Office of the Assistant Secretary for HousingFederal Housing Commissioner; Consolidation of Regulations for Project-Based Section 8 Programs

SUMMARY: This rule removes obsolete provisions concerning development

of housing under regulations for the Section 8 project-based assistance

programs for New Construction, Substantial Rehabilitation, and State

Housing Agencies, and Rural Rental Housing now found in 24 CFR parts

880, 881, 883, and 884. It also consolidates into one part, the certain

nearly identical provisions concerning the housing assistance payments

contract and management for the New Construction, Substantial

Rehabilitation, and State Housing Agencies programs that are now found

in three parts.

EFFECTIVE DATE: April 26, 1996.

FOR FURTHER INFORMATION CONTACT: For development issues: Jane Luton,

Director, New Products Division (telephone: (202) 708-2556, ext. 2537)

or for management issues: Barbara D. Hunter, Director, Program

Management Division (telephone: (202) 708-4162, ext. 2632), Office of

Multifamily Housing, Department of Housing and Urban Development, 451

Seventh Street, SW, Washington, D.C. 20410. The above telephone numbers

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. 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.

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.

The authority for funding activity under the Section 8 project-

based assistance programs affected by this rule was repealed in 1983,

and there have been no projects in the development stage for a

substantial period. This rule, accordingly, removes from 24 CFR parts

880, 881, 883, and 884 obsolete provisions relating to the development

of projects under these parts. The removed provisions include but are

not limited to: part 880, subparts C and D; part 881, subparts C, D,

and G; and part 883, subparts B, D, and E. Section 883.106, added by

this rule, replaces current Sec. 883.201, which was in subpart B. In

part 884, individual sections have been removed.

This rule also consolidates into part 880, subparts E and F, the

closely-related housing assistance payments (HAP) contract and the

management regulations currently contained in parts 880, 881, and 883.

Because of the similarity of the two sets of HAP contract regulations,

Secs. 881.505 through 881.508 have been removed and replaced by a

cross-reference to the same sections in part 880, subpart E. (See

Sec. 881.503) In part 883, which is not as closely related to part 880,

Secs. 883.605 and 883.608 have been replaced by cross-reference to the

comparable Secs. 880.504 and 880.508 provisions in part 880, subpart E.

In both parts 881 and 883, the respective Management subparts have

been removed and replaced by cross-references to part 880, subpart F.

Part 880, subpart F has been revised to include certain part 883-

specific requirements, where the current part 883 requirements differ

from those applicable to part 880 and part 881 projects.

The New Construction Set-Aside for Section 515 Rural Rental Housing

Projects program, contained in part 884, is administered by the Rural

Housing and Community Development Service, successor agency to the

Farmers Home Administration, under a memorandum of understanding. The

part 884 provisions have not been consolidated into part 880.

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

obsolete regulatory provisions and does not establish or affect

substantive policy. Therefore, prior public comment is unnecessary.

Findings and Certifications

Impact on the Environment

A Finding of No Significant Impact with respect to the environment

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

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

Act of 1969. The Finding of No Significant Impact is available for

public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the

Office of the Rules Docket Clerk at the above address.

Federalism Impact

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 do not have significant impact on States or

their political subdivisions since the rule merely consolidates

existing provisions into one part.

Impact on 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, since it only consolidates and streamlines existing

provisions. Therefore, the rule is not subject to review under the

Order.

Impact on Small Entities

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 will not have a significant

impact on a substantial number of small entities, because it makes no

substantive changes in the regulations affected.

Catalog

The Catalog of Federal Domestic Assistance number for the programs

affected by this rule is 14.182.

[[Page 13587]]

List of Subjects

24 CFR Part 880

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

Reporting and recordkeeping requirements.

24 CFR Part 881

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

Reporting and recordkeeping requirements.

24 CFR Part 883

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

Reporting and recordkeeping requirements.

24 CFR Part 884

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

Reporting and recordkeeping requirements, Rural areas.

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

reasons stated in the preamble, parts 880, 881, 883, and 884 of title

24 of the Code of Federal Regulations are amended as follows:

PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW

CONSTRUCTION

1. The authority citation for part 880 continues to read as

follows:

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and

13611-13619.

Subpart A--Summary and Applicability

2. Section 880.101 is revised to read as follows:

Sec. 880.101 General.

(a) The purpose of the Section 8 program is to provide low-income

families with decent, safe and sanitary rental housing through the use

of a system of housing assistance payments. This part contains the

policies and procedures applicable to the Section 8 new construction

program. The assistance may be provided to public housing agency owners

or to private owners either directly from HUD or through public housing

agencies.

(b) This part does not apply to projects developed under other

Section 8 program regulations, including 24 CFR parts 881, 882, 883,

884, and 885, except to the extent specifically stated in those parts.

Portions of subparts E and F of this part 880 have been cross-

referenced in 24 CFR parts 881 and 883.

Secs. 880.102 and 880.103 [Removed]

3. Sections 880.102 and 880.103 are removed.

4. Section 880.104 is revised to read as follows:

Sec. 880.104 Applicability of part 880 in effect as of November 5,

1979.

(a) Part 880, in effect as of November 5, 1979, applies to all

proposals for which a notification of selection was not issued before

the November 5, 1979 effective date of part 880. (See 24 CFR part 880,

revised as of April 1, 1980.) Where a notification of selection was

issued for a proposal before the November 5, 1979 effective date, part

880, in effect as of November 5, 1979, applies if the owner notified

HUD within 60 calendar days that the owner wished the provisions of

part 880, effective November 5, 1979, to apply and promptly brought the

proposal into conformance.

(b) Subparts E (Housing Assistance Payments Contract) and F

(Management) of this part apply to all projects for which an Agreement

was not executed before the November 5, 1979, effective date of part

880. Where an Agreement was so executed:

(1) The owner and HUD may agree to make the revised subpart E of

this part applicable and to execute appropriate amendments to the

Agreement and/or Contract.

