Indian Housing Block Grant ProgramRevised Notice of Transition Requirements

SUMMARY: On January 27, 1997 (62 FR 3972), HUD published for public

comment a notice to implement that part of section 106 of the Native

American Housing Assistance and Self-Determination Act of 1996

(NAHASDA) which requires HUD to establish the requirements necessary to

provide for the transition from the provision of assistance for Indian

tribes and Indian housing authorities under the United States Housing

Act of 1937 and other related provisions of law to the provision of

assistance in accordance with NAHASDA. The January 27, 1997 notice also

provided notice of the negotiated rulemaking process for the

development of regulations necessary to implement NAHASDA, and

requested nominations for membership on the negotiated rulemaking

committee. This notice addresses the public comments received on the

January 27, 1997 transition requirements, and provides additional

transition guidance and requirements.

DATES: The revised transition requirements are effective upon

publication.

IHP submission date: No earlier than the publication date of the

final regulations implementing NAHASDA and no later than July 1, 1998.

Effective date of NAHASDA section 701(c): November 3, 1998.

FOR FURTHER INFORMATION CONTACT: Deborah Lalancette, National Office of

Native American Programs, Department of Housing and Urban Development,

1999 Broadway, Suite 3390, Denver, CO; telephone (303) 675-1600 (this

is not a toll-free number). Hearing or speech-impaired individuals may

access this number via TTY by calling the toll-free Federal Information

Relay Service at 1-800-877-8339.

Indian tribes or tribally designated housing entities with specific

questions relating to the preparation of Indian Housing Plans as

required by this notice may call their Area Office of Native American

Programs for assistance in resolving their questions. The telephone

numbers and addresses for these Offices appear in Question 7 of this

notice.

SUPPLEMENTARY INFORMATION:

I. Statutory Background

The Native American Housing Assistance and Self-Determination Act

of 1996 (Pub. L. 104-330, approved October 26,1996) (NAHASDA)

reorganizes the system of Federal housing assistance to Native

Americans by eliminating several separate programs of assistance and

replacing them with a single block grant program. Beginning on October

1, 1997, the first day of the 1998 fiscal year (FY), a single block

grant program replaced assistance previously authorized under:

1. The United States Housing Act of 1937 (1937 Act);

2. The Indian Housing Child Development Program under Section 518

of the Cranston-Gonzalez National Affordable Housing Act (12 U.S.C.

1701z-6 note);

3. The Youthbuild Program under subtitle D of title IV of the

Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12899 et

seq.);

4. The Public Housing Youth Sports Program under section 520 of the

Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 11903a);

5. The HOME Investment Partnerships Program under title II of the

Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12721 et

seq.); and

6. Housing assistance for the homeless under title IV of the

Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11361 et seq.)

and the Innovative Homeless Demonstration Program under section 2(b) of

the HUD Demonstration Act of 1993 (42 U.S.C. 11301 note).

In addition to simplifying the process of providing housing

assistance, the purpose of NAHASDA is to provide Federal assistance for

Indian tribes in a manner that recognizes the right of tribal self-

governance.

Section 106 of NAHASDA sets out the general procedure for the

implementation of the new Indian housing block grant (IHBG) program.

The procedure described is a two-step process. First, section 106(a)

requires the publication of a notice in the Federal Register not later

than 90 days from enactment of NAHASDA. The purpose of the notice is to

establish any requirements necessary for the transition from the

provision of assistance for Indian tribes and Indian housing

authorities under the 1937 Act and other related provisions of law to

the provision of assistance in accordance with NAHASDA.

Secondly, section 106(b) requires that HUD issue final regulations

implementing NAHASDA no later than September 1, 1997. Further, section

106(b)(2)(A) of NAHASDA provides that all regulations required under

NAHASDA be issued in accordance with the procedures of the Negotiated

Rulemaking Act of 1990 (5 U.S.C. 561-570). Accordingly, the Secretary

of HUD established the Native American Housing Assistance & Self-

Determination Negotiated Rulemaking Committee to negotiate and develop

a proposed rule implementing NAHASDA. This proposed rule was published

on July 2, 1997 (62 FR 35718).

