Streamlining Public Housing Maintenance and Operation Rules

SUMMARY: This proposed rule would amend regulations on public housing

maintenance and operation to streamline and simplify necessary

requirements and to eliminate unnecessary requirements.

DATES: Comments due date: November 24, 1995.

ADDRESSES: Interested persons are invited to submit comments regarding

this proposed rule to the Rules Docket Clerk, Office of General

Counsel, Room 10276, Department of Housing and Urban Development, 451

Seventh Street, SW, Washington, DC 20410-0500. Communications should

refer to the above docket number and title. Facsimile (FAX) comments

are not acceptable. A copy of each communication submitted will be

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

p.m. weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: William C. Thorson, Acting Director,

Administration and Maintenance Division, Room 4214, Office of Public

and Indian Housing, Department of Housing and Urban Development, 451

Seventh Street, SW, Washington, DC 20410, telephone (202) 708-4703

(voice). Hearing- or speech-impaired persons may use the

Telecommunications Devices for the Deaf (TDD) by contacting the Federal

Information Relay Service on 1-800-877-TDDY (1-800-877-8339) or (202)

708-9300. (Other than the ``800'' TDD number, telephone numbers are not

toll-free.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

The information collection requirements contained in this proposed

rule have been submitted to the Office of Management and Budget for

review under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520).

The burden on the public associated with the information collections is

described more fully below under the heading, Other Matters. Send

comments regarding this burden estimate or any other aspect of this

information collection to the Rules Docket Clerk, Room 10276,

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

Washington, DC 20410-0500; and to the Office of Information and

Regulatory Affairs, Office of Management and Budget, Attention: Desk

Officer for HUD, Washington, DC 20503.

II. Background

Upon assuming the leadership of the Department of Housing and Urban

Development (HUD) in 1993, Secretary Cisneros made the reinvention of

HUD one of his first priorities. HUD's reinvention efforts took place

in the context of a broader, government-wide reinvention process, the

National Performance Review, under the leadership of Vice President

Gore. At that time, HUD established five program goals to accomplish

its mission that involved working for healthy growth in cities,

providing adequate housing for all, and protection of society's most

vulnerable people.

HUD determined that one of the first steps needed in its

transformation from the old HUD to a new HUD was the consolidation and

streamlining of funding programs. HUD recently submitted to Congress

sweeping changes to transform public housing to a resident-based

program.

Another aspect of the reinvention involve HUD's rules, which have

been at the forefront of HUD's reinvention efforts since those efforts

commenced in 1993. The foundation of HUD's regulatory process is

Executive Order 12866 (Regulatory Planning and Review) issued by

President Clinton on September 30, 1993. This order directs agencies

to, among other things, explore regulatory alternatives and, if

regulations are determined to be necessary, to select approaches that

maximize benefits and involve enhanced public accessibility and

participation in the rulemaking process.

HUD has done a comprehensive review of 24 CFR Part 965, PHA-Owned

or Leased Projects--Maintenance and Operation. Part 965 contains 8

subparts, covering a wide range of topics. Based on its comprehensive

review, HUD has determined that one subpart can be eliminated; three

subparts can be revised and simplified; two subparts that are

applicable to other housing programs can be consolidated and relocated

to a new ``general'' part that will be applicable to all programs; one

subpart will have to be revised to reflect new statutory requirements;

and one subpart recently issued will be unchanged.

III. Proposed Changes

Subpart A, Preemption of State Prevailing Wage Rates, makes higher

State determined prevailing wage rates ``inapplicable'' to a contract

for PHA-performed work. The ``inapplicability'' of these higher State

rates represents cost savings to public housing agencies (PHAs)

permitting limited resources to go further in addressing much needed

maintenance. For this reason, HUD does not propose to revise this

requirement. At the same time, there are similar requirements in the

development regulations, 24 CFR part 941, and in the modernization

regulations, 24 CFR part 968. HUD plans to consolidate these

requirements in a single regulation in another rulemaking.

