Indian Housing Program: Amendments

SUMMARY: This final rule adds a new part 950 to HUD's regulations. New

part 950 contains the Indian Housing consolidated regulations that were

previously set forth in 24 CFR part 905. In addition to moving the

Indian Housing consolidated regulations from part 905 to part 950, the

final rule amends a number of the Indian Housing consolidated

regulations to simplify program processes, reduce the number of

regulatory requirements, and provide more flexibility to local tribal

and Indian housing authority officials in the administration of the

Indian Housing program.

EFFECTIVE DATE: May 10, 1995.

FOR FURTHER INFORMATION CONTACT: Dominic Nessi, Director, Office of

Native American Programs, Public and Indian Housing, Room 4140,

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

Washington, DC 20410, telephone (202) 755-0032. Hearing- or speech-

impaired persons may use the TDD number (202) 708-0850. (These are not

toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

The information collection requirements contained in this final

rule have been submitted to the Office of Management and Budget (OMB)

for review. These information collection requirements are not effective

until such time that OMB grants its approval. The approval number will

be published in the Federal Register through separate notice.

II. Background

On August 1, 1994 (59 FR 39072), HUD published a proposed rule that

would add a new part 950 to title 24 of the Code of Federal Regulations

to contain the Indian Housing consolidated regulations. The proposed

rule would also make simplifying amendments to these regulations, in

order to accomplish the primary goal of giving Indian Housing

Authorities (IHAs) greater discretion and responsibility in

administering their programs. The preamble to the proposed rule

described HUD's consultation with its six Native American Program Area

Offices, the National American Indian Housing Council, regional IHA

associations, and other IHA representatives. The preamble also

described HUD's four-year trend to provide IHAs with administrative

flexibility through regulatory revisions (59 FR 39072).

Consistent with the principles of Executive Order 12866, HUD has

reviewed the existing Indian Housing regulations and the public

comments received on the proposed rule, and with this final rule

modifies the regulations to make them more effective, consistent,

understandable, and sensible.

III. Comments on the August 1, 1994 Proposed Rule

HUD solicited public comments on the proposed rule amending the

Indian Housing program. By the expiration of the public comment period

on September 30, 1994, HUD had received 15 comments, all from IHAs and

tribal leaders. This final rule contains several changes to the

proposed rule in response to these comments, as further described in

the following section, which summarizes the comments according to their

relevant subparts and provides HUD's responses to those comments.

A. Subpart A--General

1. Applicability and Scope (Sec. 950.101)

One commenter stated that Sec. 950.101(a)(1) should expressly

acknowledge that this rule applies to operations and funds arising from

HUD programs. The current language states that HUD provides financial

assistance (funds) to IHAs for the development and operation

(operation) of low-income housing projects in Indian areas. This part

is applicable to such projects developed or operated by an IHA in an

Indian area. HUD was unclear what additional language was requested and

believes that the current language adequately addresses the comment.

2. Definitions (Sec. 950.102)

One commenter requested that the definition of Allowable Utilities

Consumption Level (AUCL) and Heating Degree Days (HDD) should be

adjusted. The commenter requested that Cooling Degree Days be added, as

HDD is irrelevant to Indian country.

Section 508 of the Cranston-Gonzalez National Affordable Housing

Act (Pub. L. 101-625, approved November 28, 1990) directed HUD to

incorporate into the Performance Funding System (PFS) a methodology to

adjust utility consumption to account for Cooling Degree Days that was

the same as the methodology used to account for Heating Degree Days.

The impetus for this legislation was that IHAs in the sunbelt that had

to pay higher utility bills for air conditioning during hot summers

wanted an adjustment in their PFS payments to account for the increased

utility consumption. HUD published a proposed rule, and based on the

comments received, HUD implemented an approach to greatly simplify the

PFS by dropping all heating and cooling degree day adjustments. The

final rule implementing this action was published in the Federal

Register on October 13, 1994 (59 FR 51852). Additional information on

this change can be found in the preamble of that rule.

There were a number of comments concerning the definitions of

Adjusted Income and Annual Income. These suggestions included an

increase in deductions, lowering the 30 percent rule, counting only the

income from the head of household, counting only the income of head of

household and spouse, and using net income rather than gross income.

Also, a commenter requested that both child care and travel expenses be

eligible deductions.

HUD appreciates the many comments received on the definition of

Adjusted Income and Annual Income. In response to the comment to allow

both travel and child care as deductions, section 103(a)(2) of the

Housing and Community Development Act of 1992 (Pub. L. 102-550,

approved October 28, 1992) amended section 3(b)(5) of the United States

Housing Act of 1937 (42 U.S.C. 1437 et seq.) to allow for both

deductions. HUD implemented this change by PIH Notice 93-23 dated May

19, 1993. The proposed rule included this revision, and the same

language appears in this final rule. With regard to the other comments

on Adjusted Income and Income, these terms are defined in the United

States Housing Act of 1937. Section 3(b)(4) of that Act defines

``income'' as ``income from all sources of each member of the

household.'' Section 3(b)(5) contains the statutory definition of

``adjusted income.'' The Office of Native American Programs is

developing a legislation package for the program, and it will carefully

review all comments as it prepares this proposal.

One commenter stated that the definition of disposition should

exclude references to real estate, since the IHAs do not transfer any

interest in the ``real [[Page 18175]] estate.'' The commenter stated

that the most that IHAs transfer by a quit claim deed is the remaining

portion of the leasehold interest in the underlying land, together with

the improvements. HUD agrees with the comment as it relates to trust

and allotted land. However, there are many cases in Indian areas in

which interest in the real estate is transferred. Due to these

situations, HUD has not changed the definition.

One commenter requested that the tribal government and not HUD

define low-income family based on a determination of tribal median

income and adjustments to income due to family size, construction

costs, or other local variations. Another commenter stated that IHAs

should be able to establish their own income limits based on the

tribes' economies, not on the local communities.

The definitions of low- and very low-income are found in the United

States Housing Act of 1937. By statute, the definition of very low-

income is tied to ``50 per centum of median family income'' for an

area, and the definition of low-income is tied to ``80 per centum of

the median family income'' for the area (42 U.S.C. 1427a). As required

by statute, the meaning of the term ``area'' is affected by whether the

local median family income is less than the respective State's

nonmetropolitan median family income. In addition, the statute provides

for adjustments to income limits for areas with unusually high or low

incomes in relation to housing costs. Income limits are published

annually by HUD. If an IHA or tribe feels that the median income for

its area is not appropriate, they should contact the local HUD Office

to obtain information on how to proceed with a request for a change.

3. Applicability of Civil Rights Requirements (Sec. 950.115).

A commenter stated that the civil rights quotation in

Sec. 950.115(a) in the proposed rule is misleading and the definition

should additionally explain that these equal protection and due process

rights do not apply if they violate customs, traditions, and practices

of the tribe. HUD agrees with this comment and has adjusted the

definition in the final rule to include this statement.

A commenter suggested that HUD should strike the reference to

handbooks in Sec. 950.115(a)(3) of the proposed rule. This commenter

also requested that the reference to Title VI, the Fair Housing Act,

and the Americans with Disabilities Act in Sec. 950.115(b) of the

proposed rule be removed if they are not applicable to IHAs established

by exercise of a tribe's power of self-government. HUD agrees with both

of these comments. HUD has removed the reference to handbooks and the

language regarding the nonapplicability of those statutes in this

section.

4. Displacement, Relocation, and Acquisition (Sec. 950.117)

One commenter stated that upon the request of a resident, an IHA

should be allowed to relocate a resident temporarily to his or her

traditional home even if it is not decent, safe, and sanitary, and the

family should be eligible for relocation assistance. HUD agrees with

this comment and has revised the language in Sec. 950.117(b) for

temporary relocation.

A commenter stated that in Sec. 950.117(c)(2), the word

``comparable'' should be removed since it is subject to many

interpretations, and that the IHA should be allowed to use any

available Indian housing unit as a replacement. The commenter also

requested that HUD add the following language: ``Houses that do not

meet Section 8 fair market rent would be allowed for comparable housing

units.'' HUD is unable to eliminate the term ``comparable'' in this

section of the rule. This term is defined in the Uniform Relocation

Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42

U.S.C. 4601-4605), as amended. The use of ``comparable'' is also

required by the Department of Transportation's government-wide rule

implementing the URA (49 CFR part 24). The 1987 amendments to the URA

specify that the Federal agencies covered by the URA no longer have

independent statutory authority to promulgate their own separate URA

regulations, and in implementing the URA they must follow the

regulations published by the lead agency, which is the Department of

Transportation.

5. Compliance With Other Federal Requirements (Sec. 950.120)

Multiple commenters suggested that the wage rate requirements of

the Davis-Bacon Act (Sec. 950.120(c)) should be waived for Indian

housing. However, the applicability of the Davis-Bacon Act to Indian

housing is required under Section 12 of the United States Housing Act

of 1937, as amended, and is not subject to waiver by HUD.

6. Establishment of IHAs by Tribal Ordinance (Sec. 950.126).

Several commenters agreed with Sec. 950.126(b) of the proposed

rule, which allows a tribe to determine the form of ordinance. However,

one commenter objected to leaving ordinance terms and wording up to

tribes. Another commenter felt that HUD was leaving the ordinance up to

the tribe, and therefore approval by the Department of Interior (DOI)

should not be necessary. As stated previously, the intent of the

revised regulation is to provide greater flexibility and control to

IHAs and tribes in the administration of housing programs. This is the

reason for allowing tribes the ability to determine the form of

ordinance that is applicable for its area. However, HUD agrees with the

comment regarding DOI approval and has removed the language regarding

the need for such approval.

A commenter stated that Sec. 950.126(d) of the proposed rule should

be revised to require only those documents that demonstrate that an

authority has been properly established. HUD agrees with this comment

and has revised this section accordingly.

7. IHA Commissioners Who Are Tenants or Homebuyers (Sec. 950.130)

One commenter stated that they agreed that the change in the rule

that explains the role of a commissioner when he or she faces a

decision that affects them personally is an excellent idea. HUD

appreciates the comment regarding this section.

8. Administrative Capability (Sec. 950.135)

One commenter agreed that the Administrative Capability Assessment

(ACA) should be used with other tools to evaluate the need for

technical assistance. Two commenters stated that there should be

another appeal level, and one commenter requested that all appeals

should go to HUD Headquarters. One commenter stated that the reference

to HUD handbooks and other program requirements should be deleted since

these do not constitute statutory or regulatory authority that is

binding on the IHAs. One commenter stated that sanctions should be

clearly defined in Sec. 950.135(f)(2), and limitation on appeals should

be eliminated from Sec. 950.135(g)(2).

HUD agrees with the comment suggesting the removal of the handbook

references in this section and has revised this section in the final

rule. In response to the comments on the appeal process, HUD finds that

the current appeal process will provide IHAs with the ability to appeal

any decision regarding funding. All other appeals will not affect any

funding. Furthermore, without limits to the appeal process, HUD would

not be able to initiate corrective action when it finds a serious

deficiency. [[Page 18176]]

B. Subpart B--Procurement

1. General Comments.

Several commenters suggested minor changes in wording throughout

the subpart to improve the readability and clarity of the language. For

the most part, HUD agrees with these comments and has incorporated the

suggested wording.

2. Procurement Standards (Sec. 950.160)

One commenter wrote that the $25,000 limit on small purchases

created additional costs for IHAs. Since the publication of the

proposed rule on August 1, 1994, Federal procurement regulations have

increased the small purchase limit to $100,000. HUD has adjusted this

section accordingly.

Another commenter wrote that HUD should allow open market purchases

from petty cash for commonly used supplies or purchases of less than

$500. Such purchases are allowed within existing regulations that are

not changed by this rule.

3. Methods of Procurement (Sec. 950.165)

One commenter suggested the addition of language in Sec. 950.165(c)

that specifically states that an IHA may reject all proposals for

soundly documented reasons and has the right to waive certain

irregularities. General procurement methods currently allow these

practices, and therefore they have not been added to this rule.

4. Other Requirements Applicable to Development Contracts

(Sec. 950.170)

One commenter suggested that the bonding alternative allowing a 25

percent letter of credit should be deleted. HUD disagrees with this

suggestion. Each of the options for surety other than 100 percent

performance and payment bonds are included in the rule to enable IHAs

to assist small or disadvantaged contractors that have the ability to

perform but do not have the resources to pay for a performance and

payment bond. IHAs have the option but are not obligated to use this

option in their procurement.

Another commenter suggested that the rule should clarify that

performance and payment surety continue through a contract's warranty

period. The term of the surety is contained in individual contract

provisions, and therefore HUD does not believe it should be added to

this rule.

5. Indian Preference Requirements (Sec. 950.175)

HUD received a general comment that the revised Indian preference

requirements are not simplified from the previous rule. In these

revised regulations, HUD has tried to accomplish two objectives. The

first objective was to make the Indian Preference requirements less

prescriptive, enabling IHAs and their tribes to determine the best

methods for providing Indian preference in their programs. The second

objective was to make HUD's Indian preference requirements identical

across its programs to remove confusion for participating tribes. HUD

is also revising the Indian Community Development Block Grant and

Indian HOME program regulations to mirror the Indian Housing

regulations. HUD believes it has met both these objectives but is

receptive to any additional suggestions that would improve the Indian

preference requirements.

6. Insurance (Sec. 950.190)

One commenter suggested that this section is unnecessarily complex

and long. The contents of this section provide the basic requirements

for insurance coverage, however, and therefore HUD has decided not to

make any reductions at this time.

C. Subpart C--Development

1. General Comments

Several commenters suggested minor changes throughout the subpart

to improve the readability and clarity of the language. For the most

part, HUD agrees with these comments and has incorporated the suggested

wording.

2. Allocation (Sec. 950.205)

One commenter suggested the conversion of the allocation method

from a competitive nature to a formula funding. This commenter wrote

that this would enable IHAs to better anticipate funding, thereby

allowing for better long-range planning. HUD is investigating the

potential for formula funding for development allocations; however, a

change to a formula funding basis may require statutory authority.

3. Eligibility (Sec. 950.207)

In response to general comments on clarity within the rule, HUD has

added a new section that specifies the eligibility requirements to

apply for new Indian Housing development. Included in this section are

performance thresholds not previously specified in the regulation but

relied upon by HUD in determining eligibility.

4. Authority for Proceeding Without HUD Approval (Sec. 950.210)

Several commenters suggested that the rule would provide HUD great

latitude in requiring an IHA to obtain HUD approval of processing

steps. In reviewing this section, HUD agrees that its wording is too

broad and not fully consistent with administrative capability remedies

contained in Sec. 950.135. Accordingly, HUD has clarified this section

to require HUD to follow the provisions of Sec. 950.135 in its

determination of performance deficiencies and remedies. Additionally,

HUD has removed the examples of performance deficiencies.

This final rule consolidates time constraints on development in

this section from throughout Subpart C. In response to several

comments, the time constraints contained in the regulation are: (1) 24

months from program reservation to construction start, (2) 30 months

from program reservation before HUD can recapture funds, and (3) six

years from program reservation to closeout of development.

5. Production Methods (Sec. 950.215)

HUD received several comments that questioned the clarity of the

production method descriptions. Upon review, HUD has determined that

descriptions of production methods are more appropriately contained in

program guides or handbooks. Accordingly, HUD has deleted the brief

descriptions of production methods in this section.

Several comments were received concerning the definition of an IHA

attachable asset required as security for force account construction

approval and the need for IHAs to provide such security. Attachable

assets are those assets that are unencumbered by restrictions on their

use and that can be liquidated to pay for any overruns in the

development of the project. HUD has reevaluated the risk associated

with force account construction and has modified the surety

requirements in this final rule. The final rule (Sec. 950.215(b))

allows Area Offices of Native American Programs (Area ONAPs) to approve

the force account method without requiring the tribe or IHA to provide

specific security to cover excess costs if the IHA agrees to construct

the project in small stages with additional HUD oversight.

6. Total Development Cost (Sec. 950.220)

One commenter suggested that the $1,500 Mutual Help contribution

and development funded counseling should be deleted from the program.

