Section 8 Certificate and Voucher Programs Conforming Rule: Admissions; Final Rule DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

SUMMARY: This rule amends requirements for admission of eligible

families to receive tenant-based Section 8 rental assistance under the

rental certificate program and the rental voucher program. The rule

includes procedures for waiting list and non-waiting list admission,

including federal and local preferences for admission from the Housing

Agency waiting list. The rule makes these changes to implement a

statutory change and to reorganize and clarify the admissions

process.The statutory change implemented by this rule decreases the

number of families that must be admitted on the basis of qualifying for

a federal selection preference and specifically authorizes adoption of

local selection preferences by housing agencies. The rule also

consolidates and clarifies existing policies concerning the admissions

process.

EFFECTIVE DATES: Except for Sec. 982.209(b), this rule is effective on

October 18, 1994. Section 982.209(b) is effective January 18, 1995.

FOR FURTHER INFORMATION CONTACT: Madeline Hastings, Director, Rental

Assistance Division, Room 4204. Telephone numbers (202) 708-2841

(voice); (202) 708-0850 (TDD). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The information collection requirements in this rule have been

approved by the Office of Management and Budget (OMB) under the

Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520), and have been

assigned OMB Control Number 2577-0169.

Background

On February 24, 1993, HUD published a comprehensive proposed rule

to combine and conform the rules for tenant-based Section 8 rental

assistance under the rental certificate program and the rental voucher

program. [58 FR 11292]

This final rule only covers unified admission procedures for the

tenant-based program. Admission procedures are contained in Subpart E

of a new tenant-based rule at 24 CFR Part 982. As soon as possible, HUD

will issue a comprehensive final rule covering all aspects of the

tenant-based programs. The final rule may include further revisions of

program admission procedures.

Eligibility

When HA Can Admit Non Very Low-Income Families

The proposed rule listed the categories of non very low-income

families who may be selected for the tenant-based programs. Public

comments state that the list is confusing, administratively cumbersome

and unfair. Comments also claim HUD is improperly restricting admission

of non very low-income families.

Under the law, there are different income limits for admission to

the certificate and voucher programs. In the certificate program, the

law permits assistance for low-income families (income below 80 percent

of area median). However, in the voucher program, the law generally

limits participation to very low-income families (income below 50

percent of area median). Families that are not very low-income can be

admitted to the voucher program only in cases specified in the law--

families who reside in specified types of housing affected by various

HUD programs or activities.

A central goal of this rule is to unify regulatory requirements for

the tenant-based certificate and voucher programs, except for

differences that are required by the law. To this end, the rule largely

sets the same eligibility requirements for the two tenant-based

programs. For both programs, the rule allows admission of non very low-

income families within the statutory categories prescribed by law for

the Section 8 voucher program (such as a family previously assisted in

public housing), and also within the statutory lower income limit for

admission to the Section 8 non-voucher programs. Thus families that

meet the uniform eligibility requirements under this rule are within

the statutory eligibility limits for both the Section 8 voucher and

certificate programs.

For the certificate program only, the rule permits admission of a

low-income family that lives in a property sold by HUD or in a property

sold at foreclosure of a HUD-held mortgage. This is the only difference

between the uniform eligibility requirements for the tenant-based

programs under this rule.

In the certificate and voucher programs, the law establishes the

outer boundaries of statutory eligibility. However, the law does not

assure assistance for any eligible family. Unlike entitlement programs,

in which assistance is provided to any eligible person, the

availability of Section 8 certificate or voucher assistance is

constrained by the amount of funding appropriated by the Congress, and

by the funding available to the HA at which a family applies. Many may

apply, but the HA can only assist the number of families that can be

supported with available funding.

In this context, the rule defines uniform eligibility criteria for

admission of non very low-income families. The law does not require HUD

to set eligibility limits at the boundaries of statutory program

eligibility. Rather, the law specifically recognizes HUD's authority to

limit admission of non very low-income families. [See 42 U.S.C. 1437n]

HUD agrees with comments which note that the list of specific

eligibility categories (for non very low-income admissions) is clumsy

and confusing. However, since the voucher law does not permit

assistance for other non very low-income families, use of the statutory

voucher categories is the only way to define a uniform standard for

admission of low-income families other than very low-income families.

HUD may not totally prohibit admission of low-income families other

than very low income families. [42 U.S.C. 1437n(c)] In addition, the

eligibility definition in this rule focuses most available assistance

on very low-income families, while permitting assistance for other low-

income families affected by specific HUD programs and activities.

Under this rule, a Housing Agency (HA) can only admit non very low-

income families in the special categories defined in the rule. Before

this rule, low-income families were, in theory, broadly eligible for

admission to the certificate program. However, admission of such

families was sharply restricted by HUD.

By law, only 15 percent (5 percent before a 1990 amendment) of

Section 8 and public housing units added nationally since federal

fiscal year 1982 can be leased to non very low-income families. [U.S.H.

Act, Sec. 16, 42 U.S.C. 1437n(b)(1)] The restrictions on leasing

Section 8 units to non very low-income families are stated in a cross-

cutting regulation for the various Section 8 programs. [24 CFR

Sec. 813.104 and Sec. 813.105] For the certificate program, the limit

is applied by regulation to families admitted to the certificate

program since July 1984. [Sec. 813.105(c)] In practice, almost all

Section 8 tenant-based units are covered by the regulatory restriction.

In general, the HA may not admit a non very low-income (but statutorily

eligible) family unless HUD has given the HA approval to grant an

``exception''.

In implementing the limit on non very low-income admissions,

exceptions were routinely permitted by HUD for the types of non very

low-income admissions allowed under this rule. In practice, non very

low-income occupancies have represented less than five percent of the

Section 8 and public housing programs as a whole, or of the certificate

program or voucher program separately. Even in the categories for which

exceptions have been granted by HUD, most families are very low-income

at admission to the certificate and voucher programs.

For tenant-based assistance, this rule now lists the categories of

non very low-income families that may be admitted to the program. For

this reason, HUD has decided to delete the separate regulatory

limitations (in Part 813) on non very low-income occupancy in the

certificate programs, and to delete also the accompanying requirement

to secure grant of a HUD ``exception'' permitting admission of non very

low-income families. In essence, the exception cases are now built into

the definition of income eligibility in the program rule. Since the

number of non very low-income certificate and voucher admissions in

these special categories is limited (in relation to the aggregate

number of program admissions), experience indicates such admissions

will continue to be well below 15 percent of certificate and voucher

admissions, and will not jeopardize compliance with the global 15

percent limitation for the Section 8 and public housing programs as a

whole. Deletion of the certificate and voucher procedures for

restricting and tracking non very low-income occupancy will simplify

program administration by HAs and HUD, but will not substantially

affect actual levels of occupancy in these programs.

Applicable Income Limit

HUD establishes sets of income limits for each area of the country.

The HA determines whether a family is income-eligible by comparing the

family's annual income (gross income) and the HUD-established very low-

income limit or low-income limit for the appropriate income limit area.

The final rule codifies how the HA determines the applicable income

limit area for a family admitted to the tenant-based assistance

programs.

In the public housing program, and in the project-based Section 8

assistance programs, family income eligibility at admission to the

program is governed by the income limit for the area where the project

is located, and the family is initially assisted. In the tenant-based

programs, at initial issuance of a certificate or voucher to a family,

the HA does not know where the family will initially rent with

assistance under the program.

At admission, a family may generally choose to rent a unit anywhere

in the HA jurisdiction, and (if qualified for initial portability) may

elect to rent a unit outside the HA jurisdiction under portability

procedures. For some HAs, such as an HA with Statewide jurisdiction,

the HA jurisdiction may include more than one income limit area. If the

family moves to a different HA jurisdiction under portability, the

receiving HA may be in a different income limit area (or areas) than

the HA that admitted the family. The HA needs to know what income limit

applies, both when the HA initially issues the family a certificate or

voucher, and also when the HA initially executes a HAP contract for the

family.

The rule provides that in determining the applicable income limit

for issuance of a certificate or voucher upon selection for the

program, the HA uses the highest income limit (for the family unit

size) of all the income limit areas in the HA jurisdiction. However,

the family may only use the certificate or voucher to rent a unit in an

area where the family is income eligible at admission to the program

(that is, when the HA executes a HAP contract for the unit selected by

the family). The applicable income limit for admission to the program

is the income limit for the area where the family is initially

assisted. [Sec. 982.201(b)(2)] For admission as a very low-income

family, the family income must be within the very low-income limit for

the area. For admission as a low-income family (which meets criteria

for admission of a non very low-income family), the family income must

be within the low-income limit for the area.

Continuously Assisted Family

The rule provides that the HA may assist a low-income family that

is continuously assisted under the 1937 Housing Act.

[Sec. 982.201(b)(1)(ii)(A)] The rule lists the 1937 Housing Act

programs. [``1937 Housing Act program'' defined at Sec. 982.3] The 1937

Act programs include the public housing program and all of the Section

8 project and tenant-based programs (as well as the old Section 23

leased housing and Section 23 housing assistance payments programs).

Public comments express concern about the process for determining

if families are ``continuously assisted'' under the 1937 Housing Act.

Families do not know if they have been continuously assisted under a

1937 Act program. The HA would have to conduct investigations to

determine if families qualify as continuously assisted. Comments ask

for guidance on how to get this information.

If a family is currently assisted in a 1937 Act program of the same

HA at which it is applying for assistance under the certificate or

voucher program, the HA should usually have no difficulty getting this

information. If the family was receiving assistance under one of the

1937 Housing Act programs from another HA or a private Section 8 owner,

the family must generally provide the information to the HA. The HA may

verify the information by inquiry to the HA or owner.

The rule provides that an applicant is considered to be

continuously assisted under the 1937 Housing Act if the family is

already receiving assistance under any 1937 Housing Act program when

the family is admitted to the certificate or voucher program.

[Sec. 982.201(d)(1)] The Department recognizes that in a variety of

circumstances there may be a brief interruption in the transition from

another 1937 Act program to assistance under the 1937 Act tenant-based

programs. For example, tenant-based assistance may be provided for

continued assistance to residents of a Section 8 project after the HAP

contract expires or is terminated for owner breach, and there may be a

short delay in arranging for continued assistance for project-

residents.

This rule allows the HA flexibility to deal with brief breaks that

do not interrupt the essential continuity of 1937 Act assistance to the

family. The rule provides, as proposed, that an HA must establish

policies concerning whether and to what extent a brief interruption

between assistance under a 1937 Act program and admission to the HA's

tenant-based program will be considered to break continuity of

assistance. [Sec. 982.201(d)(2)] Comments approve this approach.

Limit on Assistance for Aliens

Comments suggest that proof of citizenship should be an eligibility

requirement, and that foreign students should be ineligible for the

program.

Section 214 of the Housing and Community Development Act of 1980

(42 U.S.C. 1436a) prohibits Section 8 assistance for persons other than

United States citizens or eligible aliens. Section 214 will be

implemented in a separate rule.

Definition of a Family

In the Section 8 and public housing programs, the statutory term

``family'' refers to a group or single person that can be assisted

under the program. A 1992 law redefined the term ``family''. [42 U.S.C.

1437a(b)(3), as amended by the Housing and Community Development Act of

1992, section 621; 106 Stat. 3812] The February 24, 1993 proposed rule

contained a new ``family'' definition based on the 1992 law. HUD did

not propose to amend the general Section 8 definition of ``family'' and

other related terms in 24 CFR 812.2. The statutory family definition

was amended again, on April 11, 1994. [42 U.S.C. 1437a(b)(3)(B),

amended by Section 301 of Public Law 103-233, 108 Stat. 342, 369]

Public comments raise important questions about the new definition

of the term ``family'' under the 1992 law and proposed rule. The

Section 8 and public housing programs are covered by the same statutory

``family'' definition in the U.S. Housing Act of 1937. Since there

should be substantially uniform regulatory treatment of family

eligibility in these programs, the Department is deferring

implementation of any substantive changes because of the family

redefinition under the 1992 law.

The 1992 law provided that the term ``families'' ``means families

with children''. [106 Stat. 3812] Many public comments echo HUD's

concern in the proposed rule, that this new statutory definition might

not permit admission of a multi-person family without children, such as

a married couple without children or two adults. In 1994, the law was

amended to provide that ``the term `families' includes families with

children''.

This final rule does not give a new family definition. However, the

rule restates how the family concept is used in determining program

eligibility. The rule states that a ``family'' may receive assistance

under the certificate or voucher programs. [Sec. 982.201(a)] The

``family'' may be either a single person or a group of persons.

[Sec. 982.201(c)(1)] In accordance with the 1994 amendment, the rule is

revised to provide that the group of persons constituting a family

``includes a family with a child or children''. [Sec. 982.201(c)(2)]

This provision allows admission of a family with children, but does not

preclude the admission of a multi-person family without children.

Over time, successive amendments of the U.S.H. Act ``family''

definition have widened the qualification of single individuals for

assistance under the program. Originally, the term covered only aged,

displaced or disabled single persons. Currently, any single person may

qualify as a ``family''. Although the rule does not include a new

family definition, the rule specifies that a single person family may

be an elderly person, a disabled person, a displaced person or ``any

other single person''. [Sec. 982.201(c)(4)(iv)]

Through successive statutory amendments, the 1937 Housing Act

specified when a single person qualifies as a family, but did not

contain a comprehensive definition stating when a group of persons

(other than an elderly family or disabled family) qualifies as a

family. HUD does not impose a national definition of a multi-person

family, but has substantially left this term to local definition by

individual HAs for application to their programs.

The rule confirms that ``family'' includes an elderly or disabled

person or persons residing with a live-in aide who provides necessary

supportive services. In accordance with historical practice and

understanding, the rule provides that the HA determines if any other

group of persons qualifies as a family. [Sec. 982.201(c)(3)]

A 1993 rule removed restrictions on assistance for singles who are

not elderly, disabled or displaced. [58 FR 39658, July 26, 1993] HAs

now have broad authority to house other single persons, but must house

the elderly, disabled or displaced ahead of other singles.

Near-elderly

In accordance with the 1992 law, the family definition in the

proposed rule contains several provisions on assistance to a ``near-

elderly'' person--defined as a person from 50 to 61 years old. The

proposed rule provides that a statutory ``family'' (the entity eligible

for program assistance) includes a family whose head or spouse is near-

elderly, and also provides that a single person family includes a near-

elderly person. Comments approve assistance for the near-elderly. The

comments generally appear to assume that qualification as near-elderly

makes a single person eligible for assistance, or confers priority over

younger single persons. Such comment indicates confusion as to the

impact of the near-elderly designation on program eligibility. Since

any single person may now qualify as a statutory family, the near-

elderly designation is not necessary to confer single person program

eligibility. Also, near elderly singles do not have a statutory

priority for admission.

This rule does not include the proposed near-elderly definition and

provisions on family eligibility of a near-elderly person. Under the

1992 law, the near-elderly characterization chiefly affects use of

Section 8 project-based assistance in units or projects designated for

the elderly. In the tenant-based programs, there are no projects or

units designated for Section 8 elderly occupancy. Each family chooses a

unit in the private market.

