Electronic Transmission of Required Data for Certification and Recertification and Subsidy Billing Procedures for Multifamily Subsidized Projects

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing

Commissioner

24 CFR Part 208

[Docket No. R-94-1691; FR-3521-F-03]

RIN 2502-AG16

Electronic Transmission of Required Data for Certification and

Recertification and Subsidy Billing Procedures for Multifamily

Subsidized Projects

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing

Commissioner, HUD.

ACTION: Final rule.

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SUMMARY: This rule requires electronic submission in a HUD-prescribed

format of tenant and financial data by owners of certain subsidized

multifamily projects and by the public agencies that administer the

assistance contracts for HUD. Electronic transmission is necessary

because the manual submission of HUD forms has become a burden to

project owners, managers and HUD.

This final rule responds to public comments received on a previous

interim rule that applies to multifamily subsidized projects

administered by State housing finance and development agencies and

other public housing agencies under the following programs: the section

236 Interest Reduction and Rental Assistance Payments program, the

section 8 Housing Assistance Payments Program (except the section 8

Existing Housing Program or the Moderate Rehabilitation Program), the

section 221(d)(3) Below Market Interest Rate Loan program, and the

section 101 Rent Supplement Payment program. It also applies to

projects under the following programs: the section 202 program (except

section 202/8 projects, for which a similar rule was already

effective), and the section 811 Supportive Housing for Persons with

Disabilities program.

The change made in response to comments on the interim rule to

clarify the 12 month retroactive data collection is extended in this

rule to comparable provisions applicable already by final rule to

owners of subsidized projects that are administered directly by HUD.

EFFECTIVE DATE: This rule is effective September 23, 1994.

FOR FURTHER INFORMATION CONTACT: Barbara D. Hunter, Acting Director,

Planning and Procedures Division, Office of Multifamily Housing

Management, Room 6180, Department of Housing and Urban Development, 451

Seventh Street SW., Washington, D.C. 20410, telephone (202) 708-3944.

Hearing or speech-impaired individuals may call HUD's TDD number (202)

708-4594. (These telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

The information collection requirements contained in this rule were

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

Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520) and assigned OMB

control numbers 2502-0204 and 2502-0182.

II. Background

On November 19, 1993, a rule was published (58 FR 61017) [following

previous publication of a proposed rule in June 1988] that covered both

the HUD multifamily subsidized projects administered by HUD and the

ones administered by State finance and development agencies or other

public housing agencies as Contract Administrators (CAs) for HUD. The

rule was final as to the projects administered directly by HUD and

interim with no stated effective date with respect to those

administered by CAs and to Section 202 and Section 811 projects.

(Project owners who had already automated tenant certifications and

recertifications of income were subject to an effective date of March

21, 1994, whereas project owners who had not yet automated were subject

to an effective date of May 20, 1994.)

The rule was interim (Secs. 208.108 (c) and (d)) with respect to

the projects administered by CAs, Section 202 Elderly Housing projects,

and Section 811 Supportive Housing for Persons With Disabilities

projects. No effective date announcement has been published for the

interim rule, and this rule makes final the provisions of that interim

rule with two changes to reflect response to comments received.

III. Discussion of Public Comments From Interim Rule

Comments on the requirements applicable to contract administrators

and the Section 202 projects and Section 811 projects were due January

18, 1994. In response to the publication of that rule, the Department

received 6 public comments. The commenters were three management

companies, two State housing finance and development agencies, and the

National Council of State Housing Agencies. All commentors expressed

concern about details of the conversion to electronic submission of

data rather than about the overall concept. As a result of these

comments, the Department has made some revisions to the rule governing

automation of submission of data by project owners and contract

administrators. The following discussion summarizes the comments and

provides HUD's responses to those comments.

Comment: This automation of certification and recertification of

tenant data (TRACS) should be put on hold or implemented as designed in

the proposed rule. If this is not done, it will be impractical for many

CAs to meet the current timing.