(2) The owner and HUD may agree to make the revised subpart F of

this part applicable (with or without the limitation on distributions)

and to execute appropriate amendments to the Agreement and/or Contract.

(c) Section 880.607, Termination of Tenancy and Modification of

Leases, applies to new families who begin occupancy or execute a lease

on or after 30 days after the November 5, 1979, effective date of part

880. This section also applies to families not covered by the preceding

sentence, including existing families under lease, with respect to all

leases in which a renewal becomes effective on or after the 60th day

following the November 5, 1979 effective date of part 880. A lease is

considered to be renewed where both the landlord and the family fail to

terminate a tenancy under a lease permitting either party to terminate.

(d) Notwithstanding the provisions of paragraph (b) of this

section, the provisions of 24 CFR part 5 (concerning preferences for

selection of applicants) apply to all projects, regardless of when an

Agreement was executed.

Subpart B--Definitions and Other Requirements

5. The heading for subpart B of part 880 is revised as set forth

above.

6. Section 880.201 is amended by removing the definitions of

``Allocation area'', ``New Communities'', and ``Preliminary proposal''

and by adding in alphabetical order, the definition of ``Agency'', to

read as follows:

Sec. 880.201 Definitions.

* * * * *

Agency. As defined in 24 CFR part 883.

* * * * *

Secs. 880.202, 880.203, 880.204, 880.206, 880.209, and

880.210 [Removed]

7. Sections 880.202, 880.203, 880.204, 880.206, 880.209, and

880.210 are removed.

Subparts C and D--[Removed and Reserved]

8. Subpart C (Secs. 880.301 through 880.311) and subpart D

(Secs. 880.401 through 880.405) of part 880 are removed and reserved.

Subpart E--Housing Assistance Payments Contract

9. Section 880.501 is amended by revising paragraph (a), and by

removing and reserving paragraph (b), to read as follows:

Sec. 880.501 The contract.

(a) Contract. The Housing Assistance Payments Contract sets forth

rights and duties of the owner and the contract administrator with

respect to the project and the housing assistance payments. The owner

and contract administrator execute the Contract in the form prescribed

by HUD upon satisfactory completion of the project.

(b) [Reserved]

* * * * *

10. In Sec. 880.504, paragraphs (b), (c) introductory text, (c)(1),

and (e) are revised, to read as follows:

Sec. 880.504 Leasing to eligible families.

* * * * *

(b) Reduction of number of units covered by Contract. (1) Part 880

and 24 CFR part 881 projects. HUD (or the PHA at the direction of HUD,

as appropriate) may reduce the number of units covered by the Contract

to the number of units available for occupancy by eligible families if:

(i) The owner fails to comply with the requirements of paragraph

(a) of this section; or

(ii) Notwithstanding any prior approval by the contract

administrator to lease such units to ineligible families, HUD (or the

PHA at the direction of HUD, as appropriate) determines that the

inability to lease units to eligible families is not a temporary

problem.

(2) For 24 CFR part 883 projects. HUD and the Agency may reduce the

number

[[Page 13588]]

of units covered by the Contract to the number of units available for

occupancy by eligible families if:

(i) The owner fails to comply with the requirements of paragraph

(a) of this section; or

(ii) Notwithstanding any prior approval by the Agency to lease such

units to ineligible families, HUD and the Agency determine that the

inability to lease units to eligible families is not a temporary

problem.

(c) Restoration. For this part 880 and 24 CFR part 881 projects,

HUD will agree to an amendment of the ACC or the Contract, as

appropriate, to provide for subsequent restoration of any reduction

made pursuant to paragraph (b) of this section, and for 24 CFR part 883

projects, HUD will agree to an amendment of the ACC and the Agency may

agree to an amendment to the Contract to provide for subsequent

restoration of any reduction made pursuant to paragraph (b) of this

section, if:

(1) HUD determines (for 24 CFR part 883 projects, HUD and the

Agency determine) that the restoration is justified by demand,

* * * * *

(e) Termination of assistance for failure to submit evidence of

citizenship or eligible immigration status. If an owner who is subject

to paragraphs (a) and (b) of this section is required to terminate

housing assistance payments for the family in accordance with 24 CFR

part 5 because the owner determines that the entire family does not

have U.S. citizenship or eligible immigration status, the owner may

allow continued occupancy of the unit by the family without Section 8

assistance following the termination of assistance, or if the family

constitutes a mixed family, as defined in 24 CFR part 5, the owner

shall comply with the provisions of 24 CFR part 5 concerning assistance

to mixed families, and deferral of termination of assistance.

Subpart F--Management

11. Section 880.601 is amended by revising paragraphs (a)(4), (b),

(c), and (e), to read as follows:

Sec. 880.601 Responsibilities of owner.

(a) * * *

(4) At the time of Contract execution, the owner must submit a list

of leased and unleased units, with justification for the unleased

units, in order to qualify for vacancy payments for the unleased units.

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

management functions, including determining eligibility of applicants

in accordance with 24 CFR parts 5 and 24 CFR part 813, provision of

Federal selection preferences in accordance with 24 CFR part 5,

selection of tenants, obtaining and verifying Social Security Numbers

submitted by families (as provided by 24 CFR part 5), obtaining signed

consent forms from families for the obtaining of wage and claim

information from State Wage Information Collection Agencies (as

provided by 24 CFR part 5), reexamination of family income, evictions

and other terminations of tenancy, and collection of rents, and all

repair and maintenance functions (including ordinary and extraordinary

maintenance and replacement of capital items). All these functions

shall be performed in compliance with applicable Equal Opportunity

requirements.