II. The January 27, 1997 Transition Notice and the July 2, 1997

Proposed Rule

On January 27, 1997 (62 FR 3972), HUD published the transition

notice required by section 106(a) of NAHASDA. As directed by section

106(a), the January 27, 1997 notice requested public comment on the

transition requirements and invited nominations for membership on the

negotiated rulemaking committee. The January 27, 1997 notice described

in detail the transition requirements and the establishment of the

negotiated rulemaking committee.

The public comment period on the transition notice expired on

February 27, 1997. Twelve comments were submitted on the transition

requirements. Additionally, sixteen nominations for negotiated

rulemaking committee membership were received. In several cases, the

public comments raised issues more appropriately addressed in the

proposed rule implementing NAHASDA, rather than in the transition

requirements. Accordingly, the proposed rule addresses many of the

public comments received on the January 27, 1997 transition notice.

Section III. of this notice presents a summary of the significant

issues raised by the public commenters on the January 27, 1997

transition requirements and HUD's responses to these comments. Where

appropriate, readers are referred to the provisions of the July 2, 1997

proposed rule that address the issue raised by the commenter.

The July 2, 1997 rule contains a detailed description of the

proposed regulatory requirements and the negotiated rulemaking process.

The public comment deadline on the proposed rule was August 18, 1997.

All comments will be considered in the development of the final rule.

[[Page 4077]]

III. Discussion of Public Comments on the January 27, 1997

Transition Requirements

Indian Housing Plan Submission Date of June 1, 1997 Is Not Reasonable

Comment. Eight of the commenters objected to the June 1, 1997 IHP

submission deadline established by the January 27, 1997 notice. The

commenters believed that this date would not provide sufficient time

for relevant tribal input in the development of the IHP. Specifically,

it would not have allowed housing authorities (HAs) to adequately

compile local and regional data and develop a quality, comprehensive

housing plan.

Several of these commenters suggested alternate IHP submission

dates. For example, five commenters objected to the submission of an

IHP prior to the development of regulations implementing NAHASDA. Three

of the commenters suggested that HUD extend the IHP submission deadline

to August 1, 1997. This date is based on section 103 of NAHASDA, which

provides HUD with a 60-day period to review an IHP submitted by a tribe

or its TDHE. Since NAHASDA becomes effective on October 1, 1997, this

alternate August date would provide HUD with a 60-day review period

prior to the statute's effective date.

Response. HUD has addressed the concerns raised by these

commenters. On February 24, 1997 (62 FR 8258), HUD published a notice

in the Federal Register extending the IHP submission deadline to

November 3, 1997. With the publication of the proposed rule, many

commenters indicated that the deadline did not provide sufficient time

to prepare an IHP. Also, it is not expected the regulations

implementing NAHASDA will be effective by November 3, 1997. Therefore,

it is unreasonable to expect a recipient to submit a plan prior to

publication date of the program regulations.

Based on the above, this transition notice is establishing new IHP

submission dates for Fiscal Year 1998 only. An IHP can be submitted no

earlier than the publication date of the final regulations implementing

NAHASDA and no later than July 1, 1998. The July 1, 1998, date is

necessary in order to provide for a 60-day review period by the Office

of Native American Program (ONAP) field staff and reservation of funds

prior to September 30, 1998. The final regulations will establish IHP

submission dates for all future years.

October 1, 1997 Implementation Date is Premature

Section 107 of NAHASDA states that ``[e]xcept as otherwise

expressly provided in this Act, this Act * * * shall take effect on

October 1, 1997.'' Four of the commenters expressed concern about the

short statutory deadline for the implementation of NAHASDA. The

commenters believe that additional time is necessary for the successful

implementation of this new program.

One of these commenters suggested that HUD use the waiver authority

granted in section 101(b)(2) of NAHASDA to waive the requirement for an

IHP submission in FY 1998, in order to permit HUD and affected Indian

tribes adequate time to develop comprehensive final regulations

implementing NAHASDA. This commenter also suggested that the Negotiated

Rulemaking Committee develop interim regulations to put in place for FY

1998 to guide tribes in the administration of block grants during this

interim period, rather than racing to complete regulations by October

1, 1997.

Response. The Negotiated Rulemaking Committee has developed a work

schedule which it believes provides for the effective implementation of

NAHASDA in a timely manner.

IHP Should Be Format Driven Rather Than Forms Driven

Comment. One commenter urged that HUD not implement the IHP

requirement by prescribing a series of forms. The commenter believes

that a forms driven approach will stifle innovation and increase

administrative burden. This commenter fears that beneficial information

might be omitted from the IHP if the tribe or its TDHE is unable to

make it fit into a prescribed HUD form. Further, each planning

innovation could potentially require an updated or new form.

