[Federal Register Volume 62, Number 92 (Tuesday, May 13, 1997)]
[Rules and Regulations]
[Pages 26207-26211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12315]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service; Rural Business-Cooperative Service; Rural
Utilities Service; Farm Service Agency
7 CFR Part 1944
RIN 0575-AB43
Housing Preservation Grant Program
AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, and Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Housing Service (RHS), a successor agency to the
Farmers Home Administration (FmHA), is amending its Housing
Preservation Grant regulations. The purpose is to allow replacement
housing where the grantee has determined that the costs for repair and
rehabilitation on the recipient's (individual homeowners only) existing
housing are not economically feasible or practical. These revisions
will bring the regulations into conformance with the Housing and
Community Development Act of 1992 amending the Housing Preservation
Grant program, section 533 of the Housing Act of 1949.
EFFECTIVE DATE: June 12, 1997.
FOR FURTHER INFORMATION CONTACT: Sue M. Harris-Green, Senior Loan
Specialist, Multi-Family Housing Processing Division, Rural Housing
Service, United States Department of Agriculture, Washington, DC 20250,
telephone (202) 720-1606 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
Classification
This rule has been determined to be not significant for purposes of
Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget (OMB).
Paperwork Reduction Act
The information collection requirements contained in this
regulation have been approved by OMB under the provisions of 44 U.S.C.
chapter 35 and have been assigned OMB control number 0575-0115 in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507).
This final rule does not revise or impose any new information
collection or recordkeeping requirement from those approved by OMB.
Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. In accordance with this rule: (1) All state and
local laws and regulations that are in conflict with this rule will be
preempted; (2) No retroactive effect will be given to this rule; and
(3) Administrative proceedings in accordance with the regulations of
the agency published at 7 CFR part 11, must be exhausted before
bringing suit.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.
L. 104-4, established requirements for Federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments and the private sector. Under section 202 of UMRA, Federal
agencies generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to state, local, or tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. When such a statement is needed for a
rule, section 205 of the UMRA generally requires RHS to identify and
consider a reasonable number of regulatory alternatives and adopt the
least costly, more cost-effective or least burdensome alternative that
achieves the objectives of the rule.
The rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for state, local, and tribal
governments or the private sector. Therefore, this rule is not subject
to the requirements of sections 202 and 205 of the UMRA.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' It is the determination of RHS
that this action does not constitute a major Federal action
significantly affecting the quality of the human environment and in
accordance with the national Environmental Policy Act of 1969, Pub. L.
91-190, an Environmental Impact Statement is not required.
Programs Affected
This program is listed in the Catalog of Federal Domestic
Assistance under number 10.433, Rural Housing Preservation Grants.
Intergovernmental Consultation
This program is subject to the provisions of Executive Order 12372
which requires intergovernmental consultation with state and local
officials (7 CFR part 3015, subpart V, 48 FR 29115, June 24, 1983). The
Rural Housing Service has conducted intergovernmental consultation in
the manner delineated in RD Instruction 1940-J, ``Intergovernmental
Review of
[[Page 26208]]
Farmers Home Administration Programs and Activities.''
Background Information
The final rule incorporates title VII, section 711 of the Housing
and Community Development Act of 1992 (Pub. L. 102-550, dated October
28, 1992) amending section 533 of the Housing Act of 1949, 42 U.S.C.
1490m, allowing for replacement housing where the grantee has
determined that the costs for repair and rehabilitation on the
recipient's (individual homeowners only) existing housing is not
economically feasible. RHS is making no other significant changes other
than to implement this statutory authority.
Public Comments
The Rural Housing Service received 11 comments on the April 17,
1995, proposed rule (60 FR 19168). The comments were from public and
nonprofit organizations, governmental entities, and advocacy groups for
housing.
General
Comment: One commented stated that the rule should permit
replacement housing when it is less expensive than rehabilitation, even
if the dwelling is not beyond repair or rehabilitation.
Rural Housing Service Response: The law restricts the use of
housing preservation grant funds for replacement housing if it is not
economically feasible for rehabilitation regardless of expense. The
Agency, therefore, must only consider the economic feasibility of
rehabilitation. In light of the comment and to reduce confusion caused
by the term ``beyond repair or rehabilitation,'' we have changed
Sec. 1944.651(a), Sec. 1944.652 (a), and Sec. 1944.653 to state that
individual housing that is owner occupied may qualify for replacement
housing when it is determined by the grantee that the housing is not
economically feasible for repair or rehabilitation.
