal year. Failure of an
IHA to submit the required adjustment of investment income by the date
due may, in the discretion of HUD, result in the withholding of
approval of future obligation of operating subsidies until the
adjustment is received.
(c) Adjustments to Utilities Expense Level. An IHA receiving
operating subsidy under Sec. 950.705, excluding those IHAs that receive
operating subsidy solely for IPA audit (Sec. 950.720(a)), shall submit
a year-end adjustment regarding the Utility Expense Level approved for
operating subsidy eligibility purposes. This adjustment, which will
compare the actual utility expense and consumption for the IHA fiscal
year to the estimates used for subsidy eligibility purposes, shall be
submitted on forms prescribed by HUD. This request shall be submitted
to the HUD Area ONAP by a deadline established by HUD, which will be
during the IHA fiscal year following the IHA fiscal year for which an
operating subsidy was received by the IHA, exclusive of a subsidy
solely for IPA audit costs. Failure to submit the required adjustment
of the Utilities Expense Level by the due date may, in the discretion
of HUD, result in the withholding of approval of future obligation of
operating subsidies until it is received. Adjustments under this
subsection normally will be made in the IHA fiscal year following the
year for which the adjustment is applicable, except as provided in
paragraph (c)(5) of this section or unless a repayment plan is
necessary as noted in paragraph (d) of this section.
(1) Rates. (i) A decrease in the utilities expense level because of
decreased utility rates--to the extent funded by operating subsidy--
will be deducted by HUD from future operating subsidy payments.
However, when the rate reduction covering utilities, such as water,
fuel oil, electricity, and gas, is directly attributable to action by
the IHA, such as well-head purchase of natural gas, or administrative
appeals or legal action beyond normal public participation in
ratemaking proceedings, then the IHA will be permitted to retain one-
half of the cost savings attributable to its actions for the first
year, and upon determination that the action was cost-effective in the
first year, for up to an additional six years, as long as the actions
continue to be cost-effective, and the other one-half of the cost
savings will be deducted from operating subsidy otherwise payable.
(ii) An increase in the utilities expense level because of
increased utility rates--to the extent funded by operating subsidy--
will be fully funded by increased operating subsidy, subject to
availability of funds.
(2) Consumption. (i) Generally, 50 percent of any decrease in the
Utilities Expense Level attributable to decreased consumption after
adjustment for any utility rate change, will be retained by the IHA; 50
percent will be offset by HUD against subsequent payment of operating
subsidy.
(ii) However, in the case of an IHA whose energy conservation
measures have been approved by HUD as satisfying the requirements of
Sec. 950.715(f)(1), the IHA may retain 100 percent of the savings from
decreased consumption after payment of the amount due the contractor
until the term of the financing agreement is completed. The decreased
consumption is to be determined by adjusting for any utility rate
changes. The savings realized shall be applied in the following order:
(A) Retention of up to 50 percent of the total savings from
decreased consumption to cover training of IHA employees, counseling of
tenants, IHA management of the cost reduction program, and any other
eligible costs; and
(B) Prepayment of the amount due the contractor under the contract.
(iii) Fifty percent of the increase in the Utilities Expense Level
attributable to increased consumption will be funded by increased
operating subsidy payments, subject to the availability of funds.
(3) Emergency adjustments. In emergency cases, when an IHA
establishes to HUD's satisfaction that a severe financial crisis would
result from a utility rate increase, the IHA may submit to HUD an
adjustment covering only the rate increase at any time during the IHA's
Current Budget Year. Unlike the adjustments mentioned in paragraphs
(c)(1) and (c)(2) of this section, the IHA shall submit this adjustment
to the HUD Area ONAP by revision of the original submission of the
estimated Utility Expense Level for the fiscal year to be adjusted.
(4) Documentation. The IHA shall retain supporting documentation
substantiating the requested adjustments pending HUD audit.
(d) Requests for adjustments to projected average monthly dwelling
rental income. The IHA may make requests for adjustments to projected
average monthly dwelling rental income as follows:
(1) Criteria for granting request. An IHA may request an adjustment
to projected average monthly dwelling rental income under PFS if the
IHA can establish to HUD's satisfaction that the projected amount
computed under Sec. 950.725 was not attained because of
[[Page 18265]] circumstances beyond the control of the IHA, such as a
substantial increase in general unemployment in the locality, or
because of a revision of the IHA's rent schedule that has been approved
by HUD. The IHA shall also demonstrate to HUD's satisfaction that it
has established and is effectively implementing tenant selection
criteria in compliance with HUD requirements. HUD shall have complete
discretion to approve completely, approve in part, or deny any
requested adjustments to projected average monthly dwelling rental
income.
(2) Procedure. The IHA shall submit a request for an adjustment
under this subsection to the HUD Area ONAP by a deadline established by
HUD, which will be within twelve months following the IHA's fiscal year
being adjusted. In emergency cases, however, when an IHA establishes to
HUD's satisfaction that decreased rental income would result in a
severe financial crisis, the IHA may submit a request for adjustments
to HUD at an earlier time.
(e) Energy conservation financing. If HUD has approved an energy
conservation contract under Sec. 950.715(f)(2), then the IHA is
eligible for additional operating subsidy each year of the contract to
amortize the cost of the energy conservation measures under the
contract, subject to a maximum annual limit equal to the cost savings
for that year (and a maximum contract period of 12 years).
(1) Each year, the energy cost savings would be determined as
follows:
(i) The consumption level that would have been expected if the
energy conservation measure had not been undertaken would be adjusted
for the Heating Degree Days experience for the year, and for any change
in utility rate.
(ii) The actual cost of energy (of the type affected by the energy
conservation measure) after implementation of the energy conservation
measure would be subtracted from the expected energy cost, to produce
the energy cost savings for the year. (See also paragraph (c)(2)(ii) of
this section for retention of consumption savings.)
(2) If the cost savings for any year during the contract period is
less than the amount of operating subsidy to be made available under
this paragraph (e) to pay for the energy conservation measure in that
year, the deficiency will be offset against the IHA's operating subsidy
eligibility for the IHA's next fiscal year.
(3) If energy cost savings are less than the amount necessary to
meet amortization payments specified in a contract, the contract term
may be extended (up to the 12-year limit) if HUD determines that the
shortfall is the result of changed circumstances rather than a
miscalculation or misrepresentation of projected energy savings by the
contractor or IHA. The contract term may only be extended to
accommodate payment to the contractor and associated direct costs.
(f) Formal review process (1992). (1) Eligibility for
consideration. Any IHA with an established Allowable Expense Level may
request to use a revised Allowable Expense Level for its requested
budget year that starts on or after April 1, 1992 (and ends during
calendar year 1993).
(2) Eligibility for adjustment. (i) If an IHA's AEL for the budget
year that ends during calendar year 1992 is either less than 85 percent
of the Formula Expense Level or more than 115 percent of the Formula
Expense Level, as calculated using the revised formula and the
characteristics for the IHA and its community, then the IHA's AEL for
the budget year that ends during calendar year 1993 is subject to
adjustment at the IHA's request. The revised formula expense level for
the fiscal year ending during calendar year 1992 is the IHA's value of
the following formula, after updating by the local inflation factors
from FY 1989 to the requested budget year.
(ii) The revised formula is the sum of the following six numbers:
(A) The number of pre-1940 rental units occupied by poor households
in 1980 as a percentage of the 1980 population of the community
multiplied by a weight of 7.954. This Census-based statistic applies to
the county of the IHA, except that, if the IHA has 80 percent or more
of its units in an incorporated city of more than 10,000 persons, it
uses city-specific data. County data will exclude data for any
incorporated cities of more than 10,000 persons within its boundaries.
(B) The Local Government Wage Rate multiplied by a weight of
116.496. The wage rate used is a figure determined by the Bureau of
Labor Statistics. It is a county-based statistic, calibrated to a unit-
weighted IHA standard of 1.0. For multi-county IHAs, the local
government wage is unit-weighted. For this formula, the local
government wage index for a specific county cannot be less than 85
percent or more than 115 percent of the average local government wage
for counties of comparable population and metro/non-metro status, on a
state-by-state basis. In addition, for counties of more than 150,000
population in 1980, the local government wage cannot be less than 85
percent or more than 115 percent of the wage index of private
employment determined by the Bureau of Labor Statistics and the
rehabilitation cost index of labor and materials determined by the R.S.
Means Company.
(C) The lesser of the current number of the IHA's two or more
bedroom units available for occupancy, or 15,000 units, multiplied by a
weight of .002896.
(D) The current ratio of the number of the IHA's two or more
bedroom units available for occupancy in high-rise family projects to
the number of all the IHA's units available for occupancy multiplied by
a weight of 37.294. For this indicator, a high-rise family project is
defined as averaging 1.5 or more bedrooms per unit available for
occupancy, averaging 35 or more units available for occupancy per
building, and containing at least one building with units available for
occupancy that is five or more stories high.
(E) The current ratio of the number of the IHA's three or more
bedroom units available for occupancy to the number of all the IHA's
units available for occupancy multiplied by a weight of 22.303.
(F) An equation calibration constant of -.2344.
(3) Procedure. If an IHA wants to request a revision to its AEL, it
should determine whether its AEL for the fiscal year ending in calendar
year 1992 (for purposes of this section, the ``unrevised AEL'') is
either less than 85 percent of the Formula Expense Level or more than
115 percent of the Formula Expense Level. Then, in lieu of using the
unrevised AEL as the basis for developing the IHA's AEL and operating
budget for the fiscal year ending in calendar year 1993, the IHA will
use 85 percent of the FEL (if this is higher than the unrevised AEL) or
115 percent of the FEL (if this is lower than the unrevised AEL). If an
IHA has submitted its original operating budget before the publication
of a change to the PFS handbook containing forms and instructions
necessary to implementation of this regulatory change, the IHA shall
submit a revision to its operating budget with calculations based on
the new AEL. If an IHA requests such revision of its AEL in connection
with submission of an operating budget and its current AEL is within 85
to 115 percent of the FEL, HUD will not adjust the AEL. If an IHA
requests revision and its AEL is not within 85 to 115 percent of the
FEL, HUD will increase it to 85 percent or decrease it to 115 percent.
The revised Allowable Expense Levels approved by HUD will be put into
effect for the IHA's budget year that begins on or after April 1, 1992
(and thus ends in calendar year 1993). [[Page 18266]]
(g) Additional HUD-initiated adjustments. Notwithstanding any other
provisions of this subpart, HUD may at any time make an upward or
downward adjustment in the amount of the IHA's operating subsidy as
result of data subsequently available to HUD that alters projections
upon which the approved operating subsidy was based. Normally
adjustments shall be made in total in the IHA fiscal year in which the
needed adjustment is determined; however, if a downward adjustment
would cause a severe financial hardship on the IHA, the HUD Area ONAP
may establish a recovery schedule that represents the minimum number of
years needed for repayment.
Sec. 950.735 Transition funding for excessive high-cost IHAs.
If an IHA's Base Year Expense Level exceeds its Allowable Expense
Level, computed as provided in Sec. 950.710, for any budget year under
PFS, the IHA may be eligible for transition funding. Transition funding
shall be an amount not to exceed the difference between the Base Year
Expense Level and the Allowable Expense Level for the requested budget
year, multiplied by the number of units months available. HUD shall
have the right to discontinue payment of all or part of the transition
funding in the event HUD at any time determines that the IHA has not
achieved a satisfactory level of management efficiency, or is not
making efforts satisfactory to HUD to improve its management
performance.
Sec. 950.740 Operating reserves.
The IHA shall maintain an operating reserve in an amount sufficient
for working capital purposes, estimated future nonroutine maintenance
requirements for IHA-owned administrative facilities, common property
and dwelling units, payment of advanced insurance premiums,
unanticipated project requirements, and other eligible uses as
determined by the IHA.
Sec. 950.745 Operating budget submission and approval.
(a) Required documentation. (1) An IHA shall prepare an operating
budget each fiscal year in a manner prescribed by HUD. The board of
commissioners shall review and approve the budget by resolution. Each
fiscal year, the IHA shall submit to the Area ONAP the approved board
resolution and the necessary HUD-required PFS calculation forms.
(2) The Area ONAP may direct an IHA to submit a complete operating
budget if the IHA has been issued a corrective action order with
respect to financial management. If such action is necessary, the Area
ONAP will notify the IHA prior to the beginning of the fiscal year.
(b) HUD operating budget review. (1) The HUD Area ONAP will perform
a detailed review on IHA operating budgets that are subject to HUD
review and approval. If the HUD Area ONAP finds that an operating
budget is incomplete, includes illegal or ineligible expenditures,
mathematical errors, errors in the application of accounting
procedures, or is otherwise unacceptable, the HUD Area ONAP may at any
time require the submission by the IHA of further information regarding
an operating budget or operating budget revision.
(2) When the IHA no longer is operating in a manner that threatens
the future serviceability, efficiency, economy, or stability of the
housing, HUD will notify the IHA that it no longer is required to
submit an operating budget to HUD for review and approval.
Sec. 950.750 Payment procedure for operating subsidy under PFS.
(a) General. Subject to the availability of funds, payments of
operating subsidy under PFS shall be made generally by electronic funds
transfers, based on a schedule submitted by the IHA and approved by
HUD, reflecting the IHA's projected cash needs. The schedule may
provide for several payments per month. If an IHA has an unanticipated,
immediate need for disbursement of approved operating subsidy, it may
make an informal request to HUD to revise the approved schedule.
(Requests by telephone are acceptable.)
(b) Payments procedure. In the event that the amount of operating
subsidy has not been determined by HUD as of the beginning of an IHA's
budget year under these PFS regulations in this subpart, annual,
monthly, or quarterly payments of operating subsidy shall be made, as
provided in paragraph (a) of this section, based upon the amount of the
IHA's operating subsidy for the previous budget year or such other
amount as HUD may determine to be appropriate.
(c) Availability of funds. In the event that insufficient funds are
available to make payments approvable under PFS for operating subsidy
payable by HUD, HUD shall have complete discretion to revise, on a pro
rata basis or other basis established by HUD, the amounts of operating
subsidy to be paid to IHAs.
Sec. 950.755 Payments of operating subsidy conditioned upon
reexamination of income of families in occupancy.
(a) Policy. The income and composition of each family shall be
reexamined at least annually (see Sec. 950.315). IHAs shall be in
compliance with this reexamination requirement to be eligible to
receive full operating subsidy payments.
(b) IHAs in compliance with requirements. Each submission of the
original operating budget for a fiscal year shall be accompanied by a
certification by the IHA that it is in compliance with the annual
income reexamination requirements and that rents have been or will be
adjusted in accordance with subpart D of this part.
(c) IHAs not in compliance with requirements. Any IHA not in
compliance with the annual income reexamination requirement at the time
of operating budget submission shall furnish to the HUD Area ONAP a
copy of the procedure it is using to attain compliance and a statement
of the number of families that have undergone reexamination during the
twelve months preceding the date of the operating budget submission, or
the revision thereof. If, on the basis of such submission, or any other
information, the Area ONAP Director determines that the IHA is not
substantially in compliance with the annual income reexamination
requirement, HUD shall withhold payments to which the IHA might
otherwise be entitled under this part, equal to his or her estimate of
the loss of rental income to the IHA resulting from its failure to
comply with those requirements.
Sec. 950.760 Determining actual occupancy percentage.
(a) For each requested budget year beginning on or after July 1,
1986, the IHA shall determine the percentage of occupancy for all
project units included in the unit months available (actual occupancy
percentage), at its option, either:
(1) For the last day of the month that ends six months before the
beginning of the requested budget year; or
(2) Based on the average occupancy during the month ending six
months before the beginning of the requested budget year.
(b) If the IHA elects to use an average, it shall maintain a record
of its computation of its actual occupancy percentage. The actual
occupancy percentage shall be adjusted to reflect expected changes in
occupancy because of modernization, new development, demolition, or
disposition in order to reflect the expected average occupancy
[[Page 18267]] rate throughout the year. If, after that date, there are
changes, up or down, in occupancy because of modernization, new
development, demolition, or disposition not reflected in the
adjustment, the IHA shall submit a budget revision to reflect the
actual change in occupancy due to these actions.
Sec. 950.770 Comprehensive Occupancy Plan (COP) requirements.
(a) IHAs that may submit a Comprehensive Occupancy Plan (COP). An
IHA may prepare and submit a COP to HUD in accordance with the
provisions of this section:
(1) For its first requested budget year beginning on or after July
1, 1986, if the IHA has an actual occupancy percentage (Sec. 950.760)
less than 97 percent, and has more than five vacant units, not solely
because of vacant, on-schedule modernization units (as defined in
Sec. 950.725(b)(3)(v)); or
(2) For a requested budget year beginning on or after July 1, 1987,
if:
(i) The IHA projects an actual occupancy percentage (Sec. 950.760)
for the requested budget year of less than 97 percent and has more than
five vacant units, other than vacant, on-schedule modernization units;
(ii) The IHA is not currently a low occupancy IHA, that is, the IHA
had an actual occupancy percentage determined under Sec. 950.760 for
the current requested budget year that equalled or exceeded 97 percent
or had five or fewer vacant units other than vacant, on-schedule
modernization units; and
(iii) The IHA is not currently under a COP.
(b) Comprehensive Occupancy Plan content. A COP shall provide a
general IHA-wide strategy for returning to occupancy or deprogramming
all vacant units and a specific strategy for returning to occupancy or
deprogramming units for each project that has an occupancy percentage
of less than 97 percent.
(1) The general IHA-wide strategy for returning to occupancy or
deprogramming all vacant units shall specify management actions the IHA
is taking or intends to take to eliminate vacancies, such as revised
occupancy policies, actions to reduce time to return vacated units to
occupancy, and identification of the need to use the exception for
nonelderly tenants in elderly projects, and shall include a schedule
for completing these actions.
(2) The project-specific strategy shall:
(i) Identify each project that has a percentage of occupancy less
than 97 percent.
(ii) State the project-specific actions the IHA is taking or
intends to take to eliminate vacancies, such as:
(A) Modernization;
(B) Demolition;
(C) Disposition;
(D) Change in occupancy policy; or
(E) Physical or management improvements; and
(iii) For each project identified, include a schedule for
completing these actions and returning the units to occupancy.
(3) The COP shall also include yearly IHA-wide occupancy goals and
yearly occupancy goals for each project with an occupancy rate below 97
percent stated for each year until there is a projected IHA-wide
occupancy rate of at least 97 percent or an estimate that the IHA will
have five or fewer vacant units, excluding units that are vacant, on-
schedule modernization units. These goals should reflect the average
occupancy percentage for each year. The yearly occupancy goals (both
IHA-wide and project specific) for the first year of a COP that is
submitted with an IHA's budget for its first requested budget year
beginning on or after July 1, 1986, shall take into account actions
taken by the IHA from August 2, 1985, to reduce vacancies.
(c) Time for submitting a Comprehensive Occupancy Plan. An IHA that
submits a COP to HUD for approval in accordance with paragraph (a) of
this section shall submit the COP with its budget.
(d) Maximum term of a Comprehensive Occupancy Plan. (1) Except as
provided in paragraph (d)(2) of this section, a COP:
(i) Submitted for an IHA's first requested budget year beginning on
or after July 1, 1986, shall be for a period approved by HUD as
reasonable, which shall not exceed five years; or
(ii) Submitted for a requested budget year beginning on or after
July 1, 1987, shall be for a period of one or two years, as approved by
HUD.
