[Federal Register Volume 64, Number 203 (Thursday, October 21, 1999)]
[Rules and Regulations]
[Pages 56894-56915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27519]
[[Page 56893]]
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Part VI
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Parts 888 and 982
Section 8 Tenant-Based Assistance; Statutory Merger of Section 8
Certificate and Voucher Programs; Housing Choice Voucher Program; Final
Rule
Federal Register / Vol. 64, No. 203 / Thursday, October 21, 1999 /
Rules and Regulations
[[Page 56894]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 888 and 982
[Docket No. FR-4428-F-04]
RIN 2577-AB91
Section 8 Tenant-Based Assistance; Statutory Merger of Section 8
Certificate and Voucher Programs; Housing Choice Voucher Program
AGENCY: Office of the Secretary, HUD.
ACTION: Final rule.
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SUMMARY: This final rule adopts as final certain provisions of the
interim rule published on May 14, 1999, to implement the statutory
merger of the Section 8 tenant-based certificate and voucher programs
into the new Housing Choice Voucher Program, and makes amendments to
other provisions of this interim rule. This final rule takes into
consideration the public comments received on the interim rule, and
most of the amendments made at this final rule stage are in response to
public comment.
EFFECTIVE DATE: November 22, 1999.
FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Office of Public and
Indian Housing, Department of Housing and Urban Development, Room 4210,
451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708-0477.
(This is not a toll-free number.) Hearing or speech-impaired
individuals may access this number via TTY by calling the toll-free
Federal Information Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On May 14, 1999 (64 FR 26632), HUD published for public comment an
interim rule amending the regulations for the Section 8 tenant-based
program. The interim rule implemented most of the Section 8 tenant-
based program provisions contained in the Quality Housing and Work
Responsibility Act of 1998 (Title V of the FY 1999 HUD Appropriations
Act; Public Law 105-276, approved October 21, 1998; 112 Stat. 2461)
(the ``1998 Act''). Of particular significance, the May 14, 1999
interim rule implemented section 545 of the 1998 Act. Section 545
provides for the complete merger of the Section 8 tenant-based
certificate and voucher programs.
HUD had previously promulgated regulations (known as the
``conforming rule'') that combined and conformed rules for Section 8
tenant-based assistance to the extent permitted by prior law. The new
tenant-based program has features of the previously authorized
certificate and voucher programs, plus new features, as described in
the preamble to the interim rule.
HUD provided for a 90-day delayed effective date for the interim
rule (in contrast to the customary 30-day delayed effective date for
most HUD rules issued for effect), in order to afford public housing
agencies (PHAs) additional time to prepare for the implementation of
the interim rule. On August 11, 1999, HUD published a notice changing
the effective date of the interim rule to October 1, 1999. (See 64 FR
43613.)
This rule does not implement the 1998 Act revisions to the project-
based certificate program, which is the subject of 24 CFR part 983.
Until HUD issues revisions to part 983, PHAs may continue to provide
project-based assistance in accordance with the published part 983.
II. Public Forums
In addition to the comments submitted in response to publication of
the interim rule, HUD convened three public forums on the May 14, 1999
interim rule. Section 559 of the 1998 Act requires that before HUD
publishes its final rule on the merger of the Section 8 certificate and
voucher programs, HUD is to seek recommendations from organizations
representing: (1) State or local PHAs; (2) owners and managers of
tenant-based housing assistance under section 8 of the U.S. Housing Act
of 1937; and (3) legal services organizations. Section 559 also
requires HUD to convene not less than two public forums at which the
persons or organizations making recommendations may express their views
concerning the proposed disposition of their recommendations.
The three public forums convened by HUD on this rule were held in
Omaha, Nebraska on May 19, 1999, in Syracuse, New York on June 28,
1999, and in Washington, DC, on July 28, 1999. At each of these forums,
forum participants made helpful recommendations and suggestions,
discussed issues and exchanged ideas on the merger of the section 8
certificate and voucher programs, especially the requirements
established in the May 14, 1999 interim rule. Consistent with the
statutory requirements, HUD advised the forum participants of its
proposed disposition of the participants recommendations when HUD had
formulated a proposed disposition of a specific view or recommendation
offered. For certain issues, HUD was unable to offer the forum
participants a proposed disposition, because the issues required
further deliberation by HUD, but HUD discussed with the participants
the considerations involved in HUD's decisionmaking process.
III. Significant Changes Between the May 14, 1999 Interim Rule and
This Final Rule
This section highlights the significant changes made to the May 14,
1999 interim rule at this final rule stage. This final rule adopts
without change the amendments made to 24 CFR parts 248, 791, and 792 in
the May 14, 1999 interim rule. This rule makes a conforming amendment
to 24 CFR part 888 and also makes further amendments to several
sections of part 982. The major changes made by this final rule to
parts 888 and 982 are summarized below. Other changes are also noted in
the discussion of the public comments.
Amendments to 24 CFR part 888. The final rule amends part
888, which describes the regulations governing fair market rents and
contract annual adjustment factors for the Section 8 housing assistance
payment program. Specifically, the final rule revises the part 888
requirements regarding fair market rents to increase the FMR for a
manufactured home space rental from 30 percent to 40 percent of the FMR
for a two-bedroom unit to reflect the new procedures applicable to
manufactured home space rental under the Section 8 Housing Choice
Voucher program.
Definitions. The final rule revises Sec. 982.4
(Definitions) to provide three new definitions applicable to the
Section 8 Housing Choice Voucher program--``Family rent to owner,''
``Utility reimbursement,'' and ``Welfare-to-work (WTW) families.''
Additionally, the final rule removes the definitions of ``extremely low
income family'' and ``utility reimbursement'' from part 982 and
replaces them with a cross-reference to part 5. The definitions of
these terms are applicable to several HUD programs. Part 5 was
established by HUD to provide the definitions and other program
requirements that are generally applicable to HUD programs.
Accordingly, it is unnecessary to repeat the definitions of these terms
in part 982.
Equal opportunity requirements. The rule revises paragraph
(c) of Sec. 982.53 to provide that the actions to affirmatively further
fair housing must be in accordance with the requirements of the PHA
Plan regulation in 24 CFR 903.7(o).
Administrative plan. The rule revises paragraph (b) of
Sec. 982.54 to specify that the PHA's administrative plan is a
supporting document to the
[[Page 56895]]
PHA plan and must be available for public review.
Income targeting. The final rule amends the income
targeting provisions at Sec. 982.201(b)(2). Specifically, the final
rule establishes the limited circumstances in which a PHA may admit a
percentage of extremely low income families lower than the 75 percent
required under the income targeting provisions of the 1998 Act.
Local admission preferences. The final rule amends
Sec. 982.207 to provide that a PHA must not deny a local preference,
nor otherwise exclude or penalize a family in admission to the
programs, solely because the family resides in public housing. Further,
the final rule clarifies and emphasizes certain requirements for PHA
adoption of residency preferences. For example, the rule specifies that
a PHA may only implement residency preferences in accordance with
applicable non-discrimination and equal opportunity requirements.
The rule provides that a PHA may establish local admission
preferences for: (a) Working families; (b) persons with disabilities;
(c) victims of domestic violence; and (d) single persons who are
elderly, displaced, homeless, or a person with disabilities.
PHA approval of assisted tenancy. The final rule amends
Sec. 982.305(a), which describes the requirements that must be
satisfied before a PHA may approve the assisted tenancy. Specifically,
the final rule provides that at the time a family initially receives
tenant-based assistance for occupancy of a dwelling unit, the PHA must
ensure that the family share may not exceed 40 percent of the family's
monthly adjusted income.
PHA disapproval of owner. This rule adds to
Sec. 982.306(d) a statement that the restriction against a PHA approval
of a unit occupied by a family member only applies at the time a family
initially receives tenant-based assistance for occupancy of a
particular unit, but does not apply to PHA approval of a new tenancy
with continued tenant-based assistance in the same unit.
Lease and tenancy. The final rule makes various revisions
to Sec. 982.308, which sets forth the lease and tenancy requirements
under the Section 8 Housing Choice Voucher program. Among other
changes, the final rule provides that owners may use another form of
lease (such as a PHA model lease) if the owner does not use a standard
lease form for rental to unassisted families. The final rule also
defines what constitutes ``legal capacity'' to enter into a lease.
Further, the rule specifies the minimum information that must be
contained in the lease. The final rule also establishes certain
requirements regarding changes to the lease or rent. For example, the
final rule specifies that all changes to the lease must be in writing.
Additionally, the rule specifies that in certain situations, Section 8
assistance will not be continued unless the PHA has approved a new
tenancy in accordance with program requirements and has executed a new
HAP contract with the owner.
Owner notice of grounds for termination of lease. This
final rule amends Sec. 982.310 (captioned ``Owner termination of
tenancy'') to clarify that the owner must give the tenant a written
notice that specifies the grounds for termination of tenancy during the
term of the lease. The tenancy does not terminate before the owner has
given this notice, and the notice must be given before the commencement
of the eviction action.
Portability. The final rule amends Sec. 982.355, which
establishes the portability procedures governing administration by the
receiving PHA. The final rule provides that when a family has a right
to lease a unit in the receiving PHA jurisdiction, the receiving PHA
must provide assistance for the family. Receiving PHA procedures and
preferences for selection among eligible applicants do not apply, and
the receiving PHA waiting list is not used. However, the receiving PHA
may deny or terminate assistance for family action or inaction in
accordance with Sec. 982.552 (``PHA denial or termination of assistance
for family'') and Sec. 982.553 (``Crime by family members'').
PHA unit inspection. The final rule removes
Sec. 982.405(f) of the interim rule. Paragraph (f) of Sec. 982.405
required that a PHA adopt procedural guidelines and performance
standards for conducting required HQS inspections.
Late payment penalties. The final rule amends the late
payment provisions located in Sec. 982.451(b)(5)(ii). Specifically, the
final rule provides that the HAP contract shall provide for penalties
against the PHA for late housing assistance payments due to the owner
only if all of the following conditions apply: (a) The penalties are in
accordance with generally accepted practices and law in the local
housing market; (b) it is the owner's practice to charge such penalties
for assisted and unassisted tenants; and (c) the owner also charges
such penalties against the tenant for late payment of family rent to
the owner. The interim rule provision regarding late payment penalties
only referenced the first condition identified above (i.e., generally
accepted local practice and law).
Owner breach of contract. The final rule revises
Sec. 982.453 (captioned ``Owner breach of contract''). Specifically,
the final rule expands the list of owner actions considered to be a
breach of the HAP contract to include violent criminal activity.
Payment standard for pre-merger voucher tenancies. The
final rule revises Sec. 982.502, which establishes the requirements
governing conversion to the Section 8 Housing Choice Voucher program.
The interim rule (and this final rule) provide that if the PHA entered
into a HAP contract for a voucher tenancy before the merger date, the
tenancy will continue to be considered and treated as a tenancy under
the voucher program, and will be subject to the voucher program
requirements of part 982. The final rule revises Sec. 982.502 to remove
the provision for a shopping incentive for over-FMR certificate
tenancies before the effective date of the second regular reexamination
of family income and composition on or after the merger date. The
shopping incentive was never applicable to over-FMR certificate
tenancies and will not be triggered by conversion of these families to
the voucher program.
HUD approval of payment standard amount below the basic
range. The final rule amends Sec. 982.503 (captioned ``Voucher tenancy:
Payment standard amount and schedule'') to provide that HUD, in its
sole discretion, may approve a PHA request for approval to establish a
payment standard amount that is lower than the basic range. In
determining whether to approve the PHA request, HUD will consider
appropriate factors, including rent burden of families assisted under
the program. HUD will not approve a lower payment standard if the
family share for more than 40 percent of participants in the PHA's
voucher program exceeds 30 percent of adjusted monthly income.
How to calculate housing assistance payment. The final
rule amends Sec. 982.505 (captioned ``Voucher tenancy: How to calculate
housing assistance payment''). Specifically, the final rule provides
that during the first 24 months of the HAP contract, the payment
standard for a family is the higher of: (a) the initial payment
standard (minus any amount by which the initial rent to owner exceeds
the current rent to owner); or (b) the payment standard, as determined
at the most recent regular reexamination of family income and
composition after the beginning of the HAP contract term. After the
first twenty four months of the HAP contract term, the payment standard
is the
[[Page 56896]]
payment standard as determined at the most recent regular reexamination
of family income and composition after the beginning of the HAP
contract term.
PHA denial or termination of assistance for family. The
final rule revises Sec. 982.552(c)(1)(x) to elaborate on factors that a
PHA may consider in its decision to deny or terminate assistance
because of action or failure to act by members of the family.
FMR for manufactured home space. As explained in more
detail in the comment section of this preamble, the final rule amends
Sec. 982.623 (captioned ``Manufactured home space rental: Housing
assistance payment'') to provide that the FMR for a manufactured home
space is generally 40 percent of the published FMR. Previously, the
FMRs for manufactured home spaces were based on a 30 percent figure.
IV. Discussion of Public Comments.
The public comment period closed on July 13, 1999. During that
period, HUD received written comments from PHAs; regional/State housing
agencies; organizations representing PHAs; organizations representing
women who are victims of domestic violence; legal services
organizations; advocates for persons with disabilities; low income
housing advocates; and various other organizations and individuals. At
the close of the public comment period, HUD had received 97 written
comments. The summary of public comments that follows presents the
major issues, recommendations and questions raised by the public on the
May 14, 1999 interim rule, whether made at the public forums, or
provided as written comments during the 60-day comment period on the
rule.
The summary is organized by regulatory section (e.g.,
Sec. 982.201). The underlined headings that follow each regulatory
section present the issue and are followed by a brief description of
the comment. Comments that are not directed to a specific regulatory
section are described under the heading ``Miscellaneous comments''.
As previously indicated, the interim rule published on May 14, 1999
(as modified by the technical corrections published on September 14,
1999) was effective on October 1, 1999 and PHAs must implement that
rule beginning October 1, 1999. This final rule includes additional
changes to the interim rule, which PHAs must implement beginning on the
effective date of this rule.
Section 982.4 Definitions.
Comment: Definition of PHA. HUD should revise the definition of PHA
to include non-profit disability organizations administering the
Section 8 Mainstream Program for people with disabilities.
HUD response. The rule contains the United States Housing Act of
1937 (42 U.S.C. 1437n(d)) (1937 Act) definition of ``PHA.'' In addition
to the traditional definition of a PHA as a governmental entity or
public body authorized to administer a 1937 Act program, for
administration of the tenant-based program only, the rule includes in
the definition of ``PHA'' additional entities: a consortium of PHAs; a
non-profit entity administering certificates or vouchers under a
contract with HUD or a PHA on October 21, 1998; and for any area
outside the jurisdiction of a PHA with a tenant-based program or where
HUD determines that the PHA is not administering the tenant-based
program effectively, a private non-profit or governmental entity or
public body that would otherwise lack jurisdiction to administer the
program in such area. A minor correction is made to this provision in
this final rule.
Comment: Definition of ``tenant rent''. Tenant rent should be
defined as ``The amount payable by the tenant as rent to the unit
owner. In the certificate program, it is the total tenant payment minus
any utility allowance.''
Rule needs to clarify whether the method of determining total
tenant payment (TTP) in the Admissions and Occupancy proposed rule
(published April 30, 1999) at Sec. 5.613 will apply to the voucher
program. Section 982.505 incorporates the TTP concept, but
Sec. 5.601(a)(2)(ii) of the current rule states that the definitions of
``total rent'' and ``total tenant payment'' do not apply to the voucher
program. Clarification is needed.