Comment: Comments were directed to the proposed rule in
Sec. 1944.659(b)(2) which requires that an individual homeowner must
have been denied an RHS Section 502 loan for replacement housing. The
commenters stated that the process will take too long and the language
should be materially modified.
Rural Housing Service Response: Section 1944.659(b)(2) has been
moved to Sec. 1944.659(b)(3) to require that the grantee and RHS both
determine that the owner of the dwelling is unable to afford a loan
under Section 502 for replacement housing.
Comment: One commenter stated that the rule should permit the
demolition of the existing housing after the new house is built so that
families will have a place to live during construction.
Rural Housing Service Response: The Rural Housing Service has
modified Sec. 1944.659(c)(1) to require only that the house be
demolished as part of the process of providing replacement housing. It
will be determined by the grantee and individual homeowner when is the
best time for demolition. However, the existing house must be
demolished no later than occupation of the replacement house and cannot
be sold.
Comment: One commenter stated that the rule should allow on-site
improvements, such as installation of sidewalks, curbs, and off-street
parking.
Rural Housing Service Response: Section 1944.664(d)(3) has been
revised to add, ``and other on-site improvements required by local
jurisdictions.''
Comment: One commenter was concerned about the Rural Housing
Service's definition of dwelling. The commenter stated that at times a
mobile home is the only solution in rural areas.
Rural Housing Service Response: The rule provides for the use of
manufactured housing placed on permanent foundation or which will be
put on permanent foundation with Housing Preservation Grant (HPG)
funds. Manufactured housing is sometimes referred to as a mobile home.
Lists of Subjects in 7 CFR Part 1944
Grant programs--housing and community development, Home
improvement, Loan programs--housing and community development,
Nonprofit organizations, Reporting and recordkeeping requirements,
Rural housing.
Therefore, chapter XVIII, title 7, Code of Federal Regulations is
amended as follows:
PART 1944--HOUSING
1. The authority citation for part 1944 continues to read as
follows:
Authority: 5 U.S.C. 301; 42 U.S.C. 1480.
Subpart N--Housing Preservation Grants
Sec. 1944.651 [Amended]
2. Section 1944.651 is amended by revising the phrase ``FmHA or its
successor agency under Public Law 103-354'' to read ``RHS'' in
paragraph (d); and by revising the last sentence and adding a new
sentence to the end of paragraph (a) and revising paragraph (b) to read
as follows:
Sec. 1944.651 General.
(a) * * * Such assistance will be used to reduce the cost of repair
and rehabilitation, to remove or correct health or safety hazards, to
comply with applicable development standards or codes, or to make
needed repairs to improve the general living conditions of the
residents, including improved accessibility by persons with a
disability. Individual housing that is owner occupied may qualify for
replacement housing when it is determined by the grantee that the
housing is not economically feasible for repair or rehabilitation.
(b) The Rural Housing Service (RHS) will provide Housing
Preservation Grant (HPG) assistance to grantees who are responsible for
providing assistance to eligible persons without discrimination because
of race, color, religion, sex, national origin, age, familial status,
or disability.
* * * * *
3. Section 1944.652 is revised to read as follows:
Sec. 1944.652 Policy.
(a) The policy of RHS is to provide HPG's to grantees to operate a
program which finances repair and rehabilitation activities to
individual housing, rental properties, or co-ops for very low- and low-
income persons. Individual housing that is owner occupied may qualify
for replacement housing when it is determined by the grantee that the
housing is not economically feasible for repair or rehabilitation.
Grantees are expected to:
(1) Coordinate and leverage funding for repair and rehabilitation
activities, as well as replacement housing, with housing and community
development organizations or activities operating in the same
geographic area; and
(2) Focus the program on rural areas and smaller communities so
that it serves very low and low-income persons.
(b) RHS intends to permit grantees considerable latitude in program
design and administration. The forms or types of assistance must
provide the greatest long-term benefit to the greatest number of
persons residing in individual housing, rental properties, or co-ops
needing repair and rehabilitation or replacement of individual housing.
(c) Repairs and rehabilitation or replacement activities affecting
properties on or eligible for listing on the National Register of
Historic Places will be accomplished in a manner that supports national
historic preservation objectives as specified in Sec. 1944.673.
[[Page 26209]]
4. Section 1944.653 is amended by adding a sentence to the end of
the section to read as follows:
Sec. 1944.653 Objective.
* * * Further, individual housing that is owner occupied may
qualify for replacement housing when it is determined by the grantee
that the housing is not economically feasible for repair or
rehabilitation, except as specified in Sec. 1944.659.