However, the $1,500 Mutual Help contribution is required by the

statute. HUD has modified the counseling provision to make it optional

for IHAs.

One commenter suggested that the rule should include a detailed

description of how total development [[Page 18177]] cost (TDC)

standards are computed. By statute, HUD is required to establish TDC

standards using two national cost indices, which are multiplied by 1.6

for elevator type structures and 1.75 for nonelevator structures. Total

development cost standard requirements are published periodically in a

departmental notice. HUD believes that such a notice is the appropriate

vehicle for conveying TDC requirements, and therefore HUD has not

adopted this suggestion.

One commenter suggested that the rule should require all projects

to be funded at the full TDC standard. The TDC standard establishes the

maximum allowable cost for a development and is not intended to provide

a prescribed amount required to develop a project. Accordingly, HUD has

not adopted this comment.

One commenter suggested that the rule should require HUD Area ONAPs

to obtain the input of tribes in the determination of the adequacy of

TDC areas. The TDC notice provides for IHAs to request a HUD assessment

of the adequacy of TDC areas within their jurisdiction. HUD believes

that this provision of the notice serves to obtain tribal input.

Therefore, HUD has not adopted this suggestion.

HUD has significantly reduced Sec. 950.220 of the proposed rule by

deleting process items that are included in periodic TDC Notices, the

discussion of the program reservation, and HUD cost review

requirements. Additionally, HUD has rewritten the resident training and

insurance subsections, and has added a separate subsection that

includes the exception of donations and off-site water and sanitation

facility infrastructure costs from the TDC calculation. HUD has

modified the 30 month for construction cost and moved it to

Sec. 950.207.

7. Application (Sec. 950.225)

To provide greater clarity in section titles, the Application

section has been divided, with items involving program reservation and

annual contributions contract (ACC) execution moved to a new section

950.227. HUD has deleted from the rule process activities that are

included in the annual Notice of Funding Availability. HUD has also

added a new paragraph (c), which clarifies the criteria under which HUD

may approve new units for state-created IHAs.

8. Program Reservation and ACC Execution (Sec. 950.227)

HUD received several comments supporting the elimination of the 3

percent limitation on initial planning funds.

One commenter suggested that the limitation on planning funds was

too vague. Upon review, HUD has determined that since such limitations

are included in the ACC, they are unnecessary in this rule.

To further clarify the change to a grant program, HUD has changed

the term ``program reservation'' to ``development grant approval''

throughout the rule.

To streamline the development process, HUD has modified subpart C

to remove the two-step process for executing the ACC for development.

This final rule provides for execution of the ACC (or amendment) in the

full amount of the grant upon approval of the grant. Amendments to the

ACC would only be required if the character of the development were

changed by the IHA.

This final rule also adds a new section 950.229 to address the

process for establishing limits on the IHA's ability to incur

obligations under the ACC. This section consolidates requirements for

submittal of development cost budgets and contains the existing

provision for comprehensive housing plans.

9. Project Coordination (Sec. 950.230)

One commenter suggested that HUD should participate in project

planning in order to provide technical assistance if requested by the

IHA. The current wording does not prohibit HUD staff from participating

in planning activities if the IHA requests, and HUD has sufficient

staff resources available to provide such assistance. The decision to

provide voluntary technical assistance is a joint decision of the IHA

and HUD. HUD does not find that additional clarifying language is

needed.

10. Site Selection Criteria (Sec. 950.235)

HUD received several comments supporting the removal of the one

acre limitation on site size. One commenter objected to prohibiting the

cost of access roads as a project expense. With the exception of off-

site water and sanitary facility infrastructure that Congress includes

in Indian Housing appropriations, infrastructure development outside

the boundaries of the IHA site(s) are not eligible project expenses. In

the case of off-site access roads, Congress provides funding through

the Bureau of Indian Affairs (BIA) to construct off-site roads.

Accordingly, HUD has retained the restrictions on off-site access roads

in this rule.

11. Types of Interest in Land (Sec. 950.240)

Several commenters objected to the requirement for HUD approval of

the form of lease. Because of the period of affordability requirements

contained in the statute and in the ACC, HUD has a continuing interest

in the availability of dwelling units for occupancy by eligible

participants. It is in HUD's best interest to assure that the

provisions contained in site leases provide sufficient protection for

the government in this area. Therefore, HUD has retained the

requirement for a HUD approved form of lease.

Another commenter objected to allowing leases of unrestricted fee

simple land in lieu of outright purchase. In most instances, an IHA

will prefer to purchase fee simple land instead of entering into a

long-term lease. However, prohibiting leasing of unrestricted fee

simple property would, according to HUD, unduly restrict IHA options in

securing building sites.

Another commenter suggested that HUD allow tribes to build off

tribal lands. There is no specific prohibition against an IHA using

non-tribal sites. IHAs must operate within the jurisdiction of the

tribe, which is generally within the tribe's reservation boundaries. If

the IHA wishes to use sites not within the jurisdiction of the tribe

that are subject to property taxes, they must obtain the cooperation of

the taxing body.

12. Environment (Sec. 950.247)

The Multifamily Housing Property Disposition Reform Act of 1994

(Pub. L. 103-233, approved April 11, 1994) provided for tribes or local

governments to assume the responsibilities for environmental

assessments of public and Indian housing sites. To implement this

requirement, HUD is revising its environmental review regulations at 24

CFR part 58 to include the Indian Housing program. HUD is also adding a

new section 950.247, Environment, in this rule to provide for local

completion of the environmental assessment.

13. Site Approval (Sec. 950.250)

HUD has decided to remove Sec. 950.250(b)(3) from the final rule.

This section had required IHA cooperation to enable HUD to complete the

environmental assessment. Under the final rule, the tribe or local

governing body will complete the environmental assessment.

One commenter suggested that there may be unnecessary duplication

in the review of sites, and that HUD and the BIA should adopt a single

environmental assessment procedure. [[Page 18178]] HUD and the BIA have

made continuing efforts to coordinate environmental review procedures

to minimize duplication of efforts. With the transfer of environmental

review responsibility, the tribe or local government will work with the

BIA in this regard.

One commenter suggested that sites should be inspected only when

the IHA deems it appropriate. HUD finds that it is impossible to

approve a site for inclusion in a development without first making an

on-site visit to determine the suitability for development.

Accordingly, HUD has not adopted this suggestion.

Another commenter suggested that environmental reviews should be

limited to sites larger than 10 acres. The National Environmental

Policy Act of 1969 (42 U.S.C. 4332) requires an environmental

assessment for any development action regardless of the size of the

site.

14. Design Criteria (Sec. 950.255)

HUD received a number of comments objecting to requiring newly

constructed Indian housing units to comply with specific building

codes. This requirement is not new. Due to the investment of public

funds and the long-term association between HUD and the IHA during the

operating period, HUD finds that it is necessary to require minimum

building standards. National building codes, such as the Uniform

Building Code or the Uniform Plumbing Code, provide minimum standards

for such development. HUD encourages tribes to develop and adopt

building codes that reflect the needs of their areas. In the absence of

adopted tribal codes, IHAs must rely on local, state, or national

codes.

HUD has added a new subsection to specify that the IHA must perform

a life cycle cost analysis in the IHA's selection of utility

combinations.

15. IHA Development Program (Sec. 950.260)

Several commenters stated that HUD's suggestion in the proposed

rule (Sec. 950.260(a)(2)) that a development program should be

submitted within 18 months of program reservation date was

inappropriate since IHAs rely on schedules prepared at the project

coordination meeting to reach development program submission. HUD

agrees with these comments and has removed the subsection containing

this suggestion.

In response to general comments for further streamlining of the

process, and in order to recognize program evolution to a grant basis,

HUD has removed the requirement for a development program from the

rule. In its place, HUD has specified the documents that are actually

required prior to the IHA proceeding with final planning, bid/proposal

solicitation, and construction start. These documents include a

development cost budget reflecting the anticipated cost of constructing

the project, certifications of compliance with program requirements,

and project characteristics that were previously gleaned from the

development program documents (Sec. 950.260(a) of the final rule).

16. Construction and Inspections (Sec. 950.265)

One commenter suggested replacing the term ``program requirements''

with ``all ACC, statutory, and regulatory requirements.'' HUD agrees

and has made the modification.

Several commenters suggested that HUD should not monitor project

construction if it was unwilling to perform project inspections.

Congress has charged HUD with the oversight of appropriated funds. To

properly perform this duty, HUD must monitor IHA compliance with all

ACC, statutory, and regulatory requirements of the program, including

the IHA's administration of its construction contracts.

Several commenters suggested that HUD should either do away with

the 30 month requirement for reaching construction start or reduce the

time to 24 months. The final rule has consolidated in Sec. 950.210 all

references to this 30 month period. HUD has changed the wording of the

30 month requirement to more closely follow the language of the

statute, which limits HUD's ability to cancel a project before the end

of the 30 month period. HUD has also adopted the suggestion that

construction start should occur within 24 months after the program

reservation date, and has added language that requires HUD, subject to

the availability of resources, to provide technical assistance to an

IHA that has not reached construction start within the 24 month time-

frame.

In response to numerous suggestions for overall streamlining of the

rule, HUD has rewritten this section to simplify the requirements.

17. Correcting Deficiencies (Sec. 950.280)

HUD received a number of comments suggesting that HUD should be

required to fund the correction of any design or construction

deficiencies. HUD does not agree that it is obligated to fund the

correction of all design or construction deficiencies. Under program

requirements, IHAs are required to have in place adequate systems to

assure new developments are properly designed and constructed. As HUD

attempts to remove its controls over IHA decisionmaking by conveying

the authority to manage its developments, it would be inconsistent not

to convey the responsibility to adequately manage those developments,

as well. HUD does maintain the option of funding design or construction

deficiency corrections when it believes it is appropriate to provide

such funding.

One commenter suggested that the requirement for HUD approval to

spend existing funds to correct design or construction deficiencies

should be deleted. HUD agrees that, along with the responsibility to

assure such corrections are made, the rule should provide the authority

to spend existing funds appropriately, including remaining project

development funds, operating receipts, or other funds available to the

IHA. Therefore, HUD has removed the requirement for its prior approval.

18. Fiscal Closeout (Sec. 950.285)

HUD has added language to this section emphasizing the importance

of completing development grants in a timely manner. Under the limited

oversight procedures now in effect for Indian Housing development, it

is critical that grants be completed and the accounts audited as soon

as possible after the date of full availability (DOFA).

19. Reformulation

HUD received several comments suggesting that a new section be

added authorizing IHAs to reformulate project funds at any time for any

purpose without prior HUD approval. HUD provides funds to an IHA to

develop a specified project. Consistent with other grant programs, if

an IHA wishes to redirect project funds, a program modification must be

proposed and approved before such reformulation can proceed. HUD has

delegated the authority to approve reformulations to its Area ONAPs,

which will expedite processing of requests by IHAs.

D. Subpart D--Operation

1. Admission Policies (Sec. 950.301)

One commenter stated that Sec. 950.301(a)(2)(iii) of the proposed

rule needs to be strengthened to read ``participants or the physical,

financial or environmental aspects of the project'' to help deal with

applicants with a history of nonpayment or unit damage. Each IHA has

the ability to develop admission policies that address the needs in its

area. HUD's goal is to provide greater discretion to the IHAs

[[Page 18179]] administering the housing program. Therefore, HUD does

not feel that these additional regulatory requirements should be added

for all IHAs. However, each IHA is encouraged to develop admissions

policies to address individual needs, such as the ability to deal with

applicants with a history of nonpayment or unit damage.

A commenter stated that the proposed language ``for not less than

70 percent of the units'' in Sec. 950.301(a)(2)(iv) is a marked change

from the earlier draft figure of 30 percent of the units. The commenter

stated that the 30 percent figure seems high enough considering that

others have been on the waiting list for years. The language in the

current Indian housing regulation states that only 10 percent of non-

Federal preference holders are eligible for admission in a given year.

Section 501 of the National Affordable Housing Act amended the

percentage to allow for 30 percent of non-Federal preference holders to

be eligible for admission. The language in the proposed rule stated

that the IHA shall develop tenant and homebuyer selection criteria

designed: ``(iv) For not less than 70 percent of the units made

available for occupancy in a given fiscal year, to give a preference in

the selection of participants who at the time they are seeking housing

assistance, are involuntary displaced, living in substandard housing,

or paying more than 50 percent of family income for rent'' (Federal

preference).

In the final rule, HUD will handle differently the issue of

counting Federal preferences. The final rule on Preferences for

Admission to Assisted Housing, published in the Federal Register on

July 18, 1994 (59 FR 36616) revised the tenant selection preference

provisions. The rule implements a statutory change that decreases the

number of families that must be admitted on the basis of qualifying for

a Federal selection preference, and specifically authorizes the

adoption of local selection preferences by IHAs to be used in admitting

some applicants. Because of several comments regarding how to count

admissions, the language in the final rule frames the ``counting'' of

admissions in terms of a limit on the number of ``local preference''

admissions that can be made during a one-year period. Only 30 percent

of annual admissions may be families selected on the basis of local

preference. Under that rule, a family that qualifies for a ``Federal

preference'' is not precluded from being admitted on the basis of its

``local preference,'' but the admission would be counted against the

IHA's local preference limit, and the selection is made without regard

to that Federal preference. A more detailed discussion of these

preferences can be found in the preamble to that final rule. Changing

the percentage would require Congress changing the statute.

Another commenter recommended that the language in

Sec. 950.301(a)(2)(iv) ``at the time they are seeking housing

assistance'' be changed to ``at the time an appropriate housing unit

becomes available for their use,'' since these two events could occur

at different times. It would be difficult to justify attaching a

Federal preference to an applicant and then carrying that applicant for

several months until a unit becomes available, if the applicant had

found decent, safe, sanitary, and affordable housing in the interim.

The reference to which this commenter refers has been revised in

the final rule regarding Preferences for Admission to Assisted Housing

(59 FR 36616, July 18, 1994). That rule amended Sec. 905.301, and

included a section on verification of preference at Sec. 905.304(c)(3).

HUD believes that rule addresses the commenter's concern regarding the

timing of applicant verification.

Another commenter stated that admission requirements continue to

get too complex and difficult to administer. The commenter stated that

the final rule regarding Preferences for Admission to Assisted Housing

was clear, but that additional clarification is needed. HUD understands

the concern of this commenter and has tried to simplify the regulation

while implementing statutory provisions for admission.

One commenter stated that income limits should be abolished.

Another commenter requested that HUD reduce the definitional age for an

elderly person from 62 to 55. However, the provisions for admission of

low-income families and the age definition for an elderly person are

statutory, and therefore HUD cannot change them in this rule. HUD will

consider both of these comments as HUD develops its legislative

proposal for Indian housing.

2. Initial Determination, Verification, and Reexamination of Family

Income and Composition (Sec. 950.315)

One commenter stated that recertifications should only be done once

for elderly. Another commenter stated that recertification of

participants should be every three years. However, the United States

Housing Act of 1937 states that reviews of family income shall be made

at least annually. Amending this provision would require a statutory

change.

3. Total Tenant Payment--Rental and Turnkey III Programs (Sec. 950.325)

Many commenters objected to the 30 percent of monthly adjusted

income provision in Sec. 950.325(a)(i) of the proposed rule. Both

tribes and IHAs submitted resolutions objecting to this provision.

Commenters stated that this provision causes an unreasonable burden on

tenants and does not provide an incentive to seek gainful employment.

One commenter stated that the rule promotes dependency on the Federal

Government for welfare assistance and destroys the initiative for self-

sufficiency. Several commenters objected that automatically charging 30

percent, regardless of the quality of the unit, would have a

discriminatory effect, in that it perpetuates poverty, is a

disincentive for viable employment, and penalizes tribal members who

are struggling to achieve economic sufficiency.

Many commenters requested a change in the total tenant payment from

30 percent to 20 percent. Some commenters requested that the percentage

be lowered for the elderly only. Another commenter requested that a

flat rent be charged or the IHA be allowed to charge minimum rents.

