Supportive Housing for Persons With Disabilities; Management

SUMMARY: This interim rule establishes the requirements related to

management and operation of the Supportive Housing for Persons with

Disabilities Program. The purpose of the Supportive Housing for Persons

with Disabilities Program is to enable persons with disabilities to

live with dignity and independence within their communities by

expanding the supply of supportive housing that is designed to

accommodate the special needs of such persons and provides supportive

services that address the individual health, mental health, and other

needs of such persons. Included in a companion interim rule in today's

Federal Register for the management and operation of projects funded by

the Supportive Housing for the Elderly Program are amendments which add

both Supportive Housing programs to the list of projects covered by the

pet ownership requirements, and which apply the wage and claim consent

form requirements to both programs.

DATES: Effective Date: April 13, 1995.

Sunset Provisions: Sections 890.600 through 890.650 shall expire

and shall not be in effect after October 2, 1996, unless changes in

this interim rule are published as a final rule, or the Department

publishes a notice in the Federal Register to extend the effective

date.

Comments due date: May 1, 1995.

ADDRESSES: Interested persons are invited to submit comments regarding

this interim rule to the Rules Docket Clerk, Office of the 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. A copy of each

communication submitted will be available for public inspection during

regular business hours (weekdays 7:30 a.m. to 5:30 p.m.) at the above

address.

FOR FURTHER INFORMATION CONTACT: Margaret Milner, Acting Director,

Office of Elderly and Assisted Housing, Department of Housing and Urban

Development, 451 Seventh Street SW., Room 6130, Washington, DC 20410,

telephone (202) 708-4542; (TDD) (202) 708-4594. (These are not toll-

free numbers).

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

The information collection requirements contained in this interim

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

assigned OMB control number 2502-0470.

II. Justification for Interim Rulemaking

In general, the Department publishes a rule for public comment

before issuing a rule for effect, in accordance with its own

regulations on rulemaking, 24 CFR part 10. However, part 10 provides

for exceptions from that general rule when the agency finds good cause

to omit advance notice and public participation. The good cause

requirement is satisfied when prior public procedure is

``impracticable, unnecessary, or contrary to the public interest'' (24

CFR 10.1). The Department finds that good cause exists to publish this

interim rule for effect without first soliciting public comment, in

that prior public procedure is unnecessary. These management rules vary

only slightly from previous management requirements for the section

202/162 direct loan program for persons with disabilities. This interim

rule furthers the legislative mandate of section 811 of the Cranston-

Gonzalez National Affordable Housing Act, as amended, and it involves

only minor interpretations of that statute. The section 811 capital

advance program currently is operating under a series of interim rules.

The Department intends to publish a final rule that will incorporate

public comments for all aspects of the section 811 capital advance

program.

Furthermore, the Department finds that prior public procedure would

be impracticable. The Department has awarded capital advances since

1991, and many of these projects are approaching the management phase

or have become operational. Management requirements are needed

immediately to assure transition from the development phase to the

management phase.

III. Sunset of Interim Rule

In accordance with the Department's policy on interim rules, the

amendments made by this interim rule shall expire 18 months after the

effective date of this interim rule, unless extended by notice

published in the Federal Register, or adopted by a final rule published

on or before the 18-month anniversary date of the effective date of

this interim rule.

IV. Background

The Supportive Housing for Persons with Disabilities Program is

authorized by section 811 of the Cranston-Gonzalez National Affordable

Housing Act (the NAHA Act), as amended by the Housing and Community

Development Act of 1992 (1992 Act). Under the program, which is

implemented in 24 CFR part 890, assistance is provided to nonprofit

organizations to expand the supply of supportive housing for persons

with disabilities. Such assistance is provided as (1) capital advances

and (2) project rental assistance contracts. Capital advances may be

used to finance the acquisition with rehabilitation, acquisition

without rehabilitation (group homes only), construction or

rehabilitation of a structure, and acquisition of property from the

Resolution Trust Corporation (group homes and independent living

facilities) to be used as supportive housing for persons with

disabilities. This assistance may also cover the cost of real property

acquisition, site improvement, conversion, demolition, relocation, and

other expenses that the Secretary determines are necessary to expand

the supply of supportive housing for persons with disabilities.

On June 12, 1991, the Department published an interim rule (56 FR

27070) implementing section 811 of the NAHA to establish the Supportive

Housing for Persons with Disabilities Program. That interim rule, which

enabled the program to be funded for FY-1991, described application

procedures and program requirements, selection of applications and

duration of fund reservation requirements. A second interim rule was

published on August 12, 1992 (57 FR 36330) to provide the development-

related requirements (closing of capital advances and requirements

related to project rental assistance contracts) of the program. The

program was the subject of further amendments by the 1992 Act, which

were implemented by a third interim rule published on May 5, 1993 (58

FR 26816). All three interim rules are codified at 24 CFR part 890.

