Transitional Housing Loan Program

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

[2900-AG82]

Transitional Housing Loan Program

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to establish application provisions and

selection criteria for loans to non-profit organizations for use in

initial startup costs cor transitional housing for veterans who are in

(or have recently been) in a program for the treatment of substance

abuse. This new program is intended to increase the amount of

transitional housing available for such veterans who need a period of

supportive housing to encourage sobriety maintenance and

reestablishment of social and community relationships.

DATES: Comments must be received on or before August 31, 1994.

ADDRESSES: Send written comments to: Secretary of Veterans Affairs,

(271A), Department of Veterans Affairs, 810 Vermont Avenue NW,

Washington, DC 20420. All written comments received will be available

for public inspection on business days in the Veterans Services Unit,

Room 119 of the above address between the hours of 8 a.m. and 4:30 p.m.

FOR FURTHER INFORMATION CONTACT: Frederick Lee, Acting Deputy Associate

Director for Psychiatric Rehabilitation Services, or Christine Woods,

Administrative Officer; either can be reached at (804) 722-9961 x3628.

(This is not a toll-free number)

SUPPLEMENTARY INFORMATION:

Background

Substance abuse is a significant problem among veterans, with

approximately 25% of veterans discharged from VA Medical Centers having

substance abuse as a primary or secondary diagnosis. Many of these

veterans, wish not to return to their prior living situation because of

negative effects that environment may have on their substance abuse

recovery. Group living arrangements, such as described by this

Transitional Housing Loan Program, offer affordable housing with other

recovering veterans, in an atmosphere free from alcohol and illegal

drugs.

To help ensure the availability of such transitional housing,

section 8 of PL. 102-54 (Loans to Organizations Providing Transitional

Housing to Substance Abusers) authorizes the Secretary of VA to make

loans to non-profit organizations to assist in the provision of leased

transitional housing exclusively for veterans who are in (or who have

recently been in) a program for the treatment of substance abuse.

This proposed rule contains application provisions and selection

criteria for obtaining loans. Portions of this proposed rule restate

statutory requirements. However, insofar as they establish regulatory

material beyond the statutory requirements, the procedures and criteria

are designed to provide a mechanism for making loans consistent with

the statutory purpose. It is proposed that the interest rate for the

loans shall be the same as the rate the VA is charged to borrow these

funds from the U.S. Department of the Treasury. It is also proposed

that a penalty of 4% of the amount due be imposed on each failure to

pay an installment by the date specified in the loan agreement

involved. This is in accordance with standard VA debt collection

procedures.

Loans may be made for up to $4,500 for each housing unit and may be

used only for initial startup costs. Veteran residents will be required

to pay for ongoing housing costs through fees collected by the non-

profit organization to cover rent and utilities.

Criteria for approval of loan applications will focus on the

applicant's favorable credit history, evidence of prior successful

experience in providing similar services for groups of people

recovering from substance abuse, plans for the provision of

transitional housing, and plans for use of loan proceeds.

E.O. 12866

This action is exempt from OMB review under E.O. 12866.

Regulatory Flexibility Act

The Secretary hereby certifies that the provisions of this proposed

rule would not have a significant economic impact on a substantial

number of small entities as they are defined in the Regulatory

Flexibility Act (RFA), 5 U.S.C. 601-612. The reason for this

certification is that in all likelihood, only similar entities that are

small entities would seek loans under this program. Therefore, pursuant

to 5 U.S.C. 605(b), this rule is exempt from the initial and final

regulatory flexibility analysis requirement of sections 603 and 604.

The comment period for this proposed rule has been shortened to

thirty days. It has been determined that this is necessary in order to

establish a final rule as soon as possible in an effort to help ensure

that veterans recovering from substance abuse can be afforded

transitional housing in an environment where measures are taken to help

assure that they will not relapse.