Another commenter requested that no rent be charged for welfare

families.

One commenter stated that Sec. 950.325(a) should be changed to read

as follows: ``Total tenant payment shall be the highest of the

following, up to the IHA's established ceiling rent (calculated using

local income levels, rents, and economic conditions) rounded to the

nearest dollar.''

Many commenters recommended a change to the current ceiling rent

policy. These commenters further stated that IHAs should be allowed to

establish ceiling rates using local economic conditions to provide

housing for the working poor at reasonable rates. Another commenter

requested that ceiling rents be based on fair market rents for the

particular reservation or a rent ceiling equal to the administrative

fee for Mutual Help housing. The commenter stated that this would not

conflict with the United States Housing Act of 1937, as the Mutual Help

administrative fee generally represents the average monthly amount of

debt service and operating expenses attributed to a dwelling unit.

HUD received many comments on the definitions of adjusted income

and annual income. Several commenters stated that rent should be

calculated based on net income; deductions should be changed to be

comparable to IRS deductions because of the cost of living

[[Page 18180]] increases; medical deductions should apply to everyone

and there should be a secondary wage earner deduction; child support

payments should be deducted from the person paying; elderly families

should have a deduction of $2,500; only one income should be used when

calculating rent; more deductions should be given for child care;

deductions should be allowed for child support; an inflation factor

should be built into the deductions; no raises in payments if income

increases; and deductions should be provided for investments.

HUD understands that the 30 percent rule and the definition of

annual and adjusted income are of major concern in the Indian housing

rental program. The United States Housing Act of 1937 establishes the

amount of payment for rental housing and defines the term ``income''

and ``adjusted income.'' Therefore, without a statutory change, HUD

cannot address any of these requested changes. As indicated in other

parts of this preamble, HUD is considering other regulatory changes for

the public and Indian housing programs, and is preparing a legislative

proposal for the Indian housing program. HUD will consider all of the

comments above as it develops the proposal.

4. Rent and Homebuyer Payment Collection Policy (Sec. 950.335)

A commenter stated that payment and collection policies should

comply with ACC, statutory, and regulatory requirements, and not HUD

guidelines. HUD agrees with this comment and has revised the language

in this section of the final rule.

5. Grievance Procedures and Leases (Sec. 950.340)

A commenter stated that (a)(iii) of the proposed rule should be

struck, or HUD should at least explain that such a party may be an

official or employee of the IHA. The reference from the commenter was

incorrect, and therefore HUD is unable to determine the nature of the

commenter's concerns. HUD would like to note that the language in

Sec. 950.340(a)(1) is statutory.

A commenter stated that Sec. 950.340(a)(3)(ii) should be changed.

The basic elements of due process should recognize Indian Civil Rights

Act (ICRA) exceptions for tribal customs and practices. HUD finds it

unnecessary to amend the rule to recognize exceptions from the Indian

Civil Rights Act (ICRA) (25 U.S.C. 1301-1303), because the rule

currently states in Sec. 950.340(a)(1) that each IHA shall adopt

grievance procedures that are appropriate to local circumstances and

that comply with the ICRA, if applicable.

A commenter stated that the phrase ``related to the termination''

in Sec. 950.340(a) and (b) should be changed to ``used'' in the

termination or eviction. HUD could not locate this phrase in subsection

(a). HUD is unable to change the wording in subsection (b)(6) because

it is a statutory requirement.

One commenter stated that this section attempts to give HUD the

authority to determine whether tribal and state termination or eviction

procedures provide the basic elements of due process. The commenter

continued that since HUD has no authority over tribal sovereignty

rights to determine its own eviction and termination procedures, this

section should be removed from the rule. However, HUD's ability to

determine the basic elements of due process is statutory, and therefore

this section remains unchanged.

A commenter found a typographical error in Sec. 950.340(b)(6) in

the proposed rule. The provision should read ``Specify that with

respect to any notice.'' HUD has corrected the typographical error in

the final rule.

6. Fire Safety (Sec. 950.346)

A commenter recommended that this section be revised to change

references to ``hard-wire smoke detectors'' to ``hard-wire with battery

back-up smoke detectors,'' and that this section should reflect the

need for fire extinguishers in each unit. The commenter indicated that

many Mutual Help homes have only battery operated smoke detectors, and

that many of them are inoperable. The commenter stated that IHAs should

be allowed to receive funding to bring such units up to code.

HUD received a second comment regarding the benefits of a

residential range top suppression system that is capable of detecting a

cooking grease fire originating on the range top, extinguishing the

fire, and preventing reignition. The commenter provided sample

specifications for the product for inclusion in the rule. The Fire

Administration Authorization Act of 1992 (the Act) (Pub. L. 102-522,

approved October 26, 1992) established applicable Federal standards for

fire safety, and these standards are reflected in this rule. HUD

considers it appropriate to reflect the minimum Federal requirements

mandated by the Act and does not plan to establish more stringent

requirements in this rule. To the extent that the State, tribal, or

local jurisdiction in which the units are located has more stringent

fire prevention and control standards, the more stringent State,

tribal, or local standards will govern. Further, HUD wishes to point

out that funding is available under both the CIAP and CGP programs for

fire safety needs. Under the competitive CIAP application process, work

items related to fire safety are prioritized for funding along with

emergency work items.

E. Subpart E--Mutual Help Homeownership Opportunity Program

1. Scope and Applicability (Sec. 950.401)

One commenter asked what regulations exist for Mutual Help (MH)

units placed under ACC before March 9, 1976. There are no regulations

for the MH units placed under ACC prior to March 9, 1976. The document

governing that program is the Mutual Help and Occupancy (MHO)

Agreement.

2. Special Provisions for Development of an MH Project (Sec. 950.413)

One commenter stated that paragraph (d) in this section of the

proposed rule should be revised since it allows HUD to decide not to

proceed with the development of a MH project. The commenter stated that

this provision is inconsistent with the goal of the rule--HUD is giving

IHAs greater responsibility, yet it is still reserving control and

discretion as to how IHAs carry out the housing program. In response to

this comment, HUD has removed this entire section. The provisions of

Sec. 950.135, Administrative capability, will apply prior to an action

that would result in cancellation of a development by HUD, and the IHA

would be involved and given every opportunity to respond and appeal if

necessary.

3. Selection of MH Homebuyers (Sec. 950.416)

One commenter requested that the Federal preference mentioned in

Sec. 950.416(d) be removed from this section because IHAs should select

homebuyers with the ability to meet the obligations of the program, and

Federal preference is in conflict with the ability to meet homebuyer

obligations. However, as the commenter recognized, the Federal

preference is a statutory requirement that HUD is unable to remove at

this time. As mentioned previously in this preamble, the Office of

Native American Programs is developing a legislative proposal and will

consider this comment at that time.

One commenter requested that HUD revise Sec. 950.416(e) on

principal residency to emphasize that the determination of whether the

home is necessary for the family's livelihood or [[Page 18181]] for

cultural preservation be solely that of the IHA. In response to this

comment, HUD has changed the wording on the principal residency as

requested.

One commenter asked HUD to streamline this section and handle many

of these requirements in a handbook or by Board policy. HUD has

reviewed this section and streamlined where possible; however, many of

the requirements in this section are statutorily based and therefore

HUD cannot change them.

One commenter requested the inclusion of a discretionary preference

that the local IHA would apply to handle unique situations in their

area. On July 18, 1994 (59 FR 36616), HUD published a final rule in the

Federal Register on Preferences for Admission to Assisted Housing. That

rule specifically authorizes the adoption of local selection

preferences by housing authorities in admitting some applicants. This

rule permits IHAs to adopt preferences that respond to local housing

needs and priorities after conducting public hearings. See

Secs. 950.301 and 950.303 of this final rule.

4. MH Contribution (Sec. 950.419)

One commenter suggested that the MH contribution requirement should

be at the option of the IHA. Another commenter requested that land cost

be determined individually by each tribe through an appraisal with a

cap of $2500. The requirement for a MH contribution of at least $1500

is statutory, and therefore HUD cannot remove the requirement from the

rule. In response to these comments, however, HUD has revised this

section to reflect the statutory requirement that the MH contribution

be at least $1500, rather than a maximum of $1500, to allow for

additional MH contributions by the homebuyer.

One commenter requested that a subsequent homebuyer be given credit

for land donated by the tribe. HUD has recently provided guidance to

the Area ONAPs that clarifies this section of the rule. A subsequent

homebuyer can be given credit for a land contribution by a tribe and

not be required to provide an additional MH contribution.

5. Inspections, Responsibility for Items Covered by Warranty

(Sec. 950.425)

One commenter recommended that Secs. 950.425(a) (1) and (2) be

revised to clarify that latent defects would be covered even after the

warranty period. In response to this comment, HUD has streamlined this

section, and this issue is now covered under the development section

(Sec. 950.270(a)), in which HUD believes the language is clearer.

6. Homebuyer Payments--Post-1976 Projects (Sec. 950.426)

One commenter requested that the percentage of income used for

determining homebuyer payments be changed from 15 percent to 12

percent. Another commenter requested that the percentage for elderly be

changed to 10 percent. Another commenter stated that MH should have

fixed payments, which would eliminate the need for recertification. The

requirement to charge MH participants 15 to 25 percent of income is

statutory, and HUD cannot change it through regulation. However, as

mentioned above, HUD's Office of Native American Programs will consider

these comments when it develops its legislative proposal for Native

American Programs.

7. Maintenance, Utilities, and Use of Home (Sec. 950.428)

HUD received two comments regarding Sec. 950.428(c) on inspections.

One commenter requested that HUD eliminate the need for inspections.

Another commenter stated that inspections should be based on the amount

of equity in a homebuyer's account. In response to these comments, HUD

has changed the requirement in the final rule for MH inspections. The

language in the final rule states that the IHA shall conduct

inspections of each home on a schedule developed by the IHA that

ensures that the home is maintained in a decent, safe, and sanitary

condition.

One commenter requested that the language in Sec. 950.428(d) of the

proposed rule be revised since the correction of warranty items is not

the same as providing maintenance, and the two concepts should be

distinct. HUD agrees, and in response to this comment HUD has revised

this language.

HUD received two comments on Sec. 950.428(g). One commenter stated

that an IHA should be able to use Monthly Equity Payments Account

(MEPA) funds for improvements without a waiver. Another commenter

stated that the IHA, not HUD, should determine how MEPA funds can be

used. This rule does not require an IHA to obtain approval or a waiver

from HUD in order to allow a homebuyer to use MEPA funds for

betterments and additions. The IHA also has the ability to determine

whether the homebuyer needs to replenish the MEPA. Therefore, HUD has

made no changes.

8. Operating Subsidy (Sec. 950.434)

One commenter requested a change in the operating subsidy for

collection losses so that the IHA could have funds in advance to repair

vacant units because of the lack of reserves. While HUD never intended

to provide funds for needed repairs to a vacant unit after the repairs

were completed, that was often the case due to the budget process and

the need for the IHA to follow through on all collection efforts prior

to receiving funds. HUD has modified the language in the final rule and

will provide additional guidance on the process to the Area ONAPs so

that funds can be provided to the IHA as soon as possible.

Two commenters requested additional subsidy in the MH program. One

commenter requested operating subsidy for units converted for self-

sufficiency or anti-drug programs. Another requested subsidy to pay for

administrative costs involved with using the MEPA for low-income

housing purposes. However, HUD finds that the administrative charge in

the MH program should be used to cover the minimal costs associated

with the programs mentioned above.

One commenter requested that operating subsidy be provided for

counseling in the rental program and that all subsidy be provided at

100 percent. HUD provides operating subsidy for the rental program

through the Performance Funding System, and the IHA can budget for

staff to provide counseling in the rental program if the budget can

support this service. HUD recognizes the difficulty that IHAs

experience when subsidy is provided at less than 100 percent. However,

the amount of subsidy is subject to annual congressional

appropriations, and therefore HUD is unable to guarantee funding at 100

percent.

Several commenters requested that HUD take into account logistical

concerns and IHA size when developing a formula for counseling and

training funds. HUD agrees with the comments and will take these

factors into account when developing the plan for providing operating

subsidy funding for counseling and training. HUD will consult IHAs

prior to implementation.

9. Homebuyer Reserves and Accounts (Sec. 950.437)

Several commenters stated their support for the change to use MEPA

funds for low-income housing purposes. HUD received several other

comments on this regulatory change. One commenter suggested that the

use of MEPA in Sec. 950.437(b)(2)(ii) should be limited based on home

inspections. This commenter stated that if there are maintenance items

that need to be addressed, the IHA should not be allowed to use the

MEPA. Another [[Page 18182]] commenter requested that the IHA be able

to use MEPA funds for alternative types of housing aimed at middle-

income Indian families. Another commenter requested more independence

from HUD rules in Sec. 950.437(b), but this commenter provided no

additional information. HUD also received comments requesting

clarification of the requirements for resident notification, eligible

uses, and developing a formula for the percentage that can be used, as

well as a request to change the definition of MEPA.

HUD appreciates the comments received on this major regulatory

change. HUD developed this section of the proposed rule based on public

comment during the Native American consultation process in order to

give flexibility to IHAs that wish to use the MEPA. IHAs will be

required to obtain approval for use of the MEPA and to maintain a

sufficient reserve of equity for homebuyers in need of maintenance.

Hopefully, this will address the concerns of the commenters regarding

which IHAs will be eligible to use the MEPA for other low-income

housing purposes.

With regard to the comment on expanding the use of the MEPA to

middle-income families, HUD has determined that the use of MEPA funds

must be limited to low-income housing purposes as long as the

development is under the Annual Contributions Contract.

HUD plans to address many of the issues such as eligible uses in

ONAP guidebooks. In streamlining the regulation, HUD found that it was

best to handle policy questions in this way. It is also HUD's goal to

give IHAs the ability to make decisions on the amount of MEPA available

for use and the amount needed for homebuyer maintenance if they permit

homebuyers to use the reserve.

One commenter stated that IHAs should not be required to pay

interest on MEPA accounts if the funds are being used for other low-

income housing purposes. The commenter requested clarification on how

the IHA would earn or pay interest to homebuyers. The current Mutual

Help and Occupancy Agreement between the IHA and the homebuyer states

that interest on equity accounts will be provided annually. Due to this

provision, HUD has not changed the regulation as requested.

One commenter requested that the first $5,000 of MH equity be used

as a nonrefundable downpayment. HUD believes that a requirement for a

downpayment other than the $1,500 MH contribution would violate the

intent of the United States Housing Act of 1937.

One commenter requested that HUD retain the Voluntary Equity

Payment Account (VEPA). However, HUD removed the requirement for the

VEPA to streamline the MH program. IHAs had indicated that the account

was seldom used. If an IHA wants to continue to use a voluntary

account, they have the ability to do so. However, without a VEPA, a

homebuyer could continue to make additional monthly payments that would

be deposited in the Monthly Equity Payment Account and be used to pay

off a home in a shorter period of time, similar to the current VEPA.

10. Purchase of Home (Sec. 950.440).

Several commenters indicated that they supported the change that

allows the IHA to establish the purchase price schedule. One commenter

requested national uniformity based on development cost. Another

commenter requested clarification on whether the new regulations

regarding purchase price would apply to existing homes. In response to

the comments received, HUD will implement the provisions of

Sec. 950.440(b) of the proposed rule, which provides for the IHA to set

the purchase price for initial and subsequent homebuyers, in the final

rule. In response to whether the rule is retroactive, the IHA can

implement the changes in the final rule for current homebuyers with

their consent. The current MHO Agreement may differ on several topics.

Since this is the contract between the homebuyer and the IHA, homebuyer

consent would be required.

HUD received several other comments regarding Sec. 950.440. One

commenter requested that an IHA be allowed to convey a unit and still

perform modernization after that unit is conveyed, if prior to

conveyance that unit was on a comprehensive improvement assistance

program (CIAP) or 5 year Comp Grant comprehensive plan. Another

commenter requested that IHAs be allowed to perform only emergency work

on a paid-off unit if there was a repayment plan for the delinquency.

