Office of the Assistant Secretary for Public and Indian Housing; Family Self-Sufficiency Program; Streamlining Final Rule

SUMMARY: This final rule amends HUD's regulations for the Family Self-

Sufficiency (FSS) Program. In an effort to comply with the President's

regulatory reform initiatives, this rule will streamline the Family

Self-Sufficiency Program regulations by consolidating the public

housing and the Section 8 FSS regulations and by eliminating redundant

or otherwise unnecessary provisions. This final rule will make the

Family Self-Sufficiency regulations clearer and more concise.

EFFECTIVE DATE: April 4, 1996.

FOR FURTHER INFORMATION CONTACT: Louise K. Hunt, Director for Policies

and Procedures, Room 4216, Department of Housing and Urban Development,

451 Seventh Street, SW., Washington, DC 20410, telephone number (202)

708-3887, ext. 330. This number may be accessed through TDD by calling

the Federal Relay Service at (202) 708-9300 or 1-800-877-TDDY (1-800-

877-8389). (Other than the ``1-800'' number, these telephone numbers

are not toll-free.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act Statement

This rule does not alter existing information collection

requirements. The information collection requirements contained in

Secs. 962.201, 962.302, 962.305, and 962.401 of this rule were

previously submitted to the Office of Management and Budget for review

under the Paperwork Reduction Act of 1995 (42 U.S.C. 3501-3520) and had

been approved under the control number 2577-0178. The Department's

request for reinstatement of this control number is pending at OMB.

(See notice published in the Federal Register on November 30, 1995, at

60 FR 61563.) An agency may not conduct or sponsor, and person is not

required to respond to a collection of information unless the

collection displays a valid control number. The OMB control number,

when reinstated, will be added by separate notice in the Federal

Register.

Background

On March 4, 1995, President Clinton issued a memorandum to all

Federal departments and agencies regarding regulatory reinvention. In

response to this memorandum, the Department of Housing and Urban

Development conducted a page-by-page review of its regulations to

determine which can be eliminated, consolidated, or otherwise improved.

HUD has determined that the regulations for the public housing and

Section 8 FSS Programs can be improved and streamlined by consolidating

these regulations. The two current Code of Federal Regulations parts

affected (part 962 for the public housing FSS Program and part 984 for

the Section 8 FSS program) contain many identical provisions.

Consolidating the parts should especially benefit HAs that operate both

a public housing and a Section 8 FSS program.

Some provisions in the regulations are not regulatory requirements.

For example, several sections in the regulations contain nonbinding

guidance or explanations. While this information is very helpful to

recipients, HUD will more appropriately provide this information

through handbook guidance or other materials rather than maintain it in

the CFR.

Section 984.201, Action Plan, contains revisions to conform to

changes to administrative plan requirements in 24 CFR part 982 for the

Section 8 Tenant-Based Assistance Program. (See 24 CFR 982.54, as added

by 60 FR 34698, July 3, 1995, and the related preamble discussion of

the FSS action plan at 60 FR 34661.) In conformity with those changes

this rule removes the requirement in the current Section 8 FSS program

regulation to include certain FSS policies in the administrative plan

rather than in the action plan.

This rule does not affect the Indian housing FSS Program, which is

codified at 24 CFR part 950 with other Indian housing programs. This

rule applies to Indian Housing Authorities that opt or have opted to

participate in the Section 8 FSS Program.

Justification for Final Rulemaking

HUD generally publishes a rule for public comment before issuing a

rule for effect, in accordance with its own regulations on rulemaking

in 24 CFR part 10. However, part 10 provides for exceptions to the

general rule if the agency finds good cause to omit advance notice and

public participation. The good cause requirement is satisfied when

prior public procedure is ``impracticable, unnecessary, or contrary to

the public interest'' (24 CFR 10.1). HUD finds that good cause exists

to publish this rule for effect without first soliciting public

comment. This rule merely consolidates existing CFR parts and removes

unnecessary regulatory provisions and does not establish or affect

substantive policy. Therefore, prior public comment is unnecessary.

Other Matters

Regulatory Flexibility Act

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

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

doing certifies that this rule will not have a significant economic

impact on a substantial number of small entities. This rule merely

streamlines regulations by removing redundant or unnecessary

provisions. The rule will have no adverse or disproportionate economic

impact on small businesses.

Environmental Impact

This rulemaking does not have an environmental impact. This

rulemaking simply amends an existing regulation by consolidating and

streamlining provisions and does not alter the environmental effect of

the regulations being amended. A Finding of No Significant Impact with

respect to the environment was made in accordance with HUD regulations

in 24 CFR part 50 that implement section 102(2)(C) of the National

Environmental Policy Act of 1969 (42 U.S.C. 4332) at the time of

development of regulations initially implementing the FSS Program (HUD

Docket No. FR-2961). That finding remains applicable to this rule, and

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

weekdays in the Office of the Rules Docket Clerk, Office of General

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

Seventh Street, SW., Washington, DC.

Executive Order 12612, Federalism

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

of Executive Order 12612, Federalism, has determined that 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. No programmatic or policy changes

will result from this rule that would affect the relationship between

the Federal Government and State and local governments.

[[Page 8815]]

Executive Order 12606, The Family

The General Counsel, as the Designated Official under Executive

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

the potential for significant impact on family formation, maintenance,

or 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.

Catalog

The Catalog of Federal Domestic Assistance numbers for the programs

affected by this proposed rule is 14.850, 14.855, and 14.887.

List of Subjects

24 CFR Part 962

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

Reporting and recordkeeping requirements.

24 CFR Part 984

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

subsidies, Reporting and recordkeeping requirements.

Accordingly, under the authority of 42 U.S.C. 3535(d), parts 962

and 984 of 24 Code of Federal Regulations are amended as follows:

PART 962--[REMOVED]

1. Part 962 is removed.

2. Part 984 is revised to read as follows:

PART 984--SECTION 8 AND PUBLIC HOUSING FAMILY SELF-SUFFICIENCY

PROGRAM

Subpart A--General

Sec.

