# Indian Housing Program: Amendments

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A95-8346

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** April 10, 1995
- **Citation:** 60 FR 18174

## Text

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 impro

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-8346. Public record. Not legal advice.