(2) A COP that exceeds the maximum period provided in paragraphs
(d)(1)(i) or (ii) of this section may be approved only if the Assistant
Secretary for Public and Indian Housing has given written authorization
for such longer period before the approval of the COP.
(e) Local governing body review. The IHA shall have the COP
reviewed by the local governing body for comment and shall submit any
comments from the local governing body to HUD with the COP.
(f) HUD review of Comprehensive Occupancy Plan. If HUD fails to
approve, disapprove, or otherwise substantively comment on a COP within
45 days of receipt of the plan, the IHA-wide yearly occupancy goal for
the first year of the COP shall be considered approved for the purpose
of determining the IHA's projected occupancy percentage under paragraph
(g) of this section.
(g) Projected Occupancy Percentage (Comprehensive Occupancy Plan).
An IHA that has a HUD-approved COP shall use as its projected occupancy
percentage for computing its projected operating income level under
Sec. 950.725 the greater of its actual occupancy percentage, as
determined under Sec. 950.760, or its approved, yearly IHA-wide
occupancy goal, adjusted as necessary to discount units that are vacant
for reasons beyond the IHA's control, as provided in paragraph (h) of
this section.
(h) Units vacant for reasons beyond an IHA's control. A vacant unit
is considered vacant for reasons beyond an IHA's control only if the
unit is located in a project that meets one of the following
conditions:
(1) The IHA has applied for modernization, HUD cannot fund the
project because of lack of sufficient funding, and it is expected that
the units will be occupied when the units are modernized.
(2) The vacant units are vacant, on-schedule modernization units.
(3) The units are vacant because of natural disasters, or as a
result of court-ordered, or HUD-approved, constraints relating to title
VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d).
Sec. 950.772 Financial management systems, monitoring, and reporting.
The financial management systems, monitoring, and reporting on
program performance and financial reporting will be in compliance with
the requirements of 24 CFR 85.20, 85.40, and 85.41, except to the
extent that HUD requirements provide for additional specialized
procedures necessary to permit the Secretary to make the determinations
regarding the payment of operating subsidy specified in section 9(a)(1)
of the United States Housing Act of 1937 (42 U.S.C 1437g(a)(1)).
Sec. 950.774 Operating subsidy eligibility for projects owned by IHAs
in Alaska.
The provisions of this subpart are applicable to the development,
modernization, and operation of the rental housing owned by the IHAs in
the State of Alaska, excluding the formula calculation for the PFS.
[[Page 18268]]
Subpart K--Energy Audits, Energy Conservation Measures and Utility
Allowances
Sec. 950.801 Purpose and applicability.
(a) Purpose. The purpose of this subpart K is to implement HUD
policies in support of national energy conservation goals by reducing
energy consumption through requiring that IHAs conduct energy audits
and undertake certain cost-effective energy conservation measures. This
subpart K also provides for the establishment of utility allowances for
residents based on reasonable consumption of utilities by an energy-
conscious household.
(b) Applicability. The provisions of this subpart K apply to all
IHAs with IHA-owned housing, including Mutual Help and Turnkey III.
Energy Audits and Energy Conservation Measures
Sec. 950.805 Requirements for energy audits.
All IHAs shall complete an energy audit for each IHA-owned project
under management. Standards for energy audits shall be equivalent to
State or tribal standards for energy audits. Energy audits shall
analyze all of the energy conservation measures, and the payback period
for these measures, that are pertinent to the type of buildings and
equipment operated by the IHA.
Sec. 950.810 Order of funding.
Within the funds available to an IHA, energy conservation measures
should be accomplished with the shortest pay-back periods funded first.
However, HUD Area ONAPs should permit IHAs to make adjustments to this
funding order because of insufficient funds to accomplish high-cost
energy conservation measures (ECM), or a situation in which an ECM with
a longer pay-back period can be more efficiently installed in
conjunction with other planned modernization. Area ONAPs may not
authorize installation of individual utility meters that measure the
energy or fuel used for space heating in dwelling units that need
substantial weatherization, when installation of meters would result in
economic hardship for residents. In these cases, the ECMs related to
weatherization shall be accomplished before the installation of
individual utility meters.
Sec. 950.812 Funding.
(a) The cost of accomplishing cost-effective energy conservation
measures, including the cost of performing energy audits, shall be
funded from operating funds of the IHA to the extent feasible. When
sufficient operating funds are not available for this purpose, such
costs are eligible for inclusion in a modernization program, for
funding from any available development funds in the case of projects
still in development, or for other available funds that HUD may
designate to be used for energy conservation.
(b) If an IHA finances energy conservation measures from sources
other than modernization or operating reserves, such as on the basis of
a promise to repay, HUD may agree to provide adjustments in its
calculation of the IHA's operating subsidy eligibility under the PFS
for the project and utility involved if the financing arrangement is
cost-beneficial to HUD. (See Sec. 950.730(e)).
Sec. 950.815 Energy conservation equipment and practices.
In purchasing original or, when needed, replacement equipment, IHAs
shall acquire only equipment that meets or exceeds the minimum
efficiency requirements established by the U.S. Department of Energy.
In the operation of their facilities, IHAs shall follow operating
practices directed to maximum energy conservation.
Sec. 950.822 Compliance schedule.
All energy conservation measures determined by energy audits to be
cost effective shall be accomplished as funds are available.
Sec. 950.825 Energy performance contracts.
Method of procurement. Energy performance contracting shall be
conducted using one of the following methods of procurement:
(a) Competitive proposals (see Sec. 950.165(c)). In identifying the
evaluation factors and their relative importance, as required by
Sec. 950.165(c)(1), the solicitation shall state that technical factors
are significantly more important than price (of the energy audit); or
(b) If the services are available only from a single source,
noncompetitive proposals (see Sec. 950.165(d)).
Individual Metering of Utilities
Sec. 950.840 Individually metered utilities.
(a) All utility service shall be individually metered to residents,
either through provision of retail service to the residents by the
utility supplier or through the use of checkmeters, unless:
(1) Individual metering is impractical, such as in the case of a
central heating system in an apartment building;
(2) Change from a mastermetering system to individual meters would
not be financially justified based upon a benefit/cost analysis; or
(3) Checkmetering is not permissible under State or local law, or
under the policies of the particular utility supplier or public service
commission.
(b) If checkmetering is not permissible, retail service shall be
considered. Where checkmetering is permissible, the type of individual
metering offering the most savings to the IHA shall be selected.
Sec. 950.842 Benefit/cost analysis.
(a) A benefit/cost analysis shall be made to determine whether a
change from a mastermetering system to individual meters will be cost
effective, except as otherwise provided in Sec. 950.846.
(b) Proposed installation of checkmeters shall be justified on the
basis that the cost of debt service (interest and amortization) of the
estimated installation costs plus the operating costs of the
checkmeters will be more than offset by reduction in future utilities
expenditures to the IHA under the mastermeter system.
(c) Proposed conversion to retail service shall be justified on the
basis of net savings to the IHA. This determination involves making a
comparison between the reduction in utility expense obtained through
eliminating the expense to the IHA for IHA-supplied utilities and the
resultant allowance for resident-supplied utilities, based on the cost
of utility service to the residents after conversion.
Sec. 950.844 Funding.
The cost to change mastermeter systems to individual metering of
resident consumption, including the costs of benefit/cost analysis and
complete installation of checkmeters, shall be funded from operating
funds of the IHA to the extent feasible. When sufficient operating
funds are not available for this purpose, such costs are eligible for
inclusion in a modernization project or for funding from any available
development funds.
Sec. 950.845 Order of conversion.
Conversions to individually metered utility service shall be
accomplished in the following order when an IHA has projects of two or
more of the designated categories, unless otherwise approved by the HUD
Area ONAP:
(a) In projects for which retail service is provided by the utility
supplier and the IHA is paying all the individual utility bills, no
benefit/cost analysis is necessary, and residents shall be billed
directly after the IHA adopts revised payment schedules providing
appropriate allowances for resident-supplied utilities.
(b) In projects for which checkmeters have been installed but are
not being [[Page 18269]] utilized as the basis for determining utility
charges to the residents, no benefit/cost analysis is necessary. The
checkmeters shall be used as the basis for utility charges and
residents shall be surcharged for excess utility use.
(c) Projects for which meter loops have been installed for
utilization of checkmeters shall be analyzed both for the installation
of checkmeters and for conversion to retail service.
(d) Low- or medium-rise family units with a mastermeter system
should be analyzed for both checkmetering and conversion to retail
service, because of their large potential for energy savings.
(e) Low- or medium-rise housing for elderly should next be analyzed
for both checkmetering and conversion to retail service, since the
potential for energy saving is less than for family units.
(f) Electric service under mastermeters for high-rise buildings,
including projects for the elderly, should be analyzed for both use of
retail service and of checkmeters.
Sec. 950.846 Actions affecting residents.
(a) Before making any conversion to retail service, the IHA shall
adopt revised payment schedules, providing appropriate allowances for
the resident-supplied utilities resulting from the conversion.
(b) Before implementing any modifications to utility services
arrangements with the residents or charges with respect thereto, the
requisite changes shall be made in resident dwelling leases in
accordance with subpart D of this part.
(c) To the extent practicable, IHAs should work closely with
resident organizations in making plans for conversion of utility
service to individual metering, explaining the national policy
objectives of energy conservation, the changes in charges and rent
structure that will result, and the goals of achieving an equitable
structure that will be advantageous to residents who conserve energy.
(d) A transition period of at least six months shall be provided in
the case of initiation of checkmeters, during which residents will be
advised of the charges but during which no surcharge will be made based
on the readings. This trial period will afford residents ample notice
of the effects the checkmetering system will have on their individual
utility charges and also afford a test period for the adequacy of the
utility allowances established.
(e) During and after the transition period, IHAs shall advise and
assist residents with high utility consumption on methods for reducing
their usage. This advice and assistance may include counseling,
installation of new energy conserving equipment or appliances, and
corrective maintenance.
Sec. 950.849 Waivers for similar projects.
IHAs with more than one project of similar design and utilities
service may prepare a benefit/cost analysis for a representative
project. A finding that a change in metering is not cost effective for
the representative project is sufficient reason for the HUD Area ONAP
to waive the requirements of this subpart for benefit/cost analysis on
the remaining similar projects.
Sec. 950.850 Reevaluations of mastermeter systems.
Because of changes in the cost of utility services and the periodic
changes in utility regulations, IHAs with mastermeter systems are
required to reevaluate mastermeter systems without checkmeters by
making benefit/cost analyses at least every 36 months. HUD Area ONAPs
may grant waivers of this requirement upon making a finding as provided
in Sec. 950.849.
Resident Utility Allowances
Sec. 950.860 Applicability.
(a) Sections 950.860 through 950.876 apply to all Indian housing
dwelling units, including those operated under the Mutual Help
Homeownership Opportunity Program.
(b) In rental units for which utilities are furnished by the IHA
but there are no checkmeters to measure the actual utilities
consumption of the individual units, residents shall be subject to
charges for consumption of resident-owned major appliances, or for
optional functions of IHA-furnished equipment, in accordance with
Sec. 950.865(e), but no utility allowance will be established.
Sec. 950.865 Establishment of utility allowances by IHAs.
(a) IHAs shall establish allowances for IHA-furnished utilities for
all checkmetered utilities and allowances for resident-purchased
utilities for all utilities purchased directly by residents from the
utilities suppliers.
(b) The IHA shall maintain a record that documents the basis on
which allowances and scheduled surcharges, and revisions thereof, are
established and revised. Such record shall be available for inspection
by residents.
(c) The IHA shall give notice to all residents of proposed
allowances, scheduled surcharges, and revisions thereof. Such notice
shall be given, in the manner provided in the lease or homebuyer
agreement, not less than 60 days before the proposed effective date of
the allowances or scheduled surcharges or revisions; shall describe
with reasonable particularity the basis for determination of the
allowances, scheduled surcharges, or revisions, including a statement
of the specific items of equipment and function whose utility
consumption requirements were included in determining the amounts of
the allowances or scheduled surcharges; shall notify residents of the
place where the IHA's record maintained in accordance with paragraph
(b) of this section is available for inspection; and shall provide all
residents an opportunity to submit written comments during a period
expiring not less than 30 days before the proposed effective date of
the allowances or scheduled surcharges or revisions. Such written
comments shall be retained by the IHA and shall be available for
inspection by residents.
(d) Schedules of allowances and scheduled surcharges shall not be
subject to approval by HUD before becoming effective, but will be
reviewed in the course of audits or reviews of IHA operations.
(e) The IHA's determinations of allowances, scheduled surcharges,
and revisions thereof shall be final and valid unless found to be
arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law.
Sec. 950.867 Categories for establishment of allowances.
Separate allowances shall be established for each utility and for
each category of dwelling units determined by the IHA to be reasonably
comparable as to factors affecting utility usage. The IHA will
establish allowances for different size units, in terms of numbers of
bedrooms. Other categories may be established at the discretion of the
IHA.
Sec. 950.869 Period for which allowances are established.
(a) IHA-furnished utilities. Allowances will normally be
established on a quarterly basis; however, residents may be surcharged
on a monthly basis. The allowances established may provide for seasonal
variations.
(b) Resident-purchased utilities. Monthly allowances shall be
established at a uniform monthly amount based on an average monthly
utility requirement for a year; however, if the utility supplier does
not offer residents a uniform payment plan, the allowances established
may provide for seasonal variations.
Sec. 950.870 Standards for allowances for utilities.
(a) The objective of an IHA in designing methods of establishing
[[Page 18270]] utility allowances for each dwelling unit category and
unit size shall be to approximate a reasonable consumption of utilities
by an energy-conservative household of modest circumstances consistent
with the requirements of a safe, sanitary, and healthful living
environment.
(b) Allowances for both IHA-furnished and resident-purchased
utilities shall be designed to include such reasonable consumption for
major equipment or for utility functions furnished by the IHA for all
residents (e.g., heating furnace, hot water heater), for essential
equipment whether or not furnished by the IHA (e.g., range and
refrigerator), and for minor items of equipment (such as toasters and
radios) furnished by residents.
(c) The complexity and elaborateness of the methods chosen by the
IHA, in its discretion, to achieve the foregoing objective will depend
upon the data available to the IHA and the extent of the administrative
resources reasonably available to the IHA to be devoted to the
collection of such data, the formulation of methods of calculation, and
actual calculation and monitoring of the allowances.
(d) In establishing allowances, the IHA shall take into account
relevant factors affecting consumption requirements, including:
(1) The equipment and functions intended to be covered by the
allowance for which the utility will be used. For instance, natural gas
may be used for cooking, heating domestic water, or space heating, or
any combination of the three.
(2) The climatic location of the housing projects.
(3) The size of the dwelling units and the number of occupants per
dwelling unit.
(4) Type of construction and design of the housing project.
(5) The energy efficiency of IHA-supplied appliances and equipment.
(6) The utility consumption requirements of appliances and
equipment whose reasonable consumption is intended to be covered by the
total resident payment.
(7) The physical condition, including insulation and
weatherization, of the housing project.
(8) Temperature levels intended to be maintained in the unit during
the day and at night, and in cold and warm weather.
(9) Temperature of domestic hot water.
Sec. 950.872 Surcharges for excess consumption of IHA-furnished
utilities.
(a) For dwelling units subject to allowances for IHA-furnished
utilities where checkmeters have been installed, the IHA shall
establish surcharges for utility consumption in excess of the
allowances. Surcharges may be computed on a straight per unit of
purchase basis (e.g., cents per kilowatt hour of electricity) or for
stated blocks of excess consumption, and shall be based on the IHA's
average utility rate. The basis for calculating such surcharges shall
be described in the IHA's schedule of allowances. Changes in the dollar
amounts of surcharges based directly on changes in the IHA's average
utility rate shall not be subject to the advance notice requirements of
this section.
(b) For dwelling units served by IHA-furnished utilities where
checkmeters have not been installed, the IHA shall establish schedules
of surcharges indicating additional dollar amounts residents will be
required to pay by reason of estimated utility consumption attributable
to resident-owned major appliances or to optional functions of IHA-
furnished equipment. Such surcharge schedules shall state the resident-
owned equipment (or functions of IHA-furnished equipment) for which
surcharges shall be made and the amounts of such charges, which shall
be based on the cost to the IHA of the utility consumption estimated to
be attributable to reasonable usage of such equipment.
Sec. 950.874 Review and revision of allowances.
(a) Annual review. The IHA shall review at least annually the basis
on which utility allowances have been established and, if reasonably
required in order to continue adherence to the standards stated in
Sec. 950.870, shall establish revised allowances. The review shall
include all changes in circumstances (including completion of
modernization and/or other energy conservation measures implemented by
the IHA) indicating probability of a significant change in reasonable
consumption requirements and changes in utility rates.
(b) Revision as a result of rate changes. The IHA may revise its
allowances for resident-purchased utilities between annual reviews if
there is a rate change (including fuel adjustments) and shall be
required to do so if such change, by itself or together with prior rate
changes not adjusted for, results in a change of 10 percent or more
from the rates on which such allowances were based. Adjustments to
resident payments as a result of such changes shall be retroactive to
the first day of the month following the month in which the last rate
change taken into account in such revision became effective.
Sec. 950.876 Individual relief.
Requests for relief from surcharges for excess consumption of IHA-
purchased utilities, or from payment of utility supplier billings in
excess of the allowances for resident-purchased utilities, may be
granted by the IHA on reasonable grounds, such as special needs of
elderly, il,l or handicapped residents, or special factors affecting
utility usage not within the control of the resident, as the IHA shall
deem appropriate. The IHA's criteria for granting such relief, and
procedures for requesting such relief, shall be adopted at the time the
IHA adopts the methods and procedures for determining utility
allowances. Notice of the availability of such procedures (including
identification of the IHA representative with whom initial contact may
be made by residents), and the IHA's criteria for granting such relief,
shall be included in each notice to residents given in accordance with
Sec. 950.865(c) and in the information given to new residents upon
admission.
Subpart L--Operation of Projects After Expiration of Initial ACC
Term
Sec. 950.901 Purpose and applicability.
(a) Purpose. This subpart L specifies methods for extending the
effective period of provisions of the ACC relating to project operation
beyond the original ACC term. Such an extension provides a contractual
basis for continued eligibility for operating subsidy.
(b) Applicability. This subpart L applies to any Indian housing
project which is owned by an IHA and is subject to an ACC under section
5 of the United States Housing Act of 1937, including rental, Turnkey
III, or Mutual Help housing. However, it does not apply to the Section
8 and Section 23 Housing Assistance Payments Programs and the Section
10(c) and Section 23 Leased Housing Programs.
Sec. 950.903 Continuing eligibility for operating subsidy; ACC
extension.
(a) Operating subsidy. After the initial term of the ACC, HUD will
pay operating subsidy with respect to a project only in accordance with
an ACC amendment providing for extension of the term of the ACC
provisions related to project operation for at least ten years after
the last payment of HUD assistance. The ACC amendment shall be in the
form prescribed by HUD, and shall specify the particular provisions of
the ACC that relate to continued project operation and, therefore,
remain in effect for the extended ACC term. These
[[Page 18271]] provisions shall include a requirement that the IHA
execute and file, for public record, an appropriate document evidencing
the IHA's covenant not to convey, encumber or make any other
disposition of the project without HUD approval for a period of ten
years after the receipt of the last payment of HUD assistance.