HUD response. The definition of TTP in part 5 will apply to the
voucher program resulting from the merger of the certificate and
voucher programs. However, the definitions of tenant rent and utility
reimbursement in part 5 will not apply to the voucher program. Instead,
in this part 982 rule, the term ``family rent to owner'' is used
instead of ``tenant rent.'' Definitions of ``family rent to owner'' and
``utility reimbursement'' for the voucher program were added to
Sec. 982.4. Family rent to owner is the portion of the rent to owner
paid by the family. Family rent to owner is calculated by subtracting
the housing assistance payment to the owner from the rent to owner. A
utility reimbursement in the voucher program is the portion of the
housing assistance payment which exceeds the rent to owner. A utility
reimbursement is only paid when the housing assistance payment exceeds
the rent to owner.
Comment: Merger date of August 12, 1999. PHAs expressed concern
about the merger date of August 12, 1999 because (1) the Admissions and
Occupancy proposed rule, published April 30, 1999 (64 FR 23460),
covered related topics; (2) HUD needs to revise the voucher contracts
and forms; and (3) PHAs need to obtain computer software capable of
implementing the changes required by part 982.
HUD response. In a Federal Register notice of August 11, 1999 (64
FR 43613), HUD extended the merger date defined in Sec. 982.4 of the
interim merger rule to October 1, 1999.
Section 982.53 Equal opportunity requirements.
Comment: State equal opportunity requirements. The language in
Sec. 982.53(d) needs to be expanded to include not only State laws but
also local ordinances. These tools are used increasingly by local
communities to promote fair housing.
HUD response. Section 982.53(d) was revised to change the ``state
law'' references to ``State and local laws''.
Comment: Affirmatively furthering fair housing requirements. The
language of the section is too broad, requiring PHAs to take undefined
actions based on undefined criteria. HUD should require PHAs to
establish mechanisms to respond to complaints of discrimination in the
Section 8 program, including informing voucher holders of their rights
and the remedies available to them. This provision also should require
conformity with any city or county laws that prohibit discrimination.
The final rule should provide that the PHA must refrain from
actions that are discriminatory or segregative, or that perpetuate the
effects of past discrimination or segregation by the PHA; administer
the program to remedy past discrimination and segregation in PHA
programs and local government policies; administer the program to
promote fair housing rights and choice; eliminate impediments to fair
housing choice; and remedy the effects of discrimination and
segregation in the market. HUD needs to clarify what it means by
``impediments to fair housing choice''.
HUD response. Many of the changes sought by the commenters are part
of existing rules. For example, under Sec. 982.301(b), PHAs must
include information about federal, State and local equal opportunity
requirements and housing discrimination complaint forms in the briefing
packet given to
[[Page 56897]]
new families. Section 982.304 specifies that the PHA must give the
family information on how to fill out and file a housing discrimination
complaint if the family claims that illegal discrimination has
prevented the family from finding or leasing a suitable unit. In
addition, Sec. 982.52 specifies that the voucher program requires
compliance with all equal opportunity requirements imposed by contract
or federal law and the PHA must submit a signed certification that it
will administer the program in conformity with civil rights laws.
The PHA obligation to affirmatively further fair housing is
identical to the requirement contained in the PHA plan final rule. It
is important to note that in implementing program changes covered by
the 1998 Act, both HUD and the PHA must ensure compliance with
applicable nondiscrimination requirements and affirmatively further
fair housing. The PHA obligation to affirmatively further fair housing
is specifically required by both the part 982 (the housing choice
voucher program) and part 903 (the PHA plan) rules.
Section 982.54 Administrative plan.
Comment: Section 8 administrative plan. HUD should eliminate a
separate Section 8 administrative plan and incorporate the information
required by this plan in the PHA plan. A separate Section 8
administrative plan should apply only to those PHAs that are not yet
operating under an approved PHA plan.
HUD response. Notice PIH 99-33 (HA) issued on July 30, 1999,
provided further PHA plan instructions, including a mandatory
electronic template for submission of the PHA plan. As stated in the
HUD notice, PHAs will provide statements of policy using short
responses and by checking boxes in the PHA plan template. To ensure
that the public has access to detailed information about all of the
PHA's discretionary policies, the HUD notice calls for the
administrative plan to be a supporting document to the PHA Plan and
available for public review. Therefore, the PHA will not be required to
repeat administrative plan information in the PHA plan.
Section 982.151 Annual Contributions Contract.
Comment: Funding. There should be no reduction in assistance
amounts based upon differences between the Fair Market Rent (FMR) and
payment standards in existing voucher Annual Contribution Contracts
(ACCs) and merged ACCs. All funding must be transferred.
HUD response. Conversion to the merged program will not result in
the loss of PHA funding for the Section 8 program. HUD is publishing a
separate rule on renewal funding for the Section 8 tenant-based
assistance program.
Section 982.152 Administrative fee.
Comment: Administrative fees. The final rule needs more specific
guidance on when to apply for additional administrative funds, because
PHAs may be reluctant to apply for such fees.
HUD response. Guidance concerning PHA administrative fees is
published annually in the Federal Register and in HUD handbooks and
notices.
Comment: Administrative fee bonuses for high performers. This
section should provide for an additional administrative fee as a bonus
or incentive to particularly high-performing PHAs, if HUD chooses to
develop such an incentive.
HUD response. The statute does not permit HUD to provide bonus
administrative fees to high performance PHAs.
Comment: Additional administrative fees for conversion to the
merged program. HUD should provide additional administrative fees to
facilitate conversion, and HUD should convert the certificate program
quickly while ensuring rent neutrality through appropriate voucher
payment standards.
HUD response. There are no funds available for this purpose; the
statute does not permit HUD to provide PHAs with additional
administrative fees to facilitate the merger.
Section 982.154 ACC reserve account.
Comment: ACC reserve account. A change in language (from the word
``establishes'' to ``may'') will open the door to the elimination of
individual PHA reserve accounts. It is both prudent and essential for
the efficient operation of the Section 8 program that PHAs have access
to funds for various unexpected cost increases. HUD should change the
language back to the word ``establishes''.
HUD response. The text of Sec. 982.154(a) was changed in the May
14, 1999 interim rule to more clearly reflect the fact that HUD has
discretion to determine the amount of the ACC reserve account as
provided in the ACC for many years. This change in regulatory text does
not signal a change in HUD authority to determine the amount of the ACC
reserve account. HUD is publishing a separate rule on renewal funding,
which will address the ACC reserve account.
Section 982.162 Use of HUD-required contracts and other forms.
Comment: HUD forms and contracts. HUD needs to revise its required
contracts in a timely manner and have an adequate supply for PHAs.
HUD response. The merged program housing assistance payments (HAP)
contract (form HUD-52641) and tenancy addendum (form HUD-52641-A) are
posted on the HUD web at www.hudclips.org. Until other contracts and
forms are issued, PHAs may continue to use the current voucher program
forms (e.g., rental voucher and HAP contract for leasing manufactured
home spaces).
Section 982.201 Eligibility and targeting.
Comment: Targeting requirements effect on welfare reform and
working poor. Targeting that limits assistance to extremely low income
families is contrary to welfare reform efforts and will deny assistance
to the working poor. Targeting rewards welfare recipients by moving
them up on PHA waiting lists. Conversely, the rule penalizes the
working poor by moving those individuals further down the list.
HUD response. The targeting requirements are statutory, but the
rule permits variations where needed and as authorized by the statute.
Section 16(d) of the 1937 Act provides that at least 75 percent of
annual admissions to the Section 8 tenant-based assistance program must
be families whose incomes do not exceed 30 percent of area median
income. In the final rule, such families are called ``extremely low
income families'', a new term defined at Sec. 5.603 of this title.
The statute permits HUD to exercise some discretion to modify the
impact of the statutory requirement to target 75 percent of a PHA's
tenant-based program admissions to extremely low income families.
Section 16(b)(1) of the 1937 Act permits HUD to establish the extremely
low income limit higher or lower than 30 percent of area median income
where HUD determines a higher or lower limit is necessary because of
unusually high or low incomes.
HUD has determined that one-person households with incomes below
their State Supplemental Security Income (SSI) benefit level are of
unusually low income and that a modification to the income limit for
extremely low income determination standards was needed. HUD issued
Notice PDR 99-04 (on July 21, 1999) to make changes in the Section 8
existing housing extremely low income limit determinations. The
extremely low income limit amounts have been increased wherever
necessary
[[Page 56898]]
so that the one-person 30 percent of median income limit is at least as
high as the State SSI benefit level.
HUD will not make further adjustments to this year's 30 percent of
area median income determination to accommodate minimum wage
households. Such a change would go far beyond other adjustments and
drastically alter the thirty percent standard.
In addition, under the authority of section 16(d) of the 1937 Act,
a provision has been added to the final rule that allows a reduced
targeting percentage for welfare-to-work voucher admissions, only if
and to the extent the PHA has demonstrated that compliance with the
targeting obligations for such welfare-to-work families would interfere
with the objectives of the welfare-to-work voucher program. HUD expects
this authority to be needed only in exceptional circumstances.
Comment: Lower targeting requirements for good cause. The rule must
specify the standard for good cause requests made by PHAs to establish
different targeting requirements, and what documentation the PHAs must
provide to HUD. The rule should provide that a targeting exception will
be granted only in unusual or extraordinary circumstances.
HUD should consider fair housing concerns and the consolidated plan
in approving a different targeting percentage.
HUD response. HUD has authority under section 16(d) of the 1937 Act
to approve for good cause PHA establishment and implementation of
different targeting requirements for the PHA's Section 8 tenant-based
program, in accordance with the PHA plan. HUD will carefully scrutinize
all requests for targeting exceptions and will only approve exceptions
on a case-by-case when fully justified by exceptional circumstances.
The final rule adds provisions that specify two cases when a PHA may
adopt a different targeting standard:
--When HUD has approved a lower targeting requirement for a PHA in
accordance with specific good cause standards specified in the rule,
which are designed to demonstrate that the PHA is not able to find a
sufficient number of extremely low income families to fill available
program openings despite outreach and marketing and that the vouchers
will substantially address worst case housing needs.
--The targeting disregard for families that receive vouchers funded
under the HUD welfare-to-work program (or a renewal of that funding)
explained above.
The following is a more detailed description of the first type of
targeting exception. In both cases, the use of a modified targeting
standard must be consistent with the PHA plan. In addition, any HUD
approval of a targeting exception must be consistent with the PHA
obligation to administer the program in a manner that affirmatively
furthers fair housing.
The rule provides that a PHA may admit less than seventy five
percent of extremely low income families during the PHA fiscal year if
HUD determines there is good cause for, and approves the use of, a
lower targeting standard by the PHA. HUD may approve a lower targeting
requirement if HUD determines that:
(1) The PHA has opened its waiting list for a reasonable time for
admission of extremely low income families residing in the same
metropolitan statistical area (MSA) or nonmetropolitan county, both
within and without the PHA jurisdiction;
(2) The PHA has provided full public notice of such opening to such
families, and has conducted outreach and marketing to reach such
families, including families on waiting lists of other PHAs in the same
MSA or nonmetropolitan county.
(3) Admission of the additional very low income families other than
extremely low income families to the PHA's tenant-based voucher program
will substantially address worst case housing needs as determined by
HUD.
If there are not enough extremely low income families to fill
available program slots during the PHA fiscal year, even though the PHA
has opened the waiting list, given public notice, and conducted
outreach and marketing and the vouchers will address worst case housing
needs, then HUD may approve the PHA's use of a lower targeting
standard.
Comment: Higher targeting goals. The rule should permit PHAs to
meet their targeting obligations by targeting at least 75 percent of
newly available vouchers to households with incomes below 20 or 25
percent of area median income.
HUD response. The statute requires that at least 75 percent of new
admissions be families having incomes up to 30 percent of median. At
its option, a PHA may choose to limit admissions to families with
incomes lower than 30 percent of area median income. The extremely low
income limit is the maximum qualifying income. Any family with an
annual income below the extremely low income limit counts as an
extremely low income family, and the admission of such a family counts
toward satisfaction of the PHA's targeting responsibilities.
Comment: Targeting requirements effect on the Section 8
homeownership program. By giving preference to welfare recipients, the
targeting limits negate the impact of HUD's recently issued Section 8
homeownership proposed rule, published April 30, 1999 (64 FR 23488).
HUD response. HUD anticipates that most participants in the Section
8 homeownership program will be current program participants, not
applicants. Since families continuing to receive assistance under the
1937 Act are not considered as new admissions, their income levels are
not examined for compliance with income targeting requirements.
Therefore, the income targeting requirements may have minimal impact on
the implementation of the Section 8 homeownership program.
Comment: Targeting requirements effect on deconcentration goals and
the number of families assisted. Targeting goals conflict with
deconcentration goals. The targeting policy may add additional cost to
the Section 8 tenant-based program, reducing the number of families
assisted.
HUD response. The statutory and regulatory targeting requirement is
designed to assure that available assistance funds are targeted to the
families that need it most. HUD is making adjustments in the final rule
to assure reasonable use of the program by eligible families by
allowing targeting exceptions in accordance with the law, as described
above. Although assistance is targeted to extremely low income
families, such families have the right to move anywhere in the PHA
jurisdiction and may also receive housing assistance outside the PHA
jurisdiction under portability procedures.
Comment: Income used to determine ``extremely low income''.
Adjusted income should be used to calculate targeting limits. Using
adjusted income in the determination of income targeting requirements
would be more appropriate, since it provides a more realistic picture
of those persons in need of housing assistance.
HUD response. HUD has not made the recommended change. Annual
income, not adjusted income, is compared to the income limits to
determine whether the family is extremely low income. Use of annual
income for this purpose is consistent with both the statute and the
method used to determine whether the family is very low income, low
income, or moderate income.
[[Page 56899]]
Comment: Income targeting implementation. Will PHAs be forced to
skip very low income families on the waiting list to attain the
required percentage of extremely low income families? HUD should
provide directions for waiting list management. Will program slots be
held open until there are enough extremely low income applicants so
that the 75 percent admission requirement is satisfied, or should such
slots be filled by other eligible applicants until there is an
extremely low income applicant?
HUD response. HUD expects to provide further guidance on techniques
for implementation of the income targeting requirements, and other
questions concerning requirements under this rule. Meeting the income
targeting requirements will require skipping higher income families on
the waiting list as necessary to satisfy the PHA's annual targeting
requirement.
Comment: Effect of portability on targeting requirements. If a
family moves under portability, is the admission counted against the
initial PHA or the receiving PHA? If a family exercises its right of
portability, and the recipient PHA decides to absorb the family, does
the admission count toward the recipient PHA's targeting goal, or does
the admission always count toward the initial PHA's targeting goal? If
the receiving PHA bills but does not absorb, is the family classified
as a new admission? May a proposed recipient PHA refuse to accept a
porting family if acceptance will cause the recipient PHA to fall below
its targeting requirement? If a recipient PHA bills the initial PHA for
a participating family and the recipient PHA later decides to absorb
the family, does the absorption count as an admission for the purposes
of income targeting?
HUD response. Admission of an applicant family that moves under
portability procedures is charged against the initial PHA's targeting
obligation--even if the family is initially assisted at the receiving
PHA--if the receiving PHA bills the initial PHA. The admission is
included in the initial PHA base of annual admissions (to which the 75
percent minimum targeting percentage is applied). If a portable family
is an extremely low income family at the time of admission, the
admission also counts toward satisfaction of the initial PHA's minimum
targeting percentage.