Today's interim rule (subpart F, part 890) completes the

establishment of the program by providing the requirements for

management and operation of projects funded under the program. After

the period of public comment is [[Page 11837]] completed on this

interim rule, the Department will develop a final rule based on all

previous rules.

V. Summary of Interim Rule (Subpart F)

Subpart F provides the responsibilities of the Owner, requirements

of the replacement reserve, selection and admission requirements for

tenants, obligations of tenants, provisions regarding overcrowded and

underoccupied units, lease requirements, and requirements regarding

termination of tenancy, modifications of leases, security deposits and

vacancy payments.

The subpart F requirements are similar to existing requirements for

the Section 202 Projects for Nonelderly Handicapped Families and

Individuals receiving assistance under section 202(h) of the Housing

Act of 1959. See 24 CFR 885.940-885.985.

Owner Responsibilities

The responsibilities of an Owner under part 890 include marketing,

management and maintenance, contracting for services, submission of

financial and operating statements, project fund accounting and

reporting. Marketing must be conducted in accordance with a HUD-

approved affirmative fair housing marketing plan and all Federal, State

or local fair housing and equal opportunity requirements. The Owner is

responsible for all management functions. These functions include

selection and admission of tenants, required reexaminations of incomes

for households occupying assisted units or residential spaces,

collection of tenant payments, termination of tenancy and eviction, and

all repair and maintenance functions (including ordinary and

extraordinary maintenance and replacement of capital items). All

functions must be performed in compliance with equal opportunity

requirements. The section 811 Owner must also establish and maintain a

replacement reserve to aid in funding extraordinary maintenance, and

repair and replacement of capital items.

The Owner is required to adopt written tenant selection procedures

which ensure nondiscrimination in the selection of tenants and that are

(1) consistent with the purpose of improving housing opportunities for

very low-income persons with disabilities; and (2) reasonably related

to program eligibility and an applicant's ability to perform the

obligations of the lease. The Owner must comply with all

nondiscrimination authorities. The Owner must accept applications for

admission to the project in the form prescribed by HUD. Applicant

households applying for assisted units (or residential spaces in a

group home) must complete a certification of eligibility as part of the

application for admission.

The Owner is also responsible for determining whether applicants

are eligible for admission and for the selection of households. To be

eligible for admission, an applicant must be a disabled person (as

defined in Sec. 890.105); must meet any project occupancy requirements

approved by HUD under Sec. 890.305(a)(1); must meet the disclosure and

verification requirements for Social Security Numbers, as provided by

24 CFR part 750; must sign and submit consent forms for the obtaining

of wage and claim information from State Wage Information Collection

Agencies, as provided by 24 CFR part 760; and must be a very low-income

family, as defined by Sec. 890.105. Owners shall make selections in a

nondiscriminatory manner without regard to considerations such as race,

religion, color, sex, national origin, familial status, or disability.

However, an Owner may, with the approval of the Secretary, limit

occupancy within housing developed under this part to persons with

disabilities who have similar disabilities and require a similar set of

supportive services in a supportive housing environment. Under certain

circumstances, HUD may permit the leasing of units to ineligible

families under Sec. 890.515. If the Owner determines that the household

is eligible and is otherwise acceptable and units (or residential

spaces in a group home) are available, the Owner will assign the

household a unit or residential space in a group home. If the household

will occupy an assisted unit, the Owner will assign the household a

unit of the appropriate size in accordance with HUD's general occupancy

guidelines. If no suitable unit (or residential space in a group home)

is available, the Owner will place the household on a waiting list for

the project and notify the household when a suitable unit or

residential space may become available. If the waiting list is so long

that the applicant would not be likely to be admitted for the next 12

months, the Owner may advise the applicant that no additional

applications for admission are being considered for that reason.

If the Owner determines that an applicant is ineligible for

admission or the Owner is not selecting the applicant for other

reasons, the Owner will promptly notify the applicant in writing of the

determination, the reasons for the determination, and that the

applicant has a right to request a meeting to review the rejection, in

accordance with HUD requirements.

Records on applicants and approved eligible households, which

provide racial, ethnic, gender and place of previous residency data

required by HUD, must be retained for three years. The Owner must

reexamine the income and composition of the household at least every 12

months. Upon verification of the information, the Owner must make

appropriate adjustments in the total tenant payment in accordance with

part 813, as modified by Sec. 890.105, and must determine whether the

household's unit size is still appropriate. The Owner must adjust

tenant payment and the project rental assistance payment and must carry

out any unit transfer in accordance with HUD standards.

