Public and Indian Housing DevelopmentAmendment to Calculation of Total Development Cost

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Public and Indian Housing

24 CFR Parts 905 and 941

[Docket No. R-94-1690; FR-3550-F-02]

RIN 2577-AB34

Public and Indian Housing Development--Amendment to Calculation

of Total Development Cost

AGENCY: Office of the Assistant Secretary for Public and Indian

Housing, HUD.

ACTION: Final rule.

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SUMMARY: This rule adopts as final an interim rule, published on

November 29, 1993, which revised the Department's regulations at 24 CFR

parts 905 and 941 to remove donations (non-public or non-Indian housing

funds) from the Department's calculation of total development cost

(TDC). The Department's experience indicated that the inclusion of

donations within the TDC of projects has created unwarranted delays in

the development process, and, in some cases, has been a contributory

reason for cost increases in the low-income housing development

process.

EFFECTIVE DATE: April 25, 1994.

FOR FURTHER INFORMATION CONTACT: For Public Housing, Janice Rattley,

Director of the Office of Construction, Rehabilitation and Maintenance,

Department of Housing and Urban Development, 451 Seventh Street SW.,

room 4136, Washington, DC 20410. Telephone (202) 708-1800 (voice) or

(202) 708-4594 (TDD). (These are not toll-free numbers.)

For Indian Housing, Dom Nessi, Director, Office of Native American

Programs, Department of Housing and Urban Development, 451 Seventh

Street SW., room 4140, Washington, DC 20410. Telephone (202) 708-1015

(voice) or (202) 708-4594 (TDD). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

1. The November 29, 1993 Interim Rule

On November 29, 1993 (58 FR 62522), HUD published an interim rule

to remove donations (non-public or non-Indian housing funds) from the

Department's calculation of total development cost (TDC).

Before publication of the November 29, 1993 interim rule, the

regulations for HUD's public housing development program and Indian

housing development program (codified, respectively, in 24 CFR parts

941 and 905) provided for the inclusion of donations (non-public or

non-Indian housing funds), in calculating the total development cost

(TDC). The project TDC would then be compared to the published TDC

limitations currently in effect, which could result in actual

development costs that are less than, the same as, or more than the

published TDC limitations. Under this procedure, if the project TDC

exceeded 100 percent of the published TDC limitation, notwithstanding

the reason for the increase over the TDC limitation or the source of

funding for the increase, the Field Office was unable to approve the

project TDC without authorization of the Regional Administrator or the

Assistant Secretary for Public and Indian Housing. This approval

procedure was intended to verify Field Office processing, and to ensure

that the project TDC would provide modest, non-luxury, durable housing

at a reasonable cost. In actual fact, however, the TDC approval

process, which did not take into consideration that donations may be

the reason for, or the source of payment of, the increase over the TDC

limits, resulted in unwarranted delays in the development process

because of the amount of time it takes for the request to move through

the system. In some cases, these delays were a contributory reason for

cost increases in development of public and Indian housing.

The amendments to be made by the November 29, 1993 interim rule,

and adopted in final by this rule, permit HUD Field Offices to

calculate the project TDC relative to published TDC limitations, and to

authorize housing agencies to proceed with developments, without

referral to Regional Administrators or the Assistant Secretary, where

funds in excess of TDC limits are provided through donations. Where

funds in excess of TDC limits will not be provided through donations,

Field Offices must continue to seek authorization from the Regional

Administrators or the Assistant Secretary. HUD will not provide funds

to housing agencies under section 5 of the U.S. Housing Act of 1937 in

excess of TDC limitations without such authorization.

The specific sections in 24 CFR parts 905 and 941 amended by the

November 29, 1993 interim rule, and adopted in final by this rule, are

as follows:

Sections 905.102 and 941.103 are each amended by revising the

definition of ``total development cost'' contained in these sections to

clarify that maximum total development cost excludes any donations.

Sections 905.255 and 941.204 are amended to add a new paragraph to

each section that will clarify that although donations are not included

in the project TDC calculations, donations must be included in the

project development cost budget. A new paragraph (j) has been added to

Sec. 905.255 and a new paragraph (d) has been added to Sec. 941.204.

Additionally, Sec. 905.255(a)(2) is amended to clarify that the

``inclusion of all costs'' discussed in this paragraph does not include

donations.

Additionally, Sec. 941.406 is amended to clarify that the total

project cost refers to HUD funds.

2. Public Comments

The November 29, 1993 interim rule solicited public comments

through January 28, 1994. By the expiration of the comment period, only

one comment was received. The commenter, a public housing agency,

stated that it was in full agreement with the interim rule, and

supported the amendment to HUD's regulations.

Since no other comments were received on the interim rule, and

since the Department intends to make no further changes, the Department

will adopt as its final rule the November 29, 1993 interim rule.

Other Matters

Environmental Impact

At the time of development of the November 29, 1993 interim rule, a

Finding of No Significant Impact with respect to the environment was

made in accordance with HUD regulations at 24 CFR part 50, which

implement section 102(2)(C) of the National Environmental Policy Act of

1969. That Finding remains applicable to this final rule, and is

available for public inspection between 7:30 a.m. and 5:30 p.m.

weekdays in the Office of the Rules Docket Clerk at the above address.

Impact on Small Entities

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

U.S.C. 605(b)), has reviewed this final rule before publication, and,

by approving it, certifies that this final rule will not have a

significant economic impact on a substantial number of small entities.

The rule's major effect is on housing agencies which are state and

local governmental entities. The final rule revises the manner in which

the total development cost is calculated, and in so doing, reduces

delays and costs in the development of public and Indian housing, which

is beneficial to housing agencies.

Federalism Impact

The General Counsel, as the Designated Official under section 6(a)

of Executive Order No. 12612, Federalism, has determined that this

final rule will not have a substantial, direct effect on the States or

their political subdivisions or on the relationship between the Federal

government and the States, or on the distribution of power or

responsibilities among the various levels of government. The rule

removes, rather than imposes, a program requirement.

Impact on the Family

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that this final rule does not

have a potential 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.

Regulatory Agenda

This rule was listed as sequence number 1650 in the Department's

Semiannual Agenda of Regulations published on October 25, 1993 (58 FR

56402, 56451) under Executive Order 12291 and the Regulatory

Flexibility Act.

Catalog of Federal Domestic Assistance Program

The Catalog of Federal Domestic Assistance Program title and number

is 14.850, Public and Indian Housing.

List of Subjects

24 CFR Part 905

Aged, Energy conservation, Grant programs--housing and community

development, Grant programs--Indians, Indians, Individuals with

disabilities, Lead poisoning, Loan programs--housing and community

development, Loan programs--Indians, Low and moderate income housing,

Public housing, Reporting and recordkeeping requirements.

24 CFR Part 941

Grant programs--housing and community development, Loan programs--

housing and community development, Public housing.

Accordingly, the Department adopts as final and without change, the

interim rule published on November 29, 1993 (58 FR 62522) that amended

24 CFR parts 905 and 941.

Dated: March 16, 1994.

Joseph Shuldiner,

Assistant Secretary for Public and Indian Housing.

[FR Doc. 94-7035 Filed 3-24-94; 8:45 am]

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