984.101 Purpose, scope, and applicability.

984.102 Program objectives.

984.103 Definitions.

984.104 Basic requirements of the FSS program.

984.105 Minimum program size.

Subpart B--Program Development and Approval Procedures

984.201 Action Plan.

984.202 Program Coordinating Committee (PCC).

984.203 FSS family selection procedures.

984.204 On-site facilities.

Subpart C--Program Operation

984.301 Program implementation.

984.302 Administrative fees.

984.303 Contract of participation.

984.304 Total tenant payment, family rent, and increases in family

income.

984.305 FSS account.

984.306 Section 8 residency and portability requirements.

Subpart D--Reporting

984.401 Reporting.

Authority: 42 U.S.C. 1437f, 1437u, and 3535(d).

Subpart A--General

Sec. 984.101 Purpose, scope, and applicability.

(a) Purpose. (1) The purpose of the Family Self-Sufficiency (FSS)

program is to promote the development of local strategies to coordinate

the use of public and Indian housing assistance and housing assistance

under the Section 8 rental certificate and rental voucher programs with

public and private resources, to enable families eligible to receive

assistance under these programs to achieve economic independence and

self-sufficiency.

(2) The purpose of this part is to implement the policies and

procedures applicable to operation of a local FSS program, as

established under section 23 of the 1937 Act (42 U.S.C. 1437u), under

HUD's rental voucher, rental certificate, and public housing programs.

(b) Scope. (1) Each PHA that received funding for public housing

units under the FY 1991 and FY 1992 FSS incentive award competitions

must operate a public housing FSS program.

(2) Each HA that received funding for Section 8 rental certificates

or rental vouchers under the combined FY 1991/1992 FSS incentive award

competition must operate a Section 8 FSS program.

(3) Unless the HA receives an exception from the program as

provided in Sec. 984.105, each HA that, in FY 1993 or any subsequent

FY, received or receives funding for additional rental certificates or

rental vouchers must operate a Section 8 FSS program or for additional

public housing units must operate a public housing FSS program.

(c) Applicability--(1) Public housing. This part applies to public

housing assisted under the 1937 Act.

(2) Indian Housing Authorities. This part does not apply to Indian

housing. The regulations governing Indian housing FSS programs are set

forth in 24 CFR part 950, subpart R. The operation of a Section 8 FSS

program is optional for Indian Housing Authorities (IHAs) that operate

a certificate or voucher program. IHAs that elect to operate a Section

8 FSS program are subject to the requirements of this part, except that

Sec. 984.105(c) of this subpart A governing minimum program size does

not apply to IHAs. Additionally, IHAs that received section 8 units

under the FSS incentive award competitions and are operating a section

8 FSS program are not subject to the minimum program size requirements.

(3) Section 8. This part also applies to the Section 8 rental

certificate program and the Section 8 rental voucher program authorized

by Section 8 of the 1937 Act and implemented at 24 CFR parts 882, 887,

and 982.

Sec. 984.102 Program objectives.

The objective of the FSS program is to reduce the dependency of

low-income families on welfare assistance and on Section 8, public or

Indian housing assistance, or any Federal, State, or local rent or

homeownership subsidies. Under the FSS program, low-income families are

provided opportunities for education, job training, counseling, and

other forms of social service assistance, while living in assisted

housing, so that they may obtain the education, employment, and

business and social skills necessary to achieve self-sufficiency, as

defined in Sec. 984.103 of this subpart A. The Department will measure

the success of a local FSS program not only by the number of families

who achieve self-sufficiency, but also by the number of FSS families

who, as a result of participation in the program, have family members

who obtain their first job, or who obtain higher paying jobs; no longer

need benefits received under one or more welfare programs; obtain a

high school diploma or higher education degree; or accomplish similar

goals that will assist the family in obtaining economic independence.

Sec. 984.103 Definitions.

(a) The terms 1937 Act, Fair Market Rent, HUD, Indian Housing

Authority (IHA), Public Housing Agency (PHA), Secretary, and Section 8,

as used in this part, are defined in 24 CFR 5.100.

(b) As used in this part:

Certification means a written assertion based on supporting

evidence, provided by the FSS family or the HA, as may be required

under this part, and which:

(1) Shall be maintained by the HA in the case of the family's

certification, or by HUD in the case of the HA's certification;

(2) Shall be made available for inspection by HUD, the HA, and the

public, as appropriate; and

(3) Shall be deemed to be accurate for purposes of this part,

unless the Secretary or the HA, as applicable, determines otherwise

after inspecting the evidence and providing due notice and opportunity

for comment.

Chief executive officer (CEO). The CEO of a unit of general local

government means the elected official or

[[Page 8816]]

the legally designated official, who has the primary responsibility for

the conduct of that entity's governmental affairs. The CEO for an

Indian tribe is the tribal governing official.

Contract of participation means a contract in a form approved by

HUD, entered into between a participating family and an HA operating an

FSS program that sets forth the terms and conditions governing

participation in the FSS program. The contract of participation

includes all individual training and services plans entered into

between the HA and all members of the family who will participate in

the FSS program, and which plans are attached to the contract of

participation as exhibits. For additional detail, see Sec. 984.303 of

this subpart A.

Earned income means income or earnings included in annual income

from wages, tips, salaries, other employee compensation, and self-

employment. (See 24 CFR 813.106(b)(1), (2) and (8) and 913.106(b)(1),

(2) and (8).) Earned income does not include any pension or annuity,

transfer payments, any cash or in-kind benefits, or funds deposited in

or accrued interest on the FSS escrow account established by an HA on

behalf of a participating family.

Effective date of contract of participation means the first day of

the month following the month in which the FSS family and the HA

entered into the contract of participation.

Eligible families means:

(1) For the public housing FSS program, current residents of public

housing. Eligible families also include current residents of public

housing who are participants in local public housing self-sufficiency

programs; and

(2) For Section 8 FSS program, current Section 8 rental certificate

or rental voucher program participants, including participants in the

Project Self-Sufficiency or Operation Bootstrap or other local self-

sufficiency programs.

Enrollment means the date that the FSS family entered into the

contract of participation with the HA.

Family Self-Sufficiency program or FSS program means the program

established by an HA within its jurisdiction to promote self-

sufficiency among participating families, including the provision of

supportive services to these families, as authorized by section 23 of

the 1937 Act.

FSS account means the FSS escrow account authorized by section 23

of the 1937 Act, and as provided by Sec. 984.305 of this subpart A.

