99-10565. Changes to Admission and Occupancy Requirements in the Public Housing and Section 8 Housing Assistance Programs  

  • [Federal Register Volume 64, Number 83 (Friday, April 30, 1999)]
    [Proposed Rules]
    [Pages 23460-23478]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-10565]
    
    
          
    
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    Part III
    
    
    
    
    
    Department of Housing and Urban Development
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    24 CFR Parts 5, 960, 966, and 984
    
    
    
    Changes to Admission and Occupancy Requirements in the Public Housing 
    and Section 8 Housing Assistance Programs; Proposed Rule
    
    Federal Register / Vol. 64, No. 83 / Friday, April 30, 1999 / 
    Proposed Rules
    
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    DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
    
    24 CFR Parts 5, 960, 966, and 984
    
    [Docket No. FR-4485-P-01]
    RIN 2501-AC59
    
    
    Changes to Admission and Occupancy Requirements in the Public 
    Housing and Section 8 Housing Assistance Programs
    
    AGENCY: Office of the Secretary, HUD.
    
    ACTION: Proposed rule.
    
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    SUMMARY: This proposed rule addresses several changes related to 
    admission and occupancy requirements of public housing and section 8 
    assisted housing that were made by the Quality Housing and Work 
    Responsibility Act of 1998 (referred to as the ``1998 Act''). With 
    respect to admission and occupancy, this rule includes important 
    changes concerning choice of rent, community service and self-
    sufficiency in public housing. This rule also includes important 
    changes concerning admission preferences and determination of income 
    and rent in public housing and Section 8 housing assistance programs. 
    Some of the provisions included in this rule are already in effect, as 
    more fully discussed in HUD's Notice of Initial Guidance on the 1998 
    Act, published on February 18, 1999 (``Initial Guidance Notice''), and 
    HUD's interim rule on the PHA Plan, also published on February 18, 1999 
    (PHA Plan interim rule). The provisions that are already in effect are 
    identified in this rulemaking.
    
    DATES: Comment due date: June 29, 1999.
    
    ADDRESSES: Submit comments regarding this proposed rule to the 
    Regulations Division, Office of General Counsel, Room 10276, Department 
    of Housing and Urban Development, 451 Seventh Street, SW, Washington, 
    DC 20410-0500. Please refer to the above docket number and title. 
    Facsimile (FAX) comments are not acceptable. A copy of each 
    communication submitted will be available for public inspection and 
    copying between 7:30 a.m. and 5:30 p.m. weekdays at the above address.
    
    FOR FURTHER INFORMATION CONTACT: For the public housing and tenant-
    based Section 8 housing assistance programs--Patricia Arnaudo, Senior 
    Program Manager, Office of Public and Assisted Housing Delivery, 
    Department of Housing and Urban Development, 451 Seventh Street, SW, 
    Room 4112, Washington, DC 20410; telephone (202) 708-0744, or the 
    Public and Indian Housing Resource Center at 1-800-955-2232.
        For the Section 8 project-based programs--Willie Spearmon, 
    Director, Office of Multifamily Business Products, Office of Housing, 
    Department of Housing and Urban Development, 451 Seventh Street, SW, 
    Room 6138, Washington, DC 20410; telephone (202) 708-3000.
        (With the exception of the telephone number for the PIH Resource 
    Center, these are not toll-free telephone numbers.) Persons with 
    hearing or speech impairments may access these numbers via TTY by 
    calling the Federal Information Relay Service at (800) 877-8339.
    
    SUPPLEMENTARY INFORMATION:
    
    Background--the 1998 Act
    
    Comprehensive Reforms to Public Housing and Section 8 Programs
    
        The Quality Housing and Work Responsibility Act of 1998 (title V of 
    the FY 1999 HUD appropriations Act, Pub.L. 105-276, 112 Stat. 2518, 
    approved October 21, 1998) (referred to in this rule as ``the 1998 
    Act'' or ``the Act'') amended the United States Housing Act of 1937 (42 
    U.S.C. 1437, et seq., ``the 1937 Act'') to make comprehensive changes 
    to HUD's public housing, tenant-based assistance, and Section 8 
    project-based programs. Some of the reforms made by the 1998 Act affect 
    public housing only, and some of the reforms affect Section 8 tenant-
    based and project-based programs as well. Throughout this preamble and 
    in the provisions of 24 CFR part 5 addressed in this rule, HUD 
    indicates where the matter under discussion applies only to one program 
    or to more than one program.
    
    This Proposed Rule
    
    What This Rule Addresses
    
        This rule addresses both provisions of the 1998 Act that are 
    already in effect, and provisions that are being implemented by this 
    rule. The chart provided in this preamble shows:
        (1) Which sections of the 1998 Act are being addressed by this 
    rule,
        (2) Which of the 1998 Act changes being implemented in this rule 
    apply to which HUD programs, and
        (3) Which sections of the 1998 Act are effective now.
    
    Several Conforming Amendments Included in This Rule
    
        HUD will accept comments on any of the regulatory changes included 
    in this rule. The provisions of the 1998 Act that are already in effect 
    have been implemented directly from the statute, without exercise of 
    discretion by HUD. In order to bring HUD's regulations up to date with 
    the changes made by the 1998 Act, the final rule published after 
    consideration of comments on this proposed rule will need to 
    incorporate these changes. Therefore, the conforming regulatory changes 
    that need to be made to the regulations in 24 CFR parts 5 and 960 have 
    been included in this rule, so the reader can review the regulations in 
    their amended and updated form. Since these changes do not reflect 
    exercise of discretion, however, HUD is not likely to change these 
    provisions in response to public comment.
    
    Regulatory Location of Statutory Provisions
    
        In some cases, a statutory provision being implemented could be 
    placed either in specific program regulations, such as part 982 
    covering Section 8 tenant-based assistance, or in the regulations 
    governing programs authorized by the 1937 Act, part 5. This proposed 
    rule and other proposed rules being issued at approximately the same 
    time may contain overlapping provisions. When the final rules are 
    issued, we will make the final determination about the appropriate 
    regulatory location of the provisions and place them in the appropriate 
    part.
    
    Program Changes That Require Appropriations Act Approval
    
        Some of the 1998 Act provisions make changes to HUD programs that 
    would take effect only upon approval in appropriations acts. These 
    changes are not included in this rule. If approved in appropriations 
    acts, they will be implemented by notice. Examples of provisions that 
    are dependent upon appropriations act approval are the addition of 
    exclusions from income for medical expenses of nonelderly families and 
    for child and spousal support, and the addition of earned income 
    disallowances in the Section 8 program for earned income.
    
    Previous Proposed Rule on Admission and Occupancy
    
        A proposed rule streamlining the admission and occupancy provisions 
    applicable to public housing and making other changes was published in 
    the Federal Register on May 9, 1997 (62 FR 25728). The May 9, 1997 
    proposed rule is withdrawn. HUD intends to issue a second proposed rule 
    to implement the 1998 Act safety and security provisions for public and 
    assisted housing and expects to make other streamlining changes similar 
    to those
    
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    proposed in the May 9, 1997 rule at that time.
        Again, the chart that follows presents a summary overview of what 
    this rule addresses. In the chart, the term PBC refers to project-based 
    certificates.
    
    BILLING CODE 4210-32-P
    
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    [GRAPHIC] [TIFF OMITTED] TP30AP99.003
    
    
    
    BILLING CODE 4210-32-C
    
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    Organization of Rule
    
        While the rule is published for public comment, HUD may reconsider 
    the organization of this rule, and not only this rule but the existing 
    codified regulations. HUD may determine that the regulations proposed 
    by this rule or proposed to be revised by this rule can be better 
    organized. HUD also may determine that regulatory text can be worded 
    more plainly and clearly, and some regulatory provisions can be 
    consolidated with others, or if they are provisions that are likely to 
    change frequently, these provisions (if not imposing binding 
    requirements) may be better left to non-regulatory sources (such as 
    notices, guidance documents, etc.) Accordingly, HUD may make 
    organizational changes (including streamlining and plain language 
    changes) at the final rule stage. Any comments on the organization of 
    this rule or the existing regulations is welcome.
    
    II. Specific Changes to Admission and Occupancy Requirements
    
        This section of the preamble discusses the changes made to 
    admission and occupancy requirements of the 1937 Act by the 1998 Act 
    and the regulatory changes that will be made as a result of the 
    statutory amendments. Some of these statutory sections were also 
    discussed in the Initial Guidance Notice on the 1998 Act, published in 
    the Federal Register on February 18, 1999 (64 FR 8192). For the 
    convenience of any reader who would like a reference to the discussion 
    of a certain section of the new statute provided in the Initial 
    Guidance Notice, this section provides the applicable reference.
    
    Using Computer Matching Results (24 CFR 5.211) (Section 508 of the 1998 
    Act Amending Section 3 of the 1937 Act)
    
        For some time, HUD has conducted a computer matching initiative to 
    provide one independent source for verifying resident income. HUD can 
    disclose the matched information to the PHAs, in the case of 
    information matched from Social Security records. Since HUD is 
    precluded by law from disclosing Federal tax return data to PHAs, 
    section 508 of the 1998 Act adds a requirement that when HUD notifies 
    an assisted family of information regarding family income, earnings, 
    wages, or unemployment compensation, the family must disclose the 
    information to the public housing agency. This rule adds a new section, 
    24 CFR 5.211 to implement these provisions.
        The rule provides that once the family discloses the information to 
    the PHA, the PHA must review the information for accuracy and take 
    appropriate action. Appropriate action may include review of the 
    information with the tenant and changing the family's rent as needed. 
    If the PHA verifies a case of documented fraud, it should take action 
    to recover excess housing assistance received by the tenant due to 
    unreported income, or evict the tenant or terminate assistance, and 
    take other appropriate administrative or legal action. HUD will be 
    providing additional information on its computer matching initiative.
        Section 508 of the Act was discussed in the Initial Guidance Notice 
    at 64 FR 8198, beginning in the middle column.
    
    Change From HA to PHA (Sec. 5.214)
    
        In the definitions provided in 24 CFR 5.214, HUD removes the 
    definition of ``HA.'' This acronym HA refers to a housing agency, which 
    was the collective term used by HUD to refer to both a public housing 
    agency and an Indian housing authority. The Native American Housing 
    Assistance and Self-Determination Act (NAHASDA) (Pub.L. 104-330, 
    approved October 26, 1996) eliminated several separate programs of 
    Indian housing assistance and replaced them with a single block grant 
    program. NAHASDA also provided that affordable housing assistance be 
    made directly to Federally-recognized tribes, which in turn may 
    designate a housing entity to act on their behalf by becoming the 
    NAHASDA block grant program recipient. The practical consequence is 
    that Indian housing authorities (or ``tribally designated entities'') 
    are now governed by separate regulations, implementing NAHASDA. 
    Therefore, the only remaining category of housing agency recognized 
    under the 1937 Act is a Public Housing Agency or ``PHA.'' HUD's rule 
    amending part 982, published elsewhere in today's Federal Register, 
    provides a broader definition for HA. At the final rule stage, the part 
    5 regulations may incorporate this definition.
    
    Repeal of Preference for Elderly, Disabled, and Displaced Over Other 
    Singles (24 CFR 5.405, 960.407) (Section 506 of the 1998 Act Amending 
    Section 3(b) of the 1937 Act)
    
        This rule removes the current regulatory giving preference to 
    elderly, disabled, or displaced families over other single persons in 
    all 1937 Act programs (Sec. 5.405(b)), in compliance with section 506 
    of the Act. In addition, this rule includes a conforming change to 
    remove the outdated public housing provisions (Sec. 960.407(b), (c), 
    and (d)). A PHA may continue to have this type of preference as part of 
    its local preference policies. If a PHA does not keep as its highest 
    preference a preference for elderly, disabled, or displaced families 
    over other singles as a local preference, the PHA will have to 
    rearrange its current waiting list.
    
    Repeal of Federal Preferences in Admission and Selection for Assistance 
    (24 CFR 5.410-5.430, 960.204, 960.407) (Sections 514 and 545 of the 
    1998 Act Amending Sections 6 and 8 of the 1937 Act)
    
        The Federal preferences, which have long applied to public housing 
    and Section 8 housing assistance payments programs, are repealed by the 
    1998 Act. The system of Federal preferences provided that some 
    significant portion of applicants who are involuntarily displaced, 
    living in substandard housing, or paying more than 50 percent of family 
    income for rent, were to be given preference in admission and selection 
    for assistance over other families. Congress had suspended this system 
    of preferences on an annual basis in appropriations acts beginning on 
    January 26, 1996, until this repeal.
        Although the 1998 Act eliminates the Federal preferences, the Act 
    continues to allow PHAs to establish their own system for making 
    dwelling units or Section 8 assistance available to families having 
    certain characteristics, now requiring this system of preferences to be 
    linked to their PHA Annual Plan. Each PHA's system of preferences 
    established must be based upon local housing needs and priorities, as 
    determined by the PHA using generally accepted data sources, including 
    waiting list data and any information obtained during public comment on 
    the PHA Annual Plan and under the requirements applicable to the 
    Consolidated Plan (see 24 CFR part 91, subpart B). These requirements 
    are reflected in the PHA Plan interim rule.
        The 1998 Act (in section 514) also includes a statement that a PHA 
    should consider preferences for individuals who are victims of domestic 
    violence, consistent with the PHA Annual Plan. Section 514(e) provides:
    
        It is the sense of the Congress that, each public housing agency 
    involved in the selection of eligible families for assistance under 
    the United States Housing Act of 1937 (including residency in public 
    housing and tenant-based assistance under section 8 of such Act), 
    should, consistent with the public housing agency plan of the 
    agency, consider preferences for individuals who are victims of 
    domestic violence.
    