Subpart B, Required Insurance Coverage, was codified for the first

time on October 5, 1993. It provides policies concerning insurance

coverage required under the Annual Contributions Contract when provided

by a qualified PHA-Owned insurance entity, pursuant to the HUD

Appropriations Act of 1992. A comprehensive review of this subpart

indicates that its provisions are the minimum necessary to implement

the statutory provisions. No further simplification or streamlining is

necessary, except to remove a cross-reference to a provision of the

Annual Contributions Contract (ACC), since a new, completely revised

ACC with different numbering of the provisions is now being adopted.

Three subparts of this part have a bearing on the Federal

government's utility costs associated with the public housing program.

Subpart C, Energy Audits and Energy Conservation Measures, deals with a

subject that is critical to the long term success, viability and

livability of public housing. Conducting energy audits and installation

of energy conservation measures has a significant financial impact for

both PHAs and the Department. Approximately $1.5 billion is spent on

public housing utility costs annually, most of which is paid by the

Federal government. As a result, the current requirement to conduct

energy audits and install cost effective energy conservation measures

is judicious. At the same time, HUD's review of this subpart reveals

that it can be simplified. In revising the text of this subpart, HUD

gave consideration to the final rule published in the Federal Register

on April 10, 1995 regarding Indian Housing Program Amendments, 24 CFR

Parts 905 and 950 (60 FR 18174, 18268). HUD's

[[Page 49481]]

Office of Native American Programs reduced the size and scope of the

comparable portion of its rule (now 24 CFR 950.805 through 950.825) to

a reasonable level that still ensures that energy conservation is

appropriately addressed. Accordingly, this subpart is proposed to be

revised in substantially the same manner as part 950.

A second subpart of this part that has an effect on utility costs

is subpart D, Individual Metering of Utilities for Existing PHA-Owned

Projects. Public housing agencies spend over $1 billion each year for

utility costs, a substantial portion of which is funded by Federal

operating subsidies. It is appropriate that HUD require PHAs to take

reasonable steps to reduce these utility costs. One significant step is

determining the extent to which it is cost effective to individually

meter projects and require residents to pay utility costs directly, as

is currently required by subpart D. Because of its impact on the cost

of public housing to the Federal government, HUD is retaining this

requirement in substantially its current form. HUD does believe that

some streamlining is possible. The revised language is consistent with

the new Indian Programs rule at Secs. 950.840 through 950.850. (See 60

FR 18268-18269.)

HUD is proposing to eliminate the purpose and definitions sections

because they are self-evident. This rule also proposes to eliminate

much of the technical language now contained in Sec. 965.404. The

language of the current Sec. 965.407 concerning PHA consultation with

resident organizations, which is advisory only, is revised to reflect

the Department's intent that it be mandatory.

The third subpart with an impact on utility costs is subpart E,

Tenant Allowances for Utilities. To the extent individual metering or

checkmetering is determined cost effective, it is necessary for a PHA

to establish resident allowances for utilities. The current subpart E

provides a broad framework and allows PHAs the flexibility to determine

the appropriate allowances. This philosophy is consistent with the

principles of the reinvention of government. As a result, HUD will

retain subpart E substantially in its current form. However, HUD

believes that some streamlining is possible. Revisions similar to those

made in the new Indian Programs rule at Secs. 950.860 through 950.876

(60 FR 18269-18270) have been made to eliminate the much of the

purpose, applicability, definitions and other unnecessary language.

Subpart F, Modernization of Oil-Fired Heating Plants, was issued in

1980 to implement a statutory set-aside of $25 million to modernize

oil-fired heating equipment. This subpart is now obsolete and is

proposed to be removed.

HUD plans to consolidate Subpart H, Lead-Based Paint Poisoning

Prevention, with similar provisions for other HUD programs. However,

that change will be made in a separate rule.

Subpart I, Fire Safety, will be revised in a separate rule that

updates provisions throughout HUD rules that deal with this subject.

[HUD published amendments to a number of assisted housing rules on July

30, 1992, to ensure that residents are protected from fire hazards. On

October 26, 1992, Congress passed the Fire Administration Authorization

Act of 1992 (Pub. L. 102-522), which prohibits the use of housing

assistance in connection with certain assisted and insured properties,

unless various fire protection and safety standards are met. The fire

protection and safety standards prescribed by the statute add

requirements beyond those contained in this subpart.]