As in the past, ``admission'' is the first execution of a HAP
contract by a PHA on behalf of a family. For purposes of targeting, the
initial PHA counts the admission of the portable family as an extremely
low income admission if the family's annual income is at or below 30
percent of median income at the location of the housing where the
family is initially assisted at admission to the program (in the
jurisdiction of the receiving PHA--if the family is initially assisted
(admitted in the receiving PHA jurisdiction).) If a portable family is
not an extremely low income family when admitted to the program (in the
initial PHA or receiving PHA jurisdiction), the admission does not
count towards meeting the initial PHA's income targeting requirements.
However, if the receiving PHA decides to absorb the portable family (at
admission), the receiving PHA counts the family towards the receiving
PHA's targeting requirements.
Comment: Targeting requirements for PHAs with identical
jurisdictions. The rule provides that two or more PHAs with identical
jurisdiction must jointly meet the targeting goals. No PHA should be
responsible for the action of another PHA. This requirement unfairly
penalizes a high-performing PHA that has the identical jurisdiction as
a troubled PHA.
HUD needs to define the meaning of ``identical jurisdiction.'' Does
``overlapping'' mean the same as ``identical''?
HUD response. The final rule has been revised to clarify--in
accordance with the law, and as intended by the interim rule--that the
requirement to jointly meet income targeting requirements only applies
when the geographic jurisdictions of two or more PHAs are
``identical''--not merely overlapping, as is frequently the case for
county, regional and state PHAs. Thus, the obligation for PHAs to
coordinate their income targeting only applies if every part of the
jurisdiction of each PHA is also the jurisdiction of the other PHA.
Section 982.201(b)(2)(v) was also revised in the final rule to require
that coordination of income targeting only applies if the PHAs with
identical jurisdictions agree to being treated as a single jurisdiction
for purposes of income targeting.
Comment: Income limit for issuance of a voucher. The reference to
``family unit size'' in Sec. 982.201(b)(4) of the interim rule should
be just ``family size.''
HUD response. HUD made the recommended change in the technical
corrections to the interim rule that were published in the Federal
Register on September 14, 1999 (64 FR 49656).
Comment: Income limit for admission. Section 982.201(b)(4) of the
interim rule seems to permanently limit the use of a voucher to only
those areas for which the family was eligible for admission. In
reality, once admitted, the family is able to move to any area. The
last sentence of paragraph (b)(4) should be revised to read: ``At
admission, the family may only use the voucher to rent a unit in an
area where the family is income eligible.''
HUD response. HUD has adopted this recommended change.
Section 982.202 How applicants are selected: General requirements.
Comment: Local admission preferences: income skipping. The
prohibition against local preferences for admission of higher income
families over families of lower income (Sec. 982.202(b)(3)(ii)) is not
required by statute and should be deleted. It is inconsistent with the
intent of the targeting requirements of the 1998 Act (section 513).
Unlike the express prohibition on income-skipping in the project-based
component of the Section 8 program, the parallel provision concerning
income targeting in the tenant-based Section 8 program says absolutely
nothing about income-skipping. Silence in the statute should not be
interpreted as a prohibition of income-skipping.
HUD response. HUD has decided to continue this requirement.
Continuation of this requirement will help to ensure that extremely low
income families are admitted to the tenant-based program.
Section 982.207 Waiting list: Local preferences in admission to
program.
Comment: Local admission preferences: victims of domestic violence.
PHAs should consider preferences for individuals who are victims of
domestic violence, as provided in HUD's admission and occupancy
proposed rule (published in the Federal Register on April 30, 1999, 64
FR 23460).
HUD response. The 1998 Act states that it is the ``sense of
Congress'' that each PHA involved in selection of families assisted in
the public housing program, or in the Section 8 tenant-based assistance
program, ``should * * * consider'' preferences for individuals who are
victims of domestic violence (section 514(e) of the 1998 Act). HUD has
amended this rule to provide that the PHA ``should consider'' whether
to adopt a local preference for admission of families that include
victims of domestic violence (Sec. 982.207). After such consideration,
the PHA may or may not choose to adopt such a preference.
Comment: Local admission preferences: preference for elderly,
disabled and displaced over other singles. May a PHA continue to
provide
[[Page 56900]]
an admission preference to elderly, disabled and displaced single
persons over other single persons?
HUD response. Yes. Even though the 1998 Act repealed the
requirement that PHAs must provide an admission preference to single
persons who are elderly, disabled, or displaced persons before other
single persons, the PHA may opt to continue this practice as part of
its local admission preference policies.
Comment: Local admission preferences: equal opportunity
requirements. The final rule should provide that HUD will approve an
admission preference only if it is consistent with civil rights laws
and affirmatively furthers fair housing.
HUD response. By law, the PHA may adopt local preferences in
accordance with local housing needs and priorities as determined by the
PHA. HUD does not approve the PHA's local admission preferences. HUD
only conducts a limited review to determine whether the PHA's selection
procedures ``are consistent with information and data available to
[HUD],'' and ``are not prohibited by or inconsistent with applicable
law'' (section 511 of the 1998 Act, adding section 5A(i)(1) of the 1937
Act).
The PHA's local admission preferences must be consistent with the
PHA plan and the consolidated plans for local governments in the PHA
jurisdiction. Of course, PHAs must administer tenant-based assistance
in conformity with civil rights laws and must affirmatively further
fair housing. Equal opportunity requirements are specified in
Sec. 982.53.
Comment: Local admission preferences: local housing needs. In light
of the demand and need for affordable housing, HUD should require that
all admission preferences used by the PHA should be based on local
housing needs.
HUD response. Sections 982.207(a)(1) and (2) reflect the statutory
requirements for local preferences in the merged program. The
regulations require that the PHA system of local preferences be based
on local housing needs and priorities, as determined by the PHA. The
PHA must use generally accepted data sources in determining local
housing needs and priorities, and must consider public comment on the
PHA plan and the jurisdiction's consolidated plan.
Local admission preferences: waiting list. The rule should
explicitly require PHAs to consider the needs of persons on their
waiting list in determining local preferences.
The rule should provide that the waiting list is a ``generally
accepted data source'' to be used by the PHA in determining housing
needs and priorities.
HUD response. PHA waiting lists may be an excellent source of local
housing needs information in some communities, and an unreliable data
source in other communities. PHA practices in purging or updating their
waiting lists vary widely. Some PHAs periodically close the waiting
list, while other PHAs have never closed the waiting list since the
program began in 1975. For these reasons, HUD is not mandating use of
the waiting list as a basis for local admission preferences.
Comment: Local admission preferences: preference for workers. The
rule currently provides that a PHA which grants an admission preference
to a family who is employed must grant the same preference to people
with disabilities and to the elderly. This requirement should be
included in the final rule.
HUD response. The rule is revised to clarify that the PHA may
establish a preference for admission of working families
(Sec. 982.207(b)). An applicant family must be given the benefit of the
working family preference if the head and spouse, or sole member is
either age 62 or older or a person with disabilities.
Comment: Local admission preferences: public housing tenants. HUD
should retain the prohibition against Section 8 preferences that
discriminate against public housing tenants.
HUD response. The 1998 Act repealed the statutory requirement (the
so called ``Bartlett amendment'') that a PHA must permit public housing
tenants to retain their pre-public housing preference status on the
PHA's Section 8 waiting list. This prior requirement has therefore been
removed from the program rule.
However, the Congress has not repealed section 8(s) of the 1937 Act
(42 U.S.C. 1437f(s)), which provides that a PHA must not deny a local
preference, nor otherwise exclude or penalize a family in admission to
the voucher program, solely because the family resides in a public
housing project. HUD has, therefore, added a new provision that
specifies this continuing statutory requirement (Sec. 982.207(a)(4)).
In addition, the regulation clarifies that a PHA may establish a
preference for public housing residents who are victims of a crime of
violence.
Section 982.303 Term of voucher.
Comment: Voucher term extensions. HUD should grant PHAs discretion
to extend voucher time limits if a discrimination complaint has been
filed with a proper fair housing enforcement agency, in connection with
reasonable accommodation requests, and to increase housing choice
opportunities.
HUD response. The final rule is revised to allow PHA discretion to
extend the cumulative voucher term beyond the prior 120 day limit,
whether for reasonable accommodation or other good cause determined by
the PHA and stated in the administrative plan (Sec. 982.303(b)). This
change will permit additional local administrative flexibility
consistent with the Congressional policy to grant PHAs maximum local
discretion in administration of their programs.
Section 982.305 PHA approval of assisted tenancy.
Comment: 15-day initial inspection requirement for PHAs with 1250
units or less. The 15-day Housing Quality Standards (HQS) inspection
requirement is not reasonable for rural areas, where rental units are
scattered and often located miles away from a PHA office. The final
rule should provide rural PHAs with the same flexibility the interim
rule currently provides large PHAs in complying with the HQS inspection
requirements.
HUD should permit all PHAs (regardless of size) to comply with HQS
inspection requirements within a ``reasonable time''.
All PHAs should be required to comply with the 15-day inspection
requirement. Failure to conduct a timely HQS inspection imposes a
serious hardship on the family because voucher assistance cannot
commence until completion of the inspection. Therefore, a family must
usually pay a market rent for the unit pending completion of the HQS
inspection.
PHAs faced with uncooperative tenants or owners should be exempted
from the 15-day inspection requirement.
HUD response. The 15-day initial HQS inspection standard is
statutory and applies to all PHAs with 1250 or fewer budgeted tenant-
based Section 8 units. The law provides a different standard for PHAs
with more than 1250 budgeted units. HUD does not have discretion to
provide rural (or non-rural) PHAs with relief from the 15-day deadline
unless a PHA has more than 1250 units.
Although HUD cannot exempt PHAs faced with uncooperative owners or
tenants from the initial HQS inspection deadline, the regulation
provides that the 15-day clock begins after both the family and owner
request approval of the tenancy, and the 15-day clock is
[[Page 56901]]
suspended during any time when the unit is not available for
inspection. ``Not available for inspection'' encompasses a multitude of
reasons why the unit is unavailable, including lack of cooperation by
tenants or owners.
HUD expects to enforce the 15-day inspection deadline by including
this element in the PHA's SEMAP rating, after appropriate rulemaking.
Comment: 15-day initial inspection requirement for PHAs with more
than 1250 units. HUD lacks authority to establish a presumptive
standard of 15 days for inspections by large PHAs. The law only
requires a maximum 15-day inspection period for PHAs with 1250 or fewer
assisted units. For PHAs that provide assistance to more than 1250
families, the statute requires that pre-assistance inspections be
conducted ``before the expiration of a reasonable period.'' The interim
rule text requires PHAs with more than 1250 units to conduct the
initial HQS inspection within a reasonable time after the family
submits a request for approval of the tenancy and, to the extent
practicable, within 15 days after the family and the owner submit a
request for approval of the tenancy.
The rule should provide that the period for PHA inspection of the
unit is tolled during any period when the unit is not available for
inspection.
HUD response. The interim rule provides that PHAs with more than
1250 units must conduct the initial HQS inspection within a reasonable
time after the family submits a request for approval of the tenancy. To
the extent practicable, the inspection must be conducted within 15 days
after the family and the owner submit a request for approval of the
tenancy to the PHA. These provisions are an appropriate exercise of
HUD's rulemaking authority in implementing the statutory inspection
requirements for large PHAs. If it is practicable for a PHA to conduct
the inspection within 15 days, then 15 days is a reasonable inspection
deadline, and is consistent with the law.
The interim rule already provides for suspending the clock for all
PHAs when the unit is not available for inspection.
Comment: Applicability of rent burden cap to lease renewals. The
rule should require PHA approval of renewal tenancies. The rule should
also provide that the PHA may not approve a renewal tenancy unless the
family share (rent--including tenant-paid utilities--minus the Section
8 subsidy payment) does not exceed 40 percent of the family's adjusted
income.
HUD response. The 40 percent rent burden threshold does not apply
to lease renewals. The 40 percent rent burden threshold only applies
when a unit is first leased by a family (on or after October 1, 1999--
the effective date of the merger rule) with tenant-based assistance
under the voucher program. Thus the maximum rent burden requirement
applies to: (1) the initial rent for the unit rented with voucher
assistance by a family when admitted to the voucher program on or after
October 1, 1999 (the merger date); and (2) the initial rent for any
unit a participant first rents with voucher assistance on or after
October 1, 1999--i.e., to all moves by program participants on or after
October 1, 1999.
Section 932.306 PHA disapproval of owner.
Comment: Optional PHA disapproval of owners. HUD should provide an
appeals process for owners prohibited from participating in the
program. HUD should act as independent arbitrator between the PHA and
the owner.
There must be clear definitions and processes for implementing this
provision; otherwise, the provision may used to deny Section 8
contracts to owners where local governmental officials or
``influential'' residents simply do not want Section 8 families.
Section 982.306(c)(5) of the interim rule provides that the PHA is
authorized to disapprove an owner if the owner has a history or
practice of ``failing'' to terminate tenancy of the undesirable tenants
described in the statute. The statutory language does not use the term
``fail'' but uses the term ``refuse.'' This minor change from the
statutory language may seem innocuous, but in practice it can be
significant. This section needs to conform to the statutory language.
HUD's HUB offices should consider coordinating information in
multi-State metropolitan areas to minimize chances for ``bad''
landlords to become Section 8 program participants by ``PHA-shopping.''
HUD response. Owners have no statutory or regulatory right to
participate in the housing choice voucher program, and consequently
have no due process right to a hearing on a PHA's decision to
disapprove owner participation. There is no federal mandate for PHAs or
HUD to grant owners a process for appeal of a PHA decision to
disapprove owner participation. The PHA has discretion whether to
provide a local review or appeal process to owners disapproved by the
PHA for the reasons authorized by the regulations, and the nature of
any such process.
HUD has not substantively changed the statutory requirement. HUD
considers the term ``fail'' more appropriate to and consistent with the
statutory requirement, and clarifies that the PHA's authority to
disapprove an owner does not require a specific PHA demand and refusal
of the PHA demand by the owner. This implementation of the law is
within HUD's rulemaking authority.
HUD will explore ways too coordinate this information as suggested
by the commenters. In the meantime, PHAs may wish to establish a
communication process to share information about owners denied
participation in the voucher program.
Section 982.307 Tenant screening.
Comment: Optional PHA screening of applicants: General. HUD should
eliminate the option for PHAs to screen family behavior or suitability
for tenancy. Does the PHA now owe any obligation to the landlord and
can a participant appeal this determination?
The voucher program is based on the private market principle that
prospective private landlords (not PHAs or other third parties) can
best determine a family's suitability for tenancy. The only purpose of
PHA screening should be the provision of supplemental information for
prospective private landlords.
PHAs should be encouraged to share their screening information
regarding family behavior and suitability for tenancy to owners to
assist owners in making the required independent determination of
suitability of potential tenants.
The rule needs to clarify that the final decision on tenant
acceptability rests with the owner. The PHA can choose to collect
screening information and provide it to the private owner, but it is up
to the private owner, based on this information, to make a decision on
acceptability. However, if the final rule authorizes PHA denial of
admission based on screening criteria, the rule must establish clear,
objective and non-discriminatory guidelines on screening criteria.