(b) Consolidated ACC. Where a single ACC covers more than one
project (consolidated ACC), each annual operating subsidy payable under
that ACC is a lump-sum amount which is not divided into discrete
amounts for the individual projects subject to the consolidated ACC
(see subpart J of this part). Accordingly, if an IHA, before submitting
a request for operating subsidy, determines that any project(s) under
the consolidated ACC will not require operating subsidy and should not
be subject to the provisions of paragraph (a) of this section, the IHA
shall accompany its request with a resolution adopted by the Board of
Commissioners certifying that no operating subsidy shall be used with
respect to such project(s) thereafter and that all financial records
and accounts shall be kept separately for such project(s). In such
cases, the removal of the project(s) from the request for operating
subsidy shall be reflected by the inclusion of that number of unit
months available for the project(s) when making the calculations, under
subpart J of this part, for determination of total amount of operating
subsidy payable under the consolidated ACC. In any event no operating
subsidy payable under a consolidated ACC or otherwise shall be used to
pay, directly or indirectly, any costs attributable to a project that
is ineligible or otherwise excluded from operating subsidy under
paragraph (a) of this section. Even if no operating subsidy is received
with respect to a project, the IHA remains obligated to maintain and
operate the project in accordance with the provisions of the ACC
related to project operation so long as those ACC provisions remain in
effect.
Sec. 950.905 ACC extension in absence of current operating subsidy.
Where no operating subsidy is being paid under an ACC, the IHA
shall, at least one year before the anticipated ACC expiration date for
the project, notify the Area ONAP as to whether or not the IHA desires
to maintain a basis for receiving operating subsidy with respect to the
project after the anticipated ACC expiration date. This notification
shall be submitted to the appropriate Area ONAP in the form of a
resolution by the IHA's Board of Commissioners. If the IHA does not
desire to maintain a basis for operating subsidy payments with respect
to the project after the anticipated ACC expiration date, the
resolution shall certify that no operating subsidy shall be utilized
with respect to the project after the effective date of this rule and
that all financial records and accounts for such a project shall be
kept separately. If the IHA does desire to maintain a basis for such
operating subsidy payments, the resolution shall include the IHA's
request for extension of the term of the ACC provisions related to
project operation, for a period of not less than one nor more than 10
years. Upon the Area ONAP's receipt of the request, HUD and the IHA
shall enter into an ACC amendment effecting the extension for the
period requested by the IHA, unless HUD finds that continued operation
of the project cannot be justified under the standards set forth in
subpart M of this part.
Sec. 950.907 HUD approval of disposition or demolition.
During the post-assistance service period of continued operation as
low-income housing, HUD may authorize an IHA to dispose of or demolish
housing units at any time, in accordance with subpart M of this part.
Subpart M--Disposition or Demolition of Projects
Sec. 950.921 Purpose and applicability.
(a) Purpose. This subpart M sets forth requirements for HUD
approval of an IHA's application to dispose of or demolish (in whole or
in part) IHA-owned projects assisted under the Act. The rules and
procedures contained in 24 CFR part 85 are inapplicable.
(b) Applicability. (1) Type of projects. This subpart M applies to
any Indian housing project that is owned by an IHA and is subject to an
ACC under section 5 of the United States Housing Act of 1937 (42 U.S.C.
1437c), including rental, Turnkey III, or Mutual Help housing. This
subpart M does not apply to:
(i) IHA-owned Section 8 housing or housing leased under section
10(c) or section 23 of the Act (42 U.S.C. 1437h(c) or 1437u);
(ii) Demolition or disposition before the end of the initial
operating period (EIOP), as determined under the ACC, of property
acquired incident to the development of an Indian housing project
(however, this exception does not apply to units occupied or available
for occupancy by Indian housing tenants before EIOP);
(iii) Conveyance of Indian housing for the purpose of providing
homeownership opportunities for low-income families under section 21 of
the Act, the Turnkey III or Mutual Help Homeownership Opportunity
programs, or any other homeownership programs established under
sections 5(h) and 6(c)(4)(D) of the Act (42 U.S.C. 1437c(h),
1437d(c)(4)(3)) or titles II and III of the Act (42 U.S.C. 1437aa,
1437aaa).
(iv) Leasing of dwelling or nondwelling space incident to the
normal operation of the project for Indian housing purposes, as
permitted by the ACC;
(v) Easements, rights-of-way, and transfers of utility systems
incident to the normal operation of the project for Indian housing
purposes, as permitted by the ACC;
(vi) Reconfiguration of the interior space of buildings (e.g.,
moving or removing interior walls to change the design, sizes, or
number of units) without demolition; and
(vii) A whole or partial taking by a public or quasi-public entity
through the exercise of its power of eminent domain.
(2) [Reserved].
(c) Type of actions. Any action by an IHA to dispose of or demolish
an Indian housing project or a portion of an Indian housing project is
subject to the requirements of this subpart M. Until such time as HUD
approval may be obtained, the IHA may not take any action to dispose of
or demolish an Indian housing project or portion of an Indian housing
project, and the IHA shall continue to meet its ACC obligations to
maintain and operate the property as housing for low-income families.
This does not mean that HUD approval under this subpart M is required
for planning activities, analysis, or consultations, such as project
viability studies, comprehensive modernization planning, or
comprehensive occupancy planning.
Sec. 950.923 General requirements for HUD approval of disposition or
demolition.
(a) For purposes of this subpart M, the term ``tenant'' will also
include ``homebuyer'' when the development involved is a homeownership
project; and the term ``unit of general government'' will include the
tribal government, when applicable.
(b) HUD will not approve an application for disposition or
demolition unless:
(1) The application has been developed in consultation with tenants
of the project involved, any tenant organizations for the project, and
any IHA-wide tenant organizations that will be affected by the
disposition or demolition; [[Page 18272]]
(2) The IHA has complied with the requirement to offer the project
or portion of the project proposed for demolition or disposition to the
resident organizations as required under Sec. 950.925;
(3) The application contains a certification by the chief executive
officer, or designee, that the unit of general government will comply
with displacement, relocation, and real property acquisition policies
described in Sec. 950.117;
(4) Demolition or disposition (including any related replacement
housing plan) will meet the requirements of the National Environmental
Policy Act of 1969 (42 U.S.C. 4321), the National Historic Preservation
Act of 1966 (16 U.S.C. 469), and related laws, as stated in HUD's
regulations at 24 CFR part 50. When the site of the replacement housing
is unknown at the time of submission of the application for demolition
or disposition, the application shall contain a certification that the
applicant agrees to assist HUD to comply with 24 CFR part 50, and that
the applicant shall:
(i) Supply HUD with all available, relevant information necessary
for HUD to perform for each property any environmental review required
by 24 CFR part 50;
(ii) Carry out mitigating measures required by HUD or select
alternate eligible property; and
(iii) Not acquire, rehabilitate, convert, lease, repair, or
construct property, or commit HUD funds or other funds to such program
activities with respect to any eligible property, until HUD approval is
received.
(5) The IHA has developed a replacement housing plan, in accordance
with Sec. 950.935, and has obtained a commitment for the funds
necessary to carry out the plan over the approved schedule of the plan.
To the extent such funding is not provided from other sources (e.g.,
State, tribal, or local programs or proceeds of disposition), HUD
approval of the application for demolition or disposition is
conditioned on HUD's agreement to commit the necessary funds (subject
to availability of future appropriations).
Sec. 950.925 Resident organization opportunity to purchase.
(a) Applicability. (1) This section applies to applications for
demolition or disposition of a development which involve dwelling
units, nondwelling spaces (e.g., administration and community
buildings, maintenance facilities), and excess land.
(2) The requirements of this section do not apply to the following
cases which it has been determined do not present appropriate
opportunities for resident purchase:
(i) The IHA has determined that the property proposed for
demolition is an imminent threat to the health and safety of residents;
(ii) The tribal or local government has condemned the property
proposed for demolition;
(iii) A tribal or local government agency has determined and
notified the IHA that units shall be demolished to allow access to fire
and emergency equipment;
(iv) The IHA has determined that the demolition of selected
portions of the development in order to reduce density is essential to
ensure the long-term viability of the development or the IHA (but in no
case should this be used cumulatively to avoid Section 412
requirements); or
(v) A public body has requested to acquire vacant land that is less
than two acres in order to build or expand its services (e.g., a tribal
or local government wishes to use the land to build or establish a
police substation).
(3) In the situations listed in paragraph (a)(2) of this section,
the IHA may proceed to submit its request to demolish or dispose of the
property, or the portion of the property, to HUD, in accordance with
section 18 of the United States Housing Act of 1937 (42 U.S.C. 1437p)
and this subpart without affording an opportunity for purchase by a
resident organization. However, resident consultation would be required
in accordance with Sec. 950.923(b)(1). The IHA shall submit written
documentation, on official stationery, with date and signatures to
justify paragraphs (a)(2)(i) through (v) of this section. Examples of
such documentation include:
(i) A certification from a tribal or local agency, such as the fire
or health department, that a condition exists in the development that
is an imminent threat to residents; or
(ii) A copy of the condemnation order from the local health
department. If, however, at some future date, the IHA proposes to sell
the remaining property described in paragraphs (a)(2)(i) through (iii)
of this section, the IHA will be required to comply with this section.
(b) Opportunity for residents to organize. Where the affected
development does not have an existing resident organization, resident
management corporation or resident cooperative at the time of the IHA
proposal to demolish or dispose of the development or a portion of the
development, the IHA shall make a reasonable effort to inform residents
of the development of the opportunity to organize and purchase the
property proposed for demolition or disposition. Examples of
``reasonable effort'' at a minimum include at least one of the
following activities: convening a meeting, sending letters to all
residents, publishing an announcement in the resident newsletter, where
available, or hiring a consultant to provide technical assistance to
the residents. HUD will not approve any application that cannot
demonstrate that the IHA has allowed at least 45 days for the residents
of the affected development to organize a resident organization. The
IHA should initiate its efforts to inform the residents of their right
to organize as an integral part of the resident consultation
requirement under Sec. 950.923(b)(1).
(c) Established organizations. Where there are duly formed resident
management corporations, resident organizations or resident
cooperatives at the affected development, the IHA should follow the
procedures beginning in paragraph (d) of this section. Where the
affected development is fully or partially occupied, the residents
shall be given the opportunity to form under the procedures in
paragraph (b) of this section.
(d) Offer of sale to resident organizations. (1) The IHA shall make
the formal offer for sale which shall include the information listed in
this section. All contacted organizations shall have 30 days to express
an interest in the offer. The IHA shall offer to sell the property
proposed for demolition or disposition to the resident management
corporation, the resident organization or resident cooperative of the
affected development under at least as favorable terms and conditions
as the IHA would offer it for sale to another purchaser. The offer
shall include:
(i) An identification of the development, or portion of the
development, in the proposed demolition or disposition, including the
development number and location, the number of units and bedroom
configuration, the amount of space and use for non-dwelling space, the
current physical condition (e.g., fire damaged, friable asbestos, lead
based paint test results), and occupancy status (e.g., percent
occupancy);
(ii) In the case of disposition, a copy of the appraisal of the
property and any terms of sale;
(iii) An IHA disclosure and description of plans proposed for reuse
of land, if any, after the proposed demolition or disposition;
[[Page 18273]]
(iv) An identification of available resources (including its own
and HUD's) to provide technical assistance to the resident management
corporation, resident organization or resident cooperative of the
affected development to enable the organization to better understand
its opportunity to purchase the development, the development's value
and potential use;
(v) Any and all terms of sale that the IHA requires for the Section
18 action; [If the resident management corporation, resident
organization or resident cooperative of the affected development
submits a proposal that is other than the terms of sale (e.g., purchase
at less than fair market value with demonstrated commensurate public
benefit or for the purposes of homeownership), the IHA may consider
accepting the offer.]
(vi) A date by which the resident management corporation, resident
organization or resident cooperative of the affected development shall
respond to the IHA's offer to sell the property proposed for demolition
or disposition, which shall be no less than 30 days from the date of
the official offering of the IHA which will be made sometime after the
meeting. The response from the resident management corporation,
resident organization or resident cooperative of the affected
development shall be in the form of a letter expressing its interest in
accepting the IHA's written offer.
(vii) A statement that the resident management corporation,
resident organization and resident cooperative of the affected
development will be given up to 60 days to develop and submit a
proposal to the IHA to purchase the property and to obtain a firm
financial commitment. It shall explain that the IHA shall approve the
proposal from the resident management corporation, resident
organization or resident cooperative of the affected development, if it
meets the terms of sale. However, the statement shall indicate that the
IHA can consider accepting an offer from the resident management
corporation, resident organization or resident cooperative of the
affected development that is other than the terms of sale; e.g.,
purchase at less than fair market value with demonstrated commensurate
public benefit or for the purposes of homeownership. The statement
shall explain that if the IHA receives more than one proposal from a
resident management corporation, resident organization or resident
cooperative at the affected development, the IHA shall select the
proposal that meets the terms of sale. In the event that two proposals
from the affected development meet the terms of sale, the IHA shall
choose the best proposal.
(2) After the 30 day time frame for the resident management
corporation, resident organization or resident cooperative of the
affected development to respond to the notification letter has expired,
the IHA is to prepare letters to those organizations that responded
affirmatively inviting them to submit a formal proposal to purchase the
property. The organization has up to 60 days from the date of its
affirmative response to prepare and submit a proposal to the IHA that
provides all the information requested in paragraph (d)(1) of this
section and meets the terms of sale.
(e) IHA review of proposals. The IHA has up to 60 days from the
date of receipt of the proposals to review them and determine whether
they meet the terms of sale set forth in its offer. If the resident
management corporation, resident organization or resident cooperative
of the affected development submits a proposal that is other than the
terms of sale (e.g., purchase at less than the fair market value with
demonstrated commensurate public benefit or for the purposes of
homeownership), the IHA may consider accepting the offer. If the terms
of sale are met, within 14 days of the IHA's final decision, the IHA
shall notify the resident management corporation, resident organization
or resident cooperative of the affected development of that fact and
that the proposal has been accepted or rejected.
(f) Appeals. The resident management corporation, resident
organization or resident cooperative of the affected development has
the right to appeal the IHA's decision to the HUD Area ONAP. A written
appeal shall be made within 30 days of the decision by the IHA. The
appeal should include copies of the proposal and any related
correspondence. The HUD Area ONAP will render a final decision within
30 days. A letter communicating the decision is to be prepared and sent
to the IHA and the resident management corporation, resident
organization or resident cooperative of the affected development.
(g) Contents of proposal. (1) The proposal from the resident
management corporation, resident organization or resident cooperative
of the affected development shall at a minimum include the following:
(i) The length of time the organization has been in existence;
(ii) A description of current or past activities which demonstrate
the organization's organizational and management capability or the
planned acquisition of such capability through a partner or other
outside entities;
(iii) A statement of financial capability;
(iv) A description of involvement of any non-resident organization
(non-profit, for-profit, governmental or other entities), if any, the
proposed division of responsibilities between the two, and the non-
resident organization's financial capabilities;
(v) A plan for financing the purchase of the property and a firm
commitment for funding resources necessary to purchase the property and
pay for any necessary repairs;
(vi) A plan for the use of the property;
(vii) The proposed purchase price in relation to the appraised
value;
(viii) Justification for purchase at less than the fair market
value in accordance with Sec. 950.931(h), if appropriate;
(ix) Estimated time schedule for completing the transaction;
(x) The response to the IHA's terms of sale;
(xi) A resolution from the resident organization approving the
proposal; and
(xii) A proposed date of settlement, generally not to exceed six
months from the date of IHA approval of the proposal, or such period as
the IHA may determine to be reasonable.
(2) If the proposal is to purchase the property for homeownership
under section 5(h) or HOPE 1, then the requirements of section 18 of
the United States Housing Act of 1937 (42 U.S.C. 1437p) and this
subpart do not apply, and the applicable requirements shall be those
under the HOPE 1 guidelines, as set forth at 24 CFR Subtitle A, App. A,
or the section 5(h) regulation, as set forth in subpart P of this part.
In order for the IHA to consider a proposal to purchase under section
412, using homeownership opportunities under section 5(h) or HOPE 1,
the resident management corporation, organization or resident
cooperative of the affected development shall meet the provisions of
this subsection, including items in paragraph (g)(1) of this section.
(3) If the proposal is to purchase the property for other than the
aforementioned homeownership programs or for uses other than
homeownership, then the proposal shall meet all the disposition
requirements of section 18 of the United States Housing Act of 1937 (42
U.S.C. 1437p) and this subpart.
(h) IHA Obligations. (1) Prepare and disperse the formal offer of
sale to the resident management corporation, resident organization and
resident cooperative of the affected development. [[Page 18274]]
(2) Evaluate proposals received and make the selection based on the
considerations set forth in paragraph (b) of this section. Issue
letters of acceptance and rejection.
(3) Prepare certifications, where appropriate, as discussed in
paragraph (j)(3) of this section. The IHA shall comply with its
obligations under Sec. 950.923(b)(1) regarding tenant consultation and
provide evidence to HUD that it has met those obligations. The IHA
shall not act in an arbitrary manner and shall give full and fair
consideration to any qualified resident management corporation,
resident organization or resident cooperative of the affected
development and accept the proposal if it meets the terms of sale.
(i) IHA application submission requirements for proposed demolition
or disposition. (1) If the proposal from the resident organization is
rejected by the IHA, and either there is no appeal by the organization
or the appeal has been denied, the IHA shall submit its demolition or
disposition application to HUD in accordance with section 18 of the
United States Housing Act of 1937 (42 U.S.C. 1437p) and this subpart.
The demolition or disposition application shall include complete
documentation that the requirements of this section have been met. IHAs
shall submit written documentation that the resident management
corporation, resident organization and resident cooperative of the
affected development have been apprised of their opportunity to
purchase under this section. This documentation shall include a copy of
the signed and dated IHA notification letter(s) to each organization
informing them of the IHA's intention to submit an application for
demolition or disposition and the responses from each organization.
(2) If the IHA accepts the proposal of the resident organization,
the IHA shall submit a disposition application in accordance with
section 18 of the United States Housing Act of 1937 (42 U.S.C. 1437p)
and this subpart, with appropriate justification for a negotiated sale
and for sale at less than fair market value, if applicable.
(3) HUD will not process an application for demolition or
disposition unless the IHA provides HUD with one of the following:
(i) Where no resident management corporation, resident organization
or resident cooperative exists in the affected development and the
residents of the affected development have not formed a new
organization, a certification from either the executive director or the
board of commissioners stating that no such organization(s) exists and
documentation that a reasonable effort to inform residents of their
opportunity to organize has been made; or
(ii) Where a resident management corporation, resident organization
or resident cooperative exists in the affected development one of the
following, either paragraph (i)(3)(ii)(A) or (B) of this section:
(A) A board resolution or its equivalent from each resident
management corporation, resident organization or resident cooperative
stating that such organization has received the IHA letter, and that it
understands the offer and waives its opportunity to purchase the
project, or portion of the project, covered by the demolition or
disposition application. The response should clearly state that the
resolution was adopted by the entire organization at a formal meeting;
or
(B) A certification from the executive director or board of
commissioners of the IHA that the thirty (30) day timeframe has expired
and no response was received to its offer.