Accordingly, the commenter suggested that HUD maximize the flexibility

available to tribes and their TDHEs by merely requiring that the IHP

follow a certain format.

Response. The Negotiated Rulemaking Committee has considered this

comment in the development of the proposed regulations. Interested

readers should refer to the proposed requirements of 24 CFR part 1000,

subpart C, which would govern IHP submission requirements.

Cooperation Agreement Requirement May Prevent the Receipt of Funding

Comment. The January 27, 1997 notice requires that the IHP include

a certification that the tribe or its TDHE has entered into, or has

begun negotiations to enter into, a local cooperation agreement with

the governing body of the locality within which any affordable housing

to be assisted with grant amounts will be situated (62 FR 3974). One

commenter expressed concern that this requirement may prevent a tribe

or its TDHE from receiving funding in situations where, through no

fault of the housing entity or the affected tribal members, such an

agreement cannot be negotiated before grant funds are needed to

maintain existing housing. The commenter noted that the cooperation

agreement requirement is set forth in NAHASDA section 101(b). The

commenter supported amendments to NAHASDA which would permit HUD to

waive the requirement for a cooperation agreement.

Response. The Negotiated Rulemaking Committee considered this

public comment in the development of the proposed rule. Interested

readers should consult the preamble to the July 2, 1997 proposed rule,

which discusses the requirement for a local cooperation agreement and

highlights this issue for public comment (See 62 FR 35728).

Concerns Regarding Tax Exemption and Reimbursement Requirements

Comment. The January 27, 1997 notice requires that the cooperation

agreement discussed above provide that the tribe or its TDHE is exempt

from all real or personal property taxes. The tribe or TDHE, however,

must compensate the relevant political subdivision for the costs of

providing governmental services (such as police and fire protection).

Alternatively, if the tribe or its TDHE is not tax exempt, the

cooperation agreement must provide for the reimbursement of the tribe

or TDHE. The reimbursement amount will be equal to the difference

between the tax amount and the costs of providing governmental

services. (62 FR 3974.)

One commenter expressed reservations about this requirement. The

commenter noted that a tribe or its TDHE may initiate a program to

provide off-reservation housing within its area of operation. In these

cases, a city council or board of supervisors may have to approve a

cooperation agreement. The commenter wrote that under State law the

council or board may lack the statutory authority to exempt a

particular housing unit from real or personal property taxes imposed by

state statute. If the combination of those taxes exceed the cost of

providing governmental services, the affected city or county may be

unable or unwilling to

[[Page 4078]]

remit the difference in cash or tax remission.

The commenter suggested that HUD address this concern by keeping

the requirement for a cooperation agreement separate from the tax

exemption requirement. The commenter wrote that NAHASDA treats the

local cooperation agreement requirement and the tax exemption

requirement in separate subsections (See NAHASDA sections 101(c) and

(d).) The certification required in the January 27, 1997 notice folds

these requirements together, making the tax exemption requirements the

contents of the cooperation agreements. The commenter noted that a

cooperation agreement could address subjects other than tax exemptions

and a tribe could comply with the tax exemption requirements without

necessarily having an agreement with a local jurisdiction.

Response. The Negotiated Rulemaking Committee considered this

comment in the development of the July 2, 1997 proposed rule.

Interested readers should consult the preamble to the proposed rule,

which discusses the tax exemption requirement and requests additional

public comment on this issue (See 62 FR 35728).

Negotiated Rulemaking Committee Should Develop Budget Scenarios

Comment. Section 102 of NAHASDA requires that the IHP include an

operating budget. One commenter questioned the ability of a tribe or

its TDHE to develop a budget prior to FY 1998 appropriations. This

commenter recommended that the Negotiated Rulemaking Committee develop

budget information to assist tribes and their TDHEs in the preparation

of the IHPs. The commenter noted that IHAs have an advantage in

estimating probable allocation amounts based on historical allocations

and awards. However, some tribes (especially those currently served by

an umbrella housing authority) considering whether or not to submit an

IHP may have very little to work from.

Response. The Negotiated Rulemaking Committee considered this issue

in the development of the proposed rule. Interested readers should

refer to the July 2, 1997 proposed regulatory requirements. Further,

section 302(d) of NAHASDA speaks to funding levels under the Act.