5. Section 1944.656 is amended by revising the definitions of
``Housing preservation,'' ``Overcrowding,'' ``Rural area,'' and ``Very
low-income,'' by removing the definition of ``Adjusted annual income,''
and by adding definitions of ``Adjusted income,'' ``HPG,''
``Replacement housing,'' and ``RHS'' in alphabetical order to read as
follows:
Sec. 1944.656 Definitions.
* * * * *
Adjusted income. As defined in 7 CFR 3550.54(c).
* * * * *
Housing preservation. The repair and rehabilitation activities that
contribute to the health, safety, and well-being of the occupant, and
contribute to the structural integrity or long-term preservation of the
unit. As a result of these activities, the overall condition of the
unit or dwelling must be raised to meet RHS Thermal Standards for
existing structures and applicable development standards for existing
housing recognized by RHS in part 1924, subpart A, of this chapter or
standards contained in any of the voluntary national model codes
acceptable upon review by RHS. Properties included on or eligible for
inclusion on the National Register of Historic Places are subject to
the standards and conditions of Sec. 1944.673. The term ``housing
preservation'' does not apply to replacement housing.
HPG. Housing Preservation Grant.
* * * * *
Overcrowding. The guidelines in the table in this definition are
designed to assist grantees in implementing occupancy standards. Part
1930, subpart C, exhibit B, paragraph VID2, of this chapter (available
in any Rural Development State or District Office) gives further
guidance. The table follows:
------------------------------------------------------------------------
Ideal
Number of bedrooms number of
persons
------------------------------------------------------------------------
0.......................................................... 2
1.......................................................... 2
2.......................................................... 4
3.......................................................... 6
4.......................................................... 8
5.......................................................... 10
------------------------------------------------------------------------
* * * * *
Replacement housing. The replacement of existing, individual owner
occupied housing where repair and rehabilitation assistance is not
economically feasible or practical. The term replacement housing does
not apply to housing preservation. The overall condition of the unit or
dwelling must meet RHS Thermal Standards for new or existing structures
and applicable development standards for new or existing housing
recognized by RHS in part 1924, subpart A, of this chapter or standards
contained in any of the voluntary national model codes acceptable upon
review by RHS. Properties included on or eligible for inclusion on the
National Register of Historic Places are subject to the standards and
conditions of Sec. 1944.673 prior to replacement.
RHS. RHS means the Rural Housing Service, or a successor agency.
Rural area. The definition in 7 CFR part 3550 applies.
* * * * *
Very low-income. An adjusted annual income that does not exceed the
very low-income limit according to size of household as established by
HUD for the county of MSA where the property is located. Maximum very
low-income limits are set forth in 7 CFR part 3550.
Sec. 1944.658 [Amended]
6. Section 1944.658 is amended by adding the words ``as well as for
replacement housing'' after the word ``assistance'' in paragraph
(a)(2).
7. Section 1944.659 is added to read as follows:
Sec. 1944.659 Replacement housing.
Replacement housing applies only to existing, individual owner
occupied housing. Replacement housing does not apply to rental
properties (single-unit or multiple-unit) or to cooperative housing
projects. The grantee is responsible for determining the extent of the
repairs and rehabilitation prior to any assistance given to an
individual homeowner. If the cost of such repairs and rehabilitation is
not economically feasible, then the grantee may consider replacing the
existing housing with replacement housing, subject to the following:
(a) The HPG grantee:
(1) Shall document the total costs for all repairs and
rehabilitation of the existing housing; and
(2) Shall document the basis for the determination that the costs
for all repairs and rehabilitation for the existing housing are not
economically feasible.
(b) The individual homeowner:
(1) Must meet all requirements of Sec. 1944.661;
(2) Must lack the income and repayment ability to replace their
existing home without the assistance of the HPG grantee;
(3) Must have been determined by the HPG grantee and RHS to be
unable to afford a loan under section 502 for replacement housing; and
(4) Must be able to afford the replacement housing on terms set
forth by the HPG grantee.
(c) The existing home:
(1) Must be demolished as part of the process of providing
replacement housing. It will be determined by the grantee and
individual homeowner when is the best time for demolition; and
(2) May not be sold to make way for the replacement housing.
(d) The replacement housing:
(1) May be either new housing or a dwelling brought onto the site
of the existing housing;
(2) May use no more than $15,000 in HPG funds;
(3) Must meet all applicable requirements of 7 CFR 3550.57; and
(4) May not be sold within 5 years of completion of the project.
(e) Any moneys received by the homeowner from selling salvaged
material after demolishing the existing home must be used towards the
replacement housing.