Another commenter stated that they agree with the changes, but they are

concerned about the operating cost once the unit is paid off.

In response to these comments, HUD's Office of General Counsel

(OGC) was asked to review the issue once more. OGC stated that they

believe that the statute can be read to allow modernization work to be

done on units, title to which have been conveyed, but which were

approved for modernization funding prior to conveyance. However, once

conveyed, the unit is not eligible for future assistance. The language

in the regulations at 950.440 and 950.602 will be revised accordingly.

In response to the comment that IHAs be allowed to perform only

emergency work on a paid-off unit if there is a repayment plan for a

delinquency, HUD believes that modernization may be required, either by

statute or regulation, for these units, and therefore HUD has not

changed the language in the rule. However, the IHA does have the

ability to determine its priorities with respect to modernization work

for all units and could limit the work to emergency items. In response

to the comment regarding operating costs, until a unit is conveyed, the

homebuyer is responsible for monthly payments in accordance with the

Mutual Help and Occupancy Agreement. Therefore, the administration

charge should still be collected to cover operating costs until the

unit is conveyed.

One commenter requested that zero interest be applied to rental,

Turnkey III, and Old Mutual Help. HUD issued guidance in Notice PIH 91-

29, dated June 18, 1991, which provides for zero interest in the Old

Mutual Help Program. HUD has also modified the Turnkey III rule at

Sec. 950.525 to provide for zero interest. It is not necessary to

change the interest in the rental program, since all debt relating to

the rental program has been forgiven through the loan forgiveness

legislation, and since tenants are not charged interest with their

housing payments.

One commenter requested that Sec. 940.440(e)(6) be changed to allow

an IHA to use proceeds from the sale for middle-income families.

Recently, HUD's Office of General Counsel stated that there are no

statutory restrictions that would prohibit the amendment of an

Administrative Use Agreement to allow proceeds from the sale of

homeownership units to be used for other housing purposes, including

purposes other than for lower income housing. However, any proceeds of

sale must still be used in connection with low- and very low-income

persons. Therefore, HUD has not changed the language in the rule.

11. Termination of MHO Agreement (Sec. 950.446)

One commenter stated that Sec. 950.446(f)(3) suggests that the IHA

is the entity that evicts. This commenter recommended that this section

should instead indicate that the IHA initiates an eviction action. HUD

agrees with this comment and has made the change. [[Page 18183]]

12. Succession (Sec. 950.449)

One commenter stated that this is perhaps the most important and

significant change to the Indian Housing regulations. Another commenter

supported this change and stated it was in agreement with the IHA.

Another commenter stated that ``at the very least, there should be a

provision that provides that the designation of a successor by the

homebuyer must be approved by tribal government.'' Although HUD

supports tribal involvement in the program, HUD believes that the

homebuyer should determine the successor to their unit whenever

possible, subject to any restrictions by the tribe on succession to the

land.

13. Conversion (Secs. 950.445 and 950.458)

HUD received several comments on the conversion process. One

commenter requested that the requirement for an actual development cost

certificate (ADCC) be eliminated, since this is a lengthy process and

holds up conversions. Another commenter requested that HUD eliminate

the requirement that a conversion application be in a form required by

HUD. Another commenter requested that the MH contribution not be

required in a conversion and that the lease process should not hold up

a conversion. There was a general comment that HUD does not allow

conversion.

In response to these comments, HUD has eliminated the need for an

ADCC prior to conversion and the requirement that the conversion

package be in a form required by HUD. HUD has not changed the

requirement for a MH contribution, since it is a statutory requirement

for every MH unit. However, the contribution can be in the form of

land. HUD encourages the use of the conversion process whenever it is

beneficial for an IHA. If an IHA is having difficulty with the

conversion process, it should contact the Office of Native American

Programs in Washington, D.C., at the address specified in the ``For

Further Information Contact'' section, above.

F. Subpart F--Self-Help Development in the Mutual Help Homeownership

Opportunity Program

HUD received no comments on this subpart. However, HUD has made

additional revisions in the final rule to streamline this program.

G. Subpart G--Turnkey III Program

HUD only received one comment on the Turnkey III subpart of the

rule. This commenter requested that a zero interest rate apply to this

program, as it does with Mutual Help Homeownership Opportunity Program.

HUD had made this change in the proposed rule at Sec. 950.525, and this

change is included in this final rule.

Due to the fact that there are currently only 18 IHAs managing the

Turnkey III Program, and in response to general public support for

additional streamlining of the entire regulation, HUD has attempted to

further reduce the regulatory requirements of this program.

H. Subpart H--Lead-Based Paint Poisoning Prevention

With this final rule, HUD makes no changes to the existing

regulations for lead-based paint poisoning prevention, other than to

move them from part 905 to new part 950. However, HUD is republishing

the existing regulations in this rule in an effort to consolidate all

the Indian housing regulations.

I. Subpart I--Modernization

1. Comprehensive Improvement Assistance Program and Comprehensive Grant

Program

HUD received many comments regarding the changes proposed for the

Comprehensive Improvement Assistance Program (CIAP) and Comprehensive

Grant Program (CGP). The comments were overwhelmingly supportive of

HUD's efforts to simplify the programs. Many of the changes requested

on CGP were implemented in the Public and Indian Housing Amendments to

the CGP final rule, which was published in the Federal Register on

August 30, 1994 (59 FR 44810).

One commenter indicated that CIAP should be an entitlement based on

age and number of units, and that the formula must take into account

small IHAs. However, the United States Housing Act of 1937 specifically

provides for two different modernization programs based on housing

authority size: a formula funded program for those with 250 or more

units, and a discretionary application program for those with fewer

than 250 units. Therefore, HUD could not implement this recommendation

without a legislative amendment.

Another commenter recommended that CIAP have a five-year plan, like

CGP. However, as stated above, funding of a CIAP is made through a

competitive application process that does not allow forecasting funding

availability for future years, as does the CGP. Although HUD encourages

IHAs to plan for modernization needs, a five-year plan would not serve

the same purpose as in the CGP.

One commenter indicated that CIAP funds for IHAs should be a

separate set-aside from Public Housing. Currently, there is only one

appropriation for Public and Indian Housing. Therefore, implementing

this recommendation would require a legislative change.

A commenter suggested that the process of moving CIAP/CGP funds to

resident organizations should be in regulations. However, HUD finds

that regulating a process for transferring funds to resident

organizations would decrease local flexibility, and therefore HUD has

not implemented this recommendation.

2. Special requirements for Turnkey III and Mutual Help developments

(Sec. 950.602)

Many commenters made recommendations regarding this section of

Subpart I and a cross reference in the Mutual Help Homeownership

Opportunity Program, Subpart E, Sec. 950.440. Both references discuss

the use of modernization funds for paid-off and conveyed units. In the

final CGP rule (published in the Federal Register on August 30, 1994

(59 FR 44810)), HUD removed the regulatory prohibition against

modernizing Mutual Help units that are paid off but not conveyed. The

preamble to that rule stated:

The Department believes that the only regulatory restrictions on

the modernization of paid-off Mutual Help units should be that:

title has not been conveyed to the homebuyer; where the homebuyer

has a delinquency at the end of the amortization period, non-

emergency modernization work shall not be done until all

delinquencies are repaid; and, the units shall be identified in the

Comprehensive Plan (including the Physical Needs Assessments and

Five-Year Action Plan). The prohibition against performing

modernization work on conveyed units is based on a determination by

the Department's Office of General Counsel that statutory authority

for the expenditure of modernization funds is limited to existing

public housing units. Once title is conveyed and the unit is no

longer covered by the ACC, the unit is no longer a public housing

unit and there is no legal authority for the expenditure of

modernization funds provided under section 14 of the Act. IHAs that

wish to modernize conveyed Mutual Help units must obtain funding

from another source; e.g., proceeds from the sale of homeownership

units or Bureau of Indian Affairs Housing Improvement Program funds.

(59 FR 44811).

A group of IHAs consolidated their comments and offered two

alternative recommendations for this rule's provisions on conveyed

units at [[Page 18184]] Sec. Sec. 950.602 and 950.440. They recommended

that IHAs be allowed to convey a unit and still perform modernization

after the unit is conveyed, if prior to conveyance the work was in an

approved CIAP application or CGP Five-Year Plan, and the work is done

within five years. Alternatively, they recommended that IHAs have the

option to delay conveyance for up to five years to conduct

modernization, but only with the written consent of the homebuyer.

Another IHA commented that conveyed units should be eligible for

modernization work. The IHA argued that first priority should go to

homebuyers who have shown good faith by paying for their homes and now

have the deeds to the homes, and not to those who, because of a

delinquent status, have not received their conveyance documents. The

IHA recommended that in the renovation of paid-off units, IHAs should

have the discretion to decide which units to modernize, whether the

unit has been conveyed or not.

Two IHAs recommended that HUD allow old Mutual Help and Turnkey III

units that have been conveyed to be brought back into the programs for

the purpose of comprehensive modernization. The IHAs considered the

proposed change to be unfair to homebuyers in paid-off units that were

not included in the Comprehensive Plans because paid-off units were

ineligible under the original regulation. Many of those units were

conveyed before the proposed rule was published, which provided that

units that are paid off but not conveyed are eligible for

modernization. The IHAs argued that the conveyed units deserve the same

consideration and have the same physical improvement needs, such as

handicapped accessibility, lead-based paint testing, and meeting

current codes.

As discussed in the preamble language for Subpart E, the Office of

General Counsel (OGC) has advised that the statute can be read to allow

modernization work to be done on units, title to which have been

conveyed, but which were approved for modernization funding prior to

conveyance. Therefore, HUD has revised the rule in response to the

comments submitted on this issue. Although title can be conveyed once

the unit has been approved for modernization funding, OGC recommends

that IHAs delay conveyance until modernization work is completed on a

Mutual Help unit.

In response to the comments requesting that modernization be

eligible for a Mutual Help unit that has been conveyed but not approved

for modernization funding prior to conveyance, the prohibition is based

on the determination that statutory authority for the expenditure of

funds is limited to existing public housing units. Once title is

conveyed and the unit is no longer owned by an IHA and covered by the

ACC, the unit is no longer a public housing unit, and there is no legal

authority for the expenditure of modernization funds provided under

section 14 of the United States Housing Act of 1937.

Two commenters recommended that when units become paid off, the

operating costs should be charged to the Comprehensive Grant Program.

Another commenter recommended that the rule be revised to specify

clearly that during the period after a unit becomes paid off, until it

is modernized and title is conveyed, the homebuyer is responsible for

the administration charge. In response to the first two comments, the

United States Housing Act of 1937 requires that the homebuyer make

monthly payments of at least an administration charge to cover monthly

operating expenses on the dwelling. The second commenter was correct in

the statement that the administration charge shall be made by a

homebuyer until conveyance. HUD has included language to clarify this

requirement in Sec. 950.440 of the rule.

3. Contracting Requirements (CIAP) (Sec. 950.642) and Conduct of

Modernization Activities (CGP) (Sec. 950.681)

One commenter stated that in order to assist new contractors in

getting established an IHA should be allowed to give preference to new

contractors and pay their licensing and bonding fees. A change to the

contracting requirements would conflict with 24 CFR part 85, which

contains the government-wide administrative requirements for grants.

Paying licensing and bonding fees would give an unfair advantage to new

contractors and would not provide fair and open competition as required

by Part 85.

4. Eligible Costs (Sec. 950.666)

One commenter agreed with the increase from 10 percent to 20

percent in the cost limitation on management improvements in

Sec. 950.666(m)(2), but indicated that the cost limitation on

administrative costs should also be increased from 7 percent to 10

percent. HUD appreciates the comment in support of the change in the

cost limitation for management improvement. The cost limitation on

administrative costs was increased from 7 percent to 10 percent of the

annual grant in the CGP final rule published in the Federal Register on

August 30, 1994 (59 FR 44810), and effective September 29, 1994. That

change is also reflected in this rule.

One commenter stated that the proposed rule is too restrictive with

respect to room additions needed for handicapped accessibility. Three

commenters recommended that the rule include additions to the living

space in a dwelling unit as an eligible work item under CGP and CIAP.

HUD implemented this recommendation for the CGP final rule cited above

at Sec. 905.666(c). That rule provides that ``[a]dditional dwelling

space may be added to existing units.'' A similar change has been made

in this CIAP final rule at Sec. 950.615(b).

5. Allocation of Assistance (Sec. 950.669)

A regional association of IHAs commended the proposed rule for

allowing IHAs to hold public hearings earlier in the year using the

prior year's formula amount for planning purposes. HUD appreciates the

comment in support of this change.

6. Comprehensive Plan (Including Five-Year Action Plan) (Sec. 950.672).

One commenter anticipated a problem with unrealistically raising

expectations by consulting with the residents on all five years of the

Comprehensive Plan. The commenter recommended limiting resident

participation to years when funds are available. However, section 14 of

the United States Housing Act of 1937 requires that residents affected

by the planned activities be given the opportunity to review and

provide their input. This rule (Sec. 950.672(b)(5)) requires that at

the annual Public Hearing the IHA present ``information on the

Comprehensive Plan/Annual Submission and the status of prior approved

programs.''

7. HUD Review and Approval of Comprehensive Plan (Including Five-Year

Action Plan) (Sec. 950.675).

One commenter wanted to be able to maintain flexibility to move

work items between years of the CGP Action Plan and have the ability to

switch line items within the original scope of work. HUD has included

the ability to undertake any of the work identified in any of the other

four years of the latest approved Five-Year Action Plan, current Annual

Statement, or previously approved CIAP budgets in Sec. 950.675(c) of

the CGP final rule cited above. [[Page 18185]]

J. Subpart J--Operating Subsidy

1. General Comments.

One commenter requested that the calculation for the PFS be changed

because it is too complicated. Another commenter stated that the PFS

should be designed specifically for IHAs. This commenter suggested that

HUD should initiate a national study on PFS and how to redesign it. HUD

recognizes the concerns regarding the PFS and how it relates to the

Indian Housing program. However, any change in the PFS would require

statutory and/or regulatory changes. At this time, HUD is studying the

entire Indian Housing program. In this process, HUD will address any

recommendation for change in this area.

Another commenter stated that IHAs should be provided with

additional subsidy to cover the costs of implementing part 85. However,

the PFS is designed to cover administrative costs of a well-managed

IHA. In the Mutual Help program, the administration charge is used to

cover an IHA's administrative expenses. There are no additional

congressional appropriations to cover these costs, and therefore HUD

cannot change the rule to accommodate this request.

2. Other Costs (Sec. 950.720).

A commenter stated that additional operating subsidy should be

provided for user fees for the Mutual Help program. Section 122(c) of

the Housing and Community Development Act of 1992 amended Section 203

of the Indian Housing Act of 1988 (Pub. L. 100-358, approved June 29,

1988) to provide user fees to municipalities specifically for each

rental housing unit. The amendment did not include Mutual Help, and a

legislative change would be necessary to provide this funding.

3. Operating Reserves (Sec. 950.740)

One commenter requested that HUD maintain the requirement for a

maximum operating reserve in the rental program. However, HUD is making

efforts to streamline regulations and give control of project

operations to IHAs. This includes the determination by an IHA of the

amount of reserves needed for efficient program operation. For that

reason, HUD has eliminated the requirement for the maximum operating

reserve in both the rental and Turnkey III programs.

4. Operating Budget Submission and Approval (Sec. 950.745)

A commenter recommended that HUD revise the Handbook early in

Fiscal Year (FY) 1995 to implement the budget submission change. On

October 4, 1994, HUD issued HUD Notice 94-72, which implemented the

revised procedures regarding operating budget submission. HUD has also

modified this rule slightly to reflect the budget submission changes.

K. Subpart K--Energy Audits, Energy Conservation Measures, and Utility

Allowances General Changes

1. General Comment

HUD received a comment suggesting that this entire section should

be simplified, and it should reflect less HUD reviews and approvals. In

response to this comment, HUD has reviewed the section and streamlined

when possible. HUD has also removed many of the reviews and approvals

mentioned by the commenter.