Transition Notice Should Establish Streamlined IHP Requirements for

Small Tribes and Small TDHEs

Comment. Section 102(f)(1) of NAHASDA permits the Secretary to

``waive any [IHP] requirements * * * that the Secretary determines are

burdensome or unnecessary for'' small tribes and small TDHEs. One

commenter questioned why the transition notice had not established such

streamlined IHP requirements for these tribes and housing entities.

Response. The Negotiated Rulemaking Committee considered this

comment in the development of the proposed rule. The proposed rule

provides that there are no separate IHP requirements for small Indian

tribes. The IHP requirements set forth in proposed 24 CFR part 1000,

subpart C are minimal. Further, HUD has general authority under section

101 of NAHASDA to waive IHP requirements when an Indian tribe cannot

comply with IHP requirements due to circumstances beyond its control.

The waiver authority under section 101 provides flexibility to address

the needs of every Indian tribe, including small Indian tribes.

Transition Requirements Should Reference Statutory Review Criteria

Comment. Section 103 of NAHASDA provides that the Secretary of HUD

shall conduct a limited review of each Indian housing plan to ensure

that the plan complies with the NAHASDA submission requirements for

IHPs. One commenter believes that the January 27, 1997 notice should

have provided an interpretation of the phrase ``limited review.''

Section 103 of NAHASDA also establishes a 60-day deadline for review of

an IHP. Further, this section requires that the Secretary of HUD

provide an explanation to the tribe or TDHE if the Secretary finds the

IHP deficient. The commenter believes these statutory review

requirements should also have been referenced in the January 27, 1997

notice.

Response. The Negotiated Rulemaking Committee considered this

comment in the development of the proposed rule. Interested readers

should refer to proposed 24 CFR part 1000, subpart C, which would

govern IHP submission procedures (including the process for HUD review

of IHPs and IHP amendments).

Concerns Regarding TDHE Designation

Comment. Section 102 of NAHASDA provides that an IHP may be

submitted by an Indian tribe or, if specifically empowered by the

recognized tribal government, by the TDHE. The January 27, 1997 notice

provided that if ``a tribe does not specifically authorize an entity to

act as its tribally designated housing entity, the tribe's * * * HA

under the United States Housing Act of 1937, if there is one on the

date of NAHASDA's enactment, is the tribe's [default] TDHE'' (62 FR

3973).

One of the commenters believes that this provision violates the

principle of tribal self-governance. First, the provision would

delegate to the HA the authority to administer the block grant even if

the tribe has not taken any affirmative step to designate the HA as its

TDHE. Secondly, the January 27, 1997 notice fails to specify the

timeframe in which a tribe would lose the important right to designate

the TDHE. Further, the provision is unclear as to whether the IHP

developed by an HA acting as the default TDHE must still be reviewed

and approved by the tribe.

Response. HUD agrees with the commenter that the transition

requirements must reflect the right of tribal self-governance and the

unique relationship between the government of the United States and the

governments of Indian tribes. This notice makes the appropriate

revisions to the January 27, 1997 transition notice. The notice

clarifies that NAHASDA section 102(d) requires that a tribe identify

its TDHE, if any, in its IHP. Specifically, when an IHP is submitted on

behalf of a tribe by its TDHE, the IHP must contain a certification by

the recognized tribal government that either (1) the tribe has had an

opportunity to review the IHP and has authorized its submission by the

TDHE, or (2) the tribe has delegated to the TDHE the authority to

submit an IHP without prior review by the tribe. This certification

must be included in the IHP, even in those cases where the tribe's HA

under the United States Housing Act of 1937 is serving as the tribe's

default TDHE.

``Broad Discretion'' of Section 204 of NAHASDA Should Be Referenced

Comment. Section 204(a) of NAHASDA provides:

(a) Subject to * * * [program requirements] and the Indian

housing plan for an Indian tribe, the recipient for that tribe shall

have--

(1) the discretion to use grant amounts for affordable housing

activities through equity investments, interest-bearing loans or

advances, noninterest bearing loans or advances, interest subsidies,

leveraging of private investments, or any other form of assistance

that the Secretary has determined to be consistent with the purposes

of this Act; and

(2) the right to establish the terms of assistance.

