[Federal Register Volume 59, Number 125 (Thursday, June 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15846]
[[Page Unknown]]
[Federal Register: June 30, 1994]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing
24 CFR Parts 905 and 990
[Docket No. R-94-1733; FR-3387-F-01]
RIN 2577-AB24
Annual Contributions for Operating Subsidy; Shared Savings From
Utility Rate Reduction and Subsidy for Economic Self-Sufficiency and
Anti-Drug Activities
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This final rule extends, for a period not to exceed an
additional 6 years, the existing arrangement under which a public
housing agency or Indian housing authority (hereinafter referred to
collectively as ``HAs'') may share equally with the Department any cost
reductions due to the differences between projected and actual utility
rates in the first year that the reductions occur. The rate savings
must be directly related to the actions of the HA and must be cost
effective. In addition, the rule eliminates the need for a waiver
before operating subsidy may be paid for certain units approved for
nondwelling use to promote economic self-sufficiency services and anti-
drug activities.
EFFECTIVE DATE: August 1, 1994.
FOR FURTHER INFORMATION CONTACT: John T. Comerford, Director, Financial
Management Division, Office of Assisted Housing, Room 4212, Department
of Housing and Urban Development, 451 Seventh Street, SW., Washington,
DC 20410. Telephone: (202) 708-1872; TDD: (202) 708-0850. (These are
not toll-free numbers.)
SUPPLEMENTARY INFORMATION:
Information Collection Requirements
The information collection requirements contained in the remaining
sections of this rule have been submitted to the Office of Management
and Budget (OMB) for review under the Paperwork Reduction Act of 1980
(44 U.S.C. 3501-3520). No person may be subjected to a penalty for
failure to comply with these information collection requirements until
they have been approved and assigned an OMB control number. The OMB
control number, when assigned, will be announced by separate notice in
the Federal Register.
Public reporting burden for the collection of information
requirements contained in this rule is estimated to include the time
for reviewing the instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information. Information on the estimated public
reporting burden is provided under the Preamble heading, Other Matters.
Send comments regarding this burden estimate or any other aspect of
this collection of information, including suggestions for reducing this
burden, to the Department of Housing and Urban Development, Rules
Docket Clerk, 451 Seventh Street, SW., Room 10276, Washington, DC
20410-0500; and to the Office of Information and Regulatory Affairs,
Office of Management and Budget, Attention: Desk Officer for HUD,
Washington, DC 20503.
Background on Shared Utility Rate Savings
Section 9(a)(3)(B)(i) of the United States Housing Act of 1937 (42
U.S.C. 1437g) (the ``1937 Act'') provides that under the performance
funding system in the first year that the reductions occur, any public
housing agency shall share equally with the Department any cost
reductions due to the differences between projected and actual utility
rates attributable to actions taken by the agency which lead to such
reductions.
Section 114(c) of the Housing and Community Development Act of 1992
(Pub. L. 102-550, approved October 28, 1992) (the ``1992 Act'') amended
section 9(a)(3)(B)(i) of the 1937 Act to provide that in subsequent
years, the Secretary may continue, with regard to energy savings, the
sharing arrangement with the public housing agency for an additional 6
years.
As a result of section 201(b)(1) of the 1937 Act, the provisions of
Title I of the 1937 Act apply to low-income housing developed or
operated pursuant to a contract between the Secretary and an Indian
housing authority. Therefore, the shared savings provisions under
section 9(a)(3)(B)(i) extend to Indian housing authorities. However,
under section 201(b)(2) no provision of Title I, or amendment to Title
I, that is enacted after the date of enactment of the Indian Housing
Act of 1988 (June 29, 1988) shall apply to public housing developed or
operated pursuant to a contract between the Secretary and an Indian
housing authority unless the provision explicitly provides for
applicability. Therefore, absent such a provision, section 114(c) of
the 1992 Act does not extend to Indian housing authorities. The
Department, however, as matter of policy, is extending the shared
savings arrangement to Indian housing authorities also. Not to do so
would frustrate the goals of providing incentives to undertake energy
conservation activities.
Utility rate reduction measures include wellhead purchases of
natural gas and administrative appeals or legal action beyond normal
public participation in rate-making proceedings. It is important that
an extension of the shared savings term provide adequate incentives and
cover the increased administrative expense involved in undertaking
energy conservation activities as sophisticated as a wellhead purchase
program. The Department has a manifold interest in promoting the most
economical purchasing arrangements in order to reduce the need for
operating subsidies. There is, first and foremost, a national interest
in reducing consumption of non-replaceable energy resources, and a
parallel interest in making sure that energy resources are purchased
economically and efficiently. In the context of the housing assistance
programs, HUD is obliged to honor these over-all goals by encouraging
energy conservation in assisted housing environments.