2. Energy Performance Contracts (Sec. 950.825)

One commenter requested that the word ``shall'' in the following

sentence of Sec. 950.825(a) be removed: ``Energy performance

contracting shall be conducted using one of the following methods of

procurement * * *.'' However, removal of the word ``shall'' would

eliminate the need to conduct energy audits. HUD finds that its

policies in this section support national energy conservation goals,

and the elimination of the audits would not meet HUD's goals of

reducing energy consumption or operating costs.

L. Subpart L--Operation of Projects After Expiration of Initial ACC

Term

With this final rule, HUD makes no changes to the existing

regulations for the operation of projects after the expiration of the

initial ACC term, other than to move them from part 905 to new part

950. However, HUD is republishing the existing regulations in this rule

in an effort to consolidate all the Indian housing regulations.

M. Subpart M--Disposition or Demolition of Projects

HUD received no comments on this subpart. HUD had taken steps to

streamline this subpart in the proposed rule, and has made no

additional changes in this final rule.

N. Subpart N--Miscellaneous

Subpart N was incorporated into subpart J (Sec. 950.772) of the

final rule.

O. Subpart O--Resident Participation and Opportunities General

Provisions

A final rule for the Public and Indian Housing Amendment to the

Tenant Participation and Tenant Opportunities in Public and Indian

Housing was published in the Federal Register on August 24, 1994 (59 FR

43622). With today's final rule, HUD makes no changes to the Resident

Participation and Opportunities regulations, other than to move them

from part 905 to new part 950. However, HUD is republishing the

existing regulations in today's rule in an effort to consolidate all

the Indian housing regulations.

P. Subpart P--Section 5(h) Homeownership Program

A final rule for the Section 5(h) Homeownership Program for Public and

Indian Housing was published in the Federal Register on November 10,

1994 (59 FR 56354). With today's final rule, HUD makes no changes to

the Section 5(h) Homeownership regulations for Indian housing, other

than to move them from part 905 to new part 950. However, HUD is

republishing the existing regulations in today's rule in an effort to

consolidate all the Indian housing regulations.

Q. Subpart R--Family Self-Sufficiency

HUD received no comments on this subpart. As stated in the proposed

rule, HUD made very few changes to the regulation implementing the FSS

program because the current regulation reflects the statutory

provisions of section 23 of the United States Housing Act of 1937. HUD

has revised the final rule to eliminate definitions that are included

in Sec. 950.102.

IV. Other Matters

Finding of No Significant Impact

At the time of the development of the proposed rule, a Finding of

No Significant Impact with respect to the environment was made in

accordance with HUD regulations at 24 CFR part 50 that implement

section 102(2)(C) of the National Environmental Policy Act of 1969 (42

U.S.C. 4332). The Finding of No Significant Impact remains applicable

to this final rule and is available for public inspection and copying

during regular business hours (7:30 a.m. to 5:00 p.m. weekdays) in the

Office of the Rules Docket Clerk, Room 10272, 451 Seventh Street, S.W.,

Washington, D.C. 20410.

Regulatory Flexibility Act

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

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

approving it certifies that this rule does not have a significant

economic impact on a substantial number of small entities. The rule

makes a number of amendments to the Indian Housing Consolidated Program

regulations to simplify program [[Page 18186]] processes, reduce the

number of regulatory requirements, and to provide more flexibility to

local tribal and Indian housing authority officials in the

administration of the Indian Housing program.

Executive Order 12612, Federalism

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

of Executive Order 12612, Federalism, has determined that the policies

contained in this rule will not have substantial direct effects on

States or their political subdivisions, or the relationship between the

Federal Government and the States, or on the distribution of power and

responsibilities among the various levels of government. As a result,

the rule is not subject to review under the order.

Executive Order 12606, the Family

The General Counsel, as the Designated Official under Executive

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

potential for significant impact on family formation, maintenance, and

general well-being, and thus is not subject to review under the Order.

No significant change in existing HUD policies or programs will result

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

to family concerns.

Regulatory Agenda

This rule was listed as sequence number 1894 in HUD's Semiannual

Regulatory Agenda published on November 14, 1994 (59 FR 57632, 57638)

in accordance with Executive Order 12866 and the Regulatory Flexibility

Act.

Catalog of Domestic Assistance

The Catalog of Domestic Assistance numbers for the programs

affected by this rule are 14.146, 14.147, 14.850, 14.851, 14.852, and

15.141.

List of Subjects

24 CFR Part 905

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

development, Grant programs--Indians, Indians, Homeownership,

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 950

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

programs--Indians, Disability, Homeownership, Indians, Low and moderate

income housing, Public housing, Reporting and recordkeeping

requirements.

Accordingly, and under the authority of 42 U.S.C. 3535(d), title 24

of the Code of Federal Regulations is amended as follows:

PART 905--[REMOVED AND RESERVED]

1. Part 905 is removed and reserved.

2. Part 950 is added to read as follows:

PART 950--INDIAN HOUSING PROGRAMS

Subpart A--General

Sec.

950.101 Applicability and scope.

950.102 definitions.

950.110 Assistance from Indian Health Service and Bureau of Indian

Affairs.

950.115 Applicability of civil rights requirements.

950.117 Displacement, relocation, and acquisition.

950.120 Compliance with other Federal requirements.

950.125 Establishment of IHAs pursuant to State law.

950.126 Establishment of IHAs by tribal ordinance.

950.130 IHA Commissioners who are tenants or homebuyers.

950.135 Administrative capability.

Subpart B--Procurement

950.160 Procurement standards.

950.165 Methods of procurement.

950.170 Other requirements applicable to development contracts.

950.172 Wage rates.

950.175 Indian preference requirements.

950.190 Insurance.

950.195 Lead-based paint liability insurance coverage.

Subpart C--Development

950.200 Roles and responsibilities of Federal agencies.

950.205 Allocation.

950.207 Eligibility.

950.210 Authority for proceeding without HUD approval.

950.215 Production methods.

950.220 Total development cost.

950.225 Application.

950.227 Initial development grant approval and ACC execution.

950.229 Expenditure of funds.

950.231 Project coordination.

950.235 Site selection criteria.

950.240 Types of interest in land.

950.245 Appraisals.

950.247 Environment.

950.250 Site approval.

950.255 Design criteria.

950.260 Construction stage development cost budget and

certifications.

950.265 Construction and inspections.

950.270 Construction completion and settlement.

950.275 Warranty inspections and enforcement.

950.280 Correcting deficiencies.

950.285 Fiscal closeout.

Subpart D--Operation

950.301 Admission policies.

950.303 Selection preferences.

950.304 Federal preferences: general.

950.305 Federal preferences: involuntary displacement.

950.306 Federal preference: substandard housing.

950.307 Federal preference: rent burden.

950.308 Exemption from eligibility requirements for police officers

and other security personnel.

950.310 Restrictions on assistance to noncitizens.

950.315 Initial determination, verification, and reexamination of

family income and composition.

950.320 Determination of rents and homebuyer payments.

950.325 Total tenant payment--Rental and Turnkey III programs.

950.335 Rent and homebuyer payment collection policy.

950.340 Grievance procedures and leases.

950.345 Maintenance and improvements.

950.346 Fire safety.

950.360 IHA employment practices.

Subpart E--Mutual Help Homeownership Opportunity Program

950.401 Scope and applicability.

950.416 Selection of MH homebuyers.

950.419 MH contribution.

950.422 Commencement of occupancy.

950.425 Inspections, responsibility for items covered by warranty.

950.426 Homebuyer payments before March 9, 1976.

950.427 Homebuyer payments for projects under ACC on or after March

9, 1976.

950.428 Maintenance, utilities, and use of home.

950.431 Operating reserve.

950.432 Operating budget submission and approval.

950.434 Operating subsidy.

950.437 Homebuyer reserves and accounts.

950.440 Purchase of home.

950.443 IHA homeownership financing.

950.446 Termination of MHO Agreement.

950.449 Succession.

950.452 Miscellaneous.

950.453 Counseling of homebuyers.

950.455 Conversion of rental projects.

950.458 Conversion of Mutual Help projects to rental program.

Subpart F--Self-Help Development in the Mutual Help Homeownership

Opportunity Program

950.470 Purpose and applicability.

950.475 Basic requirements.

950.480 Self-Help agreement.

950.485 Application.

950.490 Development program.

950.495 Default of Self-Help agreement.

Subpart G--Turnkey III Program

950.501 Introduction.

950.503 Conversion of Turnkey III developments. [[Page 18187]]

950.505 Eligibility and selection of Turnkey III homebuyers.

950.507 Homebuyer Ownership Opportunity Agreements (HOOA).

950.509 Responsibilities of homebuyer.

950.511 Homebuyers' association (HBA).

950.512 Homeowners' association (HOA).

950.513 Break-even amount and application of monthly payments.

950.515 Monthly operating expense.

950.517 Earned Home Payments Account (EHPA).

950.519 Nonroutine Maintenance Reserve (NRMR).

950.521 Operating reserve.

950.523 Operating subsidy.

950.525 Purchase price and methods of purchase.

950.529 Termination of Homebuyer Ownership Opportunity Agreement.

Subpart H--Lead-Based Paint Poisoning Prevention

950.551 Purpose and applicability.

950.553 Testing and abatement applicable to development.

950.555 Testing and abatement applicable to modernization.

950.560 Notification.

950.565 Maintenance obligation; defective paint surfaces.

950.570 Procedures involving EBLs.

950.575 Compliance with tribal, State, and local laws.

950.580 Monitoring and enforcement.

950.585 Insurance coverage.

Subpart I--Modernization Program General Provisions

950.600 Purpose and applicability.

950.601 Allocation of funds under section 14.

950.602 Special requirements for Turnkey III and Mutual Help

developments.

950.603 Modernization and energy conservation standards.

Comprehensive Improvement Assistance Program (For IHAs That Own or

Operate Fewer than 250 Indian Housing Units)

950.609 Purpose.

950.615 Eligible costs.

950.618 Procedures for obtaining approval of a modernization

program.

950.624 Resident and homebuyer participation.

950.635 Initiation of modernization activities.

950.639 Fund requisitions.

950.642 Contracting requirements.

950.645 On-site inspections.

950.648 Budget revisions.

950.651 Progress reports.

950.654 HUD review of IHA performance.

950.657 Fiscal closeout.

Comprehensive Grant Program (For IHAs That Own or Operate 250 or More

Indian Housing Units)

950.660 Purpose.

906.666 Eligible costs.

950.667 Reserve for emergencies and disasters.

950.669 Allocation of assistance.

950.672 Comprehensive Plan (including Five-Year Action Plan).

950.675 HUD review and approval of Comprehensive Plan (including

action plan).

950.678 Annual Submission of activities and expenditures.

950.681 Conduct of modernization activities.

950.684 IHA Performance and Evaluation Report.

950.687 HUD review of IHA performance.

Subpart J--Operating Subsidy

950.701 Purpose and applicability.

950.705 Determination of amount of operating subsidy under PFS.

950.710 Computation of Allowable Expense Level.

950.715 Computation of Utilities Expense Level.

950.720 Other costs.

950.725 Projected operating income level.

950.730 Adjustments.

950.735 Transition funding for excessive high-cost IHAs.

950.740 Operating reserves.

950.745 Operating budget submission and approval.

950.750 Payment procedure for operating subsidy under PFS.

950.755 Payments of operating subsidy conditioned upon

reexamination of income of families in occupancy.

950.760 Determining actual occupancy percentage.

950.770 Comprehensive Occupancy Plan (COP) requirements.

950.772 Financial management systems, monitoring and reporting.

950.774 Operating subsidy eligibility for projects owned by IHAs in

Alaska.

Subpart K--Energy Audits, Energy Conservation Measures, and Utility

Allowances

950.801 Purpose and applicability.

Energy Audits and Energy Conservation Measures

950.805 Requirements for energy audits.

950.810 Order of funding.

950.812 Funding.

950.815 Energy conservation equipment and practices.

950.822 Compliance schedule.

950.825 Energy performance contracts.

Individual Metering of Utilities

950.840 Individually metered utilities.

950.842 Benefit/cost analysis.

950.844 Funding.

950.845 Order of conversion.

950.846 Actions affecting residents.

950.849 Waivers for similar projects.

950.850 Reevaluations of mastermeter systems.

Resident Utility Allowances

950.860 Applicability.

950.865 Establishment of utility allowances by IHAs.

950.867 Categories for establishment of allowances.

950.869 Period for which allowances are established.

950.870 Standards for allowances for utilities.

950.872 Surcharges for excess consumption of IHA-furnished

utilities.

950.874 Review and revision of allowances.

950.876 Individual relief.

Subpart L--Operation of Projects After Expiration of Initial ACC Term

950.901 Purpose and applicability.

950.903 Continuing eligibility for operating subsidy; ACC

extension.

950.905 ACC extension in absence of current operating subsidy.

950.907 HUD approval of disposition or demolition.

Subpart M--Disposition or Demolition of Projects

950.921 Purpose and applicability.

950.923 General requirements for HUD approval of disposition or

demolition.

950.925 Resident organization opportunity to purchase.

950.927 Specific criteria for HUD approval of disposition requests.

950.928 Specific criteria for HUD approval of demolition requests.

950.931 IHA application for HUD approval.

950.933 Use of proceeds.

950.935 Replacement housing plan.

Subpart N--[Reserved]

Subpart O--Resident Participation and Opportunities General Provisions

950.960 Purpose.

950.961 Applicability and scope.

950.962 Definitions.

950.963 HUD's role in activities under this subpart.

950.964 Resident participation requirements.

950.965 Funding resident participation.

Tenant Opportunities Program

950.966 General.

950.967 Eligible TOP activities.

950.968 Technical assistance.

950.969 Resident management requirements.

950.970 Management specialist.

950.971 Operating subsidy, preparation of operating budget,

operating reserves, and retention of excess revenues.

950.972 TOP Audit and administrative requirements.

Family Investment Centers (FIC) Program

950.980 General.

950.982 Eligibility.

950.983 FIC activities.

950.984 IHA role in activities under this part.

950.985 HUD Policy on training, employment, contracting, and

subcontracting of Indian housing residents.

950.986 Grant set-aside assistance.

950.987 Resident compensation.

950.988 Administrative requirements.

Subpart P--Section 5(h) Homeownership Program

950.1001 Purpose.

950.1002 Applicability.

950.1003 General authority for sale.

950.1004 Fundamental criteria for HUD approval. [[Page 18188]]

950.1005 Resident consultation and involvement.

950.1006 Property that may be sold.

950.1007 Methods of sale and ownership.

950.1008 Purchaser eligibility and selection.

950.1009 Counseling, training, and technical assistance.

950.1010 Nonpurchasing residents.

950.1011 Nonroutine maintenance reserve.

950.1012 Purchase prices and financing.

950.1013 Protection against fraud and abuse.

950.1014 Limitation on resale profit.

950.1015 Use of sale proceeds.

950.1016 Replacement housing.

950.1017 Records, reports, and audits.

950.1018 Submission and review of homeownership plan.

950.1019 HUD approval and IHA-HUD implementing agreement.

950.1020 Content of homeownership plan.

950.1021 Supporting documentation.

Subpart Q--[Reserved]

Subpart R--Family Self-Sufficiency

950.3001 Purpose, scope, and applicability.

950.3002 Program objectives.

950.3003 Definitions.

950.3004 Basic requirements of the FSS program.

950.3011 Action Plan.

950.3012 Program Coordinating Committee (PCC).

950.3013 FSS family selection procedures.

950.3014 On-site facilities.

950.3020 Program implementation.

950.3021 Administrative fees.

950.3022 Contract of participation.

950.3024 Total tenant payment and increases in family income.

950.3025 FSS account.

950.3030 Reporting.

Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437aa-1437ee and

3535(d).

Subpart A--General

Sec. 950.101 Applicability and scope.