List of Subjects in 38 CFR Part 17

Administrative practice and procedure, Alcohol abuse, Alcoholism,

Claims, Daycare, Dental health, Drug abuse, Foreign relations,

Government contracts, Grant programs--health, Grant programs--veteran

Healthcare, Health facilities, Health professionals, Health records,

Loans, Medical and dental schools, Medical devices, Medical research,

Medical health programs, Nursing homes, Philippines, Reporting and

recordkeeping requirements, Scholarships and fellowships, Travel and

transportation expenses, Veterans, Veterans Affairs Department.

For the reasons set out in the preamble, 38 CFR part 17 is proposed

to be amended as set out below:

PART 17--MEDICAL

1. The authority citation for Part 17 is amended to read as

follows:

Authority: 38 U.S.C. 501, 7721, unless otherwise noted.

2. Part 17 is amended by adding Sections 17.800 through 17.805 and

on undesignated center heading preceding section 17.800 to read as

follows:

Transitional Housing Loan Program

Sec.

17.800 Purpose.

17.801 Definitions.

17.802 Application Provisions.

17.803 Order of Consideration.

17.804 Loan Approval Criteria.

17.805 Additional Terms of Loans.

Transitional Housing Loan Program

Sec. 17.800 Purpose.

The purpose of the Transitional Housing Loan Program regulations is

to establish application provisions and selection criteria for loans to

non-profit organizations for use in initial startup costs for

transitional housing for veterans who are in (or have recently been in)

a program for the treatment of substance abuse. This program is

intended to increase the amount of transitional housing available for

such veterans who need a period of supportive housing to encourage

sobriety maintenance and reestablishment of social and community

relationships.

Sec. 17.801 Definitions.

(a) Applicant: A non-profit organization making application for a

loan under this program.

(b) Non-profit organization: A secular or religious organization,

no part of the net earnings of which may inure to the benefit of any

member, founder, contributor, or individual. The organization must

include a voluntary board and must either maintain or designate an

entity to maintain an accounting system which is operated in accordance

with generally accepted accounting principles. If not named in, or

approved under Title 38 U.S.C. (United States Code), Section 5902, a

non-profit organization must provide VA with documentation which

demonstrates approval as a non-profit organization under Internal

Revenue Code, Section 501.c(3).

(c) Recipient: A non-profit organization which has received a loan

from VA under this program.

(d) Veteran: A person who served in the active military, naval, or

air service, and who was discharged or released therefrom under

conditions other than dishonorable.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat 271, 38 U.S.C. 501)

Sec. 17.802 Application Provisions.

(a) To obtain a loan under these Transitional Housing Loan Program

regulations, an application must be submitted by the applicant in the

form prescribed by VA in the application package. The completed

application package must be submitted to the Deputy Associate Director

for Psychiatric Rehabilitation Services, (302/111C), VA Medical Center,

100 Emancipation Drive, Hampton, VA 23667. An application package may

be obtained by writing to the preceding address or telephoning (804)

722-9961 x3628. (This is not a toll-free number)

(b) The application package includes exhibits to be prepared and

submitted, including:

(1) Information concerning the applicant's income, assets,

liabilities and credit history,

(2) Information for VA to verify the applicant's financial

information,

(3) Identification of the official(s) authorized to make financial

transactions on behalf of the applicant,

(4) Information concerning:

(i) The history, purpose and composition of the applicant,

(ii) The applicant's involvement with recovering substance abusers,

including:

(A) Type of services provided,

(B) Number of persons served,

(C) Dates during which each type of service was provided,

(D) Names of at least two references of government or community

groups whom the organization has worked with in assisting substance

abusers,

(iii) The applicant's plan for the provision of transitional

housing to veterans including:

(A) Means of identifying and screening potential residents,

(B) Number of occupants intended to live in the residence for which

the loan assistance is requested,

(C) Residence operating policies addressing structure for

democratic self-government, expulsion policies for nonpayment, alcohol

or illegal drug use or disruptive behavior,

(D) Type of technical assistance available to residents in the

event of house management problems,

(E) Anticipated cost of maintaining the residence, including rent

and utilities,

(F) Anticipated charge, per veteran, for residing in the residence,

(G) Anticipated means of collecting rent and utilities payments

from residents,

(H) A description of the housing unit for which the loan is sought

to support, including location, types of neighborhood, brief floor plan

description, etc., and why this residence was selected for this

endeavor.