        Under the rule, PHA policies may provide preferences for veterans, 
    as a needy population.
    
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        To implement the elimination of the Federal preferences, this rule 
    removes Secs. 5.415, 5.420, 5.425, and 5.430 and revises Secs. 960.204 
    and 960.407 to remove references to the term ``Federal preference.'' 
    This rule also makes several changes to Sec. 5.410:
    
    --It reflects the new link of a PHA's local preferences with the PHA 
    Annual Plan.
    --For Section 8 programs other than the Certificate/Voucher, Project-
    based Certificate, and Moderate Rehabilitation, it gives project owners 
    more flexibility in determining their own tenant selection plan. The 
    rule does the following:
    
        (1) Continues the prohibition on use of residency requirements;
        (2) Removes reference to use of the PHA's local preferences (which 
    was located in Sec. 5.410(d)(2)(iii)); and
        (3) Specifically authorizes the owner to use a preference for 
    working families, providing it does not give greater weight to an 
    applicant based on the amount of the employment income.
        This last provision is included in the revised Sec. 5.410(c)(1), 
    which preserves a responsible entity's authority to adopt a preference 
    for working families (currently found in Sec. 4.415(b)(1)), retaining 
    the reference to anti-skipping protections (currently found in 
    Sec. 5.410(e)(2)) in the revised Sec. 5.410(g). This authority for 
    working family preferences separate from any local preferences adopted 
    by a PHA is derived from section 513(c)(4) of the Act, which describes 
    the income targeting requirements for project-based Section 8 assisted 
    housing.
        Sections 514 and 545 were discussed in the Initial Guidance Notice 
    at 64 FR 8200, beginning in the right hand column, and 64 FR 8207, 
    middle column, respectively.
    
    Income Targeting (24 CFR 5.607) (Section 513 of the 1998 Act Amending 
    Section 16 of the 1937 Act)
    
        The 1998 Act (section 513) completely revises the income targeting 
    provisions formerly found in section 16 of the 1937 Act.
    For Public Housing
        The 1998 Act imposes a general rule that not less than 40 percent 
    of admissions in any fiscal year must be families whose income does not 
    exceed 30 percent of median income for the area--``extremely low-income 
    families.'' The Act, however, allows a PHA to decrease the percentage 
    of extremely low-income families admitted to public housing if the PHA 
    has given new Section 8 tenant-based assistance to more than the 
    required number of extremely low-income families, subject to several 
    restrictions. Even in that event, the PHA cannot reduce the percentage 
    of extremely low-income families in public housing below 30 percent.
    For Section 8 Project-Based Assistance
        For Section 8 project-based assistance, the percentages of units to 
    which families with incomes higher than 50 percent of median income may 
    be admitted and the anti-skipping restriction remain the same. This 
    rule, however, adds a provision (Sec. 5.410(c)(1)) permitting owners to 
    adopt a preference for working families, as discussed above. This rule 
    also adds a new requirement for admission of at least 40 percent 
    extremely low-income families to a particular project in a fiscal year. 
    The income targeting requirements do not apply to project-based 
    assistance made available to prevent or ameliorate the effects of 
    displacement.
    For Section 8 Tenant-Based Assistance
        For Section 8 tenant-based assistance, PHAs must target 75 percent 
    of new admissions to extremely low income families. A PHA may use 
    admission of extremely low-income families in its section 8 tenant-
    based program that exceed 75 percent of it admissions in a fiscal year 
    (``credit'') to reduce the number of admissions of extremely low income 
    families in its public housing program. This credit, however, must be 
    the lesser of: (1) 10 percent of the families initially given section 8 
    tenant-based assistance during the year; or (2) the number of families 
    who are not extremely low income and who have been admitted to public 
    housing in projects located in census tracts having a poverty rate of 
    30 percent or more.
        Section 8 tenant-based assistance targeting requirements do not 
    apply to a low-income family that is ``continuously assisted'' under 
    the 1937 Act or to a low-income or moderate income family that is 
    displaced as a result of the prepayment of the mortgage or voluntary 
    termination of an insurance contract on eligible low-income housing.
    New Definition Added
        Because of the importance of the term ``extremely low-income 
    family,'' this rule adds a definition for this term in Sec. 5.603.
    Facilitating Administration of Income Targeting
        A PHA can facilitate administration of income targeting if it 
    applies these requirements on the same annual basis as the fiscal year 
    of its public housing or tenant-based program.
        Section 513 was discussed in the Initial Guidance Notice at 64 FR 
    8199, right hand column.
    
    Annual Income, Adjusted Income (24 CFR 5.603, 5.609, 5.611) (Section 
    508 of the 1998 Act amending Section 3 of the 1937 Act)
    
    Exclusions Versus Deductions
        HUD has long made a distinction between exclusions from income used 
    to determine ``annual income'' for eligibility, and deductions for use 
    in determining ``adjusted income,'' and therefore rent. Section 508 of 
    the 1998 Act changed the calculation of adjusted income by adding a 
    number of mandatory deductions to determine adjusted income, which in 
    some cases reflected HUD's exclusions from annual income. For example, 
    HUD's regulations already exclude from ``annual income'' the earned 
    income of minors. The Act adopted a mandatory deduction from income 
    used to calculate ``adjusted income'' for earned income of minors. 
    Given the statutory enactment of this as a deduction, this rule removes 
    the exclusion from annual income and places earned income of minors as 
    a deduction in calculating ``adjusted income,'' to avoid providing a 
    duplicate benefit on the same subject.
        The 1998 Act adopted the requirement alaready found in HUD's 
    regulatory definition of ``child care expenses'' (in 24 CFR 5.603) that 
    they must be ``reasonable.'' The Act revised the definition of 
    dependents to include not only full-time students at traditional 
    educational institutions, but also persons pursuing full-time 
    vocational training. HUD's definition of ``full-time student'' (in 24 
    CFR 5.603) already included vocational training, but only in the 
    context of certificate granting vocational schools. In this rulemaking, 
    HUD revises the definition of ``full-time student'' (in Sec. 5.603) to 
    refer generally to ``vocational training.''
    Permissive Deductions--Applicable to Public Housing Only
        For public housing, the 1998 Act created deductions for PHAs to 
    use, if they so choose, to promote self-sufficiency and for other 
    purposes. A PHA that decides to provide permissive deductions must 
    describe its deductions in the agency's written policies. HUD cannot 
    assure the provision of additional subsidy to the PHA to cover reduced 
    income resulting from such permissive deductions, however.
        The 1998 Act lists a number of examples of permissive deductions: 
    to
    
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    the extent these amounts have not already been deducted from annual 
    income or reimbursed to the family from other sources:
        (1) Excessive travel expenses, in an amount not to exceed $25 per 
    family per week for travel related to employment, education, or 
    training.
        (2) An amount of a family's earned income, based on any of the 
    following:
        (i) All the earned income of the family;
        (ii) The amount earned by particular members of the family;
        (iii) The amount earned by families having certain characteristics; 
    or
        (iv) The amount earned by families or members during certain 
    periods or from certain sources.
        Other deductions include but are not limited to payroll deductions, 
    such as social security taxes, income taxes and medical insurance 
    premiums. In setting policies on permissive deductions, PHAs are 
    encouraged to coordinate with their local Temporary Assistance for 
    Needy Families (TANF) agencies to assure that assisted housing and TANF 
    support one another. The permissive deductions replace the current 
    optional exclusions from annual income for public housing. (The 
    proposed rule removes the optional exclusions from the definition of 
    annual income, 24 CFR 5.609.)
        Section 508 was discussed in the Initial Guidance Notice at 64 FR 
    8198, middle column.
    
    Minimum Rents (24 CFR 5.616) (Section 507 of the 1998 Act Amending 
    Section 3(a) of the 1937 Act)
    
        Section 507 follows the previous statutory authority of requiring 
    minimum rents of up to $50 for public housing and the Section 8 
    certificate, voucher, and moderate rehabilitation programs. For section 
    8 project-based assistance, the minimum rent is $25. In the public 
    housing and the Section 8 programs other than the vouchers, ``minimum 
    rent'' refers to minimum total tenant payment (TTP) and not a minimum 
    tenant rent (TR). As provided in Sec. 5.613, the total tenant payment 
    is the highest of several calculations, one of which is the minimum 
    rent. So, for example, if 30 percent of a family's ``monthly adjusted 
    income'' were $42, and 10 percent of the family's unadjusted ``monthly 
    income'' were $20, and a PHA had set the minimum rent at $50, the 
    amount of the ``total tenant payment'' would be $50. What the family 
    paid (``tenant rent'') might be less or more than that, depending on 
    whether the family pays its own utilities. A family paying its own 
    utilities would be entitled to a utility reimbursement, if the utility 
    allowance were greater than the TTP.
    Total Tenant Payment (TTP)
        To remove current confusion in the old definition of TTP and 
    clarify that it applies to all programs, this rule changes the current 
    definition to include current statutory definitions and adding a 
    definition of minimum rent.
        Section 507 of the Act was discussed in the Initial Guidance Notice 
    at 64 FR 8197, left hand column.
    
    Self-Sufficiency Incentives--Public Housing Only (24 CFR 5.612) 
    (Section 508 of the 1998 Act Amending Section 3 of the 1937 Act)
    
    Disallowance of Earned Income
        For public housing only, the 1998 Act exempts earned income for 
    families who start work or self-sufficiency programs. The Act phases in 
    the impact on rent of an increase in earned income of certain families. 
    A PHA cannot increase a public housing family's rent for a period of 12 
    months if the increase in income results from (1) earnings of a 
    previously unemployed family member; (2) earnings of a family member 
    during participation in a self-sufficiency or job training program; or 
    (3) earnings of a family member that had been receiving welfare in the 
    previous six months. After the 12-month disallowance, a family's rent 
    increase must be phased in. The phased-in rent cannot increase as a 
    result of the earned income by more than 50 percent (50%) for an 
    additional 12 months. HUD is implementing this statutory provision by 
    directing PHAs not to increase the family's annual income, on which the 
    income-based rent is based, to reflect such an increase in income. The 
    actual change in family income will be recorded in the data system, 
    however. (New Sec. 5.612 reflects this change.)
        As families move into the work force for the first time, they often 
    experience periods of employment and unemployment. The rule as proposed 
    does not place a limit on the number of times a family or an individual 
    can benefit from the disallowance of earned income; the 1998 Act 
    contains no specific limitations. HUD specifically asks for comments on 
    this subject, including limits on the number of times a family or 
    individual can take advantage of the disallowance.
    Previous Earned Income Disregard
        The income disregards formerly applicable only to public housing 
    (under 24 CFR 5.609) are being removed. These include PHA optional 
    exclusions from annual income. These exclusions are replaced with 
    similar permissive deductions reflected in the new definition of 
    adjusted income (24 CFR 5.611). Families who have been given optional 
    income exclusions under the old rules must be permitted to retain those 
    exclusions until the family's next annual reexamination.
        The new 12-month disallowance (under 24 CFR 5.612) replaces the 
    current 18-month earned income disregard for persons going from 
    training programs to work (under 24 CFR 5.609(c)(13)). Families who 
    currently have an 18-month disregard, or who qualify for such disregard 
    on or before September 30, 1999, can continue that disregard for the 18 
    months or as long as they would have qualified under the old rule.
    Individual Savings Account
        Under the 1998 Act, PHAs may establish and maintain individual 
    savings accounts for public housing residents who pay income-based 
    rents. Where the PHA has a policy to offer individual savings accounts, 
    a family may choose an individual savings account instead of being 
    given the 12-month disallowance of earned income and phasing in of a 
    rent increase. Families who choose individual savings accounts would 
    pay the higher rent and the PHA would deposit the increased amount in 
    the savings account. Once established, a family could access the 
    account for purchasing a home, paying education costs, moving out of 
    public housing, or other purposes promoting self-sufficiency. PHAs are 
    not required to provide the savings account option. However, savings 
    accounts are a good way to help families reach self-sufficiency. If a 
    PHA offers savings accounts, the PHA needs to have written policies on 
    management of the accounts. (See 24 CFR 5.612 and 5.614(a)(2).) These 
    policies could be modeled after the Family Self-Sufficiency (FSS) 
    escrow accounts found at 24 CFR part 984 or Turnkey III accounts at 24 
    CFR part 904. At a minimum, a PHA savings account policy must: (1) 
    provide for payment of interest and annual notification to the resident 
    of account status; and (2) provide that any balance in such an account 
    when the family moves out is the property of the family.
        Section 508 was discussed in the Initial Guidance Notice at 64 FR 
    8198, middle column.
    