(c) Contracting for services. (1) For this part 880 and 24 CFR part

881 projects, with HUD approval, the owner may contract with a private

or public entity (except the contract administrator) for performance of

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

section.

(2) For 24 CFR part 883 projects, with approval of the Agency, the

owner may contract with a private or public entity (but not with the

Agency unless temporarily necessary for the Agency to protect its

financial interest and to uphold its program responsibilities where no

alternative management agent is immediately available) for performance

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

section.

(3) However, such an arrangement does not relieve the owner of

responsibility for these services and duties.

* * * * *

(e) Use of project funds. (1) Project funds must be used for the

benefit of the project, to make required deposits to the replacement

reserve in accordance with Sec. 880.602 and to provide distributions to

the owner as provided in Sec. 880.205, Sec. 881.205 of this chapter, or

Sec. 883.306 of this chapter, as appropriate.

(2) For this part 880 and 24 CFR part 881 projects:

(i) Any remaining project funds must be deposited with the

mortgagee or other HUD-approved depository in an interest-bearing

residual receipts account. Withdrawals from this account will be made

only for project purposes and with the approval of HUD.

(ii) Partially-assisted projects are exempt from the provisions of

this section.

(iii) In the case of HUD-insured projects, the provisions of this

paragraph (e) will apply instead of the otherwise applicable mortgage

insurance provisions.

(3) For 24 CFR part 883 projects:

(i) Any remaining project funds must be deposited with the Agency,

other mortgagee or other Agency-approved depository in an interest-

bearing account. Withdrawals from this account may be made only for

project purposes and with the approval of the Agency.

(ii) In the case of HUD-insured projects, the provisions of this

paragraph will apply instead of the otherwise applicable mortgage

insurance provisions, except in the case of partially-assisted projects

which are subject to the applicable mortgage insurance provisions.

* * * * *

12. Section 880.602 is revised to read as follows:

Sec. 880.602 Replacement reserve.

(a) A replacement reserve must be established and maintained in an

interest-bearing account to aid in funding extraordinary maintenance

and repair and replacement of capital items.

(1) Part 880 and 24 CFR part 881 projects. (i) For this part 880

and 24 CFR part 811 projects, an amount equivalent to .006 of the cost

of total structures, including main buildings, accessory buildings,

garages and other buildings, or any higher rate as required by HUD from

time to time, will be deposited in the replacement reserve annually.

This amount will be adjusted each year by the amount of the automatic

annual adjustment factor.

(ii) The reserve must be built up to and maintained at a level

determined by HUD to be sufficient to meet projected requirements.

Should the reserve achieve that level, the rate of deposit to the

reserve may be reduced with the approval of HUD.

(iii) All earnings including interest on the reserve must be added

to the reserve.

(iv) Funds will be held by the mortgagee or trustee for

bondholders, and may be drawn from the reserve and used only in

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

by, HUD.

(v) Partially-assisted part 880 and 24 CFR part 881 projects are

exempt from the provisions of this section.

(2) Part 883 of this chapter projects. (i) For 24 CFR part 883

projects, an amount equivalent to at least .006 of the cost of total

structures, including main buildings, accessory buildings, garages and

other buildings, or any higher rate as required from time to time by:

[[Page 13589]]

(A) The Agency, in the case of projects approved under 24 CFR part

883, subpart D; or

(B) HUD, in the case of all other projects, will be deposited in

the replacement reserve annually. For projects approved under 24 CFR

part 883, subpart D, this amount may be adjusted each year by up to the

amount of the automatic annual adjustment factor. For all projects not

approved under 24 CFR part 883, subpart D, this amount must be adjusted

each year by the amount of the automatic annual adjustment factor.

(ii) The reserve must be built up to and maintained at a level

determined to be sufficient by the Agency to meet projected

requirements. Should the reserve achieve that level, the rate of

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

(iii) All earnings, including interest on the reserve, must be

added to the reserve.

(iv) Funds will be held by the Agency, other mortgagee or trustee

for bondholders, as determined by the Agency, and may be drawn from the

reserve and used only in accordance with Agency guidelines and with the

approval of, or as directed by, the Agency.

(v) The Agency may exempt partially-assisted projects approved

under 24 CFR part 883, subpart D, from the provisions of this section.

All partially-assisted projects not approved under the Fast Track

Procedures formerly in 24 CFR part 883, subpart D, are exempt from the

provisions of this section.

(b) In the case of HUD-insured projects, the provisions of this

section will apply instead of the otherwise applicable mortgage

insurance provisions, except in the case of partially-assisted insured

projects which are subject to the applicable mortgage insurance

provisions.

13. Section 880.603 is revised to read as follow:

Sec. 880.603 Selection and admission of assisted tenants.

(a) Application. The owner must accept applications for admission

to the project in the form prescribed by HUD. Both the owner (or

designee) and the applicant must complete and sign the application. For

this part 880 and 24 CFR part 881 projects, on request, the owner must

furnish copies of all applications to HUD and the PHA, if applicable.

For 24 CFR part 883 projects, on request, the owner must furnish to the

Agency or HUD copies of all applications received.

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

owner is responsible for obtaining and verifying information related to

income in accordance with 24 CFR part 813, and evidence related to

citizenship and eligible immigration status in accordance with 24 CFR

part 5, to determine whether the applicant is eligible for assistance

in accordance with the requirements of 24 CFR part 5, and 24 CFR part

813, and to select families for admission to the program, which

includes giving selection preferences in accordance with 24 CFR part 5,

subpart D.

(1) If the owner determines that the family is eligible and is

otherwise acceptable and units are available, the owner will assign the

family a unit of the appropriate size in accordance with HUD standards.

If no suitable unit is available, the owner will place the family on a

waiting list for the project and notify the family of when a suitable

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

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

the owner may advise the applicant that no additional applications are

being accepted for that reason, provided the owner complies with the

procedures for informing applicants about admission preferences as

provided in 24 CFR part 5, subpart D.