Sec. 950.927 Specific criteria for HUD approval of disposition
requests.
In addition to other applicable requirements of this subpart, HUD
will not approve a request for disposition unless HUD determines that
retention is not in the best interests of the tenants and the IHA,
because at least one of the following criteria is met:
(a) Developmental changes in the area surrounding the project
adversely affect the health or safety of the tenants or the feasible
operation of the project by the IHA.
(b) Disposition will allow the acquisition, development, or
rehabilitation of other properties that will be more efficiently or
effectively operated as low-income housing projects, and that will
preserve the total amount of low-income housing stock available to the
community.
(c) There are other factors justifying disposition that HUD
determines are consistent with the best interests of the tenants and
the IHA that are not inconsistent with other provisions of the Act.
(d) In the case of disposition of property other than dwelling
units:
(1) The property is determined by HUD to be excess to the needs of
the project (after the end of the initial operating period); or
(2) The disposition of the property is incidental to, or does not
interfere with, continued operation of the remaining portion of the
project.
Sec. 950.928 Specific criteria for HUD approval of demolition
requests.
In addition to other applicable requirements of this subpart, HUD
will not approve an application for demolition unless HUD determines
that at least one of the following criteria is met:
(a) In the case of demolition of all or a portion of a project, the
project, or a portion of the project, is obsolete as to physical
condition, location, or other factors, making it unusable for housing
purposes; and
(b) No reasonable program of modifications, in keeping with the
provisions of subpart I of this part, is feasible to return the project
or portion of the project to useful life.
Sec. 950.931 IHA application for HUD approval.
Written approval by HUD shall be required before the IHA may
undertake any transaction involving demolition or disposition. To
request approval, the IHA shall submit an application to the HUD Area
ONAP that includes the following:
(a) A description of the property involved;
(b) A description of, as well as a timetable for, the specific
action proposed (including, in the case of disposition, the specific
method proposed);
(c) A statement justifying the proposed disposition or demolition
under one or more of the applicable criteria of Secs. 950.927 or
950.928;
(d) If applicable, a plan that meets the requirements of
Sec. 950.117 for the relocation of tenants who would be displaced by
the proposed demolition or disposition;
(e) A description of the IHA's consultations with tenants and any
tenant organizations (as required under Sec. 950.923(b)(1)), with
copies of any written comments which may have been submitted to the IHA
and the IHA's evaluation of the comments;
(f) A replacement housing plan, as required under Sec. 950.935, and
a resolution by the governing body of the unit of tribal or general
local government in which the project is located, indicating approval
of the replacement plan;
(g) Evidence that the IHA has complied with the requirement to
offer the project or portion of the project proposed for demolition or
disposition to the resident organizations, as required under
Sec. 950.925;
(h) The estimated balance of project debt, if any, under the ACC
for development and modernization;
(i) In the case of disposition, an estimate of the fair market
value of the [[Page 18275]] property, established on the basis of one
independent appraisal, unless, as determined by HUD:
(1) More than one appraisal is warranted; or
(2) Another method of valuation is clearly sufficient and the
expense of an independent appraisal is unjustified because of the
limited nature of the property interest involved or other available
data;
(j) In the case of disposition, estimates of the gross and net
proceeds to be realized, with an itemization of estimated costs to be
paid out of gross proceeds and the proposed use of any net proceeds in
accordance with Sec. 950.933;
(k) A copy of a resolution by the IHA's Board of Commissioners
approving the application;
(l) If determined to be necessary by HUD, an opinion by the IHA's
legal counsel that the proposed action is consistent with applicable
requirements of Federal, State, tribal, and local laws; and
(m) Any additional information necessary to support the application
and assist HUD in making determinations under this subpart M.
Sec. 950.933 Use of proceeds.
(a) Disposition. (1) If HUD approves the disposition of real
property of a project, in whole or in part, the IHA shall dispose of it
promptly by public solicitation of bids for not less than fair market
value, unless HUD authorizes negotiated sale for reasons found to be in
the best interests of the IHA or the Federal Government, or for sale
for less than fair market value (where permitted by State, tribal, or
local law), based on commensurate public benefits to the community, the
IHA, or the Federal Government justifying such an exception.
(2) Net proceeds (after payment of HUD-approved costs of
disposition and relocation under paragraph (a) of this section) shall
be used, subject to HUD approval, as follows: first for the retirement
of outstanding obligations, if any, issued to finance development or
modernization of the project, which in the case of scattered site
housing of an IHA, shall be in an amount that bears the same ratio to
the total of such costs and obligations as the number of units disposed
of bears to the total number of units of the project at the time of
disposition; and thereafter for the provision of housing assistance for
low-income families, through such measures as modernization of low-
income housing or the acquisition, development, or rehabilitation of
other properties to operate as low-income housing.
(b) Demolition. If HUD has approved demolition of a project, or a
portion of a project, and the proposed action is part of a
modernization program under subpart I of this part, the costs of
demolition and of relocation of displaced tenants may be included in
the modernization budget.
Sec. 950.935 Replacement housing plan.
(a) HUD may not approve an application or furnish assistance under
this subpart unless the IHA submitting the application for disposition
or demolition also submits a plan for the provision of an additional
decent, safe, sanitary, and affordable dwelling unit (at rents no
higher than permitted under the Act) for each dwelling unit to be
disposed of or demolished under the application. The plan shall include
any one or a combination of the following:
(1) The acquisition or development of additional low-income housing
dwelling units;
(2) The use of project-based assistance under section 8 (as
provided for in 24 CFR part 882, subpart G);
(3) The use of project-based assistance under other Federal
programs;
(4) The acquisition or development of dwelling units assisted under
a State or local tribal government program that provides for project-
based assistance comparable in terms of eligibility, contribution to
rent, and length of assistance contract to assistance under section
8(b)(1) of the Act; or
(5) The use of tenant-based assistance under section 8 of the Act
(excluding vouchers under section 8(o) of the Act (42 U.S.C. 1437f(o)),
under the conditions described in paragraph (b) of this section.
(b) Tenant-based assistance under section 8 may be approved under
the replacement plan only if:
(1) There is a finding by HUD that replacement with project-based
assistance is not feasible; that the supply of private rental housing
actually available to those who would receive project-based assistance
under the plan is sufficient for the total number of certificates and
vouchers available in the community after implementation of the plan;
and that this available housing supply is likely to remain available
for the full term of the assistance; and
(2) HUD's findings under paragraph (b)(1) of this section are based
on objective information, which shall include rates of participation by
landlords in the Section 8 program; size, condition, and rent levels of
available rental housing as compared to Section 8 standards; the supply
of vacant existing housing meeting the Section 8 housing quality
standards with rents at or below the fair market rent or the likelihood
of adjusting the fair market rent; the number of eligible families
waiting for housing assistance under the Act; the extent of
discrimination practiced against the types of individuals or families
to be served by the assistance; and such additional data as HUD may
determine to be relevant in particular circumstances.
(c) The plan shall be approved by the unit of general local
government (including tribal government) in which the project is
located.
(d) The plan shall include a schedule for carrying out all its
terms within a period consistent with the size of the proposed
disposition or demolition, except that the schedule for completing the
plan shall in no event exceed six years from the date specified to
begin plan implementation.
(e) The plan shall include a method that ensures that at least the
same total number of individuals and families will be provided housing,
allowing for replacement with units of different sizes to accommodate
changes in local priority needs.
(f) The plan shall include an assessment of the suitability of the
location of proposed replacement housing based upon application of the
site selection criteria established in Sec. 950.235.
(g) The plan shall contain assurances that any replacement units
acquired, newly constructed, or rehabilitated will meet the applicable
accessibility requirements set forth in 24 CFR 8.25.
Subpart N--[Reserved]
Subpart O--Resident Participation and Opportunities General
Provisions
Sec. 950.960 Purpose.
The purpose of this subpart O is to recognize the importance of
involving residents in creating a positive living environment and in
contributing to the successful operation of Indian housing.
Sec. 950.961 Applicability and scope.
(a) This subpart O applies to any Indian housing authority (IHA)
that has an Annual Contributions Contract (ACC) with the Department.
This subpart does not apply to housing assistance payments under
section 8 of the United States Housing Act of 1937.
(b) This subpart O contains HUD's policies, procedures, and
requirements for the participation of Indian housing residents in
Indian housing management. [[Page 18276]]
(c) This subpart O is designed to encourage increased resident
participation in Indian housing.
(d) This subpart O is not intended to negate any pre-existing
arrangements for resident management in Indian housing between an IHA
and a resident management corporation.
(e) This subpart O includes requirements for the Family Investment
Centers (FIC) Program, which was established by Section 515 of the
National Affordable Housing Act, which created a new Section 22 of the
Act. The FIC program is designed to provide families living in Indian
housing with better access to educational and employment opportunities.
Sec. 950.962 Definitions.
Family Investment Center. A facility in or near Indian housing
which provides families living in Indian housing with better access to
educational and employment opportunities to achieve self sufficiency
and independence.
Management. All activities for which the IHA is responsible to HUD
under the ACC, within the definition of ``operation'' under the Act and
the ACC, including the development of resident programs and services.
Management contract. A written agreement between a resident
management corporation and an IHA, as provided by Sec. 950.969.
Project. For purposes of this subpart, any of the following could
be the subject of a management contract:
(1) One or more contiguous buildings.
(2) An area of contiguous row houses.
(3) Scattered site buildings.
(4) Scattered site single-family units.
Resident management. The performance of one or more management
activities for one or more projects by a resident management
corporation under a management contract with the IHA.
Resident Management Corporation (RMC). A Resident Management
Corporation is an entity that proposes to enter into, or enters into, a
contract to manage IHA property. The corporation shall have each of the
following characteristics:
(1) It shall be a nonprofit organization that is incorporated under
the laws of the State or Indian tribe in which it is located.
(2) It may be established by more than one resident organization,
so long as each such organization both approves the establishment of
the corporation and has representation on the Board of Directors of the
corporation.
(3) It shall have an elected Board of Directors.
(4) Its by-laws shall require the Board of Directors to include
representatives of each resident organization involved in establishing
the corporation.
(5) Its voting members are required to be residents of the project
or projects it manages.
(6) It shall be approved by the resident organization. If there is
no organization, a majority of the households of the project or
projects shall approve the establishment of such an organization.
Resident Organization (RO). A Resident Organization (or ``Resident
Council'' as defined in section 20 of the Act) is an incorporated or
unincorporated nonprofit organization or association that meets each of
the following criteria:
(1) It shall consist of residents only, and only residents may
vote.
(2) If it represents residents in more than one development or in
all of the developments of an IHA, it shall fairly represent residents
from each development that it represents.
(3) It shall adopt written procedures providing for the election of
specific officers on a regular basis.
(4) It shall have a democratically elected governing board. The
voting membership of the board shall consist solely of the residents of
the development or developments that the RO represents.
Resident-owned business. Any business concern which is owned and
controlled by public housing residents. (The term ``resident-owned
business'' includes sole proprietorships.) For purposes of this part,
``owned and controlled'' means a business:
(1) Which is at least 51 percent owned by one or more public
housing residents; and
(2) Whose management and daily business operations are controlled
by one or more such individuals.
Resident participation. A process of consultation between residents
and the IHA concerning matters affecting the management of Indian
housing.
Sec. 950.963 HUD's role in activities under this subpart.
(a) General. Subject to the requirements of this part and other
requirements imposed on IHAs by the ACC, statute or regulation, the
form and extent of resident participation or resident management are
local decisions to be made jointly by ROs and the IHAs.
(b) Duty to bargain in good faith. If an IHA refuses to negotiate
with a RMC in good faith or, after negotiations, refuses to enter into
a contract, the corporation may file an informal appeal with HUD,
setting out the circumstances and providing copies of relevant
materials evidencing the corporation's efforts to negotiate a contract.
HUD shall require the IHA to respond with a report stating the IHA's
reasons for rejecting the corporation's contract offer or for refusing
to negotiate. Thereafter, HUD shall require the parties (with or
without direct HUD participation) to undertake or to resume
negotiations on a contract providing for resident management, and shall
take such other actions as are necessary to resolve the conflicts
between the parties. If no resolution is achieved within 90 days from
the date HUD required the parties to undertake or resume such
negotiations, HUD shall serve notice on both parties that
administrative remedies have been exhausted (except that, pursuant to
mutual agreement of the parties, the time for negotiations may be
extended by no more than an additional 30 days).
Sec. 950.964 Resident participation requirements.
(a) IHA responsibilities. (1) An IHA shall provide the residents or
any resident organization with current information concerning the IHA's
policies on resident participation in management, including guidance on
information and recognition of a RO, and, where appropriate, a RMC.
(2) An IHA shall consult with residents or resident organizations
(if they exist), to determine the extent to which residents desire to
participate in the management of their housing and the specific methods
that may be mutually agreeable to the IHA and the residents.
(3) When requested by residents, an IHA shall provide appropriate
guidance to residents to assist them in establishing and maintaining a
RO, and, where appropriate, a RMC.
(b) Recognition. A resident organization may request that it be
recognized as the official organization representing the residents in
meetings with the IHA or with other entities.
(c) Written understanding. At a minimum, the IHA and the RO shall
put in writing their understanding concerning the elements of their
relationship.
(d) Conflict of interest. Resident council officers can not serve
as contractors or employees if they are in policy making or supervisory
positions at the IHA.
Sec. 950.965 Funding resident participation.
Funding will be provided under subpart J of this part, for the
following:
(a) Resident Organizations. (1) Subject to appropriations, the IHA
shall provide [[Page 18277]] funds to ROs for resident participation
activities. Eligibility to receive operating subsidy for duly elected
RO activities at $25 per unit per year is an additional category of
subsidy eligibility for units represented by a duly elected resident
organization under the Performance Funding System. Of this amount, $15
per unit per year shall fund resident participation activities of the
duly elected ROs. Ten dollars per unit per year shall fund IHA costs
incurred in carrying out resident participation activities.
(2) The IHA and the duly elected resident organization at each
development shall collaborate on how the funds will be distributed for
resident participation activities. If disputes regarding funding
decisions arise between the parties, the matter shall be referred to
the HUD Headquarters for intervention. HUD ONAP Headquarters may
require the parties to undertake further negotiations to resolve the
dispute. If no resolution is achieved within 90 days from the date of
renegotiation, Headquarters shall take appropriate actions to settle
the dispute in a fair and equitable manner.
(b) Stipends. (1) IHAs may provide stipends to officers of the duly
elected RO. The stipend, which may be up to $200 per month per officer,
shall be decided locally by the ROs and the IHA. Subject to
appropriations, the stipends will be funded from the portion of the
operating subsidy funding for RO expenses ($15.00 per unit per year).
(See definition of annual income in Sec. 950.102 for exclusion for
these stipends.)
(2) Funding provided by an IHA to a duly elected RO may be made
only under a written agreement between the IHA and a RO, which includes
a RO budget and assurance that all RO expenditures will not contravene
provisions of law and will promote serviceability, efficiency, economy
and stability in the operation of the local development. The agreement
shall require the local RO to account to the IHA for the use of the
funds and permit the IHA to inspect and audit the resident council's
financial records related to the agreement.
Tenant Opportunities Program
Sec. 950.966 General.
The Indian Tenant Opportunities Program (TOP) (which is the program
similar to the public housing TOP for public housing residents)
provides technical assistance for various activities including resident
management for ROs/RMCs as authorized by Section 20 of the Act. The TOP
provides opportunities for RO/RMCs to improve living conditions and
resident satisfaction in Indian housing communities.
Sec. 950.967 Eligible TOP activities.
Activities to be funded and carried out by an eligible RO or
resident management corporation, as defined in subpart B of this part,
shall improve the living conditions and Indian housing operations and
may include any combination of, but are not limited to, the following:
(a) Resident Capacity Building. (1) Training Board members in
community organizing, Board development, and leadership training;
(2) Determining the feasibility of resident management enablement
for a specific project or projects; and
(3) Assisting in the actual creation of a RMC, such as consulting
and legal assistance to incorporate, preparing by-laws and drafting a
corporate charter.
(b) Resident Management. (1) Training residents, as potential
employees of a RMC, in skills directly related to the operation,
management, maintenance and financial systems of a project;
(2) Training of residents with respect to fair housing
requirements; and
(3) Gaining assistance in negotiating management contracts, and
designing a long-range planning system.
(c) Resident Management Business Development. (1) Training related
to resident-owned business development and technical assistance for job
training and placement in RMC developments;
(2) Technical assistance and training in resident managed business
development through:
(i) Feasibility and market studies;
(ii) Development of business plans;
(iii) Outreach activities; and
(iv) Innovative financing methods including revolving loan funds.
(3) Legal advice in establishing a resident managed business
entity.
(d) Social Support Needs (such as self-sufficiency and youth
initiatives). (1) Feasibility studies to determine training and social
services needs;
(2) Training in management-related trade skills, computer skills,
etc;
(3) Management-related employment training and counseling;
(4) Coordination of support services;
(5) Training for programs such as child care, early childhood
development, parent involvement, volunteer services, parenting skills,
before and after school programs;
(6) Training programs on health, nutrition, and safety;
(7) Training in the development of strategies to successfully
implement a youth program. For example, assessing the needs and
problems of the youth, improving youth initiatives that are currently
active, and training youth, housing authority staff, resident
management corporations, and resident organizations on youth
initiatives and program activities; and
(8) Workshops for youth services, child abuse and neglect
prevention, tutorial services, in partnership with community-based
organizations such as local Boys and Girls Clubs, YMCA/YWCA, Boy/Girl
Scouts, Campfire, and Big Brother/Big Sisters. Other HUD programs such
as the Youth Sports Program and the Public Housing Drug Elimination
Programs also provide funding in these areas.
(e) Homeownership Opportunity. Determining feasibility for
homeownership by residents, including assessing the feasibility of
other housing (including HUD owned or held single or multi-family)
affordable for purchase by residents.
(f) General. (1) Required training on HUD regulations and policies
governing the operation of low-income public and Indian housing
including contracting/procurement regulations, financial management,
capacity building to develop the necessary skills to assume management
responsibilities at the development and property management;
(2) Purchasing hardware, i.e., computers and software, office
furnishings and supplies, in connection with business development.
Every effort shall be made to acquire donated or discounted hardware;
(3) Training in accessing other funding sources; and
(4) Hiring trainers or other experts. RO/RMCs shall ensure that
this training is provided by a qualified housing management specialist,
a community organizer, the IHA, or other sources knowledgeable about
the program.
Sec. 950.968 Technical assistance.
To the extent that grant authority is available, HUD shall provide
financial assistance to ROs or RMCs that obtain, by contract or
otherwise, technical assistance for the development of resident
management entities, including the formation of these entities; the
development of the management capabilities of newly formed or existing
entities; the identification of the social support needs of residents
of projects, and the securing of this support; and a wide range of
activities to further the purposes of this subpart O.
Sec. 950.969 Resident management requirements.
The following requirements apply when an IHA and its residents are
[[Page 18278]] interested in providing for resident performance of
management functions in one or more projects under this subpart O.
(a) Resident management corporation. Residents interested in
contracting with an IHA shall establish a RMC that meets the
requirements for such a corporation, as specified in this subpart O.