HUD response. The 1998 Act provides that PHAs ``may elect to screen
applicants for the [housing choice voucher] program in accordance with
such requirements as [HUD] may establish''. This final rule permits PHA
screening of program applicants, and permits the PHA to deny admission
as a result of the screening. In accordance with existing program
requirements, the PHA must give the opportunity for informal review of
the PHA decision to deny program admission as a result of the PHA
screening.
[[Page 56902]]
PHAs may establish local screening criteria. PHAs are encouraged to
share screening information, when practicable. It is important to note,
however, that regardless of whether the PHA opts to screen applicants,
the owner remains responsible for screening and selection of the family
to occupy the owner's unit.
Comment: Optional PHA screening of applicants: equal opportunity
concerns. Screening will disproportionately exclude person with
physical or psychological disabilities. The final rule should require
PHAs to consider measures for reasonable accommodation of disabilities
before making a final decision to reject an applicant.
HUD response. PHAs must administer tenant-based assistance in
conformity with civil rights laws and affirmatively further fair
housing. Equal opportunity requirements are specified in Sec. 982.53.
In addition, PHA denials of admission are subject to the program
requirements concerning informal reviews.
Comment: Optional PHA screening of applicants: PHA plan. A PHA's
screening criteria should be part of the PHA plan, and should be
subject to public and resident scrutiny and comment.
HUD response. Any PHA screening criteria will be included in PHA
administrative plan which is a supporting document to the PHA plan and
available for public review.
Comment: Optional PHA screening of applicants: portability. The
portability provisions must continue to allow the receiving PHA to
screen participants with portable vouchers based on the receiving PHAs
local policies consistent with Sec. 982.307.
HUD response. The receiving PHA may opt to screen the portable
family using the receiving PHA's screening criteria only if the family
is not a current participant in the tenant-based program (i.e., the
family is not receiving housing assistance pursuant to a certificate or
voucher HAP contract).
Section 982.308 Lease and tenancy.
Comment: Tenant's legal capacity. Additional guidance is required
regarding the tenant's legal capacity.
HUD response. The rule is revised to specify that the tenant must
have legal capacity to enter a lease under State and local law, and
that ``legal capacity'' means that the tenant is bound by the terms of
the lease, and may enforce the terms of the lease against the owner
(Sec. 982.308).
Comment: PHA model lease. In several jurisdictions, most landlords
use no written lease at all. In some jurisdictions, some landlords do
not use a written lease. If the lease term is not defined, PHAs will
not be able to plan reinspections and lease renewals in advance. Many
landlords rely on a PHA to provide the written lease. Further, the
landlords' standard leases might contain clauses that are contradictory
to Section 8 voucher program requirements.
HUD response. Section 982.308(b)(2) was revised to specify that if
the owner does not use a standard lease form for rental to unassisted
tenants, the owner may use another form of lease, such as a PHA model
lease (including the HUD-prescribed tenancy addendum). The HAP contract
prescribed by HUD will contain the owner's certification that if the
owner uses a standard lease form for rental to unassisted tenants, the
lease is in such standard form. The regulations provide that a
participating owner must certify that the terms and conditions of the
lease are consistent with State and local law. It will be a violation
of the HAP contract if the owner certification of lease consistency
with State and local law is deficient.
Comment: Prohibited lease provisions. A list of prohibited lease
provisions should be required by the final rule. The ``tenancy
addendum'' is a HUD form that is not subject to rulemaking procedures,
and the courts may not have access to the addendum or know what weight
to give the addendum.
HUD response. The recommendation is inconsistent with the statutory
provision, which requires use of the lease that the owner uses in the
locality. Congress revised the lease provisions to minimize differences
between voucher tenancies and unassisted tenancies to facilitate
expanded owner participation in the Section 8 voucher program.
Comment: Lease and Tenancy Addendum. Many property owners may
refuse to sign a written lease, but they will sign the HUD lease
addendum. To ensure a broad range of housing choice, the only required
rental agreement should be the HUD lease addendum. The voucher
recipient should be allowed the choice of a verbal agreement or any
type of written rental agreement or lease sufficient for execution of a
HAP contract.
The tenancy addendum should not be part of the HAP contract. There
is an inherent conflict between including a legal document to be signed
by the owner and tenant, as an attachment to or part of a lease, in a
document (the HAP contract) to be signed by the owner and the PHA, and
barring the tenant from using any legal process to involve the PHA in
its enforcement.
The regulations do not provide the tenant with all enforcement
tools that it may need to protect itself from a bad landlord.
HUD response. The statute now requires use in the voucher program
of the lease the owner uses in the locality. The HUD-prescribed tenancy
addendum states the special requirements of a voucher tenancy in
accordance with federal law, but is not intended to be a substitute for
a complete lease. The lease is composed of two parts: The owner's
standard form lease, plus the federal tenancy addendum.
Section 982.456 clarifies that the tenant is authorized to enforce
rights under the tenancy addendum, but does not have the right to
enforce other provisions of the HAP contract. The statute (section
8(o)(7)) specifically authorizes HUD to specify an addendum to the HAP
contract concerning the lease and the assisted tenancy. Accordingly,
the tenancy addendum, dealing with requirements of tenancy, is included
in the HAP contract executed between the PHA and owner. However, since
the tenancy addendum also sets forth owner lease obligations, HUD has
required that the tenancy addendum also be part of the lease executed
by the tenant and the owner, directly enforceable by the tenant against
the owner. The requirement that the tenancy addendum be part of the
lease assures tenant access to a legal process to enforce the rights
contained in the tenancy addendum.
HUD has reexamined its position concerning whether a minimal amount
of leasing information is needed since leases vary widely, and some
owners do not typically provide a written lease. Accordingly,
Sec. 982.308(d) of the final rule provides that the lease must include,
in addition to the utilities and appliances to be furnished by the
owner, the names of the owner and tenant, the address of the unit
rented, the term of the lease, and the amount of monthly rent to owner.
Comment: PHA approval of the lease. Final rule should require that
the lease be approvable by the PHA. The only practical way to make sure
that an owner's lease complies with State and local law is for the PHA
to review and approve the lease.
Both the tenant and PHA should have 60 days advance notice of any
proposed changes to the lease so the PHA may screen leases and approve
the tenancy. This is especially important for any new changes in
security deposits, responsibility for utilities, and proposed rent
changes that may be affected by the new lease.
If HUD no longer will require a new HAP contract for a revised
lease, which in itself is a welcome reduction in work,
[[Page 56903]]
it should retain the PHA's authority to disapprove the continued
tenancy if the revised lease violates any program requirements or State
and local law. The PHA should review the terms of the new tenancy,
determine whether a HAP contract should be executed for this tenancy,
and review the terms and conditions of the lease.
HUD response. HUD has not revised the interim rule to require PHA
approval of leases. Instead, the housing choice voucher program
regulations provide that a participating owner must certify that the
terms and conditions of the lease are consistent with State and local
law. It will be a violation of the HAP contract if the owner
certification of lease consistency with State and local law is
deficient. PHAs are not required to review the lease to assure such
consistency, although the rule provides in Sec. 982.308(c) that the PHA
may opt to review leases for State and local law compliance.
The PHA will only provide housing assistance for a tenancy approved
by the PHA. If both parties agree to terminate the lease, the family is
not considered to be moving in violation of the lease.
The final rule is revised (Sec. 982.308(g)) to specify that PHA
approval of the tenancy, and execution of a new HAP contract, are
required for the following changes in the lease: (1) Changes in tenant
or owner responsibilities for utilities or appliances; (2) changes in
the lease term; and (3) if the family moves to a new unit, even if the
unit is in the same building or complex. PHA approval of the tenancy,
and execution of a new HAP contract, are not required for other changes
in the lease such as a change in family composition or a change in the
amount of rent to owner.
Of course, lease changes are subject to the essential program
requirements, as stated in the tenancy addendum. In addition,
Sec. 982.308(g) of the final rule specifies that the owner must notify
the PHA of any changes in the amount of the rent to owner at least
sixty days before any such changes go into effect. Any such changes are
subject to rent reasonableness requirements that bar owner from
charging more than the market rent for comparable unassisted units.
Section 982.309 Term of assisted tenancy
Comment: Lease term of less than one year. HUD appropriately allows
PHAs ability to approve leases with initial terms of less than one
year.
PHAs should have greater flexibility to approve lease term of less
than one year.
Section 982.309(a) of the interim rule provides that a PHA may
approve a lease term of less than one year if such a lease term is the
prevailing local practice and the PHA determines that the shorter term
will improve housing opportunities for the family. Some PHAs serve a
number of communities, each with a prevailing local practice, thus
making it difficult for the PHA to develop a consistent lease term
policy. The final rule should provide PHAs with the latitude to allow a
lease term of less than one year (whether or not it is the prevailing
local practice in a particular community), as long as it appears to be
the prevailing practice in the State.
Clients who reside in college communities have difficulty finding
owners who are willing to sign a one-year lease. Provision for leases
of less than one year will expand housing choice for these clients.
The final rule should provide that under no circumstances may a PHA
allow for a lease term of less than 6 months; otherwise some PHAs may
use month-to-month leases, which do not adequately protect tenants from
arbitrary eviction.
A lease term of less than one year should only be granted if the
landlord would reject the lease because of the one-year lease term.
Initial lease terms of less than one year seem inconsistent with
the goal of family stabilization and allow a loophole for future rent
increases. The term ``prevailing local market practice'' should be
clarified.
Rule should make clear that approval of lease terms of less than
one year must meet two tests: (1) The PHA determines that such shorter
term would improve housing opportunities for the tenant; and (2) such
shorter term is considered to be a prevailing local market practice.
This should be a case-by-case determination.
HUD response. The statute authorizes PHA approval of initial lease
terms of less than one year under certain circumstances. The conditions
for approval of an initial lease term of less than one (1) year are
statutory. HUD intends to permit PHAs to use local judgment to
determine prevailing local practice with respect to lease terms.
The regulatory text in the interim rule (and carried forward to the
final rule) is clear that approval of initial lease terms of less than
one year must meet both statutory tests. PHAs may opt to determine
case-by-case whether approval will improve an individual family's
housing opportunities, or the PHA may make a determination based on its
overall (not case-by-case) judgment of market opportunities. PHAs will
determine what is prevailing local practice with respect to lease
terms.
Comment: Automatic lease renewals. The final rule needs to include
automatic renewal in the absence of the landlord or tenant
affirmatively terminating the tenancy. The automatic renewal will
protect a tenant from a landlord who decides at the last moment not to
renew.
HUD response. The recommendation is inconsistent with the statutory
provision, which requires use of the lease that the owner uses in the
locality. Congress revised the lease provisions to minimize differences
between voucher tenancies and unassisted tenancies to facilitate
expanded owner participation in the Section 8 voucher program.
Comment: Mutual termination of the lease by the owner and tenant;
termination of the lease by the tenant after notice. The mutual
termination provision in former Sec. 982.309(b)(3) should be retained
to clarify, at a minimum, that owners and tenants are free to negotiate
a mutual termination during the lease term.
Lease termination provisions should remain as in former
Sec. 982.309(d) which provided that, after the initial term of the
lease, the family may terminate the lease at any time, and that the
lease may not require the family to give more than 60 calendar days
notice of such termination to the owner. It is desirable to not allow
the family's right to terminate the lease, after the initial term, to
be dependent upon the terms of the particular lease used. Families may
be locked into long periods, which will restrict their mobility.
HUD response. The recommendations are inconsistent with the new
statutory requirement to use the standard lease form that an owner uses
for other tenancies in the locality. Congress revised the lease
provisions to minimize differences between voucher tenancies and
unassisted tenancies to facilitate expanded owner participation in the
Section 8 voucher program.
Section 982.310 Owner termination of tenancy.
Comment: Owner lease termination notice. The law provides that any
termination of a voucher tenancy by the owner ``shall be preceded by
the provision of written notice by the owner to the tenant specifying
the grounds for that action.'' Section 982.310(e)(1) contradicts this
statutory requirement because it permits an owner to combine the notice
of grounds with an initial pleading used to begin an eviction action.
[[Page 56904]]
The rule should specify how much notice the owner must give to end
the lease without cause at the end of a lease term.
HUD response. Section 982.310(e) has been revised to specify that
the tenancy does not terminate during the term of the lease before the
owner has given notice to the tenant that specifies the grounds for
termination. The regulations continue to require that the notice must
be given at or before the beginning of any eviction action.
The termination notice must be in accordance with the lease and
State and local law. HUD does not specify the length of notice periods
required for eviction of the tenant.
Comment: Applicability of Part 247 to lease terminations. Paragraph
(g) of this section needs to be removed. It was originally included to
minimize the landlord's burden when Section 8 requirements and Part 247
requirements were roughly equivalent. Now the landlord is allowed to
terminate the lease without good cause. Leaving this paragraph in the
final rule would mean that Section 8 tenants in federally subsidized
projects under part 247 would not be entitled to the same protections
as other residents of the project.
HUD response. HUD disagrees with the commenter. The same tenancy
requirements should apply to all voucher tenancies.
Comment: Lease termination for a lease with an initial term
exceeding one year. Section 982.310(d)(2) needs to be revised because
it requires, in the case of a lease with an initial term of two years,
that the landlord cannot terminate the tenancy, except for tenant
misfeasance or nonfeasance for a full two years. The opening clause for
paragraph (d)(2) should read: ``During the shorter of the first year of
the lease term or the initial lease term, the owner may not terminate
the tenancy for `other good cause' unless. * * *''
HUD response. The interim rule provision is not in error. The final
rule continues to provide that an owner may opt to offer an initial
lease term longer than one year. During the initial lease term, the
owner can only terminate tenancy for cause. This is not a new
requirement. Of course, the initial HAP contract term may not extend
beyond the ACC expiration date for the funding source from which the
HAP contact is to be funded.
Definition of ``serious lease violation''. HUD should define what
constitutes a ``serious lease violation.'' This should be changed to
serious or repeated violation, the standard required for evictions in
the Section 8 programs.
Serious lease violations should not include late payments or
``minor violations''. The definition of ``serious lease violation''
should not include ``other amounts due under lease.'' Tenants should
not be subject to eviction for failure to pay late charges or disputed
damage charges when a good faith dispute exists over liability for
charges.
The definition of serious lease violation should not include minor
violations or repeated minor violations of the lease.
HUD response. The regulation is clear that a ``minor'' lease
violation is not a ``serious'' lease violation. HUD has determined that
it would be impossible to provide an exhaustive list of actions or
inactions that are considered serious lease violations. The eviction
determination is ultimately made on a case-by-case basis by judges in
State or local landlord/tenant courts. The courts determine whether a
lease violation has occurred, and whether the violation is sufficiently
``serious'' to justify eviction from the assisted unit.
Section 982.314 Move with continued tenant-based assistance.
Comment: Prohibition on family moves. Permitting a PHA to prohibit
a family from moving during the first year of the assisted tenancy may
result in the termination of a family's assistance without good cause.
This may occur when the initial lease term is less than one year and
the landlord refuses to renew the lease without good cause. The family
would be prohibited from moving and, therefore, lose its assistance.
HUD should revise Sec. 982.314(c)(2) to authorize PHAs to prohibit any
moves by a family during its initial lease term (instead of during its
initial year of assisted occupancy); and to permit a family to move
whenever the landlord refuses to renew the family's tenancy without
good cause.
HUD response. Consistent with the commenter's recommendation,
Sec. 982.314(c)(2)(i) is revised to change the time frame from ``first
year'' to ``initial lease term.''