IV. Other Matters

Environmental Impact

A Finding of No Significant Impact with respect to the environment

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

which implements section 102(2)(C) of the National Environmental Policy

Act of 1969 (NEPA). This Finding is available for public inspection

between 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules

Docket Clerk, Office of the General Counsel, Department of Housing and

Urban Development, Room 10276, 451 Seventh Street, SW., Washington, DC

20410-0500.

Impact on Small Entities

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

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

so doing, certifies that the proposed rule would not have a significant

economic impact on a substantial number of small entities. This

proposed rule streamlines and reduces the existing administrative

burden on PHAs, regardless of whether the recipient is categorized as a

large entity or a small entity.

Federalism Impact

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

of Executive Order No. 12611, Federalism, has determined that this

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

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 proposed rule does not effect the autonomy of

local PHAs. Instead, it streamlines and eliminates requirements

currently in effect.

Impact on the Family

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that the proposed rule will not

have a significant impact on family formation, maintenance, and well-

being, and, therefore, is not subject to review under the Order.

Catalog

The Catalog of Federal Domestic Assistance numbers for the public

housing program is 14.850.

Public Reporting Burden

The public reporting burden for the information collections

contained in this proposed rule are shown in a chart below. These

estimates include the time for reviewing the instructions, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collection of information.

[[Page 49482]]

Tabulation of Annual Reporting Burden--Proposed Rule Streamlining Public Housing Maintenance and Operations

----------------------------------------------------------------------------------------------------------------

No. of

Section of No. of responses Total ann. Hrs. per

Description of info. coll. 24 CFR respondents per responses response Total hours

affected respondent

----------------------------------------------------------------------------------------------------------------

Energy audits every 5 years....... 965.302 3,400 1/5 700 2 1,400

Review of energy contracting soli-

citations and contracts.......... 965.308 10 1 10 8 80

Benefit/cost analysis............. 965.402 1,360 1/3 454 2 908

Review of util. allowances........ 965.507 1,924 1 1,924 2 3,848

-----------------------------------------------------------------------------

Total Annual Burden

(Reduction from current

burden of 1,764 hours)..... ........... ........... ........... ........... ........... 6,236

----------------------------------------------------------------------------------------------------------------

List of Subjects in 24 CFR Part 965

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

programs--housing and community requirements, Small businesses.

Accordingly, 24 CFR part 965, is proposed to be amended as follows:

PART 965--PHA-OWNED OR LEASED PROJECTS--MAINTENANCE AND OPERATION

1. The authority citation for part 965 continues to read as

follows:

Authority: 42 U.S.C. 1437, 1437a, 1437d, 1437g, 3535(d). Subpart

H is also issued under 42 U.S.C. 4821-4846.

Sec. 965.205 [Amended]

2. In subpart B, Sec. 965.205 is amended by removing the phrase

``(in section 305 of the ACC)'' from the first sentence in paragraph

(a).

Secs. 965.303, 965.309, 965.310, 965.315 [Removed]

3. In subpart C, Secs. 965.301, 965.302, and 965.304 through

965.308 are revised, and Secs. 965.303, 965.309, 965.310, and 965.315

are removed, to read as follows:

Subpart C--Energy Audits and Energy Conservation Measures

Sec. 965.301 Purpose and applicability.

(a) Purpose. The purpose of this subpart is to implement HUD

policies in support of national energy conservation goals by requiring

PHAs to conduct energy audits and undertake certain cost-effective

energy conservation measures.

(b) Applicability. The provisions of this subpart apply to all PHAs

with PHA-owned housing, but they do not apply to Indian Housing

Authorities. (For similar provisions applicable to Indian housing, see

part 950 of this chapter.) No PHA-leased project or Section 8 Housing

Assistance Payments Program project, including PHA-owned Section 8

projects, is covered by this subpart.

Sec. 965.302 Requirements for energy audits.

All PHAs shall complete an energy audit for each PHA-owned project

under management, not less than once every five years. Standards for

energy audits shall be equivalent to State standards for energy audits

or as approved by HUD. Energy audits shall analyze all of the energy

conservation measures, and the payback period for these measures, that

are pertinent to the type of buildings and equipment operated by the

PHA.

Sec. 965.304 Order of funding.

Within the funds available to a PHA, energy conservation measures

should be accomplished with the shortest pay-back periods funded first.