(2) If the owner determines that an applicant is ineligible on the

basis of income or family composition, or because of failure to meet

the disclosure and verification requirements for Social Security

Numbers (as provided by 24 CFR part 5), or because of failure by an

applicant to sign and submit consent forms for the obtaining of wage

and claim information from State Wage Information Collection Agencies

(as provided by 24 CFR parts 5 and 813), or that the owner is not

selecting the applicant for other reasons, the owner will promptly

notify the applicant in writing of the determination and its reasons,

and that the applicant has the right to meet with the owner or managing

agent in accordance with HUD requirements. Where the owner is a PHA,

the applicant may request an informal hearing. If the PHA determines

that the applicant is not eligible, the PHA will notify the applicant

and inform the applicant that he or she has the right to request HUD

review of the PHA's determination. The applicant may also exercise

other rights if the applicant believes that he or she is being

discriminated against on the basis of race, color, creed, religion,

sex, or national origin. See 24 CFR part 5 for the informal review

provisions for the denial of a Federal preference or the failure to

establish citizenship or eligible immigration status and for notice

requirements where assistance is terminated, denied, suspended, or

reduced based on wage and claim information obtained by HUD from a

State Wage Information Collection Agency.

(3) Records on applicants and approved eligible families, which

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

required by HUD, must be maintained and retained for three years.

(c) Reexamination of family income and composition--(1) Regular

reexaminations. The owner must reexamine the income and composition of

all families at least every 12 months. After consultation with the

family and upon verification of the information, the owner must make

appropriate adjustments in the Total Tenant Payment in accordance with

24 CFR part 813 and determine whether the family's unit size is still

appropriate. The owner must adjust Tenant Rent and the Housing

Assistance Payment to reflect any change in Total Tenant Payment and

must carry out any unit transfer required by HUD. At the time of the

annual reexamination of family income and composition, the owner must

require the family to disclose the verify Social Security Numbers, as

provided by 24 CFR part 5. For requirements regarding the signing and

submitting of consent forms by families for the obtaining of wage and

claim information from State Wage Information Collection Agencies, see

24 CFR part 5. At the first regular reexamination after June 19, 1995,

the owner shall follow the requirements of 24 CFR part 5 concerning

obtaining and processing evidence of citizenship or eligible

immigration status of all family members. Thereafter, at each regular

reexamination, the owner shall follow the requirements of 24 CFR part 5

and verify the immigration status of any new family member.

(2) Interim reexaminations. The family must comply with provisions

in its lease regarding interim reporting of changes in income. If the

owner receives information concerning a change in the family's income

or other circumstances between regularly scheduled reexaminations, the

owner must consult with the family and make any adjustments determined

to be appropriate. Any change in the family's income or other

circumstances that results in an adjustment in the Total Tenant

Payment, Tenant Rent and Housing Assistance Payment must be verified.

See 24 CFR part 5 for the requirements for the disclosure and

verification of Social Security Numbers

[[Page 13590]]

at interim reexaminations involving new family members. For

requirements regarding the signing and submitting of consent forms for

the obtaining of wage and claim information from State Wage Information

Collection Agencies, see 24 CFR part 5. At any interim reexamination

after June 19, 1995, when a new family member has been added, the owner

shall follow the requirements of 24 CFR part 5 concerning obtaining and

processing evidence of the citizenship or eligible immigration status

of any new family member.

(3) Continuation of housing assistance payments. A family's

eligibility for Housing Assistance Payments continues until the Total

Tenant Payment equals the Gross Rent. The termination of eligibility at

such point will not affect the family's other rights under its lease,

nor will such termination preclude the resumption of payments as a

result of later changes in income, rents, or other relevant

circumstances during the term of the Contract. However, eligibility

also may be terminated in accordance with HUD requirements, for such

reasons as failure to submit requested verification information,

including failure to meet the disclosure and verification requirements

for Social Security Numbers, as provided by 24 CFR part 5, or failure

to sign and submit consent forms for the obtaining wage and claim

information from State Wage Information Collection Agencies, as

provided by 24 CFR part 5. See 24 CFR part 5 for provisions requiring

termination of assistance for failure to establish citizenship or

eligible immigration status and also for provisions concerning certain

assistance for mixed families (families whose members include those

with eligible immigration status, and those without eligible

immigration status) in lieu of termination of assistance, and for

provisions concerning deferral of termination of assistance.

(Approved by the Office of Management and Budget under control

number 2502-0204.)

14. In Sec. 880.606, paragraph (b) is revised to read as follows:

Sec. 880.606 Lease requirements.

* * * * *

(b) Form. (1) Part 880 and 24 CFR part 881 projects. For this part

880 and 24 CFR part 881 projects, the form of lease must contain all

required provisions, and none of the prohibited provisions specified in

the developer's packet, and must conform to the form of lease included

in the approved final proposal.

(2) 24 CFR part 883 projects. For 24 CFR part 883 projects, the

form of lease must contain all required provisions, and none of the

prohibited provisions specified below.

(i) Required provisions (Addendum to lease).

Addendum to Lease

The following additional Lease provisions are incorporated in

full in the Lease between ____ (Landlord) and ____ (Tenant) for the

following dwelling unit: ____. In case of any conflict between these

and any other provisions of the Lease, these provisions will

prevail.

a. The total rent will be $____ per month.

b. Of the total rent, $____ will be payable by the State Agency

(Agency) as housing assistance payments on behalf of the Tenant and

$____ will be payable by the Tenant. These amounts will be subject

to change by reason of changes in the Tenant's family income, family

composition, or extent of exceptional medical or other unusual

expenses, in accordance with HUD-established schedules and criteria;

or by reason of adjustment by the Agency of any applicable Utility

Allowance; or by reasons of changes in program rules. Any such

change will be effective as of the date stated in a notification to

the Tenant.

c. The Landlord will not discriminate against the Tenant in the

provision of services, or in any other manner, on the grounds of

race, color, creed, religion, sex, or national origin.

d. The Landlord will provide the following services and

maintenance: ____________

e. A violation of the Tenant's responsibilities under the

Section 8 Program, as determined by the Agency, is also a violation

of the lease.