    [[Page 23466]]
    
    Income Changes Resulting From Welfare Program Requirements (24 CFR 
    5.618) (Section 512 of the 1998 Act Amending Section 12 of the 1937 
    Act)
    
        The 1998 Act addresses the interaction of welfare programs and 
    HUD's treatment of income for purposes of determining rent in the 
    public housing and Section 8 tenant-based assistance programs. The Act 
    provides (in section 12(d) of the 1937 Act) that a family's rent must 
    not be decreased as a result of a reduction in welfare benefits based 
    on either (1) fraud by a member of the family; or (2) the family's 
    failure to comply with the welfare program's requirement for work 
    activities or participation in an economic self-sufficiency program. 
    HUD is implementing this statutory provision by directing the 
    responsible entities not to reduce the family's annual income, on which 
    the income-based rent is based, to reflect such a reduction in welfare 
    benefits. The actual change in family income will be recorded in the 
    data system, however.
        If a reduction in income results from the expiration of a lifetime 
    limit on benefits or a loss of benefits because of a durational time 
    limit on welfare benefits despite compliance with work requirements, 
    the rule directs the responsible entity to reflect the reduced income 
    in determination of the family's annual income.
        In addition, when a family is adversely affected by reductions in 
    welfare benefits as described in this section, the rule requires the 
    responsible entity to notify families that they have the right to a 
    review through a grievance hearing in accordance with Sec. 966.55(e) 
    for public housing, or through the use of an informal hearing under 
    Sec. 982.555(a)(i) for section 8 tenant-based certificate and voucher 
    programs. (See the revision to Sec. 966.55(e) to reflect this for 
    public housing.)
        The addition of a new Sec. 5.618, which applies to public housing 
    and Section 8 tenant-based programs, reflects treatment of welfare 
    benefit reductions.
        Section 512 was discussed in the Initial Guidance Notice at 64 FR 
    8199, left hand column.
    
    Rents in Public Housing (24 CFR 5.603, 5.614) (Section 523 of the 1998 
    Act Amending Section 3(a) of the 1937 Act)
    
        Section 523 of the 1998 Act makes significant changes to the rents 
    charged for public housing units. Legislative history notes that the 
    current rent policies provides disincentives to work and upward 
    mobility. The Act gives PHAs significant flexibility to develop rent 
    policies to encourage self-sufficiency. In addition, public housing 
    residents can choose annually between paying an income-based rent or a 
    flat rent. Rent policies also can be used to help PHAs provide for 
    deconcentration of poverty and income mixing. Both income-based and 
    flat rents must be determined by the PHAs in accordance with their 
    written policies. (Rents are the subject of the new 24 CFR 5.614. In 
    this rule, HUD revises the definition of ``tenant rent'' in Sec. 5.603 
    to reflect the differences among the programs now that PHAs have 
    flexibility in determining rents in public housing.)
    Income-Based Rents
        In general, the monthly rental amount, including any applicable 
    utility allowance, calculated under this method must not exceed the 
    highest of the following: 30 percent (30%) of the family's monthly 
    adjusted income; 10 percent (10%) of the family's monthly income; or 
    the welfare rent, if applicable. The monthly rental amount cannot be 
    less than the minimum rent set by the PHA. The 1998 Act permits PHAs to 
    set income-based rents at an amount less than the maximum of 30 percent 
    of monthly adjusted income/10 percent of monthly income/welfare rent. 
    This gives PHAs considerable flexibility in setting income-based rent 
    structures. PHAs could set income-based rents at a fixed percentage 
    below 30 percent, could have a rent schedule which sets the same rent 
    amount for families whose income are within a certain income range, 
    impose ceiling rents, etc. HUD cannot assure PHAs that it can provide 
    additional subsidy to cover any reduced income resulting from such 
    policies. Future operating subsidy distribution is the subject of 
    negotiated rulemaking.
    Flat Rents
        Flat rents are intended as an incentive for residents to remain in 
    public housing after they have attained a level of self-sufficiency. 
    Working families will provide positive role models for other residents. 
    The Act requires flat rent be set at ``rental value,'' which HUD 
    interprets to be reasonable market value. In establishing reasonable 
    market value, PHAs should review rent of comparable units in the 
    community. A PHA must document its means for establishing the 
    reasonable market value. Methods that a PHA may consider in 
    establishing reasonable market value include using the area's Section 8 
    rent reasonableness survey for comparable developments. PHAs should 
    review their flat rents as often as necessary to assure they comply 
    with the regulatory requirements, but at least annually. HUD cannot 
    assure PHAs that it can provide additional subsidy to cover any reduced 
    income resulting from such policies. Future operating subsidy 
    distribution is the subject of negotiated rulemaking.
    Family Choice
        The 1998 Act requires PHAs to give families a choice among options 
    for rents. The options provided must include at least a flat rent and 
    an income-based rent. This choice must be given to each family 
    annually. PHAs must provide residents with enough information to make 
    an informed choice. For example, a PHA could provide the family both 
    the income-based rent and the flat rent for the unit. If the PHA has 
    not completed a current examination of the family's income (because the 
    family has been on flat rent and the PHA's policy is not to conduct 
    annual re-examinations on such families), the PHA should provide a 
    worksheet or other information on how income-based rent is determined 
    so the family could calculate its own income-based rent amount.
    Switching Rent Methods to Lower Rent Because of Financial Hardship
        The 1998 Act requires a PHA to immediately switch a family from a 
    flat rent to an income-based rent if the PHA determines that the family 
    has a financial hardship circumstance. The PHA must develop written 
    policies stating what the PHA will consider a financial hardship. The 
    PHA's policy must include situations in which the income of the family 
    has decreased because of loss or reduction of employment; death in the 
    family or loss of assistance; or increase in the family's expenses for 
    medical costs, child care, transportation, or education. PHAs can 
    include additional circumstances. Because the 1998 Act requires that 
    PHAs immediately switch rents, a PHA will need to conduct an 
    examination of the family's income in order to switch the rent as 
    quickly as possible, but the rent should be lowered no later than the 
    first of the month following the month the family reported the 
    hardship.
    Retaining Ceiling Rents
        The 1998 Act permits PHAs that currently have ceiling rents to 
    retain those rents instead of developing flat rents. HUD interprets 
    this to mean that PHAs may retain ceiling rent instead of flat rents 
    for three years, after which time those ceiling rents must be adjusted 
    to the same levels as required for flat rents. Ceiling rents are 
    subject to the limitations that a family cannot be required to pay more 
    than its income-based rent. Therefore, families with ceiling rents must 
    be given a reduced
    
    [[Page 23467]]
    
    rent if their income goes down. The PHA must continue to conduct annual 
    reexaminations of income for families who choose ceiling rents, since 
    the three year income review is not applicable to the ceiling rent 
    provision.
        Section 523 was discussed in the Initial Guidance Notice at 64 FR 
    8202, right hand column.
    
    New Community Service and Self-Sufficiency Requirements for Public 
    Housing (24 CFR 960.603-960.611) (Section 512 of the 1998 Act Amending 
    Section 12 of the 1937 Act)
    
        Section 512 of the 1998 Act adds a new requirement for non-exempt 
    residents of public housing. Each non-exempt adult public housing 
    resident must contribute eight (8) hours for each month of community 
    service or participate in a self-sufficiency program for 8 hours in 
    each month. (The exemptions are discussed later in this section.) 
    Community service is service for which the individual volunteers. A new 
    subpart F is added to 24 CFR part 960, establishing the community 
    service and self-sufficiency requirements.
        Each PHA Annual Plan must include a description of how the 
    community service and self-sufficiency requirements will be 
    implemented. The new subpart F of 24 CFR part 960 outlines basic 
    parameters for implementing the community service and self-sufficiency 
    requirement, while retaining flexibility for PHAs to develop 
    initiatives responsive to local circumstances. PHAs are encouraged to 
    partner with qualified resident councils or resident management 
    corporations, community and volunteer groups, or other third party 
    contractors to assist PHAs with program administration.
    The Relationship of Community Service and Self-Sufficiency
        Since community service is considered a tool to assist residents in 
    becoming responsible and self-sufficient, a number of community service 
    activities are considered self-sufficiency activities. A PHA policy may 
    provide for combining or substituting community service hours with 
    approved self-sufficiency hours to reach the 8 hour monthly 
    requirement.
    Community Service
        Community service offers public housing residents an opportunity to 
    contribute to the communities that support them. In establishing 
    community service policies, PHAs should not limit community service to 
    a single type of activity and/or a single location in which the 
    activity is to be performed. A PHA could include as community service 
    activities improving the physical environment of the resident's 
    development, volunteer work in a local school, hospital or child care 
    center, working with youth organizations, helping neighborhood groups 
    on special projects, or participation in programs that develop and 
    strengthen resident self-responsibility such as drug and alcohol abuse 
    counseling and treatment, household budgeting and credit counseling, 
    and English proficiency. The 1998 Act specifically prohibits political 
    activity as community service.
        A PHA can administer its own community service program, form 
    cooperative relationships with other entities in order to make 
    opportunities available for residents or contract the entire community 
    service program to a third party, including qualified resident 
    councils. A PHA may use a combination of these options. A PHA must 
    ensure that its own community service programs as well as programs 
    developed through cooperative relationships or contracts with third 
    parties are accessible for persons with disabilities.
        In administering its own program, a PHA or its authorized designee 
    identifies the most appropriate community service opportunities for 
    residents and directly supervises the performance of the community 
    service. This approach might include developing a directory of eligible 
    opportunities from which residents could select.
        Instead of managing the entire process, a PHA could link residents 
    with agencies seeking volunteers. Under this approach, the PHA's 
    administrative duties would be limited to monitoring the 
    appropriateness of the service and confirming a resident's 
    participation.
        Another alternative is for the PHA to contract with another entity 
    to run the community service program. The contract entity would then 
    perform all necessary administrative functions. The PHA would be 
    responsible to assure contract compliance. PHAs must follow their 
    procurement policies and 24 CFR 85.36 to contract out their community 
    service programs.
        When for-profit third party contractors are used, the PHA should 
    ensure that the administrators overseeing the program do not have a 
    financial interest in the entity where community service participants 
    are assigned. The PHA also should ensure that the conditions under 
    which the work is to be performed are not otherwise hazardous, that the 
    work is not labor that would be performed by the PHA's employees 
    responsible for essential maintenance and property services, or that 
    the work is otherwise unacceptable. The Senate Committee Report on this 
    provision noted that community service is not to be perceived as 
    punitive or demeaning activity, but rather community service should be 
    considered as rewarding activity that will assist residents in 
    improving their own and their neighbors' economic and social well-being 
    and give residents a greater stake in their communities. (Senate Report 
    at pg 21).
    Self-Sufficiency
        Participation in self-sufficiency activities can satisfy part or 
    all of a resident's requirement to perform community service. A non-
    exempt adult public housing resident may participate in an economic 
    self-sufficiency program for 8 hours in each month. The 1998 Act 
    defines economic self-sufficiency program to include activities that 
    are designed to encourage, assist, train or facilitate economic 
    independence. In setting policies for this requirement, PHAs are 
    encouraged to look at a broad range of self-sufficiency activities. In 
    addition to apprenticeships and job readiness training, such activities 
    as substance abuse and mental health counseling and treatment, English 
    proficiency, and household budgeting and credit counseling may be 
    considered activities which promote economic self-sufficiency. As with 
    community service, a PHA could operate its own economic self-
    sufficiency program, develop linkages with other agencies (e.g., TANF), 
    or contract for services to be provided to its residents.
    Geographic Location
        The 1998 Act discusses the geographic location where the resident 
    must perform the community service or participate in the economic self-
    sufficiency activity. The location includes PHA-owned property and the 
    community at large. The Congressional intent is that residents provide 
    service to their own communities. In rural areas, a resident's 
    community may encompass a large geographic area, while in dense urban 
    settings, the community may be a neighborhood. In its policy, a PHA 
    should make clear the meaning of ``community.''
    Exemptions
        The 1998 Act provides a list of exemptions to the requirement for 
    community services and economic self-sufficiency. These include adults 
    who are 62 years of age or older, persons with disabilities, persons 
    engaged in work activities (as defined by section
    
    [[Page 23468]]
    