Section 982.352 Eligible housing.
Comment: PHA-owned units. The rule should not require a PHA to
obtain the services of an independent agency to determine rent
reasonableness and conduct HQS inspections. PHAs should be trusted to
offer a decent unit and reasonable rent to an otherwise eligible
family. Generally accepted accounting practices permit a separation of
duties and control within the same organization. The independent
auditor should be required to conduct a random sampling of Section 8
files where the PHA is the owner. PHA rent reasonableness data and
other periodic checks on leased units provide adequate protection for
the government and the taxpayer.
HUD should permit high-performing PHAs to conduct their own
inspections of PHA-owned units.
The final rule should clarify how HUD will approve an independent
agency. Is it HUD's intention to permit a neighboring PHA to perform
such services?
HUD response. The special requirements for independent inspections
and contract rent negotiations and reviews for PHA-owned housing are
statutory. These requirements reflect legitimate and substantial
concern with the inherent conflict of interest when the PHA contract
administrator--responsible for oversight of the Section 8 owner--is
itself the Section 8 owner, or substantially controls the nominal
ownership entity.
The HUD field office will review any independent agency arrangement
to ensure that the independent agency has an arms-length relationship
with the PHA. A neighboring PHA may act as an acceptable independent
agency--so long as the neighboring PHA is authentically independent of
the PHA unit owner. A unit of general local government such as the
Community Development Agency may also be an acceptable independent
agency, unless the PHA is itself part of the same unit of general local
government or an agency of such government.
Comment: Administrative fees for PHA-owned units. The reasoning
behind requiring PHAs to obtain the services of independent entity is
sound, but PHAs should earn the full administrative fee for the unit.
HUD response. The statute provides for a lower administrative fee
for PHA-owned units.
Section 982.353 Where family can lease a unit with tenant-based
assistance.
Comment: Portable moves during first 12 months. The rule should
provide that the PHA's discretion regarding whether to allow
portability in the first 12 month period from a non-resident family's
admission to the program must be exercised program-wide, not family-by-
family.
Rule should clarify that the PHA will provide reasonable
accommodation to families during the 12-month initial period that might
include waiver of its policy under Sec. 982.353(c).
[[Page 56905]]
HUD response. The statute permits PHAs to prohibit portability
during the first 12 months from admission for families who did not live
in the PHA jurisdiction when they applied for assistance. This
provision maintains the local character of a PHA's voucher program, and
prevents families from shopping for assistance from different PHAs,
regardless of where the family intends to live with assistance under
the program. The decision to allow or deny portability during the first
12 months after family admission is appropriately left to PHA
discretion--to exercise on a program-wide or case-by-case basis.
Although HUD has not made the recommended change concerning
reasonable accommodation, PHAs must consider reasonable accommodation
in the context of all program requirements and functions in accordance
with the statute and HUD equal opportunity requirements. Equal
opportunity requirements are specified in Sec. 982.53.
Comment: Income eligibility of portable family. HUD should
eliminate the requirement to determine income-eligibility of a porting
family admitted (initially assisted) in the jurisdiction of a receiving
PHA (Sec. 982.353(d)(3)). If the family is found eligible by the
initial PHA, there is no reason to impose the burden of a second
income-eligibility determination by the receiving PHA.
HUD response. The statute requires that an applicant be income
eligible before initially receiving housing assistance. If the family
will first receive assistance in the receiving PHA's jurisdiction, then
the family must be income eligible in the receiving PHA's jurisdiction.
Section 982.355 Portability: Administration by receiving PHA.
Comment: Effect of preferences on portability. The final rule
should explicitly provide that a receiving PHA may not use a local
residency preference to deny portability.
HUD response. The rule is revised to clarify that when the family
has a right to lease a unit in the receiving PHA jurisdiction under
portability procedures, the receiving PHA must provide assistance for
the family (Sec. 982.355(c)(10)). Receiving PHA selection preferences
(including any residency preferences) do not apply, and the receiving
PHA waiting list is not used. However, the receiving PHA may deny or
terminate assistance for family action or inaction in accordance with
Secs. 982.552 and 982.553.
Comment: Portability to areas serviced by other PHAs. Section
982.353(b) imposes restrictions on portability by requiring that the
area to which the family wants to move must have a PHA administering a
Section 8 Housing Choice Voucher Program. In many instances this will
not allow families to leave urban areas for suburban areas or rural
areas.
HUD response. The statute provides for portability to any area in
the United States that is in the jurisdiction of a PHA administering a
tenant-based Section 8 program. In practice, in most communities there
is a PHA that operates a Section 8 program. Often, multi-jurisdictional
PHAs (such as state agencies) administer the certificate and voucher
programs in areas where there are no local PHAs.
Section 982.405 PHA initial and periodic unit inspection.
Comment: HQS procedural guidelines and performance standards. HUD
needs to provide additional guidance regarding the procedural
guidelines and performance standards that must conform to practice
utilized in the private housing market.
If the Secretary exercises discretion to issue procedural
guidelines and performance standards, they must be published for notice
and comment.
The rule cannot directly delegate a secretarial duty to a PHA, and
HUD guidelines and standards need to be published in an accessible
format with no hidden criteria.
HUD response. Section 982.405(f) of the interim rule which required
the PHA to adopt procedural guidelines and performance standards for
conducting required HQS inspections has been deleted. HUD has
determined that the pre-merger HQS inspection requirements and the
SEMAP HQS-related performance standards meet the section 8(o)(8)(E)
statutory requirement for the Secretary to establish inspection
guidelines and performance standards.
Section 982.451 Housing assistance payments contract.
Comment: PHA penalties for late housing assistance payments to
owners. The rule should exempt new or revised HAP contracts from
penalties for late payment of housing assistance to owners. The
paperwork and other administrative work involved in preparing a new or
revised HAP contract may make it difficult for a PHA (and in particular
a large PHA) to avoid a late payment. Recurring late payments should be
penalized.
The rule should clarify whether a owner that normally does not
charge a late fee to tenants can still charge a late fee to the PHA. If
the owner can charge late fees to the PHA, does the PHA have the right
to determine the maximum amount of liability it will assume? Further
clarification is needed on whether late fees will be determined based
on date the payment is mailed.
HUD response. The interim rule provided that the PHA may be
assessed a late rental payment penalty only if it is in accordance with
generally accepted practices and law in the local housing market. The
interim rule also stated that a PHA is not obligated to pay any late
payment penalty if HUD determines that the late payment is attributable
to factors beyond the PHA's control. Section 982.451 of the final rule
has been revised to add two more conditions for owner assessment of a
late fee to the PHA: it must be the owner's practice to charge such
penalties for assisted and unassisted tenants, and the owner must
charge such penalties against the tenant for late payment of family
rent to owner.
The interim rule specified that the PHA may add to the HAP contract
a provision which defines when the housing assistance payment by the
PHA is deemed received by the owner. There is nothing that would
prohibit a PHA from defining ``receipt of the housing assistance
payment by the owner'' as the date the PHA mailed the funds to the
owner or the date of actual receipt by the owner.
Comment: Funding for PHA penalties for late housing assistance
payments to owners. It is unfair to penalize PHAs for late payments
unless HUD headquarters is willing to pay for the late payments.
HUD response. The statute provides for payment of penalties for
late payments of housing assistance under certain circumstances. The
statute further provides that a late payment fee may only be paid from
the PHA's administrative fee income, including any amounts in the PHA
administrative fee reserve. The PHA is not obligated to pay any late
fee if HUD determines that the late payment is due to factors beyond
the control of the PHA.
Section 982.453 Owner breach of contract.
Comment: Owner breach of HAP contract for ``drug-related criminal
activity''. The change to Sec. 982.453(a)(5) to make ``drug-related
criminal activity'' (instead of only ``drug trafficking'') an owner
breach of contract was a good one. Why did the change not also include
violent criminal activity as a contract breach?
HUD response. Section 982.453(a) was revised to add commission of
any violent criminal activity by the owner as a breach of the HAP
contract.
[[Page 56906]]
Section 982.502 Conversion to voucher program.
Comment: Deadline for conversion to the merged program after the
merger date. Conversion from pre-merger assistance should be expedited.
Conversion should be effective upon the next regular reexamination on
or after the merger date. The final rule should provide that a landlord
and tenant may jointly (not individually) convert their regular
certificate tenancy to a voucher tenancy at any time after the merger
date. Reducing the number of certificate conversions during the second
year after the merger date will reduce PHA administrative burdens that
may delay one or more assistance payments to a family.
Conversion from pre-merger assistance should be delayed. Requiring
that conversion take place at the second regular reexamination is too
restrictive. HUD should permit an extension in situations where the
tenant and owner cannot agree to convert.
PHAs should be permitted to delay the transition of certificate
families leased units with exception rents as a reasonable
accommodation until the family leaves the Section 8 program or moves to
another unit.
HUD response. The interim rule provided for the complete conversion
of all pre-merger tenant-based assistance to the merged program no
later than the effective date of the second regular reexamination on or
after the merger date (October 1, 1999). HUD considers this time frame
reasonable and has not adopted the recommendations to shorten or
lengthen the time. It is noted, however, if both a participant and the
owner want to convert to the merged program sooner than required, they
may do so by executing a new lease and HAP contract. In addition, the
technical correction to the interim rule published on September 14,
1999, addresses approval of higher payment standards and approval of
exception payment standards as a reasonable accommodation for a tenant
with disabilities.
Comment: Continuing current benefits after conversion. HUD should
not terminate program assistance upon conversion. HUD should allow
``grandfathering'' of pre-existing benefits. Terminating program
assistance will create undue hardship on the family and create an
impact on PHA staff.
HUD response. The conversion time frame is reasonable and the rule
provides for a uniform delay in increases in the family share of rent
that may result from implementation of the housing choice voucher
program.
Comment: Delayed reductions in subsidy for over-FMR tenancies based
on payment standard revisions. To protect families with over-FMR
tenancies, the final rule could simply require that over-FMR tenancies
be treated no differently than other certificate tenancies. Alternately
the final rule could require that the subsidy for over-FMR tenancies be
calculated based on the higher of the FMR or payment standard for the
transition period before the second annual reexamination after October
1, 1999.
HUD response. The regulation has been revised to require that any
reduction in subsidy attributable to the decrease in the payment
standard will be delayed until the effective date of the family's
second regular reexamination on or after the payment standard decrease.
This is a change in practice for the voucher program. Before this final
rule, a voucher participant's subsidy was based on the higher of the
current payment standard or the payment standard in effect when the
participant initially leased a specific unit under the voucher program.
Comment: New certificate HAP contracts after the merger date. The
final rule should permit execution of a new certificate HAP contract
until the family's second annual reexamination after August 12, 1999
under certain circumstances.
HUD response. HUD has not made the recommended change to permit
execution of new certificate program HAP contracts after the October 1,
1999 merger date. The requirement that only voucher HAP contracts may
be executed on or after October 1, 1999, will facilitate conversion to
the housing choice voucher program.
Comment: Timing of HQS inspections and income reexaminations during
conversion period. HUD should clarify whether the regularly scheduled
annual HQS inspection and the family income determination for a
continually assisted tenant will suffice for the purpose of the
conversion. Unless the property is due for an annual HQS inspection,
the PHA should not be required to conduct an HQS inspection upon
conversion.
HUD response. The regularly scheduled annual HQS inspection and
family income reexamination will suffice for purposes of the conversion
to the merged program. A new HQS inspection or income reexamination is
not automatically triggered because a certificate program unit is being
converted to the merged program and a voucher HAP contract will be
executed. A new HQS inspection and a new income reexamination for the
family is not required until 12 months lapse from the date of the last
HQS inspection and income reexamination under the certificate program.
Comment: Currency of income verifications during conversion period.
HUD should clarify whether the period of time for which verifications
are valid may be extended for more than 120 days to allow the PHA to
determine income and the family share well in advance (more than 120
days) of the conversion date. At the mandatory 120 day notification
period, the PHA will not have income verifications for the current
year, and the PHA should probably be collecting such information with
the 120 day notice.
HUD response. HUD recognizes that the PHA may not be able to meet
the normal time frames for the currency of the family's income
verification data during the transition period to the housing choice
voucher program. Chapter 10 of Handbook 7420.7, PHA Administrative
Practices Handbook, provides guidance (not requirements) with respect
to income reexaminations. That handbook states that income verification
data should not be older than 120 days. It is acceptable to HUD if the
income verification data is older than the 120 day norm in order to
facilitate the conversion to the housing choice voucher program and to
provide needed information to participant families.
Comment: Reporting of conversions on Form HUD-50058. HUD should
confirm that the correct update type to be used is ``reexamination''
for all Form HUD-50058 reporting of conversions of certificate to
voucher tenancies.
HUD response. Termination of the certificate HAP contract and
execution of a voucher HAP contract does not constitute an admission.
The family is a current participant in the tenant-based Section 8
program and, therefore, ``reexamination'' is the correct term to
describe the process of updating the information concerning the
family's income and composition.
Comment: Grandfathering of pre-merger units rented from relatives.
The final rule should clarify how current tenancies involving a
landlord who is leasing to a relative are to be treated when the
current certificate assistance is converted to a voucher HAP contract.
HUD response. Section 982.306(d) was revised to clarify that the
prohibition on renting a unit from a relative does not apply for
continued assistance in the same unit. Therefore, the prohibition on
renting a unit from a relative is not triggered by the conversion to
the housing choice
[[Page 56907]]
voucher program if the Section 8 participant does not move from the
unit assisted under the certificate program.
Comment: Owner damage claims during the conversion period. HUD
should clarify that all legitimate damage claims can be processed for
payment at the conversion of the family's assistance regardless of
whether the family moves or remains in place.
HUD response. PHA reimbursement for damage claims was eliminated
beginning on October 2, 1995. However, HAP contracts executed before
that date permit owners to submit a damage claim to the PHA if the
family moves in violation of the lease. If a participant remains in the
same unit after conversion to the housing choice voucher program, there
is no ``move in violation of the lease'' to trigger eligibility for a
damage claim (for a unit under a HAP contract executed before October
2, 1995). If a certificate participant moves to another unit as a
result of the conversion to the voucher program (e.g., the owner does
not wish to participate in the voucher program), the PHA may process
any damage claim.
Comment: Renewal of certificate tenancies during the conversion
period. Section 982.502(d) should emphasize conversion of certificate
assistance, not termination of assistance. The regulation should refer
to the renewal of the certificate tenancies under the voucher program.
HUD response. HUD has not made the recommended change to
Sec. 982.502(d).
The conversion process from the certificate program to the voucher
program cannot be characterized as a ``renewal.'' Any remaining
certificate HAP contracts must be terminated on the effective date of
the family's second regular reexamination after the October 1, 1999
merger date. Termination of the certificate HAP contract and the
certificate program tenancy and lease permits the PHA to execute a new
HAP contract under the housing choice voucher program on behalf of the
family.
Comment: Unit rent increases after conversion. Clarification is
requested regarding whether owners will be able to raise rents they
were receiving under the regular certificate program to market level
(reasonable rent) at the time of conversion to a voucher tenancy. The
result may be in excess of the voucher payment standard and require
tenants to move.
HUD response. Yes, if an owner were charging an artificially low
rent under the certificate program, it is possible that the owner would
be able to raise the rent after the certificate program HAP contract is
canceled. The PHA must ensure that any increases in the rent to owner
meet the program's rent reasonableness requirements.