(b) Management Contract. (1) A management contract between the IHA
and a RMC is required for resident management. The IHA and the
corporation may agree to the performance by the corporation of any or
all management functions for which the IHA is responsible to HUD under
the ACC, and any other functions not inconsistent with the ACC and
applicable laws and regulations. The management contract shall be in
conformance with the minimum requirements established by HUD.
(2) The management contract may include specific provisions
governing management personnel; compensation for maintenance laborers
and mechanics and administrative employees employed in the operation of
the project, except that the amount of this compensation shall meet
applicable labor standard requirements of Federal law; rent collection
procedures; resident income verification; resident eligibility
determinations; resident eviction; the acquisition of supplies and
materials; and such other matters as the IHA and the corporation
determine to be appropriate, and as HUD may specify in administrative
instructions.
(3) The management contract shall be treated as a contracting out
of services, and shall be subject to any provision of a collective
bargaining agreement regarding the contracting out of services to which
the IHA is subject.
(4) Provisions on competitive bidding and requirements of prior
written HUD approval of contracts contained in the ACC do not apply to
the decision of an IHA to contract with a RMC.
(c) Prohibited activities. An IHA may not contract for assumption
by the RMC of the IHA's underlying responsibilities to HUD under the
ACC.
(d) Bonding and insurance. Before assuming any management
responsibility under its contract, the RMC shall provide fidelity
bonding and insurance, or equivalent protection that is adequate (as
determined by HUD and the IHA) to protect HUD and the IHA against loss,
theft, embezzlement, or fraudulent acts on the part of the corporation
or its employees.
Sec. 950.970 Management specialist.
The RO shall select, in consultation with the IHA, a qualified
Indian housing management specialist to assist in determining the
feasibility of, and to help establish, a RMC and to provide training
and other duties in connection with operating the TOP project. The
Housing Management Specialist (Trainer) can be a non-profit
organization, the IHA or a consultant.
Sec. 950.971 Operating subsidy, preparation of operating budget,
operating reserves, and retention of excess revenues.
(a) Calculation of operating subsidy. Operating subsidy will be
calculated separately for any project managed by a resident management
corporation. This subsidy computation will be the same as the separate
computation made for the balance of the projects in the IHA in
accordance with subpart J of this part, with the following exceptions:
(1) The project managed by a resident management corporation will
have an Allowable Expense Level based on the actual expenses for the
project in the fiscal year immediately preceding management under this
subpart O. These expenditures will include the project's share of any
expenses which are overhead or centralized IHA expenditures. The
expenses shall represent a normal year's expenditures for the project,
and shall exclude all expenditures that are not normal fiscal year
expenditures as to amount or as to the purpose for which expended.
Documentation of this expense level shall be presented with the project
budget and approved by HUD. Any project expenditures funded from a
source of income other than operating subsidies or income generated by
the locally owned Indian housing program will be excluded from the
subsidy calculation. For budget years after the first budget year under
management by the resident management corporation, the Allowable
Expense Level will be calculated as it is for all other projects, in
accordance with subpart J of this part.
(2) The resident management corporation project will estimate
dwelling rental income based on the rent roll of the project
immediately preceding the assumption of management responsibility under
this subpart O, increased by the estimate of inflation of resident
income used in calculating PFS subsidy.
(3) The resident management corporation will exclude, from its
estimate of other income, any increased income directly generated by
activities of the corporation or facilities operated by the
corporation.
(4) Any reduction in the subsidy of an IHA that occurs as a result
of fraud, waste, or mismanagement by the IHA shall not affect the
subsidy calculation for the resident management corporation project.
(b) Calculation of total income and preparation of operating
budget. No reduction. (1) Subject to paragraph (c) of this section, the
amount of funds provided by an IHA to a project managed by a resident
management corporation under this subpart may not be reduced during the
three-year period beginning on the date a resident management
corporation first assumes management responsibility for the project.
(2) Treatment of technical assistance. For purposes of determining
the amount of funds provided to a project under paragraph (b)(1) of
this section, the provision of technical assistance by the IHA to the
resident management corporation will not be included.
(3) Operating budget. The resident management corporation and the
IHA shall submit a separate operating budget, including the calculation
of operating subsidy eligibility in accordance with paragraph (a) of
this section, for the project managed by a resident management
corporation to HUD for approval. This budget will reflect all project
expenditures and will identify which expenditures are related to the
responsibilities of the resident management corporation and which are
related to functions which will continue to be performed by the IHA.
(4) Operating reserves. (i) Each project or part of a project that
is operating in accordance with the ACC amendment relating to this
subpart and in accordance with a contract vesting maintenance
responsibilities in the resident management corporation will have
transferred, into a sub-account of the operating reserve of the host
IHA, an operating reserve. Where all maintenance responsibilities for
the resident-managed project are the responsibility of the corporation,
the amount of the reserve made available to projects under this subpart
will be the per unit cost amount available in the IHA operating
reserve, exclusive of all inventories, prepaids, and receivables (at
the end of the IHA fiscal year preceding implementation), multiplied by
the number of units in the project operated in accordance with the
provisions of this subpart. Where some, but not all, maintenance
responsibilities are vested in the resident management corporation, the
contract may provide for an appropriately reduced portion of the
operating reserve to be transferred into the corporation's subaccount.
(ii) The use of the reserve will be subject to all administrative
procedures generally applicable to the Indian housing program. Any
expenditure of [[Page 18279]] funds from the reserve will be for
eligible expenditures which are incorporated into an operating budget
subject to approval by HUD.
(iii) Investment of funds held in the reserve will be in accordance
with the provisions of chapter 4 of the Financial Management Handbook,
7475.1 REV, and interest generated will be included in the calculation
of operating subsidy in accordance with subpart J of this part.
(c) Adjustments to total income. (1) Operating subsidy will reflect
changes in inflation, utility rates and consumption, and changes in the
number of units in the project.
(2) In addition to the amount of income derived from the project
(from sources such as rents and charges) and the operating subsidy
calculated in accordance with paragraph (a) of this section, the
contract may specify that income be provided to the project from other
sources of income of the IHA.
(3) The following conditions may not affect the amounts to be
provided to a project managed by a resident management corporation
under this subpart O:
(i) Any reduction in the total income of an IHA that occurs as a
result of fraud, waste, or mismanagement by the IHA; or
(ii) Any change in the total income of an IHA that occurs as a
result of project-specific characteristics that are not shared by the
project managed by the corporation under this subpart O.
(d) Retention of excess revenues. Any income generated by a
resident management corporation that exceeds the income estimated for
the income category involved shall be excluded in subsequent years in
calculating:
(1) The operating subsidy provided to an IHA under subpart J of
this part; and
(2) The funds provided by the IHA to the resident management
corporation.
(e) Use of retained revenues. Any revenues retained by a resident
management corporation under paragraph (d) of this section may only be
used for purposes of improving the maintenance and operation of the
project, establishing business enterprises that employ residents of
Indian housing, or acquiring additional dwelling units for low-income
families. Units acquired by the resident management corporation will
not be eligible for payment of operating subsidy.
Sec. 950.972 TOP Audit and administrative requirements.
(a) Annual audit of financial statements. The financial statements
of a RMC managing a project under this subpart shall be audited
annually by a licensed certified public accountant, designated by the
RMC, in accordance with generally accepted government audit standards.
A written report of each audit shall be forwarded to HUD and the IHA
within 30 days of issuance.
(b) Relationship to other authorities. The requirements of
paragraph (a) of this section are in addition to any other Federal law
or other requirement that would apply to the availability and audit of
financial statements of RMCs under this part.
(c) General administrative requirements. Except as modified by this
part, RMCs shall comply with the requirements of OMB Circulars A-110
and A-122, as applicable.
Family Investment Centers (FIC) Program
Sec. 950.980 General.
(a) The Family Investment Centers (FIC) Program. This program
provides families living in Indian housing with better access to
educational and employment opportunities by:
(1) developing facilities in or near Indian housing for training
and support services;
(2) mobilizing public and private resources to expand and improve
the delivery of such services;
(3) providing funding for such essential training and support
services that cannot otherwise be funded; and
(4) improving the capacity of management to assess the training and
service needs of families, coordinating the provision of training and
services that meet such needs, and ensuring the long-term provision of
such training and services.
(b) Supportive Services. New or significantly expanded services
essential to providing families in Indian housing with better access to
educational and employment opportunities to achieve self-sufficiency
and independence. IHAs applying for funds to provide supportive
services shall demonstrate that the services will be provided at a
higher level than currently provided. Supportive services may include:
(1) Child care;
(2) Employment training and counseling;
(3) Computer skills training;
(4) Education including remedial education; literacy training;
completion of secondary or post secondary education and assistance in
the attainment of certificates of high school equivalency;
(5) Business, entrepreneurial training and counseling;
(6) Transportation necessary to enable any participating family
member to receive available services or to commute to his/her place of
employment;
(7) Personal welfare (e.g. substance/alcohol abuse treatment and
counseling, self-development counseling, etc.);
(8) Supportive Health Care Services (e.g., outreach and referral
services); and
(9) Any other services and resources, including case management,
determined to be appropriate in assisting eligible residents.
(c) FIC Service Coordinator. Any person who is responsible for:
(1) Determining the eligibility and assessing needs of families to
be serviced by the FIC;
(2) Assessing training and service needs of eligible residents;
(3) Working with service providers to coordinate the provision of
services and to tailor the services to the needs and characteristics of
eligible residents;
(4) Mobilizing public and private resources to ensure that the
supportive services identified can be funded over the five-year period,
at least, following the initial receipt of funding;
(5) Monitoring and evaluating the delivery, impact and
effectiveness of any supportive service funded with capital or
operating assistance under the FIC program;
(6) Coordinating the development and implementation of the FIC
Program with other self-sufficiency, educational and employment
programs; and
(7) performing other duties and functions that are appropriate for
providing eligible residents with better access to educational and
employment opportunities.
Sec. 950.982 Eligibility.
An IHA may apply to establish one or more FICs for more than one
Indian housing development. An IHA shall demonstrate a firm commitment
of assistance from one or more sources ensuring that supportive
services will be provided for not less than one year following the
completion of activities.
Sec. 950.983 FIC activities.
Activities that may be funded and carried out by an eligible IHA
may include:
(a) The renovation, conversion, or combination of vacant dwelling
units to create common areas to accommodate the provision of supportive
services;
(b) The renovation of existing common areas to accommodate the
provision of supportive services;
(c) The acquisition, construction, or renovation of facilities
located near the premises of one or more IHA developments to
accommodate the provision of supportive services;
(d) The provision of not more than 15 percent of the total cost of
supportive [[Page 18280]] services (which may be provided directly to
eligible residents by the IHA or by contract or lease through other
appropriate agencies or providers), but only if the IHA demonstrates
that:
(1) The supportive services are appropriate to improve the access
of eligible residents to employment and educational opportunities; and
(2) The IHA has made diligent efforts to use or obtain other
available resources to fund or provide such services; and
(e) The employment of service coordinators.
Sec. 950.984 IHA role in activities under this part.
An IHA shall develop a process that ensures that RO/RMC
representatives and residents are fully informed of, and have an
opportunity to comment on, the contents of the application and
activities at all stages of the application and grant award process.
The IHA shall give full and fair consideration to the comments and
concerns of the residents.
Sec. 950.985 HUD Policy on training, employment, contracting, and
subcontracting of Indian housing residents.
In accordance with Section 3 of the Housing and Urban Development
Act of 1968 and the implementing regulations at 24 CFR part 135, IHAs,
their contractors, and subcontractors shall use best efforts,
consistent with existing Federal, State, tribal, and local laws and
regulations (including Section 7(b) of the Indian Self-Determination
and Education Assistance Act), to give low- and very low-income persons
the training and employment opportunities generated by Section 3
covered assistance (as this term is defined in 24 CFR 135.7) and to
give Section 3 business concerns the contracting opportunities
generated by Section 3 covered assistance.
Sec. 950.986 Grant set-aside assistance.
HUD may set-aside five percent of any amounts available in each
fiscal year (subsequent to the first funding cycle) to supplement
grants previously awarded under this program. These supplemental grants
would be awarded to IHAs that demonstrate that funds cannot otherwise
be obtained and are needed to provide adequate service levels to
residents.
Sec. 950.987 Resident compensation.
Residents employed pursuant to a FIC grant shall be paid at a rate
not less than the highest of:
(a) The minimum wage that would be applicable to the employee under
the Fair Labor Standards Act of 1938 (FLSA), if section 6(a)(1) of the
FLSA applied to the resident and if the resident was not exempt under
section 13 of the FLSA;
(b) The State, local, or tribal minimum wage for the most nearly
comparable covered employment; or
(c) The prevailing rate of pay for persons employed in similar
public occupations by the same employer.
Sec. 950.988 Administrative requirements.
Each IHA receiving a grant shall submit to the Area ONAP annual
progress report describing and evaluating the use of grant amounts
received under this program.
Subpart P--Section 5(h) Homeownership Program
Sec. 950.1001 Purpose.
This part codifies the provisions of the Section 5(h) Homeownership
Program for Indian housing, as authorized by sections 5(h) and
6(c)(4)(D) of the United States Housing Act of 1937 (the Act) and
administered by the Department of Housing and Urban Development (HUD).
Sec. 950.1002 Applicability.
(a) General applicability. This subpart P applies to low-income
housing owned by Indian Housing Authorities (IHAs), subject to Annual
Contributions Contracts (ACCs) under the Act. The terms ``housing'' or
``low-income housing,'' as used in this subpart P, refer to the types
of properties described in the preceding sentence, except as indicated
by the particular context. In reference to housing properties,
``development'' means the same as ``project'' (as defined in the Act).
Except where otherwise indicated by the context, ``resident'' means the
same as ``tenant,'' as the latter term is used in the Act, including
Mutual Help and Turnkey III homebuyers, as well as rental tenants of
low-income housing and Section 8 residents, and references to sale,
purchase, conveyance, and ownership include the types of interests and
transactions that are incident to cooperative ownership.
(b) Nonretroactivity. In the case of a Section 5(h) homeownership
plan that was approved by HUD before October 21, 1991, no modifications
or additional requirements will be imposed, except for reasonable
administrative procedures prescribed by HUD. Similarly, in the case of
a plan that was approved after October 20, 1991, but before December
12, 1994, no modifications or additional requirements will be imposed,
except for such reasonable administrative procedures.
Sec. 950.1003 General authority for sale.
An IHA may sell all or a portion of a development to eligible
residents, as defined under Sec. 950.1008, for purposes of
homeownership, according to a homeownership plan approved by HUD under
this subpart P. Upon sale in accordance with the HUD-approved
homeownership plan, HUD will execute a release of the title
restrictions prescribed by the ACC. Because the property will no longer
be subject to the ACC after sale, it will cease to be eligible for
further HUD funding for operating subsidies or modernization under the
Act upon conveyance of title by the IHA. (That does not preclude any
other types of post-sale subsidies that may be available, under other
Federal, tribal, State, or local programs, such as the possibility of
available assistance under Section 8 of the Act, in connection with a
plan for cooperative homeownership, if authorized by the Section 8
regulations.)
Sec. 950.1004 Fundamental criteria for HUD approval.
HUD will approve an IHA's homeownership plan if it meets all three
of the following criteria:
(a) Workability. The plan shall be practically workable, with sound
potential for long-term success. Financial viability, including the
capability of purchasers to meet the financial obligations of
homeownership, is a critical requirement.
(b) Legality. The plan shall be consistent with law, including the
requirements of this part and any other applicable Federal, tribal,
State, and local statutes and regulations, and existing contracts.
Subject to the other two criteria stated in this section, any provision
that is not contrary to those legal requirements may be included in the
plan, at the discretion of the IHA, whether or not expressly authorized
in this subpart P.
(c) Documentation. The plan shall be clear and complete enough to
serve as a working document for implementation, as well as a basis for
HUD review.
Sec. 950.1005 Resident consultation and involvement.
(a) Resident input. In developing a proposed homeownership plan,
and in carrying out the plan after HUD approval, the IHA shall consult
with residents of the development involved, and with any resident
organization that represents them, as necessary and appropriate to
provide them with information and a reasonable opportunity to make
their views and recommendations known to the IHA. If [[Page 18281]] the
plan contemplates sale of units in an entirely vacant development, the
IHA shall consult with the IHA-wide resident organization, if any.
While the Act gives the IHA sole legal authority for final decisions,
as to whether or not to submit a proposed homeownership plan and the
content of such a proposal, the IHA shall give residents and their
resident organizations full opportunity for input in the homeownership
planning process, and full consideration of their concerns and
opinions.
(b) Resident initiatives. Where individual residents, a resident
management corporation (RMC), or another form of resident organization
may wish to initiate discussion of a possible homeownership plan, the
IHA shall negotiate with them in good faith. Joint development and
submission of the plan by the IHA and RMC, or other resident
organization, is encouraged. In addition, participation of an RMC or
other resident organization in the implementation of the plan is
encouraged. (Approved by the Office of Management and Budget under
control number 2577-0201).
Sec. 950.1006 Property that may be sold.
(a) Types of property. Subject to the workability criterion of
Sec. 950.1004(a) (including, for example, consideration of common
elements and other characteristics of the property), a homeownership
plan may provide for sale of one or more dwellings, along with
interests in any common elements, comprising all or a portion of one or
more housing developments. A plan may provide for conversion of
existing housing to homeownership or for homeownership sale of newly-
developed housing. (However, for low-income housing units developed as
replacement housing for units demolished or disposed of pursuant to
subpart M of this part, that subpart requires that the initial
occupants be selected solely on the basis of the requirements governing
rental occupancy (or Mutual Help occupancy, if applicable), without
reference to any additional homeownership eligibility or selection
requirements under this subpart P.) Mutual Help or Turnkey III
homeownership units may be converted to Section 5(h) homeownership,
upon voluntary termination by any existing Mutual Help or Turnkey III
homebuyers of their contractual rights and amendment of the ACC, in a
form prescribed by HUD.
(b) Physical condition of property. The property shall meet local
code requirements (or, if no local code exists, the housing quality
standards established by HUD for the Section 8 Housing Assistance
Payments Program for Existing Housing, under 24 CFR part 882) and the
requirements for elimination of lead-based paint hazards in HUD-
associated housing, under subpart C of 24 CFR part 35. When a
prospective purchaser with disabilities requests accessible features,
the features shall be added in accordance with 24 CFR parts 8 and 9.
Further, the property shall be in good repair, with the major
components having a remaining useful life that is sufficient to justify
a reasonable expectation that homeownership will be affordable by the
purchasers. This standard shall be met as a condition for conveyance of
a dwelling to an individual purchaser, unless the terms of sale include
measures to assure that the work will be completed within a reasonable
time after conveyance, not to exceed two years (e.g., as a part of a
mortgage financing package that provides the purchaser with a home
improvement loan or pursuant to a sound sweat equity arrangement).
Sec. 950.1007 Methods of sale and ownership.
(a) Permissible methods. Any appropriate method of sale and
ownership may be used, such as fee simple conveyance of single-family
dwellings or conversion of multifamily buildings to resident-owned
cooperatives or condominiums.