Sec. 1944.661 [Amended]
8. Section 1944.661 is amended by revising the reference
``Sec. 1944.8 of subpart A of this part'' to read ``7 CFR 3550.54(c)''
in paragraph (a), and by revising the introductory text of paragraph
(b)(2) and paragraph (b)(3) to read as follows:
Sec. 1944.661 Individual homeowners--eligibility for HPG assistance.
* * * * *
(b) * * *
(2) An undivided or divided interest in the property to be
repaired, rehabilitated, or replaced when not all of the owners are
occupying the property. HPG assistance may be made in such cases when:
* * * * *
(3) A leasehold interest in the property to be repaired,
rehabilitated, or replaced. When the potential HPG recipient's
``ownership'' interest in the property is based on a leasehold
[[Page 26210]]
interest, the lease must be in writing and a copy must be included in
the grantee's file. The unexpired portion of the lease must not be less
than 5 years and must permit the recipient to make modifications to the
structure without increasing the recipient's lease cost.
* * * * *
Sec. 1944.664 [Amended]
9. Section 1944.664 is amended by redesignating paragraphs (d)
through (g) as paragraphs (e) through (h), respectively; by revising
the words ``to make improvements that'' to read ``where they'' in the
first sentence of the introductory text of newly redesignated paragraph
(f); by adding the words ``or replacement housing'' after the word
``preservation'' in the introductory text of newly redesignated
paragraph (g); and by revising the section heading, paragraph (a), and
newly redesignated paragraphs (h)(1) and (h)(3) and by adding a new
paragraph (d) to read as follows:
Sec. 1944.664 Housing preservation and replacement housing assistance.
(a) Grantees are responsible for providing loans, grants, or other
comparable assistance to homeowners, owners of rental properties or co-
ops for housing preservation or for replacement housing as described in
Sec. 1944.656.
* * * * *
(d) Authorized replacement housing assistance includes, but is not
limited to:
(1) Building a dwelling and providing related facilities for use by
the individual homeowner as a permanent resident;
(2) Providing a safe and sanitary water and waste disposal system,
together with related plumbing and fixtures, which will meet local
health department requirements;
(3) Providing minimum site preparation and other on-site
improvement including grading, foundation plantings, and minimal
landscaping, and other on-site improvements required by local
jurisdictions;
(4) Providing special design features or equipment when necessary
because of physical handicap or disability of the HPG recipient or
member of the household;
(5) Purchasing and installing approved energy saving measures and
approved furnaces and space heaters which use a type of fuel that is
commonly used, and is economical and dependably available;
(6) Providing storm cellars and similar protective structures, if
typical for the area;
(7) Paying real estate taxes which are due and payable on the
existing dwelling or site at the time of closing, if this amount is not
a substantial part of the HPG assistance. (HPG assistance may not be
made available if the real estate taxes which are due and payable are
not paid at the time assistance is granted.);
(8) Providing living area for the HPG recipient and all members of
the household as required in 7 CFR 3550.54(c);
(9) Moving a dwelling onto the site of the demolished, previously
existing housing and meeting all HPG housing preservation requirements
for repair and rehabilitation;
(10) Providing funds for demolishing the existing housing; and
(11) Any other cost that is reasonable and justifiable directly
related to replacement activities.
* * * * *
(h) * * *
(1) Assist in the construction or completion of an addition
(excluding paragraph (c)(11) of this section) or a new dwelling. This
paragraph does not apply to replacement housing.
* * * * *
(3) Repair or rehabilitate as well as replace any property located
in the Coastal Barrier Resources System.
10. Section 1944.665 is amended by revising the section heading and
the first sentence to read as follows:
Sec. 1944.665 Supervision and inspection of work.
Grantees are responsible for supervising all rehabilitation and
repair work, as well as replacement housing financed with HPG
assistance. * * *
Sec. 1944.666 [Amended]
11. Section 1944.666 is amended by revising the reference
``Sec. 1944.64(f)'' to read ``Sec. 1944.664(g)'' in the last sentence
of paragraph (b)(3); and by adding the words ``as well as for
replacement housing (individual homeowners only)'' after the word
``rehabilitation'' in paragraph (b)(6).
Sec. 1944.667 [Amended]
12. Section 1944.667 is amended by adding the words ``or for
individual homes replaced,'' after the word ``rehabilitated'' in the
second sentence of the introductory text of paragraph (a).
13. Section 1944.670 is amended by revising paragraph (b) to read
as follows:
Sec. 1944.670 Project income.