FSS credit means the amount credited by the HA to the participating

family's FSS account.

FSS family or participating family means a family that resides in

public housing or receives assistance under the rental certificate or

rental voucher programs, and that elects to participate in the FSS

program, and whose designated head of the family has signed the

contract of participation.

FSS related service program means any program, publicly or

privately sponsored, that offers the kinds of supportive services

described in the definition of ``supportive services'' set forth in

this Sec. 984.103.

FSS slots refer to the total number of public housing units or the

total number of rental certificates or rental vouchers that comprise

the minimum size of an HA's respective public housing FSS program or

Section 8 FSS program.

FY means Federal Fiscal Year (starting with October 1, and ending

September 30, and designated by the calendar year in which it ends).

HA means a Housing Authority--either a Public Housing Agency (PHA)

or an Indian Housing Authority (IHA).

Head of FSS family means the adult member of the FSS family who is

the head of the household for purposes of determining income

eligibility and rent.

Housing subsidies means assistance to meet the costs and expenses

of temporary shelter, rental housing or homeownership, including rent,

mortgage or utility payments.

Individual training and services plan means a written plan that is

prepared for the head of the FSS family, and each adult member of the

FSS family who elects to participate in the FSS program, by the HA in

consultation with the family member, and which sets forth:

(1) The supportive services to be provided to the family member;

(2) The activities to be completed by that family member; and

(3) The agreed upon completion dates for the services and

activities. Each individual training and services plan must be signed

by the HA and the participating family member, and is attached to, and

incorporated as part of the contract of participation. An individual

training and services plan must be prepared for the head of the FSS

family.

JOBS Program means the Job Opportunities and Basic Skills Training

Program authorized under part F of title IV of the Social Security Act

(42 U.S.C. 402(a)(19)).

JTPA means the Job Training Partnership Act (29 U.S.C. 1579(a)).

Low-income family. See definitions in 24 CFR 813.102 and 913.102.

Participating family. See definition for ``FSS family'' in this

section.

Program Coordinating Committee or PCC is the committee described in

Sec. 984.202 of this part.

Public housing means housing assisted under the 1937 Act, excluding

housing assisted under Section 8 of the 1937 Act.

Self-sufficiency means that an FSS family is no longer receiving

Section 8, public or Indian housing assistance, or any Federal, State,

or local rent or homeownership subsidies or welfare assistance.

Achievement of self-sufficiency, although an FSS program objective, is

not a condition for receipt of the FSS account funds. (See Sec. 984.305

of this part.)

Supportive services means those appropriate services that an HA

will make available, or cause to be made available to an FSS family

under a contract of participation, and may include:

(1) Child care--child care of a type that provides sufficient hours

of operation and serves an appropriate range of ages;

(2) Transportation--transportation necessary to enable a

participating family to receive available services, or to commute to

their places of employment;

(3) Education--remedial education; education for completion of

secondary or post secondary schooling;

(4) Employment--job training, preparation, and counseling; job

development and placement; and follow-up assistance after job placement

and completion of the contract of participation;

(5) Personal welfare--substance/alcohol abuse treatment and

counseling;

(6) Household skills and management--training in homemaking and

parenting skills; household management; and money management;

(7) Counseling--counseling in the areas of:

(i) The responsibilities of homeownership;

(ii) Opportunities available for affordable rental and

homeownership in the private housing market, including information on

an individual's rights under the Fair Housing Act; and

(iii) Money management; and

(8) Other services--any other services and resources, including

case management, reasonable accommodations for individuals with

disabilities, that the HA may determine to be appropriate in assisting

FSS families to achieve economic independence and self-sufficiency.

Unit size or size of unit refers to the number of bedrooms in a

dwelling unit.

Very low-income family. See definitions in 24 CFR 813.102 and

913.102.

[[Page 8817]]

Welfare assistance means income assistance from Federal or State

welfare programs, and includes assistance provided under the Aid to

Families with Dependent Children (AFDC) Program, Supplemental Security

Income (SSI) that is subject to an income eligibility test; Medicaid,

food stamps, general assistance, or other assistance provided under a

Federal or State program directed to meeting general living expenses,

such as food, health care, child care, but does not include assistance

solely directed to meeting housing expenses, and does not include

transitional welfare assistance provided to JOBS participants.

Sec. 984.104 Basic requirements of the FSS program.

An FSS program established under this part shall be operated in

conformity with:

(a) The regulations of this part, and for a Section 8 FSS program,

the rental certificate and rental voucher regulations, codified in 24

CFR parts 882, 887, and 982 respectively, and for a public housing FSS

program, the applicable public housing regulations, including the

regulations in 24 CFR parts 913, 960, and 966;

(b) An Action Plan, as described in Sec. 984.201, and provide

comprehensive supportive services as defined in Sec. 984.103; and

(c) An FSS program established under this part shall be operated in

compliance with the nondiscrimination and equal opportunity

requirements set forth in 24 CFR part 5, with the exception of

Executive Orders 11246, 11625, 12432, and 12138.

Sec. 984.105 Minimum program size.

(a) General. Unless otherwise excepted from operation of an FSS

program as provided in paragraph (c) of this section, or from operation

of an FSS program of the minimum size as provided in paragraph (d) of

this section, an HA shall operate an FSS program of the minimum size as

determined in this section.

(1) Determining minimum program size. The minimum size of a FSS

program:

(i) For a public housing FSS program, is equal to:

(A) The total number of public housing units reserved in FY 1993,

and each subsequent FY; plus (if applicable)

(B) The number of public housing units reserved in FY 1991 and FY

1992 under the FSS incentive award competitions;

(ii) For a Section 8 FSS program, is equal to:

(A) The total number of rental certificates and rental vouchers

reserved in FY 1993, and each subsequent FY; plus (if applicable)

(B) The number of rental certificates and rental vouchers reserved

under the combined FY 1991/1992 FSS incentive award competition.

(2) Applicable units and certificates and vouchers. In determining

minimum program size, for a public housing FSS program, all new public

housing rental units reserved will be counted and, for a Section 8 FSS

program, all rental certificates and rental vouchers reserved will be

counted, except those used to replace rental certificates or rental

vouchers (renewals).