Response: The Department's intent to automate has been known since

1988, and most owners and agents have already automated the form HUD

50059. Furthermore, this effort is necessary for the Department to meet

its goals of improving financial management of these important programs

and enabling accurate forecasting of budget projections for these

programs.

Comment: (From two management companies) HUD should consult with

Contract Administrators to find out what additional data they would

like to obtain, and HUD should prescribe one alternative transmission

format for this additional data. This additional format would allow

developers/owners to achieve the benefits of uniformity and provide

them with the information they need.

Response: The Department is limited to the collection of

information that is approved by OMB. The information collected must be

mandated by Federal Regulations and be justified by HUD before OMB will

grant approval. Therefore, HUD is not authorized to require the

collection of any additional information CAs may believe it is

desirable to obtain from project owners. CAs may not use HUD data

collection needs as a basis for seeking additional information.

Comment: HUD should provide clear directions to CAs regarding how

TRACS operates, what software will be needed by CAs and what technical

assistance HUD will provide CAs to get up and running. They ask HUD to

work with them to answer these questions to determine a reasonable date

by which the CAs will be in full compliance with TRACS.

Response: When a project obtains HUD-50059 data on paper, it

submits the certification data, either directly or by a service bureau,

to the CA in the prescribed format. The certification data are

submitted electronically to the CA via modem, disk or tape, in

accordance with this rule. The CA then transmits the certification data

to HUD via modem, disk or tape.

HUD receives the certification data and checks the format of the

transmission. Physically acceptable records are validated for

conformation to HUD programmatic rules. Discrepancy records are

generated for data that does not conform to programmatic rules.

Discrepancy records are sent back to the CA, which are in turn

forwarded to the project. (A future enhancement of the TRACS software

will allow discrepancy records to be sent simultaneously to the CA and

the project if desired.) Invalid certifications are corrected as

required by the project and resubmitted to HUD by the CA.

There are a number of sources available to CAs that provide

guidance:

The HUD-50059 Information Packet. This is also known as the Yellow

Book. The HUD-50059 Information Packet contains general information on

TRACS, data collection and processing, data transmission media, error

correction, and the Monthly Activity Transmission (MAT) User Guide,

which details the required format--record layouts and field

characteristics--for all TRACS data transmitted to and from HUD.

The Release 1.1 Entity and Attribute Definition Report Reference.

This contains detailed information about the data gathered by TRACS and

the edits performed on the data to ensure that it is valid. (This

information is technical and would be most suited for use by ADP

professionals.)

The PC SprintMail Electronic Information Packet. This is also known

as the Blue Book. The PC SprintMail Electronic Information Packet

contains information regarding electronic submission of certification

data to HUD, using SprintMail software. The Packet covers hardware

requirements, configuration information, installation instructions, and

operating instructions for PC SprintMail. The PC SprintMail software is

available from the TRACS Central Facility at 1-800-767-7558.

Understanding the TRACS Automation Rule. This contains information

on the programs covered by the rule, effective dates for the rule,

transmission of retroactive data, options for submitting data

electronically, the costs of automation, and the data to be transmitted

to HUD.

TRACS Industry Bulletin Board. The Bulletin Board provides a format

for open communication between HUD and third parties with an active

interest in TRACS. Questions and observations of a technical or

programmatic nature can be posted on the Bulletin Board, via modem, at

202-755-2189. For more information, CAs should consult the TRACS BBS

User Guide.

The TRACS Central Facility. The TRACS Central Facility can provide

guidance on the data transmittal process and assistance in correction

of errors in the physical composition of transmissions. All of the

documents referenced here are available from the TRACS Central

Facility. The TRACS Central Facility can be contacted at 1-800-767-

7588.