Temporary Absence of Foster Child

Comments asked HUD to clarify a rule which states that the

temporary absence of a child from the home due to placement in foster

care may not be considered in determining what constitutes a family. A

1990 law provides that: The temporary absence of a child from the home

due to placement in foster child care shall not be considered in

considering family composition and family size. [1990 NAHA, section

574, amending 42 U.S.C. 1437a(b)(3); 104 Stat. 4238]

In determining family composition, the temporarily absent child is

considered to be part of the assisted household. For example, a single

woman with two children who are currently and temporarily living in

foster care homes, is considered as a family of three people, one adult

and two children, instead of a single person family. The statutory

provision is intended to promote family re-unification by permitting

the family to rent a subsidized unit that will be big enough for the

whole family when the absent child returns from foster care. To clarify

this concept, the rule provides that: A child who is temporarily away

from the home because of placement in foster care is considered a

member of the family. [Sec. 982.201(c)(5)]

The statutory and regulatory provisions only pertain to the foster

child's ``temporary'' absence from the home, but are not intended to

artificially enlarge the space available for other family members.

Remaining Family Member

Comments ask HUD to clarify a proposed provision stating that the

``remaining'' members of an assisted family qualify as a ``family''.

Since the beginning of the Section 8 program, the law has provided that

a ``family'' includes a ``remaining'' member of the tenant family.

[Definition now at 42 U.S.C. 1437a(b)(3)(A)] Under the existing

regulatory definition of a ``family'', the term ``family'' includes the

``remaining member of a tenant family'' (at Sec. 812.2, not amended by

this rule).

If composition of an assisted family changes by death or departure

of family members after initial admission to the program, the remaining

members or individual member of the assisted family are a statutory

``family''. The definition of a ``family'' as including a ``remaining''

family member merely confirms that the HA may continue assistance on

behalf of a remaining family member after departure of other members of

the original assisted family. The ``remaining'' family member concept

does not affect original eligibility or admission to the program--

whether of a single individual or of a multi-person family.

Since this rule only covers HA admission processes (Part 982,

Subpart E), the rule deletes the proposed provision on remaining family

members. The final stage of this rulemaking will clarify that remaining

family members constitute a family.

Disability

The family definition in the 1992 law includes a new definition of

``person with disabilities'' (essentially combining defining elements

of three separate disability definitions under prior law). [106 Stat.

3812, amending 42 U.S.C. 1437a(b)(3)(E)] The law provides that ``person

with disabilities'' may not exclude persons with the disease of

acquired immunodeficiency syndrome (AIDS), or conditions resulting from

the AIDS syndrome. The proposed rule would incorporate the new AIDS-

related elements in the definition of ``person with disabilities''.

Comments ask HUD to clarify whether the disability definition

includes a person who is HIV positive, but who does not exhibit

symptoms or conditions associated with AIDS. Comments ask why persons

with terminal illnesses other than AIDS are not included in the

definition, and suggest that HUD expand the definition of the term

disabled person to include persons in recovery programs for substance

abuse or other conditions.

As indicated above, substantive changes in the ``family''

definition under the 1992 law will be implemented by HUD in a separate

rulemaking for the whole universe of covered Section 8 and public

housing programs. This rule does not include special provisions on

eligibility of individuals with AIDS and related conditions. To qualify

for assistance as a disabled person, a single person must meet the

general disability standards carried forward from the prior law (and

consolidated under the term ``disabled person''). In addition, since

the law and rule now permit assistance to any single person (not only

the aged, disabled or displaced), disabled or non-disabled single

persons are broadly eligible for Section 8 assistance.

The definition of ``disabled person'' includes a person with a

disability as defined in section 223 of the Social Security Act.

[Definition of ``disabled person'' in Sec. 982.3; 42 U.S.C.

1437a(b)(3)(E)(i)] Comments state that the HUD rule should use the

disabled definition in the Americans with Disabilities Act instead of

the definition of disabled under section 223 of the Social Security

Act. Since the disability definition in the 1937 Housing Act explicitly

incorporates the disability definition in the Social Security Act, HUD

has not followed this recommendation.

Live-in Aide

The rule defines the term ``live-in aide''. [Sec. 982.3] A live-in

aide resides with the assisted family to care for a family member who

is disabled or elderly. Section 8 family income does not include income

of the live-in aide (either for determination of family eligibility at

admission to the program, or for determination of the family share at

admission and reexamination). If the Section 8 participant leaves the

unit, the live-in aide is not considered a ``remaining'' family member

or program participant, and does not receive any assistance for

continued occupancy of the unit.

The definition of live-in aide in this rule substantially tracks

the definition in other cross-cutting Section 8 rules that apply to the

certificate and voucher programs. [24 CFR Parts 812 and 813] The 1992

law also authorizes the use of a live-in aide for a near-elderly

person. This change will be implemented in the future rulemaking for

programs affected by the 1992 family amendments.

The final rule deletes a proposed change of the live-in aide

definition (not included in the parallel language of other Section 8

rules) to provide that a live-in aide may not be related by blood,

marriage or operation of law to the persons receiving Section 8

assistance for occupancy of the unit. Comments objected to this

proposal, stating that HUD should encourage a family relative to act as

a live-in aide.

Single Persons: Preference for Admission of Elderly or Disabled

By law, a single person who is elderly (over 62), disabled or

displaced must be admitted before other single person families. [42

U.S.C. 1437a(b)(3)(A)] This singles preference is implemented in the

existing HUD rule on admission of single persons in the Section 8

programs. [Sec. 812.3, as amended at 58 Federal Register 39658-59, 7/

26/93]

In HUD's existing rules, the statutory preference for a disabled or

elderly single person is broadened to provide a preference for an

``elderly family'' or displaced person over other single persons.

[Sec. 812.3(e)] An ``elderly family'' includes both a single person

family consisting of a person who is disabled or over 62, and a multi-

person family whose head or spouse is disabled or over 62. [Definition

of ``elderly family'' in Sec. 812.2]

The proposed rule merely states the bare statutory preference for

an elderly, disabled or displaced single person over other single

persons, without stating the preference for an ``elderly'' multi-person

family. [Proposed Sec. 982.201(a)(2)(ii)] In this rule, the statement

of the preference has been conformed to the existing rule that gives

preference to any family with an elderly or disabled head or spouse,

not limited to a preference for elderly or disabled single person

families.

The rule provides that: In selecting applicants, the HA must give

preference to:

(1) A family (with or without federal preference):

(i) Whose single member is a displaced person or,

(ii) Whose head or spouse or single member is an elderly person or

a disabled person, over

(2) A single person (with or without federal preference) who is not

elderly, disabled or displaced. [Sec. 982.207(d)]

Comments note that the proposed rule does not explain how the

statutory singles preference (for single persons who are elderly,

disabled or displaced) relates to the statutory federal preferences

(for single or multi-person families that are displaced, rent-burdened

or live in substandard housing). Comments recommend that the rule

should specify that the preference for singles applies between

applicants with the same federal preference status (i.e., applicants

with or without a federal preference). As HUD understands this

proposal, the singles preference would require the admission of a

federal preference single who is elderly, disabled or displaced before

a federal preference single who is not elderly, disabled or displaced.

The statutes do not state the relation between the two types of

statutory preference, nor prescribe which type of preference takes

precedence. HUD has decided to provide that the federal statutory

preference for elderly, disabled or displaced singles will take

precedence over the so-called ``federal preferences''. Under this rule,

the singles preference is not limited--as proposed by the comment--to

applicants with the same federal preference status. The rule is revised

to provide that the singles preference applies to a family ``with or

without a federal preference'' over a single person with or without a

federal preference. The rule requires admission of a single individual

who is elderly, disabled or displaced, but does not qualify for federal

preference, before a single individual who qualifies for federal

preference, but is not elderly, disabled or displaced.

[Sec. 982.207(d)]

Comments state that HAs should not be required to accept

applications from non-elderly applicants, when these applicants will

never be reached on the waiting list because of the preference for

elderly or disabled persons.

The rule does not require the admission of ``other'' single

persons, who are not entitled to the statutory singles preference. The

rule also permits the HA to adopt a policy on opening or closing the

waiting list to applications from such other singles. The HA may adopt

local policy on who may apply for assistance when the waiting list is

open. [Sec. 982.206(a)(3) and Sec. 982.206(b)(1)] If singles with

statutory preference will absorb available program openings, the HA may

elect to stop accepting new applications from other single persons.

Verifying Eligibility

The proposed rule requires that an HA must verify family

eligibility during the 90 day period before the family initially

receives assistance under the program. Comments note that HAs will have

difficulty in satisfying this requirement. The Department is also asked

to clarify whether ``initially receiving assistance'' means the date a

certificate or voucher is issued or the effective date of the HAP

contract.

After considering comments, HUD has decided to require that the HA

obtain information verifying family eligibility no more than 60 days

before the HA initially issues a certificate or voucher to an applicant

family. [Sec. 982.201(e)] This timing of the verification process will

eliminate scheduling problems that might be caused if the time for

eligibility verification is linked to the commencement of assistance

(effective date of the HAP contract).

Comments state that the requirement to verify eligibility 90 days

before commencement of assistance is inconsistent with handbook

guidance providing that verifications are valid for 120 days from

receipt by the HA. The 120 day validity period is and will remain

applicable for annual reexaminations and interim redetermination of

family income and composition after admission to the program. The

program handbook will give additional guidance on how to administer the

initial income eligibility verification deadline in this rule.

The proposed rule provides that the HA must make a preliminary

eligibility determination before placing a family's name on the waiting

list. Comments criticize HUD for trying to micro-manage the admission

process. An HA should have discretion whether to make an eligibility

determination before a family is added to the waiting list. Family

circumstances change. A family that is ineligible at the time of

application may become eligible before its name is reached on the

waiting list. Comments also ask HUD to clarify that the HA is not

required to verify family eligibility before adding a family's name to

the waiting list.

An HA must determine and verify eligibility before a family is

admitted. However, HUD agrees that HAs need flexibility to design an

admission process and timing that fits the need of the local program.

For most HAs, there are many qualified applicants and a long wait for

entrance to the program. Families may move away or lose interest.

Eligibility information must be current when the family is finally

selected for admission to a program. The HA needs to balance

administrative cost and problems against the need for an adequate pool

of families for orderly admission to available program openings.

Various program requirements apply to the HA ``waiting list'',

including the federal preference scheme, and provisions governing the

relation of the Section 8 waiting list to waiting lists for other

assisted housing programs. The proposed rule provides that the HA must

make a preliminary eligibility determination before a family is placed

on the Section 8 waiting list. This provision was intended to specify

that the universe to which ``waiting list'' requirements apply is the

universe of families for which the HA has made a preliminary

determination of eligibility (which need not be verified at that time).

The proposed requirement was not intended to accelerate the HA's

preliminary eligibility determination, or to require the HA to verify

family eligibility before adding the family to the waiting list.

In the rule, HUD does not require a preliminary eligibility

determination before the HA puts the family on the waiting list.

Selecting Families

Family Size--Effect on Selection

In the tenant-based programs, HAs currently apportion available

program funding resources by unit size (1 bedroom, 2 bedroom * * *).

The HA selects an applicant for the unit size opening for which the

family qualifies under the HA occupancy standards. To match available

program resources for each bedroom size with families who qualify for a

particular bedroom size, waiting lists are organized by bedroom size.

In the certificate program, an HA is currently required to use

program resources in accordance with a HUD approved unit size

distribution. The target unit distribution for the program is stated in

the consolidated ACC for the program. Generally, HUD must approve

substantial deviation from the distribution allowed under the ACC. In

the voucher program, the HA has discretion to determine the bedroom

distribution of the program units supported with available program

resources.

In both programs, families are selected by bedroom size for

available program openings for the appropriate bedroom sizes. In this

respect, the current selection procedure for the tenant-based programs

is the same as the selection procedure by which HAs and owners fill

vacant units in project-based assisted housing programs. For example,

when there is a vacant two bedroom unit in an assisted project, the HA

or owner selects a family that needs a two bedroom unit. In the

project-based programs, selection is inherently constrained by the

existing configuration of the subsidized unit, and the need to assure

an appropriate match between the size of the project unit and the

housing needs of the assisted family.

In the tenant-based programs, however, there are no project units.

The family chooses among units available for rent in the assisted

housing market. Once admitted to the tenant-based program, a family

that qualifies for any unit size can search for a suitable sized unit

in the local rental market. The HA is limited by the total program

funds available under the consolidated ACC. However, there is no

inherent need to match the unit size needs of the family with any

particular assisted unit, or with program funds apportioned to support

rental of a particular size unit.

In the tenant-based programs, the unit size for which the family

qualifies determines the maximum subsidy for the family. For example,

in the certificate program a four bedroom family must lease a unit that

rents under the four bedroom fair market rent.

Under the existing program procedures, the distribution of

available program resources by unit size may result in different

waiting periods for the different unit sizes. For example, at a

particular HA the wait for a four bedroom certificate may be three

years, while the wait for a two bedroom certificate is only one year.

In general, the length of the time a family has to wait for assistance

is determined by the amount of funding allocated by the HA for a given

unit size, and the number of waiting list families who qualify for that

unit size. In this system, federal and other locally determined

preferences determine the order of admission among waiting list

families who qualify for a given unit size.

In this rulemaking, comments recommend that families should not be

selected by unit size. Families should be chosen from the top of the

waiting list without regard to unit size. HUD should not allocate

funding by unit size.

After careful consideration, HUD has decided to prohibit HA

selection of families for tenant-based assistance on the basis of the

unit size needed by the family. HAs are no longer permitted to select

families to meet a pre-determined program unit size distribution.

Instead, families must be selected by the HA without regard to family

size, or to the unit size for which a family qualifies under the HA

occupancy policy. When selected, a family receives the appropriate

subsidy for the family size. The HA selects families of any size in

order from the waiting list, up to the limit of available funding. The

program unit size distribution is no longer the basis for selection,

but the result of selection.

To accomplish this important change in program selection

procedures, the rule provides that ``the order of admission from the

waiting list may not be based on family size, or on the family unit

size for which the family qualifies under the HA occupancy policy.''

[Sec. 982.204(d)(1)]

At the time when a family comes to the top of the waiting list, the

HA may or may not immediately have enough funds to support the amount

of subsidy required for the family. The new rule provides that if the

HA does not have sufficient funds to subsidize the family unit size of

the family at the top of the waiting list, the HA may not skip the top

waiting list family in order to admit an applicant family with a

smaller family unit size (that can be immediately supported with

available funding). [Sec. 982.204(d)(2)]

In eliminating selection by unit size, the rule also eliminates HA

administrative problems in managing available assistance resources to

meet a pre-determined unit distribution. Moreover, the rule has also

eliminated the need and authority for the HA to establish priorities

for families requiring different size units.

At any given funding level, the HA can assist more families with a

smaller subsidy, and fewer families with a larger subsidy. This

proposition is equally true of the old system and of the system

established under this rule. However, under the prior system, the

choice of the pre-determined program unit distribution is also a choice

of how many families will be assisted in the program. Under the new

rule, the number of assisted families is the number of families

supported by the available funding.

HUD has developed a new form of consolidated annual contributions

contract (ACC) for the certificate and voucher programs. The unified

contract covers both tenant-based programs administered by an HA, and

eliminates the HA's obligation to meet a pre-determined program unit

size mix in administration of the certificate program under the old

certificate program ACC form. HUD will also eliminate the current

certificate handbook provision requiring HUD approval of unit size

redistributions for more than 12 units.

Prohibited Admission Criteria

In deciding whether to admit a family, the rule does not permit the

HA to consider certain types of ``family characteristics'' listed in

the rule. [Sec. 982.202(b)(4)]

Discrimination Against Family With Children

The proposed rule provides that HA selection of families may not be

based on ``whether the family includes children (family status)''.