(b) Maintaining minimum program size. As the contracts of

participation for FSS families are completed or terminated, replacement

FSS families must be selected to maintain the minimum program size. A

replacement family must be selected in accordance with the FSS family

selection procedures set forth in Sec. 984.203.

(c) Exception to program operation. (1) Upon approval by HUD, an HA

will not be required to establish and carry out a public housing or a

Section 8 FSS program if the HA provides to HUD a certification, as

defined in Sec. 984.103, that the establishment and operation of such

an FSS program is not feasible because of local circumstances, which

may include, but are not limited to:

(i) Lack of accessible supportive services funding, including lack

of the availability of programs under JTPA or JOBS;

(ii) Lack of funding for reasonable administrative costs;

(iii) Lack of cooperation by other units of State or local

government; or

(iv) Lack of interest in participating in the FSS program on the

part of eligible families.

(2) An exception will not be granted if HUD determines that local

circumstances do not preclude the HA from effectively operating an FSS

program that is smaller than the minimum program size.

(d) Reduction in program size. Upon approval by HUD, an HA may be

permitted to operate a public housing or a Section 8 FSS program that

is smaller than the minimum program size if the HA provides to HUD a

certification, as defined in Sec. 984.103, that the operation of an FSS

program of the minimum program size is not feasible because of local

circumstances, which may include, but are not limited to:

(1) Decrease in or lack of accessible supportive services,

including decrease in the availability of programs under JTPA or JOBS;

(2) Decrease in or lack of funding for reasonable administrative

costs;

(3) Decrease in or lack of cooperation by other units of State or

local government;

(4) Decrease in or lack of interest in participating in the FSS

program on the part of eligible families.

(e) Review of certification records. HUD reserves the right to

examine, during its management review of the HA, or at any time, the

documentation and data that an HA relied on in certifying to the

unfeasibility of its establishing and operating an FSS program, or of

operating an FSS program of less than minimum program size.

Subpart B--Program Development and Approval Procedures

Sec. 984.201 Action Plan.

(a) Requirement for Action Plan--(1) General. To participate in the

FSS program, an HA must have a HUD-approved Action Plan that complies

with the requirements of this section.

(2) [Reserved]

(b) Development of Action Plan. The Action Plan shall be developed

by the HA in consultation with the chief executive officer of the

applicable unit of general local government, and the Program

Coordinating Committee.

(c) Initial submission and revisions--(1) Initial submission.

Unless the dates set forth in this paragraph (c) are extended by HUD

for good cause, an HA that is establishing its first FSS program must

submit an Action Plan to HUD for approval within 90 days of

notification by HUD of approval of:

(i) The HA's application for incentive award units; or

(ii) If the HA did not apply for FSS incentive award units, other

funding that establishes the obligation to operate an FSS program.

(2) Revision. Following initial approval of the Action Plan by HUD,

no further approval of the Action Plan is required unless the HA

proposes to make policy changes to the Action Plan, or changes are

required by HUD. Any changes to the Action Plan must be submitted to,

and approved by, HUD.

(d) Contents of Plan. The Action Plan shall describe the policies

and procedures of the HA for operation of a local FSS program, and

shall contain, at a minimum, the following information:

(1) Family demographics. A description of the number, size,

characteristics, and other demographics (including racial and ethnic

data), and the supportive service needs of the families expected to

participate in the FSS program;

(2) Estimate of participating families. A description of the number

of eligible

[[Page 8818]]

FSS families who can reasonably be expected to receive supportive

services under the FSS program, based on available and anticipated

Federal, tribal, State, local, and private resources;

(3) Eligible families from other self-sufficiency program. If

applicable, the number of families, by program type, who are

participating in Operation Bootstrap, Project Self-Sufficiency, or any

other local self-sufficiency program who are expected to agree to

execute an FSS contract of participation.

(4) FSS family selection procedures. A statement indicating the

procedures to be utilized to select families for participation in the

FSS program, subject to the requirements governing the selection of FSS

families, set forth in Sec. 984.203. This statement must include a

description of how the HA's selection procedures ensure that families

will be selected without regard to race, color, religion, sex,

handicap, familial status, or national origin.

(5) Incentives to encourage participation--a description of the

incentives that the HA intends to offer eligible families to encourage

their participation in the FSS program (incentives plan). The

incentives plan shall provide for the establishment of the FSS account

in accordance with the requirements set forth in Sec. 984.305, and

other incentives, if any, designed by the HA. The incentives plan shall

be part of the Action Plan.

(6) Outreach efforts. A description of:

(i) The HA's efforts, including notification and outreach efforts,

to recruit FSS participants from among eligible families; and

(ii) The HA's actions to be taken to assure that both minority and

non-minority groups are informed about the FSS program, and how the HA

will make this information known.

(7) FSS activities and supportive services. A description of the

activities and supportive services to be provided by both public and

private resources to FSS families, and identification of the public and

private resources which are expected to provide the supportive

services.

(8) Method for identification of family support needs. A

description of how the FSS program will identify the needs and deliver

the services and activities according to the needs of the FSS families;

(9) Program termination; withholding of services; and available

grievance procedures. A description of the HA's policies concerning:

terminating participation in the FSS program, withholding of supportive

services, or terminating or withholding Section 8 assistance, on the

basis of a family's failure to comply with the requirements of the

contract of participation; and the grievance and hearing procedures

available for FSS families.

(10) Assurances of non-interference with rights of non-

participating families. An assurance that a family's election not to

participate in the FSS program will not affect the family's admission

to public housing or to the Section 8 program or the family's right to

occupancy in accordance with its lease.

(11) Timetable for program implementation. A timetable for

implementation of the FSS program, as provided in Sec. 984.301(a)(1),

including the schedule for filling FSS slots with eligible FSS

families, as provided in Sec. 984.301;

(12) Certification of coordination. A certification that

development of the services and activities under the FSS program has

been coordinated with the JOBS Program; the programs provided under the

JTPA; and any other relevant employment, child care, transportation,

training, and education programs (e.g., Job Training for the Homeless

Demonstration program) in the applicable area, and that implementation

will continue to be coordinated, in order to avoid duplication of

services and activities; and

(13) Optional additional information. Such other information that

would help HUD determine the soundness of the HA's proposed FSS

program.