    407(d) of the Social Security Act), and persons participating in a 
    welfare to work program, or receiving assistance from and in compliance 
    with a State program funded under part A, title IV of the Social 
    Security Act. (For purposes of the community service requirement, an 
    adult is a person 18 years or older.) PHAs need to develop policies and 
    procedures for determining and documenting residents' exemptions. 
    Generally PHAs should re-verify an adult's exemption status annually. 
    There are, of course, obvious exceptions. For example, an individual 
    exempt by being over 62 years in age would not need re-verification.
        PHAs must establish policies that permit residents to change 
    exemption status during the year if their situation changes. Unemployed 
    residents, for example, must be able to request a determination of 
    exemption if they find work or start a training program.
        Persons eligible for a disability deduction are not necessarily 
    automatically exempt from the community service, economic self-
    sufficiency requirement. The 1998 Act defines ``disability'' very 
    narrowly for the purpose of the community service requirement. Further, 
    the Act states that a person is exempt only to the extent the 
    disability makes the person ``unable to comply'' with the community 
    service requirement. The PHA must ensure that the community service and 
    self-sufficiency programs are accessible to persons with disabilities.
        The PHA must document all exemptions for the resident's file. 
    Policies must identify what kinds of documentation the PHA will accept. 
    Generally, PHAs should follow the same standards of documentation for 
    exemptions as they do for other verifications.
        While the 1998 Act exempts categories of persons based on their 
    characteristics, such as age or employment, the Act does not exempt 
    adult residents of particular developments or kind of units. Therefore, 
    families who pay flat rent, live in public housing units within market 
    rate developments, or families who are over income when they initially 
    occupy a public housing unit are not automatically exempt.
    Cooperative Relationships With Welfare Agencies
        The 1998 Act calls upon all PHAs to make their best efforts to 
    enter into cooperative relationships with the agencies that provide 
    assistance to their clients. PHAs should seek and advocate for 
    agreements to target assistance to PHA clients. Agreements with such 
    agencies will not only facilitate exchange of information, they will 
    expand the choice of community service and self-sufficiency programs 
    available to PHA clients and facilitate coordination of those services. 
    As noted in the Initial Guidance Notice, the 1998 Act amends the Public 
    Housing Management Assessment Program (PHMAP) (and the successor 
    program--the Public Housing Assessment System (PHAS)) to include the 
    extent of a PHA's coordination, promotion or provision of effective 
    self-sufficiency programs.
    Lease Requirements
        Under the 1998 Act, public housing leases must have 12 month terms. 
    The lease must be automatically renewable except for noncompliance with 
    the community service requirements. An annual signing process is not 
    necessary. The public housing lease also must provide for termination 
    and eviction for noncompliance with the community service requirements. 
    Any lease changes (including addenda) must be made in accordance with 
    the provisions of 24 CFR 966.3, including notice to tenants and 
    opportunity for comment. The PHA must implement this provision for each 
    family at the family's next regularly scheduled annual reexamination on 
    or after October 1, 1999, and for families admitted after October 1, 
    1999. The PHA may not renew or extend the lease if a household contains 
    a nonexempt adult who has failed to comply with the community service 
    requirement.
    Documentation
        Reasonable documentation must be provided to verify the community 
    service requirements. The documentation must be placed in the 
    resident's file at the time of reexamination.
    Noncompliance
        Each PHA must determine, on an annual basis, if non-exempt 
    residents are in compliance. The PHA must have a policy which permits 
    noncompliant families to cure the noncompliance. Such a policy must 
    require the noncompliant adult and the head of household to sign an 
    agreement to make up the hours needed within the next 12-month period. 
    Continued noncompliance will result in eviction of the entire family, 
    unless the noncompliant family member is no longer a part of the 
    household.
        Section 512 was discussed in the Initial Guidance Notice at 64 FR 
    8199, left hand column.
    
    Occupancy by Police Officers and Over-Income Families (24 CFR Parts 5 
    and 960) (Sections 524 and 548 of the 1998 Act Amending Sections 3 and 
    8 of the 1937 Act)
    
        Section 524 of the 1998 Act amends section 3(a) of the 1937 Act to 
    provide that PHAs and owners may allow police officers to reside in 
    public housing or assisted housing under the requirements of the 
    statute. Under this section, small PHAs may also rent units to over-
    income families on a month-to-month basis, in accordance with statutory 
    requirements, if there are no eligible families applying for assistance 
    for that month, provided that the over-income family agrees to vacate 
    (with at least 30 days notice) when the unit is needed for an income-
    eligible family. Section 548 of the Act provides for law enforcement 
    and security personnel in project-based section 8 housing assistance to 
    increase security.
        Section 524 of the Act was discussed in the Initial Guidance Notice 
    at 64 FR 8202, right-hand column. Section 548 of the Act was discussed 
    in the Initial Guidance Notice at 64 FR 8204, middle column.
    
    Changes to Existing Self-Sufficiency Programs--Public Housing and 
    Section 8 Certificate/Voucher Programs (24 CFR Part 984) (Section 509 
    of the 1998 Act Amending Section 23 of the 1937 Act)
    
        Section 509 of the 1998 Act amended section 23 of the 1937 Act to 
    make several changes to the Family Self-Sufficiency Program, which were 
    effective on October 21, 1998. Section 509 provides that the mandatory 
    minimum FSS program size will not increase when a PHA receives 
    incremental Section 8 funding or public housing units on or after 
    October 21, 1998. Section 509 also allows PHAs to reduce their 
    mandatory minimum FSS program size obligation as families successfully 
    complete their FSS contracts.
        HUD's regulations (24 CFR part 984) are amended to clarify that for 
    public housing, receipt of incremental housing units means reservation 
    of funds to acquire or construct additional public housing units on or 
    after October 21, 1998. Similarly, for Section 8 certificate and 
    voucher funding, receipt of funds means reservation of funds for the 
    Section 8 certificate and voucher programs. An expanded listing of 
    excluded funding categories that did not increase a PHA's mandatory 
    minimum program size is now included in 24 CFR 984.105. The regulations 
    in part 984 are also amended to clarify that PHAs may continue to 
    implement and administer
    
    [[Page 23469]]
    
    FSS programs larger than the required levels, and that HUD approval of 
    the PHA's FSS action plan authorizes the PHA to implement a voluntary 
    FSS program.
        In addition, Sec. 984.306(b)(1) has been revised so that PHAs can 
    now approve a family's move outside the PHA's jurisdiction during the 
    first 12 months of a family's FSS contract of participation. The 
    regulatory definition of welfare assistance in Sec. 984.103 also has 
    been revised so that it does not disadvantage working families and 
    families with persons with disabilities.
        Section 509 was discussed in the Initial Guidance Notice at 64 FR 
    8198, right hand column.
    
    III. Findings and Certifications
    
    Public Reporting Burden
    
        The information collection requirements contained in Secs. 5.410, 
    5.612, 5.614, 5.616, 960.605, and 984.201 have been submitted to the 
    Office of Management and Budget (OMB) under the Paperwork Reduction Act 
    of 1995 (44 U.S.C. 3501-3520). In accordance with the Paperwork 
    Reduction Act, HUD may not conduct or sponsor, and a person is not 
    required to respond to, a collection of information unless the 
    collection displays a currently valid OMB control number.
        Comments regarding the information collections contained in the 
    rule must be submitted by June 29, 1999. Comments on these information 
    collections should refer to the title of this rule and must be sent to: 
    Reports Liaison Officer, Mildred Hamman, Department of Housing and 
    Urban Development, 451 Seventh Street, SW, Room 4238, Washington, DC 
    20410.
        Specifically, comments are solicited from members of the public and 
    affected entities concerning the proposed collection of information to:
        (1) Evaluate whether the proposed collection of information is 
    necessary for the proper performance of the functions of the agency, 
    including whether the information will have practical utility;
        (2) Evaluate the accuracy of the agency's estimate of the burden of 
    the proposed collection of information;
        (3) Enhance the quality, utility, and clarity of the information to 
    be collected; and
        (4) Minimize the burden of the collection of information on those 
    who are to respond, including through the use of appropriate automated 
    collection techniques or other forms of information technology, e.g., 
    permitting electronic submission of responses.
        The burden of the information collections is estimated as follows:
    
    ----------------------------------------------------------------------------------------------------------------
                                         Number of     Responses per    Total ann.       Hours per      Total ann.
            Section of 24 CFR           respondents        resp.         responses       response          hours
    ----------------------------------------------------------------------------------------------------------------
    5.410 (Resid. Prefs.)...........           3,400               1           3,400              16          54,400
    5.611 New Deductions............           3,400               1           3,400               8          27,000
    5.612(c) Indiv Sav Accounts.....           8,000               1           8,000               2          16,000
    5.614(c) Written Rent Options...           3,400               1           3,400              16          54,400
    5.618(b) Welf. Rent Verif.......           3,400               1           3,400               3          10,200
    5.618(c) Welf. Rent Notice......           3,400               1           3,400               1           3,400
    960.605(c) Comm Serv............           3,400               1           3,400               1           3,400
    984.201 FSS Action Plan 2577-     ..............  ..............  ..............  ..............  ..............
     0178 exp 7/31/99...............
    960.505 Over Inc Fams in Small               500               1             500               1             500
     PHAs...........................
                                     -------------------------------------------------------------------------------
        Total Burden................  ..............  ..............  ..............  ..............         169,300
    ----------------------------------------------------------------------------------------------------------------
    
    Regulatory Review
    
        The Office of Management and Budget (OMB) reviewed this proposed 
    rule under Executive Order 12866, Regulatory Planning and Review. OMB 
    determined that this proposed 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 proposed 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), has reviewed and approved this proposed rule and in so 
    doing certifies that this rule would not have a significant economic 
    impact on a substantial number of small entities. The proposed rule 
    begins the rulemaking process to implement changes to admission and 
    occupancy requirements in public housing made by the Quality Housing 
    and Work Responsibility Act of 1998. Although HUD has determined that 
    this proposed rule would not have a significant economic impact on a 
    substantial number of small entities, HUD welcomes comments regarding 
    any less burdensome alternatives to this rule that will meet HUD's 
    objectives as described in this preamble.
    
    Environmental Impact
    
        A Finding of No Significant Impact with respect to the environment 
    was made 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 
    during regular business hours in the Office of the Rules Docket Clerk, 
    Office of General Counsel, Department of Housing and Urban Development, 
    Room 10276, 451 Seventh Street, SW, Washington, DC 20410.
    
    Federalism Impact
    
        The General Counsel, as the Designated Official for HUD under 
    Section 6(a) of Executive Order 12612, Federalism, has determined that 
    this proposed rule would not have federalism implications concerning 
    the division of local, State, and Federal responsibilities, and 
    therefore review under the order is not required. The proposed rule is 
    exclusively concerned with admission and occupancy requirements in 
    public housing. No programmatic or policy changes will result from this 
    rule that would affect the relationship between the Federal government 
    and State and local governments.
    
    Unfunded Mandates Reform Act
    
        The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532) 
    establishes requirements for Federal agencies to assess the effects of 
    their regulatory actions on State, local, and tribal governments and 
    the private sector. This proposed rule does not impose a Federal 
    mandate that will result in the expenditure by State, local, or tribal
    
    [[Page 23470]]
    
    governments, in the aggregate, or by the private secto, or $100 million 
    or more in any one year.
    
    Catalog
    
        The Catalog of Federal Domestic Assistance numbers for these 
    programs are 14.850, 14.855, and 14.857.
    
    List of Subjects
    
    24 CFR Part 5
    
        Administrative practice and procedure, Aged, Claims, Drug abuse, 
    Drug traffic control, Grant programs--housing and community 
    development, Grant programs--Indians, Individuals with disabilities, 
    Loan programs--housing and community development, Low and moderate 
    income housing, Mortgage insurance, Pets, Public housing, Rent 
    subsidies, Reporting and recordkeeping requirements.
    
    24 CFR Part 960
    
        Aged, Grant programs--housing and community development, 
    Individuals with disabilities, Public housing.
    
    24 CFR Part 966
    
        Grant programs--housing and community development, Public housing.
    
    24 CFR Part 984
    
        Grant programs--housing and community development, Rent subsidies, 
    Reporting and recordkeeping requirements.
    
        Accordingly, HUD proposes to amend parts 5, 960, and 966 of title 
    24 of the Code of Federal Regulations as follows:
    
    PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
    
        1. The authority citation for part 5 continues to read as follows:
    
        Authority: 42 U.S.C. 3535(d), unless otherwise noted.
    
    Subpart B--Disclosure and Verification of Social Security Numbers 
    and Employer Identification Numbers; Procedures for Obtaining 
    Income Information
    
        2. Add a new Sec. 5.211, to read as follows:
    
    
    Sec. 5.211  Disclosure of income matching information to the public 
    housing agency.
    
        (a) Public housing residents and section 8 tenant-based 
    participants must disclose the letter and other information they 
    received from HUD regarding their income (under HUD's income 
    verification initiative) to the PHA.
        (b) The PHA must verify the accuracy of the income data, change 
    rent amounts, or terminate assistance, as appropriate, when public 
    housing residents or Section 8 tenant-based participants disclose 
    income information, as described in paragraph (a) of this section.
    
    
    Sec. 5.214  [Amended]
    
        3. Amend Sec. 5.214 by removing the definition of ``HA''.
    
    Subpart D--Definitions and Other General Requirements for 
    Assistance Under the United States Housing Act of 1937
    
    
    Sec. 5.400  [Amended]
    
        4. Amend Sec. 5.400 by removing the parenthetical phrase.
        5. Amend Sec. 5.403 to add a definition of responsible entity, to 
    read as follows:
    
    
    Sec. 5.403  Definitions.
    