Comments state that presence or absence of children may be key to

determining if a family is eligible for assistance. Contrary to the

comment, program ``eligibility'' is not based on whether there are

children in the family.

Comments note that waiting lists are organized by unit size, and

that the unit size for which a family qualifies is determined by the

number and relationship of family members. As discussed above, this

rule eliminates waiting list selection based on the size of the unit

for which a family qualifies under the HA occupancy policy.

[Sec. 982.204(d)]

In response to comments, the rule is revised to clarify, as

originally intended, that the HA is prohibited from using selection

criteria which result in ``discrimination because a family includes

children (familial status discrimination)''. [Sec. 982.202(b)(4)(i)(C)]

Employment or Education

The proposed rule would have prohibited the HA from basing

selection of participants on the ``employment history or education'' of

family members.

The final rule removes the proposed prohibition against selection

based on employment history of family members. In addition, the rule

now specifically permits the HA to give a preference among Federal

preference holders for ``working families''. [Sec. 982.210(b)(3)(iv)]

For admissions not subject to Federal preference, the HA may also give

preference (``local preference'') to working families.

In affording a preference for ``working families,'' the HA is

subject to the statutory and regulatory prohibitions against

discrimination because of age or disability. To provide protection

against such discrimination, the rule provides that an applicant family

must be given the benefit of a working family preference if the head

and spouse, or sole member, are age 62 or older or are receiving social

security disability, supplemental security income disability benefits,

or any other payments based on an individual's inability to work.

Regulations for the tenant-based programs do not allow an HA to

adopt a preference for admission of higher income waiting list families

over families of lower income. [Sec. 982.202(b)(4)(ii)] For tenant-

based programs, this restriction is Departmental policy, but is not

required by statute. In accordance with this policy, the rule provides

that when an HA elects to adopt a ranking preference for Federal

preference-qualified ``working families'', the HA admission preference

``may not give greater preference to an applicant based on the amount

of employment income.'' [Sec. 982.210(b)(3)(iv)]

The final rule does not include the proposed prohibition of

selection based on ``education'' of family members. An HA has

discretion whether or not to adopt an admission policy with a

preference for this purpose. For selection among federal preference

holders, the rule explicitly provides that an HA admission policy may

give ranking preference for graduates of, or active participants in

educational and training programs that are designed to prepare

individuals for the job market. [Sec. 982.210(b)(4)] (However, the law

and regulation prohibit a special preference for applicant families

that agree to participate in the HA's family self-sufficiency program.)

Suitability for Tenancy

The rule restates the old rule requirement that the owner, not the

HA, determines whether a family is suitable for tenancy. Admission to

the program may not be based on a family's suitability for tenancy.

[Sec. 982.202(b)(1)] Comments state that the HA determines suitability

for tenancy when the HA denies assistance because of drug or violent

crime by family members. Since 1990, program rules allow the HA to deny

assistance if family members engage in drug crimes and crimes of

violence. The rule has been revised to confirm that the HA may deny

assistance to an applicant (under existing provisions of the program

rule) because of drug-related criminal activity or violent criminal

activity by family members. [Sec. 982.202(b)(1)]

Special Admission--Non Waiting List

Sometimes HUD gives an HA program funding for families living in

specified units, for example, funding for families displaced because of

demolition or disposition of a public housing project. The final rule

provides that: ``If HUD awards an HA program funding that is targeted

for families living in specified units:

(1) The HA must use the assistance for the families living in these

units.

(2) The HA may admit a family that is not on the HA waiting list,

or without considering the family's waiting list position. The HA must

maintain records showing that the family was admitted with HUD-targeted

assistance.'' [Sec. 982.203(a)]

The rule also lists examples of types of cases in which HUD may

give the HA program funding for a family living in a specified unit.

[Sec. 982.203(b)] In general, these are cases where HUD provides

certificate or voucher funding for continued assistance to low income

residents of projects in various HUD programs. The funding is granted

to an HA by HUD to provide assistance for families who would be

displaced from a project by the termination of assistance or some other

event. The HA must use the funding for that purpose. The HA is not free

to ``select'' other families.

In the proposed rule, a non-waiting list admission is called a

``special family selection''. In the final rule, HUD now uses the term

``special admission'' to more accurately reflect the nature of these

cases--which do not involve an authentic HA selection between eligible

applicants. In the rule a ``special admission'' is defined as:

``Admission of an applicant that is not on the HA waiting list, or

without considering the applicant's waiting list position.''

[Sec. 982.3]

The proposed rule would have allowed special admission of: (1)

families forced to vacate housing because of rehabilitation under the

former rental rehabilitation grant program; (2) families living in

Section 8 Moderate Rehabilitation or Project-based Certificate Projects

in units that are too big or too small; (3) families living in such

projects when an assistance contract expires; (4) when HUD gives the HA

funding for settlement of litigation. Under the terms of the final

rule, special admission is limited to cases when HUD provides the HA

funding for families living in specified units.

Special Admission: Overcrowded or Overhoused Family in Federally-

Assisted Project

Under the proposed rule, the HA would be permitted to make a non-

waiting list admission of a family that lives in a project-based

assisted unit that is too large or too small for the family (if there

is no vacant unit of appropriate size in the project or program). This

proposed provision would have applied to families living in project-

based units assisted under certain HA-administered programs: a public

housing unit, a moderate rehabilitation unit, or a project-based

certificate unit.

Comments recommend that HUD should allow non-waiting list admission

of a family living in an inappropriate-sized unit assisted under the

Section 8 new construction or substantial rehabilitation programs.

Comments also ask HUD to clarify that an HA has the option whether to

use the authority for non-waiting list admission of families in units

that are too big or too small.

HUD has decided to eliminate altogether the proposed authority for

special admission of families who occupy assisted units that are not

suitable for the actual family size. Instead, the HA has latitude to

grant preference for such families in the context of the HA's general

scheme for federal preference and non-federal preference admissions, or

to open the waiting list for such families. In administering the limit

on non-federal preference admissions, the HA may choose to grant a

local preference for these families.

Special Admission: Proposal for Expansion

Comments ask HUD to permit additional categories of non-waiting

list admission. Comments suggest that special admission should be

allowed:

--For persons who are terminally ill.

--For moderate rehabilitation and project-based certificate program

families whose health, welfare or safety is threatened, or families who

have provided drug activity testimony.

--For families that need to move closer to medical or social services.

HUD has not adopted the recommendation to expand the list of non-

waiting list categories (special admission). Each of the situations

noted in the public comments may be a legitimate basis for preferential

admission. Within the scheme of federal preference and non-federal

preference admissions, the HA can employ admission techniques that

expedite assistance for waiting list families with special and urgent

needs described in the HA administrative plan. The HA may, for example,

open a closed waiting list to such families. The HA may adopt

``ranking'' preferences for selection among federal preference holders,

or ``local'' preferences for a local preference admission. Use of the

HA local preference quota is the appropriate vehicle for rationing

available local assistance resources among eligible families who do not

qualify for federal preference. Non-waiting list treatment does not

solve or avoid the burden of local choice in allocation of program

resources.

Special Admission: Funding for Specific Families; Terminology

The rule provides that if HUD awards the HA funding that is

targeted for families living in specified units, the HA must use the

funding for the designated purpose. [Sec. 982.203(a)]

Comments suggest that the limit on use of targeted funding should

only restrict the HA's initial use of the funding. This recommendation

is not adopted. The HA must use targeted funding in accordance with the

conditions imposed when the funds are awarded to and accepted by an HA.

Sometimes HUD funding may be earmarked for specific families, even

after turnover. In most cases, special admission funding is only

restricted on initial use for a particular family. On turnover, such

funding becomes available for general use in the HA tenant-based

program. HUD determines how long the HA is bound by the requirement to

use special funding for the purpose awarded. If HUD does not require

continued use of the funding for a special purpose, the funding is

released from special use requirements.

Waiting List

Status of Applicant

The rule provides that an applicant does not have any right or

entitlement to be listed on the waiting list, to any particular

position on the waiting list, or to admission to the programs. Further,

the rule states that this provision does not affect or prejudice any

applicant right, independent of the certificate and voucher

regulations, to bring a judicial action challenging an HA violation of

a constitutional or statutory requirement. [Sec. 982.202(c)]

Comments ask HUD to delete this provision, asserting that qualified

applicants have a right to be listed on and selected from a waiting

list if funding is available. Other comments expressed concern that

this rule could be construed to mean that an HA may be sued if HUD

fails to take action to implement a statutory provision.

The rule language at issue substantially restates provisions of the

current rule. [See 49 FR 12215, 12224, March 29, 1984] The language

makes clear that the rule is not intended to create any right or

entitlement of individual applicants to apply for or participate in the

programs.

Metropolitan Area Admission Procedures

Comments recommend that HUD require the establishment of a

metropolitan-wide waiting list and nonprofit clearinghouse to take and

process tenant applications for all subsidized housing programs in a

metropolitan area. Comments state that this type of process is needed

to ensure equitable treatment of applicants, and to maximize fair

housing opportunities.

The proposal to restructure metropolitan area admission procedures

would affect operation of all HUD public and assisted housing programs.

In this rulemaking, HUD will not require adoption of metropolitan-wide

waiting lists for all subsidized programs, or the use of non-profit

clearinghouses for processing applications.

HUD plans to develop and implement a metropolitanwide strategy for

the delivery of HUD-assisted housing programs. Initially HUD expects to

develop a model for implementation of a pilot program in up to three

metropolitan areas.

Admission to Different Subsidized Housing Programs

This rule gives a unified statement of provisions on the

relationship between admission to the Section 8 tenant-based programs,

and provisions on admission to other subsidized housing programs. These

provisions cover:

--The relation between the Section 8 tenant-based certificate and

voucher programs. [Sec. 982.205(a)]

--The relation between the Section 8 tenant-based programs and other

assisted housing programs. [Sec. 982.205 (b) and (c)]

Single Waiting List for Tenant-Based Programs

The rule provides that an HA which uses residency preferences for a

county or municipality in the HA jurisdiction may use a separate

waiting list for the county or municipality. [Sec. 982.205(a)(1)]

However, an HA must use the same waiting list for admission to its

tenant-based certificate and voucher programs. [Sec. 982.205(a)(2)] The

HA may not have separate waiting lists for its certificate and voucher

programs.

Refusing Tenant-Based Assistance

An applicant may decline an offer of admission to the certificate

or voucher program, preferring to wait for admission to the other

tenant-based program. However, if an applicant refuses offers of

admission to both of the tenant-based programs, the HA may remove the

applicant from the waiting list for tenant-based assistance.

[Sec. 982.205(c)(2)]

Relation to Other Subsidized Housing Programs

The rule provides that a family may apply for, receive or refuse

other housing assistance without losing the opportunity for listing on

the Section 8 tenant-based waiting list. For this purpose, ``other

housing assistance'' means a federal, State or local housing subsidy,

as determined by HUD, including public or Indian housing.

[Sec. 982.205(c)(1)] Of course, the family may not continue to receive

two forms of housing subsidy after admission to the tenant-based

program.

The proposed rule provided that an HA must combine the waiting list

for the tenant-based programs with the waiting list for project-based

certificate assistance, and that the HA may merge its tenant-based

waiting list with the waiting list for its public or Indian housing

program, or Section 8 moderate rehabilitation program. Comments object

to requiring a common waiting list for tenant-based subsidy and the

project-based certificate program. Comments note that many families on

a common waiting list would only accept the offer of a tenant-based

subsidy, and that it is cumbersome for the HA to administer a waiting

list covering tenant-based and project-based units.

HUD concurs that the decision whether to combine the tenant-based

and certificate project-based waiting lists should be left to local

choice by individual HAs. The rule removes the proposed requirement to

use the same waiting list for the tenant-based programs as for the HA's

project-based certificate program.

The rule provides that an HA may merge the waiting list for tenant-

based assistance with HA waiting lists for admission to other assisted

housing programs--including project-based programs administered by the

HA (such as the project-based certificate program or the public housing

program). The decision whether to merge the program waiting lists rests

in the discretion of the HA. If the HA elects to merge the program

waiting lists, selection from the merged waiting list is subject to HUD

regulations and requirements for each of the covered programs.

[Sec. 982.205(b)(1)]

Management of the Waiting List

An HA must give public notice that the waiting list is open. The HA

may adopt criteria defining who can apply, but the limitations must be

stated in the public notice. [Sec. 982.206] The final rule adds a new

provision clarifying that the HA may not arbitrarily refuse

applications when the waiting list is open. The rule now provides that

if the waiting list is open, the HA must accept applications from

families who meet the criteria in the HA notice unless there is a

``good cause'' for not accepting the application, such as a denial of

assistance for one of the grounds listed in the regulation.

[Sec. 982.206(b)(2)]

Comments ask HUD to provide guidance on how and when to ``purge''

or ``update'' the waiting list. They state that the rule should not

allow the HA to drop families who fail to demonstrate continued

interest in assistance under the program. Comments state that the HA

should have a rational process for updating the waiting list. They

state that HAs should be required to establish procedures to protect

applicants from being arbitrarily dropped from the waiting list.

HUD does not require an HA to purge its waiting list. Usually, an

HA purges the waiting list when the list becomes unmanageable, or the

HA is unable to contact families. HUD believes that the HA should

retain discretion in management of the waiting list, in determining

when names should be dropped from the list, or in using a new or

updated list. HUD has not adopted recommendations to add new

restrictions on HA procedures for determining the active waiting list.

Individual applicant families do not have a right to be placed on

the waiting list, or to a waiting list position. [Sec. 982.202(c)] The

HA is charged with the task of distributing limited available

assistance resources among eligible families. To this end, the HA is

legitimately vested with broad discretion to develop reasonable local

policies for managing the process for admission of eligible families.

The HA policies may properly reflect local values and local choices.

The HA must comply with HUD requirements, including requirements

for eligibility and preference. Within these requirements, HAs have

wide latitude to develop a fair, orderly and economical process for

admission of families. Because the universe of eligible families is

generally much larger than the number of available slots, an HA needs

to achieve a balance between the need to maintain a pool of families

for admission to the program as openings occur, and the burden and

expense entailed to support a waiting list that is disproportionate to

available program resources. So long as the size of the HA waiting list

is sufficient to fill available openings, an increase in the waiting

list does not increase the number of families assisted. Rather,

enlargement of the list absorbs funds that could otherwise be used for

assistance to families--for example, by providing additional search

assistance to selected families.

Under this rule, HAs may decide when and how to purge the waiting

list. The exercise of this discretion does not affect any property or

procedural rights of individual applicants. The rule provides that:

``The HA administrative plan must state HA policy on when applicant

names may be removed from the waiting list. For example, the policy may

provide that the HA will remove names of applicants who do not respond

to HA requests for information or updates, or who have refused offers

of tenant-based assistance under both the certificate program and the

voucher program.'' [Sec. 982.204(c)(1)]

The rule emphasizes that the HA's system for purging the waiting

list may not prejudice the rights of a disabled applicant. The HA may

not strike the name of a disabled applicant whose failure to respond to

HA requests was caused by the applicant's disability. The HA must

provide a reasonable accommodation that allows the disabled applicant a

fair opportunity for response to the HA. [Sec. 982.204(c)(2)]

Comments ask HUD to require all HAs to accept completed

applications by mail. The Department has not accepted this

recommendation. HAs use many different methods of taking applications.