(e) Eligibility of a combined program. An HA that wishes to operate

a joint FSS program with other HAs may combine its resources with one

or more HAs to deliver supportive services under a joint Action Plan

that will provide for the establishment and operation of a combined FSS

program that meets the requirements of this part.

(f) Single action plan. HAs implementing both a Section 8 FSS

program and a public or Indian housing FSS program may submit one

Action Plan.

Sec. 984.202 Program Coordinating Committee (PCC).

(a) General. Each participating HA must establish a PCC whose

functions will be to assist the HA in securing commitments of public

and private resources for the operation of the FSS program within the

HA's jurisdiction, including assistance in developing the Action Plan

and in implementing the program.

(b) Membership--(1) Required membership. The PCC must: (i) For a

public housing FSS program, consist of representatives of the PHA, and

the residents of public housing. The public housing resident

representatives shall be solicited from one or more of the following

groups:

(A) An area-wide or city-wide resident council, if one exists;

(B) If the PHA will be transferring FSS participants to vacant

units in a specific public housing development, the resident council or

resident management corporation, if one exists, of the public housing

development where the public housing FSS program is to be carried out;

(C) Any other public housing resident group, which the PHA believes

is interested in the FSS program, and would contribute to the

development and implementation of the FSS program; and

(ii) For a Section 8 FSS program, consist of representatives of the

HA, and of residents assisted under the section 8 rental certificate or

rental voucher program or under HUD's public or Indian housing

programs.

(2) Recommended membership. Membership on the PCC also may include

representatives of the unit of general local government served by the

HA, local agencies (if any) responsible for carrying out JOBS training

programs, or programs under the JTPA, and other organizations, such as

other State, local or tribal welfare and employment agencies, public

and private education or training institutions, child care providers,

nonprofit service providers, private business, and any other public and

private service providers with resources to assist the FSS program.

(c) Alternative committee. The HA may, in consultation with the

chief executive officer of the unit of general local government served

by the HA, utilize an existing entity as the PCC if the membership of

the existing entity consists or will consist of the individuals

identified in paragraph (b)(1) of this section, and also includes

individuals from the same or similar organizations identified in

paragraph (b)(2) of this section.

Sec. 984.203 FSS family selection procedures.

(a) Preference in the FSS selection process. An HA has the option

of giving a selection preference for up to 50 percent of its public

housing FSS slots and of its Section 8 FSS slots respectively to

eligible families, as defined in Sec. 984.103, who have one or more

family members currently enrolled in an FSS related service program or

on the waiting list for such a program. The HA may limit the selection

preference given to participants in and applicants for FSS related

service programs to one or more eligible FSS related service

[[Page 8819]]

programs. An HA that chooses to exercise the selection preference

option must include the following information in its Action Plan:

(1) The percentage of FSS slots, not to exceed 50 percent of the

total number of FSS slots for each of its FSS programs, for which it

will give a selection preference;

(2) The FSS related service programs to which it will give a

selection preference to the programs' participants and applicants; and

(3) The method of outreach to, and selection of, families with one

or more members participating in the identified programs.

(b) FSS selection without preference. For those FSS slots for which

the HA chooses not to exercise the selection preference provided in

paragraph (a) of this section, the FSS slots must be filled with

eligible families in accordance with an objective selection system,

such as a lottery, the length of time living in subsidized housing, or

the date the family expressed an interest in participating in the FSS

program. The objective system to be used by the HA must be described in

the HA's Action Plan.

(c) Motivation as a selection factor--(1) General. An HA may screen

families for interest, and motivation to participate in the FSS

program, provided that the factors utilized by the HA are those which

solely measure the family's interest, and motivation to participate in

the FSS program.

(2) Permissible motivational screening factors. Permitted

motivational factors include requiring attendance at FSS orientation

sessions or preselection interviews, and assigning certain tasks which

indicate the family's willingness to undertake the obligations which

may be imposed by the FSS contract of participation. However, any tasks

assigned shall be those which may be readily accomplishable by the

family, based on the family members' educational level, and

disabilities, if any. Reasonable accommodations must be made for

individuals with mobility, manual, sensory, speech impairments, mental

or developmental disabilities.

(3) Prohibited motivational screening factors. Prohibited

motivational screening factors include the family's educational level,

educational or standardized motivational test results, previous job

history or job performance, credit rating, marital status, number of

children, or other factors, such as sensory or manual skills, and any

factors which may result in discriminatory practices or treatment

toward individuals with disabilities or minority or non-minority

groups.

Sec. 984.204 On-site facilities.

Each HA may, subject to the approval of HUD, make available and

utilize common areas or unoccupied dwelling units in public housing

projects (or for IHAs, in Indian housing projects) to provide

supportive services under an FSS program, including a Section 8 FSS

program.

Subpart C--Program Operation

Sec. 984.301 Program implementation.

(a) Program implementation deadline--(1) Program start-up. Except

as provided in paragraph (a)(3) of this section, operation of a local

FSS program must begin within 12 months of the earlier of notification

to the HA of HUD's approval of the incentive award units or of other

funding that establishes the obligation to operate an FSS program.

Operation means that activities such as outreach, participant

selection, and enrollment have begun. Full delivery of the supportive

services to be provided to the total number of families required to be

served under the program need not occur within 12 months, but must

occur by the deadline set forth in paragraph (a)(2) of this section.

(2) Full enrollment and delivery of service. Except as provided in

paragraph (a)(3) of this section, the HA must have completed enrollment

of the total number of families required to be served under the FSS

program (based on the minimum program size), and must have begun

delivery of the supportive services within two years from the date of

notification of approval of the application for new public housing

units for a public housing FSS program or for new rental certificates

or rental vouchers for a Section 8 FSS program.

(3) Extension of program deadlines for good cause. HUD may extend

the deadline set forth in either paragraph (a)(1) or paragraph (a)(2)

of this section if the HA requests an extension, and HUD determines

that, despite best efforts on the part of the HA, the development of

new public housing units will not occur within the deadlines set forth

in this paragraph (a), the commitment by public or private resources to

deliver supportive services has been withdrawn, the delivery of such

services has been delayed, or other local circumstances warrant an

extension of the deadlines set forth in this paragraph (a).