Household Responsibilities

Households under the program are required to do the following: (1)

Pay amounts due under the lease directly to the Owner; (2) supply such

certification, release, information, or documentation as the Owner or

HUD determines necessary, including information and documentation

relating to the disclosure and verification of Social Security Numbers,

as provided by 24 CFR part 750, and the signing and submission of

consent forms for the obtaining of wage and claim information from

State Wage Information Collection Agencies, as provided by 24 CFR part

760; (3) allow the Owner to inspect the dwelling unit or residential

space at reasonable times and after reasonable notice; (4) notify the

Owner before vacating the dwelling unit or residential space; and (5)

use the dwelling unit or residential space solely for residence by the

household, and as the household's principal place of residence. The

household may not assign the lease or transfer the unit or residential

space, nor may it occupy, or receive assistance for the occupancy of a

unit or residential space governed under this part while occupying, or

receiving assistance for occupancy of, another unit assisted under any

Federal housing assistance program, including any section 8 program.

Lease

The term of the lease may not be less than one year. Unless the

lease has been terminated by appropriate action, upon expiration of the

lease term, the household and Owner may execute a new lease for a term

not less than one year, or may take no action. If no action is taken,

the lease will automatically be [[Page 11838]] renewed for successive

terms of one month. The Owner shall use the lease form prescribed by

HUD. The Owner may not use any of the prohibited provisions specified

by HUD. In addition to required provisions of the lease form, the Owner

may include a provision in the lease permitting the Owner to enter the

leased premises, at any time, without advance notice where there is

reasonable cause to believe that an emergency exists or that health or

safety of a family member is endangered. The provisions of 24 CFR part

247 apply to all decisions by an Owner to terminate the tenancy or

modify the lease of a household residing in a unit (or residential

space in a group home).

Security Deposit

At the time of the initial execution of the lease, the Owner will

require each household occupying an assisted unit (or residential space

in a group home) to pay a security deposit in an amount equal to one

month's tenant payment or $50, whichever is greater. The household is

expected to pay the security deposit from its own resources and other

available public or private resources. The Owner may collect the

security deposit on an installment basis. The Owner must place the

security deposits in a segregated interest-bearing account.

Utility Allowances

The Owner must submit an analysis of any utility allowances

applicable in an independent living complex. Such data as changes in

utility rates and other facts affecting utility consumption should be

provided as part of this analysis to permit appropriate adjustments in

the utility allowances for assisted units. In addition, if utility rate

changes would result in a cumulative increase of 10 percent or more in

the most recently approved utility allowances, the Owner must advise

HUD and request approval of new utility allowances. Whenever a utility

allowance for an assisted unit is adjusted, the Owner will promptly

notify affected households and make a corresponding adjustment of the

tenant payment and the amount of the project rental assistance payment.

Vacancy Payments

Vacancy payments under the Project Rental Assistance Contract

(PRAC) will not be made unless the conditions for receipt of these

project rental assistance payments are fulfilled. For each unit (or

residential space in a group home) that is not leased as of the

effective date of the PRAC, the Owner is entitled to vacancy payments

in the amount of 50 percent of the per unit operating cost (or pro rata

share of the group home operating cost) for the first 60 days of

vacancy, if the Owner: (1) Conducted marketing in accordance with

Sec. 890.600(a) and otherwise complied with Sec. 890.600; (2) has taken

and continues to take all feasible actions to fill the vacancy; and (3)

has not rejected any eligible applicant except for good cause

acceptable to HUD. If an eligible household vacates an assisted unit

(or residential space in a group home) the Owner is entitled to vacancy

payments in the amount of 50 percent of the approved per unit operating

cost (or pro rata share of the group home operating cost) for the first

60 days of vacancy if the Owner: (1) Certifies that it did not cause

the vacancy by violating the lease, the PRAC, or any applicable law;

(2) notified HUD of the vacancy or prospective vacancy and the reasons

for the vacancy upon learning of the vacancy or prospective vacancy;

(3) has fulfilled and continues to fulfill the requirements specified

in Sec. 890.600(a) (2) and (3) and Sec. 890.645(b) (2) and (3); and (4)

for any vacancy resulting from the Owner's eviction of an eligible

household, certifies that it has complied with Sec. 890.630. If the

Owner collects payments for vacancies from other sources (tenant

payment, security deposits, payments under Sec. 890.635(c), or

governmental payments under other programs), the Owner shall not be

entitled to collect vacancy payments to the extent these collections

from other sources plus the vacancy payment exceed the approved per

unit operating cost.

HUD Reviews

HUD shall conduct periodic on-site management reviews of the

Owner's compliance with the requirements of part 890.

HUD Issuances

The Department intends to amend the Handbook 4350.3, Occupancy

Requirements of Subsidized Multifamily Housing Programs, with these new

part 890 requirements.