Landlord---------------------------------------------------------------

By---------------------------------------------------------------------

Date-------------------------------------------------------------------

Tenant-----------------------------------------------------------------

Date-------------------------------------------------------------------

[End of addendum]

(ii) Prohibited provisions. Lease clauses which fall within the

classifications listed below must not be included in any Lease.

Lease Clauses

a. Confession of Judgment. Consent by the tenant to be sued, to

admit guilt, or to accept without question any judgment favoring the

landlord in a lawsuit brought in connection with the lease.

b. Seize or Hold Property for Rent or Other Charges.

Authorization to the landlord to take property of the tenant and/or

hold it until the tenant meets any obligation which the landlord has

determined the tenant has failed to perform.

c. Exculpatory Clause. Prior agreement by the tenant not to hold

the landlord or landlord's agents legally responsible for acts done

improperly or for failure to act when the landlord or landlord's

agent was required to do so.

d. Waiver of Legal Notice. Agreement by the tenant that the

landlord need not give any notices in connection with (1) a lawsuit

against the tenant for eviction, money damages, or other purposes,

or (2) any other action affecting the tenant's rights under the

lease.

e. Waiver of Legal Proceeding. Agreement by the tenant to allow

eviction without a court determination.

f. Waiver of Jury Trial. Authorization to the landlord's lawyer

to give up the tenant's right to trial by jury.

g. Waiver of Right to Appeal Court Decision. Authorization to

the landlord's lawyer to give up the tenant's right to appeal a

decision on the ground of judicial error or to give up the tenant's

right to sue to prevent a judgment being put into effect.

h. Tenant Chargeable with Cost of Legal Actions Regardless of

Outcome of Lawsuit. Agreement by the tenant to pay lawyer's fees or

other legal costs whenever the landlord decides to sue the tenant

whether or not the tenant wins. (Omission of such a clause does not

mean that the tenant, as a party to a lawsuit, may not have to pay

lawyer's fees or other costs if the court so orders.)

[End of clauses]

15. Section 880.607 is amended by:

a. Removing from paragraph (b)(3)(ii), the words ``part 812'',

``part 750'', ``part 760'', and by adding, in their respective places,

the words ``part 5''; and

b. Revising paragraphs (c)(4) and (d), to read as follows:

Sec. 880.607 Termination of tenancy and modification of lease.

* * * * *

(c) * * *

(4) See 24 CFR part 5 for provisions related to termination of

assistance because of failure to establish citizenship or eligible

immigration status, including informal hearing procedures and also for

provisions concerning certain assistance for mixed families (families

whose members include those with eligible immigration status, and those

without eligible immigration status) in lieu of termination of

assistance, and for provisions concerning deferral of termination of

assistance.

(d) Modification of Lease form. The owner, with the prior approval

of HUD or, for a 24 CFR part 883 project, the Agency, may modify the

terms and conditions of the lease form effective at the end of the

initial term or a successive term, by serving an appropriate notice on

the family, together with the offer of a revised lease or an addendum

revising the existing lease. This notice and offer must be received by

the family at least 30 days prior to the last date on which the family

has the right to terminate the tenancy without being bound by the

modified terms and conditions. The family may accept the modified terms

and conditions by executing the offered revised lease or addendum, or

may reject the modified terms and conditions by giving the owner

written notice in

[[Page 13591]]

accordance with the lease that the family intends to terminate the

tenancy. Any increase in rent must in all cases be governed by

Sec. 880.609 and other applicable HUD regulations.

* * * * *

Sec. 880.608 [Amended]

16. In Sec. 880.608, paragraph (f) introductory text is amended by

removing the words ``HUD or the PHA, as appropriate,'' and by adding,

in their place, the words ``the contract administrator''.

17. In Sec. 880.609, paragraph (b) is revised to read as follows:

Sec. 880.609 Adjustment of contract rents.

* * * * *

(b) Special additional adjustments. For all projects, special

additional adjustments will be granted, to the extent determined

necessary by HUD (for 24 CFR part 883 projects, by the Agency and HUD),

to reflect increases in the actual and necessary expenses of owning and

maintaining the assisted units which have resulted from substantial

general increases in real property taxes, assessments, utility rates,

and utilities not covered by regulated rates, and which are not

adequately compensated for by annual adjustments under paragraph (a) of

this section. The owner must submit to the contract administrator

required supporting data, financial statements and certifications.

* * * * *

18. In Sec. 880.611, the introductory text to paragraph (d)(3) is

revised to read as follows:

Sec. 880.611 Conditions for receipt of vacancy payments.

* * * * *

(d) * * *

(3) The owner has (for 24 CFR part 883 projects, the owner and the

Agency have) demonstrated to the satisfaction of HUD that:

* * * * *

19. In Sec. 880.612, paragraph (b) is revised to read as follows:

Sec. 880.612 Reviews during management period.

* * * * *

(b) In addition:

(1)(i) For this part 880 and 24 CFR part 881 private-owner/PHA

projects, HUD will review the PHA's administration of the Contract at

least annually to determine whether the PHA is in compliance with the

ACC; and

(ii) For 24 CFR part 883 projects, HUD will periodically review the

Agency's administration of the Contract to determine whether it is in

compliance with the Contract.

(2) HUD may independently inspect project operations and units at

any time.

* * * * *

PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR

SUBSTANTIAL REHABILITATION

20. The authority citation for part 881 continues to read as

follows:

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and

13611-13619.