(b) Direct or indirect sale. An IHA may sell dwellings to residents
directly or (with respect to multifamily buildings or a group of
single-family dwellings) through another entity established and
governed by, and solely composed of, residents of the IHA's low-income
housing, provided that:
(1) The other entity has the necessary legal capacity and practical
capability to carry out its responsibilities under the plan.
(2) The respective rights and obligations of the IHA and the other
entity will be specified by a written agreement that includes:
(i) Assurances that the other entity will comply with all
provisions of the HUD-approved homeownership plan;
(ii) Assurances that the IHA's conveyance of the property to the
other entity will be subject to a title restriction providing that the
property may be resold or otherwise transferred only by conveyance of
individual dwellings to eligible residents, in accordance with the HUD-
approved homeownership plan, or by reconveyance to the IHA, and that
the property will not be encumbered by the other entity without the
written consent of the IHA;
(iii) Protection against fraud or misuse of funds or other property
on the part of the other entity, its employees and agents;
(iv) Assurances that the resale proceeds will be used only for the
purposes specified by the HUD-approved homeownership plan;
(v) Limitation of the other entity's administrative and overhead
costs, and of any compensation or profit that may be realized by the
entity, to amounts that are reasonable in relation to its
responsibilities and risks;
(vi) Accountability to the IHA and residents for the recordkeeping,
reporting and audit requirements of Sec. 950.1017;
(vii) Assurances that the other entity will administer its
responsibilities under the plan in accordance with applicable civil
rights statutes and implementing regulations, as described in
Sec. 950.115; and
(viii) Adequate legal remedies for the IHA and residents, in the
event of the other entity's failure to perform in accordance with the
agreement.
Sec. 950.1008 Purchaser eligibility and selection.
Standards and procedures for eligibility and selection of the
initial purchasers of individual dwellings shall be consistent with the
following provisions:
(a) Applications. Persons who are interested in purchase shall
submit applications for that specific purpose, and those applications
shall be handled separately from applications for other IHA programs.
For vacant units, applications shall be dated as received by the IHA
and, subject to eligibility and preference factors, selection shall be
made in the order of receipt. Application for homeownership shall not
affect an applicant's place on any other IHA waiting list.
(b) Eligibility threshold. Subject to any additional eligibility
and preference standards that are required or permitted under this
section, a homeownership plan may provide for the eligibility of
residents of low-income housing owned or leased by the seller IHA
(including Mutual Help and Turnkey III homebuyers, who may elect to
terminate their existing homebuyer agreements in favor of purchase
under the Section 5(h) homeownership plan) and residents of other
housing who are receiving housing assistance under Section 8 of the
Act, under an ACC administered by the seller IHA; provided that the
resident has been in lawful occupancy for a minimum period specified in
the plan (not less than 30 days prior to conveyance of title to the
dwelling to be [[Page 18282]] purchased). For residents of other
housing who are receiving housing assistance under Section 8, the
minimum occupancy requirement may be satisfied in the unit for which
the family is receiving Section 8 assistance or the Indian housing
unit. If the family is to meet part or all of the minimum occupancy
requirement in the Indian housing unit, the Section 8 assistance shall
be terminated before the family moves into the Indian housing unit.
Indian housing units are ineligible for Section 8 certificate and
voucher assistance as long as they remain under the ACC as Indian
housing.
(c) Applicants who do not meet minimum residency requirement for
eligibility. (1) A homeownership plan, at IHA discretion, may also
permit eligibility for applicants who do not meet the minimum residency
requirement of paragraph (b) of this section (30 days or more, as
prescribed by the homeownership plan) at the time of application,
provided that their selection is conditioned upon completion of the
minimum residency requirement prior to conveyance of title. A plan may
thus allow satisfaction of the threshold requirements for eligibility
by:
(i) Existing low-income housing or Section 8 residents with less
than the minimum period of residency;
(ii) Families who are already on the IHA's waiting lists; and
(iii) Other low-income families who are neither low-income housing
nor Section 8 residents at the time of application or selection.
(2) Applicants who are not already low-income housing residents,
however, shall also satisfy the requirements for admission to such
housing.
(d) Compliance with lease obligations. Eligibility shall be
limited, however, to residents who have been current in all of their
lease obligations (in the case of Mutual Help or Turnkey III
homebuyers, obligations under their homebuyer agreements) over a period
of not less than six months prior to conveyance of title (or, if so
provided by the homeownership plan, such lesser period as has elapsed
since the beginning of low-income housing or Section 8 tenure),
including, but not limited to, payment of rents (or homebuyer's monthly
payments) and other charges and reporting of all income that is
pertinent to determination of rents (or homebuyer's monthly payments).
At the IHA's discretion, the homeownership plan may allow a resident to
remedy under-reporting of income, provided that proper reporting of
income would not have resulted in ineligibility for admission to low-
income housing or for Section 8 assistance, by payment of the resulting
underpayment for rent (or homebuyer's monthly payments) prior to
conveyance of title to the homeownership dwelling, either in a lump sum
or in installments over a reasonable period. Alternatively, the plan
may permit payment within a reasonable period after conveyance of
title, under an agreement secured by a mortgage on the property.
(e) Affordability standard. Eligibility shall be further limited to
residents who are capable of assuming the financial obligations of
homeownership, under minimum income standards for affordability, taking
into account the unavailability of operating subsidies and
modernization funds after conveyance of the property by the IHA. A
homeownership plan may, however, take account of any available subsidy
from other sources (e.g., in connection with a plan for cooperative
ownership, assistance under Section 8 of the Act, if available and
authorized by the Section 8 regulations). Under this affordability
standard, an applicant shall meet the following requirements:
(1) On an average monthly estimate, the amount of the applicant's
payments for mortgage principal and interest, plus insurance, real
estate taxes, utilities, maintenance, and other regularly-recurring
homeownership costs (such as condominium, cooperative, or other
homeownership association fees) will not exceed the sum of 35 percent
of the applicant's adjusted income, as defined in this part.
(2) The applicant can pay any amounts required for closing, such as
a downpayment (if any) and closing costs chargeable to the purchaser,
in accordance with the homeownership plan.
(f) Option to restrict eligibility. A homeownership plan may, at
the IHA's discretion, restrict eligibility to one or more residency-
based categories (e.g., for occupied units, eligibility may be
restricted to the existing residents of the units to be sold; for
vacant units, eligibility may be restricted to low-income housing
residents only, or to low-income housing residents plus any one or more
of the other residency-based categories that may be established under
paragraphs (b) and (c) of this section), as may be reasonable in view
of the number of units to be offered for sale and the estimated number
of eligible applicants in various categories provided that the
residency-based preferences mandated by paragraph (g) of this section
are observed.
(g) Residency-based preferences. For occupied units, a preference
shall be given to the existing residents of each of the dwellings to be
sold. For vacant units (including units which are voluntarily vacated),
a preference shall be given to residents of other low-income housing
units owned or leased by the seller IHA (over any other residency-based
categories that may be established by a homeownership plan for Section
8 residents or for nonresident applicants).
(h) Other eligibility or preference standards. If consistent with
the other provisions of this section, a homeownership plan may include
any other standards for eligibility or preference, or both, at the
discretion of the IHA, that are not contrary to law. (Approved by the
Office of Management and Budget under control number 2577-0201).
Sec. 950.1009 Counseling, training, and technical assistance.
Appropriate counseling shall be provided to prospective and actual
purchasers, as necessary for each stage of implementation of the
homeownership plan. Particular attention shall be given to the terms of
purchase and financing, along with the other financial and maintenance
responsibilities of homeownership. In addition, where applicable,
appropriate training and technical assistance shall be provided to any
entity (such as an RMC, other resident organization, or a cooperative
or condominium entity) that has responsibilities for carrying out the
plan.
Sec. 950.1010 Nonpurchasing residents.
(a) Nonpurchasing resident's options. If an existing resident of a
dwelling authorized for sale under a homeownership plan is ineligible
for purchase, or declines to purchase, the resident shall be given the
choice of either relocation to other suitable and affordable housing or
continued occupancy of the present dwelling on a rental basis, at a
rent no higher than that permitted by the Act. Displacement (permanent,
involuntary move), in order to make a dwelling available for sale, is
prohibited. In addition to applicable program sanctions, a violation of
the displacement prohibition may trigger a requirement to provide
relocation assistance in accordance with the Uniform Relocation and
Real Property Acquisition Act of 1970 and implementing regulations at
49 CFR part 24. Where continued rental occupancy by a nonpurchasing
resident is contemplated after conveyance of the property, the
homeownership plan shall include provision for any rental subsidy
required (e.g., Section 8 assistance, if available and authorized by
the Section [[Page 18283]] 8 regulations). As soon as feasible after
they can be identified, all nonpurchasing residents shall be given
written notice of their options under this section.
(b) Relocation assistance. A nonpurchasing resident who chooses to
relocate pursuant to this section shall be offered the following
relocation assistance:
(1) Advisory services to assure full choices and real opportunities
to obtain relocation within a full range of neighborhoods where
suitable housing may be found, including timely information,
counseling, and explanation of the resident's rights under applicable
civil rights statutes and implementing regulations, as specified in
Sec. 950.115, and referrals to suitable, safe, sanitary, and affordable
housing (at a rent no higher than permitted by the Act), which is of
the resident's choice, on a nondiscriminatory basis, in accordance with
applicable civil rights statutes and implementing regulations, as
specified in Sec. 950.115. This requirement will be met if the
applicant is offered the opportunity to relocate to another suitable
unit in other low-income housing, under any of the housing assistance
programs under Section 8 of the Act, or any other Federal, tribal,
State, or local program that is comparable, as to standards of housing
quality, admission, and rent, to the programs under the Act, and
provides a term of assistance of at least five years; and
(2) Payment for actual, reasonable moving and related expenses.
(c) Temporary relocation. A nonpurchasing resident who must
relocate temporarily to permit work to be carried out shall be provided
suitable, decent, safe, and sanitary housing for the temporary period
and reimbursed for all reasonable out-of-pocket expenses incurred in
connection with the temporary relocation, including the cost of moving
to and from the temporarily occupied housing and any increase in
monthly rent and utility costs.
Sec. 950.1011 Nonroutine maintenance reserve.
(a) When reserve is required. A nonroutine maintenance reserve
shall be established for all multifamily properties sold under a
homeownership plan. For single-family dwellings, such a reserve shall
not be required if the availability of the funds needed for nonroutine
maintenance is adequately addressed under the affordability standard
prescribed by the plan.
(b) Purpose of reserve. The purpose of this reserve shall be to
provide a source of reserve funds for nonroutine maintenance (including
replacement), as necessary to ensure the long-term success of the plan,
including protection of the interests of the homeowners and the IHA.
The amounts to be set aside, and other terms of this reserve, shall be
as necessary and appropriate for the particular homeownership plan,
taking into account such factors as prospective needs for nonroutine
maintenance, the homeowners' financial resources, and any special
factors that may aggravate or mitigate the need for such a reserve.
Sec. 950.1012 Purchase prices and financing.
(a) Below-market terms. To ensure affordability by eligible
purchasers, by the standard adopted under Sec. 906.8(e) of this
chapter, a homeownership plan may provide for below-market purchase
prices or below-market financing, or a combination of the two.
Discounted purchase prices may be determined on a unit-by-unit basis,
based on the particular purchaser's ability to pay, or may be
determined by any other fair and reasonable method (e.g., uniform
prices for a group of comparable dwellings, within a range of
affordability by a group of potential purchasers).
(b) Types of financing. Any type of private or public financing may
be used (e.g., conventional, Federal Housing Administration (FHA),
Department of Veterans Affairs (VA), Farmers' Home Administration
(FmHA), or a tribal, State, or local program). An IHA may finance or
assist in financing purchase by any methods it may choose, such as
purchase-money mortgages, guarantees of mortgage loans from other
lenders, shared equity, or lease-purchase arrangements.
Sec. 950.1013 Protection against fraud and abuse.
A homeownership plan shall include appropriate protections against
any risks of fraud or abuse that are presented by the particular plan,
such as collusive purchase for the benefit of nonresidents, extended
use of the dwelling by the purchaser as rental property, or collusive
sale that would circumvent the resale profit limitation of
Sec. 950.1014.
Sec. 950.1014 Limitation on resale profit.
(a) General. If a dwelling is sold to the initial purchaser for
less than fair market value, the homeownership plan shall provide for
appropriate measures to preclude realization by the initial purchaser
of windfall profit on resale. ``Windfall profit'' means all or a
portion of the resale proceeds attributable to the purchase price
discount (the fair market value at date of purchase from the IHA less
the below-market purchase price), as determined by one of the methods
described in paragraphs (b) through (d) of this section. Subject to
that requirement, however, purchasers should be permitted to retain any
resale profit attributable to appreciation in value after purchase (or
a portion of such profit under a limited or shared equity arrangement),
along with any portion of the resale profit that is fairly attributable
to improvements made by them after purchase.
(b) Promissory note method. Where there is potential for a windfall
profit because the dwelling unit is sold to the initial purchaser for
less than fair market value, without a commensurate limited or shared
equity restriction, the initial purchaser shall execute a promissory
note, payable to the IHA, along with a mortgage securing the obligation
of the note, on the following terms and conditions:
(1) The principal amount of indebtedness shall be the lesser of:
(i) The purchase price discount, as determined by the definition in
paragraph (a) of this section and stated in the note as a dollar
amount; or
(ii) The net resale profit, in an amount to be determined upon
resale by a formula stated in the note. That formula shall define net
resale profit as the amount by which the gross resale price exceeds the
sum of:
(A) The discounted purchase price;
(B) Reasonable sale costs charged to the initial purchaser upon
resale; and
(C) Any increase in the value of the property that is attributable
to improvements paid for or performed by the initial purchaser during
tenure as a homeowner.
(2) At the option of the IHA, the note may provide for automatic
reduction of the principal amount over a specified period of ownership
while the property is used as the purchaser's family residence,
resulting in total forgiveness of the indebtedness over a period of not
less than five years from the date of conveyance, in annual increments
of not more than 20 percent. This does not require an IHA's plan to
provide for any such reduction at all, or preclude it from specifying
terms that are less generous to the purchaser than those stated in the
foregoing sentence.
(3) To preclude collusive resale that would circumvent the intent
of this section, the IHA shall (by an appropriate form of title
restriction) condition the initial purchaser's right to resell upon
approval by the IHA, to be based solely on the IHA's determination that
the resale price represents fair market value or a lesser amount that
will result in [[Page 18284]] payment to the IHA, under the note, of
the full amount of the purchase price discount (subject to any accrued
reduction, if provided for by the homeownership plan pursuant to
paragraph (b)(2) of this section). If so determined, the IHA shall be
obligated to approve the resale.
(4) The IHA may, in its sole discretion, agree to subordination of
the mortgage that secures the promissory note, in favor of an
additional lien granted by the purchaser as security for a loan for
home improvements or other purposes approved by the IHA.
(c) Limited equity method. As a second option, the requirement of
this section may be satisfied by an appropriate form of limited equity
arrangement, restricting the amount of net resale profit that may be
realized by the seller (the initial purchaser and successive purchasers
over a period prescribed by the homeownership plan) to the sum of:
(1) The seller's paid-in equity;
(2) The portion of the resale proceeds attributable to any
improvements paid for or performed by the seller during homeownership
tenure; and
(3) An allowance for a portion of the property's appreciation in
value during homeownership tenure, calculated by a fair and reasonable
method specified in the homeownership plan (e.g., according to a price
index factor or other measure).
(d) Third option. The requirements of this section may be satisfied
by any other fair and reasonable arrangement that will accomplish the
essential purposes stated in paragraph (a) of this section.
(e) Appraisal. Determinations of fair market value under this
section shall be made on the basis of appraisal within a reasonable
time prior to sale, by an independent appraiser to be selected by the
IHA.
Sec. 950.1015 Use of sale proceeds.
(a) General authority for use. Sale proceeds may, after provision
for sale and administrative costs that are necessary and reasonable for
carrying out the homeownership plan, be retained by the IHA and used
for housing assistance to low-income families (as such families are
defined under the Act). The term ``sale proceeds'' includes all
payments made by purchasers for credit to the purchase price (e.g.,
earnest money, downpayments, payments out of the proceeds of mortgage
loans, and principal and interest payments under purchase-money
mortgages), along with any amounts payable upon resale under
Sec. 950.1014, and interest earned on all such receipts. (Residual
receipts, as defined in the ACC, shall not be treated as sale
proceeds.)
(b) Permissible uses. Sale proceeds may be used for any one or more
of the following forms of housing assistance for low-income families,
at the discretion of the IHA and as stated in the HUD-approved
homeownership plan:
(1) In connection with the homeownership plan from which the funds
are derived, for purposes that are justified to ensure the success of
the plan and to protect the interests of the homeowners, the IHA and
any other entity with responsibility for carrying out the plan.
Nonexclusive examples include nonroutine maintenance reserves under
Sec. 950.1011, a reserve for loans to homeowners to prevent or cure
default or for other emergency housing needs; a reserve for any
contingent liabilities of the IHA under the homeownership plan (such as
IHA guaranty of mortgage loans); and a reserve for IHA repurchase,
repair, and resale of homes in the event of defaults.
(2) In connection with another HUD-approved homeownership plan
under this part, for assistance to purchasers and for reasonable
planning and implementation costs.
(3) In connection with a tribal, State, or local homeownership
program for low-income families, as described in the homeownership
plan, for assistance to purchasers and for reasonable planning and
implementation costs. Under such programs, sales proceeds may be used
to construct or acquire additional dwellings for sale to low-income
families, or to assist such families in purchasing other dwellings from
public or private owners.
(4) In connection with the IHA's other low-income housing that
remains under ACC, for any purposes authorized for the use of operating
funds under the ACC and applicable provisions of the Act and Federal
regulations, as included in the HUD-approved operating budgets.
Examples include maintenance and modernization, augmentation of
operating reserves, protective services, and resident services. Such
use shall not result in the reduction of the operating subsidy
otherwise payable to the IHA for its other low-income housing.
(5) In connection with any other type of Federal, tribal, State, or
local housing program for low-income families, as described in the
homeownership plan.
Sec. 950.1016 Replacement housing.
(a) Replacement requirement. As a condition for transfer of
ownership under a HUD-approved homeownership plan, the IHA shall obtain
a funding commitment, from HUD or another source, for the replacement
of each of the dwellings to be sold under the plan. Replacement housing
may be provided by one or any combination of the following methods:
(1) Development by the IHA of additional low-income housing under
this part (by new construction or acquisition).
(2) Rehabilitation of vacant low-income housing owned by the IHA.
(3) Use of five-year, tenant-based certificate or voucher
assistance under Section 8 of the Act.
(4) If the homeownership plan is submitted by the IHA for sale to
residents through an RMC, resident organization, or cooperative
association that is otherwise eligible to participate under this
subpart, acquisition of non-publicly-owned housing units, that the RMC,
resident organization, or cooperative association will operate as
rental housing, comparable to IHA-owned low-income housing as to term
of assistance, housing standards, eligibility, and contribution to
rent.
(5) Any other Federal, tribal, State, or local housing program that
is comparable, as to housing standards, eligibility, and contribution
to rent, to the programs referred to in paragraphs (a)(1) through
(a)(3) of this section, and provides a term of assistance of not less
than five years.