A PHA may make adjustments to this funding order because of

insufficient funds to accomplish high-cost energy conservation measures

(ECM), or a situation in which an ECM with a longer pay-back period can

be more efficiently installed in conjunction with other planned

modernization. A PHA may not install individual utility meters that

measure the energy or fuel used for space heating in dwelling units

that need substantial weatherization, when installation of meters would

result in economic hardship for residents. In these cases, the ECMs

related to weatherization shall be accomplished before the installation

of individual utility meters.

Sec. 965.305 Funding.

(a) The cost of accomplishing cost-effective energy conservation

measures, including the cost of performing energy audits, shall be

funded from operating funds of the PHA to the extent feasible. When

sufficient operating funds are not available for this purpose, such

costs are eligible for inclusion in a modernization program, for

funding from any available development funds in the case of projects

still in development, or for other available funds that HUD may

designate to be used for energy conservation.

(b) If an PHA finances energy conservation measures from sources

other than modernization or operating reserves, such as on the basis of

a promise to repay, HUD may agree to provide adjustments in its

calculation of the PHA's operating subsidy eligibility under the PFS

for the project and utility involved if the financing arrangement is

cost-beneficial to HUD. (See Sec. 990.107(g) of this chapter.)

Sec. 965.306 Energy conservation equipment and practices.

In purchasing original or, when needed, replacement equipment, PHAs

shall acquire only equipment that meets or exceeds the minimum

efficiency requirements established by the U.S. Department of Energy.

In the operation of their facilities, PHAs shall follow operating

practices directed to maximum energy conservation.

Sec. 965.307 Compliance schedule.

All energy conservation measures determined by energy audits to be

cost effective shall be accomplished as funds are available.

Sec. 965.308 Energy performance contracts.

(a) Method of procurement. Energy performance contracting shall be

conducted using one of the following methods of procurement:

(1) Competitive proposals (see 24 CFR 85.36(d)(3)). In identifying

the evaluation factors and their relative importance, as required by

Sec. 85.36 (d)(3)(i) of this title, the solicitation shall state that

technical factors are significantly more important than price (of the

energy audit); or

(2) If the services are available only from a single source,

noncompetitive proposals (see 24 CFR 85.36 (d)(4)(i)(A)).

(b) HUD Review. Solicitations for energy performance contracting

shall be submitted to the HUD Field Office for review and approval

prior to issuance.

[[Page 49483]]

Energy performance contracts shall be submitted to the HUD Field Office

for review and approval before award.

Secs. 965.408, 965.409, 965.410 [Removed]

4. In subpart D, Secs. 965.401 through 965.407 are revised, and

Secs. 965.408, 965.409, and 965.410 are removed, to read as follows:

Subpart D--Individual Metering of Utilities for Existing PHA-Owned

Projects

Sec. 965.401 Individually metered utilities.

(a) All utility service shall be individually metered to residents,

either through provision of retail service to the residents by the

utility supplier or through the use of checkmeters, unless:

(1) Individual metering is impractical, such as in the case of a

central heating system in an apartment building;

(2) Change from a mastermetering system to individual meters would

not be financially justified based upon a benefit/cost analysis; or

(3) Checkmetering is not permissible under State or local law, or

under the policies of the particular utility supplier or public service

commission.

(b) If checkmetering is not permissible, retail service shall be

considered. Where checkmetering is permissible, the type of individual

metering offering the most savings to the PHA shall be selected.

Sec. 965.402 Benefit/cost analysis.

(a) A benefit/cost analysis shall be made to determine whether a

change from a mastermetering system to individual meters will be cost

effective, except as otherwise provided in Sec. 965.405.

(b) Proposed installation of checkmeters shall be justified on the

basis that the cost of debt service (interest and amortization) of the

estimated installation costs plus the operating costs of the

checkmeters will be more than offset by reduction in future utilities

expenditures to the PHA under the mastermeter system.

(c) Proposed conversion to retail service shall be justified on the

basis of net savings to the PHA. This determination involves making a

comparison between the reduction in utility expense obtained through

eliminating the expense to the PHA for PHA-supplied utilities and the

resultant allowance for resident-supplied utilities, based on the cost

of utility service to the residents after conversion.

Sec. 965.403 Funding.