Background on Subsidy for Nondwelling Uses
On September 6, 1991, the Department published a proposed rule that
would have established new conditions under which a PHA or an IHA could
have included vacant units in its computation of eligibility for
operating subsidy. The comment period for this proposed rule was
reopened on June 22, 1992 (57 FR 27716). Ultimately, as a result of
congressional action, the proposed rule was not pursued to a final
rule. See, Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act, 1992 (Pub. L.
102-139, approved October 29, 1991; 106 Stat. 757), and section 114(b)
of the Housing and Community Development Act of 1992 (Pub. L. 102-550,
approved October 28, 1992; 106 Stat. 3691).
A number of the provisions contained in the proposed rule were
opposed by commenters. However, the aspect of the proposed rule that
would permit the payment of operating subsidy, under certain
conditions, for units approved for nondwelling use for economic self-
sufficiency and anti-drug activities was not controversial. The
comments received on this aspect generally supported the proposed rule,
but urged the Department to adopt an even more generous treatment of
nondwelling space in the calculation of operating subsidy eligibility.
However, in this final rule the Department is adopting only the
provisions that appeared in the proposed rule, and only to the extent
that those provisions reflect the existing practice. The Department is
clarifying in Secs. 905.720(b)(2) and 990.198(b)(2) that an IHA or PHA
need demonstrate only that non-utility operating costs are not
available from other funding. This conforms to existing practice.
Currently, the Department is permitting PHAs and IHAs to continue
receiving operating subsidy for units that are no longer available for
occupancy because they have been removed from the rent roll and
approved for economic self-sufficiency and anti-drug activities. Under
Notice PIH 90-39 (PHA) (issued August 24, 1990), a PHA or an IHA may
request a waiver to allow consideration of such units in its
calculation of operating subsidy eligibility. Therefore, the effect of
the revisions to Secs. 905.720 and 990.108(b) in this final rule is not
to change current treatment of these units in the calculation of
operating subsidy eligibility, but merely to reduce the administrative
burdens of all parties involved in the waiver process.
This Rule
The existing regulation on shared utility rate savings provides an
incentive to HAs to implement utilities conservation programs,
particularly rate-savings programs like wellhead purchase, when
calculating eligibility for operating subsidy under the Performance
Funding System, but limits the effect of that incentive to one year.
This revision to the regulation does not change the mechanism for
granting the incentive, but extends the authorization for the shared
savings arrangement up to an additional six years. HUD will continue to
require that the HA be able to demonstrate in each annual budget that
there are real rate reduction savings in each of the years for which
the extended incentive applies.
In addition, the revisions in this rule will eliminate the need to
seek a waiver to permit the payment of operating subsidy for certain
units approved for nondwelling use for economic self-sufficiency and
anti-drug activities.
To achieve the regulatory goals discussed above, this rule amends
24 CFR 905.715(b)(2), 905.720(b), 905.730(c), 990.107(b)(2),
990.108(b), and 990.110(c)(1)(i).
Other Matters
Justification for Final Rule
The Department has determined that notice and public comment are
unnecessary and contrary to the public interest before making this rule
effective because it is an extension of an ongoing policy which rewards
a HA for its action to secure a reduction in utility rates.
Information Collection Requirements
The information collection requirements contained in this rule have
been submitted to the Office of Management and Budget under the
Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520). The Department
has determined that the following provisions contain information
collection requirements.
Tabulation of Reporting and Recordkeeping Burdens
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Estimated
No. of Frequency average Estimated
Sections respondents of response response annual
time (in burden (in
hours) hours)
----------------------------------------------------------------------------------------------------------------
Reporting burden:
905.720(b)(2), 990.108(b)(2)............................ 200 1 8 1,600
905.730(c)(1)(i), 990.110(c)(1)(i)...................... 100 1 2 200
905.720(b)(2)(i)-(v), 990.108(b)(2)(i)-(v).............. 200 1 4 800
---------------------------------------------------
Total reporting burden................................ ........... ........... ........... 2,600
Recordkeeping burden:
905.720(b)(2)(v), 990.108(b)(2)(v)...................... 200 1 2 400
---------------------------------------------------
Total recordkeeping burden............................ ........... ........... ........... 400
===================================================
Total burden.......................................... ........... ........... ........... 3,000
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Environmental Review
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD regulations at 24 CFR Part 50,
which implement section 102(2)(C) of the National Environmental Policy
Act of 1969. The Finding of No Significant Impact is available for
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the
Office of the Rules Docket Clerk, Office of the General Counsel,
Department of Housing and Urban Development, Room 10276, 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. This rule
pertains only to an arrangement between HUD and certain HAs.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that this rule
does not have ``federalism implications'' because it does not have
substantial direct effects on the States (including their political
subdivisions), or on the distribution of power and responsibilities
among the various levels of government.