(b) Funding commitments. Although a HUD funding commitment is
required if the replacement housing requirement is to be satisfied
through any of the HUD programs listed in paragraph (a) of this
section, HUD's approval of a Section 5(h) homeownership plan on the
expectation that such a funding commitment will be forthcoming shall
not constitute a binding obligation to make such a commitment. Where
the requirement is to be satisfied under a tribal, State, or local
program, or a Federal program not administered by HUD, a funding
commitment shall be required from the proper authority.
(c) Use of sale proceeds to fund replacement housing. Sale proceeds
that are generated under the homeownership plan may be used under some
of the replacement housing options under paragraph (a) of this section
(e.g., rehabilitation of vacant public housing units, or an eligible
local program). Where a homeownership plan provides for sale proceeds
to be used for replacement housing, HUD approval of the plan and
execution of the IHA-HUD implementing agreement shall satisfy the
funding commitment requirement of paragraph (a) of this section, with
regard to the amount of replacement housing to be funded out of sale
proceeds. [[Page 18285]]
(d) Consistency with current housing needs. Replacement housing may
differ from the dwellings sold under the homeownership plan, as to unit
sizes or family or elderly occupancy, if the IHA determines that such
change is consistent with current local housing needs for low-income
families.
(e) Inapplicability to prior plans. This section shall not apply to
homeownership plans that were submitted to HUD under the Section 5(h)
Homeownership Program prior to October 1, 1990.
Sec. 950.1017 Records, reports, and audits.
The IHA shall be responsible for the maintenance of records
(including sale and financial records) for all activities incident to
implementation of the homeownership plan. Until all planned sales of
individual dwellings have been completed, the IHA shall submit to HUD
annual sales reports, in a form prescribed by HUD. The receipt,
retention, and expenditure of the sale proceeds shall be covered in the
regular independent audits of the IHA's housing operations, and any
supplementary audits that HUD may find necessary for monitoring. Where
another entity is responsible for sale of individual units, pursuant to
Sec. 950.1007(b), the IHA shall ensure that the entity's
responsibilities include proper recordkeeping and accountability to the
IHA, sufficient to enable the IHA to monitor compliance with the
approved homeownership plan, to prepare its reports to HUD, and to meet
its audit responsibilities. All books and records shall be subject to
inspection and audit by HUD and the General Accounting Office (GAO).
(Approved by the Office of Management and Budget under control number
2577-0201).
Sec. 950.1018 Submission and review of homeownership plan.
Whether to develop and submit a proposed homeownership plan is a
matter within the discretion of each IHA. An IHA may initiate a
proposal at any time, according to the following procedures:
(a) Preliminary consultation with HUD staff. Before submission of a
proposed plan, the IHA shall consult informally with the appropriate
HUD Area ONAP to assess feasibility and the particulars to be addressed
by the plan.
(b) Submission to HUD. The IHA shall submit the proposed plan,
together with supporting documentation, in a format prescribed by HUD,
to the appropriate HUD Area ONAP.
(c) Conditional approval. Conditional approval may be given, at HUD
discretion, when HUD determines that to be justified. For example,
conditional HUD approval might be a necessary precondition for the IHA
to obtain the funding commitments required to satisfy the requirements
for final HUD approval of a complete homeownership plan. Where
conditional approval is granted, HUD will specify the conditions in
writing. (Approved by the Office of Management and Budget under control
number 2577-0201)
Sec. 950.1019 HUD approval and IHA-HUD implementing agreement.
Upon HUD notification to the IHA that the homeownership plan is
approvable (in final form that satisfies all applicable requirements of
this part), the IHA and HUD will execute a written implementing
agreement, in a form prescribed by HUD, to evidence HUD approval and
authorization for implementation. The plan itself, as approved by HUD,
shall be incorporated in the implementing agreement. Any of the items
of supporting documentation may also be incorporated, if agreeable to
the IHA and HUD. The IHA shall be obligated to carry out the approved
homeownership plan and other provisions of the implementing agreement
without modification, except with written approval by HUD.
(Approved by the Office of Management and Budget under control
number 2577-0201).
Sec. 950.1020 Content of homeownership plan.
The homeownership plan shall address the following matters, as
applicable to the particular factual situation:
(a) Property description. A description of the property, including
identification of the development and the specific dwellings to be
sold.
(b) Repair or rehabilitation. If applicable, a plan for any repair
or rehabilitation required under Sec. 950.1006, based on the assessment
of the physical condition of the property that is included in the
supporting documentation.
(c) Purchaser eligibility and selection. The standards and
procedures to be used for homeownership applications and the
eligibility and selection of purchasers, consistent with the
requirements of Sec. 950.1008.
(d) Sale and financing. Terms and conditions of sale and financing
(see particularly Secs. 950.1011 through 950.1014).
(e) Future consultation with residents. A plan for consultation
with residents during the implementation stage (See Sec. 950.1005). If
appropriate, this may be combined with the plan for counseling.
(f) Counseling. Counseling, training, and technical assistance to
be provided in accordance with Sec. 950.1009.
(g) Sale via other entity. If the plan contemplates sale to
residents via an entity other than the IHA, a description of that
entity's responsibilities and information demonstrating that the
requirements of Sec. 950.1007 have been met or will be met in a timely
fashion.
(h) Nonpurchasing residents. If applicable, a plan for
nonpurchasing residents, in accordance with Sec. 950.1010.
(i) Sale proceeds. An estimate of the sale proceeds and an
explanation of how they will be used, in accordance with Sec. 950.1015.
(j) Replacement housing. A replacement housing plan, in accordance
with Sec. 950.1016.
(k) Administration. An administrative plan, including estimated
staffing requirements.
(l) Recordkeeping, accounting and reporting. A description of the
recordkeeping, accounting, and reporting procedures to be used,
including those required by Sec. 950.1017.
(m) Budget. A budget estimate, showing the costs of implementing
the plan, and the sources of the funds that will be used.
(n) Timetable. An estimated timetable for the major steps required
to carry out the plan.
(Approved by the Office of Management and Budget under control
number 2577-0201).
Sec. 950.1021 Supporting documentation.
The following supporting documentation shall be submitted to HUD
with the proposed homeownership plan, as appropriate for the particular
plan:
(a) Estimate of value. An estimate of the fair market value of the
property, including the range of fair market values of individual
dwellings, with information to support the reasonableness of the
estimate. (The purpose of this information is merely to assist HUD in
determining whether, taking into consideration the estimated fair
market value of the property, the plan adequately addresses any risks
of fraud and abuse, pursuant to Sec. 950.1013, and windfall profit on
resale, pursuant to Sec. 950.1014. A formal appraisal need not be
submitted with the proposed homeownership plan.)
(b) Physical assessment. An assessment of the physical condition of
the property, based on the standards specified in Sec. 950.1006.
(c) Workability. A statement demonstrating the practical
workability of the plan, based on analysis of data on such elements as
purchase prices, costs [[Page 18286]] of repair or rehabilitation,
homeownership costs, family incomes, availability of financing, and the
extent to which there are eligible residents who are expected to be
interested in purchase. (See Sec. 950.1004(a).)
(d) IHA commitment and capability. Information to substantiate the
commitment and capability of the IHA and any other entity with
substantial responsibilities for implementing the plan.
(e) Resident planning input. A description of resident consultation
activities carried out pursuant to Sec. 950.1005 before submission of
the plan, with a summary of the views and recommendations of residents
and copies of any written comments that may have been submitted to the
IHA by individual residents and resident organizations, and any other
individuals and organizations.
(f) Nondiscrimination certification. The IHA's certification that
it will administer the plan on a nondiscriminatory basis, in accordance
with applicable civil rights laws and implementing regulations, as
described in Sec. 950.115, and will assure compliance with those
requirements by any other entity that may assume substantial
responsibilities for implementing the plan.
(g) Legal opinion. An opinion by legal counsel to the IHA, stating
that counsel has reviewed the plan and finds it consistent with all
applicable requirements of Federal, tribal, State, and local law,
including regulations as well as statutes. In addition, counsel shall
identify the major legal requirements that remain to be met in
implementing the plan, if approved by HUD as submitted, indicating an
opinion about whether those requirements can be met without special
problems that may disrupt the timetable or other features contained in
the plan.
(h) Board resolution. A resolution by the IHA's Board of
Commissioners, evidencing its approval of the plan.
(i) Other information. Any other information that may reasonably be
required for HUD review of the plan. Except for the IHA-HUD
implementing agreement under Sec. 950.1019, HUD approval is not
required for documents to be prepared and used by the IHA in
implementing the plan (such as contracts, applications, deeds,
mortgages, promissory notes, and cooperative or condominium documents),
if their essential terms and conditions are described in the plan.
Consequently, those documents need not be submitted as part of the plan
or the supporting documentation. (Approved by the Office of Management
and Budget under control number 2577-0201).
Subpart Q--[Reserved]
Subpart R--Family Self-Sufficiency
Sec. 950.3001 Purpose, scope, and applicability.
(a) Purpose. The purpose of the Family Self-Sufficiency (FSS)
program is to develop local strategies to coordinate the use of public
and Indian housing assistance and housing assistance under the section
8 rental certificate and rental voucher programs with public and
private resources, to enable families eligible to receive assistance
under these programs to achieve economic independence and self-
sufficiency.
(b) Applicability. This subpart applies to Indian housing
authorities (IHA) that elect to operate a local FSS program, and when
such an election is made, to Indian housing assisted under the United
States Housing Act of 1937, and developed or operated by an IHA in an
Indian area, as defined in Sec. 950.102. This subpart does not apply to
the Mutual Help Homeownership Program or the Turnkey III Program. IHAs
that elect to participate in the FSS program are not subject to minimum
program size requirements. Additionally, IHAs that received Indian
housing units under the FSS incentive award competitions are not
subject to the minimum program size requirements.
Sec. 950.3002 Program objectives.
The objective of the FSS program is to reduce the dependency of
low-income families on welfare assistance, on section 8, public, or
Indian housing assistance, or any Federal, State, or local rent or
homeownership subsidies. The FSS program provides low-income families
opportunities for education, job training, counseling, and other forms
of social service assistance, while living in assisted housing, so that
they may obtain the education, employment, and business and social
skills necessary to achieve self-sufficiency, as this term is defined
in Sec. 950.3003. HUD will measure the success of a local FSS program
not only by the number of families who achieve self-sufficiency, but
also by the number of FSS families who, as a result of participation in
the program, have family members who obtain their first job, or who
obtain higher paying jobs; no longer need benefits received under one
or more welfare programs; obtain a high school diploma or higher
education degree; or accomplish similar goals that will assist the
family in obtaining economic independence.
Sec. 950.3003 Definitions.
As used in this subpart R:
Certification means a written assertion based on supporting
evidence, provided by the FSS family or the IHA, as may be required
under this subpart R, and that:
(1) Shall be maintained by the IHA in the case of the family's
certification, or by HUD in the case of the IHA's certification;
(2) Shall be made available for inspection by HUD, the IHA, and the
public, as appropriate; and
(3) Shall be deemed to be accurate for purposes of this subpart R,
unless the Secretary or the IHA, as applicable, determines otherwise
after inspecting the evidence and providing due notice and opportunity
for comment.
Contract of participation means a contract in a form approved by
HUD, entered into between a participating family and an IHA operating
an FSS program that sets forth the terms and conditions governing
participation in the FSS program. The contract of participation
includes all individual training and services plans, attached to the
contract as exhibits, entered into between the IHA and all members of
the family who will participate in the FSS program. For additional
details, see Sec. 950.3022.
Earned income means income or earnings included in annual income
from wages, tips, salaries, other employee compensation, and self-
employment. (See Sec. 950.102.) Earned income does not include any
pension or annuity, transfer payments, any cash or in-kind benefits, or
funds deposited in or accrued interest on the FSS escrow account
established by an IHA on behalf of a participating family.
Effective date of contract of participation means the first day of
the month following the month in which the FSS family and the IHA
entered into the contract of participation.
Eligible families mean current residents of Indian housing.
Enrollment means the date that the FSS family entered into the
contract of participation with the IHA.
Family Self-Sufficiency program or FSS program means the program
established by an IHA within its jurisdiction to promote self-
sufficiency among participating families, including the provision of
supportive services to these families, as authorized by section 23 of
the United States Housing Act of 1937 (42 U.S.C. 1437u).
[[Page 18287]]
FSS account means the FSS escrow account authorized by section 23
of the Act, and as provided by Sec. 950.3025.
FSS credit means the amount credited by the IHA to the
participating family's FSS account.
FSS family or participating family means a family that resides in
Indian housing, that elects to participate in the FSS program, and
whose designated head of the family has signed the contract of
participation.
FSS related service program means any program, publicly or
privately sponsored, that offers the kinds of supportive services
described in the definition of ``supportive services'' set forth in
this section.
FSS slots means the total number of Indian housing units that
comprise the minimum size of an IHA's Indian housing FSS program.
Head of FSS family means the adult member of the FSS family who is
the head of the household for purposes of determining income
eligibility and rent.
Housing subsidies means assistance to meet the costs and expenses
of temporary shelter, rental housing, or homeownership, including rent,
mortgage, or utility payments.
Individual training and services plan means:
(1) A written plan that is prepared for the head of the FSS family,
and each adult member of the FSS family who elects to participate in
the FSS program, by the IHA in consultation with the family member, and
that sets forth:
(i) The supportive services to be provided to the family member;
(ii) The activities to be completed by that family member; and
(iii) The agreed upon completion dates for the services and
activities.
(2) Each individual training and services plan shall be signed by
the IHA and the participating family member, and is attached to and
incorporated as part of the contract of participation. An individual
training and services plan shall be prepared for the head of the FSS
family.
JOBS Program means the Job Opportunities and Basic Skills Training
Program authorized under part F, title IV of the Social Security Act
(42 U.S.C. 402(a)(19)).
JTPA means the Job Training Partnership Act (29 U.S.C. 1579(a)).
Program Coordinating Committee or PCC means the committee described
in Sec. 950.3012.
Secretary means the Secretary of Housing and Urban Development.
Self-sufficiency means that an FSS family is no longer receiving
section 8, public, or Indian housing assistance, or any Federal, State,
or local rent or homeownership subsidies or welfare assistance.
Achievement of self-sufficiency, although an FSS program objective, is
not a condition for receipt of the FSS account funds. (See
Sec. 950.3025).
Supportive services means those appropriate services that an IHA
will make available, or cause to be made available, to an FSS family
under a contract of participation, and may include:
(1) Child care--child care of a type that provides sufficient hours
of operation and serves an appropriate range of ages;
(2) Transportation--transportation necessary to enable
participating family members to receive available services, or to
commute to their places of employment;
(3) Education--remedial education; education for completion of
secondary or post secondary schooling;
(4) Employment--job training, preparation, and counseling; job
development and placement; and follow-up assistance after job placement
and completion of the contract of participation;
(5) Personal welfare--substance/alcohol abuse treatment and
counseling;
(6) Household skills and management--training in homemaking and
parenting skills; household management; and money management;
(7) Counseling--counseling in the areas of:
(i) The responsibilities of homeownership;
(ii) Opportunities available for affordable rental and
homeownership in the private housing market; and
(iii) Money management; and
(8) Other services--any other services and resources, including
case management, reasonable accommodations for individuals with
disabilities, that the IHA may determine to be appropriate in assisting
FSS families to achieve economic independence and self-sufficiency.
Unit size or size of unit refers to the number of bedrooms in a
dwelling unit.
Sec. 950.3004 Basic requirements of the FSS program.
(a) Compliance with program regulations. An FSS program established
under this subpart shall be operated in conformity with the regulations
of this part.
(b) Compliance with Action Plan. An FSS program established under
this subpart shall be operated in compliance with an Action Plan, as
described in Sec. 950.3011, and provide comprehensive supportive
services as defined in Sec. 950.3003.
(c) Compliance with equal opportunity requirements. An FSS program
established under this subpart shall be operated in compliance with all
applicable Indian housing regulations and all applicable civil rights
authorities, including: the Indian Civil Rights Act of 1968 (25 U.S.C.
1301-1303); title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d),
the Fair Housing Act (42 U.S.C. 3601-3619); section 504 of the
Rehabilitation Act of 1973 (29 U.S.C. 794); the Age Discrimination Act
of 1975 (42 U.S.C. 6101-6107); Executive Order 11063 (3 CFR, 1959-1963
Comp., p. 652), as amended by Executive Order 12259 (3 CFR, 1980 Comp.,
p. 307); section 7(b) of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450(e)(b)); section 3 of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701u); and the regulations
implementing these authorities. (The Indian Civil Rights Act applies to
IHAs organized pursuant to tribal laws; and Title VI of the Civil
Rights Act of 1964 and the Fair Housing Act applies to State authorized
IHAs.)
Sec. 950.3011 Action Plan.
(a) General. To participate in the FSS program, an IHA shall have a
HUD-approved Action Plan that complies with the requirements of this
section.
(b) Development of Action Plan. The Action Plan shall be developed
by the IHA in consultation with the chief executive officer of the
applicable unit of general local government, and the Program
Coordinating Committee.
(c) Initial submission and revisions. (1) Initial submission.
Unless the dates set forth in this paragraph are extended by HUD for
good cause, an IHA that is establishing its first FSS program shall
submit an Action Plan to HUD for approval within 90 days of
notification by HUD of approval of the IHA's first application for new
housing units.
(2) Revision. Following initial approval of the Action Plan by HUD,
no further approval of the Action Plan is required unless the IHA
proposes to make policy changes to the Action Plan, or HUD requires
changes. Any changes to the Action Plan shall be submitted to and
approved by HUD.
(d) Contents of Plan. The Action Plan shall describe the policies
and procedures of the IHA for operation of a local FSS program, and
shall contain, at a minimum, the following information:
(1) Family demographics--a description of the number, size,
characteristics, and other demographics (including racial and ethnic
data), and the supportive service needs of the [[Page 18288]] families
expected to participate in the FSS program;
(2) Estimate of participating families--an estimate of the number
of eligible FSS families who can reasonably be expected to receive
supportive services under the FSS program, based on available and
anticipated Federal, tribal, State, local, and private resources;
(3) Eligible families from other self-sufficiency programs--if
applicable, the number of eligible families, by program type, who are
participating in Operation Bootstrap, Project Self-Sufficiency, or any
other local self-sufficiency program who are expected to agree to
execute an FSS contract of participation;
(4) FSS family selection procedures--a statement indicating the
procedures to be utilized to select families for participation in the
FSS program, subject to the requirements governing the selection of FSS
families, set forth in Sec. 950.3013.
(5) Incentives to encourage participation--a description of the
incentives that the IHA's intends to offer eligible families to
encourage their participation in the FSS program (incentives plan). The
incentives plan shall provide for the establishment of the FSS account
in accordance with the requirements set forth in Sec. 950.3025, and
other incentives, if any, designed by the IHA. The incentives plan
shall be part of the Action Plan.
(6) Outreach efforts--a description of:
(i) The IHA's efforts, including notification and outreach efforts,
to recruit FSS participants from among eligible families; and
(ii) The IHA's actions to be taken to assure that both minority and
nonminority groups are informed about the FSS program, and how the IHA
will make this information known (e.g., through door-to-door flyers,
posters in any common rooms, advertisements in newspapers of general
circulation, as well as any media targeted to minority groups).
(7) FSS activities and supportive services--a description of the
activities and supportive services to be provided by both public and
private resources to FSS families, and identification of the public and
private resources that are expected to provide the supportive services.