Subpart A--Summary and Applicability

21. Section 881.101 is revised to read as follows:

Sec. 881.101 General.

(a) The purpose of the Section 8 program is to provide low-income

families with decent, safe and sanitary rental housing through the use

of a system of housing assistance payments. This part contains the

policies and procedures applicable to the Section 8 substantial

rehabilitation program. The assistance may be provided to public

housing agency owners or to private owners either directly from HUD or

through public housing agencies.

(b) This part does not apply to projects developed under other

Section 8 program regulations, including 24 CFR parts 880, 882, 883,

884, and 885, except to the extent specifically stated in those parts.

Secs. 881.102 and 881.103 [Removed]

22. Sections 881.102 and 881.103 are removed.

23. Section 881.104 is revised to read as follows:

Sec. 881.104 Applicability of part 881 in effect as of February 20,

1980.

(a) Part 881, in effect as of February 20, 1980, applies to all

proposals for which a notification of selection was not issued before

the February 20, 1980 effective date of part 881. (See 24 CFR part 881,

revised as of April 1, 1980). Where a notification of selection was

issued for a proposal before the February 20, 1980, effective date,

part 881 in effect as of February 20, 1980 applies if the owner

notified HUD within 60 calendar days that the owner wished the

provisions of part 881, effective February 20, 1980, to apply and

promptly brought the proposal into conformance.

(b) Subparts E (Housing Assistance Payments Contract) and F

(Management) of this part apply to all projects for which an Agreement

was not executed before the February 20, 1980, effective date of part

881. Where an Agreement was so executed:

(1) The owner and HUD may agree to make the revised subpart E of

this part applicable and to execute appropriate amendments to the

Agreement and/or Contract.

(2) The owner and HUD may agree to make the revised subpart F of

this part applicable (with or without the limitation on distributions)

and to execute appropriate amendments to the Agreement and/or Contract.

(c) Section 880.607 of this chapter, Termination of Tenancy and

Modification of Leases, applies to new families who begin occupancy or

execute a lease on or after 30 days after the February 20, 1980,

effective date of part 881. This section also applies to families not

covered by the preceding sentence, including existing families under

lease, with respect to all leases in which a renewal becomes effective

on or after the 60th day following the February 20, 1980 effective date

of part 881. A lease is considered to be renewed where both the

landlord and the family fail to terminate a tenancy under a lease

permitting either party to terminate.

(d) Notwithstanding the provisions of paragraph (b) of this

section, the provisions of 24 CFR part 5 (concerning preferences for

selection of applicants) apply to all projects, regardless of when an

Agreement was executed.

Subpart B--Definitions and Other Requirements

24. The heading for subpart B of part 881 is revised to read as set

forth above.

Sec. 881.201 [Amended]

25. Section 881.201 is amended by removing the definitions of

``Allocation area'', ``New Communities'', and ``Preliminary proposal''.

Secs. 881.202, 881.203, 881.204, 881.206, 881.209, and

881.210 [Removed]

26. Sections 881.202, 881.203, 881.204, 881.206, 881.209, and

881.210 are removed.

Subparts C and D--[Removed and Reserved]

27. Subpart C (Secs. 881.301 through 881.312) and subpart D

(Secs. 881.401 through 881.405) of part 881 are removed and reserved.

Subpart E--Housing Assistance Payments Contract

28. In Sec. 881.501, paragraph (a) is revised and paragraph (b) is

removed and reserved, to read as follows:

Sec. 881.501 The contract.

(a) Contract. The Housing Assistance Payments Contract sets forth

rights and duties of the owner and the contract administrator with

respect to the project

[[Page 13592]]

and the housing assistance payments. The owner and contract

administrator execute the Contract in the form prescribed by HUD upon

satisfactory completion of the project.

(b) [Reserved]

* * * * *

29. Section 881.503 is revised to read as follows:

Sec. 881.503 Cross-reference.

All of the provisions of Secs. 880.503, 880.504, 880.505, 880.506,

880.507, and 880.508 of this chapter apply to projects assisted under

this part, subject to the requirements of Sec. 881.104.

Secs. 881.504, 881.505, 881.506, 881.507, and 881.508 [Removed]

29a. Sections 881.504, 881.505, 881.506, 881.507, and 881.508 are

removed.

30. Subpart F of part 881 is revised to read as follows:

Subpart F--Management

Sec. 881.601 Cross-reference.

All of the provisions of part 880, subpart F, of this chapter apply

to projects assisted under this part, subject to the requirements of

Sec. 881.104.

Subpart G--[Removed]

31. Subpart G (Secs. 881.701 through 881.709) of part 881 is

removed.

PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE

HOUSING AGENCIES

32. The authority citation for part 883 continues to read as

follows:

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-

13619.

Subpart A--Summary and Guide

33. Section 883.101 is revised to read as follows:

Sec. 883.101 General.

(a) The purpose of the Section 8 program is to provide decent, safe

and sanitary housing for low-income families through the use of a

system of housing assistance payments. These needs may be met by

statewide or special purpose housing agencies established by the

various States.

(b) The regulations in this part 883 contain the policies and

procedures applicable to the Section 8 program for these State

agencies.

Secs. 883.102, 883.103, and 883.104 [Removed]

34. Sections 883.102, 883.103 and 883.104 are removed.

35. Section 883.105, is revised to read as follows:

Sec. 883.105 Applicability of part 883 in effect as of February 29,

1980.

(a) Part 883, in effect as of February 29, 1980, applies to

projects for which the initial application was submitted on or after

the February 29, 1980, effective date. (See 24 CFR part 883, revised as

of April 1, 1980.) Projects for which applications or proposals were

submitted before the February 29, 1980, effective date of part 883 have

been processed under the part 883 regulations and procedures in effect

at the date of submission. If, however, the agency notified HUD within

60 calendar days of the February 29, 1980, effective date of the part

883 regulations that they chose to have the provisions of part 883, in

effect as of February 29, 1980, apply to a specific case, it must have

promptly modified the application(s) and proposal(s) to comply.