VI. 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

implementing 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 between 7:30 a.m. and 5:30

p.m. weekdays at the Office of the Rules Docket Clerk, 451 Seventh

Street, SW., Room 10276, Washington, DC 20410-0500.

Regulatory Flexibility Act

Under 5 U.S.C. 605(b), (the Regulatory Flexibility Act), the

undersigned hereby certifies that this interim rule does not have a

significant economic impact on a substantial number of small entities.

The interim rule would provide capital advances to private nonprofit

organizations to expand the supply of supportive housing for persons

with disabilities. Although small entities will participate in the

program, the interim rule would not have a significant impact on them.

Executive Order 12606, the Family

The General Counsel, as the Designated Official for Executive order

12606, the Family, has determined that the provisions of this interim

rule will not have a significant impact on family formation,

maintenance or well being. No significant change in existing HUD

policies or programs will result from promulgation of this interim

rule, as those policies and programs relate to family concerns.

Executive Order 12612, Federalism

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

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

interim rule does not involve the preemption of State law by Federal

statute or regulation and does not have federalism impacts.

Regulatory Agenda

This interim rule was listed as sequence 1809 in the Department's

Semiannual Agenda of Regulations published on November 14, 1994 (59 FR

57632, 57658) under Executive Order 12866 and the Regulatory

Flexibility Act.

Catalog of Federal Domestic Assistance

The program number is 14.181, Supportive Housing for Persons with

Disabilities.

List of Subjects in 24 CFR Part 890

Civil rights, Grant programs--housing and community development,

Individuals with disabilities, Loan programs--housing and community

development, Low and moderate income housing, Mental health programs,

Reporting and recordkeeping requirements.

Accordingly, for the reasons stated in the preamble, part 890 of

title 24 of the [[Page 11839]] Code of Federal Regulations is amended

as follows:

PART 890--SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES

1. The authority citation for part 890 continues to read as

follows:

Authority: 42 U.S.C. 3535(d) and 8013.

2. Section 890.100 is amended by adding paragraph (d) to read as

follows:

Sec. 890.100 Purpose and policy.

* * * * *

(d) Effective date of regulation. Sections 890.600 through 890.650

shall expire and shall not be in effect after October 2, 1996, unless

changes in this interim rule are published as a final rule, or the

Department publishes a notice in the Federal Register to extend the

effective date.

3. Part 890 is amended by adding subpart F to read as follows:

Subpart F--Project Management

Sec.

890.600 Responsibilities of Owner.

890.605 Replacement reserve.

890.610 Selection and admission of tenants.

890.615 Obligations of the household.

890.620 Overcrowded and underoccupied units.

890.625 Lease requirements.

890.630 Termination of tenancy and modification of lease.

890.635 Security deposits.

890.640 Adjustment of utility allowances.

890.645 Conditions for receipt of vacancy payments for assisted

units.

890.650 HUD review.

Subpart F--Project Management

Sec. 890.600 Responsibilities of Owner.

(a) Marketing. (1) The Owner must commence and continue diligent

marketing activities not later than 90 days before the anticipated date

of availability for occupancy of the group home or the anticipated date

of availability of the first unit in an independent living complex.

Market activities shall include the provision of notices of the

availability of housing under the program to operators of temporary

housing for the homeless in the same housing market.

(2) Marketing must be done in accordance with a HUD-approved

affirmative fair housing marketing plan and all Federal, State or local

fair housing and equal opportunity requirements. The purpose of the

plan and requirements is to achieve a condition in which eligible

households of similar income levels in the same housing market area

have a like range of housing choices available to them regardless of

discriminatory considerations such as their race, color, creed,

religion, familial status, disability, sex or national origin.

(3) At the time of PRAC execution, the Owner must submit to HUD a

list of leased and unleased assisted units (or in the case of a group

home, leased and unleased residential spaces) with a justification for

the unleased units or residential spaces, in order to qualify for

vacancy payments for the unleased units or residential spaces.

(b) Management and maintenance. The Owner is responsible for all

management functions. These functions include selection and admission

of tenants, required reexaminations of incomes for households occupying

assisted units or residential spaces, collection of tenant payments,

termination of tenancy and eviction, and all repair and maintenance

functions (including ordinary and extraordinary maintenance and

replacement of capital items). All functions must be performed in

compliance with equal opportunity requirements.

(c) Contracting for services. (1) With HUD approval, the Owner may

contract with a private or public entity for performance of the

services or duties required in paragraphs (a) and (b) of this section.

However, such an arrangement does not relieve the Owner of

responsibility for these services and duties. All such contracts are

subject to the restrictions governing prohibited contractual

relationship described in Sec. 890.105 (definition of Owner) (These

prohibitions do not extend to management contracts entered into by the

Owner with the Sponsor or its non-profit affiliate).