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 significant impact on family formation, maintenance, and
general well-being. It pertains only to an arrangement between HUD and
certain HAs.
Semi-Annual Agenda of Regulations
This rule was listed as item number 1706 in the Department's
Semiannual Agenda of Regulations published on April 25, 1994 (59 FR
20424, 20474) in accordance with Executive Order 12866 and the
Regulatory Flexibility Act.
Catalog of Federal Domestic Assistance
The Federal domestic assistance number is 14.850.
List of Subjects
24 CFR Part 905
Aged, Energy conservation, Grant programs--housing and community
development, Grant programs--Indians, Indians, 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 990
Grant programs--housing and community development, Public housing,
Reporting and recordkeeping requirements.
Accordingly, the Department amends 24 CFR parts 905 and 990 as
follows:
PART 905--INDIAN HOUSING PROGRAMS
1. The authority for part 905 is revised to read as follows:
Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437a, 1437aa, 1437bb,
1437cc, 1437ee, and 3535(d).
2. In Sec. 905.715, paragraph (b)(2) is revised to read as follows:
Sec. 905.715 Computation of utilities expense level.
* * * * *
(b) * * *
(2) If an IHA takes action, such as a wellhead 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. 905.730(c).
* * * * *
3. In Sec. 905.720, the text of paragraph (b) following the heading
is designated as paragraph (b)(1), and new paragraph (b)(2) is added,
to read as follows:
Sec. 905.720 Other costs.
* * * * *
(b) * * *
(1) * * *
(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 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 non-utility operating costs of the unit are
available:
(i) The unit must 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
must be directed toward and for the benefit of residents of the
development.
(ii) The IHA must 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 must demonstrate satisfactorily that other funding is
not available to pay for the non-utility operating costs. All rental
income generated as a result of the activity must 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 must 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 must maintain specific
documentation of the units covered. Such documentation should include a
listing of the units, the street addresses, and project/management
control numbers.
* * * * *
4. In Sec. 905.730, paragraph (c)(1)(i) is revised to read as
follows:
Sec. 905.730 Adjustments.
* * * * *
(c) * * *
(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, where the rate reduction covering utilities, such as water,
fuel oil, electricity, and gas, is directly attributable to action by
the IHA, such as wellhead purchase of natural gas, or administrative
appeals or legal action beyond normal public participation in rate-
making 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.
* * * * *
PART 990--ANNUAL CONTRIBUTIONS FOR OPERATING SUBSIDY
5. The authority for part 990 is revised to read as follows:
Authority: 42 U.S.C. 1437(g) and 3535(d).
6. In Sec. 990.107, paragraph (b)(2) is revised to read as follows:
Sec. 990.107 Computation of utilities expense level.
* * * * *
(b) * * *
(2) If a PHA takes action, such as wellhead 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
PHA 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 PHA 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. 990.110(c).
* * * * *
7. In Sec. 990.108, the text of paragraph (b) is designated as
paragraph (b)(1), and new paragraph (b)(2) is added, to read as
follows:
Sec. 990.108 Other costs.
* * * * *
(b) * * *
(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 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 PHA can demonstrate that no other
sources for paying the non-utility operating costs of the unit are
available:
(i) The unit must 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
must be directed toward and for the benefit of residents of the
development.
(ii) The PHA must 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 the resources are
committed to make the space safe and suitable.
(iii) The PHA must demonstrate satisfactorily that other funding is
not available to pay for the non-utility operating costs. All rental
income generated as a result of the activity must 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 public 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 PHA must 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 PHA must maintain specific
documentation of the units covered. Such documentation should include a
listing of the units, the street addresses, and project/management
control numbers.
* * * * *
8. In Sec. 990.110, paragraph (c)(1)(i) is revised to read as
follows:
Sec. 990.110 Adjustments.
* * * * *
(c) * * *
(1) Rates. (i) A decrease in the Utilities Expense Level because of
decreased utility rates--to the extent funded by the operating
subsidy--will be deducted by HUD from future operating subsidy
payments. However, where the rate reduction covering utilities, such as
water, fuel oil, electricity, and gas, is directly attributable to
action by the PHA, such as wellhead purchase of natural gas, or
administrative appeals or legal action beyond normal public
participation in rate-making proceedings, then the PHA 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.
* * * * *
Dated: June 24, 1994.
Joseph Shuldiner,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 94-15846 Filed 6-29-94; 8:45 am]
BILLING CODE 4210-33-P