(b) Program administration. An HA may employ appropriate staff,

including a service coordinator or program coordinator to administer

its FSS program, and may contract with an appropriate organization to

establish and administer the FSS program, including the FSS account, as

provided by Sec. 984.305.

Sec. 984.302 Administrative fees.

(a) Public housing FSS program. The performance funding system

(PFS), provided under section 9(a) of the 1937 Act, shall provide for

the inclusion of reasonable and eligible administrative costs incurred

by PHAs in carrying out the minimum program size of the public housing

FSS programs. These costs are subject to appropriations by the

Congress. However, a PHA may use other resources for this purpose.

(b) Section 8 FSS program. The administrative fees paid to HAs for

HUD-approved costs associated with operation of an FSS program are

established by the Congress and subject to appropriations.

Sec. 984.303 Contract of participation.

(a) General. Each family that is selected to participate in an FSS

program must enter into a contract of participation with the HA that

operates the FSS program in which the family will participate. The

contract of participation shall be signed by the head of the FSS

family.

(b) Form and content of contract--(1) General. The contract of

participation, which incorporates the individual training and services

plan(s), shall be in the form prescribed by HUD, and shall set forth

the principal terms and conditions governing participation in the FSS

program, including the rights and responsibilities of the FSS family

and of the HA, the services to be provided to, and the activities to be

completed by, the head of the FSS family and each adult member of the

family who elects to participate in the program.

(2) Interim goals. The individual training and services plan,

incorporated in the contract of participation, shall establish specific

interim and final goals by which the HA, and the family, may measure

the family's progress toward fulfilling its obligations under the

contract of participation, and becoming self-sufficient. For each

participating FSS family that is a recipient of welfare assistance, the

HA must establish as an interim goal that the family become independent

from welfare assistance and remain independent from welfare assistance

at least one year before the expiration of the term of the contract of

participation, including any extension thereof.

(3) Compliance with lease terms. The contract of participation

shall provide that one of the obligations of the FSS family is to

comply with the terms and

[[Page 8820]]

conditions of the respective public housing lease or Section 8-assisted

lease.

(4) Employment obligation--(i) Head of family's obligation. The

head of the FSS family shall be required under the contract of

participation to seek and maintain suitable employment during the term

of the contract and any extension thereof. Although other members of

the FSS family may seek and maintain employment during the term of the

contract, only the head of the FSS family is required to seek and

maintain suitable employment.

(ii) Seek employment. The obligation to seek employment means that

the head of the FSS family has applied for employment, attended job

interviews, and has otherwise followed through on employment

opportunities.

(iii) Determination of suitable employment. A determination of

suitable employment shall be made by the HA based on the skills,

education, and job training of the individual that has been designated

the head of the FSS family, and based on the available job

opportunities within the jurisdiction served by the HA.

(5) Consequences of noncompliance with the contract. The contract

of participation shall specify that if the FSS family fails to comply,

without good cause, with the terms and conditions of the contract of

participation, which includes compliance with the public housing lease

or the Section 8-assisted lease, the HA may:

(i) Withhold the supportive services;

(ii) Terminate the family's participation in the FSS program; or

(iii) For the Section 8 FSS program, terminate or withhold the

family's Section 8 assistance, except in the case where the only basis

for noncompliance with the contract of participation is noncompliance

with the lease, or failure to become independent from welfare

assistance. However, failure to become independent from welfare

assistance because of failure of the head of household to meet the

employment obligation described in paragraph (a)(4) of this section, or

failure of the FSS family to meet any other obligation under the

contract of participation, except the interim goal concerning welfare

assistance, is grounds for the HA to terminate or withhold Section 8

assistance.

(c) Contract term. The contract of participation shall provide that

each FSS family will be required to fulfill those obligations to which

the participating family has committed itself under the contract of

participation no later than 5 years after the effective date of the

contract.

(d) Contract extension. The HA shall, in writing, extend the term

of the contract of participation for a period not to exceed two years

for any FSS family that requests, in writing, an extension of the

contract, provided that the HA finds that good cause exists for

granting the extension. The family's written request for an extension

must include a description of the need for the extension. As used in

this paragraph (d), ``good cause'' means circumstances beyond the

control of the FSS family, as determined by the HA, such as a serious

illness or involuntary loss of employment. Extension of the contract of

participation will entitle the FSS family to continue to have amounts

credited to the family's FSS account in accordance with Sec. 984.304.

(e) Unavailability of supportive services--(1) Good faith effort to

replace unavailable services. If a social service agency fails to

deliver the supportive services pledged under an FSS family member's

individual training and services plan, the HA shall make a good faith

effort to obtain these services from another agency.

(2) Assessment of necessity of services. If the HA is unable to

obtain the services from another agency, the HA shall reassess the

family member's needs, and determine whether other available services

would achieve the same purpose. If other available services would not

achieve the same purpose, the HA shall determine whether the

unavailable services are integral to the FSS family's advancement or

progress toward self-sufficiency. If the unavailable services are:

(i) Determined not to be integral to the FSS family's advancement

toward self-sufficiency, the HA shall revise the individual training

and services plan to delete these services, and modify the contract of

participation to remove any obligation on the part of the FSS family to

accept the unavailable services, in accordance with paragraph (f) of

this section; or

(ii) Determined to be integral to the FSS family's advancement

toward self-sufficiency (which may be the case if the affected family

member is the head of the FSS family), the HA shall declare the

contract of participation null and void. Nullification of the contract

of participation on the basis of unavailability of supportive services

shall not be grounds for termination of Section 8 assistance.

(f) Modification. The HA and the FSS family may mutually agree to

modify the contract of participation. The contract of participation may

be modified in writing with respect to the individual training and

services plans, the contract term in accordance with paragraph (d) of

this section, and designation of the head of the family.

(g) Completion of the contract. The contract of participation is

considered to be completed, and a family's participation in the FSS

program is considered to be concluded when one of the following occurs:

(1) The FSS family has fulfilled all of its obligations under the

contract of participation on or before the expiration of the contract

term, including any extension thereof; or

(2) 30 percent of the monthly adjusted income of the FSS family

equals or exceeds the published existing housing fair market rent for

the size of the unit for which the FSS family qualifies based on the

HA's occupancy standards. The contract of participation will be

considered completed and the family's participation in the FSS program

concluded on this basis even though the contract term, including any

extension thereof, has not expired, and the family members who have

individual training and services plans have not completed all the

activities set forth in their plans.