(2) Consistent with the objectives of Executive Orders 11625, 12432

and 12138, the Owner will promote awareness and participation of

minority and women's business enterprises in contracting and

procurement activities.

(d) Submission of financial and operating statements. The Owner

must submit to HUD:

(1) Within 60 days after the end of each fiscal year of project

operations, financial statements for the project audited by an

independent public accountant and in the form required by HUD; and

(2) Other statements regarding project operation, financial

conditions and occupancy as HUD may require to administer the PRAC and

to monitor project operations.

(e) Use of project funds. The Owner shall maintain a separate

interest bearing project fund account in a depository or depositories

which are members of the Federal Deposit Insurance Corporation or

National Credit Union Share Insurance Fund and shall deposit all tenant

payments, charges, income and revenues arising from project operation

or ownership to this account. All project funds are to be deposited in

Federally insured accounts. All balances shall be fully insured at all

times, to the maximum extent possible. Project funds must be used for

the operation of the project (including required insurance coverage),

and to make required deposits to the replacement reserve under

Sec. 890.605, in accordance with HUD-approved budget. Any remaining

project funds in the project funds account (including earned interest)

following the expiration of the fiscal year shall be deposited in a

Federally-insured residual receipts account within 60 days following

the end of the fiscal year. Withdrawals from this account may be made

only for project purposes and with the approval of HUD. If there are

funds remaining in the residual receipts account when the mortgage is

satisfied, such funds shall be returned to HUD.

(f) Reports. The Owner shall submit such reports as HUD may

prescribe to demonstrate compliance with applicable civil rights and

equal opportunity requirements. See Sec. 890.610(a). (Approved by the

Office of Management and Budget under control number 2502-0470).

Sec. 890.605 Replacement reserve.

(a) Establishment of reserve. The Owner shall establish and

maintain a replacement reserve to aid in funding extraordinary

maintenance and repair and replacement of capital items.

(b) Deposits to reserve. The Owner shall make monthly deposits to

the replacement reserve in an amount determined by HUD.

(c) Level of reserve. The reserve must be built up to and

maintained at a level determined by HUD to be sufficient to meet

projected requirements. Should the reserve reach that level, the amount

of the deposit to the reserve may be reduced with the approval of HUD.

(d) Administration of reserve. Replacement reserve funds must be

deposited with HUD or in a Federally-insured depository in an interest-

bearing account(s) whose balances(s) are fully insured at all times.

All earnings including interest on the reserve must be added to the

reserve. Funds may be drawn from the reserve and used only in

accordance with HUD guidelines and with the approval of, or as directed

by, HUD. [[Page 11840]]

Sec. 890.610 Selection and admission of tenants.

(a) Written tenant selection procedures. The Owner shall adopt

written tenant selection procedures which ensure nondiscrimination in

the selection of tenants and that are consistent with the purpose of

improving housing opportunities for very low-income persons with

disabilities; and reasonably related to program eligibility and an

applicant's ability to perform the obligations of the lease. The Owner

must comply with the following nondiscrimination authorities: section

504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and the

implementing regulations at 24 CFR part 8; the Fair Housing Act (42

U.S.C. 3600-3619) and the implementing regulations at 24 CFR parts 100,

108, 109, and 110; Title VI of the Civil Rights Act of 1964 (42 U.S.C.

2000d) and the implementing regulations at 24 CFR part 1; section 3 of

the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and the

implementing regulations at 24 CFR part 135; the Age Discrimination Act

of 1975 (42 U.S.C. 6101-6107) and the implementing regulations at 24

CFR part 146; Executive Order 11246 (as amended), 3 CFR, 1964-1965

COMP., p. 339, and the implementing regulations at 41 CFR Chapter 60;

the regulations implementing Executive Order 11063 (Equal Opportunity

in Housing), 3 CFR, 1959-1963 COMP., p. 652, at 24 CFR part 107; the

Americans with Disabilities Act (42 U.S.C. 12101 et seq.) to the extent

applicable; and other applicable Federal, State and local laws

prohibiting discrimination and promoting equal opportunity. While local

residency requirements are prohibited, local residency preferences may

be applied in selecting tenants only to the extent that they are not

inconsistent with affirmative fair housing marketing objectives and the

Owner's HUD-approved affirmative fair housing marketing plan.

Preferences may not be based on the length of time the applicant has

resided in the jurisdiction. With respect to any residency preference,

persons expected to reside in the community as a result of current or

planned employment will be treated as residents. Owners shall promptly

notify in writing any rejected applicant of the grounds for any

rejection. Additionally, owners shall maintain a written, chronological

waiting list showing the name, race, gender and ethnicity and date of

each person applying for the program.