The HUD-50059 Information Packet, the Release 1.1 Entity and

Attribute Definition Report Reference, and the PC SprintMail Electronic

Information Packet are available from the TRACS Central Facility at 1-

800-767-7588. In addition, many software vendors are now developing and

offering products that automate the preparation of certification data

in the prescribed format. CAs may call either or both the National

Leased Housing Association (NLHA) at 202-785-8888 and the National

Assisted Housing Management Association (NAHMA) at 703-683-8630 or

other associations related to the management of assisted housing to

obtain a listing of software developers.

Comment: Although owners and agents may voluntarily participate by

submitting data electronically to CA after December 1993, the CAs who

are not automated will not be able to process these payment requests.

Response: CAs will need to purchase or modify their software to be

ready to receive and transmit data electronically when this rule

becomes effective. After the CAs are automated they must notify

projects under their jurisdiction as to when and how they are to begin

electronic submission.

Comment: HUD should provide CAs with in-house TRACS edit programs

that would allow the Contract Administrators to correct all field and

format errors before forwarding to the HUD database. This edit program

will enhance the accuracy of the housing assistance payments.

Response: The TRACS team has created several documents to assist

data submitters in preparation of error-free transmissions. See above

listing.

Comment: Section 208.108(c) requires CAs to transmit data

electronically to HUD in a HUD specified format. To date, the CAs have

not been advised of the format to be utilized.

Response: The HUD specified format is detailed in the Yellow Book.

See listing of sources of information on TRACS.

Comment: In order to build the contemplated HUD database, it does

not appear necessary to collect all tenant data for the previous twelve

months. Rather collection of the most recent tenant certification from

form HUD 50059 should provide all the necessary data.

Response: Data is requested for subsidized tenants who are

currently in occupancy and have not had their assistance terminated.

The transmission of retroactive data is to include only the tenant's

most recent ``complete certification'' (move-in, initial certification,

interim recertification). When the most recent certification for a

tenant is a partial certification (gross rent change or unit transfer),

both the complete and partial certifications should be transmitted so

that HUD's automated system can establish a complete record for the

household.

Sections 208.108(a) through (d) have been revised to reflect this

clarification, both for the projects administered by CAs and those

directly administered by HUD.

Comment: Current HUD handbook provisions require the CA to review

supporting documentation for Special Claims before approving the claim

for payment. Special claims are submitted for billing only after this

review. The Interim Rule (Sec. 208.108(e)) does not distinguish between

Special Claims that have been reviewed and approved for payment from

those that have just been received from project owners. The Final Rule

should clearly indicate that only previously approved Special Claims

should be submitted electronically to the CA.

Response: Automation of Special Claims is contained in a future

system release, and the design has not been fully developed at this

time. In instances where HUD is the contract administrator, current

plans call for electronic transmission of detailed data contained in

the Section 8 Special Claims Worksheets (Forms 52671A-D), prior to

approval by the field office. There would be a concurrent manual

submission of supporting documentation as required in Handbook

Sec. 4350.3, Chapter 6. Special Claims would not be submitted for

billing until after the field office has approved the claim and so

noted it in the system. The billing data is contained in the Housing

Owner's Certification and Application for Housing Assistance Payments

(Form 52670), and Schedule of Section 8 Special Claims (Form 52670A

Part 2). The system will be designed to verify that approval has been

granted when special claims are billed.

Where a contract administrator other than HUD has the

responsibility for reviewing and approving special claims, it is

anticipated that there will be a similar process by which the contract

administrator will review the documentation and note the approval in

the system. Again, the system will verify that approval has been

granted by the contract administrator. More information on this

function will be provided when the system design is completed.

Comment: HUD should reimburse CAs equitably for TRACS-related

expenses.

Response: CAs receive an administrative fee as reimbursement for

administering contracts. It is the Department's opinion that once CAs

are automated, the actual costs of doing business will be reduced,

since CAs will be able to reduce their clerical and administrative

costs. The cost of administering contracts will be higher with the

onset of automation, but the actual costs will be reduced over time,

which will have a balancing effect on the overall cost of administering

the contracts. Moreover, CAs will need to automate various other

functions they perform just to stay current with technological

improvements in management practices.