* * * * *
(b) Grantees are encouraged to establish a program which reuses
income from loans after the grant period for continuing repair and
rehabilitation activities, as well as for individual housing replaced.
Sec. 1944.671 [Amended]
14. Section 1944.671 is amended by adding ``/disability'' after the
word ``handicap'' in the first sentence of the introductory text of
paragraph (a), and by revising paragraph (a)(2) to read as follows:
Sec. 1944.671 Equal opportunity requirements and outreach efforts.
* * * * *
(a) * * *
(2) The term ``residential and real estate-related transaction''
includes the making or purchasing of loans, grants, or other financial
assistance for purchasing, constructing, improving, repairing, or
rehabilitating a unit or dwelling, as well as for replacement housing
for individual homeowners.
* * * * *
15. Section 1944.672 is amended by revising paragraphs (a), (b),
and (d) to read as follows:
Sec. 1944.672 Environmental requirements.
* * * * *
(a) The approval of an HPG grant for the repair, rehabilitation, or
replacement of dwellings shall be a Class I action. As part of their
preapplication materials, applicants shall submit Form RD 1940-20,
``Request for Environmental Information,'' for the geographical areas
proposed to be served by the program. The applicant shall refer to
exhibit F-1 of this subpart (available in any Rural Development State
or District Office) when completing Form RD 1940-20. Further guidance
on completing this form is available from the Agency office servicing
the program.
(b) The use of HPG funds by the grantee to repair, rehabilitate, or
replace on the same site, specific dwellings is generally exempt from
an RHS environmental review. However, if such dwellings are located in
a floodplain, wetland, or the proposed work is not concurred in by the
Advisory Council on Historic Preservation under the requirements of
Sec. 1944.673, an RHS environmental review is required. Dwellings
within the Coastal Barrier Resources System are not eligible for HPG
assistance. Applicants must include in their preapplication a process
for identifying dwellings that may receive housing preservation or
replacement housing assistance that will require an environmental
assessment. This may be accomplished through use of exhibit F-2 of this
subpart (available in any Rural Development State or District Office)
or another process
[[Page 26211]]
supplying similar information acceptable to RHS.
* * * * *
(d) When a dwelling requiring an environmental assessment is
proposed for HPG assistance, the grantee will immediately contact the
RHS office designated to service the HPG grant. Prior to approval of
HPG assistance to the recipient by the grantee, RHS will prepare the
environmental assessment in accordance with part 1940, subpart G, of
this chapter with the assistance of the grantee, as necessary.
Paragraph VIII of exhibit C of this subpart (available in any Rural
Development State or District Office) provides further guidance in this
area.
* * * * *
16. Section 1944.673 is amended by revising the section heading and
paragraph (b) to read as follows:
Sec. 1944.673 Historic preservation and replacement housing
requirements and procedures.
* * * * *
(b) Each applicant for an HPG grant will provide, as part of its
preapplication documentation submitted to RHS, a description of its
proposed process for assisting very low-and low-income persons owning
historic properties needing rehabilitation, repair, or replacement.
``Historic properties'' are defined as properties that are listed or
eligible for listing on the National Register of Historic Places. Each
HPG proposal shall comply with the provisions of Stipulation I, A-G of
the PMOA (RD Instruction 2000-FF), available in any Rural Development
State or District Office. Should RHS be required to assume
responsibility for compliance with 36 CFR part 800 in accordance with
Stipulation III of the PMOA, the grantee will assist RHS in preparing
an environmental assessment. RHS will work with the grantee to develop
alternative actions or mitigation measures, as appropriate.
* * * * *
Sec. 1944.683 [Amended]
17. Section 1944.683 is amended by redesignating paragraphs (b)(3)
through (b)(7) as paragraphs (b)(4) through (b)(8), respectively; by
adding the words ``as well as for replacement housing'' after the word
``rehabilitation'' in newly redesignated paragraph (b)(4)(i) and after
the word ``financed'' in newly redesignated paragraph (b)(8); and by
adding a new paragraph (b)(3) to read as follows:
Sec. 1944.683 Reporting requirements.
* * * * *
(b) * * *
(3) The use of HPG and any other funds for replacement housing.
* * * * *
18. Section 1944.700 is revised to read as follows:
Sec. 1944.700 OMB control number.
According to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter
35), no persons are required to respond to a collection of information
unless it displays a valid OMB control number. The valid OMB control
number for the information collection in this subpart is 0575-0115.
Dated: April 17, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-12315 Filed 5-12-97; 8:45 am]
BILLING CODE 3410-XV-U