(a) General. (1) Under title II of the United States Housing Act of

1937, as added by the Indian Housing Act of 1988 (42 U.S.C. 1437aa, et

seq.), the Department of Housing and Urban Development (HUD) provides

financial and technical assistance to Indian Housing Authorities

(IHAs), for the development and operation of low-income housing

projects in Indian areas. This part is applicable to such projects

developed or operated by an IHA in an Indian area, as defined in

Sec. 950.102.

(2) If assistance under this part is not available to a low-income

family because the family desires housing in an area within which no

IHA is authorized to provide housing, or if for any other reason a

family desires housing assistance other than under this part, a family

may seek housing assistance under other HUD programs. (See 24 CFR part

203, chapter VIII of this title, as well as the remainder of chapter IX

of this title.)

(b) Other HUD regulations and requirements. The provisions of this

part are a complete statement of HUD regulations affecting the

development and operation of low-income housing by IHAs except as

supplemented by parts in other chapters of this title that are

referenced in this part.

Sec. 950.102 Definitions.

Act. The United States Housing Act of 1937 (42 U.S.C. 1437-1440).

Action plan. A plan of the actions to be funded by an IHA over a

period of five years (including an IHA's proposed allocation of its

modernization funds to a reserve established under Sec. 950.666(a)(3))

to make the necessary physical and management improvements identified

in the IHA's comprehensive plan under subpart I of this part. The plan

shall be based upon HUD's and the IHA's best estimates of the funding

reasonably expected to become available over the next five-year period.

The action plan is updated annually to reflect a rolling five-year

base.

Adjusted income. Annual income less the following allowances,

determined in accordance with HUD instructions:

(1) $480 for each dependent;

(2) $400 for any elderly family;

(3) For any family that is not an elderly family but has a

handicapped or disabled member other than the head of household or

spouse, handicapped assistance expenses in excess of three percent of

annual income, but this allowance may not exceed the employment income

received by family members who are 18 years of age or older as a result

of the assistance to the handicapped or disabled person;

(4) For any elderly family--

(i) That has no handicapped assistance expenses (as defined in

paragraph 3 of this definition), an allowance for medical expenses (as

defined in this section) equal to the amount by which the medical

expenses exceed three percent of annual income;

(ii) That has handicapped assistance expenses greater than or equal

to three percent of annual income, an allowance for handicapped

assistance expenses computed in accordance with paragraph (3) of this

definition, plus an allowance for medical expenses that is equal to the

family's medical expenses; and

(iii) That has handicapped assistance expenses that are less than

three percent of annual income, an allowance for combined handicapped

assistance expenses and medical expenses that is equal to the amount by

which the sum of these expenses exceeds three percent of annual income;

(5) Child care expenses, as defined in this section; and

(6) Excessive travel expenses, not to exceed $25 per family per

week, for employment- or education-related travel.

Administration charge. In Mutual Help projects, the amount budgeted

per-unit per-month for operating expense, exclusive of the cost of HUD-

approved expenditures for which operating subsidy is being provided in

accordance with Sec. 950.434 (see Sec. 950.427(b)).

Allowable expense level. In rental projects, the per-unit per-month

dollar amount of expenses (excluding utilities and expenses allowed

under Sec. 950.720) computed in accordance with Sec. 950.710, which is

used to compute the amount of operating subsidy.

Allowable utilities consumption level (AUCL). In rental projects,

the amount of utilities expected to be consumed per-unit per-month by

the IHA during the requested budget year, which is equal to the average

amount consumed per-unit per-month during the rolling base period.

Annual contributions contract (ACC). A contract under the Act

between HUD and the IHA containing the terms and conditions under which

HUD assists the IHA in providing decent, safe, and sanitary housing for

low-income families. The ACC shall be in a form prescribed by HUD under

which HUD agrees to provide assistance in the development,

modernization, and/or operation of a low-income housing project under

the Act, and the IHA agrees to develop, modernize, and operate the

project in compliance with all provisions of the ACC and the Act, and

all HUD regulations and implementing requirements and procedures.

Annual income. Annual income is the anticipated total income from

all sources received by the family head and spouse (even if temporarily

absent) and by each additional member of the family, including all net

income derived from assets, for the 12-month period following the

effective date of the initial determination or reexamination of income,

exclusive of certain types of income as provided in paragraph (2) of

this definition.

(1) Annual income includes, but is not limited to:

(i) The full amount, before any payroll deductions, of wages and

salaries, overtime pay, commissions, fees, tips and bonuses, and other

compensation for personal services;

(ii) The net income from operation of a business or profession.

Expenditures [[Page 18189]] for business expansion or amortization of

capital indebtedness shall not be used as deductions in determining net

income. An allowance for depreciation of assets used in a business or

profession may be deducted, based on straight line depreciation, as

provided in Internal Revenue Service regulations. Any withdrawal of

cash or assets from the operation of a business or profession will be

included in income, except to the extent the withdrawal is

reimbursement of cash or assets invested in the operation by the

family;

(iii) Interest, dividends, and other net income of any kind from

real or personal property. Expenditures for amortization of capital

indebtedness shall not be used as deductions in determining net income.

An allowance for depreciation is permitted only as authorized in

paragraph (1)(ii) of this definition. Any withdrawal of cash or assets

from an investment will be included in income, except to the extent the

withdrawal is reimbursement of cash or assets invested by the family.

Where the family has net family assets in excess of $5,000, annual

income shall include the greater of the actual income derived from all

net family assets or a percentage of the value of such assets based on

the current passbook savings rate as determined by HUD;

(iv) The full amount of periodic payments received from social

security, annuities, insurance policies, retirement funds, pensions,

disability, or death benefits and other similar types of periodic

receipts, including a lump-sum payment for the delayed start of a

periodic payment (but see paragraph (2)(xii) of this definition);

(v) Payments in lieu of earnings, such as unemployment and

disability compensation, worker's compensation, and severance pay (but

see paragraph (2)(iii) of this definition);

(vi) Welfare assistance. If the welfare assistance payment includes

an amount specifically designated for shelter and utilities that is

subject to adjustment by the welfare assistance agency in accordance

with the actual cost of shelter and utilities, the amount of welfare

assistance income to be included as income shall consist of:

(A) The amount of the allowance or grant exclusive of the amount

specifically designated for shelter or utilities; plus

(B) The maximum amount that the welfare assistance agency could, in

fact, allow the family for shelter and utilities. If the family's

welfare assistance is ratably reduced from the standard of need by

applying a percentage, the amount calculated under paragraph (1)(vi)(B)

of this definition shall be the amount resulting from one application

of the percentage;

(vii) Periodic and determinable allowances, such as alimony and

child support payments, and regular contributions or gifts received

from persons not residing in the dwelling; and

(viii) All regular pay, special pay, and allowances of a member of

the Armed Forces (but see paragraph (2)(vii) of this definition).

(2) Annual income does not include the following:

(i) Income from employment of children (including foster children)

under the age of 18 years;

(ii) Payments received for the care of foster children;

(iii) Lump-sum additions to family assets, such as inheritances,

insurance payments (including payments under health and accident

insurance and worker's compensation), capital gains, and settlement for

personal or property losses (but see paragraph (1)(v) of this

definition);

(iv) Amounts received by the family that are specifically for, or

in reimbursement of, the cost of medical expenses for any family

member;

(v) Income of a live-in aide;

(vi) Amounts of educational scholarships paid directly to the

student or to the educational institution, and amounts paid by the

Government to a veteran, for use in meeting the costs of tuition, fees,

books, equipment, materials, supplies, transportation, and

miscellaneous personal expenses of the student. Any amount of such

scholarship or payment to a veteran that is made available for

subsistence is to be included in income;

(vii) The special pay to a family member serving in the Armed

Forces who is exposed to hostile fire;

(viii) (A) Amounts received under training programs funded by HUD;

(B) Amounts received by a disabled person that are disregarded for

a limited time for purposes of Supplemental Security Income eligibility

and benefits because they are set aside for use under a Plan for

Achieving Self-Support (PASS);

(C) Amounts received by a participant in other publicly assisted

programs that are specifically for or in reimbursement of out-of-pocket

expenses incurred (special equipment, clothing, transportation, child

care, etc.) and that are made solely to allow participation in a

specific program; or

(D) A resident stipend, but only if the resident stipend does not

exceed $200 per month per officer to resident organization officers.

Stipends are intended to cover costs related to officers' volunteer

efforts and include but are not limited to the following items: child

care, transportation, special equipment, and special clothing.

(ix) Temporary, nonrecurring, or sporadic income (including gifts);

(x) For all initial determinations and reexaminations of income

carried out on or after April 23, 1993, reparation payments paid by a

foreign government pursuant to claims filed under the laws of that

government by persons who were persecuted during the Nazi era;

(xi) The earnings and benefits to any resident resulting from the

participation in a program providing employment training and supportive

services in accordance with the Family Support Act of 1988, section 22

of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), or

any comparable Federal, State, tribal, or local law during the

exclusion period. For purposes of paragraph (2)(xi) of this definition,

the following definitions apply:

(A) Comparable Federal, State, tribal, or local law means a program

providing employment training and supportive services that--

(1) Is authorized by Federal, State, tribal, or local law;

(2) Is funded by Federal, State, tribal, or local government;

(3) Is operated or administered by a public agency; and

(4) Has as its objective to assist participants in acquiring job

skills.

(B) Exclusion period means the period during which the resident

participates in a program described in this section, plus 18 months

from the date the resident begins the first job acquired by the

resident after completion of such program that is not funded by public

housing assistance under the United States Housing Act of 1937. If the

resident is terminated from employment without good cause, the

exclusion period shall end.

(C) Earnings and Benefits means the incremental earnings and

benefits resulting from a qualifying employment training program or

subsequent job;

(xii) Any amounts that would be eligible for exclusion under

section 1613(a)(7) of the Social Security Act (deferred periodic

payments received in a lump sum from SSI and social security); or

(xiii) Amounts specifically excluded by any other Federal statute

from consideration as income for purposes of determining eligibility or

benefits under a category of assistance programs that includes

assistance under the United States Housing Act of 1937. A notice is

published from time to time in the Federal Register and distributed to

IHAs identifying the benefits that [[Page 18190]] qualify for this

exclusion. Updates will be published and distributed when necessary.

(3) If it is not feasible to anticipate a level of income over a

12-month period, the income anticipated for a shorter period may be

annualized subject to a redetermination at the end of the shorter

period.

(4) Any family receiving the reparation payments referred to in

paragraph (2)(x) of this definition that has been requested to repay

assistance under this part as a result of receipt of such payments

shall not be required to make further repayments on or after April 23,

1993.

Annual Statement. A work statement covering the first year of the

Five-Year Action Plan and setting forth the major work categories and

costs by development or IHA-wide for the current Federal Fiscal Year

(FFY) grant, as well as a summary of costs by development account and

implementation schedules for obligation and expenditure of the funds.

Annual Submission. A collective term for all documents that the IHA

shall submit to HUD for review and approval before accessing the

current FFY grant funds. Such documents include the Annual Statement,

Work Statements for years two through five of the Five-Year Action

Plan, local government statement, IHA Board Resolution, materials

demonstrating the partnership process, and any other documents as

prescribed by HUD.

Applicable surface. All intact and nonintact interior and exterior

painted surfaces of a residential structure.

Area Office of Native American Programs (ONAP). The HUD Offices in

Chicago (Eastern/Woodlands), Oklahoma City (Southern Plains), Denver

(Northern Plains), Phoenix (Southwest), Seattle (Northwest), and

Anchorage (Alaska), which have been delegated authority to administer

programs under the United States Housing Act of 1937 for the areas in

which the IHAs are located.

Base year. The IHA's fiscal year immediately preceding its first

fiscal year under the performance funding system (PFS).

Base year expense level. The expense level (excluding utilities,

audits, and certain other items) for the year, computed as provided in

Sec. 950.710(a).

Benefit/cost analysis. For purposes of subpart K of this part, a

direct comparison of the present worth of any savings generated by a

given system during the expected useful life of the system or the

estimated remaining life of the project, whichever is the shortest

number of years, to the cost of the change.

BIA. The Bureau of Indian Affairs in the Department of the

Interior.

Checkmeter. A device for measuring utility consumption of each

individual dwelling unit where the utility service is supplied through

a mastermeter system. The IHA pays the utility supplier on the basis of

the mastermeter readings and uses the checkmeters to determine whether

and to what extent utility consumption of each dwelling unit is in

excess of the allowance for IHA-furnished utilities, established in

accordance with subpart K of this part.

Chewable surface. All chewable protruding painted surfaces up to

five feet from the floor or ground, that are readily accessible to

children under seven years of age, such as protruding corners,

windowsills and frames, doors and frames, and other protruding

woodwork.

Chief executive officer (CEO). The CEO of a unit of general local

government means the elected official or the legally designated

official who has the primary responsibility for the conduct of that

entity's governmental affairs.

Child. A member of the family, other than the family head or a

spouse, who is under 18 years of age.

Child care expenses. Amounts anticipated to be paid by the family

for the care of children under 13 years of age during the period for

which annual income is computed, but only where such care is necessary

to enable a family member to be gainfully employed or to further his or

her education only to the extent such amounts are not reimbursed. The

amount deducted shall reflect reasonable charges for child care, and,

in the case of child care necessary to permit employment, the amount

deducted shall not exceed the amount of income received from such

employment.

Citizen. A citizen or national of the United States.

Common property. The nondwelling structures and equipment, common

areas, community facilities, and in some cases certain component parts

of dwelling structures, that are contained in the development. It also

may include common property as defined in a cooperative form of

ownership, as determined by the IHA.

Comprehensive grant number. A grant number that is unique to each

work statement (under subpart I of this part) covering the improvements

to one or more existing Indian housing projects.

Comprehensive Plan. A plan prepared by an IHA, and approved by HUD,

under the Comprehensive Grant Program setting forth all of the physical

and management improvement needs of the IHA and its Indian housing

developments, indicating the relative urgency of needs, and including

the IHA's action plan, cost estimates, and required local government

and IHA certifications. The Comprehensive Plan may be revised, as

necessary, but shall be revised at least every sixth year. (See subpart

I of this part.)

Cooperation agreement. An agreement between an IHA and a local

governing (taxing) body that assures exemption from real and personal

property taxes and provides for payments in lieu of taxes by the IHA,

and that provides for cooperation with respect to the development and

operation of low-income housing owned by the IHA.

Current budget year. The IHA fiscal year in which the IHA is

operating.

Defective lead-based paint surface. Paint on applicable surfaces

having a lead content of greater than or equal to 1 mg/cm2, that is

cracking, scaling, chipping, peeling, or loose.

Defective paint surface. Paint on applicable surfaces that is

cracking, scaling, chipping, peeling, or loose.

Demolition. The razing in whole, or in part, of one or more

permanent buildings of an Indian housing project.

Dependent. A member of the family household (excluding foster

children) other than the family head or spouse, who is under 18 years

of age, or is a disabled person or handicapped person, or is a full-

time student.

Deprogramming. Removal from the IHA's inventory under the ACC,

pursuant to the IHA's formal request and HUD's approval, of a dwelling

unit no longer used for dwelling purposes or a nondwelling structure or

a unit used for nondwelling purposes that the IHA has determined will

no longer be used for IHA purposes.

Development. Any or all undertakings necessary for planning, land

acquisition, demolition, construction, or equipment, in connection with

a low-income housing project.

Development grant. The grant that provides IHAs, in response to an

application for housing, funds to enable the IHA to plan and construct

either rental or mutual help housing. The development grant is for a

fixed amount of funding and ends when the housing development is

through the warranty period (normally six years from initial

development grant approval).

Disabled person. A person who is under a disability as defined in

section 223 of the Social Security Act (42 U.S.C. 423), or who has a

developmental disability as defined in section 102(7) of the

Developmental Disabilities [[Page 18191]] Assistance and Bill of Rights

Act (42 U.S.C. 6001(7)).

Displaced person. A person displaced by governmental action, or a

person whose dwelling has been extensively damaged or destroyed as a

result of a disaster declared or otherwise formally recognized under

Federal disaster relief laws.