The Department has no reason to impose a particular method for taking

applications. HAs are encouraged to use various locally-determined

methods of taking applications, including home visits to applicants who

are unable to reach the HA office. However, HAs should be aware of

their obligation to make the application process accessible to

applicants with a full range of disabilities.

Preference in Admission

Residency Preference

As in the past, the rule provides that an HA may adopt a residency

preference for admission of families on the HA waiting list.

[Sec. 982.208] ``Residency preference'' means an HA preference for

admission of families that reside in a specified area, including a

family with a member who works or has been hired to work in the area.

``Residency preference area'' means the specified area where a family

must reside to qualify for a residency preference. [Sec. 982.208(a)]

The final rule also clarifies when an HA may establish a residency

preference for a part of the HA jurisdiction. If HUD approves, an HA

may adopt a residency preference that establishes a county or

municipality as a residency preference area. However, an HA may not

establish a residency preference for an area smaller than a county or

municipality. [Sec. 982.208(c)] An HA may elect to use a separate

waiting list for a county or municipality. [Sec. 982.205(a)(1)]

In addition, the final rule provides that selection for admission

to the program may not be based on where a family lives before

admission to the program. As an exception to this prohibition, the rule

provides that an HA may target assistance for families who live in

public housing or other federally assisted housing.

[Sec. 982.202(b)(2)]

The rule provides that an HA may use a residency preference either

(1) as a ``ranking preference''--to select among federal preference

holders, or (2) as a ``local preference''--to select among families

that do not hold a federal preference. [Sec. 982.208(f)] Applicants

with family members who work or who have been hired to work in the

residency preference area must be treated the same as families that

reside in the residency preference area. [Sec. 982.208(d)] A residency

preference may not be based on how long the family has lived in or

worked in the HA jurisdiction or the residency preference area.

[Sec. 982.208(e)] A residency preference must be approved by HUD.

[Sec. 982.208(b)]

Some public comments approve local residency preferences. Other

comments object to such preferences.

Comments claim that HA residency preferences are not authorized

under the preference statute, arguing that such preferences do not

further any other national housing objective. HUD does not agree with

this comment. Nothing in the preference statute precludes use of

residency preferences.

In admission of families who qualify for the federal preference,

federal law does not dictate the order of admission among preference

holders. An HA may adopt a residency preference for admission of

federal preference holders who are local residents before admission of

federal preference holders who are not local residents.

In a non-federal preference admission, the law allows broad scope

for HA adoption of local preferences to meet ``local needs and

priorities''. The local need and priority may accommodate the desire to

serve local residents before families who do not reside in the

community. The law provides that the purposes of a local preference

``may include'' a preference adopted to achieve statutory objectives of

national housing policy. The listing of preference purposes in the law

is not an exclusive enumeration of the purposes for which the HA may

adopt a local preference. In addition, the adoption of a local

residency preference may be consistent with the objective of providing

housing to local residents in accordance with the broad objectives of

national housing policy. [Sec. 982.209(a)]

Comments state that an HA should use a single waiting list for the

whole HA jurisdiction. Other comments state that HUD should not permit

an HA to establish a separate waiting list for an area smaller than a

county. Comments recommend that a large-area HA should be allowed to

maintain a separate waiting list or preference for residents of a

``reasonable subdivision'' or region of the HA jurisdiction.

In the tenant-based programs, an HA residency preference affects

entry to the housing program, and availability of the HA's housing

subsidy resources for applicant families. However, the use of a

residency preference does not affect geographic mobility of families

once admitted to the program. During the first year after admission,

all families may move anywhere in the HA jurisdiction. After the first

year in the program, families may move anywhere in the State or

metropolitan area under statutory portability procedures. (For a family

that lives in the HA's jurisdiction when the family applies for

assistance, the right of portability applies as soon as the family is

admitted to the program.)

Comments state that local residency preferences must comply with

civil rights requirements, and should be approved in advance by HUD

Fair Housing and Equal Opportunity. Comments also state that HUD should

not approve a residency preference that would have a ``racially

exclusionary effect''. The comments also allege that HUD routinely

approves HA residency preferences, and that HUD approval is not founded

on an adequate fair housing analysis.

HUD emphatically agrees that HA admission policies, including any

residency or other preference, are subject to civil rights

requirements. HA selection policies are included in the HA

administrative plan and the HA equal opportunity plan.

As in the past, any residency preferences must be submitted for

review and approval by HUD. The Department will be undertaking a full

notice and comment rulemaking on standards or procedures for approval

of HA residency preferences.

Federal Preference: General

Under federal law, a housing authority with a Section 8 certificate

or voucher program must give preference for selection of families that

are:

(1) Involuntarily displaced.

(2) Homeless or living in substandard housing.

(3) Paying more than 50 percent of income for rent.

These are known as the ``federal preferences''.

The law requires federal preference for at least 90 percent of the

families who initially receive tenant-based assistance in a one-year

period. For the other 10 percent of admissions, the HA is not required

to award a federal preference.

The new rule establishes the same federal preference requirements

and non-federal preference admission limit for the tenant-based

certificate and voucher programs. The rule provides that at least 90

percent of total waiting list admissions to the Section 8 tenant-based

programs in each successive one-year period must be families that

qualify for federal preference (if federal preference holders are

available on the waiting list). However, up to ten percent of such

admissions during the year period may be families that do not qualify

for federal preference. [Sec. 982.207(b)]

This rule amends requirements for federal preference selection of

assisted families in the Section 8 certificate and voucher tenant-based

programs. The National Affordable Housing Act of 1990 (NAHA) enacted

changes concerning HA preferences in selecting Section 8 program

participants. [1990 NAHA, Section 545, Pub. L. 101-625, 104 Stat. 4218-

4220] Later legislation provides that the NAHA Section 8 preference

changes must be implemented by April 26, 1993, through a notice and

comment rulemaking. [Housing and Community Development Act of 1992,

Section 104, Pub. L. 102-550, 106 Stat. 3684] This rule implements the

NAHA preference changes for the certificate and voucher programs.

Comments state that an HA needs clarification of federal preference

requirements for consistent program administration. The rule is re-

written and re-organized for greater clarity in how to apply the

statutory preferences. For the same reason, the rule also includes a

number of new or revised definitions of preference terms.

However, the rule has left largely unchanged the regulatory

definitions of the three statutory preferences. With HUD field office

approval, an HA can adopt local modifications of the standard

preference definitions.

The old rule stated procedures that could be used by an HA to

verify the federal preference claimed by an applicant family. However,

an HA was not required to use these procedures. Since the verification

procedures are not mandatory, they need not be stated in the rule. The

final rule deletes the description of optional verification procedures.

Limit on Non-Federal Preference Admissions

Under the law, federal preference applies for 90 percent of the

families who ``initially receive assistance in any 1-year period''. [42

U.S.C. 1437f(d)(1)(A)(i) (certificates) and 1437f(o)(3)(B) (vouchers)]

Public comments object to the 10 percent limit on non-federal

preference admissions, and challenge the value of the statutory federal

preference scheme. Comments state that assistance should be distributed

first-come first-served. Comments state that the rule should increase

the permitted percentage of non-federal preference admissions, so an HA

can serve more families who do not qualify for federal preference--such

as the working poor or families who need help to become economically

self-sufficient; families at risk of becoming homeless; families in

rural areas.

Comments state that the federal preference requirements produce

much paperwork for little benefit. Almost all families that are income

eligible also qualify for federal preference. By contrast, other

comments assert that only a fraction of waiting list families qualify

for federal preference, and that 10 percent of admissions is not a

sufficient allowance for non-preference admissions. Commenters doubt

that the preference requirements are effective in achieving self-

sufficiency and equity. Others object to the difference in the

percentage of non-preference admissions allowed by the law for public

housing (50 percent), Section 8 project-based assistance (30 percent)

and Section 8 tenant-based assistance (10 percent). Many comments are

criticisms of the statutory preference requirements, rather than

objections to HUD's implementation of the law.

Comments indicate that the regulation should clarify how to apply

the limit on non-federal preference admissions. Should the limit be

tracked program-by-program? Does the count of families that initially

``receive assistance'' include a family that receives a certificate or

voucher from the HA, or only count if the HA has executed an assistance

contract for the family? What is the time period for applying the local

preference admission limit? Comments state that the rule should make

clear that the requirement to admit a federal preference holder before

a non-federal preference holder does not apply to a local preference

admission within the 10 percent limit.

The rule provides that: ```Local preference limit' means ten

percent of total annual waiting list admissions to the an HA's tenant-

based certificate and voucher programs. In any year, the number of

families given preference in admission to the HA tenant-based

certificate program and voucher program over families with a federal

preference may not exceed the local preference limit.''

[Sec. 982.207(b)(1)]

Under the old certificate and voucher program rules, the 10 percent

limit on non-federal preference admissions was applied separately for

admissions to each program. In this rule, the limit applies to total

waiting list admissions to the HA tenant-based certificate and voucher

programs, rather than as a limit on admission to each separate tenant-

based program. The HA is not required to apply the 10 percent limit in

each separate tenant-based program, so long as the HA does not breach

the limit for admissions to both programs together.

The statutory preference quota applies to a family that ``initially

receives assistance'' in the certificate or voucher program. [42 U.S.C.

1437f(d)(1)(A)(i) (certificates) and 1437f(o)(3)(B) (vouchers)] Under

this rule, ``admission'' for tenant-based assistance is defined as the

effective date of the first HAP contract executed by the HA for a

family in a tenant-based program. [Sec. 982.3] The HAP contract is

effective on the first day of the initial lease term. The term of a HAP

contract for tenant-based assistance follows the term of the lease

between the family and the owner. Calculation of the local preference

limit, and of non-federal preference admissions charged against the

limit, does not include cases where the HA has only issued a voucher or

certificate to an applicant family, but the initial lease term has not

commenced.

Under this rule, the local preference limit on admission of

families that do not qualify for federal preference only applies to

admissions from the HA waiting list. The local preference limit does

not apply to a ``special admission'' using funding awarded to the HA to

provide assistance for specific families. For example, the federal

preference requirement and local preference limit do not apply if HUD

has given the HA funding for specific families in a specific project,

such as a family living in a project sold by HUD. Non waiting list

admissions are not included in the base of program admissions to which

the federal preference percentage is applied. In addition, such

admissions are not counted against the 10 percent limit on non federal

preference admissions. [Sec. 982.207(b)(2)]

The law mandates a ``preference'' in selection of families. The law

therefore implies that federal preference applies when the HA is

exercising a choice between a qualifying family and a non-qualifying

family. In such an admission, the HA must ``prefer'' a qualifying

family over a non qualifying family. Conversely, however, if a

qualified family is not available for admission, the HA is not

presented with a choice between a qualifying and a non-qualifying

family, and is not required to give preference to a qualifying over a

non qualifying family.

Under the proposed rule, federal preference requirements would only

apply to admissions where there is a choice between a federal

preference holder and a non federal preference holder. Otherwise such

an admission would not be included in the computation of families which

initially receive assistance during the year (the base to which the

statutory percentage applies), and selection of the family would not be

counted against the 10 per cent limit on non federal preference

selections.

For ease of administration and understanding, the final rule

changes the proposed procedure for calculating and applying the limit

on non federal preference admissions. In this rule, all waiting list

admissions (that is, all admissions other than a ``special admission'')

are included in the base used to determine the 10 per cent local

preference limit on non federal preference admissions. The base is not

limited to admissions where there is a choice between a federal

preference holder and a non-federal preference holder.

However, if a federal preference holder is not available, the

admission of a family that does not qualify for preference does not

count against the federal preference limit. The final rule provides

that the 10 percent local preference limit only applies to the

admission of a non-qualifying family ``over families with a federal

preference.'' [Sec. 982.207(b)(1)] If a federal preference holder is

available for admission, the admission of a non-federal preference

family is counted against the 10 per cent local preference limit.

Conversely, if a federal preference holder is not available for

admission, the admission of a non-federal preference holder is not

counted against the HA's 10 percent local preference limit.

The federal preference requirements and limit also do not apply

when a family is received in an HA's tenant-based program under

portability procedures. The rule clarifies that in applying local

preference limit for a receiving HA, the beginning of assistance for

the portability family is not counted against the receiving HA local

preference limit. [Sec. 982.207(b)(3)] However, admission of the family

is counted against the initial HA's local preference limit.

The local preference limit applies to admissions ``in any 1-year

period''. The rule does not prescribe the HA choice of an appropriate

year period for applying the limit, such as the calendar year, the

federal fiscal year or the HA fiscal year.

Types of Preference

In the vocabulary of the proposed rule, HUD distinguished between

``federal preferences'' and other ``local preferences''. As used in the

proposed rule, the term ``local preferences'' would refer to HA

admission preferences adopted by an HA to meet local needs and

priorities, including preferences used to select between families that

qualify for federal preference (admissions that count toward the 90 per

cent of federal preference admissions), as well as preferences used to

select between families that do not qualify for federal preference

(selections counted against the 10 per cent limit on non federal

preference admissions).

In the text of the law for the Section 8 certificate program, the

term ``local preferences'' refers to preferences used in selection of

families who do not qualify for a federal preference (subject to the 10

per cent limit). For such ``remaining assistance'' the HA must give

preference under a system of ``local preferences'' established by the

public housing agency in writing and after public hearing to respond to

local housing needs and priorities. [42 U.S.C. 1437f(d)(1)(A)(ii)] The

voucher statute refers to a ``system of preferences'' established by

the HA for this purpose. [42 U.S.C. 1437f(o)(3)(B)]

This final rule adopts the terminology used in the certificate

statute. In the rule, the term ``local preference'' refers only to a

preference used by the HA to select among waiting list families without

regard to their federal preference status. [Sec. 982.3 and

Sec. 982.207(a)(3)(iii)] The rule has also added a new term ``ranking

preference'', designating a preference used by the HA to select among

families that qualify for a federal preference. [Sec. 982.3 and

Sec. 982.207(a)(3)(ii)] To summarize, the HA scheme for selection from

the waiting list may comprise three types of preference: a federal

preference directed by federal law for at least 90 percent of waiting

list admissions, a ranking preference used to select among federal

preference holders, and a local preference used to select among

families that do not qualify for federal preference.

Drug Crime Eviction: Disqualification for Preference

The rule implements legislation that denies federal or local

preference for a person or family evicted from Section 8 or public

housing in the last three years because of drug-related criminal

activity. [1990 NAHA, Section 545, 104 Stat. 4218-4220] The proposed

rule would only have denied a federal preference. The rule is broadened

to provide that the evicted family may not be granted a federal

preference, local preference or ranking preference. [Sec. 982.207(f)]

An applicant family may not be granted a preference if any member of

the family was evicted in the last three years from Section 8 housing

(project-based or tenant-based) or from public or Indian housing

because of drug-related criminal activity.

Public comments largely approve denying an admission preference to

persons who were evicted from assisted housing for drug-related

criminal activity. However, comments note that implementation of this

requirement involves the HA in screening for prior behavior of

applicants. In the Section 8 tenant-based programs, the HA is generally

prohibited from screening program applicants as prospective tenants.

By law, the family may not be granted a federal or local preference

if the family was evicted for drug-related criminal activity in the

last three years. Comments urge HUD to set a ``statute of limitations''

on denial of preference for drug-related criminal activity, asserting

that the rule should allow admission of person who have paid their debt

to society.