(b) Subpart F of this part, dealing with the HAP contract and

subpart G of this part, dealing with management, apply to all projects

for which an Agreement was not executed before the February 29, 1980,

effective date of part 883. In cases where an Agreement has been

executed:

(1) The Agency, owner and HUD may agree to make the revised subpart

F of this part applicable and execute appropriate amendments to the

Agreement or Contract;

(2) The Agency, Owner and HUD may agree to make the revised subpart

G of this part applicable (with or without the limitation on

distributions) and execute appropriate amendments to the Agreement or

Contract.

(c) Section 883.708, Termination of Tenancy and Modifications of

Leases, applies to new families who begin occupancy or execute a lease

on or after 30 days following the February 29, 1980, effective date of

part 883. This section also applies to families not covered by the

preceding sentence, including families currently under lease, who have

a lease in which a renewal becomes effective on or after the 60th day

following the February 29, 1980 effective date of part 883. A lease is

considered renewed when both the landlord and the family fail to

terminate a tenancy under a lease permitting either to terminate.

(d) Notwithstanding the provisions of paragraph (b) of this

section, the provisions of 24 CFR part 5 (concerning preferences for

selection of applicants) apply to all projects, regardless of when am

Agreement was executed.

36. A new Sec. 883.106 is added to subpart A to read as follows:

Sec. 883.106 Applicability and relationships between HUD and State

agencies.

(a) Applicability. This subpart A applies to contract authority set

aside for a State Agency.

(b) General responsibilities and relationships. Subject to audit

and review by HUD to assure compliance with Federal requirements and

objectives, Housing Finance Agencies (HFAs) shall assume responsibility

for project development and for supervision of the development,

management and maintenance functions of owners.

(c) Certifications and HUD monitoring. (1) Generally, when

reviewing any of the certifications of an HFA required by this part,

HUD shall accept the certification as correct. If HUD has substantial

reason to question the correctness of any element in a certification,

HUD shall promptly bring the matter to the attention of the HFA and ask

it to provide documentation supporting the certifications. When the HFA

provides such evidence, HUD will act in accordance with the HFA's

judgment or evaluation unless HUD determines that the certification is

clearly not supported by the documentation.

(2) HUD will periodically monitor the activities of HFA's

participating under this part only with respect to Section 8 or other

HUD programs. This monitoring is intended primarily to ensure that

certifications submitted and projects operated under this part reflect

appropriate compliance with Federal law and requirements.

Subpart B--[Removed and Reserved]

37. Subpart B (Secs. 883.201 through 883.207) of part 883 is

removed and reserved.

Subpart C--Definitions and Other Requirements

38. The heading for subpart C of part 883 is revised to read as set

forth above.

Sec. 883.302 [Amended]

39. Section 883.302 is amended by removing the definitions of

``Allocation area'', ``Allocation plan'', ``Impacted jurisdiction'',

and ``New Communities''.

Secs. 883.303, 883.304, 883.305, 883.309, 883.311, and

883.312 [Removed]

40. Sections 883.303, 883.304, 885.305, 883.309, 883.311, and

883.312 are removed.

41. In Sec. 883.307, paragraph (a) is revised to read as follows:

Sec. 883.307 Financing.

(a) Types of financing. A State Agency that used the Fast Track

Procedures formerly in this part must provide

[[Page 13593]]

permanent financing for any new construction or substantial

rehabilitation project without Federal mortgage insurance, except

coinsurance under section 244 under the National Housing Act (12 U.S.C.

1701 et seq). Obligations issued by the HFA for this purpose may be

taxable under section 802 of the Housing and Community Development Act

of 1974 (42 U.S.C. 1440) or tax-exempt under section 103 of the

Internal Revenue Code (26 U.S.C. 103), 24 CFR part 811 or other Federal

Law.

* * * * *

Subparts D and E--[Removed and Reserved]

42. Subpart D (Secs. 883.401 through 883.412) and subpart E

(Sec. 883.501) of part 883 are removed and reserved.

Subpart F--Housing Assistance Payments Contract

Sec. 883.602 [Amended]

43. Section 883.602 is amended by:

a. Removing paragraph (b);

b. Redesignating paragraphs (c), (d), and (e) as paragraphs (b),

(c), and (d), respectively; and

c. By amending newly redesignated paragraphs (b)(2), (c)(2), and

(c)(3) by removing the words ``Sec. 883.712'' in each place they

appear, and by adding the words ``Sec. 880.611 of this chapter'', in

their place.

Sec. 883.604 [Amended]

44. In Sec. 883.604, paragraph (b)(2) is amended by removing the

words ``U.S. Housing Act of 1937'' and adding, in their place, the

words ``1937 Act''.

45. Section 883.605 is revised to read as follows:

Sec. 883.605 Leasing to eligible families.

The provisions of Sec. 880.504 of this chapter apply, subject to

the requirements of Sec. 883.105.

46. Section 883.608 is revised to read as follows:

Sec. 883.608 Notice upon contract expiration.

The provisions of Sec. 880.508 of this chapter apply, subject to

the requirements of Sec. 883.105.

47. Subpart G of part 883 is revised to read as follows:

Subpart G--Management

Sec. 883.701 Cross-reference.

All of the provisions of part 880, subpart F, of this chapter apply

to projects assisted under this part, subject to the requirements of

Sec. 883.105. For purposes of this subpart G, all references in part

880, subpart F, of this chapter to ``contract administrator'' shall be

construed to refer to ``Agency''.

PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW

CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING

PROJECTS

48. The authority citation for part 884 continues to read as

follows:

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-

13619.