Disposition. The conveyance or other transfer by the IHA, by sale

or other transaction, of any interest in the real estate of an Indian

housing project, excluding transfers of property described in

Sec. 950.921(b)(1)(i) through (vii).

Earned home payments account (EHPA). In the Turnkey III program

(subpart G of this part), this account is established and maintained

pursuant to Sec. 950.517 by the IHA based on a portion of the

homebuyer's required monthly payment. The EHPA should equal the IHA's

estimate of the monthly cost for routine maintenance of the home.

Elderly family. A family whose head or spouse (or sole member) is

an elderly, disabled, or handicapped person, as defined in this

section. It may include two or more elderly, disabled, or handicapped

persons living together, or one or more of these persons living with

one or more live-in aides, as defined in this section.

Elderly person. A person who is at least 62 years of age.

Elevated blood lead level or EBL. Excessive absorption of lead,

that is, a confirmed concentration of lead in whole blood of 25 ug/dl

(micrograms of lead per deciliter of whole blood) or greater.

Emergency modernization (CIAP). A type of modernization program for

a development that is limited to physical work items of an emergency

nature, posing an immediate threat to the health or safety of residents

or related to fire safety, which shall be corrected within one year of

CIAP funding approval.

Emergency work. Physical work items of an emergency nature, posing

an immediate threat to the health or safety of residents, which shall

be completed within one year of funding. Under the Comprehensive Grant

program, management improvements are not eligible as emergency work,

and therefore shall be covered by the Comprehensive Plan (including the

action plan), before the IHA may carry them out. (See subpart I of this

part.)

Energy audit. A process carried out in accordance with subpart K of

this part, that identifies and specifies the energy and cost savings

that are estimated to result from installing or accomplishing an energy

conservation measure.

Energy conservation measures (ECMs). Physical improvements or

modifications that, if undertaken for a building or facility, or its

equipment, are likely to reduce the cost of energy in an amount

sufficient to recover the installation costs in a period no longer than

the useful life of the measure. (See subpart K of this part.)

Evidence of citizenship or eligible immigration status. The

documents which must be submitted to evidence citizenship or eligible

immigration status (see Sec. 950.310(e)).

Family. Family includes but is not limited to:

(1) An elderly family or single person as defined in this part;

(2) The remaining member of a tenant family; and

(3) A displaced person.

Family project. Any project assisted under section 9 of the Act (42

U.S.C. 1437g) that is not an elderly project. For this purpose, an

elderly project is one that was designated for occupancy by the elderly

at its inception (and has retained that character) or, although not so

designated, for which the IHA gives preference in tenant selection

(with HUD approval) for all units in the project to elderly families. A

building within a mixed-use project that meets these qualifications

shall, for purposes of this definition, be excluded from any family

project, as shall zero bedroom units.

Federally recognized tribe. Any Indian tribe, band, nation, or

other organized group or community, including any Alaska Native village

or regional corporation or village as defined in or established

pursuant to the Alaska Native Claims Settlement Act, that is recognized

as eligible for the special programs and services provided by the

United States to Indians because of their status as Indians.

FFY. Federal Fiscal Year (starting with October 1, and ending with

September 30, and designated by the calendar year in which it ends).

Force account labor. Labor directly employed by the IHA on either a

permanent or a temporary basis.

Formula. The formula prescribed by HUD to be used in the

Performance Funding System to estimate the cost of operating an average

unit in an IHA's inventory. (See subpart J of this part.)

Formula expense level. The per-unit per-month dollar amount of

expenses (excluding utilities and audits) computed under the formula,

in accordance with Sec. 950.710.

Full-time student. A person who is carrying a subject load that is

considered full-time for day students under the standards and practices

of the educational institution attended. An educational institution

includes a vocational school with a diploma or certificate program, as

well as an institution offering a college degree.

Fungibility. Fungibility is a concept that permits an IHA to

substitute any work item from the latest approved Five-Year Action Plan

to any previously approved CIAP budget or CGP Annual Statement and to

move work items among approved budgets without prior HUD approval.

Handicapped assistance expenses. Reasonable expenses that are

anticipated, during the period for which annual income is computed, for

attendant care and auxiliary apparatus for a handicapped or disabled

family member and that are necessary to enable a family member

(including the handicapped or disabled member) to be employed, provided

that the expenses are neither paid to a member of the family nor

reimbursed by an outside source.

Hard costs. The physical improvement costs in development accounts

1450 through 1475 of the Low-Rent Housing Accounting Handbook, 7510.1,

as revised, that include: Account 1450 Site Improvements; Account 1460

Dwelling Structures; Account 1465.1 Dwelling Equipment--Nonexpendable;

Account 1470 Nondwelling Structures; and Account 1475 Nondwelling

Equipment.

Head of household. The adult member of the family who is the head

of the household for purposes of determining income eligibility and

rent.

High risk. See 24 CFR 85.12 and Sec. 950.135.

Homebuyer. The member or members of a low-income family who have

executed a homebuyer agreement with the IHA and who have not yet

achieved homeownership.

Homebuyer agreement. A Mutual Help and Occupancy Agreement or a

Turnkey III Homebuyer's Ownership Opportunity Agreement.

Homebuyer Association. In the Turnkey III program this means an

incorporated organization (as defined in Sec. 950.511) composed of all

of the families who are entitled to occupancy pursuant to a Homebuyer

Ownership Opportunity Agreement or who are homeowners.

Homeowner. A former homebuyer who has achieved ownership of his or

her home and acquired title to the home.

HUD. The Department of Housing and Urban Development.

IHA homeownership financing. IHA financing for purchase of a home

by an eligible homebuyer who gives the IHA [[Page 18192]] a promissory

note and mortgage for the balance of the purchase price.

IHS. The Indian Health Service in the Department of Health and

Human Services.

Indian. Any person recognized as being an Indian or Alaska Native

by an Indian tribe, the Federal Government, or any State.

Indian area. The area within which an Indian Housing Authority is

authorized to provide low-income housing.

Indian Housing Authority (IHA). An entity that is authorized to

engage in or assist in the development or operation of low-income

housing for Indians that is established either:

(1) By exercise of the power of self-government of an Indian tribe

independent of State law; or

(2) By operation of State law providing specifically for housing

authorities for Indians, including regional housing authorities in the

State of Alaska.

Indian tribe. Any tribe, band, pueblo, group, community, or nation

of Indians or Alaska Natives.

INS. The U.S. Immigration and Naturalization Service.

Interdepartmental agreement. The agreement among HUD, the

Department of Health and Human Services, the Department of Interior,

and other appropriate agencies, concerning assistance to projects

developed and operated under the Act.

Latent defect. A design or construction deficiency that could not

reasonably have been foreseen by the IHA or the Office of Native

American Programs.

Lead-based paint. A paint surface, whether or not defective,

identified as having a lead content greater than or equal to 1.0 mg/

cm2, or .5 percent by weight.

Live-in aide. A person who resides with an elderly, disabled, or

handicapped person or persons and who:

(1) Is determined by the IHA to be essential to the care and well-

being of the person(s);

(2) Is not obligated for support of the person(s); and

(3) Would not be living in the unit except to provide necessary

supportive services. (See definition of annual income for treatment of

a live-in aide's income.)

Local inflation factor. The weighted average percentage increase in

local government wages and salaries for the area in which the IHA is

located and non-wage expenses based upon the implicit price deflator

for State and local government purchases of goods and services. This

weighted average percentage will be supplied by HUD. HUD anticipates

that it will update the local inflation factor each year.

Low-income family. A family whose annual income does not exceed 80

percent of the median income for the area, as determined by HUD with

adjustments for smaller and larger families. HUD may establish income

limits higher or lower than 80 percent of the median income for an

Indian area on the basis of its finding that such variations are

necessary because of the prevailing levels of construction costs or

unusually high or low family incomes.

Management improvement plan. A document developed by the IHA in

accordance with Sec. 950.135 that specifies the actions to be taken,

including timetables, to correct deficiencies identified as a result of

a management assessment.

Mastermeter system. A utility distribution system in which an IHA

is supplied utility service by a utility supplier through a meter or

meters and the IHA then distributes the utility to its tenants.

Medical expenses. Those medical expenses, including medical

insurance premiums, that are anticipated during the period for which

annual income is computed, and that are not covered by insurance.

MH Contribution. Land, labor, cash, materials, or equipment--or a

combination of these--contributed toward the development cost of a

project in accordance with a homebuyer's MHO Agreement, credit for

which is to be used toward purchase of a home.

MH Program. The Mutual Help Homeownership Opportunity Program.

MHO Agreement. A Mutual Help and Occupancy Agreement between an IHA

and a homebuyer.

Mixed family. A family whose members include those with citizenship

or eligible immigration status, and those without citizenship or

eligible immigration status.

Modernization capability. An IHA has modernization capability for

CIAP if it is capable of effectively carrying out the proposed

modernization improvements. Where an IHA does not have a funded

modernization program in progress, HUD will determine whether the IHA

has a reasonable prospect of acquiring modernization capability through

hiring staff or contracting for assistance. (See Sec. 950.135.)

Modernization funds. Funds derived from an allocation of budget

authority for the purpose of funding physical and management

improvements.

Modernization program. An IHA's program for carrying out

modernization, as set forth in the approved CIAP budget for

modernization funds. (See subpart I (CIAP) of this part.)

Modernization project. The improvement of one or more existing

Indian housing developments under a new number designated for that

modernization program (CIAP). For each modernization project, HUD and

the IHA shall enter into an ACC amendment, requiring low-income use of

the housing for not less than 20 years from the date of the ACC

amendment (subject to sale of homeownership units in accordance with

the terms of the ACC).

Monthly adjusted income. One twelfth of adjusted income.

Monthly Equity Payments Account (MEPA). A homebuyer account in the

Mutual Help Homeownership Opportunity program credited with the amount

by which each required monthly payment exceeds the administration

charge.

Monthly income. One twelfth of annual income.

National. A person who owes permanent allegiance to the United

States, for example, as a result of birth in a United States territory

or possession.

Near elderly family. A family whose head or spouse (or sole member)

is at least 50 years of age but below the age of 62 years.

Net family assets. Net cash value after deducting reasonable costs

that would be incurred in disposing of real property, savings, stocks,

bonds, and other forms of capital investment, excluding interests in

Indian trust land and excluding equity accounts in HUD homeownership

programs. The value of necessary items of personal property such as

furniture and automobiles are excluded, and, in the case of a family in

which any member is actively engaged in a business or farming

operation, the assets that are a part of the business or farming

operation are excluded. In cases where a trust fund, such as individual

Indian monies held by the BIA, has been established and the trust is

not revocable by, or under the control of, any member of the family or

household, the value of the trust fund will not be considered an asset

so long as the fund continues to be held in trust. In determining net

family assets, IHAs shall include the value of any business or family

assets disposed of by an applicant or tenant for less than fair market

value (including a disposition in trust, but not in a foreclosure or

bankruptcy sale) during the two years preceding the date of application

for the [[Page 18193]] program or reexamination, as applicable, in

excess of the consideration received therefor. In the case of a

disposition as part of a separation or divorce settlement, the

disposition will not be considered to be for less than fair market

value if the applicant or tenant receives important consideration not

measurable in dollar terms.

Noncitizen. A person who is neither a citizen nor national of the

United States.

Nonroutine maintenance. (1) For purposes of the Turnkey III Program

(Nonroutine Maintenance Reserve), nonroutine maintenance refers to

infrequent and costly items of maintenance and replacement, including

dwelling equipment such as a range or refrigerator, or major components

such as heating or plumbing systems or a roof. Specifically excluded

are maintenance expenses attributable to homebuyer negligence or to

defective materials or workmanship.

(2) For purposes of the CIAP and Comprehensive Grant Modernization

Programs under subpart I of this part and the applicability of wage

rates, nonroutine maintenance refers to work items that ordinarily

would be performed on a regular basis in the course of upkeep of a

property, but have become substantial in scope because they have been

put off, and that involve expenditures that would otherwise materially

distort the level trend of maintenance expenses. Replacement of

equipment and materials rendered unsatisfactory because of normal wear

and tear by items of substantially the same kind does qualify, but

reconstruction, substantial improvement in the quality or kind of

original equipment and materials, or remodeling that alters the nature

or type of housing units does not qualify.

NRMR. The nonroutine maintenance reserve account in the Turnkey III

program established and maintained in accordance with Sec. 950.519.

Office of Native American Programs (ONAP). The Office of HUD that

has been delegated authority to administer programs under this part.

Operating budget. The IHA's operating budget (HUD form 52564) and

all related documents, required by HUD to be submitted pursuant to the

ACC.

Operating subsidy. Annual contributions for IHA operations made by

HUD under the authority of section 9 of the Act. (See subpart J of this

part with respect to rental projects. See also Sec. 950.434 (Mutual

Help Operating Subsidy) and Sec. 950.523 (Turnkey III Operating

Subsidy).)

Other income. Income to the IHA other than dwelling rental income

and income from investments, except that, for purposes of determining

operating subsidy eligibility, the following items are excluded: Grants

and gifts for operations, other than for utility expenses, received

from Federal, State, and local governments, individuals or private

organizations; amounts charged to tenants for repairs for which the IHA

incurs an offsetting expense; and legal fees in connection with

eviction proceedings, when those fees are lawfully charged to tenants.

Other modernization (modernization other than emergency). A type of

modernization program under the Comprehensive Improvement Assistance

Program (CIAP) for a development that includes one or more physical

work items, where HUD determines that the physical improvements are

necessary and sufficient to extend substantially the useful life of the

development, and/or one or more management work items (including

planning costs), and/or testing, professional risk assessments, interim

containment, and abatement of lead-based paint.

Partnership process. A specific and ongoing process that is

designed to ensure that residents, resident groups, and the IHA work in

a cooperative and collaborative manner to develop, implement and

monitor the CIAP or Comprehensive Grant Program. At a minimum, an IHA

shall ensure that the partnership process incorporates full resident

participation in each of the required program components.

Pay-back period. The number of years required to accumulate net

savings to equal the cost of an energy conservation measure.

Performance funding system (PFS). The standards, policies, and

procedures established by HUD for determining the amount of operating

subsidy an IHA is eligible to receive for its owned rental projects,

based on the costs of operating a comparable well-managed project.

PILOT. Payment in lieu of taxes. Includes all payments made by an

IHA to the local governing body (or other taxing jurisdiction) for the

provision of certain municipal services, including that portion of

payments in lieu of taxes that is to be applied as a reimbursement of

payments of off-site utilities. The amount charged is determined by the

cooperation agreement, which is generally defined as 10 percent of

shelter rent. Shelter rent is defined as dwelling rentals less total

utility expenses.

Program reservation. A written notification by HUD to an IHA, that

is not a legal obligation, but that expresses HUD's determination,

subject to fulfillment by an IHA of all legal and administrative

requirements within a stated time, that HUD will enter into a new or

amended ACC covering the stated number of housing units, or such other

number as is consistent with funding reserved by HUD for the project.

Project. Housing developed, acquired, or assisted by an IHA under

the Act, and the improvement of this housing.

Project for elderly families. A rental project or portion of a

rental project assisted under the United States Housing Act of 1937

that was designated for occupancy by the elderly at its inception (and

that has retained that character) or, although not so designated, for

which the IHA gives preference in tenant selection (with HUD approval)

for all units in the project, or for a portion of the units in the

project, to elderly families.

Project units. All dwelling units of an IHA's projects. Projected

operating income level. The per-unit per-month dollar amount of

dwelling rental income plus nondwelling income, computed as provided in

Sec. 950.725.

Reasonable cost. Total unfunded hard cost needs for a development

that do not exceed 90 percent of the computed total development cost

limit for a new development with the same structure type and number and

size of units in the market area.

Requested budget year. The budget year (fiscal year) of an IHA

following the current budget year.

Resident groups. Democratically elected resident groups such as

IHA-wide resident groups, area-wide resident groups, single development

resident groups, or resident management corporations (RMCs).

Retail service. Purchase of utility service by IHA tenants directly

from the utility supplier.

Rolling base period. The 36-month period that ends 12 months before

the beginning of the IHA requested budget year, which is used to

determine the allowable utilities consumption level used to compute the

utilities expense level.