One commenter interprets section 204(a) very broadly and

recommended that the January 27, 1997 notice be amended to reference

the ample discretion it believes this statutory provision grants to a

tribe or its TDHE.

[[Page 4079]]

Specifically, the commenter requested that HUD clarify that grant

recipients have the discretion to use grant amounts for affordable

housing activities using the alternatives expressly set out in NAHASDA

(e.g., equity investments, interest-bearing loans or advances, etc.).

The commenter believes that only in the case of ``any other form of

assistance'' not expressly enumerated in section 204 does NAHASDA

authorize the Secretary to determine whether the assistance is

consistent with the purposes of the Act.

Response. The Negotiated Rulemaking Committee considered this

comment in the development of the July 2, 1997 proposed rule.

Interested readers should refer to proposed 24 CFR part 1000, subpart

B, which would govern eligible affordable housing activities.

Exceptions to Low-Income Eligibility Requirements Should Be Identified

Comment. Section 201 of NAHASDA provides that, except under certain

specified circumstances, ``eligible housing activities under this Act

shall be limited to low-income Indian families on Indian reservations

and other Indian areas.'' One of the commenters suggested that the

January 27, 1997 notice should be amended to identify the exceptions to

this general rule.

Response. The Negotiated Rulemaking Committee considered this

comment in the development of the proposed regulations. Interested

readers are referred to proposed 24 CFR part 1000, subpart B, which

would govern eligible affordable housing activities (including the

provision of assistance to non low-income families).

Grant Agreement Process Should Be Identified

Comment. One commenter believes that the January 27, 1997 notice

does not seem to anticipate or require the development of a grant

agreement with the tribes. The commenter worried that the notice did

not provide sufficient information regarding the grant agreements and

the block grant process. For example, the IHP must contain goals and

objectives to be accomplished during 1998. The commenter wondered

whether these activities would be binding on the tribe through the

grant agreement. The commenter recommended that HUD identify the grant

agreement document or the process of developing the grant agreement as

early as possible.

Response. The Negotiated Rulemaking Committee considered this

comment in the development of the proposed rule. Interested readers

should consult the proposed regulatory requirements for additional

detail.

IV. Revised Effective Date for Section 701(c) of NAHASDA

Section 701(c) of NAHASDA establishes a new requirement for the

Indian Housing Loan Guarantee Program (also called the Section 184

Program) under section 184 of the Housing and Community Development Act

of 1992 (12 U.S.C. 1515z-13a). Specifically, section 701(c) provides

that Indian tribes wishing to participate in the Section 184 program

must submit an IHP that provides for the use of Section 184 loan

guarantees.

In order to prevent any interruption in the processing of Section

184 loan guarantees, HUD must establish an effective date for section

701(c) that takes into account the timeframes for submission and HUD

review of IHPs. The January 27, 1997 transition notice established an

effective date of October 1, 1997 for section 701(c), based on an IHP

submission deadline of June 1, 1997. As described above, HUD is

extending the IHP deadline date to no earlier than the publication date

of the final regulations implementing NAHASDA and no later than July 1,

1998. This notice conforms the effective date for section 701(c) to the

IHP deadline extension. Specifically, this notice amends the January

27, 1997 notice by establishing an effective date of November 3, 1998

for purposes of NAHASDA section 701(c).

V. Technical Correction to the January 27, 1997 Notice

The January 27, 1997 notice incorrectly designated the paragraph

listing the certifications as paragraph (d) of Question and Answer 3.

The paragraph should have been designated as paragraph (e). This notice

makes the necessary correction.

VI. Additional Transition Requirements

The January 27, 1997 notice stated that HUD may also issue a

supplemental notice with additional transition guidance and

requirements. Accordingly, additional guidance and requirements for the

treatment of housing, activities and funding under programs repealed by

NAHASDA are included in this notice. For the convenience of all parties

involved with NAHASDA, this notice presents the requirements of the

January 27, 1997 notice, amended as discussed in sections IV. and V. of

this notice, above, and the additional transition requirements in a

single, consolidated document. The additional requirements follow the

same Question and Answer format established in the January 27, 1997

notice and begin with Question 10 in this notice. If there are any

inconsistencies between the requirements in this notice and any final

rule issued under NAHASDA, the requirements of the rule shall govern.

VII. Findings and Certifications

Paperwork Reduction Act Statement

The information collection requirements contained in this notice

have been approved by the Office of Management and Budget under the

Paperwork Reduction Act of 1995 and assigned control number 2577-0218.