(iv) The applicant's plans for use of the loan proceeds.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat 271, 38 U.S.C. 501)

Sec. 17.803 Order of Consideration.

Loan applications will be considered on a first-come-first-served

basis, subject to availability of funds for loans, and awards will be

made on a first-come-first-serve basis to applicants who meet the

criteria for receiving a loan. If no funds are available for loans,

applications will be retained in the order of receipt for consideration

as funds become available.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat 271, 38 U.S.C. 501)

Sec. 17.804 Loan Approval Criteria.

Upon consideration of the application package, loan approval will

be based on the following:

(a) Favorable financial history and status,

(1) A minimum of a two-year credit history,

(2) No open liens, judgments, and no unpaid collection accounts,

(3) No more than two instances where payments were ever delinquent

beyond 60 days,

(4) Net ratio: (monthly expenses divided by monthly cash flow) that

does not exceed 40%,

(5) Gross ratio: (Total indebtedness divided by gross annual cash

flow) that does not exceed 35%,

(6) At least two favorable credit references.

(b) Demonstrated ability to successfully address the needs of

substance abusers as determined by a Minimum of one year of successful

experience in providing services, such as, provision of housing,

vocational training, structured job seeking assistance, organized

relapse prevention services, or similar activity. Such experience would

involve at least than twenty-five substance abusers, and would be

experience which could be verified by VA inquiries of government or

community groups with whom the applicant has worked in providing these

services.

(c) An acceptable plan for operating a residence designed to meet

the conditions of a loan under this program, which will include:

(1) measures to ensure that residents are eligible for residency,

i.e., are veterans, are in (or have recently been in) a program for the

treatment of substance abuse, are financially able to pay their share

of costs of maintaining the residence, and agree to abide by house

rules and rent/utilities payment provisions,

(2) adequate rent/utilities collections to cover cost of

maintaining the residence,

(3) policies that ensure democratic self-run government, including

expulsion policies, and

(4) available technical assistance to residents in the event of

house management problems.

(d) Selection of a suitable housing unit for use as a transitional

residence in a neighborhood with no known illegal drug activity, and

with adequate living space for number of veterans planned for residence

(at least one large bedroom for every three veterans, at least one

bathroom for every four veterans, adequate common space for entire

household)

(e) Agreements, signed by an official authorized to bind the

recipient, which include:

(1) the loan payment schedule in accordance with the requirements

of PL No. 102-54, with the interest rate being the same as the rate the

VA is charged to borrow these funds from the U.S. Department of the

Treasury and with a penalty of 4% of the amount due for each failure to

pay an installment by the date specified in the loan agreement

involved, and

(2) the applicant's intent to use proceeds of loan only to cover

initial startup costs associated with the residence, such as security

deposit, furnishings, household supplies, and any other initial startup

costs.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat. 271, 38 U.S.C. 501)

Sec. 17.805 Additional Terms of Loans.

In the operation of each residence established with the assistance

of the loan, the recipient must agree to the following:

(a) The use of alcohol or any illegal drugs in the residence will

be prohibited;

(b) Any resident who violates the prohibition of alcohol or any

illegal drugs will be expelled from the residence;

(c) The cost of maintaining the residence, including fees for rent

and utilities, will be paid by residents;

(d) The residents will, through a majority vote of the residents,

otherwise establish policies governing the conditions of the residence,

including the manner in which applications for residence are approved;

(e) The residence will be operated solely as a residence for not

less than six veterans.

(Authority: Sec. 8 of Pub. L. 102-54, 105 Stat. 271, 38 U.S.C. 501)

Approved: July 15, 1994.

Jesse Brown,

Secretary of Veterans Affairs.

[FR Doc. 94-18486 Filed 7-29-94; 8:45 am]

BILLING CODE 8320-01-M