The cost to change mastermeter systems to individual metering of

resident consumption, including the costs of benefit/cost analysis and

complete installation of checkmeters, shall be funded from operating

funds of the PHA to the extent feasible. When sufficient operating

funds are not available for this purpose, such costs are eligible for

inclusion in a modernization project or for funding from any available

development funds.

Sec. 965.404 Order of conversion.

Conversions to individually metered utility service shall be

accomplished in the following order when a PHA has projects of two or

more of the designated categories, unless the PHA has a justifiable

reason to do otherwise, which shall be documented in its files.

(a) In projects for which retail service is provided by the utility

supplier and the PHA is paying all the individual utility bills, no

benefit/cost analysis is necessary, and residents shall be billed

directly after the PHA adopts revised payment schedules providing

appropriate allowances for resident-supplied utilities.

(b) In projects for which checkmeters have been installed but are

not being utilized as the basis for determining utility charges to the

residents, no benefit/cost analysis is necessary. The checkmeters shall

be used as the basis for utility charges and residents shall be

surcharged for excess utility use.

(c) Projects for which meter loops have been installed for

utilization of checkmeters shall be analyzed both for the installation

of checkmeters and for conversion to retail service.

(d) Low- or medium-rise family units with a mastermeter system

should be analyzed for both checkmetering and conversion to retail

service, because of their large potential for energy savings.

(e) Low- or medium-rise housing for elderly should next be analyzed

for both checkmetering and conversion to retail service, since the

potential for energy saving is less than for family units.

(f) Electric service under mastermeters for high-rise buildings,

including projects for the elderly, should be analyzed for both use of

retail service and of checkmeters.

Sec. 965.405 Actions affecting residents.

(a) Before making any conversion to retail service, the PHA shall

adopt revised payment schedules, providing appropriate allowances for

the resident-supplied utilities resulting from the conversion.

(b) Before implementing any modifications to utility services

arrangements with the residents or charges with respect thereto, the

requisite changes shall be made in resident dwelling leases in

accordance with 24 CFR part 966.

(c) PHAs must work closely with resident organizations, to the

extent practicable, in making plans for conversion of utility service

to individual metering, explaining the national policy objectives of

energy conservation, the changes in charges and rent structure that

will result, and the goals of achieving an equitable structure that

will be advantageous to residents who conserve energy.

(d) A transition period of at least six months shall be provided in

the case of initiation of checkmeters, during which residents will be

advised of the charges but during which no surcharge will be made based

on the readings. This trial period will afford residents ample notice

of the effects the checkmetering system will have on their individual

utility charges and also afford a test period for the adequacy of the

utility allowances established.

(e) During and after the transition period, PHAs shall advise and

assist residents with high utility consumption on methods for reducing

their usage. This advice and assistance may include counseling,

installation of new energy conserving equipment or appliances, and

corrective maintenance.

Sec. 965.406 Benefit/cost analysis for similar projects.

PHAs with more than one project of similar design and utilities

service may prepare a benefit/cost analysis for a representative

project. A finding that a change in metering is not cost effective for

the representative project is sufficient reason for the PHA not to

perform a benefit/cost analysis on the remaining similar projects.

Sec. 965.407 Reevaluations of mastermeter systems.

Because of changes in the cost of utility services and the periodic

changes in utility regulations, PHAs with mastermeter systems are

required to reevaluate mastermeter systems without checkmeters by

making benefit/cost analyses at least every 36 months. These analyses

may be omitted under the conditions specified in Sec. 965.406.

5. Subpart E is revised to read as follows:

Subpart E--Resident Allowances for Utilities

Sec.

965.501 Applicability.

965.502 Establishment of utility allowances by PHAs.

965.503 Categories for establishment of allowances.

965.504 Period for which allowances are established.

[[Page 49484]]

965.505 Standards for allowances for utilities.

965.506 Surcharges for excess consumption of PHA-furnished

utilities.

965.507 Review and revision of allowances.

965.508 Individual relief.

Subpart E--Resident Allowances for Utilities

Sec. 965.501 Applicability.

(a) This subpart applies to public housing, including Turnkey III

Homeownership Opportunities program. This subpart also applies to units

assisted under sections 10(c) and 23 of the U. S. Housing Act of 1937

as in effect before amendment by the Housing and Community Development

Act of 1974 and to which 24 CFR part 900 is not applicable. This

subpart does not apply to Indian housing projects (see 24 CFR part

950).