This rule follows the limitation prescribed in the law. Under the

law and this rule, preference is denied only if the family member was

evicted in the last three years, but is not denied for an eviction

prior to that time. The limitation in the law is pegged to the time of

eviction for drug-related criminal activity, rather than the time when

the crime was committed. The statutory scheme should not be complicated

by adding a secondary limitation based on when the person committed a

crime for which the person was evicted in the last three years.

Comments assert that families whose members engage in drug crime

should be barred from the program, not merely denied an admission

``preference''. The HA should not be required to place the family on

the waiting list.

The federal preference scheme governs the order of admission among

families otherwise eligible and qualified for admission. However, the

statute and regulation requiring denial of an admission ``preference''

because family members were evicted from assisted housing because of

drug related criminal activity do not affect at all the independent

authority of the HA to deny program admission for drug-related criminal

activity, or for other bases allowed under the rule. The allowable

grounds for denying assistance are explicitly listed in the program

rules. (Currently at Sec. 882.210 for the certificate program and

Sec. 887.403 for the voucher program. These provisions will be combined

and conformed in the second stage of this unified rule.) Program

regulations provide that the HA may deny assistance if a family member

has engaged in drug-related or violent criminal activity. [For the

certificate program, see Sec. 882.118(b)(4) and Sec. 882.210(b)(4)] If

the HA has grounds for denial of assistance, the HA is not required to

list the family on the waiting list, or to admit the family off the

waiting list.

Comments state that the HA should be permitted to deny a preference

even if the family was not evicted for drug-related criminal activity.

They recommend that the HA should be permitted to deny preference if

the family was evicted for other reasons, or moved out before eviction,

or if the family violated program requirements.

If a family qualifies for a federal preference under the HA

selection procedures (including the HA definition of the individual

federal preferences), and was not evicted for drug-related criminal

activities, the HA may not deny the federal preference. However, the HA

may deny admission to the tenant-based programs for any of the grounds

stated in the program regulations, such as failure to pay public

housing rent, or fraud in a federal housing program. In addition, since

preferences for selection among federal preference holders are not

prescribed by federal law or program rules, the HA is free to adopt a

system of ranking preferences to reflect local policies and concerns

(so long as the preference system does not incorporate prohibited

selection criteria).

Comments ask the meaning of ``drug-related criminal activity''.

Comments note that there should be objective standards for determining

when a family member has engaged in such activity, such as arrest or

conviction. The term drug-related criminal activity is defined in the

law and rule. [42 U.S.C. 1437f(f)(5); Sec. 982.3] The definition covers

both illegal dealing in drugs (manufacture, sale or distribution) and

illegal use of drugs. The term embraces drug crimes that are illegal

under State or federal law. The definition of a specific criminal drug

crime is found in the State or federal criminal codes and caselaw that

define the elements of a criminal act. In principle, the determination

that a family member was evicted for drug-related criminal activity

does not depend on an arrest or conviction, though the fact of an

arrest or conviction may facilitate the HA determination whether the

family member was evicted because of the crime.

Comments point out the practical problems in determining whether

family members were evicted from Section 8 or public housing for drug-

related criminal activity. Comments remark that it will be hard to

implement the preference disqualification without a national tracking

system. An HA does not know what happened in another program or

jurisdiction.

HUD agrees that it will not be easy to enforce the statutory denial

of preference for families evicted for drug-related criminal activity.

For families evicted by a Section 8 owner, there may be no records, or

readily accessible records, of such eviction. For example, local court

records may show only that the court issued a judgment or order of

eviction, but without stating the grounds, and may not identify the

names of residents other than the defendant tenant. The HA is most

likely to know about prior drug eviction only if the family lived in

the HA's own public housing and was evicted by the HA itself. HAs may

be forced to rely largely on the representation or certification by the

applicant family that no family members were evicted for drug crime

from a Section 8 or public housing program in the three preceding

years.

By contrast, it may be easier for an HA to simply deny admission to

the program because of drug-related or violent criminal activities by

family members (rather than to deny a preference because of such

activities, or because of an eviction for such activities). This HA

determination does not require a finding that the family had also been

evicted for the criminal activity.

The law provides that the HA may grant a federal or local

preference if the evicted ``tenant'' has completed an HA-approved

rehabilitation program. In this context, HUD construes the word

``tenant'' as referring to a person who engaged in drug-related

criminal activity at a prior residence. The rule provides that the HA

may grant a selection preference to a family with a member evicted in

the last three years for drug-related criminal activity ``if the HA

determines that the evicted person has successfully completed a

rehabilitation program approved by the HA''. [Sec. 982.207(f)(1)]

The law also provides that the HA may ``waive'' the preference

prohibition under standards established by HUD. 42 U.S.C.

1437f(d)(1)(A)(iii) and 42 U.S.C. 1437f(o)(3)(B). The standards must

permit the HA to grant a waiver for an individual who ``clearly did not

participate in and had no knowledge of'' the drug-related criminal

activity, or when ``circumstances leading to eviction no longer

exist''. The rule provides that the HA may waive the federal preference

prohibition if the HA determines either that the evicted person

``clearly did not participate in or know about the drug-related

criminal activity'', or that the evicted person ``no longer

participates in any drug-related criminal activity''. [Sec. 982.207(f)

(2) and (3)]

Comments note that it is hard for an HA to determine if a family

member has ``successfully completed'' a rehabilitation program, or knew

of drug-related criminal activity in a prior unit. Comments recommend

that HUD define the meaning of successful completion. HUD agrees that

it will be hard for HAs to render a sound judgment on these questions.

However, these problems are inherent in the waiver law as enacted by

the Congress. Ultimately, the decision on whether to grant relief from

the preference prohibition rests in the judgment of the HA. The HA may

require the family to present information or testimony that will

satisfy the HA. HUD will not prescribe additional definitions or

instructions. Each HA is free to work out the most practical ways of

dealing with these questions.

Denying Admission to Preference Holder

Comments ask if the HA can deny assistance to a family that was

previously terminated from the Section 8 program, but applies for

readmission and now qualifies for federal preference. The HA may deny

admission to the tenant-based programs for the grounds listed in the

program rules. (This rule on program admissions does not affect the

current program rules on grounds for denial or termination of

assistance in the certificate and voucher programs. This subject will

be covered in the second phase of this rule.) As previously remarked,

the federal preference scheme affects the order of admission of

otherwise qualified families, but does not affect the determination of

who may be qualified for admission. The allowable grounds for

terminating assistance to a participant are also grounds for denial of

assistance. If there are proper grounds for denial, the HA may refuse

listing on the waiting list without regard to the family's federal

preference status.

Under the current program rule, behavior in a prior tenancy is not

a ground for denial of assistance. Comments state that a family that

causes damage or infestation to a prior residence should not qualify

for federal preference. The proposed rule provided that a participant

in the tenant-based programs is responsible for family-caused damage to

an assisted unit, and for infestation caused by poor family

housekeeping. [See Subpart L of the February 24, 1993 proposed rule. 58

FR 11352 et seq.]

Provisions on family obligations, and on grounds for denial of

assistance will be included in the second phase of this rule. At this

time, family-caused damage or infestation in a prior assisted or

unassisted unit is not a ground for denial of assistance. Moreover,

such behavior is not grounds for denying a statutory federal preference

for which the family is otherwise qualified. In development of the

rule, HUD will consider whether the HA should be authorized to deny

admission for such behavior in prior assisted or unassisted occupancy,

not just for such behavior as a participant in the Section 8 tenant-

based programs.

Denying Claim of Federal or Other Preference: Procedure

Comments state that the rule should require the HA to provide the

same procedural protections when the HA denies a claim of Federal

preference as for a denial of assistance. The rule provides that the HA

must give the applicant a brief statement of the reasons for a

determination that the applicant does not qualify for federal

preference, and must afford the applicant an opportunity to meet with

an HA representative to review the HA determination.

[Sec. 982.210(d)(1)] The same procedures are used under the existing

rule. In addition, the final rule provides that the HA must give an

applicant the same opportunity for review of the HA's decision denying

a ranking preference (among Federal preference holders), or a local

preference (among families that do not qualify for Federal preference).

HUD believes the procedures provide adequate opportunity for a

second look at an HA determination denying a federal, local or ranking

preference. The HA must determine federal or other preference for the

great mass of program applicants, in the routine processing of each

individual application for admission. A decision granting a preference

does not assure ultimate admission. Most HAs have long waiting lists.

After listing, federal and other preference holders may wait years for

admission to the program.

Federal Preference: Definitions

Federal law requires a preference for displaced families, families

living in substandard housing and families with an excessive rent

burden. The preference rule defines each of these preferences. Comments

recommend some revisions of these definitions. Comments state that an

HA should have authority to grant exceptions to the standard preference

definitions in the rule.

For the most part, this rule does not substantially change the

existing regulatory preference definitions. Under the rule, the HA has

room to tailor the definition of each federal preference to local

circumstances and local preference policy. If the HA wants to use a

different or modified preference definition, the HA may submit an

alternative definition for review and approval by the local HUD office.

[Sec. 982.210(a)] In addition, the HA may adopt its own procedures to

verify that an applicant qualifies for a federal preference.

[Sec. 982.210(c)(3)(ii)] The HA does not have to get HUD approval

before implementing its own verification procedures.

Comments note that HAs need guidance in interpreting the rule. In a

program handbook, HUD will furnish additional guidance on how to

interpret and apply the rule.

Involuntary Displacement Preference

Displacement by domestic violence. The definition of involuntary

displacement gives federal preference to a family that is forced to

move because of physical violence by a member of the household.

[Sec. 982.211(b)(4)] This preference allows other household members to

move away from a spouse or other person who has abused members of the

family.

The applicant must certify that the former abuser will not reside

with the applicant family unless the HA has given advance written

approval. If the abuser returns to the family, household members are

again exposed to the threat of domestic violence.

[Sec. 982.211(b)(4)(iii)(B)] The purpose of the certification is two-

fold: to minimize or sanction cases where there is a bogus claim for

federal preference because of domestic violence, as well as cases where

the abuser's return to the household defeats the purpose of the federal

preference.

Comments support the certification requirement, but recommend that

the rule provide that violation of the certification is grounds for

termination from the program. The recommendation is adopted. The rule

provides that if a family is admitted on the basis of this preference

(involuntary displacement because of domestic violence), the HA may

deny or terminate assistance for breach of this certification.

Composition of the assisted family must be approved by the HA. The HA

must approve return of the former abuser to the assisted household.

Thus the HA may also deny or terminate assistance where the family has

not asked and obtained HA permission for occupancy by a former family

member.

In any individual case, the decision to deny or terminate

assistance for this reason lies in the discretion of the HA. The HA

``may'' terminate assistance, but is not required to exercise this

authority. Even if the family was admitted with federal preference, so

that the family can escape a threat of domestic violence, changes in

family circumstance after admission may justify continued assistance

for the family, for example, if the former abuser has received therapy

or counselling that appears to minimize likelihood of recurrence.

Displacement by owner action. The definition of involuntary

displacement gives preference to applicants forced to vacate a dwelling

unit by certain types of owner action, such as owner action that

withdraws the unit from the rental market. [Sec. 982.211(b)(3)]

Comments recommend that involuntary displacement should not cover a

displacement because a landlord evicts the family, but should only

cover displacement because of disaster, displacement by a government

program, or displacement because of spousal abuse.

No change is required. Under the rule, a family that is evicted by

an owner for violation of the lease does not qualify for preference. To

qualify for preference, the family must have ``met all previously

imposed conditions of occupancy''. [Sec. 982.211(b)(3)(ii)(B)] In

addition, with HUD approval, an HA may adopt an alternative definition

that specifically excludes displacement because of owner eviction.

Comments suggest that in a case where an adult ``child'' is forced

out of the parent's unit, the child should not be treated as

involuntarily displaced unless there was a prior rental agreement

between the owner and child. This comment may reflect concern that in a

family context an alleged involuntary displacement may not be genuine.

However, HUD is not persuaded that this change should be included in

the national definition of involuntary displacement. In any case, an

individual HA may incorporate the suggested modification in the local

definition.

Displacement by government action. The definition of involuntary

displacement in the rule gives preference to a family displaced by

government action in connection with code enforcement, or with a public

improvement or development program. [Sec. 982.211(b)(2)] Comments argue

that displacement because of code enforcement results from private

action, and should not be treated as displacement by government action.

Comments claim that the regulatory definition rewards the building

owner, as well as a family which ``elects'' to live in a building that

violates the code.

HUD does not agree that the grant of federal preference for a

family that is forced to live in sub-code housing is an inappropriate

``reward'' for a family that is forced to live in such circumstances.

Moreover, the preference is not a reward for the owner of the housing.

The family has the right to move to any available standard unit, not

just to another unit of the same landlord. The issuance of a

certificate or voucher helps the family move from substandard housing.

Some HAs claim that families move into substandard housing in order

to qualify for federal preference, and thereby speed up access to

subsidized housing. It is likely that such cases occur only or

principally for HAs that do not have long waiting lists of federal

preference holders, and where federal preference qualification may lead

to rapid entry to the programs. HAs that want to minimize possible

abuse of the federal preferences for persons displaced by code

enforcement, or for residents of substandard housing, may adopt ranking

preferences based on duration of a family's residence in substandard

housing. Alternatively, with HUD approval, the HAs could adopt modified

preference definitions designed to deal with this problem.

Displacement to avoid reprisals. The definition of involuntary

displacement is amended to permit the HA to grant federal preference

status if there is a danger of reprisal against a family member who

provides information on criminal activities to a law enforcement

agency. The HA may only grant a preference on this basis if the law

enforcement agency has carried out a threat assessment, and recommends

rehousing a family to avoid or minimize a risk of violence against

family members. [Sec. 982.211(b)(5)]

Displacement by hate crimes. The definition of involuntary

displacement is amended to permit the HA to grant federal preference

status for a family displaced by a ``hate crime''--defined as actual or

threatened violence or intimidation against a person or the person's

property because of race, color, religion, sex, national origin,

handicap or familial status. [Sec. 982.211(b)(6)] An applicant

qualifies for preference if a family member is a hate crime victim, and

the family has been forced to vacate its housing, or fear has destroyed

the family's peaceful enjoyment of its home. The HA must determine that

the hate crime occurred recently or is of a continuing nature.

Displacement: Need for accessible unit. The definition of

involuntary displacement is amended to provide that an applicant is

involuntarily displaced if:

--A member of the family has a mobility or other impairment that

makes the person unable to use critical elements of the unit; and

--The owner is not legally obligated to make changes to the unit

that would make critical elements accessible to the disabled person as

a reasonable accommodation. [Sec. 982.211(b)(7)]

Displacement: HUD disposition of multifamily project. A recent law

amends requirements governing HUD disposition of multifamily rental

projects (that were previously insured or assisted under the National

Housing Act or were subject to a loan under Section 202 of the Housing

Act of 1959). [Pub. L. 103-233, 108 Stat. 342, April 11, 1994] This law

amends the various federal preference statutes to specify that the

preference for families that are involuntarily displaced applies to

displacement ``because of disposition of a multifamily housing project

under section 203 of the Housing and Community Development Amendments

of 1978''. [Multifamily Housing Property Disposition Reform Act of

1994. Section 101(c) (``Clarification of Federal preferences''), 108

Stat. ______, amending 42 U.S.C. 1437f(d)(1)(A)(i) (certificates) and

1437f(o)(3)(B) (vouchers)]

The rule is amended to reflect this statutory change.