Comment: Rent burden caps during the conversion period.
Clarification is requested concerning whether there are any
restrictions on how great the family share can be if the family remains
in the same unit. Many families will prefer to remain in place even
though their family share will increase.
HUD response. The initial rent burden cap does not apply to
participants who remain in the same unit.
Section 982.503 Voucher tenancy: payment standard amount and schedule.
Comment: Payment standards. The final rule should include guidance
on the legal standards applicable to PHA determination of the payment
standard schedule. Further, HUD should clarify a PHA's discretion to
vary the payment standard by unit size within designated parts of an
FMR area, and the final rule should specify requirements for HUD
approval of a payment standard below 90 percent of FMR. If justified by
rent burden and other data, HUD should be able to require a PHA to use
a payment standard above 110 percent of FMR.
PHAs should not be permitted to lower payment standards for
existing certificate holders who will be converted, nor for current
voucher holders, without prior HUD approval.
HUD response. HUD will provide further guidance on implementation
of the Housing Choice Voucher Program, including PHA establishment of
the payment standard. The statute provides that PHAs may set the
payment standard anywhere between 90 and 110 percent of the FMR. The
statute does not authorize HUD to require a PHA to use a payment
standard above 110 percent of FMR. The PHA may not set a lower standard
applicable only to prior certificate program participants. One payment
standard schedule will apply to participants in the pre-merger
certificate and voucher programs.
PHAs may opt to set different payment standards by unit size within
the 90 to 110 percent FMR range. PHAs may opt to set different payment
standards within the 90 to 110 percent of FMR range for different
market areas of the PHA jurisdiction (e.g., a low poverty
neighborhood). If more than one PHA operates in a jurisdiction, each
PHA has discretion in deciding whether the PHA will use a uniform (or a
different) payment standard within the 90 to 110 percent of FMR range
for each unit size and geographic area.
A new paragraph (d) was added to Sec. 982.503 to specify that HUD
will not approve a payment standard below 90 percent of FMR if the
family share for more than 40% of the current participants for the
applicable unit sizes exceeds TTP. Such funding may be based on the
most recent income examinations.
Comment: Exception payment standards: HUD approval requirements.
The final rule should not limit the total population of an exception
area (i.e., an area where HUD has approved a payment standard higher
than the applicable FMR) to 50% of the population of the FMR area. In
FMR areas containing a large city, the granting of an exception rent
for the city may preclude other portions of the FMR area from obtaining
an exception rent. HUD should provide all PHAs with equal opportunity
to represent their case for an exception rent.
HUD should make clear that every PHA that administers a voucher
program within an area for which HUD has approved an exception payment
standard must use the approved exception standard.
HUD should (1) permit PHAs seeking an exception payment standard
above 120 percent of FMR to use the ``median rent method''
justification, (2) permit PHAs to use a recent HUD/RDD survey to
justify an exception payment standard, and (3) in particularly tight
markets, permit PHAs to justify a payment standard exception by a
method that is not based on rent data.
The rent for most decent, safe, and sanitary units in certain areas
is often greater than 10 percent more than the FMR. This may result in
tenants with more expensive special housing needs (such as persons with
disabilities) paying greater than 40 percent of their incomes in rent.
PHAs need increased flexibility in establishing exception rents
based on local housing needs and demands.
HUD response. The FMRs are housing market-wide estimates of rents
that provide opportunities to rent standard quality housing of a modest
nature. FMRs are set at the 40th percentile rent--the dollar amount
below which 40 percent of standard quality rental housing units rent in
the FMR geographic area. Consistent with the statute, the regulation
provides for HUD approval of PHA requests for payment standards higher
than 110 percent of the FMR.
The rationale for limiting exception payment standards to 50
percent of the population in the FMR area is that to do otherwise would
result in approvals of exceptions being the norm, not an exception. If
an exception payment standard is necessary for more than 50
[[Page 56908]]
percent of the population in an FMR area, then the FMR is inappropriate
and should be revised. It is noted that the merger regulation permits
additional flexibility in this area than did the previous regulations
for the certificate and voucher program. The previous regulations for
the certificate and voucher program restricted the number of exceptions
over 100 percent of FMR, while the merger regulations restrict the
number of exceptions over 110 percent of FMR.
Section 982.503(b)(3) provides that exception rents above 120
percent of the FMR will only be approved for the total area of a
county, PHA jurisdiction, or a U.S. census ``place'' (e.g., city,
borough, town, or village). Accordingly, the ``median rent method''
which provides census tract data is not appropriate justification for
an exception rent applicable to areas larger than census tracts.
Likewise, the random digit dialing survey which provides MSA wide data
is not appropriate for an exception rent applicable to an area smaller
than a MSA.
If more than one PHA operates in a jurisdiction, each PHA has
discretion in deciding whether they will use a uniform (or a different)
exception payment standard for each unit size and geographic area. The
final rule has not modified the interim rule requirement in Section
982.503 that any PHA with jurisdiction in the exception area may use
the HUD-approved exception payment standard amount.
Comment: Exception payment standards: Persons with disabilities.
PHAs should be required to use 120% of FMR as the payment standard for
persons with disabilities who have already been granted an individual
exception rent. HUD also should require PHAs to use up to 120 percent
FMR as the payment standard when needed as a reasonable accommodation
for a tenant with disabilities.
The rule needs to permit PHAs to approve exceptions to the
established payment standard to provide for reasonable accommodations
for persons with disabilities.
HUD should inform PHAs to consider the high rental costs of
providing accessible units for people with disabilities. HUD should
issue guidance on exception rents and have an expedited and simple
process to grant such exceptions.
HUD response. The technical correction to the interim rule
published on September 14, 1999 authorizes approval of exception
payment standards as a reasonable accommodation for a tenant with
disabilities. Section 982.503 was corrected to specify that a PHA may
establish a higher payment standard between 90 percent and 110 percent
of the FMR when required as a reasonable accommodation for a family
that includes a person with disabilities. In addition, HUD field
offices may approve a payment standard over 110 percent and up to 120
percent of the FMR for this purpose.
Comment: Exception payment standards: equal opportunity concerns.
Section 982.503(c)(4) describes the condition that will permit HUD to
approve an exception rent. Among other factors, HUD will consider the
ability of families to find housing outside areas of high poverty. The
final rule should explicitly provide that PHAs have an obligation to
affirmatively further fair housing.
The rule fails to make clear that the payment standard must comply
with the fair housing and civil rights laws, affirmatively further fair
housing, and be consistent with the applicable Consolidated Plan. The
rule should require PHAs to articulate the fair housing considerations
that went into setting the payment standard.
HUD response. The statute specifically delegates to the PHA the
establishment of a payment standard between 90 to 110 percent of the
FMR. The PHA rationale for establishing the payment standard is
addressed in the PHA plan.
HUD has retained the previous regulatory requirement that mandatory
justifications for approval of an exception payment standard include
that the higher amount is needed either (1) to help families find
housing outside of areas of high poverty, or (2) because families have
trouble finding housing for lease within the term of the voucher.
Administration of all aspects of the merged program is subject to
civil rights laws and fair housing laws. Equal opportunity requirements
(including affirmatively furthering fair housing requirements) are
specified in Sec. 982.53.
Comment: HUD review of PHA payment standard schedules. The final
rule should provide that HUD will initially monitor rent burdens of
PHAs utilizing payment standards at 90 percent of FMR and that a review
of payment standards should be triggered by a voucher failure rate
above 30 percent.
The final rule should specify that the scope of HUD's payment
standard review includes mobility (i.e., the ability of families to
find housing outside of high poverty areas) and fair housing choice
(i.e., the ability of families to find housing outside areas of
minority concentration).
The trigger for HUD review of the adequacy of the payment standard
should be when 30 (not 40) percent of the participants have high rent
burdens.
HUD response. The statute provides that HUD shall monitor rent
burdens and review any payment standard that results in a significant
percentage of the families occupying units of any size paying more than
30 percent of adjusted income for rent. HUD intends to monitor rent
burdens on a case-by-case basis, PHA-by-PHA, in consideration of the
unique circumstances of different housing markets and PHA
administrative policies. As required by the statute, HUD's review of
the payment standard will be based on the rent burden of participants,
not the success rates of applicants.
HUD has not revised the regulatory standard specified in the
interim rule for HUD review of the adequacy of the PHA payment
standard. However, HUD will reexamine the appropriateness of the
trigger for a HUD payment standard review after there is experience
with implementation of the housing choice voucher program.
Section 982.504 Voucher tenancy: Payment standard for family in
restructured subsidized multifamily project.
Comment: Future funding for restructured subsidized projects.
Funding for families converted from project-based assistance must be at
an adequate level in the future, using the same comparability method as
is used when the initial tenant-based contract is calculated.
HUD response. HUD's policies for providing renewal funding for
expiring ACCs have been developed pursuant to negotiated rulemaking.
Actual costs are a factor in providing renewal funding.
Comment: Payment standard for restructured subsidized projects.
This regulatory section is more appropriately part of HUD's regulations
in 24 CFR part 401. This section lacks clarity and consistency with the
rules on HUD's Mark-to-Market program.
HUD response. The regulatory provision is consistent with HUD's
mark-to-market program. The regulations for the mark-to-market program
specifically provide that the amount of the voucher program rental
assistance will be as provided for in the voucher regulation.
Section 982.508 Rent to owner: maximum rent at initial occupancy.
Comment: Initial rent burden cap. The 40 percent maximum initial
rent burden requirement contradicts the intent of the Section 8 voucher
program,
[[Page 56909]]
which was designed to give families the freedom to find housing outside
of low income areas and to move closer to employment or educational
opportunities. It is not unusual for families to choose to pay more
than 40% of income in order to obtain good housing in non-impacted
areas. As an example, seniors often spend a higher percentage of their
income on housing in order to ensure their safety and security.
The 40 percent maximum rent burden requirement might adversely
impact certain families, such as large families, seniors and persons
with disabilities requiring special amenities or services.
In high-rent areas, such as New York, the 40 percent maximum rent
burden is unrealistic and will make it more difficult for families to
find safe and sanitary housing. A family may actually be prevented from
reducing its rent burden (for example from 55% of income to 45% of
income).
The 40 percent rent burden limit should apply throughout the life
of the tenancy.
HUD response. The maximum initial rent burden requirement is
statutory and cannot be waived by HUD. The 40 percent maximum rent
burden requirement applies when an applicant receives Section 8 tenant-
based voucher assistance for the first time on or after October 1,
1999, and every time a participant (in the certificate or voucher
program) moves to different unit on or after October 1, 1999.
After admission, the 40 percent maximum initial rent burden cap
does not apply to future changes of tenant income or changes in the
rent to owner amount if the participant stays in the same tenant-based
assistance unit. Further, the 40 percent initial rent burden cap does
not apply to families who will participate in the Section 8 tenant-
based homeownership program (for which a proposed rule was published on
April 30, 1999, 64 FR 23488) since homeownership families do not pay
rent, or any of the project-based Section 8 programs.
Comment: Effect of the minimum rent on the initial rent burden cap.
The part 5 regulation permits a PHA to set a minimum rent of up to $50.
The merger rule requires an initial rent burden cap of 40 percent of
the family's monthly adjusted income. These two regulations clash for
families who have very little or no income at the time of admission (or
at the time of a move while they are participants).
HUD response. It is true that the initial 40 percent rent burden
cap will limit admission of any family whose total tenant payment is
based on a calculation other than 30 percent of adjusted income. For
example, elderly and disabled families with large medical expenses,
families with little or no income, welfare families in ``as paid''
States, and families with undocumented alien family members most likely
will not be eligible to participate in the program because of this 40
percent rent burden cap. HUD is seeking a technical correction to the
40 percent rent burden legislative requirement to exempt families whose
total tenant payment is based on a minimum rent, welfare rent or 10
percent of gross income. In the meantime, a PHA should allow such
families that cannot find housing below the 40 percent rent burden cap
to retain their current position on the waiting list, in anticipation
of the requested legislation being enacted into law.
Section 982.509 Rent to owner in subsidized projects
Comment: Rent to owner in subsidized projects. The rule should
retain the provisions of former Sec. 982.512. This section has been
removed and should be retained.
HUD response. The basic content of former Sec. 982.512 is now found
in Sec. 982.521, but with respect to certificates only.
Section 982.521 Regular tenancy: Rent to owner in a subsidized project.
Comment: HOME program rents. The HOME rent provisions should apply
equally to the certificate and the housing choice voucher program. The
previous clarifications with regard to rents in the HOME program have
been lost in this new rule.
HUD response. The HOME program regulations specify how rents are
determined for HOME program units. Section 8 requirements do not over-
ride the HOME rental limitations. It is not necessary to repeat HOME
rental requirements in the Section 8 rule.
Section 982.552 PHA denial or termination of assistance for family.
Comment: Mandatory termination of assistance for a tenant-based
program participant evicted for serious lease violations. A lease
violation should not be grounds for terminating assistance to a family.
There may be certain circumstances that merit leniency; for example, if
an abusive spouse abandons the family resulting in the family's
eviction for nonpayment of rent. The automatic termination provision
unfairly favors landlords, because it effectively deprives tenants from
the opportunity to contest a landlord's allegation of a serious lease
violation.
Termination of assistance due to lease violations should remain a
discretionary ground for termination. This discretion is necessary to
avoid unjust and inappropriate terminations.
HUD response. HUD has determined that the mandatory nature of this
provision is necessary in order to foster responsibility in the Section
8 program. Section 8 assistance is a scarce benefit. This provision
indicates that HUD will not reward serious lease violations, such as
behavior that threatens other residents or the safety or maintenance of
the premises, by providing continued Section 8 assistance in a
different unit. Furthermore, this policy will address the complaint
that some assisted families have kept their Section 8 benefits even
after they have caused extensive damage or incurred a large unpaid rent
debt. Additional efforts to hold families accountable for actions by
family members should increase owner participation and provide expanded
housing opportunities for low income families in nontraditional
neighborhoods. It is noted that termination of assistance is only
required for an eviction resulting from a serious lease violation (not
repeated lease violations). Therefore, the family will be protected by
the due process they receive through the judicial eviction process and,
additionally, the PHA must give the family the opportunity for an
informal hearing before assistance termination.
Comment: Mandatory denial of admission if applicant is evicted from
federally assisted housing for serious lease violations. The provision
in Sec. 982.552(b) specifying denial of admission if the applicant is
evicted from federally assisted housing for serious lease violations
should be stated as a requirement and not a discretionary matter.
HUD response. Section 982.552.(b)(1) is reserved and a new
paragraph (c)(1)(ii) is added to permit PHAs to deny admission or
terminate assistance if any member of the family has been evicted from
Federally assisted housing in the last five years. This is a change
from the interim rule, which prohibited admissions of families evicted
from Federally assisted housing for serious lease violations. HUD may
review this matter again as it finalizes the pending ``One Strike''
regulation.
Comment: Termination of assistance if participant fails to meet
welfare-to-work program obligations. HUD should remove
Sec. 982.552(c)(1)(x), which authorizes PHAs to terminate section 8
assistance if the family fails to fulfill its obligations under the
section 8 welfare-to-work voucher program. If HUD
[[Page 56910]]
decides to keep the provision, HUD should, at a minimum, modify the
rule to require a much higher threshold of improper behavior on the
part of the family before the family puts its housing assistance in
jeopardy.