    * * * * *
        Responsible entity means:
        (1) For the public housing program, the Section 8 tenant-based 
    assistance program (part 982 of this title), the Section 8 project-
    based certificate assistance program (part 983 of this title), and the 
    Section 8 moderate rehabilitation program (part 882 of this title), the 
    responsible entity means the PHA administering the program under an ACC 
    with HUD;
        (2) For all other Section 8 programs, the responsible entity means 
    the Section 8 owner.
    
    
    Sec. 5.405  [Amended]
    
        6. Amend Sec. 5.405 as follows:
        a. By removing from the last sentence of paragraph (a) the phrase: 
    ``who are not elderly persons, or displaced persons, or persons with 
    disabilities'';
        b. By removing paragraphs (b) and (d); and
        c. By redesignating paragraph (c) as paragraph (b).
        7. Revise Sec. 5.410, to read as follows:
    
    
    Sec. 5.410  Selection preferences.
    
        (a) Applicability. The preferences for admission to the various 
    programs differ. For each program, the preferences are administered by 
    the responsible entity.
        (b) Local preferences in public housing. A PHA may establish a 
    system for admitting or selecting families for assistance that provides 
    preference to families having certain characteristics. A system of 
    preferences must be based on local housing needs and priorities, as 
    determined by the PHA using generally accepted data sources, including 
    waiting list and any information obtained during public comment on the 
    PHA Annual Plan and under the requirements applicable to the 
    Consolidated Plan. Additionally, consistent with the PHA's Annual Plan, 
    the PHA should consider preferences for individuals who are victims of 
    domestic violence.
        (c) Preferences in project-based Section 8 assistance programs 
    other than project-based certificates and moderate rehabilitation. (1) 
    The responsible entity may give preference to working families. In 
    implementing a preference for working families, the responsible entity 
    is subject to the anti-skipping provision of paragraph (g) of this 
    section regarding income levels. (If a responsible entity adopts a 
    preference for working families, the entity must not give greater 
    weight to an applicant based on the amount of employment income, and an 
    applicant household must be given the benefit of the preference if the 
    head of the household, spouse, or sole member of the household is age 
    62 or older or is receiving social security disability benefits, 
    supplemental security income disability benefits, or any other payments 
    based on an individual's inability to work.) A responsible entity may 
    give preference to graduates of, as well as active participants in, 
    educational and training programs that are designed to prepare 
    individuals for the job market.
        (2) Owners must develop a written tenant selection plan in 
    accordance with program requirements. Owners are permitted to use PHA 
    local preferences in their tenant selection plan. If an owner elects to 
    make use of local preferences established by a PHA, the tenant 
    selection plan must describe how any preferences will be used.
        (d) Preference in the Section 8 tenant-based, project-based 
    certificate, and moderate rehabilitation programs. The PHA may 
    establish a system of local preferences for selection of families 
    admitted to the program that are consistent with the PHA Plan. (See 
    Secs. 982.207, 983.203, and 882.514 of this title.)
        (e) Residency preferences. (1) Public housing. A preference for 
    admission or selection for assistance of families who reside anywhere 
    in a specified ``residency preference area'' is permitted to respond to 
    local needs and priorities. Applicants who are working or who have been 
    notified that they are hired to work in the residency preference area 
    must be treated as residents of the residency preference area, and a 
    residency preference may not be based on how long the applicant has 
    resided in or worked in the residency preference area.
        (2) Section 8 programs other than tenant-based certificate/voucher, 
    project-based certificate, and moderate
    
    [[Page 23471]]
    
    rehabilitation programs. In these programs, local residency 
    requirements are prohibited.
        (3) Section 8 certificate/voucher, project-based certificate, and 
    moderate rehabilitation programs. See Secs. 982.207(b), 983.203(a), and 
    882.514(b) of this title.
        (f) Use of other factors in public housing and project-based 
    Section 8 housing. The responsible entity may, in selecting a family 
    for a particular unit, match other characteristics of the applicant 
    family with the type of unit available, for example, number of 
    bedrooms. In selection of a family for a unit that has special 
    accessibility features, the responsible entity must give preference to 
    families who include persons with disabilities and can benefit from 
    those features of the unit (see Secs. 8.27 and 100.202 of this title). 
    Also, in selection of a family for a unit in a public housing mixed 
    population project, the responsible entity must give preference to 
    elderly families and disabled families (see, for example, subpart D of 
    part 960 of this title).
        (g) Section 8 income-based admission. In Section 8 programs, the 
    responsible entity may not select an applicant for admission in an 
    order different from the order on the waiting list for the purpose of 
    selecting a relatively higher income family for admission.
        (h) Informing applicants about admission preferences. (1) The 
    responsible entity must inform all applicants about available 
    preferences and must give applicants an opportunity to show that they 
    qualify for available preferences.
        (2) If the responsible entity determines that the notification to 
    all applicants on a waiting list required by paragraph (h)(1) of this 
    section is impracticable because of the length of the list, the 
    responsible entity may provide this notification to fewer than all 
    applicants at any given time.
    * * * * *
    
    
    Secs. 5.415, 5.420, 5.425, and 5.430  [Removed]
    
        8. Remove Secs. 5.415, 5.420, 5.425, and 5.430.
    
    Subpart F--Income Limits, Annual Income, Rent and Examinations for 
    the Public Housing and Section 8 Programs
    
        9. Amend Sec. 5.601 as follows:
        a. Revise the heading of Sec. 5.601;
        b. Remove existing paragraphs (a)(2)(iii) and (b);
        c. Redesignate the introductory text of paragraph (a) as new 
    paragraphs (a) and (b), introductory text;
        d. Redesignate paragraphs (a)(1) through (a)(3) as paragraphs 
    (b)(1) through (b)(3);
        e. Add new paragraphs (c) and (d).
        The revised heading of Sec. 5.601, revised paragraphs (a) and (b), 
    introductory text, and new paragraphs (c) and (d) read as follows:
    
    
    Sec. 5.601  Purpose, applicability and reporting.
    
        (a) Purpose. This subpart provides the definitions and requirements 
    for income limits for admission, annual income, adjusted income, total 
    tenant payments, utility allowances and reimbursements, and 
    reexamination of income and family composition for the programs listed 
    in paragraph (b) of this section.
        (b) Programs covered. This subpart covers the following HUD 
    programs:
        (1) * * *
    * * * * *
        (c) Income eligibility for assistance. No family other than a low-
    income family shall be eligible for admission to a program covered by 
    this subpart, unless otherwise determined by HUD.
        (d) Reporting. PHAs and owners must comply with HUD-prescribed 
    reporting requirements that will permit HUD to maintain the data 
    necessary to monitor compliance with the income eligibility 
    restrictions of this subpart.
    
    (Approved by the Office of Management and Budget under Control 
    number 2502-0204)
    
        10. In Sec. 5.603, revise the definitions of full-time student, and 
    tenant rent, and add definitions of extremely low-income family and 
    responsible entity, to read as follows:
    
    
    Sec. 5.603  Definitions.
    
    * * * * *
        Extremely low-income family. A family whose annual income does not 
    exceed 30 percent of the median income for the area, as determined by 
    HUD, with adjustments for smaller and larger families.
    * * * * *
        Full-time student. A person who is attending school or vocational 
    training on a full-time basis.
    * * * * *
        Responsible entity. For the public housing and the Section 8 
    tenant-based assistance (part 982 of this title), project-based 
    certificate assistance (part 983 of this title) and moderate 
    rehabilitation program (part 882 of this title), the responsible entity 
    means the PHA administering the program under an ACC with HUD. For all 
    other Section 8 programs, the responsible entity means the Section 8 
    owner.
    * * * * *
        Tenant rent. The amount payable monthly by the family as rent to 
    the unit owner (Section 8 owner or PHA in public housing).
    * * * * *
    
    
    Sec. 5.605  [Removed]
    
        11. Remove Sec. 5.605.
        12. Revise 5.607 to read as follows:
    
    
    Sec. 5.607  Income Limits for Admission.
    
        (a) Public housing.--(1) Income mix. For admission to a PHA's 
    public housing unit, the PHA may establish and use criteria for 
    selection of residents for units in public housing developments that 
    will produce a mix of incomes in the developments, subject to the 
    provisions of this section. (The PHA's admissions policies that are 
    designed to deconcentrate poverty and to bring a mix of incomes into 
    developments are an element of its PHA Plan, part 903 of this title.)
        (2) Targeting.--(i) General. At least 40 percent of the admissions 
    to the public housing program in each fiscal year must be extremely low 
    income families, as defined in Sec. 5.603.
        (ii) Exceptions. ``Credit'' provisions of paragraph (d) of this 
    section permit the level of extremely low income families admitted to 
    other HUD programs in a given fiscal year to affect the general 
    targeting requirement for admissions to public housing.
        (3) Prohibition. In complying with paragraph (a)(2) of this 
    section, the PHA must not concentrate very low-income families in one 
    public housing development or one building within a development. For 
    this purpose, very low-income families includes other families with 
    relatively low incomes.
        (4) Effect of Section 8 tenant-based assistance on public housing 
    targeting. The PHA may reduce the required number of public housing 
    units to which extremely low-income families must be admitted to the 
    extent the PHA has credits, in the same fiscal year, for admissions of 
    extremely low-income families to its Section 8 tenant-based assistance 
    program beyond the number required for that program.
        (i) Maximum number of credits. The PHA may not have more credits 
    than the lesser of:
        (A) Ten percent of the total number of families admitted to the 
    Section 8 tenant-based assistance program during the fiscal year; or
        (B) The number of the PHA's public housing units in projects 
    located in census tracts with a poverty rate of 30 percent or more that 
    are made available and filled by eligible families who are not 
    extremely low-income families.
    
    [[Page 23472]]
    
        (ii) Limitation on use of credits. In any fiscal year, at least 30 
    percent of a PHA's admissions to public housing units must be extremely 
    low-income families, despite the availability of credits.
        (b) Section 8 tenant-based assistance. (1) Targeting. Not less than 
    75 percent of the families admitted to a PHA's tenant-based Section 8 
    program during the PHA fiscal year must be families whose annual income 
    does not exceed the following amounts as determined by HUD:
        (i) 30 percent of the area median income, with adjustments for 
    smaller and larger families; or (ii) A higher or lower percent of the 
    area median income, if HUD determines a higher or lower percent is 
    necessary because of unusually high or low family incomes.
        (2) Conversion of assistance. Conversion of assistance for a 
    participant in the PHA certificate program to assistance in the PHA 
    voucher program does not count as an ``admission,'' and is not subject 
    to targeting under paragraph (b)(1) of this section.
        (3) Inapplicability of targeting. Admission of the following 
    categories of families is not subject to targeting under paragraph 
    (b)(1) of this section:
        (i) A low-income family that is continuously assisted under the 
    1937 Act; or
        (ii) A low-income or moderate-income family that is displaced as a 
    result of the prepayment of the mortgage or voluntary termination of an 
    insurance contract on eligible low-income housing, as defined at 
    Sec. 248.101 of this title.
        (4) Jurisdictions served by more than one PHA. If two or more PHAs 
    that administer Section 8 tenant-based assistance have an identical 
    jurisdiction, these PHAs shall be treated as a single PHA for purposes 
    of meeting the targeting requirements of this section. In such a case, 
    the PHAs shall cooperate to assure that aggregate admissions by such 
    PHAs comply with the targeting requirement under paragraph (b)(1) of 
    this section. If such PHAs do not have a single fiscal year, HUD will 
    determine which PHA's fiscal year is used for this purpose.
        (5) Use of family's income. The annual income (gross income) of an 
    applicant family is used both for determination of income-eligibility 
    under Sec. 5.601(c) and for PHA income-targeting under paragraph (b)(1) 
    of this section.
        (c) Section 8 project-based assistance. (1) Applicability. Income 
    limits established by paragraph (c)(2) of this section apply to the 
    following programs:
        (i) Section 8 New Construction or Substantial Rehabilitation (parts 
    880 and 881 of this title);
        (ii) Section 8 Property Disposition and Loan Management Set-Aside 
    (part 886 of this title);
        (iii) Section 8 Project-Based Certificate (part 983 of this title);
        (iv) Section 8 Moderate Rehabilitation (part 882 of this title);
        (v) Low-income housing preservation program (LIHPRA or ELIHPA, in 
    effect before November 28, 1990); and
        (vi) Section 8 following conversion from the Rent Supplement or 
    Section 236 Rental Assistance Payments programs.
        (2) Targeting. At least 40 percent of families admitted to a 
    project in a fiscal year must be extremely low-income families.
        (3) Limitation on admission of non- very low-income families.--(i) 
    Admission to units available before October 1, 1981. Not more than 25 
    percent of the dwelling units that were available for occupancy under 
    Annual Contributions Contracts (ACC) and Section 8 Housing Assistance 
    Payments Contracts taking effect before October 1, 1981 and that are 
    leased on or after that date shall be available for leasing by low-
    income families other than very low-income families. HUD reserves the 
    right to limit the admission of low-income families other than very 
    low-income families to these units.
        (ii) Admission to units available on or after October 1, 1981. Not 
    more than 15 percent of the dwelling units that initially become 
    available for occupancy under Annual Contributions Contracts (ACC) and 
    Section 8 Housing Assistance Payments (HAP) Contracts on or after 
    October 1, 1981 shall be available for leasing by low-income families 
    other than very low-income families. Except with the prior approval of 
    HUD under paragraphs (d) and (e) of this section, no low-income family, 
    other than a very low-income family shall be admitted to these units.
        (iii) Request for exception. A request by a PHA or owner for 
    approval of admission of low-income families other than very low-income 
    families to units described in paragraph (c)(3)(ii) of this section 
    must state the basis for requesting the exception and provide 
    supporting data. Bases for exceptions that may be considered include 
    the following:
        (A) Need for admission of a broader range of tenants to preserve 
    the financial or management viability of a project because there is an 
    insufficient number of potential applicants who are very low-income 
    families;
        (B) Commitment of an owner to attaining occupancy by families with 
    a broad range of incomes; and
        (C) Project supervision by a State Housing Finance Agency having a 
    policy of occupancy by families with a broad range of incomes supported 
    by evidence that the Agency is pursuing this goal throughout its 
    assisted projects in the community, or a project with financing through 
    Section 11(b) of the 1937 Act (42 U.S.C. 1437i) or under Section 103 of 
    the Internal Revenue Code (26 U.S.C. 103).
        (iv) Action on request for exception. Whether to grant any request 
    for exception is a matter committed by law to HUD's sole discretion, 
    and no implication is intended to be created that HUD will seek to 
    grant approvals up to the maximum limits permitted by statute, nor is 
    any presumption of an entitlement to an exception created by the 
    specification of certain grounds for exception that HUD may consider. 
    HUD will review exceptions granted to owners at regular intervals. HUD 
    may withdraw permission to exercise those exceptions for program 
    applicants at any time that exceptions are not being used or after a 
    periodic review, based on the findings of the review.
    