[Sec. 982.211(b)(8)] A family that is displaced because of the HUD

disposition may be assisted either as a federal preference admission

from the HA waiting list in accordance with the new law, or as a

special admission (non-waiting list) with funding provided by HUD for

this purpose [Sec. 982.203(b)(2)].

Substandard Housing

Substandard housing--Definition. The statute and rule give

admission preference to families that are homeless or live in

substandard housing. The rule defines when a unit is considered

substandard. [Sec. 982.212(a)]

Public comments recommend several changes in the definition of

substandard housing. In the existing preference rule, and in this final

rule, substandard housing is described by the physical attributes of

the unit. Conversely, substandardness is not defined by who occupies or

will occupy the unit. Comments recommend that the HA should be allowed

to treat as substandard--housing that is ``over-crowded'', or that is

occupied by more than one family, or that does not meet HA occupancy

standards (for the configuration of persons occupying the unit).

HUD has not followed the recommendations. A definition based on

unit occupancy patterns, as recommended by comment, would be more

subject to manipulation. Families can claim over-occupancy to

accelerate admission to the program. Over-crowding is harder to verify

than the physical condition of the unit. With HUD approval, an

individual HA can elect to adopt a local definition of substandard

housing that covers housing that is over-crowded.

Comments state that a disabled person who needs a home adapted for

disabled occupancy should be treated as an occupant of substandard

housing. However, a unit is not substandard merely because the unit is

inappropriate for its disabled occupant. Instead, it is more

appropriate to treat a disabled person who cannot continue to live in

an unsuitable unit as a person who has been involuntarily displaced,

and to afford a federal preference on this basis. In addition, for

admissions not subject to federal preference (10 percent of annual

waiting list admissions), an HA may adopt a local preference for

admission of disabled persons.

Substandard Housing: Family in Public Housing

If a family is living in public housing, and the family's apartment

is in fact substandard, the family qualifies for federal preference.

Comments agreed that a family should not be denied a federal preference

simply because the unit where the family lives is public housing. In

the certificate program, the law provides that a family may not be

denied a preference ``solely because the family resides in public

housing''. [42 U.S.C. 1437f(d)(1)(A)(i)]

Comments note that a family living in substandard public housing

may not be able to verify that the unit is substandard. However, if the

family is living in public housing run by the same HA (to which the

family is applying for Section 8), the HA is the family's present

landlord. An HA can readily verify if its own public housing unit is

substandard.

Of course, an HA may be embarrassed by the claim that the family's

public housing unit is substandard. However, the HA cannot properly

refuse verification for this reason, or refuse to take actions to

determine whether the unit is substandard.

Preference for Homeless

1990 legislation confirms that the preference for families in

substandard housing applies to families that are homeless or living in

a shelter for the homeless. Pub. L. 101-625 (Cranston-Gonzalez National

Affordable Housing Act), 11/28/90, section 545, 104 Stat. 4218-4219.

Since HUD's rules already provide that homeless families qualify for

the federal preference, no substantive change is required in this

rulemaking. [Sec. 982.212(c)]

The existing rule defines the term ``homeless family''. Comments

state that each locality should be allowed to define homelessness. An

HA may ask HUD approval to use local definitions of federal preference

terms, including local definitions of ``substandard housing'' and

``homeless family''. [Sec. 982.210(a)]

Comments state that HA admission of a homeless family should be

based on the family's current status, but should not be based on the

cause of homelessness. HUD has not adopted this comment. In addition,

in admission of homeless families, the HA may use ranking preferences

based on the cause of homelessness.

Federal or Local Preference for Resident of Temporary or Transitional

Housing

A family may currently reside in a homeless shelter or another form

of temporary housing. Under the HA preference system, the family may

qualify for a federal or local preference.

The proposed rule provides that the HA may adopt a local preference

for families that move from ``transitional housing or a homeless

shelter''. The 1990 preference law explicitly permits non-federal

preference admission of families who ``reside in transitional housing .

. .'' (that is assisted under the Mckinney Act). [42 U.S.C.

1437f(d)(1)(A)(ii) (certificates) and 1437f(o)(3)(B) (vouchers)]

Comments assert that a resident of transitional housing should be

given a local preference. Other comments correctly point out that a

family residing in a homeless shelter will generally qualify for

federal preference, and state that the family should not be admitted

under the authority for local preference.

The rule does not list examples of the statutory local preference,

including the HA option to grant a local preference for residents of

transitional housing. The HA does not need to use its local preference

admissions quota for families who qualify for federal preference. Under

existing preference rules, a family that is living in transitional

housing or a homeless shelter may qualify for federal preference.

The old preference rule provides that the definition of a

``homeless family'' includes a family living in a supervised

``shelter'' that is designed to provide ``temporary living

accommodations''. The old rule also specifies that such shelters

``include'' certain types of housing, such as ``transitional housing

for the mentally ill''. However, the listing of these shelter types is

illustrative, not exclusive, and includes transitional housing for

populations other than the mentally ill. The existing homeless family

definition also allows the HA to give a preference for persons in a

``temporary residence'' for persons to be institutionalized--a category

also embraced in the broader preference for persons in temporary living

accommodations.

In this rulemaking, the preference for persons living in temporary

accommodations is left substantially unchanged. However the list of

shelter type examples is revised to explicitly cover ``transitional

housing'' broadly, instead of referring to transitional housing ``for

the mentally ill''. [Sec. 982.212(c)(2)(ii)(A)] This revision does not

change the substantive import of the rule, and is merely intended to

make clear that the preference is not restricted to residents of

transitional housing for the mentally ill, but applies broadly to

residents of temporary housing accommodations, including transitional

housing.

Comments suggest that when the HA offers a certificate or voucher

to a family in transitional housing, the family should be allowed to

wait for completion of transitional housing services without losing its

place on the waiting list. HUD will not change the rule in response to

this comment. The decision whether to hold a family's waiting list

place should be left to the HA. However, the HA procedure may not

discriminate against persons with disabilities.

Rent Burden

Treatment of energy assistance payments. Federal law gives an

admission preference to families that pay more than 50 percent of

income for rent. For this purpose, the rule defines ``income'' and

``rent''. [Sec. 982.213(b)]

A family may draw benefits under a program that helps the family

pay for energy costs (utilities). The rule provides that if energy

assistance payments are not included in family income, the payments are

also subtracted in calculating the family's rent burden.

[Sec. 982.213(b)(3)] This provision is not changed from the prior rule.

Comments ask why energy assistance payments are subtracted from rent.

The purpose of the rent burden calculation is to determine how much

of a family's available income is consumed for payment of the family's

rent. Energy assistance payments cover a portion of family utility

costs. Energy costs that are covered by energy assistance payments are

not an additional rent burden for the family.

The calculation of family income excludes payments under the HHS

Energy Assistance Program. [58 FR 41287, 41288, August 3, 1993

(paragraph (v) on list of federally mandated exclusions)] Since such

payments are not included in income, inclusion in rent burden of costs

covered by the HHS payments would distort calculation of the family

rent burden (essentially by double-counting energy costs: first by

deducting from income, and second by counting as rent burden against

the balance of family income).

Amount of rent. Comments ask if the HA can verify the amount paid

as rent, instead of the amount due as rent. The statute is framed as a

preference for families that ``are paying'' more than 50 percent of

income for rent. Under the definition of ``rent'' in the existing rule,

rent is the ``actual amount due'' under the family's lease.

In implementing the statutory rent burden preference, HUD defines

``rent'' as the amount a tenant is contractually bound to pay the owner

as rent, not necessarily the amount that the tenant actually pays the

owner against the monthly rent due under the lease.

[Sec. 982.212(b)(2)(i)] A family's contractual obligation to pay rent

is a better gauge of the family's rent burden, than the amount the

family is able to scrape up for payment to the landlord. A family may

be unable to pay the full rent, and may be under the shadow of eviction

for non-payment. If the amount actually paid to the landlord is less

than 50 percent of income, the family would not qualify for a

preference based on the actual amount ``paid'' to the landlord. (The

smaller the amount ``paid'' as rent, the more difficulty in qualifying

for the rent burden preference.) In the present rule, as in the

existing rule, the determination of rent burden is based on rent owed

to the landlord.

Rent burden in rural areas. Comments state that some families don't

qualify for rent burden preference because rural areas have lower rent.

The comments urge flexibility in determining rent burden for rural

families.

The percentage rent burden (50 percent) needed to qualify for

preference is set by law. HUD does not have authority to allow use of a

lower percentage in rural areas. If rural or non-rural families can

rent units for less than the preference threshold, they do not qualify

for the preference.

Preference for Public Housing Residents

Summary of Law and Rule

For the certificate program, a 1990 law provides that a family may

not be denied federal preference or ``delayed or otherwise adversely

affected'' in receiving tenant-based assistance ``solely because the

family resides in public housing''. [42 U.S.C. 1437f(d)(1)(A)(i); 1990

National Affordable Housing Act, Section 545, 104 Stat. 4218-4219] The

amendment was introduced by Congressman Bartlett to preserve Section 8

federal preference status of families on the Section 8 waiting list

when admitted to public housing. [Transcript of May 21, 1990 markup by

Housing Subcommittee of Housing Banking Committee] Another law provides

that in selecting families for Section 8 certificate or voucher

assistance a housing agency may not ``exclude or penalize'' a family

solely because the family resides in a public housing project. [42

U.S.C. 1437f(s)]

For both tenant-based programs, the rule provides that if a public

housing family was on the HA Section 8 tenant-based waiting list when

admitted to the HA's public housing (since April 26, 1993), the HA

federal preference determination must be based on the situation of the

applicant at the time of admission to public housing (beginning of

initial public housing lease). [Sec. 982.210(c)(4)(ii)]

Example

At the time a family is admitted to an HA's public housing program,

the family is on the HA's waiting list for Section 8 tenant-based

assistance. The family also qualifies for federal preference as a

homeless family. The family keeps its federal preference status

(homeless) on the Section 8 waiting list.

Preference Retention: Purpose and Effect

The new rule implements the law which provides that a family may

not be denied federal preference or ``otherwise adversely affected'' in

admission to the certificate program ``solely because'' the family

resides in public housing. [42 U.S.C. 1437f(d)(1)(A)(i)] The law is a

statutory exception to the broad federal preference requirement (that

90 percent of certificate admissions must be families who currently

qualify for federal preference). The statutory exception does not apply

to the voucher program. However, under the voucher law, for good cause

HUD may permit an HA to admit more than 10 percent non-federal

preference holders before families who qualify for federal preference.

[42 U.S.C. 1437f(o)(3)(B)] HUD finds that the need for uniformity in

administration of the tenant-based programs is good cause to require

that HAs give preference for voucher admission of public housing

residents who would not otherwise currently qualify for federal

preference.

The new rule applies the same requirements for both Section 8

tenant-based assistance programs. An applicant for an HA's Section 8

program that is currently living in public housing of the same HA

qualifies for Section 8 federal preference if the applicant was

qualified for preference at the time the applicant was admitted to

public housing. [Sec. 982.210(c)(4)(ii)] This provision only applies if

the applicant:

(1) Was admitted to public housing on or after April 26, 1993--the

statutory deadline for implementation of preference requirements in the

National Affordable Housing Act of 1990. [Pub. L. 102-550, Section 104,

October 28, 1992, 106 Stat. 3684]

(2) Was qualified for federal preference at the time of such

admission.

(3) Was on the HA's Section 8 tenant-based waiting list at the time

of admission to the same HA's public housing.

Preference Retention: Family Need

Federal preferences direct housing assistance resources to families

with urgent housing needs. Usually, public housing residents do not

currently qualify for federal preference. For the most part, public

housing residents are not displaced, do not pay over fifty percent of

income for rent (most public housing families pay 30 percent of

adjusted income), and do not live in substandard housing.

Under the rule, federal preference for the public housing resident

is based on the family's federal preference situation at the time when

the family was admitted to public housing (if the family was on the

HA's Section 8 waiting list when admitted to the HA's public housing

program on or after April 26, 1993). Thus a family that was homeless

when admitted to public housing, but is now living in secure and decent

public housing, is treated the same as a homeless family on the street.

Both families benefit from the federal preference for admission of

families living in substandard housing.

In some cases, a public housing family will qualify for federal

preference because of the family's current situation. For example, a

family may currently live in a public housing unit that is substandard.

Thus a public housing family may receive federal preference for

admission to the Section 8 tenant-based assistance programs either (1)

because of the family's preference situation when admitted to public

housing, or (2) because of the family's current federal preference

status. The rule provides that the HA may not deny any admission

preference for which the applicant is currently qualified (federal,

local or ranking preference) because the applicant already resides in

public or other assisted housing. [Sec. 982.205(c)(1)]

HUD received many public comments on the proposed provision that

allows a family to retain its federal preference status at the time of

admission to public housing. Most comments strongly oppose this

requirement. Comments state that scarce housing resources should be

directed to families with the greatest need, not to families already

residing in decent, safe and sanitary public housing. Some comments

acknowledge that the regulation follows the intention of the law.

Comments assert that the language of the law does not support grant

of a preference based on the family's situation at a past time, before

the family entered public housing. Comments claim that the required

preference retention unfairly delays or denies assistance to other

families. The family's need and preference should be based on the

condition of the family's current housing.

Comments state that the preference for public housing residents is

unfair and harmful to:

--families that currently qualify for federal preference.

--families without federal preference.

--families living in other project-based assisted housing (non-public

housing).

--families living in private housing.

--families not currently receiving any form of housing assistance.

Other comments commend HUD's implementation of the requirement for

retention of federal preference. The comments state that the preference

is essential so a public housing family is not locked into public

housing projects which are highly segregated or disproportionally

minority.

HUD notes that the grant of federal preference to public housing

families that would not otherwise qualify for preference will

necessarily operate to limit Section 8 openings for other families.

Program selection is the competitive distribution of available

openings. By requiring the retention of a family's original preference

status, at the time of admission to public housing, the Section 8 rule

carries out the specific purpose of the law--that a family may not be

denied federal preference or ``otherwise adversely affected'' in

admission to the Section 8 program because the family resides in public

housing.

Preference Retention: Administration

Comments state that preference retention increases the HA

administrative burden. To implement this requirement, the HA must track

and verify the family's original preference status. By allowing HA

public housing families to move to the HA Section 8 program, the rule

will create public housing vacancy, turnover and financial burden.

Comments object that the preference retention rule treats public

housing as transitional housing. The rule implies that public housing

is bad housing, from which families are allowed to escape by operation

of an artificial preference. Operation of the preference undercuts

initiatives for improvement of public housing.

HUD agrees that the preference retention will cause public housing

turnover and associated HA administrative costs. However, the rule

faithfully implements the purpose of the law as expressed in committee

markup. The law is designed to facilitate a family's move from public

housing to Section 8. HUD is seeking repeal of the law. However, at

this time, there is no way to avoid the costs and administrative burden

of carrying out the law.

An HA must determine and verify the family's federal preference

status at admission to the HA's public housing program. At the

subsequent admission to Section 8, the HA can rely on information

obtained for the prior determination and verification.

Comments state that the preferential admission of public housing

families should not apply to more than five percent of annual

admissions to the HA Section 8 program. This recommendation is not

adopted. Under the law, HUD is not authorized to set a limit on the

percentage of Section 8 housing admissions for which the HA is

prohibited from denying a federal preference because a family resides

in public housing.