Section 214. Section 214 of the Housing and Community Development

Act of 1980, as amended (42 U.S.C. 1436a). Section 214 restricts HUD

from making financial assistance available for noncitizens unless they

meet one of the categories of eligible immigration status specified in

Section 214.

Section 214 covered programs. Programs to which the restrictions

imposed by Section 214 apply are programs that make available financial

[[Page 18194]] assistance pursuant to the United States Housing Act of

1937 (42 U.S.C. 1437-1440), Section 235 or Section 236 of the National

Housing Act (12 U.S.C. 1715z and 1715z-1) and Section 101 of the

Housing and Urban Development Act of 1965 (12 U.S.C. 1701s).

Single person. A person who lives alone or intends to live alone,

and who does not qualify as:

(1) An elderly family;

(2) A displaced person (as defined in this section); or

(3) The remaining member of a tenant family.

Soft costs. The nonphysical improvement costs, that exclude any

costs in development accounts 1450 through 1475.

State. Any of the several States of the United States of America,

the District of Columbia, the Commonwealth of Puerto Rico, the

territories and possessions of the United States, the Trust Territory

of the Pacific Islands, and Indian tribes.

Subsequent homebuyer. Any homebuyer other than the homebuyer who

first occupies a home pursuant to a Mutual Help and Occupancy (MHO)

agreement.

Substantial rehabilitation. A modernization program for a project

that provides for all physical and management improvements needed to

meet the modernization and energy conservation standards and to ensure

long-term physical and social viability.

Successor homebuyer. A person eligible to become a homebuyer who

has been designated by a current homebuyer to succeed to an interest

under a homeownership agreement in the event of the current homebuyer's

death or mental incapacity.

Surcharge. The amount charged by the IHA to a tenant, in addition

to the Tenant Rent, for consumption of utilities in excess of the

allowance for IHA-furnished utilities or for estimated consumption

attributable to tenant-owned major appliances or to optional functions

of IHA-furnished equipment. Surcharges calculated pursuant to subpart K

of this part, based on estimated consumption where checkmeters have not

been installed, are referred to as ``scheduled surcharges.''

Tenant-purchased utilities. Utilities purchased by the tenant

directly from a utility supplier.

Tenant rent. The amount payable monthly by the family as rent to

the IHA. Where all utilities (except telephone) and other essential

housing services are supplied by the IHA, tenant rent equals total

tenant payment. Where some or all utilities (except telephone) and

other essential housing services are not supplied by the IHA and the

cost thereof is not included in the amount paid as rent, tenant rent

equals total tenant payment less the utility allowance.

Total development cost. The sum of all HUD-approved costs for a

project including all undertakings necessary for administration,

planning, site acquisition, demolition, construction or equipment and

financing (including the payment of carrying charges), and for

otherwise carrying out the development of the project. The maximum

total development cost excludes off-site water and sewer facilities

development costs; costs normally paid for by other entities, but

included in the development cost budget for the project for contracting

or accounting convenience; and any donations received from public or

private sources.

Total tenant payment. The monthly amount calculated under subpart D

of this part. Total tenant payment does not include any surcharge for

excess utility consumption or other miscellaneous charges (see subpart

K of this part).

Unit approved for deprogramming. (1) A dwelling unit for which HUD

has approved the IHA's formal request to remove the dwelling unit from

the IHA's inventory and the Annual Contributions Contract but for which

removal, i.e. deprogramming, has not yet been completed; or

(2) A nondwelling structure or a dwelling unit used for nondwelling

purposes that the IHA has determined will no longer be used for IHA

purposes and that HUD has approved for removal from the IHA's inventory

and Annual Contributions Contract.

Unit months available. Project units multiplied by the number of

months the project units are expected to be available for occupancy

during a given IHA fiscal year. Except as provided in the following

sentence, for purposes of this part, a unit is considered available for

occupancy from the date on which the end of the initial operating

period for the project is established until the time it is approved by

HUD for deprogramming and is vacated or approved for nondwelling use.

On or after July 1, 1991, a unit is not considered available for

occupancy in any IHA Requested Budget Year if the unit is located in a

vacant building in a project that HUD has determined is nonviable.

Utilities. For purposes of determining utility allowances,

utilities include electricity, gas, heating fuel, water, sewerage

service, septic tank pumping/maintenance, sewer system hookup charges

(after development), and trash and garbage collection. Telephone

service is not included as a utility. For purposes of IHA accounting,

PFS and non-PFS, trash and garbage collection and maintenance and

repair of any systems are considered maintenance expenses and not

utility expenses.

Utilities expense level. The per-unit per-month dollar amount of

utilities expense used in calculation of operating subsidy, as provided

in Sec. 950.715.

Utility allowance. An allowance for IHA-furnished utilities

represents the maximum consumption units (e.g., kilowatt hours of

electricity), that may be used by a dwelling unit without a surcharge

against the tenant for excess consumption. An allowance for tenant-

purchased utilities is a fixed dollar amount that is deducted from the

total tenant payment otherwise chargeable to a tenant who has retail

service, whether the charges are more or less than the amounts of the

allowance. (See Secs. 950.865 and 950.870.)

Utility reimbursement. The amount, if any, by which the utility

allowance for tenant-purchased utilities for the unit, if applicable,

exceeds the family's total tenant payment.

Very low-income family. A low-income family whose annual income

does not exceed 50 percent of the median income for the area, as

determined by HUD, with adjustments for smaller and larger families.

HUD may establish income limits higher or lower than 50 percent of the

median income for an Indian area on the basis of its finding that such

variations are necessary because of unusually high or low family

incomes.

Welfare assistance. Welfare or other payments to families or

individuals, based on need, that are made under programs funded,

separately or jointly, by Federal, State, or local governments.

Work item. Any separately identifiable unit of work constituting a

part of a modernization program.

Work Statements. Work Statements cover the second through fifth

years of the Five-Year Action Plan and set forth the major work

categories and costs, by development or IHA-wide, that the IHA intends

to undertake in each year of years two through five. In preparing these

Work Statements, the IHA shall assume that the current FFY formula

amount will be available in each year of years two through five.

Sec. 950.110 Assistance from Indian Health Service and Bureau of

Indian Affairs.

Because HUD assistance under this part is not limited to IHAs of

Federally recognized tribes, provisions in this part relating to

assistance from BIA or IHS, or to required approvals, actions, or

determinations by these agencies in connection with such assistance,

are [[Page 18195]] applicable only to projects undertaken by IHAs of

Federally recognized tribes or by regional housing authorities created

by Alaska state law. These projects shall be developed promptly and

operated in accordance with the provisions of this part and the

Interdepartmental Agreement.

Sec. 950.115 Applicability of civil rights requirements.

(a) Indian Civil Rights Act. (1) The Indian Civil Rights Act (ICRA)

(title II of the Civil Rights Act of 1968, 25 U.S.C. 1301-1303)

provides, among other things, that no Indian tribe in exercising powers

of self-government shall deny to any person within its jurisdiction the

equal protection of its laws or deprive any person of liberty or

property without due process of law. The ICRA also states these equal

protection and due process rights do not apply if they violate customs,

traditions, and practices of the tribe. The ICRA applies to any tribe,

band, or other group of Indians subject to the jurisdiction of the

United States in the exercise of recognized powers of self-government.

The ICRA is applicable in all cases in which an IHA has been

established by exercise of tribal powers of self-government.

(2) For IHAs established pursuant to State law, HUD will determine

the applicability of the ICRA on a case-by-case basis. Factors

considered may include the existence of recognized powers of self-

government; the scope and jurisdiction of such powers; and the

applicability of such powers to the area of operation of a particular

IHA. Generally, determinations by HUD of the existence of recognized

powers of self-government and the jurisdiction of such powers will be

made in consultation with the Department of Interior-Bureau of Indian

Affairs, and may be based on applicable legislation, treaties, and

judicial decisions. The area of operation of an IHA may be determined

by the jurisdiction of the governing body creating the IHA, any

limitations within the enabling legislation, and judicial decisions.

(3) Projects of IHAs subject to the ICRA shall be developed and

operated in compliance with its provisions and all HUD regulations

thereunder.

(b) Applicability of Title VI, the Fair Housing Act; and Title II

of the Americans with Disabilities Act. Title VI of the Civil Rights

Act of 1964 (42 U.S.C. 2000d), which prohibits discrimination on the

basis of race, color, or national origin in federally assisted

programs; the Fair Housing Act (42 U.S.C. 3601-3619), which prohibits

discrimination based on race, color, religion, sex, or national origin

in the sale or rental of housing; and Title II of the Americans with

Disabilities Act (42 U.S.C. 12131) apply to those IHAs created by State

law for which HUD has determined that the ICRA is inapplicable. Actions

taken by an IHA to implement the statutory admission restriction in

favor of Indian families in the MH program, as set forth in

Sec. 950.416, shall not be considered a violation of any provision of

either Title VI, the Fair Housing Act, or Title II of the Americans

with Disabilities Act.

(c) Indian Housing Act of 1988--Mutual Help program admissions. For

provisions generally limiting admission to the Mutual Help

Homeownership Opportunity program to Indians and requiring findings of

need for admission of non-Indians, see Sec. 950.416.

(d) Disability. (1) Under section 504 of the Rehabilitation Act of

1973 (29 U.S.C. 794), as amended, HUD is required to assure that no

otherwise-qualified disabled person is excluded from participation,

denied benefits, or discriminated against under any program or activity

receiving Federal financial assistance, solely by reason of his or her

disability. IHAs shall comply with implementing instructions in 24 CFR

part 8.

(2) The IHA shall comply with the Architectural Barriers Act of

1968 (42 U.S.C. 4151-4157), and HUD implementing regulations (24 CFR

part 40).

(e) Minority Business Enterprise Development and Women's Business

Enterprise Policy. Executive Orders 12432 (3 CFR, 1983 Comp., p. 198)

and 12138 (3 CFR, 1979 Comp., p. 39), respectively, apply to Indian

Housing Authorities.

Sec. 950.117 Displacement, relocation, and acquisition.

(a) Minimizing displacement. Consistent with the other goals and

objectives of this part, IHAs shall assure that they have taken all

reasonable steps to minimize the displacement of persons (families,

individuals, businesses, nonprofit organizations, and farms) as a

result of a project assisted under this part.

(b) Temporary relocation. Residents who will not be required to

move permanently, but who must relocate temporarily (e.g., to permit

rehabilitation), shall be provided:

(1) Reimbursement for all reasonable out-of-pocket expenses

incurred in connection with the temporary relocation, including the

cost of moving to and from the temporary housing and any increase in

monthly rent/utility costs.

(2) Appropriate advisory services, including reasonable advance

written notice of:

(i) The date and approximate duration of the temporary relocation;

(ii) The location of the housing, which may include a traditional

home, to be made available for the temporary period;

(iii) The terms and conditions under which the resident may lease

and occupy a suitable, decent, safe, and sanitary dwelling in the

development following its completion; and

(iv) The provisions of paragraph (b)(1) of this section.

(c) Relocation assistance for displaced persons. (1) A displaced

person (defined in paragraph (g) of this section) shall be provided

relocation assistance at the levels described in, and in accordance

with the requirements of, the Uniform Relocation Assistance and Real

Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C.

4601-4655) and implementing regulations at 49 CFR part 24.

(2) A comparable Indian housing unit, project-based Section 8

housing, or a privately-owned dwelling made affordable by a Section 8

Rental Certificate or Rental Voucher, may qualify as a comparable

replacement dwelling for a person displaced from an Indian housing

unit.

(d) Real property acquisition requirements. The acquisition of real

property for a development is subject to the URA and the requirements

described in 49 CFR part 24, subpart B, whether the acquiring entity is

organized under State law or tribal law.

(e) Appeals. A person who disagrees with the IHA's determination

concerning whether the person qualifies as a displaced person, or the

amount of relocation assistance for which the person is eligible, may

file a written appeal of that determination with the IHA. A lower-

income person who is dissatisfied with the IHA's determination on his

or her appeal may submit a written request for review of that

determination to the HUD Area ONAP.

(f) Responsibility of IHA. (1) The IHA shall certify (i.e., provide

assurance of compliance, as required by 49 CFR part 24) that it will

comply with the URA, the regulations at 49 CFR part 24, and the

requirements of this section, and shall ensure such compliance

notwithstanding any third party's contractual obligation to the IHA to

comply with the requirements in 49 CFR part 24.

(2) The cost of required relocation assistance is an eligible

project cost in the same manner and to the same extent

[[Page 18196]] as other project costs. However, such assistance also

may be paid from funds available from other sources.

(3) The IHA shall maintain records in sufficient detail to

demonstrate compliance with the requirements of this section.

(g) Definition of displaced person. (1) For purposes of this

section, the term ``displaced person'' means a person (family,

individual, business, nonprofit organization, or farm) that moves from

real property, or moves personal property from real property,

permanently, as a direct result of acquisition, rehabilitation,

demolition, or conversion of a unit to homeownership (Mutual Help

Homeownership Opportunity (MH) Program) for a project assisted under

this part or as a direct result of disposition in accordance with

subpart M of this part. This includes any permanent, involuntary move

for an assisted project including any permanent move from the

development that is made:

(i) After notice to the person by the IHA or property owner to move

permanently from the property, if the move occurs on or after:

(A) For the comprehensive improvement assistance program (CIAP) and

the comprehensive grant program (CGP) under subpart I of this part, 45

calendar days from before:

(1) The IHA issues the invitation for bids for the project, or

(2) The start of force account work, whichever is applicable; or

(B) For the disposition or demolition of Indian housing under

subpart M of this part, the date of HUD approval of the IHA's proposal;

or

(C) For other projects subject to this section, the date HUD

approves the site for the project; or, if HUD site approval is not

required, the date the IHA approves the site for the project;

(ii) Before the date described in paragraph (g)(1)(i) of this

section, if the IHA or HUD determines that the displacement resulted

directly from acquisition, rehabilitation, demolition, or conversion

for the assisted project; or

(iii) By a resident of a dwelling unit, if any one of the following

three situations occurs:

(A) The resident moves after the initiation of negotiations (as

defined in paragraph (h) of this section) and the move occurs before

the resident is provided written notice offering him or her the

opportunity to lease and occupy a suitable, decent, safe, and sanitary

dwelling in the same development, under reasonable terms and

conditions, upon its completion. Such reasonable terms and conditions

include a monthly rent and estimated average monthly utility costs that

do not exceed the amount determined in accordance with Sec. 950.325; or

(B) The resident is required to relocate temporarily, does not

return to the development, and either:

(1) The resident is not offered payment for all reasonable out-of-

pocket expenses incurred in connection with the temporary relocation;

or

(2) Other conditions of the temporary relocation are not

reasonable; or

(C) The resident is required to move to another dwelling unit in

the same development but is not offered reimbursement for all

reasonable out-of-pocket expenses incurred in connection with the move,

or other conditions of the move are not reasonable.

(2) Notwithstanding the provisions of paragraph (g)(1) of this

section, a person does not qualify as a displaced person (and is not

eligible for relocation assistance under the URA or this section), if:

(i) The person has been evicted for serious or repeated violation

of the terms and conditions of the lease or occupancy agreement,

violation of applicable Federal, State, tribal, or local law, or other

good cause, and HUD determines that the eviction was not undertaken for

the purpose of evading the obligation to provide relocation assistance;

(ii) The person moved into the property after the date described in

paragraph (g)(1)(i) of this section and, before commencing occupancy,

was provided written notice of the project, its possible impact on the

person (e.g., the person may be displaced, temporarily relocated, or

suffer a rent increase) and the fact that he or she will not qualify as

a displaced person (or for assistance under this section) as a result

of the project:

(iii) The person is ineligible under 49 CFR 24.2(g)(2); or

(iv) HUD determines that the person was not displaced as a direct

result of acquisition, rehabilitation, demolition, or conversion for

the project.

(3) The IHA may, at any time, ask HUD to determine whether a

displacement is or would be covered by this section.

(

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