    
    Sec. 5.609  [Amended]
    
        13. Amend Sec. 5.609 as follows:
        a. Redesignate the introductory text of existing paragraph (b)(6) 
    except heading as paragraph (b)(6)(ii) and redesignate existing 
    paragraph (b)(6) (i) and (ii) as paragraphs (b)(6)(ii) (A) and (B).
        b. Add, after the heading of paragraph (b)(6), a new paragraph (i) 
    to read as follows:
    * * * * *
        (b) * * *
        (6) * * * (i) The amount of reduced welfare income that is 
    disregarded specifically because the family engaged in fraud or failed 
    to comply with an economic self-sufficiency or work activities 
    requirement.
    * * * * *
        c. Remove paragraphs (c)(1) and (c)(13) and renumber the remaining 
    paragraphs as (c) (1) through (15).
        d. Remove paragraph (d) and redesignate paragraph (e) as paragraph 
    (d).
        14. Revise Sec. 5.611 to read as follows:
    
    
    Sec. 5.611  Adjusted income.
    
        Adjusted income means annual income (as determined by the PHA) of 
    the members of the family residing or intending to reside in the 
    dwelling unit, after making the following deductions:
        (a) Mandatory deductions. In determining adjusted income, a PHA
    
    [[Page 23473]]
    
    must deduct the following amounts from annual income:
        (1) $480 for each dependent;
        (2) $400 for any elderly family or disabled family;
        (3) The sum of the following, to the extent the sum exceeds three 
    percent of annual income:
        (i) Unreimbursed medical expenses of any elderly family or disabled 
    family; and
        (ii) Unreimbursed reasonable attendant care and auxiliary apparatus 
    expenses for each member of the family who is a person with a 
    disability, to the extent necessary to enable any member of the family 
    (including the member with a disability) to be employed;
        (4) Any reasonable child care expenses necessary to enable a member 
    of the family to be employed or to further his or her education; and
        (5) The amount of any earned income of a family member (other than 
    the family head or spouse) who is not 18 years of age or older.
        (b) Permissive deductions--for public housing only. A PHA may 
    establish other deductions from annual income. The PHA must identify 
    these deductions in its written policies and must grant them to every 
    family who qualifies.
        15. Add a new Sec. 5.612 to read as follows:
    
    
    Sec. 5.612  Self-Sufficiency incentives--applicable to public housing 
    only.
    
        (a) Limit on rent increases. The PHA must not increase the annual 
    income of an eligible family as a result of increased income due to 
    employment during the 12-month period beginning on the date on which 
    the employment is commenced. Eligible families are those that reside in 
    public housing:
        (1) Whose income increases as a result of employment of a family 
    member who was previously unemployed for one or more years. For 
    purposes of this section, ``previously unemployed'' includes a person 
    who has earned, in the previous twelve months, no more than would be 
    received for 10 hours of work per week for 50 weeks at the established 
    minimum wage.
        (2) Whose employment income increases during the participation of a 
    family member in any family self-sufficiency or other job training; or
        (3) Who is or was, within 6 months, assisted under any state 
    program for temporary assistance for needy families funded under Part A 
    of Title IV of the Social Security Act, as determined by the PHA in 
    consultation with the local TANF agency, and whose earned income 
    increases.
        (b) Phase-in of rent increases. Upon expiration of the 12-month 
    period described in paragraph (a) of this section, the rent payable by 
    a family may be increased due to continued employment of a family 
    member except that for the 12-month period following expiration of the 
    12 month disallowance, the increase may not be greater than 50 percent 
    of the amount of the total rent increase.
        (c) Individual Savings Accounts. As an alternative to the 
    disallowance of earned income described in paragraph (a) of this 
    section or the phase-in of rent increase described in paragraph (b) of 
    this section, a PHA may provide for individual savings accounts for 
    public housing residents who pay an income-based rent, in accordance 
    with a written policy, which must include the following provisions:
        (1) The PHA must advise the family that the savings account option 
    is available;
        (2) At the option of the family, the PHA must deposit in the 
    savings accounts an amount equal to the total amount that otherwise 
    would have been applied to the family's rent payment as a result of 
    employment;
        (3) Amounts deposited in a savings account may be withdrawn only 
    for the purpose of:
        (i) Purchasing a home;
        (ii) Paying education costs of family members;
        (iii) Moving out of public or assisted housing; or
        (iv) Paying any other expense authorized by the PHA for the purpose 
    of promoting the economic self-sufficiency of residents of public 
    housing.
        (4) The PHA must maintain the account in an interest bearing 
    investment and must credit the family with the interest income; and
        (5) At least annually the PHA must provide the family with a report 
    on the status of the account.
        (6) The PHA must provide that any balance in such an account when 
    the family moves out is the property of the family unless the family is 
    not in compliance with the lease.
        16. Revise Sec. 5.613 to read as follows:
    
    
    Sec. 5.613  Total tenant payment.
    
        (a) Total tenant payment is the highest of the following amounts, 
    rounded to the nearest dollar:
        (1) 30 percent of the family's monthly adjusted income;
        (2) 10 percent of the family's monthly income;
        (3) If the family is receiving payments for welfare assistance from 
    a public agency and a part of those payments, adjusted in accordance 
    with the family's actual housing costs, is specifically designated by 
    such agency to meet the family's housing costs, the portion of those 
    payments which is designated for housing; or
        (4) Minimum rent, in accordance with applicable provisions of 
    Sec. 5.616.
        (b) If the family's welfare assistance is ratably reduced from the 
    standard of need by applying a percentage, the amount calculated under 
    paragraph (a)(3) of this section is the amount resulting from one 
    application of the percentage.
        17. Add a new Sec. 5.614 to read as follows:
    
    
    Sec. 5.614  Choice of rent in public housing.
    
        (a) The amount payable monthly by the family as rent to the PHA is 
    the rent selected annually by the family from the options offered under 
    the PHA's rent policies. The options must include:
        (1) Flat rent. A flat rent is the amount of tenant rent based on 
    the market value of the unit, as determined by the PHA. The flat rent 
    is designed to encourage self-sufficiency and to avoid creating 
    disincentives for continued residency by families who are attempting to 
    become economically self-sufficient. A PHA must take reasonable steps 
    to determine market value, and generally should use a comparability 
    study. The comparability study would analyze relevant factors for the 
    community in which the unit is located, including unassisted rents for 
    housing of similar age, location, condition, amenities, design and 
    size. The PHA must maintain records regarding the calculation and 
    establishment of flat rents; and
        (2) Income-based rent. An income-based rent is the amount of tenant 
    rent based on the family's income, as determined by the PHA, and the 
    PHA's rent policies, which may specify a percentage of family income, a 
    schedule of amounts, or some other feasible system. The income-based 
    rent, including any applicable utility allowance, must not exceed the 
    total tenant payment. A PHA may administer income-based rents in a way 
    that involves depositing a portion of the tenant rent to an escrow or 
    savings account, imposing a ceiling on tenant rents, adopting 
    permissive income deductions (24 CFR 5.611(b)), or other reasonable 
    amounts, as long as the tenant rent plus any utility allowance does not 
    exceed total tenant payment. (See Sec. 5.611(b).)
        (b) Ceiling rent. A PHA may retain ceiling rents instead of flat 
    rents for a period of three years from [insert effective date of final 
    rule]. After this three year period, the PHA must adjust the ceiling 
    rents to the same level as flat
    
    [[Page 23474]]
    
    rents under this section; however, ceiling rents are subject to 
    paragraph (a) of this section, the annual reexamination requirements, 
    and the limitation that the tenant rent plus any utility allowance may 
    not exceed the total tenant payment.
        (c) Information for families. For the family to make an informed 
    choice about its rent options, the PHA must provide sufficient 
    information for an informed choice. Such information must include at 
    least the following information:
        (1) The dollar amounts of tenant rent for the family under each 
    option; and
        (2) The PHA's policies on switching type of rent in circumstances 
    of financial hardship.
        (d) Changing type of rental payment. If the PHA determines that the 
    family is unable to pay the flat rent because of financial hardship, 
    the PHA must immediately switch the family's rental payment from flat 
    rent to income-based rent.
        (e) Written policies on financial hardship. The PHA must establish 
    written policies for determining financial hardship circumstances. 
    Policies must include situations in which the family:
        (1) Has experienced a decrease in income because of changed 
    circumstances, loss or reduction of employment, death in the family, 
    and reduction in or loss of earnings or other assistance;
        (2) Has experienced an increase in expenses, because of changed 
    circumstances, for medical costs, child care, transportation, 
    education, or similar items; and
        (3) Such other situations determined by the PHA to be appropriate.
        18. Add a new Sec. 5.616, to read as follows:
    
    
    Sec. 5.616  Minimum rent.
    
        (a) Minimum rent. A family must pay at least a minimum rent, 
    established by the responsible entity. For public housing and the 
    section 8 certificate, voucher and moderate rehabilitation programs, 
    the PHA may establish a minimum rent of $0 to $50. For other section 8 
    programs, the amount is $25. This minimum rent includes tenant rent 
    plus any utility allowance. The responsible entity must grant an 
    exemption from payment of this minimum rent if the family is unable to 
    pay that rent as a result of financial hardship, as described in the 
    responsible entity's written policies.
        (b) Financial hardship. The financial hardships that must be 
    included are the following:
        (1) When the family has lost eligibility for or is awaiting an 
    eligibility determination for a Federal, State, or local assistance 
    program;
        (2) When the family would be evicted as a result of the imposition 
    of the minimum rent requirement;
        (3) When the income of the family has decreased because of changed 
    circumstances, including loss of employment;
        (4) When a death has occurred in the family; and
        (5) Other circumstances determined by the responsible entity or 
    HUD.
        (c) Request for hardship exemption.--(1) For public housing. (i) If 
    a family requests a hardship exemption, the PHA must suspend the 
    minimum rent requirement immediately, until the PHA determines whether 
    there is a qualifying financial hardship and whether the hardship is 
    long-term.
        (ii) If the PHA determines that there is a qualifying hardship, but 
    that it is temporary, the PHA reinstates the minimum rent from the time 
    of suspension. The PHA cannot evict the family for nonpayment of the 
    amount of minimum rent in excess of tenant rent otherwise payable 
    during the 90-day period beginning on the date the family requested an 
    exemption. The PHA must offer the family a reasonable repayment 
    agreement for the amount of back rent owed.
        (2) For section 8 certificate, voucher and moderate rehabilitation 
    programs and project-based section 8 assistance. (i) If a family 
    requests a hardship exemption, the responsible entity must suspend the 
    minimum rent requirement beginning the month following the family's 
    hardship request until the responsible entity determines whether there 
    is a qualifying financial hardship and whether it is temporary or long 
    term.
        (ii) If the responsible entity determines that there is a 
    qualifying financial hardship, but that it is temporary, the 
    responsible entity may not impose a minimum rent for a period of 90 
    days from the date of the family's request. At the end of the 90-day 
    suspension period, a minimum rent is imposed retroactively to the time 
    of suspension. The family must be offered a responsible repayment 
    agreement for the amount of back rent owed.
        (3) For all programs. (i) If the responsible entity determines 
    there is no qualifying hardship exemption, the responsible entity must 
    reinstate the minimum rent including the back payment for minimum rent 
    from the time of suspension on terms and conditions established by the 
    responsible entity.
        (ii) If the responsible entity determines there is a qualifying 
    long-term financial hardship, the responsible entity must exempt the 
    family from the minimum rent requirements.
        (d) Appeal of financial hardship determination. A family who 
    appeals a financial hardship determination through the public housing 
    grievance procedure is exempt from any escrow deposit that may be 
    required by the regulations governing these procedures.
        19. In Sec. 5.617, revise paragraph (a); redesignate existing 
    paragraph (b) as paragraph (c); and add a new paragraph (b), to read as 
    follows:
    
    
    Sec. 5.617  Redetermination and verification of family income and 
    composition.
    