An agency may not conduct or sponsor, and a person is not required to

respond to, a collection of information unless the collection displays

a valid control number.

Regulatory Planning and Review

This notice has been reviewed in accordance with Executive Order

12866, issued by the President on September 30, 1993 (58 FR 51735,

October 4, 1993). Any changes to the notice resulting from this review

are 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 20410-0500.

Executive Order 12612, Federalism

The General Counsel has determined, as the Designated Official for

HUD under section 6(a) of Executive Order 12612, Federalism, that the

policies contained in this notice 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.

The notice only establishes temporary transition requirements for the

initial participation by Indian tribes in a new statutory program

Environmental Review

A Finding of No Significant Impact with respect to the environment

was made at the time of development of the January 27, 1997 notice in

accordance with HUD regulations at 24 CFR Part 50, which implement

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

That Finding of No Significant Impact remains applicable to this notice

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,

[[Page 4080]]

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

Street, SW, Washington, DC 20410-0500.

Transition Requirements for the Native American Housing Block Grant

Program

Question 1. How is funding made available under NAHASDA?

Answer 1. Under NAHASDA, funding is made available for affordable

housing activities on an annual basis, and is distributed each fiscal

year according to an allocation formula on behalf of Indian tribes who

submit an Indian Housing Plan (IHP) that is reviewed and approved by

HUD. Unlike other programs, NAHASDA funds are not awarded on a

competitive basis in which applications are given scores and are then

funded in rank order so that only the highest scoring applications are

funded. Every tribe, or entity designated by a tribe, that submits an

IHP which complies with the necessary requirements is awarded a block

grant which is a share of the available funds. The size of the share is

determined by the allocation formula. The award is called a block grant

because the recipient receives a single ``block'' of funds that may be

used for any eligible affordable housing activities in accordance with

the tribe's IHP.

Question 2. Who may submit an IHP to apply for a block grant?

Answer 2. An IHP may be submitted by an Indian tribe or, if

specifically empowered by the recognized tribal government, by the

tribally designated housing entity for the tribe. A tribally designated

housing entity (TDHE) is an entity other than the tribal government

which is authorized by the Indian tribe to receive the block grant

amounts and provide assistance according to the requirements of

NAHASDA.

NAHASDA section 102(d) requires that a tribe identify its TDHE, if

any, in its IHP. Specifically, when an IHP is submitted on behalf of a

tribe by its TDHE, the IHP must contain a certification by the

recognized tribal government that either: (1) the tribe has had an

opportunity to review the IHP and has authorized its submission by the

TDHE; or (2) the tribe has delegated to the TDHE the authority to

submit an IHP without prior review by the tribe. This certification

must be included in the IHP, even in those cases where the tribe's HA

under the United States Housing Act of 1937 is serving as the tribe's

default TDHE.

An IHP submitted by a TDHE may cover more than one Indian tribe,

but only if the IHP contains the certification described in the

paragraph above from each tribe covered by the IHP. This option

provides additional flexibility by permitting several tribes to agree

to have their affordable housing activities administered by a single

TDHE for reasons of greater economy or increased efficiency, or for any

other reason.

Question 3. What information must be included in an IHP?

Answer 3. Each IHP shall be in a form prescribed by HUD and every

IHP consists of two parts, a 5-year plan and a 1-year plan, each of

which is discussed separately below. The NAHASDA final rule may also

contain additional plan requirements.

The 5-year plan must contain the following information for the 5-

year period beginning with the fiscal year (FY) for which the plan is

submitted (for the first IHP submission under the transition

requirements of this notice, the five fiscal years covered are 1998,

1999, 2000, 2001 and 2002):

(a) Mission Statement--A general statement of the mission of the

Indian tribe to serve the housing needs of the low-income families in

the jurisdiction of the Indian tribe during the 5-year period.

(b) Goals and Objectives--A statement of the goals and objectives

of the Indian tribe to enable the tribe to serve the needs identified

in the Mission Statement during the 5-year period.

(c) Activities Plan--An overview of the housing activities,

including the NAHASDA-eligible affordable housing activities, planned

during the 5-year period with an analysis of the manner in which the

activities will enable the tribe to meet its mission, goals, and

objectives.