Subpart A--Applicability, Scope and Basic Policies

49. In Sec. 884.101, paragraph (a) is revised to read as follows:

Sec. 884.101 Applicability and scope.

(a) The policies and procedures in subparts A and B of this part

apply to the making of Housing Assistance Payments on behalf of

Eligible Families leasing newly constructed housing pursuant to the

provisions of section 8 of the 1937 Act. They are applicable only to

proposals submitted by the Department of Agriculture/Farmers Home

Administration (now the Department of Agriculture/Rural Housing and

Community Development Service) that have been charged against the set-

aside of section 8 contract authority specifically established for

projects to be funded under section 515 of title V of the Housing Act

of 1949 (42 U.S.C. 1485).

* * * * *

Sec. 884.102 [Amended]

50. Section 884.102 is amended by:

a. Amending the definition of ``Agreement to enter into housing

assistance payments contract (`agreement')'', by removing the word

``FmHA'' in each place it appears in paragraphs (a) and (b), and by

adding, in each place, the word ``RHCDS'';

b. Removing the definition of ``FmHA'' and by adding, in

alphabetical order, the definition ``RHCDS''; and

c. Placing the definition of ``Proposal'' in alphabetical order and

amending it by removing the word ``FmHA'', and by adding in its place,

the word ``RHCDS'', to read as follows:

Sec. 884.102 Definitions.

* * * * *

RHCDS. The Rural Housing and Community Development Service.

* * * * *

Sec. 884.103 [Removed]

51. Section 884.103 is removed.

Sec. 884.105 [Amended]

52. Section 884.105 is amended by removing the word ``Act'' from

paragraphs (b)(1) and (b)(2) in each place it appears and adding, in

each place, the words ``1937 Act''.

Secs. 884.107, 884.111, 884.112, and, 884.113 [Removed]

53. Sections 884.107, 884.111, 884.112, and 884.113 are removed.

Secs. 884.108, 884.118, 884.119, and 884.120 [Amended]

54. Sections 884.108(a), 884.118(a)(9), 884.119(b), and

884.120(b)(3) are amended by removing the word ``FmHA'', each place it

appears, and by adding in each place the word ``RHCDS''.

Sec. 884.117 [Amended]

55. Section 884.117 is amended by removing the words ``part 705''

and adding, in their place, the words ``part 5''.

56. In Sec. 884.118, paragraphs (a)(3) and (a)(7) are revised, to

read as follows:

Sec. 884.118 Responsibilities of the owner.

(a) * * *

(3) Performance of all management functions, including the taking

of applications; determining eligibility of applicants in accordance

with 24 CFR parts 5 and 813; selection of families, including

verification of income, provision of Federal selection preferences in

accordance with 24 CFR part 5, obtaining and verifying Social Security

Numbers submitted by applicants (as provided by 24 CFR part 5),

obtaining signed consent forms from applicants for the obtaining of

wage and claim information from State Wage Information Collection

Agencies (as provided in 24 CFR part 5), and other pertinent

requirements; and determination of the amount of tenant rent in

accordance with HUD established schedules and criteria;

* * * * *

(7) Reexamination of family income and composition;

redetermination, as appropriate, of the amount of Tenant Rent and the

amount of housing assistance payment in accordance with 24 CFR part

813; obtaining and verifying Social Security Numbers submitted by

participants, as provided by 24 CFR part 5; and obtaining signed

consent forms from participants for the obtaining of wage and claim

information from State Wage Information Collection Agencies, as

provided by 24 CFR part 5;

* * * * *

[[Page 13594]]

Subpart B--Project Development and Operation

Secs. 884.201, 884.202, 884.203, 884.204, 884.205, 884.206, 884.207,

884.208, 884.209, 884.210, and 884.211 [Removed]

57. Sections 884.201, 884.202, 884.203, 884.204, 884.205, 884.206,

884.207, 884.208, 884.209, 884.210, and 884.211 are removed.

Sec. 884.214 [Amended]

58. In Sec. 884.214, paragraph (b)(1) is amended by removing the

phrase ``part 812,'' and adding, in its place, the phrase ``part 5,''.

Sec. 884.216 [Amended]

59. Section 884.216 is amended by:

a. Removing the words ``part 760,'' and adding in their place, the

words ``part 5,''; and

b. Removing the words ``24 CFR 812.9, and also 24 CFR 812.10'' and

adding, in their place, the words ``24 CFR part 5 and also''.

Sec. 884.218 [Amended]

60. Section 884.218 is amended by:

a. Amending paragraph (a) by removing the words ``part 750'' where

it appears, by removing ``part 760'' where it appears, and by removing

``part 812'' each place it appears, and by adding in each place the

words ``part 5'';

b. Amending paragraph (b) by removing the words ``part 760'', where

it appears, and by removing ``part 812'', where it appears, and by

adding in each place the words, ``part 5'';

c. Amending paragraph (c) by removing the words ``part 750'', where

it appears, and by removing the words ``part 760'', where it appears,

and by adding in each place the words, ``part 5''; and

d. Further amending paragraph (c), by removing the words ``24 CFR

812.9, and also 24 CFR 812.10'' and adding, in their place, the words

``24 CFR part 5 and also''.

Sec. 884.223 [Amended]

61-62. In Sec. 884.223(e), remove the words ``Sec. 812.9 of this

chapter'' and add, in their place, the words ``24 CFR part 5'' and

remove the words ``24 CFR 812.10'' in each place they occur and add, in

each place, the words ``24 CFR part 5''.

Dated: February 28, 1996.

Stephanie A. Smith,

Acting General Deputy, Assistant Secretary for Housing-Federal Housing

Commissioner.

[FR Doc. 96-5990 Filed 3-26-96; 8:45 am]

BILLING CODE 4210-27-P