(h) Termination of the contract. The contract of participation is

automatically terminated if the family's Section 8 assistance is

terminated in accordance with HUD requirements. The contract of

participation may be terminated before the expiration of the contract

term, and any extension thereof, by:

(1) Mutual consent of the parties;

(2) The failure of the FSS family to meet its obligations under the

contract of participation without good cause, including in the Section

8 FSS program the failure to comply with the contract requirements

because the family has moved outside the jurisdiction of the HA;

(3) The family's withdrawal from the FSS program;

(4) Such other act as is deemed inconsistent with the purpose of

the FSS program; or

(5) Operation of law.

(i) Option to terminate Section 8 housing and supportive service

assistance. The HA may terminate or withhold Section 8 housing

assistance, the supportive services, and the FSS family's participation

in the FSS program, if the HA determines, in accordance with the

hearing procedures provided in 24 CFR 982.555 that the FSS family has

failed to comply without good cause with the requirements of the

contract of participation as provided in paragraph (b)(5) of this

section.

[[Page 8821]]

(j) Transitional supportive service assistance. An HA may continue

to offer to a former FSS family who has completed its contract of

participation and whose head of family is employed, appropriate FSS

supportive services in becoming self-sufficient (if the family still

resides in public housing, or Section 8-assisted housing), or in

remaining self-sufficient (if the family no longer resides in public,

Section 8-assisted housing, or other assisted housing).

Sec. 984.304 Total tenant payment, family rent, and increases in

family income.

(a)(1) Public housing FSS program: Calculation of total tenant

payment. Total tenant payment for a family participating in the public

housing FSS program is determined in accordance with the regulations

set forth in 24 CFR part 913.

(2) Section 8 FSS program: Calculation of family rent. For the

rental certificate program, total tenant payment for a family

participating in the Section 8 FSS program and the amount of the

housing assistance payment is determined in accordance with the

regulations set forth in 24 CFR parts 813 and 882. For the rental

voucher program, the housing assistance payment for a family

participating in the FSS program is determined in accordance with the

regulations set forth in 24 CFR part 887.

(b) Increases in FSS family income. Any increase in the earned

income of an FSS family during its participation in an FSS program may

not be considered as income or a resource for purposes of eligibility

of the FSS family for other benefits, or amount of benefits payable to

the FSS family, under any other program administered by HUD, unless the

income of the FSS family equals or exceeds 80 percent of the median

income of the area (as determined by HUD, with adjustments for smaller

and larger families).

Sec. 984.305 FSS account.

(a) Establishment of FSS account--(1) General. The HA shall deposit

the FSS account funds of all families participating in the HA's FSS

program into a single depository account. The HA must deposit the FSS

account funds in one or more of the HUD-approved investments.

(2) Accounting for FSS account funds--(i) Accounting records. The

total of the combined FSS account funds will be supported in the HA

accounting records by a subsidiary ledger showing the balance

applicable to each FSS family. During the term of the contract of

participation, the HA shall credit periodically, but not less than

annually, to each family's FSS account, the amount of the FSS credit

determined in accordance with paragraph (b) of this section.

(ii) Proration of investment income. The investment income for

funds in the FSS account will be prorated and credited to each family's

FSS account based on the balance in each family's FSS account at the

end of the period for which the investment income is credited.

(iii) Reduction of amounts due by FSS family. If the FSS family has

not paid the family contribution towards rent, or other amounts, if

any, due under the public housing or section 8-assisted lease, the

balance in the family's FSS account shall be reduced by that amount (as

reported by the owner to the HA in the Section 8 FSS program) before

prorating the interest income. If the FSS family has fraudulently

under-reported income, the amount credited to the FSS account will be

based on the income amounts originally reported by the FSS family.

(3) Reporting on FSS account. Each HA will be required to make a

report, at least once annually, to each FSS family on the status of the

family's FSS account. At a minimum, the report will include:

(i) The balance at the beginning of the reporting period;

(ii) The amount of the family's rent payment that was credited to

the FSS account, during the reporting period;

(iii) Any deductions made from the account for amounts due the HA

before interest is distributed;

(iv) The amount of interest earned on the account during the year;

and

(v) The total in the account at the end of the reporting period.

(b) FSS credit--(1) Computation of amount. For purposes of

determining the FSS credit, ``family rent'' is: for the public housing

program, the total tenant payment as defined in 24 CFR part 913; for

the rental certificate program, the total tenant payment as defined in

24 CFR part 813; and for the rental voucher program, 30 percent of

adjusted monthly income. The FSS credit shall be computed as follows:

(i) For FSS families who are very low-income families, the FSS

credit shall be the amount which is the lesser of:

(A) Thirty percent of current monthly adjusted income less the

family rent, which is obtained by disregarding any increases in earned

income (as defined in Sec. 984.103) from the effective date of the

contract of participation; or

(B) The current family rent less the family rent at the time of the

effective date of the contract of participation.

(ii) For FSS families who are low-income families but not very low-

income families, the FSS credit shall be the amount determined

according to paragraph (b)(1)(i) of this section, but which shall not

exceed the amount computed for 50 percent of median income.

(2) Ineligibility for FSS credit. FSS families who are not low-

income families shall not be entitled to any FSS credit.

(3) Cessation of FSS credit. The HA shall not make any additional

credits to the FSS family's FSS account when the FSS family has

completed the contract of participation, as defined in Sec. 984.303(g),

or when the contract of participation is terminated or otherwise

nullified.

(c) Disbursement of FSS account funds--(1) General. The amount in

an FSS account, in excess of any amount owed to the HA by the FSS

family, as provided in paragraph (a)(3)(iii) of this section, shall be

paid to the head of the FSS family when the contract of participation

has been completed as provided in Sec. 984.303(g), and if, at the time

of contract completion, the head of the FSS family submits to the HA a

certification, as defined in Sec. 984.103, that, to the best of his or

her knowledge and belief, no member of the FSS family is a recipient of

welfare assistance.