(8) Method for identification of family support needs--a
description of how the FSS program will identify the needs and deliver
the services and activities according to the needs of the FSS families;
(9) Program termination, withholding of services, and grievance
procedures--a description of the IHA's policies concerning: termination
of participation in the FSS program, withholding of supportive services
on the basis of a family's failure to comply with the requirements of
the contract of participation, and the grievance and hearing procedures
available to FSS families.
(10) Assurances of noninterference with rights of nonparticipating
families--an assurance that a family's election not to participate in
the FSS program will not affect the family's admission to Indian
housing or the family's right to occupancy in accordance with its
lease.
(11) Timetable for program implementation--a timetable for
implementation of the FSS program, as provided in Sec. 950.3020(a)(1),
including the schedule for filling FSS slots with eligible FSS
families, as provided in Sec. 950.3013;
(12) Certification of coordination--a certification that
development of the services and activities under the FSS program has
been coordinated with the JOBS Program; the programs provided under the
JTPA; and any other relevant employment, child care, transportation,
training, and education programs (e.g., Job Training for the Homeless
Demonstration program) in the applicable area, and that implementation
will continue to be coordinated, in order to avoid duplication of
services and activities; and
(13) Optional additional information--such other information that
would help HUD determine the soundness of the IHA's proposed FSS
program.
(e) Eligibility of a combined program. An IHA that wishes to
operate a joint FSS program with other IHAs may combine its resources
with one or more IHAs to deliver supportive services under a joint
Action Plan that will provide for the establishment and operation of a
combined FSS program that meets the requirements of this subpart.
(f) Single action plan. IHAs implementing both a section 8 FSS
program and an Indian housing FSS program may submit one Action Plan.
Sec. 950.3012 Program Coordinating Committee (PCC).
(a) General. Each participating IHA shall establish a PCC whose
functions will be to assist the IHA in securing commitments of public
and private resources for the operation of the FSS program within the
IHA's jurisdiction, including assistance in developing the Action Plan
and in implementing the program.
(b) Membership. (1) The PCC may consist of representatives of the
IHA and of residents of Indian housing.
(2) Recommended membership. Membership on the PCC also may include
representatives of the unit of general local government served by the
IHA, local agencies (if any) responsible for carrying out JOBS training
programs or programs under the JTPA, and other organizations, such as
other State, local, or tribal welfare and employment agencies, public
and private education or training institutions, child care providers,
nonprofit service providers, private business, and any other public and
private service providers with resources to assist the FSS program.
(c) Alternative committee. The IHA may, in consultation with the
chief executive officer of the unit of general local government served
by the IHA, utilize an existing entity as the PCC if the membership of
the existing entity consists or will consist of the individuals
identified in paragraph (b)(1) of this section, and also includes
individuals from the same or similar organizations identified in
paragraph (b)(2) of this section.
Sec. 950.3013 FSS family selection procedures.
(a) Preference in the FSS selection process. An IHA has the option
of giving a selection preference for up to 50 percent of its FSS slots
to eligible families, as defined in Sec. 950.3003, who have one or more
family members currently enrolled in an FSS related service program or
on the waiting list for such a program. The IHA may limit the selection
preference given to participants in and applicants for FSS-related
service programs to one or more eligible FSS-related service programs.
An IHA that chooses to exercise the selection preference option shall
include the following information in its Action Plan:
(1) The percentage of FSS slots, not to exceed 50 percent of the
total number of FSS slots, for which it will give a selection
preference;
(2) The FSS related service programs to which it will give a
selection preference to the programs' participants and applicants; and
(3) The method of outreach to, and selection of, families with one
or more members participating in the identified programs.
(b) FSS selection without preference. For those FSS slots for which
the IHA chooses not to exercise the selection preference provided in
paragraph (a) of this section, the FSS slots shall be filled with
eligible families in accordance with an objective selection system,
such [[Page 18289]] as a lottery, the length of time living in
subsidized housing, or the date the family expressed an interest in
participating in the FSS program. The objective system to be used by
the IHA shall be described in the IHA's Action Plan.
(c) Motivation as a selection factor. (1) General. An IHA may
screen families for interest and motivation to participate in the FSS
program, provided that the factors utilized by the IHA are those which
solely measure the family's interest and motivation to participate in
the FSS program.
(2) Permissible motivational screening factors. Permitted
motivational factors include requiring attendance at FSS orientation
sessions or preselection interviews, and assigning certain tasks that
indicate the family's willingness to undertake the obligations that may
be imposed by the FSS contract of participation (e.g., contacting job
training or educational program referrals). However, any tasks assigned
shall be those that may be readily accomplishable by the family, based
on the family members' educational level and disabilities, if any.
Reasonable accommodations shall be made for individuals with mobility,
manual, sensory, speech impairments, mental, or developmental
disabilities.
(3) Prohibited motivational screening factors. Prohibited
motivational screening factors include the family's educational level,
educational or standardized motivational test results, previous job
history or job performance, credit rating, marital status, number of
children, or other factors, such as sensory or manual skills, and any
factors that may result in discriminatory practices or treatment toward
individuals with disabilities or minority or nonminority groups.
Sec. 950.3014 On-site facilities.
Each IHA may, subject to the approval of HUD, make available and
utilize common areas or unoccupied units in Indian housing projects to
provide supportive services under an FSS program.
Sec. 950.3020 Program implementation.
(a) Program implementation deadline. (1) Program start-up. Full
delivery of the supportive services to be provided to the total number
of families required to be served under the program need not occur
within 12 months, but shall occur by the deadline set forth in
paragraph (a)(2) of this section.
(2) Full enrollment and delivery of services. Except as provided in
paragraph (a)(3) of this section, the IHA shall have completed
enrollment of the total number of families to be served under the FSS
program and shall have begun delivery of the supportive services within
two years from the date of notification of approval of the application
for new Indian housing units.
(3) Extension of program deadlines for good cause. HUD may extend
the deadline set forth in either paragraph (a)(1) or paragraph (a)(2)
of this section if the IHA requests an extension, and the HUD Area ONAP
determines that, despite best efforts on the part of the IHA, the
development of new Indian housing units will not occur within the
deadlines set forth in this paragraph (a), the commitment by public or
private resources to deliver supportive services has been withdrawn,
the delivery of such services has been delayed, or other local
circumstances that the HUD Area ONAP determines warrants an extension
of the deadlines set forth in paragraph (a) of this section.
(b) Program administration. An IHA may employ appropriate staff,
including a service coordinator or program coordinator, to administer
its FSS program, and may contract with an appropriate organization to
establish and administer the FSS program, including the FSS account, as
provided by Sec. 950.3025.
Sec. 950.3021 Administrative fees.
The performance funding system (PFS), provided under section 9(a)
of the Act, shall provide for the inclusion of reasonable and
administrative costs incurred by IHAs in carrying out the local FSS
programs. These costs are subject to appropriations by the Congress.
Sec. 950.3022 Contract of participation.
(a) General. Each family that is selected to participate in an FSS
program shall enter into a contract of participation with the IHA that
operates the FSS program in which the family will participate. The
contract of participation shall be signed by the head of the FSS
family.
(b) Form and content of contract. (1) General. The contract of
participation, which incorporates the individual training and services
plan, shall be in the form prescribed by HUD, and shall set forth the
principal terms and conditions governing participation in the FSS
program, including the rights and responsibilities of the FSS family
and of the IHA, the services to be provided to, and the activities to
be completed by, the head of the FSS family, and each adult member of
the family who elects to participate in the program.
(2) Interim goals. The individual training and services plan,
incorporated in the contract of participation, shall establish specific
interim and final goals by which the IHA and the family may measure the
family's progress toward fulfilling its obligations under the contract
of participation, and becoming self-sufficient. For each participating
FSS family that is a recipient of welfare assistance, the IHA shall
establish as an interim goal that the family become independent from
welfare assistance and remain independent from welfare assistance for
at least one year before expiration of the term of the contract of
participation, including any extension thereof.
(3) Compliance with lease terms. The contract of participation
shall provide that one of the obligations of the FSS family is to
comply with the terms and conditions of the Indian housing lease.
(4) Employment obligation. (i) Head of family's obligation. The
head of the FSS family shall be required under the contract of
participation to seek and maintain suitable employment during the term
of the contract and any extension thereof. Although other members of
the FSS family may seek and maintain employment during the term of the
contract, only the head of the FSS family is required to seek and
maintain suitable employment.
(ii) Seek employment. The obligation to seek employment means that
the head of the FSS family has applied for employment, attended job
interviews, and has otherwise followed through on employment
opportunities.
(iii) Determination of suitable employment. A determination of
suitable employment shall be made by the IHA based on the skills,
education, and job training of the individual that has been designated
the head of the FSS family, and based on the available job
opportunities within the jurisdiction served by the IHA.
(5) Consequences of noncompliance with contract. The contract of
participation shall specify that if the FSS family fails to comply with
the terms and conditions of the contract of participation, the IHA may:
(i) Withhold the supportive services; or
(ii) Terminate the family's participation in the FSS program.
(c) Contract term. The contract of participation shall provide that
each FSS family will be required to fulfill those obligations to which
the participating family has committed itself under the contract of
participation no later than 5 years after the effective date of the
contract. [[Page 18290]]
(d) Contract extension. The IHA shall, in writing, extend the term
of the contract of participation for a period not to exceed two years
for any FSS family that requests, in writing, an extension of the
contract, provided that the IHA finds that good cause exists for
granting the extension. The family's written request for an extension
shall include a description of the need for the extension. As used in
this paragraph (d) of this section, ``good cause'' means circumstances
beyond the control of the FSS family, as determined by the IHA, such as
a serious illness or involuntary loss of employment. Extension of the
contract of participation will entitle the FSS family to continue to
have amounts credited to the family's FSS account in accordance with
Sec. 950.3025.
(e) Unavailability of supportive services. (1) Good faith effort to
replace unavailable services. If a social service agency fails to
deliver the supportive services pledged under an FSS family member's
individual training and services plan, the IHA shall make a good faith
effort to obtain these services from another agency.
(2) Assessment of necessity of services. If the IHA is unable to
obtain the services from another agency, the IHA shall reassess the
family members' needs, and determine whether other available services
would achieve the same purpose. If other available services would not
achieve the same purpose, the IHA shall determine whether the
unavailable services are integral to the FSS family's advancement or
progress toward self-sufficiency. If the unavailable services are:
(i) Determined not to be integral to the FSS family's advancement
toward self-sufficiency, the IHA shall revise the individual training
and services plan to delete these services, and modify the contract of
participation to remove any obligation on the part of the FSS family to
accept the unavailable services, in accordance with paragraph (f) of
this section; or
(ii) Determined to be integral to the FSS family's advancement
toward self-sufficiency (which may be the case if the affected family
member is the head of the FSS family), the IHA shall declare the
contract of participation null and void.
(f) Modification. The IHA and the FSS family may mutually agree to
modify the contract of participation. The contract of participation may
be modified in writing with respect to the individual training and
services plan, the contract term in accordance with paragraph (d) of
this section, and designation of the head of the family.
(g) Completion of the contract. The contract of participation is
considered to be completed, and a family's participation in the FSS
program is considered to be concluded, when one of the following
occurs:
(1) The FSS family has fulfilled all of its obligations under the
contract of participation on or before the expiration of the contract
term, including any extension thereof; or
(2) Thirty (30) percent of the monthly adjusted income of the FSS
family equals or exceeds the published existing housing fair market
rent for the size of the unit for which the FSS family qualifies based
on the IHA's occupancy standards. The contract of participation will be
considered completed and the family's participation in the FSS program
concluded on this basis even though the contract term, including any
extension thereof, has not expired, and the family members who have
individual training and services plans, have not completed all the
activities set forth in their plans.
(h) Termination of the contract. The contract of participation may
be terminated before the expiration of the contract term, and any
extension thereof, by:
(1) Mutual consent of the parties;
(2) The failure of the FSS family to meet its obligations under the
contract of participation without good cause;
(3) The family's withdrawal from the FSS program;
(4) Such other act as is deemed inconsistent with the purpose of
the FSS program; or
(5) By operation of law.
(i) Transitional supportive service assistance. An IHA may continue
to offer to a former FSS family who has completed its contract of
participation and whose head of the family is employed, appropriate FSS
supportive services in becoming self-sufficient (if the family still
resides in Indian housing), or in remaining self-sufficient (if the
family no longer resides in Indian or other assisted housing).
Sec. 950.3024 Total tenant payment and increases in family income.
(a) Calculation of total tenant payment. Total tenant payment for a
family participating in the FSS program is determined in accordance
with the regulations set forth in Secs. 950.315 through 950.325.
(b) Increases in FSS family income. Any increase in the earned
income of an FSS family during its participation in an FSS program may
not be considered as income or a resource for purposes of eligibility
of the FSS family for other benefits, or amount of benefits payable to
the FSS family, under any other program administered by HUD, unless the
income of the FSS family equals or exceeds 80 percent of the median
income of the area (as determined by HUD, with adjustments for smaller
and larger families).
Sec. 950.3025 FSS account.
(a) Establishment of FSS account. (1) General. The IHA shall
deposit the FSS account funds of all families participating in the
IHA's FSS program into a single depository account. The IHA shall
deposit the FSS account funds in one or more of the HUD-approved
investments.
(2) Accounting for FSS account funds. (i) Accounting records. The
total of the FSS account funds will be supported in the IHA accounting
records by a subsidiary ledger showing the balance applicable to each
FSS family. During the term of the contract of participation, the IHA
shall credit monthly, to each family's FSS account, the amount of the
FSS credit determined in accordance with paragraph (b) of this section.
(ii) Proration of investment income. The investment income for
funds in the FSS account will be prorated and credited to each family's
FSS account based on the balance in each family's FSS account at the
end of the period for which the investment income is credited.
(iii) Reduction of amounts due by FSS family. If the FSS family has
not paid the family contribution towards rent, or other amounts, if
any, due under the Indian housing lease, the balance in the family's
FSS account shall be reduced by that amount before prorating the
interest income. If the FSS family has fraudulently under-reported
income, the amount credited to the FSS account will be based on the
income amounts originally reported by the FSS family.
(3) Reporting on FSS account. Each IHA will be required to make a
report, at least once annually, to each FSS family on the status of the
family's FSS account. At a minimum, the report will include:
(i) The balance at the beginning of the reporting period;
(ii) The amount of the family's rent payment that was credited to
the FSS account, during the reporting period;
(iii) Any deductions made from the account for amounts due the IHA
before interest is distributed;
(iv) The amount of interest earned on the account during the year;
and
(v) The total in the account at the end of the reporting period.
(b) FSS credit. (1) Computation of amount. For purposes of
determining the FSS credit, ``family rent'' means the
[[Page 18291]] total tenant payment as defined in this part 950. The
FSS credit shall be computed as follows:
(i) For FSS families that are very low-income families, the FSS
credit shall be the amount that is the lesser of:
(A) Thirty (30) percent of the family's current monthly adjusted
income less the family rent, which is obtained by disregarding any
increase in earned income (as defined in Sec. 950.3003) from the
effective date of the contract of participation; or
(B) The current family rent less the family rent at the time of the
effective date of the contract of participation.
(ii) For FSS families that are low-income families but not very
low-income families, the FSS credit shall be the amount determined
according to paragraph (b)(1)(i) of this section, but that shall not
exceed the amount computed for 50 percent of median income.
(2) Ineligibility for FSS credit. FSS families that are not low-
income families shall not be entitled to any FSS credit.
(3) Cessation of FSS credit. The IHA shall not make any additional
credits to the FSS family's FSS account when the FSS family has
completed the contract of participation, as defined in
Sec. 950.3022(g), or when the contract of participation is terminated
or otherwise nullified.
(c) Disbursement of FSS account funds. (1) General. The amount in
an FSS account, in excess of any amount owed to the IHA by the FSS
family, as provided in paragraph (a)(3)(iii) of this section, shall be
paid to the head of the FSS family when the contract of participation
has been completed as provided in Sec. 950.3022(g), and if at the time
of contract completion, the head of FSS family submits to the IHA a
certification, as defined in Sec. 950.3003, that, to the best of his or
her knowledge and belief, no member of the FSS family is a recipient of
welfare assistance.
(2) Disbursement before expiration of contract term. (i) If the IHA
determines that the FSS family has fulfilled its obligations under the
contract of participation before the expiration of the contract term,
and the head of the FSS family submits a certification that, to the
best of his or her knowledge, no member of the FSS family is a
recipient of welfare assistance, the amount in the family's FSS
account, in excess of any amount owed to the IHA by the FSS family as
provided in paragraph (a)(3)(iii) of this section, shall be paid to the
head of the FSS family.
(ii) If the IHA determines that the FSS family has fulfilled
certain interim goals established in the contract of participation and
needs a portion of the FSS account funds for purposes consistent with
the contract of participation, such as completion of higher education
(i.e., college, graduate school), or job training, or to meet start-up
expenses involved in creation of a small business, the IHA may, at the
IHA's sole option, disburse a portion of the funds from the family's
FSS account to assist the family to meet those expenses.
(3) Verification of family certification. Before disbursement of
the FSS account funds to the family, the IHA may verify that the FSS
family is no longer a recipient of welfare assistance by requesting
copies of any documents that may indicate whether the family is
receiving any welfare assistance, and contacting welfare agencies.
(d) Succession to FSS account. If the head of the FSS family ceases
to reside with other family members in the Indian housing unit, the
remaining members of the FSS family, after consultation with the IHA,
shall have the right to designate another family member to receive the
funds in accordance with paragraph (d) (1) or (2) of this section.
(e) Use of FSS account funds for homeownership. An FSS family may
use its FSS account funds for the purchase of a home, including the
purchase of a home under one of HUD's homeownership programs, or other
Federal, State, or local homeownership programs, unless such use is
prohibited by the statute or regulations governing the particular
homeownership program.
(f) Forfeiture of FSS account funds. (1) Conditions for forfeiture.
Amounts in the FSS account shall be forfeited upon the occurrence of
the following:
(i) The contract of participation is terminated, as provided in
Secs. 950.3022(e) or 950.3022(h); or
(ii) The contract of participation is completed by the family, as
provided in Sec. 950.3022(g), but the FSS family is receiving welfare
assistance at the time of expiration of the term of the contract of
participation, including any extension thereof.
(2) Treatment of forfeited FSS account funds. FSS account funds
forfeited by the FSS family will be credited to the IHA's operating
reserves and counted as other income in the calculation of the PFS
operating subsidy eligibility for the next budget year.
Sec. 950.3030 Reporting.
Each IHA that carries out an FSS program under this subpart shall
submit to HUD, in the form prescribed by HUD, a report regarding its
FSS program. The report shall include the following information:
(a) A description of the activities carried out under the program;
(b) A description of the effectiveness of the program in assisting
families to achieve economic independence and self-sufficiency;
(c) A description of the effectiveness of the program in
coordinating resources of communities to assist families to achieve
economic independence and self-sufficiency; and
(d) Any recommendations by the IHA or the appropriate local program
coordinating committee for legislative or administrative action that
would improve the FSS program and ensure the effectiveness of the
program.
Dated: March 30, 1995.
Joseph Shuldiner,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 95-8346 Filed 4-7-95; 8:45 am]
BILLING CODE 4210-33-P