        (a) Initial determination and regular redeterminations.--(1) 
    Section 8. The responsible entity must conduct a redetermination of 
    family income and composition at least annually.
        (2) Public housing. (i) For families who pay an income-based rent, 
    the PHA must conduct a redetermination of family income and composition 
    at least annually and must make appropriate adjustments in the rent 
    after consultation with the family and upon verification of the 
    information.
        (ii) For families who choose flat rents, the PHA must review the 
    income of the family in accordance with the PHA's established policies, 
    at least once every three years.
        (iii) For all families who include nonexempt individuals, as 
    defined in 24 CFR 960.602, the PHA must determine compliance once each 
    12 months with community service and self-sufficiency requirements in 
    24 CFR 960, subpart F.
        (iv) The PHA may use the results of these evaluations to require 
    the family to move to an appropriate size unit.
        (b) Interim redeterminations.--(1) When the redetermination is 
    conducted. A family may request an interim redetermination of family 
    income or composition because of any changes since the last 
    determination. The responsible entity must make the interim 
    redetermination within a reasonable time after the family request. The 
    responsible entity may adopt policies prescribing when and under what 
    conditions the family must report a change in family composition.
        (2) How the redetermination is conducted. In the case of a PHA, 
    interim redeterminations must be conducted consistent with policies in 
    its PHA Annual Plan. The change in income is annualized, even if the 
    income is not expected to last for a full year. If the income changes 
    again, the new amount
    
    [[Page 23475]]
    
    of monthly income will be annualized again.
    * * * * *
        20. Add a new Sec. 5.618, to read as follows:
    
    
    Sec. 5.618  Treatment of income changes resulting from welfare program 
    requirements for public housing and section 8 tenant-based programs.
    
        (a) General. A responsible entity must not reduce the annual income 
    of a family residing in public housing or reduce the contribution 
    toward rent of a family receiving Section 8 tenant-based assistance 
    because of a reduction in the family's welfare assistance specifically 
    because of fraud or failure to participate in an economic self-
    sufficiency program or comply with a work activities requirement. A 
    reduction in welfare assistance is not to be treated as failure to 
    participate in an economic self-sufficiency program or to satisfy a 
    work activities requirement if the reduction results from:
        (1) The expiration of a lifetime limit on receiving benefits;
        (2) When a family has sought but cannot find employment; or
        (3) The family has complied with welfare program requirements but 
    loses welfare because of a durational time limit such as a cap on 
    welfare benefits for a period of no more than two years in a five-year 
    period.
        (b) Verification. When a family requests a rent reduction based on 
    a reduction in family income from welfare, the responsible entity must 
    obtain written verification from the welfare agency of the basis for 
    the reduction. If the reduction is specifically the result of the 
    family's failure to participate in an economic self-sufficiency program 
    or comply with work activities requirements or fraud by the family, the 
    responsible entity must not reduce the family's rent.
        (c) Notification to families. Responsible entities must notify 
    families who are adversely affected by the requirements of this section 
    that they have the right to review through the PHA's grievance 
    procedure (for public housing) without paying a deposit in escrow, or 
    through use of the informal hearing procedure under 24 CFR 
    982.555(a)(i) (for Section 8 tenant-based certificate and voucher 
    programs).
        21. Add a new Sec. 5.619, to read as follows:
    
    
    Sec. 5.619  Occupancy by police officers in public housing and section 
    8 project-based housing.
    
        (a) Public housing--(1) Police officer. A person determined by the 
    PHA to be, during the period of residence of that person in public 
    housing, employed on a full-time basis as a duly licensed professional 
    police officer by a Federal, State or local government or by any agency 
    of these governments. An officer of an accredited police force of a 
    housing agency may qualify.
        (2) Occupancy in public housing. For the purpose of increasing 
    security for the residents of a public housing development, the PHA may 
    allow police officers who would not otherwise be eligible for public 
    housing, to reside in a public housing dwelling unit. The PHA must 
    include in its PHA Annual Plan the number and location of the units to 
    be occupied by police officers, and the terms and conditions of their 
    tenancies.
        (b) Section 8 project-based housing--(1) Police officer (including 
    security personnel). To be considered eligible for occupancy in section 
    8 project-based housing, the police officer must be employed full time 
    (not less than 35 hours per week) by a governmental unit or a private 
    employer and compensated expressly for providing police or security 
    services.
        (2) Occupancy in section 8 project-based housing. (i) Owners must 
    submit a written plan to their local HUD Field Office for authorization 
    to lease an available unit to over-income police officers. The owner's 
    application must include:
        (A) A statement detailing existing social and physical conditions 
    of the property and the owner's informed assessment of the need for 
    crime deterrence for that property;
        (B) A statement of the anticipated benefits that the presence of 
    police officers will create at the property and in the community;
        (C) A description of the proposed gross rent for the unit and any 
    special conditions for occupancy, including the rent that would 
    ordinarily be charged for the unit and the owner's annual maintenance 
    cost for the unit (this rent may be a flat rent and not related to the 
    income of the police officer);
        (D) The terms of the lease including a provision that states that 
    the police officer's right of occupancy is dependent on the 
    continuation of the employment that qualified the officer for residency 
    in the property under the plan;
        (ii) An owner may not offer a unit to a police officer if the 
    officer would displace an income eligible tenant from leasing the 
    available unit, or would require an existing tenant to move to make the 
    unit available to the officer.
    
    PART 960--ADMISSION TO, AND OCCUPANCY OF, PUBLIC HOUSING
    
        22. The authority citation for part 960 continues to read as 
    follows:
    
        Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437n, and 3535(d).
    
    Subpart B--Admission, Rent and Reexamination
    
    
    Sec. 960.204  [Amended]
    
        23. Amend Sec. 960.204 by removing from paragraph (a)(2)(iii) the 
    phrase ``federal preference, ranking preference, or local'', in 
    paragraph (a)(3)(ii) by adding a semicolon after the words ``waiting 
    list'', and by removing the remainder of paragraph (a)(3)(ii).
        24. Revise Sec. 960.209 to read as follows:
    
    
    Sec. 960.209  Regular and interim redeterminations and verification of 
    family income and composition.
    
        The PHA must conduct regular and interim redeterminations of family 
    income and composition in accordance with Sec. 5.617 of this title.
    
    Subpart D--Preference for Elderly Families and Disabled Families in 
    Mixed Population Projects
    
        25. Revise Sec. 960.407 to read as follows:
    
    
    Sec. 960.407  Selection preference for mixed population projects.
    
        (a) The PHA must give preference to elderly families and disabled 
    families equally in determining priority for admission to mixed 
    population projects. The PHA may not establish a limit on the number of 
    elderly families or disabled families who may be accepted for occupancy 
    in a mixed population projects.
        (b) In offering available units to elderly families and disabled 
    families in mixed population projects, the PHA should first offer units 
    with accessible features to persons with disabilities who require the 
    accessibility features of the unit, in accordance with the requirements 
    of Secs. 8.27 and 100.202(c)(3) of this title.
        26. Revise subpart E to read as follows:
    
    Subpart E--Occupancy by Over-Income Families
    
    Sec.
    960.503  Definitions.
    960.505  Occupancy by over-income families in certain public 
    housing.
    
    [[Page 23476]]
    
    Subpart E--Occupancy by Over-Income Families
    
    
    Sec. 960.503  Definitions.
    
        Eligible families. Families who are eligible for residence in 
    public housing assisted under the United States Housing Act of 1937 (42 
    U.S.C. 1437).
        Over-income family. An individual or family who is not a low-income 
    family at the time of initial occupancy.
    
    
    Sec. 960.505  Occupancy by over-income families in certain public 
    housing.
    
        A PHA that owns or operates fewer than two hundred fifty (250) 
    units, may rent a unit in a public housing development to an over-
    income family, in accordance with its PHA Annual Plan, under the 
    following circumstances.
        (a) There are no eligible families on the waiting list; or
        (b) There are no eligible families applying for assistance in that 
    month;
        (c) Before offering the unit to an over-income family, the PHA 
    publicizes the availability of the unit for eligible families--
    including publishing a thirty (30) day notice in one newspaper of 
    general circulation;
        (d) The over-income family rents the unit on a month-to-month basis 
    for a rent charge that is not less than the cost to operate the unit;
        (e) The over-income family signs an agreement to vacate the unit 
    when needed by an eligible family; and
        (f) The PHA gives the over-income family notice to vacate the unit 
    when the unit is needed for an eligible family, and this notice is 
    given at least thirty (30) days before the over-income family is to 
    vacate.
        27. Add a new subpart F to read as follows:
    
    Subpart F--Community Service and Self-Sufficiency Requirements
    
    Sec.
    Sec. 960.603  Definitions.
    Sec. 960.605  General requirements.
    Sec. 960.607  Determining resident noncompliance.
    Sec. 960.609  Prohibition against replacement of employees.
    Sec. 960.611  Third-party coordinating.
    
    Subpart F--Community Service and Self-Sufficiency Requirements
    
    
    Sec. 960.603  Definitions.
    
        Exempt individual. An adult who is:
        (1) 62 years or older;
        (2) Is a person with vision impairment or other person with 
    disabilities, as defined under 216(i)(l) or 1614 of the Social Security 
    Act (42 U.S.C. 416(i)(1); 1382c), and who is unable to comply with this 
    section, or is a primary caretaker of such individual;
        (3) Is engaged in a work activity as defined under section 407(d) 
    of the Social Security Act (42 U.S.C.607(d), as in effect on and after 
    July 1, 1997);
        (4) Meets the requirements for being exempted from having to engage 
    in a work activity under the State program funded under part A of title 
    IV of the Social Security Act (42 U.S.C. 601 et seq.) or under any 
    other welfare program of the State in which the PHA is located, 
    including a State-administered welfare-to-work program; or
        (5) Is in a family receiving assistance under a State program 
    funded under part A of title IV of the Social Security Act (42 U.S.C. 
    601 et seq.) or under any other welfare program of the State in which 
    the public Housing Agency is located, including a State-administered 
    welfare to work program, and has not been found by the State or other 
    administering entity to be in noncompliance with such a program.
        Community Service. For purposes of this section, community service 
    is the performance of voluntary work or duties in the public benefit 
    that serve to improve the quality of life and/or enhance resident self-
    sufficiency, or/and increase the self-responsibility of the resident 
    within the community in which the resident resides. Political activity 
    is excluded.
        Economic Self-Sufficiency program. Any program designed to 
    encourage, assist, train, or facilitate the economic independence of 
    participants and their families or to provide work for participants. 
    These programs may include programs for job training, employment 
    training, work placement, basic skills training, education, English 
    proficiency, work fare, financial or household management, 
    apprenticeship, and any program necessary to ready a participant to 
    work (such as substance abuse or mental health treatment).
    
    
    Sec. 960.605  General Requirements.
    
        (a) Participation. Except for residents exempted in Sec. 960.603 of 
    this subpart, each adult resident of a public housing development 
    shall:
        (1) Contribute 8 hours per month of community service (not 
    including political activities); or
        (2) Participate in an economic self-sufficiency program for 8 hours 
    per month.
        (b) Effective date of participation. The requirement is effective 
    for all nonexempt residents following execution of a lease, containing 
    these provisions, by the family head of household.
        (c) PHA obligation. PHAs must, at a minimum:
        (1) Develop a local policy for administration of a community 
    service and economic self-sufficiency program.
        (2) Provide written notification of the provisions of the community 
    service requirements to all residents. The notice should describe the 
    requirement, identify who is exempt and how exemption will be verified. 
    The PHA should state when the requirement is effective, as well as the 
    obligations and responsibilities of adult family members, and the 
    consequences of non-compliance.
        (3) Determine for each public housing family which family members 
    are subject to or exempt from the community service and self-
    sufficiency requirement and approves the resident's planned activities 
    to fulfill the requirement.
        (4) No more or less frequently than annually, review and determine 
    the compliance of residents with the requirements at least 30 days 
    before lease term expires. Determine any changes to each adult family 
    members exempt or nonexempt status.
        (5) Retain reasonable documentation of community service 
    participation or exemption in participant files.
        (6) Comply with the civil rights requirements in 24 CFR part 5.
    