Preference Retention: For Families on Section 8 Waiting List

Under the proposed rule, the retention of federal preference would

apply if a family was on the Section 8 waiting list when admitted to

public housing on or after September 1, 1991. Under this final rule,

the retention of federal preference will apply to a family on the

Section 8 waiting list when admitted to public housing on or after

April 26, 1993. This date is the statutory deadline for rulemaking to

implement the 1990 preference law (six months from enactment of the

Housing and Community Development Act of 1992). [Pub. Law 102-550,

October 28, 1992, Section 104, 106 Stat. 3684]

Comments object that the retention of federal preference only

applies if a family is (1) on the Section 8 waiting list (2) at the

time of admission of public housing (3) after a specified date. The

comments state that preference retention should also apply to families

which apply for Section 8 after admission to public housing.

Comments state that the preference retention should cover families

admitted to public housing at any time in the past, or admitted since

passage of the Cranston-Gonzalez National Affordable Housing Act (NAHA)

on November 28, 1990 (prohibits denial of preference because a family

resides in public housing). Comments state that the rule favors new

public housing residents over older residents.

The Housing and Community Development Act of 1992 provides that the

preference amendments under the Cranston-Gonzalez Act must be

implemented through notice and comment rulemaking by expiration of the

180-day period beginning on the date of enactment of the 1992 law

(October 28, 1992). The 180-day period expired on April 26, 1993.

Although the Department did not complete the rulemaking by this

deadline, the final rule provides that the retention of federal

preference status applies to Section 8 waiting list families admitted

to public housing on or after that date. Such families would have

qualified for preference if the rule had been issued by the deadline

date.

HUD has not adopted recommendations to go beyond the requirements

of the law--by covering families that were admitted to public housing

before April 26, 1993, or who applied for Section 8 after admission to

public housing.

Public Housing Family: Denial of Preference

The rule provides that the fact that a family lives in public or

other assisted housing may not be used as a ground for denying a

federal, local or ranking preference for which the applicant is

currently qualified. [Sec. 982.205(c)(1)] If the family's public

housing unit is substandard, the family qualifies for federal

preference, the same as a resident of private substandard housing.

Comments generally approve allowing a federal preference for a public

housing resident who currently qualifies for federal preference.

Comments assert that the rule favors public housing residents over

applicants in private housing, and is therefore unfair. The rule does

not direct favored treatment for public housing residents (other than

by implementing the law that allows a public housing family to keep the

same preference status as at admission to public housing). Conversely,

however, the rule does not prohibit the adoption of a ranking or local

preference for residents of public housing. The rule provides that the

HA may target assistance for families who live in public or other

federally assisted housing. [Sec. 982.202(b)(2)]

Family Receiving HOME Tenant-Based Assistance

In the HOME Program, HUD allocates funds to State and local

governments for support of affordable housing. [24 CFR part 92] A

participating jurisdiction may choose to use HOME funds to provide

tenant-based rental assistance for low-income families during a period

of up to 24 months. Since the period of HOME rental assistance is

limited, Section 8 tenant-based assistance may be used to provide

continued rental assistance for a family after termination of the HOME

subsidy.

A family may meet Section 8 federal preference criteria at the time

the family begins tenant-based assistance under the HOME Program.

Usually, the family does not qualify for preference while receiving the

HOME subsidy. To facilitate the transition from short-term tenant-based

assistance under the HOME Program, the HOME statute provides that

recipients of HOME tenant based rental assistance qualify for Section 8

tenant selection preferences to the same extent as when they initially

received the HOME rental assistance. [42 U.S.C. 12742(a)(3)(D)] As in

the case of the public housing preference retention provisions

discussed above, the HOME statute permits the family to retain its

prior federal preference situation.

This rule provides that if a Section 8 applicant is currently

receiving tenant-based assistance under the HOME program, the HA

determines whether the applicant qualifies for Section 8 federal

preference based on the situation of the applicant at the time the

applicant began to receive tenant-based assistance under the HOME

program. [Sec. 982.210(c)(4)(i)] The family must show that it qualifies

for preference on this basis.

Local Preference

For non-federal preference admissions, the law provides that the HA

may use a system of local preferences ``to respond to local housing

needs and priorities''. In the vocabulary of this rule, the term

``local preference'' means a preference used by the HA to select among

applicant families that do not qualify for federal preference.

[Sec. 982.3, Sec. 982.207(a)(3)(iii)] Each year, ten per cent of

admissions can be families that do not qualify for federal preference.

The HA is not required to use or exhaust the 10 percent quota of

admissions not subject to federal preference. The HA may elect to admit

federal preference holders without drawing on the limit for local

preference admission.

Preference Hearing

The law provides that local preferences must be established in

writing and after public hearing. [42 U.S.C. 1437f(d)(1)(A)(ii) and

1437f(o)(3)(B); amended by 1990 NAHA, Section 545 (104 Stat. 4219), and

1992 Housing Act, Section 144 (106 Stat. 3714)] The law does not

contain any parallel public hearing requirement for HA policies

implementing the federal preference, or for HA preferences in selecting

among federal preference holders (called ``ranking preferences'' in

this rule). In the proposed rule, HUD proposed to require public

hearing both for adoption of preferences used to select among federal

preference holders, and also for adoption of preferences used to select

among families not qualifying for the federal preference.

Comment: Some comments approve the requirement to conduct a public

hearing on HA selection preferences, asserting that the hearing process

will provide valuable input. Other comments oppose the hearing

requirement. Comments claim that the hearing will be an administrative

burden, or that the hearing will attract attention of special interest

groups. HAs are able to establish other local policies without hearing.

HUD review of the HA preference policy is a sufficient check on the HA

policy.

Comments request that HUD relieve HAs of the hearing requirement in

communities where there is a ``CHAS'' (Community Housing Affordability

Strategy) that determines local needs and priorities. Comments suggest

that HUD allow an HA to use a published local notice, instead of a

public meeting or hearing. Comments ask whether, if the HA serves a

large area, a hearing in one part of the area is sufficient.

Response: The solicitation of public comments may elicit helpful

ideas or information, but necessarily entails some burden for the HA.

In the final rule, a hearing is only required for adoption of

preferences used in a non-federal preference admission, as required by

the law. This rule provides that local preferences may be adopted after

public hearing to respond to local housing needs and priorities.

[Sec. 982.209] The HA is not required to adopt a hearing process for

adoption of ranking preferences for selection among federal preference

holders (representing 90 percent or more of HA admissions).

At this time, HUD will not attempt to dictate a set hearing

procedure. The essence of the hearing requirement is that there should

be a reasonable process for soliciting representative comment by

interested publics, and for the comment to be ``heard'' (i.e.,

considered) by the HA. A variety of processes can be devised to satisfy

the hearing requirement, and the process used need not be elaborate or

expensive. The HA may consider appropriate ways of giving public

notice--whether by publication in the local press, posting in HA

offices and projects, notice to legal services offices or other service

organizations, or notice to applicants. The rule does not require that

the hearing must necessarily be cast as a ``meeting'' between HA

representatives and the public, so long as the HA has a procedure for

gathering and considering public comment. If the HA elects to frame the

hearing process as an open public meeting, the rule does not prescribe

any number of meetings or the number of hearing venues within the HA

jurisdiction.

Comments object to requiring public hearings for local preferences

already contained in the HUD-approved administrative plan, or ask if

hearing will only be required for new proposed preferences. Comments

state that hearing should only be required for a change in existing

local preferences.

Under this rule, the local preference hearing requirements will be

effective six months after publication of the rule (see ``effective

date'' provision of rule). The hearing requirements apply to local

preference admissions after expiration of the six month period. (The

hearing requirements are stated in Sec. 982.209(b).) After that point,

the HA may not continue to use existing local preferences until the HA

has conducted the public hearing required by law and this rule.

Hearings are only required for HA selection preferences that are

used for admission of families that do not qualify for federal

preference. In admitting families that qualify for federal preference,

HAs can continue to apply the scheme of federal and ranking preferences

in the HA's administrative plan.

In a separate rulemaking, HUD proposed revisions of federal

preference requirements for the public housing program (and for other

assisted housing programs). [58 FR 44968 (August 25, 1993)] HA

representatives asked whether an HA can hold a single hearing to

consider at the same time local preferences to be used both in the HA's

public housing program, and in its certificate and voucher programs.

Nothing prevents an HA from conducting a single hearing for this

purpose.

Purpose of Local Preference

For local preference admissions, the law leaves broad authority for

an HA to develop a local preference system to meet local housing needs

and priorities. The local needs and priorities ``may include'' certain

possible purposes listed in the law, or ``other objectives'' of

national housing policy. The law does not contain any comprehensive or

exclusive enumeration of allowable local ``needs and priorities''. The

law merely states that the ``specific purposes'' and ``other

objectives'' are included among the local needs and priorities that may

be served by adoption of a local preference.

In the proposed rule, HUD listed some examples of the purposes for

which the HA may establish a system of local preferences, including

preferences designed to achieve ``other objectives of national housing

policy''.

Comments approve allowing HA discretion to adopt local selection

preferences. Comments state that HUD should offer examples of the

national housing policy objectives for which the HA may adopt a local

preference. Comments stress that the HA should not be limited by the

``examples'' listed in the rule.

This final rule provides that the HA may establish a system of

local preferences ``to respond to local housing needs and priorities''.

[Sec. 982.209(a)] The law states that the local preference system may

be designed to achieve ``objectives of national housing policy affirmed

by the Congress''.

The local needs and priorities may include the objective to remedy

unsafe and unsanitary housing conditions, and to improve housing

opportunities for residents of the United States, particularly

disadvantaged minorities, on a nondiscriminatory basis, or may promote

other objectives of national housing policy affirmed by the Congress.

For example, see the statements of national housing policy in the

United States Housing Act of 1937 (which contains Section 8) [42 U.S.C.

1437]; and in the Cranston-Gonzalez National Affordable Housing Act of

1990 [Pub. L. 101-625, November 28, 1990, Section 102(3), 42 U.S.C.

12702(3).

An HA has broad discretion to adopt local preferences in accordance

with local circumstances and local judgment. The final rule does not

give examples of local preference purposes. The HUD program handbook

will give examples of possible local preferences, and advice on how to

set up a local preference system.

Other comments state that the HA preferences must not violate fair

housing requirements, and should be subject to HUD review and approval.

The HA policies for selection of program participants, including local

preferences and ranking preferences, must be contained in the HA's

administrative plan or equal opportunity plan. The selection policy

must meet fair housing requirements. Residency preferences must be

approved by HUD.

Particular Preferences

Comments recommend that the HA should have discretion to grant

preference for an elderly person who lives in an assisted project, but

who needs to move closer to family members or medical facilities. An HA

may adopt a ranking or local preference for this purpose.

Comments recommend that HUD require the HA to grant a preference

for a disabled veteran who is eligible for discharge from a hospital or

nursing home. Under the rule, the HA may choose to adopt a ranking or a

local preference for a disabled veteran who needs a rental subsidy to

lease accessible standard housing. However, the rule does not force the

HA to adopt such a preference.

The law provides that an HA may grant a local preference for the

purpose of assisting ``youth'' after discharge from foster care. The

proposed rule recited this optional local preference. Comments ask if

the ``youth'' would have to live with an adult. The adoption of such a

preference does not require any change in the criteria for admission of

families to the HA program. If the HA chooses to adopt such a local

youth preference, the HA may limit the preference to cases where a

minor will live with a parent or guardian or other person capable of

establishing and managing a household. The HA has the authority and

responsibility to define the operation of its local preference.

Comments recommend that the rule allow a preference for the ``near-

elderly'' (a person from 50 to 61 years of age). The HA has wide

latitude to fashion its systems of ranking and local preference, and

could adopt a ranking or local preference for admission of the near

elderly.

Comments recommend that the rule allow HA's with a large

jurisdiction to award preference to a family that wants to live in a

certain ``region'' of the HA jurisdiction. This suggestion is not

adopted. The rule continues traditional program policy that admission

may not be based on where the family will live with assistance under

the program. [Sec. 982.202(b)(3)] The tenant-based programs are

designed to maximize the ability of poor families to choose where they

want to live, and also to maximize opportunities for economic

advancement by free choice of housing. An assisted family may move

anywhere in the HA jurisdiction, or anywhere outside the HA

jurisdiction under portability procedures.

The HA preference system may limit the number of families that may

qualify for any ranking or local preference. [Sec. 982.207(a)(3)(iv)]

Selection by Random Choice or Time of Application

The proposed rule provides that date and time of application govern

selection among families with the same preference status. Comments

asked if the HA may select by ``lottery'' instead of date and time of

application.

The proposed rule was not intended to prohibit selection by

techniques of random choice among families on the waiting list. HUD

agrees that use of a variety of random choice procedures may be a fair

and workable way to distribute program openings among a large number of

applicants. The rule clarifies, as originally intended, that use of

date and time of application is not the only permitted technique for

sorting among applicants in a given preference category. The final rule

specifically sanctions use of random choice procedures for selection

among applicants with the same preference status.

The rule provides that the HA must use one of two techniques to

select among applicants with the same preference status (federal,

ranking or local preference): (1) Date and time of application, or (2)

A drawing or other random choice technique. [Sec. 982.207(e)(1)] In all

cases, the selection process must be consistent with the preferences

required by federal law and regulation (both the federal preference

requirements, and the preference for elderly, disabled or displaced

over other singles). [Sec. 982.207(e)(2)] Whatever the process for

selection of applicants, the HA must use procedures which provide a

clear audit trail, that permits verification that each applicant has

been selected in accordance with the method specified in the

administrative plan. [Sec. 982.207(e)(3)]

Findings and Certifications

Impact on the Economy

This rule does not constitute a ``major rule'' as that term is

defined in Section 1(b) of Executive Order 12291, Regulatory Planning

Process. Analysis of the rule indicates that it does not: (1) Have an

annual effect on the economy of $100 million or more; (2) cause a major

increase in costs or prices for consumers, individual industries,

Federal, State or local government agencies or geographic regions; or

(3) have a significant adverse effect on competition, employment,

investment, productivity, innovation or on the ability of United

States-based enterprises to compete with foreign-based enterprises in

domestic or export markets.

Impact on the Environment

A Finding of No Significant Impact with respect to the environment

was made in connection with the proposed rule in accordance with HUD

regulations at 24 CFR part 50 that implement section 102(2)(C) of the

National Environmental Policy Act of 1969, 42 U.S.C. 4332. The Finding

of No Significant Impact is available for public inspection and copying

during regular business hours (7:30 a.m. to 5:30 p.m.) in the Office of

the Rules Docket Clerk, room 10276, 451 Seventh Street, SW, Washington,

DC 20410-0500.

Federalism Impact

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this rule have impact on States or their political

subdivisions only to the extent required by the statute being

implemented. The rule specifies to what extent preferences for

admission of particular categories of applicants that are established

by the local housing agency, in accordance with a statutorily-

prescribed hearing procedure, may be used to admit participants. The

only guidelines stated for the local agency's discretion are those

required by the statute: the preferences are to respond to local

housing needs and priorities. Since the rule merely carries out a

statutory mandate and does not create any new significant requirements,

it is not subject to review under the Executive Order.

Impact on the Family

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that this rule does not have

potential for significant impact on family formation, maintenance, and

general well-being, and, thus is not subject to review under the Order.

The rule carries out the mandate of federal statute with respect to

admission preferences.

Impact on Small Entities

The Secretary, in accordance with the Regulatory Flexibility Act (5

U.S.C. 605(b)), has reviewed this rule before publication and by

approving it certifies that this rule will not have a significant

impact on a substantial number of small entities, because it does not

place major burdens on housing authorities or housing owners.