(b) In rental units for which utilities are furnished by the PHA

but there are no checkmeters to measure the actual utilities

consumption of the individual units, residents shall be subject to

charges for consumption of resident-owned major appliances, or for

optional functions of PHA-furnished equipment, in accordance with

Sec. 965.502(e) and 965.506(b), but no utility allowance will be

established.

Sec. 965.502 Establishment of utility allowances by PHAs.

(a) PHAs shall establish allowances for PHA-furnished utilities for

all checkmetered utilities and allowances for resident-purchased

utilities for all utilities purchased directly by residents from the

utilities suppliers.

(b) The PHA shall maintain a record that documents the basis on

which allowances and scheduled surcharges, and revisions thereof, are

established and revised. Such record shall be available for inspection

by residents.

(c) The PHA shall give notice to all residents of proposed

allowances, scheduled surcharges, and revisions thereof. Such notice

shall be given, in the manner provided in the lease or homebuyer

agreement, not less than 60 days before the proposed effective date of

the allowances or scheduled surcharges or revisions; shall describe

with reasonable particularity the basis for determination of the

allowances, scheduled surcharges, or revisions, including a statement

of the specific items of equipment and function whose utility

consumption requirements were included in determining the amounts of

the allowances or scheduled surcharges; shall notify residents of the

place where the PHA's record maintained in accordance with paragraph

(b) of this section is available for inspection; and shall provide all

residents an opportunity to submit written comments during a period

expiring not less than 30 days before the proposed effective date of

the allowances or scheduled surcharges or revisions. Such written

comments shall be retained by the PHA and shall be available for

inspection by residents.

(d) Schedules of allowances and scheduled surcharges shall not be

subject to approval by HUD before becoming effective, but will be

reviewed in the course of audits or reviews of PHA operations.

(e) The PHA's determinations of allowances, scheduled surcharges,

and revisions thereof shall be final and valid unless found to be

arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with the law.

Sec. 965.503 Categories for establishment of allowances.

Separate allowances shall be established for each utility and for

each category of dwelling units determined by the PHA to be reasonably

comparable as to factors affecting utility usage. The PHA will

establish allowances for different size units, in terms of numbers of

bedrooms. Other categories may be established at the discretion of the

PHA.

Sec. 965.504 Period for which allowances are established.

(a) PHA-furnished utilities. Allowances will normally be

established on a quarterly basis; however, residents may be surcharged

on a monthly basis. The allowances established may provide for seasonal

variations.

(b) Resident-purchased utilities. Monthly allowances shall be

established at a uniform monthly amount based on an average monthly

utility requirement for a year; however, if the utility supplier does

not offer residents a uniform payment plan, the allowances established

may provide for seasonal variations.

Sec. 965.505 Standards for allowances for utilities.

(a) The objective of a PHA in designing methods of establishing

utility allowances for each dwelling unit category and unit size shall

be to approximate a reasonable consumption of utilities by an energy-

conservative household of modest circumstances consistent with the

requirements of a safe, sanitary, and healthful living environment.

(b) Allowances for both PHA-furnished and resident-purchased

utilities shall be designed to include such reasonable consumption for

major equipment or for utility functions furnished by the PHA for all

residents (e.g., heating furnace, hot water heater), for essential

equipment whether or not furnished by the PHA (e.g., range and

refrigerator), and for minor items of equipment (such as toasters and

radios) furnished by residents.

(c) The complexity and elaborateness of the methods chosen by the

PHA, in its discretion, to achieve the foregoing objective will depend

upon the data available to the PHA and the extent of the administrative

resources reasonably available to the PHA to be devoted to the

collection of such data, the formulation of methods of calculation, and

actual calculation and monitoring of the allowances.

(d) In establishing allowances, the PHA shall take into account

relevant factors affecting consumption requirements, including:

(1) The equipment and functions intended to be covered by the

allowance for which the utility will be used. For instance, natural gas

may be used for cooking, heating domestic water, or space heating, or

any combination of the three.

(2) The climatic location of the housing projects.

(3) The size of the dwelling units and the number of occupants per

dwelling unit.