Comment: HUD should allow for a trial operating period, so the

system can be tested and any difficulties resolved.

Response: Undoubtedly, once CAs start transmitting, there will be

some difficulties. These will be tested and resolved during those

initial months of transmission.

Comment: Requiring some projects, particularly small projects

located in remote areas or projects where an owner/manager only owns

one or two projects, to automate and electronically transmit the

required data to HUD will place unnecessary burden on them. HUD should

allow CAs to accept hard copy information directly from these projects,

either by processing these projects' data forms or by operating as

service bureaus.

Response: Section 208.112(e) of the current rule permits owners of

small projects covered by the rule either to automate or to contract

with a service bureau to perform the automated transmission function.

This rule revises Sec. 208.112(e) to extend the same option of using a

service bureau to State agencies administering only one project. Even

though the Department would prefer for each State agency to obtain its

own hardware and software, this rule gives greater latitude to State

agencies administering only one project (approximately 100 units) in

recognition of their concern that automation of their operations might

not be cost effective.

IV. Other Matters

A. Regulatory Review

This rule was reviewed by the Office of Management and Budget (OMB)

under Executive Order 12866 on Regulatory Planning and Review, issued

by the President on September 30, 1993. Any changes made in this rule

subsequent to its submission to OMB are identified in the docket file,

which is available for public inspection in the office of the

Department's Rules Docket Clerk, room 10276, 451 Seventh Street SW.,

Washington, DC.

B. Environmental Impact

In accordance with 40 CFR 1508.4 of the regulations of the Council

on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations,

the policies and procedures contained in this rule relate only to HUD

administrative procedures and, therefore, are categorically excluded

from the requirements of the National Environmental Policy Act.

C. Executive Order 12612, Federalism

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 will not have substantial direct effects on

states or their political subdivisions, or the relationship between the

Federal government and the states, or on the distribution of power and

responsibilities among the various levels of government. Specifically,

this rule is directed to owners of multifamily housing projects and

State housing and finance agencies that serve as contract

administrators for HUD, and will not impinge upon the general

relationship between the Federal Government and State and local

governments. As a result, the rule is not subject to review under the

order.

D. Executive Order 12606, 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. No significant change in existing HUD policies or programs will

result from promulgation of this rule, as those policies and programs

relate to family concerns.

E. Regulatory Flexibility Act

The Secretary, in accordance with the Regulatory Flexibility Act (5

U.S.C. 605(b)) has reviewed and approved this rule, and in so doing

certifies that this rule will not have a significant economic impact on

a substantial number of small entities. Because this rule changes the

way in which the data is transmitted to HUD, and all costs associated

with implementation of the electronic transmission will be considered

project operating costs, the rule is not expected to have a significant

economic impact.

F. Regulatory Agenda

This rule was listed as item number 1601 under the Office of

Housing in the Department's Semiannual Agenda of Regulations published

on April 25, 1994 (59 FR 20424, 20451) under Executive Order 12866 and

the Regulatory Flexibility Act.

G. Catalog

The Catalog of Federal Domestic Assistance numbers for the programs

affected by this rule are 14.103, 14.149, 14.157, 14.181, and 14.182.

List of Subjects in 24 CFR Part 208

Computer technology--automatic data processing, Data processing,

Electronic data processing, Subsidies--grant programs, Rent subsidies.

Accordingly, chapter II of title 24 of the Code of Federal

Regulations is amended as follows:

PART 208--ELECTRONIC TRANSMISSION OF REQUIRED DATA FOR

CERTIFICATION AND RECERTIFICATION AND SUBSIDY BILLING PROCEDURES

FOR MULTIFAMILY SUBSIDIZED PROJECTS

1. The authority citation for part 208 continues to read as

follows:

Authority: 12 U.S.C. 1701s, 1715l, 1715z-1; 42 U.S.C. 1437f and

3535(d).