(b) Application for admission. The Owner must accept applications

for admission to the project in the form prescribed by HUD. Applicant

households applying for assisted units (or residential spaces in a

group home) must complete a certification of eligibility as part of the

application for admission. Applicant households must meet the

disclosure and verification requirements for Social Security Numbers,

as provided by 24 CFR part 750. Applicant families must sign and submit

consent forms for the obtaining of wage and claim information from

State Wage Information Collection Agencies, as provided by 24 CFR part

760. Both the Owner and the applicant household must complete and sign

the application for admission. On request, the Owner must furnish

copies of all applications for admission to HUD.

(c) Determination of eligibility and selection of tenants. The

Owner is responsible for determining whether applicants are eligible

for admission and for the selection of households. To be eligible for

admission, an applicant must be a disabled person (as defined in

Sec. 890.105); must meet any project occupancy requirements approved by

HUD under Secs. 890.265(c)(14) and 890.305(a)(1); must meet the

disclosure and verification requirements for Social Security Numbers,

as provided by 24 CFR part 750; must sign and submit consent forms for

the obtaining of wage and claim information from State Wage Information

Collection Agencies, as provided by 24 CFR part 760; and must be a very

low-income family, as defined by Sec. 890.105. An Owner, may with the

approval of the Secretary, limit occupancy within housing developed

under this part to persons with disabilities who have similar

disabilities and require a similar set of supportive services in a

supportive housing environment. Owners shall make selections in a

nondiscriminatory manner without regard to considerations such as race,

religion, color, sex, national origin, familial status, or disability.

However, an Owner may, with the approval of the Secretary, limit

occupancy within housing developed under this part to persons with

disabilities who have similar disabilities and require a similar set of

supportive services in a supportive housing environment. Under certain

circumstances, HUD may permit the leasing of units to ineligible

families under Sec. 890.515.

(d) Unit assignment. If the Owner determines that the household is

eligible and is otherwise acceptable and units (or residential spaces

in a group home) are available, the Owner will assign the household a

unit or residential space in a group home. If the household will occupy

an assisted unit, the Owner will assign the household a unit of the

appropriate size in accordance with HUD's general occupancy guidelines.

If no suitable unit (or residential space in a group home) is

available, the Owner will place the household on a waiting list for the

project and notify the household when a suitable unit or residential

space may become available. If the waiting list is so long that the

applicant would not be likely to be admitted for the next 12 months,

the Owner may advise the applicant that no additional applications for

admission are being considered for that reason.

(e) Ineligibility determination. If the Owner determines that an

applicant is ineligible for admission or the Owner is not selecting the

applicant for other reasons, the Owner will promptly notify the

applicant in writing of the determination, the reasons for the

determination, and the applicant's right to request a meeting to review

the rejection, in accordance with HUD requirements. The review, if

requested, may not be conducted by a member of the Owner's staff who

made the initial decision to reject the applicant. The applicant may

also exercise other rights (e.g., rights granted under Federal, State

or local civil rights laws) if the applicant believes he or she is

being discriminated against on a prohibited basis.

(f) Records. Records on applicants and approved eligible

households, which provide racial, ethnic, gender and place of previous

residency data required by HUD, must be retained for three years. See

Sec. 890.610(a).

(g) Reexamination of household family income and composition.--(1)

Regular reexaminations. The Owner must reexamine the income and

composition of the household at least every 12 months. Upon

verification of the information, the Owner must make appropriate

adjustments in the total tenant payment in accordance with part 813 of

this chapter, as modified by Sec. 890.105, and must determine whether

the household's unit size is still appropriate. The Owner must adjust

tenant payment and the project rental assistance payment, and must

carry out any unit transfer in accordance with HUD standards. At the

time of reexamination under paragraph (g)(1) of this section, the Owner

must require the household to meet the disclosure and verification

requirements for Social Security Numbers, as provided by 24 CFR part

750. For requirements regarding the signing and submitting of consent

forms by families for obtaining of wage and claim information from

State Wage Information Collection Agencies, see 24 CFR part 760.

[[Page 11841]]

(2) Interim reexaminations. The household must comply with the

provisions in its lease regarding interim reporting of changes in

income. If the Owner receives information concerning a change in the

household's income or other circumstances between regularly scheduled

reexaminations, the Owner must consult with the household and make any

adjustments determined to be appropriate. See 24 CFR 750.10(d)(2)(i)

for the requirements for the disclosure and verification of Social

Security Number at interim reexaminations involving new household

members. For requirements regarding the signing and submitting of

consent forms by families for the obtaining of wage and claim

information from State Wage Information Collection Agencies, see 24 CFR

part 760. Any change in the household's income or other circumstances

that result in an adjustment in the total tenant payment, tenant

payment, and project rental assistance payment must be verified.