(2) Disbursement before expiration of contract term. (i) If the HA

determines that the FSS family has fulfilled its obligations under the

contract of participation before the expiration of the contract term,

and the head of the FSS family submits a certification that, to the

best of his or her knowledge, no member of the FSS family is a

recipient of welfare assistance, the amount in the family's FSS

account, in excess of any amount owed to the HA by the FSS family, as

provided in paragraph (a)(3)(iii) of this section, shall be paid to the

head of the FSS family.

(ii) If the HA determines that the FSS family has fulfilled certain

interim goals established in the contract of participation and needs a

portion of the FSS account funds for purposes consistent with the

contract of participation, such as completion of higher education

(i.e., college, graduate school), or job training, or to meet start-up

expenses involved in creation of a small business, the HA may, at the

HA's sole option, disburse a portion of the funds from the family's FSS

account to assist the family meet those expenses.

(3) Verification of family certification. Before disbursement of

the FSS account funds to the family, the HA may verify that the FSS

family is no longer a recipient of welfare assistance by

[[Page 8822]]

requesting copies of any documents which may indicate whether the

family is receiving any welfare assistance, and contacting welfare

agencies.

(d) Succession to FSS account. If the head of the FSS family ceases

to reside with other family members in the public housing or the

Section 8-assisted unit, the remaining members of the FSS family, after

consultation with the HA, shall have the right to designate another

family member to receive the funds in accordance with paragraph (c) (1)

or (2) of this section.

(e) Use of FSS account funds for homeownership. A public housing

FSS family may use its FSS account funds for the purchase of a home,

including the purchase of a home under one of HUD's homeownership

programs, or other Federal, State, or local homeownership programs

unless such use is prohibited by the statute or regulations governing

the particular homeownership program.

(f) Forfeiture of FSS account funds--(1) Conditions for forfeiture.

Amounts in the FSS account shall be forfeited upon the occurrence of

the following:

(i) The contract of participation is terminated, as provided in

Sec. 984.303(e) or Sec. 984.303(h); or

(ii) The contract of participation is completed by the family, as

provided in Sec. 984.303(g), but the FSS family is receiving welfare

assistance at the time of expiration of the term of the contract of

participation, including any extension thereof.

(2) Treatment of forfeited FSS account funds--(i) Public housing

FSS program. FSS account funds forfeited by the FSS family will be

credited to the PHA's operating reserves and counted as other income in

the calculation of the PFS operating subsidy eligibility for the next

budget year.

(ii) Section 8 FSS program. FSS account funds forfeited by the FSS

family will be treated as program receipts for payment of program

expenses under the HA budget for the applicable Section 8 program, and

shall be used in accordance with HUD requirements governing the use of

program receipts.

Sec. 984.306 Section 8 residency and portability requirements.

(a) Relocating FSS family. For purposes of this section, the term

``relocating FSS family'' refers to an FSS family that moves from the

jurisdiction of an HA at least 12 months after signing its contract of

participation.

(b) Initial occupancy. A family participating in the Section 8 FSS

program must lease an assisted unit, for a minimum period of 12 months

after the effective date of the contract of participation, in the

jurisdiction of the HA which selected the family for the FSS program.

Thereafter, the FSS family may move outside the jurisdiction of the

initial HA consistent with the regulations of 24 CFR part 982.

(c) Portability: relocation but continued participation in the FSS

program of the initial HA--(1) General. A relocating FSS family may

continue in the FSS program of the initial HA if the family

demonstrates to the satisfaction of the initial HA that,

notwithstanding the move, the relocating FSS family will be able to

fulfill its responsibilities under the initial or modified contract of

participation at its new place of residence. (For example, the FSS

family may be able to commute to the supportive services specified in

the contract of participation, or the family may move to obtain

employment as specified in the contract.)

(2) Single contract of participation. If the relocating family

remains in the FSS program of the initial HA, there will only be one

contract of participation, which shall be the contract executed by the

initial HA.

(d) Portability: relocation and participation in the FSS program of

the receiving HA--(1) General. A relocating FSS family may participate

in the FSS program of the receiving HA, if the receiving HA allows the

family to participate in its program. An HA is not obligated to enroll

a relocating FSS family in its FSS program.

(2) Two contracts of participation. If the receiving HA allows the

relocating FSS family to participate in its FSS program, the receiving

HA will enter into a new contract of participation with the FSS family

for the term on the remaining contract with the initial HA. The initial

HA will terminate its contract of participation with the family.

(e) Single FSS account. Regardless of whether the relocating FSS

family remains in the FSS program of the initial HA or is enrolled in

the FSS program of the receiving HA, there will be a single FSS account

which will be maintained by the initial HA. When an FSS family will be

absorbed by the receiving HA, the initial HA will transfer the family's

FSS account to the receiving HA.

(f) FSS program termination; loss of FSS account; and termination

of Section 8 assistance. (1) If an FSS family that relocates to another

jurisdiction, as provided under this section, is unable to fulfill its

obligations under the contract of participation, or any modifications

thereto, the HA, which is party to the contract of participation, may:

(i) Terminate the FSS family from the FSS program and the family's

FSS account will be forfeited; and

(ii) Terminate the FSS family's Section 8 assistance on the ground

that the family failed to meet its obligations under the contract of

participation.

(2) In the event of forfeiture of the family's FSS account, the

funds in the family's FSS account will revert to the HA maintaining the

FSS account for the family.

Subpart D--Reporting

Sec. 984.401 Reporting.

Each HA that carries out an FSS program under this part shall

submit to HUD, in the form prescribed by HUD, a report regarding its

FSS program. The report shall include the following information:

(a) A description of the activities carried out under the program;

(b) A description of the effectiveness of the program in assisting

families to achieve economic independence and self-sufficiency;

(c) A description of the effectiveness of the program in

coordinating resources of communities to assist families to achieve

economic independence and self-sufficiency; and

(d) Any recommendations by the HA or the appropriate local program

coordinating committee for legislative or administrative action that

would improve the FSS program and ensure the effectiveness of the

program.

Dated: February 26, 1996.

Kevin E. Marchman,

Acting Assistant Secretary for Public and Indian Housing.

[FR Doc. 96-4908 Filed 3-4-96; 8:45 am]

BILLING CODE 4210-33-P