(4) Type of construction and design of the housing project.

(5) The energy efficiency of PHA-supplied appliances and equipment.

(6) The utility consumption requirements of appliances and

equipment whose reasonable consumption is intended to be covered by the

total resident payment.

(7) The physical condition, including insulation and

weatherization, of the housing project.

(8) Temperature levels intended to be maintained in the unit during

the day and at night, and in cold and warm weather.

(9) Temperature of domestic hot water.

(e) If a PHA installs air conditioning, it shall provide, to the

maximum extent economically feasible, systems that give residents the

option of choosing to use air conditioning in their units. The design

of systems that offer each resident the option to choose air

conditioning shall include retail meters or checkmeters and residents

shall pay for the energy used in its operation. For systems that offer

residents the option to choose air conditioning, the PHA shall not

include air conditioning in the utility allowances. For systems that

offer residents the option to choose air conditioning but can not be

checkmetered, residents are to be

[[Page 49485]]

surcharged in accordance with Sec. 965.506. If an air condition system

does not provide for resident option, residents are not to be charged

and these systems should be avoided whenever possible.

Sec. 965.506 Surcharges for excess consumption of PHA-furnished

utilities.

(a) For dwelling units subject to allowances for PHA-furnished

utilities where checkmeters have been installed, the PHA shall

establish surcharges for utility consumption in excess of the

allowances. Surcharges may be computed on a straight per unit of

purchase basis (e.g., cents per kilowatt hour of electricity) or for

stated blocks of excess consumption, and shall be based on the PHA's

average utility rate. The basis for calculating such surcharges shall

be described in the PHA's schedule of allowances. Changes in the dollar

amounts of surcharges based directly on changes in the PHA's average

utility rate shall not be subject to the advance notice requirements of

this section.

(b) For dwelling units served by PHA-furnished utilities where

checkmeters have not been installed, the PHA shall establish schedules

of surcharges indicating additional dollar amounts residents will be

required to pay by reason of estimated utility consumption attributable

to resident-owned major appliances or to optional functions of PHA-

furnished equipment. Such surcharge schedules shall state the resident-

owned equipment (or functions of PHA-furnished equipment) for which

surcharges shall be made and the amounts of such charges, which shall

be based on the cost to the PHA of the utility consumption estimated to

be attributable to reasonable usage of such equipment.

Sec. 965.507 Review and revision of allowances.

(a) Annual review. The PHA shall review at least annually the basis

on which utility allowances have been established and, if reasonably

required in order to continue adherence to the standards stated in

Sec. 965.505 shall establish revised allowances. The review shall

include all changes in circumstances (including completion of

modernization and/or other energy conservation measures implemented by

the PHA) indicating probability of a significant change in reasonable

consumption requirements and changes in utility rates.

(b) Revision as a result of rate changes. The PHA may revise its

allowances for resident-purchased utilities between annual reviews if

there is a rate change (including fuel adjustments) and shall be

required to do so if such change, by itself or together with prior rate

changes not adjusted for, results in a change of 10 percent or more

from the rates on which such allowances were based. Adjustments to

resident payments as a result of such changes shall be retroactive to

the first day of the month following the month in which the last rate

change taken into account in such revision became effective.

Sec. 965.508 Individual relief.

Requests for relief from surcharges for excess consumption of PHA-

purchased utilities, or from payment of utility supplier billings in

excess of the allowances for resident-purchased utilities, may be

granted by the PHA on reasonable grounds, such as special needs of

elderly, ill or disabled residents, or special factors affecting

utility usage not within the control of the resident, as the PHA shall

deem appropriate. The PHA's criteria for granting such relief, and

procedures for requesting such relief, shall be adopted at the time the

PHA adopts the methods and procedures for determining utility

allowances. Notice of the availability of such procedures (including

identification of the PHA representative with whom initial contact may

be made by residents), and the PHA's criteria for granting such relief,

shall be included in each notice to residents given in accordance with

Sec. 965.502(c) and in the information given to new residents upon

admission.

Dated: August 24, 1995.

MaryAnn Russ,

Director, Office of Assisted Housing.

[FR Doc. 95-23643 Filed 9-22-95; 8:45 am]

BILLING CODE 4210-33-P