(3) Continuation of project rental assistance payment. (i) A

household shall remain eligible for project rental assistance payment

until the total tenant payment equals or exceeds the gross rent (or a

pro rata share of the gross rent in a group home). The termination of

subsidy eligibility will not affect the household's other rights under

its lease. Project rental assistance payment may be resumed if, as a

result of changes in income, rent or other relevant circumstances

during the term of the PRAC, the household meets the income eligibility

requirements of 24 CFR part 813 (as modified in Sec. 890.105) and

project rental assistance is available for the unit or residential

space under the terms of the PRAC. The household will not be required

to establish its eligibility for admission to the project under the

remaining requirements of paragraph (c) of this section.

(ii) A household's eligibility for project rental assistance

payment may be terminated in accordance with HUD requirements for such

reasons as failure to submit requested verification information,

including information related to disclosure and verification of Social

Security Numbers, as provided by 24 CFR part 750 or failure to sign and

submit consent forms for the obtaining of wage and claim information

from State Wage Information Collection Agencies (as provided by 24 CFR

part 760).

Sec. 890.615 Obligations of the household.

(a) Requirements. The household shall:

(1) Pay amounts due under the lease directly to the Owner;

(2) Supply such certification, release of information, consent,

completed forms or documentation as the Owner or HUD determines

necessary, including information and documentation relating to the

disclosure and verification of Social Security Numbers, as provided by

24 CFR part 750, and the signing and submission of consent forms for

the obtaining of wage and claim information from State Wage Information

Collection Agencies, as provided by 24 CFR part 760;

(3) Allow the Owner to inspect the dwelling unit or residential

space at reasonable times and after reasonable notice;

(4) Notify the Owner before vacating the dwelling unit or

residential space; and

(5) Use the dwelling unit or residential space solely for residence

by the household and as the household's principal place of residence.

(b) Prohibitions. The household shall not:

(1) Assign the lease or transfer the unit or residential space; or

(2) Occupy, or receive assistance for the occupancy of, a unit or

residential space governed under this part while occupying, or

receiving assistance for occupancy of, another unit assisted under any

Federal housing assistance program, including any section 8 program.

Sec. 890.620 Overcrowded and underoccupied units.

If the Owner determines that because of change in household size,

an assisted unit is smaller than appropriate for the eligible household

to which it is leased, or that the assisted unit is larger than

appropriate, project rental assistance payment with respect to the unit

will not be reduced or terminated until the eligible household has been

relocated to an appropriate alternate unit. If possible, the Owner

will, as promptly as possible, offer the household an appropriate

alternate unit. The Owner may receive vacancy payments for the vacated

unit if the Owner complies with the requirements of Sec. 890.645.

Sec. 890.625 Lease requirements.

(a) Term of lease. The term of the lease may not be less than one

year. Unless the lease has been terminated by appropriate action, upon

expiration of the lease term, the household and Owner may execute a new

lease for a term not less than one year or may take no action. If no

action is taken, the lease will automatically be renewed for successive

terms of one month.

(b) Termination by the household. All leases may contain a

provision that permits the household to terminate the lease upon 30

days advance notice. A lease for a term that exceeds one year must

contain such provision.

(c) Form. The Owner shall use the lease form prescribed by HUD. In

addition to required provisions of the lease form, the Owner may

include a provision in the lease permitting the Owner to enter the

leased premises, at any time, without advance notice where there is

reasonable cause to believe that an emergency exists or that health or

safety of a family member is endangered.

Sec. 890.630 Termination of tenancy and modification of lease.

The provisions of part 247 of this title apply to all decisions by

an Owner to terminate the tenancy or modify the lease of a household

residing in a unit (or residential space in a group home).

Sec. 890.635 Security deposits.

(a) Collection of security deposit. At the time of the initial

execution of the lease, the Owner will require each household occupying

an assisted unit (or residential space in a group home) to pay a

security deposit in an amount equal to one month's tenant payment or

$50, whichever is greater. The household is expected to pay the

security deposit from its own resources and other available public or

private resources. The Owner may collect the security deposit on an

installment basis.

(b) Security deposit provisions applicable to units.--(1)

Administration of security deposit. The Owner must place the security

deposits in a segregated interest-bearing account. The amount of the

segregated, interest-bearing account maintained by the Owner must at

all times equal the total amount collected from the households then in

occupancy plus any accrued interest and less allowable administrative

cost adjustments. The Owner must comply with any applicable State and

local laws concerning interest payments on security deposits.

(2) Household notification requirement. In order to be considered

for the refund of the security deposit, a household must provide the

Owner with a forwarding address or arrange to pick up the refund.