Regulatory Agenda

This rule was listed as sequence number 1691 under the Office of

the Assistant Secretary for Public and Indian Housing in the

Department's Semiannual Regulatory Agenda published on April 25, 1994

(59 FR 20424, 20471) in accordance with Executive Order 12866 and the

Regulatory Flexibility Act.

Regulatory Review

This rule was reviewed by the Office of Management and Budget under

Executive Order 12866, Regulatory Planning and Review. Any changes made

to the rule as a result of that review are clearly 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 St. SW.,

Washington, DC 20410.

List of Subjects

24 CFR Part 813

Grant programs--housing and community development, Rent subsidies,

Reporting and recordkeeping requirements, Utilities.

24 CFR Part 882

Grant programs--housing and community development, Homeless, Lead

poisoning, Manufactured homes, Rent subsidies, Reporting and

recordkeeping requirements.

24 CFR Part 887

Grant programs--housing and community development, Rent subsidies,

Reporting and recordkeeping requirements.

24 CFR Part 982

Grant programs--housing and community development, Rent subsidies,

Reporting and recordkeeping requirements.

Accordingly, chapters VIII and IX of title 24 of the Code of

Federal Regulations are amended as follows:

PART 813--DEFINITION OF INCOME, INCOME LIMITS, RENT AND

REEXAMINATION OF FAMILY INCOME FOR THE SECTION 8 HOUSING ASSISTANCE

PAYMENTS PROGRAMS AND RELATED PROGRAMS

1. The authority citation for part 813 is revised to read as

follows:

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 1437n, and 3535(d).

Sec. 813.104 [Amended]

2. In Sec. 813.104, paragraph (b)(2) is removed, and paragraph

(b)(3) is redesignated as paragraph (b)(2).

Sec. 813.105 [Amended]

3. Section 813.105 is amended as follows:

a. In the first sentence of paragraph (a) introductory text, the

words ``five percent'' are removed and the words ``fifteen percent''

are added in their place.

b. Paragraph (c) is removed and reserved.

c. Paragraphs (e)(2) and (e)(4) are removed, and paragraph (e)(3)

is redesignated as paragraph (e)(2).

PART 882--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--EXISTING

HOUSING

4. The authority citation for part 882 is revised to read as

follows:

Authority: 42 U.S.C. 1437f and 3535(d).

5. In Sec. 882.103, the introductory text of Sec. 882.103 is

removed, and paragraph (b) is revised to read as follows:

Sec. 882.103 ``Finders-keepers'' policy.

* * * * *

(b) The PHA may not, either in the provision of assistance to any

Family in finding a unit or by any other action, directly or indirectly

reduce any Family's opportunity to choose among the available units in

the housing market.

* * * * *

6. In Sec. 882.116, paragraph (c) is revised to read as follows:

Sec. 882.116 Responsibilities of the PHA.

* * * * *

(c) Receipt and review of applications for participation; selection

of applicants; verification of family income and other factors relating

to eligibility and amount of assistance; and maintenance of a waiting

list;

* * * * *

Sec. 882.207 [Removed and reserved]

7. Section 882.207 is removed and reserved.

8. In Sec. 882.209, paragraph (a) is revised to read as follows:

Sec. 882.209 Selection and participation.

(a) Selection for participation. For provisions on selection of

participants for the Section 8 certificate and voucher programs, see

Part 982, Subpart E of this title.

* * * * *

Sec. 882.216 [Amended]

9. In Sec. 882.216, paragraph (a)(4) is removed.

Sec. 882.219 [Removed and reserved]

10. Section 882.219 is removed and reserved.

11. In Sec. 882.335, paragraph (a)(2)(i) is revised to read as

follows:

Sec. 882.335 Special requirements for related lease shared housing.

(a) * * *

(2) * * *

(i) The PHA must require an applicant Family that is issued a

Certificate on the basis of its willingness to share a unit with a

particular Family to use the Certificate for occupancy of a unit with

that Family under a Contract for Related Lease Shared Housing. However,

if the Family later wants to move to another dwelling unit with

continued participation in the PHA's program, the Family may select a

dwelling unit in any area where the PHA is not legally barred from

entering into Contracts.

* * * * *

12. In Sec. 882.701, paragraph (c) is revised to read as follows:

Sec. 882.701 Purpose and applicability.

* * * * *

(c) Except as otherwise expressly modified or excluded by this

subpart G, project-based assistance under this subpart G is subject to

all provisions of subparts A and B of part 882, and of part 982 of this

title.

* * * * *

13. In Sec. 882.753, paragraph (a) is revised to read as follows:

Sec. 882.753 Family participation.

* * * * *

(a) Participation. For purposes of this subpart G, a Family becomes

a participant on the effective date of the first lease with the owner

(first date of initial lease term).

* * * * *

PART 887--HOUSING VOUCHERS

14. The authority citation for part 887 is revised to read as

follows:

Authority: 42 U.S.C. 1437f and 3535(d).

Sec. 887.5 [Amended]

15. Section 887.5 is amended by removing paragraph (c).

16. In Sec. 887.59, paragraphs (c) (1) and (d) are revised to read

as follows:

Sec. 887.59 Equal opportunity housing plan.

* * * * *

(c) * * *

(1) Outreach and public notice to eligible families;

* * * * *

(d) The plan must include any special rules for use of HUD-targeted

housing vouchers.

* * * * *

Sec. 887.105 [Amended]

17. Section 887.105 is amended as follows:

a. By removing from paragraph (b)(1) the phrase ``(see

Sec. 887.107)''.

b. By removing from paragraph (b)(2) the phrase ``in accordance

with Sec. 887.157''.

Sec. 887.107 [Removed and reserved]

18. Section 887.107 is removed and reserved.

19. In Part 887, the title of Subpart D is revised to read as

follows:

``Subpart D--Issuing Housing Vouchers''

20. In Subpart D of Part 887, Sec. 887.151 is revised to read as

follows:

Sec. 887.151 Selection for participation.

For provisions on selection of participants for the Section 8

certificate and voucher programs, see Part 982, Subpart E of this

title.

Secs. 887.152--887.157 [Removed and reserved]

21. In Subpart D of Part 887, Secs. 887.153, 887.155, and 887.157

are removed and reserved.

22. In Sec. 887.565, paragraph (c) is revised to read as follows:

Sec. 887.565 Portability: responsibilities of the receiving PHA.

* * * * *

(c) The receiving PHA must recertify the family's income initially

and at least annually thereafter for purposes of determining the

housing assistance payments.

* * * * *

23-24. Part 982, consisting of Secs. 982.1 through 982.213, is

added to chapter IX to read as follows:

PART 982--SECTION 8 TENANT-BASED ASSISTANCE: UNIFIED RULE FOR

TENANT-BASED ASSISTANCE UNDER THE SECTION 8 RENTAL CERTIFICATE

PROGRAM AND THE SECTION 8 RENTAL VOUCHER PROGRAM

Subpart A--General Information

Sec.

982.1 General program description.

982.2 Applicability.

982.3 Definitions.

Subparts B-D--[Reserved]

Subpart E--Admission to Tenant-Based Program

982.201 Eligibility.

982.202 How applicants are selected: General requirements.

982.203 Special admission (non-waiting list): Assistance targeted

by HUD.

982.204 Waiting list: Administration of waiting list.

982.205 Waiting list: Different programs.

982.206 Waiting list: Opening and closing; public notice.

982.207 Waiting list: Use of preferences.

982.208 Waiting list: Residency preference.

982.209 Waiting list: How applicant qualifies for local preference.

982.210 Waiting list: How applicant qualifies for federal

preference.

982.211 Federal preference: Involuntary displacement.

982.212 Federal preference: Substandard housing.

982.213 Federal preference: Rent burden.

Authority: 42 U.S.C. 1437f and 3535(d).

Subpart A--General Information

Sec. 982.1 General program description.

In the HUD rental voucher program and the HUD rental certificate

program, a rent subsidy is paid to help eligible families afford rent

for decent, safe, and sanitary housing. Both programs are administered

by State, local governmental or tribal bodies called housing agencies

(HAs). HUD provides funds to an HA for rent subsidy on behalf of

eligible families. HUD also provides funds for HA administration of the

programs.

Sec. 982.2 Applicability.

Part 982 is a unified statement of requirements for admission to

the tenant-based housing assistance programs under Section 8 of the

United States Housing Act of 1937 (42 U.S.C. 1437f). The tenant-based

programs are the Section 8 tenant-based rental certificate program and

the Section 8 rental voucher program.

Sec. 982.3 Definitions.

Admission. The effective date of the first HAP contract for a

family (first day of initial lease term) in a tenant-based program.

This is the point when the family becomes a participant in the program.

Annual income. Defined in 24 CFR 813.106.

Applicant (or applicant family). A family that has applied for

admission to a program, but is not yet a participant in the program.

Certificate. A document issued by an HA to a family selected for

admission to the rental certificate program. The certificate describes

the program, and the procedures for HA approval of a unit selected by

the family. The certificate also describes the obligations of the

family under the program.

Certificate or voucher holder. A family holding a voucher or

certificate with unexpired search time.

Certificate program. Rental certificate program.

Continuously assisted. An applicant is continuously assisted under

the 1937 Housing Act if the family is already receiving assistance

under any 1937 Housing Act program when the family is admitted to the

certificate or voucher program.

Disabled person. A person who is any of the following:

(1) A person who has a disability as defined in section 223 of the

Social Security Act. (42 U.S.C. 423)

(2) A person who has a physical, mental, or emotional impairment

that:

(i) Is expected to be of long-continued and indefinite duration;

(ii) Substantially impedes his or her ability to live

independently; and

(iii) Is of such a nature that ability to live independently could

be improved by more suitable housing conditions.

(3) A person who has a developmental disability as defined in

section 102(7) of the Developmental Disabilities Assistance and Bill of

Rights Act (42 U.S.C. 6001(7)).

Displaced person. A person displaced by governmental action, or a

person whose dwelling has been extensively damaged or destroyed as a

result of a disaster declared or otherwise formally recognized under

federal disaster relief laws.

Drug-related criminal activity. The illegal manufacture, sale,

distribution, use, or possession with intent to manufacture, sell,

distribute or use, of a controlled substance (as defined in section 102

of the Controlled Substances Act (21 U.S.C. 802)).

Elderly person. A person who is at least 62 years of age.

EO plan. Equal opportunity housing plan. The EO plan establishes HA

policies for implementing civil rights requirements.

Fair Market Rent. FMR. Defined in 24 CFR 882.102.

Family. Defined in 24 CFR 812.2. Family composition is discussed at

Sec. 982.201(c) of this chapter.

Family unit size. The appropriate number of bedrooms for a family.

Family unit size is determined by the HA under the HA occupancy

standards.

Federal preference. A preference under federal law for admission of

applicant families that are any of the following:

(1) Involuntarily displaced.

(2) Living in substandard housing (including families that are

homeless or living in a shelter for the homeless).

(3) Paying more than 50 percent of family income for rent.

Federal preference holder. An applicant that qualifies for a

federal preference.

FMR. Fair market rent.

HA. Housing Agency.

HAP contract. Housing assistance payments contract.

Housing agency (HA). A State, county, municipality or other

governmental entity or public body authorized to administer the

program. The term ``HA'' includes an Indian housing authority (IHA).

(``PHA'' and ``HA'' mean the same thing.)

HUD. The U.S. Department of Housing and Urban Development.

Indian housing authority (IHA). A housing agency established

either:

(1) By exercise of the power of self-government of an Indian Tribe,

independent of State law; or

(2) By operation of State law providing specifically for housing

authorities for Indians.

Live-in aide. A person who resides with an elderly person or

disabled person and who:

(1) Is determined to be essential to the care and well-being of the

person.

(2) Is not obligated for the support of the person.

(3) Would not be living in the unit except to provide necessary

supportive services.

Local preference. A preference used by the HA to select among

applicant families without regard to their federal preference status.

Local preference limit. Ten percent of total annual waiting list

admissions to the HA's tenant-based certificate and voucher programs.

The local preference limit is used to select among applicants without

regard to their federal preference status.

Low-income family. A family whose annual income does not exceed 80

percent of the median income for the area, as determined by HUD, with

adjustments for smaller and larger families. For admission to the

certificate program, HUD may establish income limits higher or lower

than 80 percent of the median income for the area on the basis of its

finding that such variations are necessary because of the prevailing

levels of construction costs or unusually high or low family incomes.

1937 Housing Act. The United States Housing Act of 1937 (42 U.S.C.

1437 et seq.). The HUD tenant-based programs are authorized by Section

8 of the 1937 Housing Act (42 U.S.C. 1437f).

1937 Housing Act program. Any of the following programs:

(1) The public housing program or Indian housing program.

(2) Any program assisted under Section 8 of the 1937 Act (42 U.S.C.

1437f) (including assistance under a Section 8 tenant-based or project-

based program).

(i) The Section 23 leased housing program.

(ii) The Section 23 housing assistance payments program. (``Section

23'' means Section 23 of the United States Housing Act of 1937 prior to

enactment of the Housing and Community Development Act of 1974.)

Occupancy standards. Standards established by an HA to determine

the appropriate number of bedrooms for families of different sizes and

compositions. See definition of ``family unit size''.

Participant. A family that has been admitted to the HA's

certificate program or voucher program. The family becomes a

participant on the effective date of the first HAP contract executed by

the HA for the family (first day of initial lease term).

PHA. Public housing agency. See definition of ``HA''. (``PHA'' and

``HA'' mean the same thing.)

Program. The tenant-based certificate program or voucher program.

Public housing agency (PHA). A State, county, municipality or other

governmental entity or public body authorized to administer the

programs. The term ``PHA'' includes an Indian housing authority (IHA).

(``PHA'' and ``HA'' mean the same thing. In this rule, a ``PHA'' is

referred to as a ``housing agency'' (HA)).

Ranking preference. A preference used by the HA to select among

applicant families that qualify for federal preference.

Rental certificate. Certificate.

Rental certificate program. Certificate program.

Rental voucher. Voucher.

Rental voucher program. Voucher program.

Residency preference. An HA preference for admission of families

that reside anywhere in a specified area, including families with a

member who works or has been hired to work in the area (``residency

preference area'').

Residency preference area. The specified area where families must

reside to qualify for a residency preference.

Special admission. Admission of an applicant that is not on the HA

waiting list, or without considering the applicant's waiting list

position.

Unit. Dwelling unit.

United States Housing Act of 1937 (1937 Housing Act). The basic law

that authorizes the public and Indian housing programs, and the Section

8 programs. (42 U.S.C. 1437 et seq.)

Very low-income family. A family whose annual income does not

exceed 50 percent of the median income for the area, as determined by

HUD, with adjustments for smaller and larger families. HUD may

establish very low-income limits higher or lower than 50 percent of the

median income for the area on the basis of its finding that such

variations are necessary because of unusually high or low family

incomes.

Voucher (rental voucher). A document issued by an HA to a family

selected for participation in the rental voucher program. The voucher

describes the program, and the procedures for HA approval of a unit

selected by the family. The voucher also states the obligations of the

family under the program.

Voucher program. Rental voucher program.

Waiting list admission. An admission from the HA waiting list.

Subparts B-D--[Reserved]

Subpart E--Admission to Tenant-Based Program

Sec. 982.201 Eligibility.

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