    
    Sec. 960.607  Determining resident noncompliance.
    
        If the PHA determines that a resident who is not an ``exempt 
    individual'' has not complied with the community service requirement, 
    the PHA must notify the resident:
        (a) Of the noncompliance;
        (b) That the determination is subject to the PHA's administrative' 
    grievance procedure;
        (c) That unless the resident enters into an agreement under 
    paragraph (d) of this section, the lease of the family of which the 
    noncompliant adult is a member may not be renewed. However, if the 
    noncompliant adult moves from the unit, the lease may be renewed;
        (d) That before the expiration of the lease term, the PHA must 
    offer the resident an opportunity to cure the noncompliance during the 
    next twelve-month period; such a cure includes a written agreement by 
    the noncompliant adult to complete as many additional hours of 
    community service or economic self-sufficiency activity needed to make 
    up the total number of hours required over the 12 month term of the 
    lease.
    
    
    Sec. 960.609  Prohibition against replacement of employees.
    
        In implementing the community service requirement, the PHA may not
    
    [[Page 23477]]
    
    substitute community service for work ordinarily performed by public 
    housing employees or replace a job at any location where community work 
    requirements are performed.
    
    
    Sec. 960.611  Third-party coordinating.
    
        The PHA may administer the community service directly, or through 
    partnerships with qualified organizations, including resident 
    organizations, or agencies or institutions with a community mission. 
    The PHA must ensure that community service programs that are based 
    directly or through partnerships with qualified organizations or 
    through contracts with such organizations are accessible to persons 
    with disabilities.
    
    PART 966--LEASE AND GRIEVANCE PROCEDURES
    
        28. The authority citation for part 966 continues to read as 
    follows:
    
        Authority: 42 U.S.C. 1437a, 1437d note, and 3535(d).
    
        29. In Sec. 966.4, revise the introductory text and add a new 
    paragraph (f)(13), to read as follows:
    
    
    Sec. 966.4  Lease requirements.
    
        Each public housing lease must have a 12-month term, which must be 
    automatically renewed for all purposes except noncompliance by an adult 
    member with the community service requirements of part 960, subpart F 
    of this title.
    * * * * *
        (f) * * *
        (13) To contribute 8 hours per month of community service (not 
    including political activities), unless otherwise exempt. The 8 hour 
    each month requirement can be a combination of PHA-approved community 
    service or economic self-sufficiency activities. (See part 960, subpart 
    F of this title.)
        30. Revise Sec. 966.55(e) to read as follows:
    
    
    Sec. 966.55  Procedures to obtain a hearing.
    
    * * * * *
        (e) Escrow deposit. (1) Before a hearing is scheduled in any 
    grievance involving the amount of rent (as defined in Sec. 966.4(b) of 
    subpart A of this part) that the PHA claims is due, the family must pay 
    an escrow deposit to the PHA. When a family is required to make an 
    escrow deposit, the amount is the amount of rent the PHA states is due 
    and payable as of the first of the month preceding the month in which 
    the family's act or failure to act took place. After the first deposit, 
    the family must deposit the same amount monthly until the family's 
    complaint is resolved by decision of the hearing officer or hearing 
    panel.
        (2) A PHA must waive the requirement for an escrow deposit where 
    required by Sec. 5.616 of this title (concerning financial hardship of 
    minimum rent requirements) or Sec. 5.618 of this title (concerning 
    reduction in welfare benefits related to work requirements). Unless the 
    PHA waives the requirement, the family's failure to make the escrow 
    deposit will terminate the grievance procedure. A family's failure to 
    pay the escrow deposit does not waive the family's right to contest in 
    any appropriate judicial proceeding the PHA's disposition of the 
    grievance.
    * * * * *
    
    PART 984--SECTION 8 AND PUBLIC HOUSING FAMILY SELF-SUFFICIENCY 
    PROGRAM
    
        31. The authority citation for part 984 continues to read as 
    follows:
    
        Authority: 42 U.S.C. 1437f, 1437u, and 3535(d).
    
        32. Throughout part 984, remove the terms ``an HA'' and ``HA'' and 
    add in their place the terms ``a PHA'' and ``PHA''.
        33. Amend Sec. 984.101 by removing paragraph (c) and revising 
    paragraph (b)(3) to read as follows:
    
    
    Sec. 984.101  Purpose, scope, and applicability.
    
    * * * * *
        (b) * * *
        (3) Unless the PHA receives an exemption under Sec. 984.105:
        (i) Each PHA that receives funding for additional rental 
    certificates or rental vouchers in FY 1993 through October 20, 1998, 
    must operate a Section 8 FSS program. Receiving funding for additional 
    certificates or vouchers means reservation of funds for the Section 8 
    certificate or voucher program.
        (ii) Each PHA that receives funding for additional public housing 
    units in FY 1993 through October 20, 1998, must operate a public 
    housing FSS program. Receiving funding for additional public housing 
    units means reservation of funds to acquire or construct additional 
    public housing units.
        34. In Sec. 984.103, revise the definition of welfare assistance to 
    read as follows:
    
    
    Sec. 984.103  Definitions.
    
    * * * * *
        Welfare assistance means income assistance from Federal or State 
    welfare programs, and includes assistance provided under the Temporary 
    Assistance to Needy Families (TANF) program, and general assistance. 
    Welfare assistance does not include assistance solely directed to 
    meeting housing expenses, and does not include programs that provide 
    health care, child care or other services for working families.
    * * * * *
    
    
    Sec. 984.105  [Amended]
    
        35. Amend Sec. 984.105 as follows:
        a. Revise paragraph (a);
        b. Redesignate paragraphs (d)(1), (d)(2), (d)(3), and (d)(4) as 
    paragraphs (d)(1)(i), (d)(1)(ii), (d)(1)(iii), and (d)(1)(iv);
        c. Redesignate the text of paragraph (d) as (d)(1) and add a new 
    heading for redesignated paragraph (d)(1); and
        d. Add a new paragraph (d)(2). The revised and added paragraphs of 
    Sec. 984.105 read as follows:
    
    
    Sec. 984.105  Minimum program size.
    
        (a) General. A PHA must operate an FSS program of the minimum size 
    determined in this section. Paragraph (c) of this section prescribes 
    the conditions under which HUD may grant an exception to this 
    requirement, and paragraph (d) of this section states the conditions 
    under which the minimum size calculated under this paragraph (a) may be 
    reduced. A PHA may always operate a program of a larger size than the 
    minimum.
        (1) Determining minimum program size. The minimum size of an FSS 
    program is equal to:
        (i) Public housing. (A) The total number of public housing units 
    reserved in FY 1993 through October 20, 1998; plus
        (B) The number of public housing units reserved in FY 1991 and FY 
    1992 under the FSS incentive award competitions; minus
        (C) The number of families that have graduated from the FSS program 
    on or after October 21, 1998, by fulfilling their FSS contract of 
    participation obligations.
        (ii) Section 8. (A) The total number of applicable rental 
    certificates and rental vouchers reserved in FY 1993 through October 
    20, 1998; plus
        (B) The number of rental certificates and rental vouchers reserved 
    under the combined FY 1991/1992 FSS incentive award competition; minus
        (C) The number of families who have graduated from the FSS program 
    on or after October 21, 1998, by fulfilling their contract of 
    participation obligations.
        (2) Applicable public housing units. In determining minimum program 
    size, all additional public housing rental units reserved in FY 1993 
    through October 20, 1998 will be counted.
        (3) Inapplicable Section 8 certificates and vouchers. (i) Renewals. 
    Except for
    
    [[Page 23478]]
    
    the renewal of funding that initially carried an FSS program 
    obligation, renewal funding for rental certificates and vouchers 
    reserved in fiscal year 1993 through October 20, 1998 is not counted 
    when determining the FSS minimum program size.
        (ii) PHAs with existing FSS obligation. When determining the 
    minimum FSS program size for a PHA that already had an FSS obligation, 
    funding reserved in fiscal year 1993 through October 20, 1998 for the 
    following categories is not counted:
        (A) Funding for families affected by the termination, expiration or 
    owner opt-outs under Section 8 project-based programs;
        (B) Funding for families affected by demolition or disposition of a 
    public housing project and replacement of public housing projects;
        (C) Funding for families affected by conversion of assistance from 
    the Section 23 leased housing or housing assistance payments program to 
    the Section 8 program;
        (D) Funding for families affected by the sale of a HUD-owned 
    project; and (E) Funding for families affected by the prepayment of a 
    mortgage or voluntary termination of mortgage insurance.
        (iii) PHAs with no existing FSS obligation. If a PHA with no 
    existing FSS obligation received certificate and voucher funding under 
    the categories described in paragraph (a)(3)(ii) of this section in 
    fiscal year 1993 through October 20, 1998, the first such funding 
    counts towards the PHA's minimum FSS program size.
    * * * * *
        (d) * * *
        (1) Approval of exception. * * *
        (2) Expiration of exception. Full and partial exceptions to the 
    minimum size of an FSS program will expire three years from the date of 
    HUD's approval of the exceptions. If a PHA seeks to continue an 
    exception after its expiration, the PHA must submit a new request and a 
    new certification to HUD for consideration. Revised FSS Action Plan 
    policies must be stated in the PHA's Annual Plan.
    * * * * *
        36. Revise paragraphs (a) and (c) of Sec. 984.201 to read as 
    follows:
    
    
    Sec. 984.201  Action Plan.
    
        (a) Requirement for Action Plan. A PHA must have a HUD-approved 
    Action Plan that complies with the requirements of this section before 
    the PHA implements an FSS program, whether the FSS program is a 
    mandatory or voluntary program.
    * * * * *
        (c) Plan submission.--(1) Initial submission.
        (i) Mandatory program. Unless the dates stated in paragraph (c) of 
    this section are extended by HUD for good cause, a PHA that is 
    establishing its first FSS program must submit an Action Plan to HUD 
    for approval within 90 days after the PHA receives notice from HUD of:
        (A) Approval of the PHA's application for incentive award units; or 
    (B) Approval of other funding that establishes the obligation to 
    operate an FSS program, if the PHA did not apply for FSS incentive 
    award units.
        (ii) Voluntary program. The PHA must submit its Action Plan and 
    obtain HUD approval of the plan before the PHA implements a voluntary 
    FSS program, including a program that exceeds the minimum size for a 
    mandatory program.
        (2) Revision. Following HUD's initial approval of the Action Plan, 
    no further approval of the Action Plan is required unless the PHA 
    proposes to make policy changes to the Action Plan or increase the size 
    of a voluntary program; or HUD requires other changes. The PHA must 
    submit any changes to the Action Plan to HUD for approval.
    * * * * *
    
    
    Sec. 984.301  [Amended]
    
        37. Amend Sec. 984.301 by redesignating paragraphs (a)(1), (a)(2), 
    and (a)(3), as paragraphs (a)(2)(i), (a)(2)(ii), and (a)(2)(iii); 
    adding a new paragraph (a)(1) and a new heading for redesignated 
    paragraph (a)(2) to read as follows:
    
    
    Sec. 984.301  Program implementation.
    
        (a) Program implementation deadline. (1) Voluntary program. There 
    is no deadline for implementation of a voluntary program. A voluntary 
    program, however, may not be implemented before the requirements of 
    Sec. 984.201 have been satisfied.
        (2) Mandatory program. * * *
    * * * * *
        38. Revise Sec. 984.306 (b) to read as follows:
    
    
    Sec. 984.306  Section 8 residency and portability requirements.
    
    * * * * *
        (b) Initial occupancy.--(1) First 12 months. A family participating 
    in the Section 8 FSS program must lease an assisted unit, for a minimum 
    period of 12 months after the effective date of the contract of 
    participation, in the jurisdiction of the PHA that selected the family 
    for the FSS program. However, the PHA may approve a family's request to 
    move outside of the PHA's jurisdiction during this period.
        (2) After the first 12 months. After the first 12 months of the FSS 
    contract of participation, the FSS family may move outside the 
    jurisdiction of the initial PHA, consistent with applicable Section 8 
    program regulations (part 982 of this title).
    * * * * *
        Dated: April 8, 1999.
    Andrew Cuomo,
    Secretary.
    [FR Doc. 99-10565 Filed 4-29-99; 8:45 am]
    BILLING CODE 4210-32-P
    
    
    

Document Information

Published:
04/30/1999
Department:
Housing and Urban Development Department
Entry Type:
Proposed Rule
Action:
Proposed rule.
Document Number:
99-10565
Pages:
23460-23478 (19 pages)
Docket Numbers:
Docket No. FR-4485-P-01
RINs:
2501-AC59: Changes to Admission and Occupancy Requirements in the Public Housing and Section 8 Housing Assistance Programs (FR-4485)
RIN Links:
https://www.federalregister.gov/regulations/2501-AC59/changes-to-admission-and-occupancy-requirements-in-the-public-housing-and-section-8-housing-assistan
PDF File:
99-10565.pdf
CFR: (36)
24 CFR 5.211
24 CFR 5.214
24 CFR 5.400
24 CFR 5.403
24 CFR 5.405
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