HUD response. The rule is revised to add requirements to the PHA
briefing of the family participating in the welfare-to-work voucher
program, and to the material provided in the family's information
packet (Sec. 982.301(a) and (b)). Specifically, the PHA must advise
(both verbally and in writing) the family of the local welfare-to-work
voucher program family obligations and that failure to meet these
obligations is grounds for PHA denial of admission or termination of
assistance.
HUD is not mandating federal standards for family obligations under
the welfare-to-work voucher program, since there is local flexibility
in designing such obligations. The option for PHA termination of
assistance or denial of admission will permit PHAs to prevent program
abuse by families that willfully and persistently violate work-related
obligations under the welfare-to-work voucher program. Of course, the
PHA must give the family the opportunity for an informal review or
informal hearing before the PHA denies admission or terminates
assistance.
Comment: HUD authority to regulate terminations of assistance. HUD
has exceeded Congressional authorization in mandating certain required
grounds for termination. Any required grounds for termination should be
limited to those which are mandated by Congress.
HUD response. HUD has authority to define grounds for termination
of assistance and has done so in a comprehensive manner since 1984.
Section 982.623 Manufactured home space rental: Housing assistance
payment, Section 888.111 Fair market rents for existing housing:
Applicability, and Section 888.113 Fair market rents for existing
housing: Methodology.
Comment: Housing assistance payment calculation and FMR for
manufactured home space rentals. HUD should clarify that tenant-paid
utilities referenced in the regulations are directly related to the
space (such as water or sewer charges) and not utilities related to the
unit such as electricity or fuel.
HUD response. The part 982 regulation refers to the utility
allowance for tenant-paid utilities. The PHA utility allowance for
manufactured home space rentals is not limited to the tenant-paid
utilities directly related to the space rental, such as water and sewer
expenses. Instead, the utility allowance covers all tenant-paid
utilities including electricity and gas for the manufactured home.
Section 888.111 is revised primarily to delete references to the
certificate program and update the applicability language. Since the
maximum subsidy now includes utilities for the manufactured home and
the 1998 Act revised the subsidy formula, Sec. 888.113(e) is revised to
increase the FMR for a manufactured home space rental from 30 percent
to 40 percent of the FMR for a two-bedroom unit.
Miscellaneous Comments
Comment: Applicability of rule to the Shelter Plus Care and Housing
Opportunities for People with AIDS (HOPWA) programs. Clarification is
requested concerning whether the requirements of new Housing Choice
Voucher Program applicable to the tenant-based components of the
Shelter Plus Care and HOPWA regulations.
HUD response. Although the regulations for the tenant-based
components of the Shelter Plus Care and HOPWA Programs are similar to
the Section 8 tenant-based regulations, a change to part 982 will not
automatically revise the Shelter Plus Care or HOPWA regulations unless
the part 982 regulations are incorporated by reference.
III. Findings and Certifications
Paperwork Reduction Act Statement
The information collection requirements contained in this rule have
been approved by the Office of Management and Budget (OMB) in
accordance with the requirements of the Paperwork Reduction Act of 1995
(44 U.S.C. Chapter 35), and have been assigned OMB Control Number 2577-
0226. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection displays a valid control number.
Environmental Impact
A Finding of No Significant Impact with respect to the environment
was made on the May 14, 1999 interim rule in accordance with HUD
regulations in 24 CFR part 50 that implement section 102(2)(C) of the
National Environmental Policy Act of 1969 (42 U.S.C. 4223). The Finding
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 General
Counsel, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, SW, Washington, DC.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This final rule does not impose any
Federal mandates on any State, local, or tribal governments or the
private sector within the meaning of Unfunded Mandates Reform Act of
1995.
Executive Order 12866
The Office of Management and Budget (OMB) reviewed this final rule
under Executive Order 12866, Regulatory Planning and Review. OMB
determined that this final rule is a ``significant regulatory action,''
as defined in section 3(f) of the Order (although not economically
significant, as provided in section 3(f)(1) of the Order). Any changes
made to the final rule subsequent to its submission to OMB are
identified in the docket file, which is available for public inspection
in the office of the Department's Rules Docket Clerk, Room 10276, 451
Seventh Street, SW, Washington, DC 20410-0500.
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) (the RFA), has reviewed and approved this final rule and
in so doing certifies that this rule would not have a significant
economic impact on a substantial number of small entities. The final
rule is exclusively concerned with public housing agencies that
administer tenant-based housing assistance under Section 8 of the
United States Housing Act of 1937. Specifically, the final rule would
establish requirements governing tenant-based assistance for an
eligible family. The final regulatory amendments would not change the
amount of funding available under the Section 8 voucher program.
Accordingly, the economic impact of this rule will not be significant,
and it will not affect a substantial number of small entities.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official for HUD under
section 6(a) of Executive Order 12612, Federalism, has determined that
this rule will not have federalism implications concerning the division
of local, State, and Federal responsibilities. No programmatic or
policy change under this rule will affect the relationship between the
Federal government and State and local governments.
[[Page 56911]]
Catalog of Domestic Assistance Numbers
The Catalog of Domestic Assistance numbers for the programs
affected by this final rule are 14.146, 14.147, 14.850, 14.851, 14.852,
14.855, 14.857, and 15.141.
List of Subjects
24 CFR Part 888
Grant programs--housing and community development, Rent subsidies.
24 CFR Part 982
Grant programs--housing and community development, Housing, Rent
subsidies.
For the reasons discussed in the preamble, HUD adopts the
amendments made to 24 CFR parts 248, 791, and 792 in the interim rule
published on May 14, 1999 at 64 FR 26632 without change, and HUD amends
24 CFR parts 888 and 982 as follows:
PART 888--SECTION 8 HOUSING ASSISTANCE PAYMENT PROGRAM--FAIR MARKET
RENTS AND CONTRACT RENT ANNUAL ADJUSTMENT FACTORS
1. Revise the authority citation for part 888 to read as follows:
Authority: 42 U.S.C. 1437f and 3535d.
2. Revise Sec. 888.111 to read as follows:
Sec. 888.111 Fair market rents for existing housing: Applicability.
(a) The fair market rents (FMRs) for existing housing are
determined by HUD and are used in the Section 8 Housing Choice Voucher
Program (``voucher program'') (part 982 of this title), Section 8
project-based assistance programs and other programs requiring their
use. In the voucher program, the FMRs are used to determine payment
standard schedules. In the Section 8 project-based assistance programs,
the FMRs are used to determine the maximum initial rent (at the
beginning of the term of a housing assistance payments contract).
(b) Fair market rent means the rent, including the cost of
utilities (except telephone), as established by HUD, pursuant to this
subpart, for units of varying sizes (by number of bedrooms), that must
be paid in the market area to rent privately owned, existing, decent,
safe and sanitary rental housing of modest (non-luxury) nature with
suitable amenities.
3. In Sec. 888.113, revise paragraph (e) to read as follows:
Sec. 888.113 Fair market rents for existing housing: Methodology.
* * * * *
(e) Manufactured home space rental. The FMR for a manufactured home
space rental (for the voucher program under part 982 of this title) is:
(1) 40 percent of the FMR for a two bedroom unit, or
(2) When approved by HUD on the basis of survey data submitted in
public comments, the 40th percentile of the rental distribution of
manufactured home spaces for the FMR area. HUD accepts public comments
requesting revision of the proposed manufactured home spaces FMRs for
areas where space rentals are thought to differ from 40 percent of the
FMR for a two-bedroom unit. To be considered for approval, the comments
must contain statistically valid survey data that show the 40th
percentile manufactured home space rent (including the cost of
utilities for the manufactured home) for the FMR area. Once approved,
the revised manufactured home space FMRs establish new base-year
estimates that will be updated annually using the same data used to
update the FMRs.
4. Amend Sec. 982.4 as follows:
a. In paragraph (b), add, in alphabetical order, definitions of the
terms ``family rent to owner'', ``utility reimbursement'', and
``welfare-to-work (WTW) families'';
b. In paragraph (b), in the definition of ``public housing agency''
remove from the end of paragraph (1) of this definition the word ``or''
and add in its place the word ``and'', and remove from paragraph (2)(i)
of this definition the word ``consortia'' and add in its place the word
``consortium''; and
c. Revise paragraph (a)(4) of Sec. 982.4 to read as follows:
Sec. 982.4 Definitions.
(a) * * *
(4) Definitions concerning family income and rent. The terms
``adjusted income,'' ``annual income,'' ``extremely low income
family,'' ``tenant rent,'' ``total tenant payment,'' ``utility
allowance,'' and ``utility reimbursement'' are defined in part 5,
subpart F of this title. The definitions of ``tenant rent'' and
``utility reimbursement'' in part 5, subpart F of this title, apply to
the certificate program, but do not apply to the tenant-based voucher
program under part 982.
(b) * * *
Family rent to owner. In the voucher program, the portion of rent
to owner paid by the family. For calculation of family rent to owner,
see Sec. 982.515(b).
* * * * *
Utility reimbursement. In the voucher program, the portion of the
housing assistance payment which exceeds the amount of the rent to
owner. (See Sec. 982.514(b)). (For the certificate program, ``utility
reimbursement'' is defined in part 5, subpart F of this title.)
* * * * *
Welfare-to-work (WTW) families. Families assisted by a PHA with
voucher funding awarded to the PHA under the HUD welfare-to-work
voucher program (including any renewal of such WTW funding for the same
purpose).
5. Amend Sec. 982.53 as follows:
a. Revise paragraph (c) as set forth below;
b. Amend paragraph (d) by revising the reference to ``State law''
in the title to read ``State and local law''; and by revising both
references to ``State laws'' in the rule text to read ``State and local
laws''.
Sec. 982.53 Equal opportunity requirements.
* * * * *
(c) Obligation to affirmatively further fair housing. The PHA shall
affirmatively further fair housing as required by Sec. 903.7(o) of this
title.
* * * * *
6. In Sec. 982.54, revise paragraph (b) to read as follows:
Sec. 982.54 Administrative plan.
* * * * *
(b) The administrative plan must be in accordance with HUD
regulations and requirements. The administrative plan is a supporting
document to the PHA plan (part 903 of this title) and must be available
for public review. The PHA must revise the administrative plan if
needed to comply with HUD requirements.
* * * * *
7. Amend Sec. 982.201 as follows:
a. Revise the section heading and paragraph (b)(2)(i) as set forth
below;
b. Redesignate paragraphs (b)(2)(ii) through (iv) as paragraphs
(b)(2)(iv) through (vi) respectively.
c. Add new paragraphs (b)(2)(ii) and (iii) as set forth below.
d. Revise the first sentence of paragraph (b)(2)(vi), as
redesignated, to read as set forth below:
e. Add new paragraph (b)(2)(vii) as set forth below.
f. Revise the last sentence of paragraph (b)(4) to read as set
forth below:
Sec. 982.201 Eligibility and targeting.
* * * * *
(b) * * *
(2) * * *
(i) Not less than 75 percent of the families admitted to a PHA's
tenant-
[[Page 56912]]
based voucher program during the PHA fiscal year from the PHA waiting
list shall be extremely low income families. Annual income of such
families shall be verified within the period described in paragraph (e)
of this section.
(ii) A PHA may admit a lower percent of extremely low income
families during a PHA fiscal year (than otherwise required under
paragraph (b)(2)(i) of this section) if HUD approves the use of such
lower percent by the PHA, in accordance with the PHA plan, based on
HUD's determination that the following circumstances necessitate use of
such lower percent by the PHA:
(A) The PHA has opened its waiting list for a reasonable time for
admission of extremely low income families residing in the same
metropolitan statistical area (MSA) or non-metropolitan county, both
inside and outside the PHA jurisdiction;
(B) The PHA has provided full public notice of such opening to such
families, and has conducted outreach and marketing to such families,
including outreach and marketing to extremely low income families on
the Section 8 and public housing waiting lists of other PHAs with
jurisdiction in the same MSA or non-metropolitan county;
(C) Notwithstanding such actions by the PHA (in accordance with
paragraphs (b)(2)(ii)(A) and (B) of this section), there are not enough
extremely low income families on the PHA's waiting list to fill
available slots in the program during any fiscal year for which use of
a lower percent is approved by HUD; and
(D) Admission of the additional very low income families other than
extremely low income families to the PHA's tenant-based voucher program
will substantially address worst case housing needs as determined by
HUD.
(iii) If approved by HUD, the admission of a portion of very low
income welfare-to-work (WTW) families that are not extremely low income
families may be disregarded in determining compliance with the PHA's
income-targeting obligations under paragraph (b)(2)(i) of this section.
HUD will grant such approval only if and to the extent that the PHA has
demonstrated to HUD's satisfaction that compliance with such targeting
obligations with respect to such portion of WTW families would
interfere with the objectives of the welfare-to-work voucher program.
If HUD grants such approval, admission of that portion of WTW families
is not counted in the base number of families admitted to a PHA's
tenant-based voucher program during the fiscal year for purposes of
income targeting.
* * * * *
(vi) If the jurisdictions of two or more PHAs that administer the
tenant-based voucher program cover an identical geographic area, such
PHAs may elect to be treated as a single PHA for purposes of targeting
under paragraph (b)(2)(i) of this section. * * *
(vii) If a family initially leases a unit outside the PHA
jurisdiction under portability procedures at admission to the voucher
program on or after the merger date, such admission shall be counted
against the targeting obligation of the initial PHA (unless the
receiving PHA absorbs the portable family into the receiving PHA
voucher program from the point of admission).
* * * * *
(4) * * * At admission, the family may only use the voucher to rent
a unit in an area where the family is income eligible.
* * * * *
8. Amend Sec. 982.207 as follows:
a. Add paragraph (a)(4) to read as set forth below;
b. Revise paragraphs (b) and (d) to read as set forth below:
Sec. 982.207 Waiting list: Local preferences in admission to program.
(a) * * *
(4) The PHA shall not deny a local preference, nor otherwise
exclude or penalize a family in admission to the program, solely
because the family resides in a public housing project. The PHA may
establish a preference for families residing in public housing who are
victims of a crime of violence (as defined in 18 U.S.C. 16).
(b) Particular local preferences. (1) Residency requirements or
preferences. (i) Residency requirements are prohibited. Although a PHA
is not prohibited from adopting a residency preference, the PHA may
only adopt or implement residency preferences in accordance with non-
discrimination and equal opportunity requirements listed at
Sec. 5.105(a) of this title.
(ii) A residency preference is a preference for admission of
persons who reside in a specified geographic area (``residency
preference area''). A county or municipality may be used as a residency
preference area. An area smaller than a county or municipality may not
be used as a residency preference area.
(iii) Any PHA residency preferences must be included in the
statement of PHA policies that govern eligibility, selection and
admission to the program, which is included in the PHA annual plan (or
supporting documents) pursuant to part 903 of this title. Such policies
must specify that use of a residency preference will not have the
purpose or effect of delaying or otherwise denying admission to the
program based on the race, color, ethnic origin, gender, religion,
disability, or age of any member of an applicant family.
(iv) A residency preference must not be based on how long an
applicant has resided or worked in a residency preference area.
(v) Applicants who are working or who have been notified that they
are hired to work in a residency preference area must be treated as
residents of the residency preference area. The PHA may treat graduates
of, or active participants in, education and training programs in a
residency preference area as residents of the residency preference area
if the education or training program is designed to prepare individuals
for the job market.
(2) Preference for working families. The PHA may adopt a preference
for admission of working families (families where the head, spouse or
sole member is employed). However, an applicant shall be given the
benefit of the working family preference if the head and spouse, or
sole member is age 62 or older, or is a person with disabilities.