2. Section 208.108 is amended by:

a. Adding section headings at the beginning of paragraphs (a), (b),

and (e);

b. Adding two sentences to the end of paragraphs (a) and (b)(3);

and

c. Revising paragraphs (c) and (d), to read as follows:

Sec. 208.108 Requirements.

(a) Projects specified in Sec. 208.104(a) that are automated. * * *

Data collected for the 12 months preceding March 21, 1994, is to

include only the tenant's most recent ``complete certification'' (move-

in, initial certification, interim recertification, or annual

recertification). When the most recent certification for a tenant is a

partial certification (gross rent change, unit transfer, or

correction), both the complete and partial certifications must be

transmitted.

(b) Projects specified in Sec. 208.104(a) that are not automated.

(3) * * *

Data collected for the 12 months preceding May 20, 1994, is to

include only the tenant's most recent ``complete certification'' (move-

in, initial certification, interim recertification, or annual

recertification). When the most recent certification for a tenant is a

partial certification (gross rent change, unit transfer, or

correction), both the complete and partial certifications must be

transmitted.

(c) Projects specified in Sec. 208.104(b). (1) Project owners.

Project owners of applicable projects under Sec. 208.104(b) must

electronically transmit data for certification, recertification and

subsidy billing procedures in a HUD specified format to the contract

administrator. These project owners are required to transmit data

collected for the 12 months preceding September 23, 1994, as well as

data collected on or after that date. Data collected for the 12 months

preceding September 23, 1994 is to include only the tenant's most

recent ``complete certification'' (move-in, initial certification,

interim recertification, or annual recertification). When the most

recent certification for a tenant is a partial certification (gross

rent change, unit transfer, or correction), both the complete and

partial certifications must be transmitted.

(2) Contract administrators. State housing finance and development

agencies and Public Housing Agencies that serve as the subsidy contract

administrator must accept the electronic transmission of the HUD forms

listed below in Sec. 208.108(e) from the projects they administer, and

electronically transmit that data to HUD in a HUD specified format

after appropriate review and correction of the data.

(d) Projects specified in Sec. 208.104(c). Project owners of

applicable projects under Sec. 208.104(c) must electronically transmit

data for certification, recertification and subsidy billing procedures

to HUD in a HUD specified format. In the case of partially assisted

section 202 projects, owners are required to electronically transmit

data only for subsidized units. These project owners are required to

transmit data collected for the 12 months preceding the effective date

of the rule, as well as data collected on or after the effective date

of the rule. Data collected for the 12 months preceding September 23,

1994 is to include only the tenant's most recent ``complete

certification'' (move-in, initial certification, interim

recertification, or annual recertification). When the most recent

certification for a tenant is a partial certification (gross rent

change, unit transfer, or correction), both the complete and partial

certifications must be transmitted.

(e) Data to be transmitted. * * *

3. In Sec. 208.112, paragraph (e) is revised to read as follows:

Sec. 208.112 Cost.

* * * * *

(e) Owners of smaller projects or partially assisted projects with

few subsidized units and CAs that administer no more than one project

that determine that the purchase of hardware and/or software is not

cost effective may contract out the electronic data transmission

function to organizations that provide such services, including, but

not limited to the following organizations: local management agents,

local management associations and management agents with centralized

facilities. Owners of multiple projects may centralize the electronic

transmission function. However, owners that contract out or centralize

the electronic transmission function are required to retain the ability

to monitor the day-to-day operations of the project at the project site

and be able to demonstrate that ability to the relevant HUD field

office.

Dated: August 15, 1994.

Nicolas Retsinas,

Assistant Secretary for Housing-Federal Housing Commissioner.

[FR Doc. 94-20656 Filed 8-23-94; 8:45 am]

BILLING CODE 4210-27-P