(3) Use of security deposit. The Owner, subject to State and local

law and the requirements of paragraphs (b)(1) and (b)(3) of this

section, may use the household's security deposit balance as

reimbursement for any unpaid amounts which the household owes under the

lease. Within 30 days (or shorter time if required by State or local

[[Page 11842]] law) after receiving notification under paragraph (b)(2)

of this section the Owner must:

(i) Refund to a household which does not owe any amount under the

lease the full amount of the household's security deposit balance;

(ii) Provide to a household owing amounts under the lease a list

itemizing each amount, along with a statement of the household's rights

under State and local law. If the amount which the Owner claims is owed

by the household is less than the amount of the household's security

deposit balance, the Owner must refund the excess balance to the

household. If the Owner fails to provide the list, the household will

be entitled to the refund of the full amount of the household's

security deposit balance.

(4) Disagreements. If a disagreement arises concerning

reimbursement of the security deposit, the household will have the

right to present objections to the Owner in an informal meeting. The

Owner must keep a record of any disagreements and meetings in a tenant

file for inspection by HUD. The procedures of paragraph (b)(4) of this

section do not preclude the household from exercising its rights under

State or local law.

(5) Decedent's interest in security deposit. Upon the death of a

member of a household, the decedent's interest, if any, in the security

deposit will be governed by State or local law.

(c) Reimbursement by HUD for assisted units. If the household's

security deposit balance is insufficient to reimburse the Owner for any

amount which the household owes under the lease for an assisted unit or

residential space and the Owner has provided the household with the

list required by paragraph (b)(3)(ii) of this section, the Owner may

claim reimbursement from HUD for an amount not to exceed the lesser of:

(1) The amount owed the Owner, or

(2) One month's per unit operating cost, minus the amount of the

household's security deposit balance. Any reimbursement under this

section will be applied first toward any unpaid tenant payment due

under the lease. No reimbursement may be claimed for any unpaid tenant

payment for the period after termination of the tenancy. The Owner may

be eligible for vacancy payments following a vacancy in accordance with

the requirements of Sec. 890.645.

(Approved by the Office of Management and Budget under control

number 2502-0470.)

Sec. 890.640 Adjustment of utility allowances.

The Owner must submit an analysis of any utility allowances

applicable in an independent living complex. Such data as changes in

utility rates and other facts affecting utility consumption should be

provided as part of this analysis to permit appropriate adjustments in

the utility allowances for assisted units. In addition, when utility

rate changes would result in a cumulative increase of 10 percent or

more in the most recently approved utility allowances, the Owner must

advise HUD and request approval of new utility allowances. Whenever a

utility allowance for an assisted unit is adjusted, the Owner will

promptly notify affected households and make a corresponding adjustment

of the tenant payment and the amount of the project rental assistance

payment.

Sec. 890.645 Conditions for receipt of vacancy payments for assisted

units.

(a) General. Vacancy payments under the PRAC will not be made

unless the conditions for receipt of these project rental assistance

payments set forth in this section are fulfilled.

(b) Vacancies during rent-up. For each unit (or residential space

in a group home) that is not leased as of the effective date of the

PRAC, the Owner is entitled to vacancy payments in the amount of 50

percent of the per unit operating cost (or pro rata share of the group

home operating cost) for the first 60 days of vacancy, if the Owner:

(1) Conducted marketing in accordance with Sec. 890.600(a) and

otherwise complied with Sec. 890.600;

(2) Has taken and continues to take all feasible actions to fill

the vacancy; and

(3) Has not rejected any eligible applicant except for good cause

acceptable to HUD.

(c) Vacancies after rent-up. If an eligible household vacates an

assisted unit (or residential space in a group home) the Owner is

entitled to vacancy payments in the amount of 50 percent of the

approved per unit operating cost (or pro rata share of the group home

operating cost) for the first 60 days of vacancy if the Owner:

(1) Certifies that it did not cause the vacancy by violating the

lease, the PRAC, or any applicable law;

(2) Notified HUD of the vacancy or prospective vacancy and the

reasons for the vacancy upon learning of the vacancy or prospective

vacancy;

(3) Has fulfilled and continues to fulfill the requirements

specified in Sec. 890.600(a) (2) and (3) and Sec. 890.645(b) (2) and

(3); and

(4) For any vacancy resulting from the Owner's eviction of an

eligible household, certifies that it has complied with Sec. 890.630.

(d) Prohibition of double compensation for vacancies. If the Owner

collects payments for vacancies from other sources (tenant payment,

security deposits, payments under Sec. 890.635(c), or governmental

payments under other programs), the Owner shall not be entitled to

collect vacancy payments to the extent these collections from other

sources plus the vacancy payment exceed the approved per unit operating

cost.

Sec. 890.650 HUD review.

HUD shall conduct periodic on-site management reviews of the

Owner's compliance with the requirements of this part.

Dated: December 27, 1994.

Jeanne K. Engel,

General Deputy Assistant Secretary for Housing--Federal Housing

Commissioner.

[FR Doc. 95-4889 Filed 3-1-95; 8:45 am]

BILLING CODE 4210-27-P