(3) Preference for person with disabilities. The PHA may adopt a
preference for admission of families that include a person with
disabilities. However, the PHA may not adopt a preference for admission
of persons with a specific disability.
(4) Preference for victims of domestic violence. The PHA should
consider whether to adopt a local preference for admission of families
that include victims of domestic violence.
(5) Preference for single persons who are elderly, displaced,
homeless or a person with disabilities. The PHA may adopt a preference
for admission of single persons who are age 62 or older, displaced,
homeless, or a person with disabilities.
* * * * *
(d) Preference for higher-income families. The PHA must not select
families for admission to the program in an order different from the
order on the waiting list for the purpose of selecting higher income
families for admission to the program.
* * * * *
9. In Sec. 982.301, add new paragraph (a)(5) and revise paragraph
(b)(14) to read as follows:
Sec. 982.301 Information when family is selected.
(a) * * *
[[Page 56913]]
(5) In briefing a welfare-to-work family, the PHA must include
specification of any local obligations of a welfare-to-work family and
an explanation that failure to meet these obligations is grounds for
PHA denial of admission or termination of assistance.
* * * * *
(b) * * *
(14) Family obligations under the program, including any
obligations of a welfare-to-work family.
* * * * *
10. In Sec. 982.303, revise paragraph (b) to read as follows:
Sec. 982.303 Term of voucher.
* * * * *
(b) Extensions of term. (1) At its discretion, the PHA may grant a
family one or more extensions of the initial voucher term in accordance
with PHA policy as described in the PHA administrative plan. Any
extension of the term is granted by PHA notice to the family.
(2) If the family needs and requests an extension of the initial
voucher term as a reasonable accommodation, in accordance with part 8
of this title, to make the program accessible to a family member who is
a person with disabilities, the PHA must extend the voucher term up to
the term reasonably required for that purpose.
* * * * *
11. Amend Sec. 982.305 as follows:
a. In paragraph (a)(3), remove the word ``and''.
b. In paragraph (a)(4), remove the period at the end and insert in
its place ``; and''.
c. Add new paragraph (a)(5) to read as follows:
Sec. 982.305 PHA approval of assisted tenancy.
(a) * * *
(5) At the time a family initially receives tenant-based assistance
for occupancy of a dwelling unit, the family share does not exceed 40
percent of the family's monthly adjusted income.
* * * * *
12. In Sec. 982.306, revise the section heading, amend the
introductory paragraph (c)(5) to add the words ``engaged in'' after the
words ``for activity'' and amend paragraph (d) to add a new final
sentence to that paragraph to read as follows:
Sec. 982.306 PHA disapproval of owner.
* * * * *
(d) * * * This restriction against PHA approval of a unit only
applies at the time a family initially receives tenant-based assistance
for occupancy of a particular unit, but does not apply to PHA approval
of a new tenancy with continued tenant-based assistance in the same
unit.
* * * * *
13. In Sec. 982.308, revise paragraphs (a), (b), (d), and (f), and
add new paragraph (g), to read as follows:
Sec. 982.308 Lease and tenancy.
(a) Tenant's legal capacity. The tenant must have legal capacity to
enter a lease under State and local law. ``Legal capacity'' means that
the tenant is bound by the terms of the lease and may enforce the terms
of the lease against the owner.
(b) Form of lease. (1) The tenant and the owner must enter a
written lease for the unit. The lease must be executed by the owner and
the tenant.
(2) If the owner uses a standard lease form for rental to
unassisted tenants in the locality or the premises, the lease must be
in such standard form (plus the HUD-prescribed tenancy addendum). If
the owner does not use a standard lease form for rental to unassisted
tenants, the owner may use another form of lease, such as a PHA model
lease (including the HUD-prescribed tenancy addendum). The HAP contract
prescribed by HUD will contain the owner's certification that if the
owner uses a standard lease form for rental to unassisted tenants, the
lease is in such standard form.
* * * * *
(d) Required information. The lease must specify all of the
following:
(1) The names of the owner and the tenant;
(2) The unit rented (address, apartment number, and any other
information needed to identify the contract unit);
(3) The term of the lease (initial term and any provisions for
renewal);
(4) The amount of the monthly rent to owner; and
(5) A specification of what utilities and appliances are to be
supplied by the owner, and what utilities and appliances are to be
supplied by the family.
* * * * *
(f) Tenancy addendum. (1) The HAP contract form required by HUD
shall include an addendum (the ``tenancy addendum''), that sets forth:
(i) The tenancy requirements for the program (in accordance with
this section and Secs. 982.309 and 982.310); and
(ii) The composition of the household as approved by the PHA
(family members and any PHA-approved live-in aide).
(2) All provisions in the HUD-required tenancy addendum must be
added word-for-word to the owner's standard form lease that is used by
the owner for unassisted tenants. The tenant shall have the right to
enforce the tenancy addendum against the owner, and the terms of the
tenancy addendum shall prevail over any other provisions of the lease.
(g) Changes in lease or rent. (1) If the tenant and the owner agree
to any changes in the lease, such changes must be in writing, and the
owner must immediately give the PHA a copy of such changes. The lease,
including any changes, must be in accordance with the requirements of
this section.
(2) In the following cases, tenant-based assistance shall not be
continued unless the PHA has approved a new tenancy in accordance with
program requirements and has executed a new HAP contract with the
owner:
(i) If there are any changes in lease requirements governing tenant
or owner responsibilities for utilities or appliances;
(ii) If there are any changes in lease provisions governing the
term of the lease;
(iii) If the family moves to a new unit, even if the unit is in the
same building or complex.
(3) PHA approval of the tenancy, and execution of a new HAP
contract, are not required for changes in the lease other than as
specified in paragraph (g)(2) of this section.
(4) The owner must notify the PHA of any changes in the amount of
the rent to owner at least sixty days before any such changes go into
effect, and any such changes shall be subject to rent reasonableness
requirements (see Sec. 982.503).
14. In Sec. 982.310, paragraph (e)(1)(i) is revised to read as
follows:
Sec. 982.310 Owner termination of tenancy.
* * * * *
(e) * * *
(1) * * *
(i) The owner must give the tenant a written notice that specifies
the grounds for termination of tenancy during the term of the lease.
The tenancy does not terminate before the owner has given this notice,
and the notice must be given at or before commencement of the eviction
action.
* * * * *
15. In Sec. 982.314, paragraph (c)(2)(i) is revised to read as
follows:
Sec. 982.314 Move with continued tenant-based assistance.
* * * * *
(c) * * *
(2) * * *
[[Page 56914]]
(i) Policies that prohibit any move by the family during the
initial lease term; and * * * * *
16. Amend Sec. 982.355 as follows:
a. Revise the section heading;
b. In paragraph (c)(9), remove the phrase ``with Sec. 982.552'',
insert in its place the phrase ``with Secs. 982.552 and Sec. 982.553'';
and
c. Add new paragraph (c)(10), to read as follows:
Sec. 982.355 Portability: Administration by receiving PHA.
* * * * *
(c) * * *
(10) When the family has a right to lease a unit in the receiving
PHA jurisdiction under portability procedures in accordance with
Sec. 982.353(b), the receiving PHA must provide assistance for the
family. Receiving PHA procedures and preferences for selection among
eligible applicants do not apply, and the receiving PHA waiting list is
not used. However, the receiving PHA may deny or terminate assistance
for family action or inaction in accordance with Secs. 982.552 and
982.553.
* * * * *
Sec. 982.405 [Amended]
17. Amend Sec. 982.405 by removing paragraph (f).
18. In Sec. 982. 451, revise paragraph (b)(5)(ii) to read as
follows:
Sec. 982.451 Housing assistance payments contract.
* * * * *
(b) * * *
(5) * * *
(ii)(A) The HAP contract shall provide for penalties against the
PHA for late payment of housing assistance payments due to the owner if
all the following circumstances apply:
(1) Such penalties are in accordance with generally accepted
practices and law, as applicable in the local housing market, governing
penalties for late payment of rent by a tenant;
(2) It is the owner's practice to charge such penalties for
assisted and unassisted tenants; and
(3) The owner also charges such penalties against the tenant for
late payment of family rent to owner.
(B) The PHA is not obligated to pay any late payment penalty if HUD
determines that late payment by the PHA is due to factors beyond the
PHA's control. The PHA may add HAP contract provisions which define
when the housing assistance payment by the PHA is deemed received by
the owner (e.g., upon mailing by the PHA or actual receipt by the
owner).
* * * * *
19. Amend Sec. 982.453, by adding new paragraph (a)(6) to read as
follows:
Sec. 982.453 Owner breach of contract.
(a) * * *
(6) If the owner has committed any violent criminal activity.
* * * * *
20. Amend Sec. 982.502 by revising the last sentence of paragraph
(c) and adding paragraphs (c)(1) and (2) to read as follows:
Sec. 982.502 Conversion to voucher program.
* * * * *
(c) * * * However, before the effective date of the second regular
reexamination of family income and composition on or after the merger
date, the payment standard for the family shall be the higher of:
(1) The initial payment standard for the family at the beginning of
the HAP contract term; or
(2) The payment standard for the family as calculated in accordance
with Sec. 982.505, except that Sec. 982.505(b)(2) shall not be
applicable.
* * * * *
21. Amend Sec. 982.503 by revising paragraph (d) and adding a new
paragraph (e) to read as follows:
Sec. 982.503 Voucher tenancy: Payment standard amount and schedule.
* * * * *
(d) HUD approval of payment standard amount below the basic range.
HUD may consider a PHA request for approval to establish a payment
standard amount that is lower than the basic range. At HUD's sole
discretion, HUD may approve PHA establishment of a payment standard
lower than the basic range. In determining whether to approve the PHA
request, HUD will consider appropriate factors, including rent burden
of families assisted under the program. HUD will not approve a lower
payment standard if the family share for more than 40 percent of
participants in the PHA's voucher program exceeds 30 percent of
adjusted monthly income. Such determination may be based on the most
recent examinations of family income.
(e) HUD review of PHA payment standard schedules. (1) HUD will
monitor rent burdens of families assisted in a PHA's voucher program.
HUD will review the PHA's payment standard for a particular unit size
if HUD finds that 40 percent or more of such families occupying units
of that unit size currently pay more than 30 percent of adjusted
monthly income as the family share. Such determination may be based on
the most recent examinations of family income.
(2) After such review, HUD may, at its discretion, require the PHA
to modify payment standard amounts for any unit size on the PHA payment
standard schedule. HUD may require the PHA to establish an increased
payment standard amount within the basic range.
22. Amend Sec. 982.505 as follows:
a. Amend paragraph (b)(1) by removing the phrase ``payment
standard'' and inserting instead the phrase ``payment standard for the
family'';
b. Revise paragraph (c)(1) introductory text;
c. Amend paragraph (c)(3) by inserting ``first 24 months of the''
after the words ``During the'';
d. Redesignate paragraph (c)(4) as paragraph (c)(5); and
e. Add new paragraph (c)(4) to read as follows:
Sec. 982.505 Voucher tenancy: How to calculate housing assistance
payment.
* * * * *
(c) * * * (1) The payment standard for the family is the lower of:
* * * * *
(4) After the first 24 months of the HAP contract term, the payment
standard for a family is the payment standard as determined in
accordance with paragraphs (c)(1) and (c)(2) of this section, as
determined at the effective date of the most recent regular
reexamination of family income and composition after the beginning of
the HAP contract term.
* * * * *
23. Revise Sec. 982.508 to read as follows:
Sec. 982.508 Maximum family share at initial occupancy.
At the time the PHA approves a tenancy for initial occupancy of a
dwelling unit by a family with tenant-based assistance under the
program, the family share must not exceed 40 percent of the family's
adjusted monthly income. The determination of adjusted monthly income
must be based on verification information received by the PHA no
earlier than 60 days before the PHA issues a voucher to the family.
Sec. 982.514 [Amended]
24. In Sec. 982.514, amend paragraph (b) by inserting the
parenthetical ``(``utility reimbursement'')'' after the phrase ``the
balance of the housing assistance payment''.
25. Amend Sec. 982.515 by revising paragraph (b) and adding a new
paragraph (c) to read as follows:
[[Page 56915]]
Sec. 982.515 Family share: Family responsibility.
* * * * *
(b) The family rent to owner is calculated by subtracting the
amount of the housing assistance payment to the owner from the rent to
owner.
(c) The PHA may not use housing assistance payments or other
program funds (including any administrative fee reserve) to pay any
part of the family share, including the family rent to owner. Payment
of the whole family share is the responsibility of the family.
26. Amend Sec. 982.516 by revising paragraph (a)(1) and by adding
new paragraph (g) to read as follows:
Sec. 982.516 Family income and composition: Regular and interim
examinations.
(a) * * *
(1) PHA responsibility for reexamination and verification. The PHA
must conduct a reexamination of family income and composition at least
annually.
* * * * *
(g) Execution of release and consent. (1) As a condition of
admission to or continued assistance under the program, the PHA shall
require the family head, and such other family members as the PHA
designates, to execute a HUD-approved release and consent form
(including any release and consent as required under part 760 of this
title) authorizing any depository or private source of income, or any
Federal, State or local agency, to furnish or release to the PHA or HUD
such information as the PHA or HUD determines to be necessary.
(2) The PHA and HUD must limit the use or disclosure of information
obtained from a family or from another source pursuant to this release
and consent to purposes directly in connection with administration of
the program.
27. Amend Sec. 982.552 as follows:
a. Revise the section heading and remove and reserve paragraph
(b)(1);
b. Revise paragraphs (c)(1)(ii) and (c)(1)(x) to read as set forth
below;
c. Remove paragraph (c)(3), and revise paragraph (c)(2) to read as
follows:
Sec. 982.552 PHA denial or termination of assistance for family.
* * * * *
(c) * * *
(1) * * *
(ii) If any member of the family has been evicted from federally
assisted housing in the last five years;
* * * * *
(x) If a welfare-to-work (WTW) family fails to fulfill its
obligations under the welfare-to-work voucher program.
(2) PHA discretion to consider circumstances. In determining
whether to deny admission or terminate assistance because of action or
failure to act by members of the family:
(i) The PHA has discretion to consider all of the circumstances in
each case, including the seriousness of the case, the extent of
participation or culpability of individual family members, mitigating
circumstances related to the disability of a family member, and the
effects of denial or termination of assistance on other family members
who were not involved in the action or failure.
(ii) The PHA may impose, as a condition of continued assistance for
other family members, a requirement that other family members who
participated in or were culpable for the action or failure will not
reside in the unit. The PHA may permit the other members of a
participant family to continue receiving assistance.
(iii) If the family includes a person with disabilities, the PHA
decision concerning such action is subject to consideration of
reasonable accommodation in accordance with part 8 of this title.
* * * * *
28. Amend Sec. 982.623 by revising paragraph (b)(1) to read as
follows:
Sec. 982.623 Manufactured home space rental: Housing assistance
payment.
* * * * *
(b) * * *
(1) There is a separate fair market rent for a manufactured home
space. The FMR for a manufactured home space is determined in
accordance with Sec. 888.113(e) of this title. The FMR for a
manufactured home space is generally 40 percent of the published FMR
for a two-bedroom unit.
* * * * *
Dated: October 14, 1999.
Harold Lucas,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-27519 Filed 10-20-99; 8:45 am]
BILLING CODE 4410-33-P