The 1-year plan must contain the following information relating to

the upcoming fiscal year (FY 1998 for purposes of the first IHP

submission under the transition requirements of this notice):

(a) Goals and Objectives--A statement of the goals and objectives

to be accomplished during FY 1998, including the NAHASDA-eligible

affordable housing activities.

(b) Statement of Needs--A statement of the housing needs of the

low-income Indian families residing in the jurisdiction of the Indian

tribe and the means by which such needs will be addressed during FY

1998, including:

(1) A description of the estimated housing needs and the need for

assistance for the low-income Indian families in the jurisdiction,

including a description of the manner in which the geographical

distribution of assistance is consistent with the geographical needs

and needs for various categories of housing assistance; and

(2) A description of the estimated housing needs for all Indian

families in the jurisdiction.

(c) Financial Resources--An operating budget for the recipient that

includes:

(1) An identification and a description of the financial resources

reasonably available to the recipient to carry out the NAHASDA-eligible

affordable housing activities described in the IHP, including an

explanation of the manner in which amounts made available will leverage

additional resources; and

(2) The uses to which such resources will be committed, including

eligible affordable housing activities and administrative expenses.

(Section 101(h) of NAHASDA requires HUD, by regulation, to authorize

each recipient to use a percentage of any grant amounts received for

any reasonable administrative and planning expenses of the recipient

relating to carrying out NAHASDA and activities assisted with such

amounts, which may include costs for salaries of individuals engaged in

administering and managing affordable housing activities assisted with

grant amounts and expenses of preparing an IHP. This regulation will be

developed by the negotiated rulemaking committee who will be proposing

to HUD the percentage of grant amounts to be used for planning and

administrative expenses.

(d) Affordable Housing Resources--A statement of the affordable

housing resources currently available and to be made available during

FY 1998, including:

(1) A description of the significant characteristics of the housing

market in the tribe's jurisdiction, including the availability of

housing from other public sources, private market housing, and the

manner in which such characteristics influence the decision of the

recipient to use grant amounts for rental assistance, production of new

units, acquisition of existing units, or rehabilitation of units;

(2) A description of the structure, coordination, and means of

cooperation between the recipient and any other governmental entities

in the development, submission, or implementation of housing plans,

including a description of the involvement of private, public, and

nonprofit organizations and institutions, and the use of loan

guarantees under section 184 of the Housing and Community Development

Act of 1992, and other housing assistance provided by the Federal

Government for Indian tribes, including loans, grants, and mortgage

insurance;

(3) A description of the manner in which the plan will address the

needs

[[Page 4081]]

identified in the Statement of Needs in the 1-year plan required by

paragraph (b), above;

(4) A description of the manner in which the recipient will protect

and maintain the viability of housing owned and operated by the

recipient that was developed under a contract between HUD and an Indian

housing authority pursuant to the United States Housing Act of 1937;

(5) A description of any existing and anticipated homeownership

programs and rental programs to be carried out during FY 1998, and the

requirements and assistance available under such programs;

(6) A description of any existing and anticipated housing

rehabilitation programs necessary to ensure the long-term viability of

the housing to be carried out during FY 1998, and the requirements and

assistance available under such programs;

(7) A description of all other existing or anticipated housing

assistance provided by the recipient during FY 1998, including

transitional housing, homeless housing, college housing, supportive

services housing, and the requirements and assistance available under

such programs;

(8) A description of any housing to be demolished or disposed of,

and a timetable for such demolition or disposition;

(9) A description of the manner in which the recipient will

coordinate with tribal and State welfare agencies to ensure that

residents of such housing will be provided with access to resources to

assist in obtaining employment and achieving self-sufficiency;

(10) A description of the requirements established by the recipient

to promote the safety of residents of such housing, facilitate the

undertaking of crime prevention measures, allow resident input and

involvement, including the establishment of resident organizations, and

allow for the coordination of crime prevention activities between the

recipient and tribal and local law enforcement officials; and

(11) A description of the entity that will carry out the activities

under the IHP, including the organizational capacity and key personnel

of the entity.

(e) Certifications of compliance--The IHP must include the

following certifications:

(1) A certification that the recipient will comply with title II of

the Civil Rights Act of 1968 in carrying out activities funded by

NAHASDA, to the extent that such title is applicable, and other

applicable Federal statutes, including Section 504 of the

Rehabilitation Act of 1973;

(2) A certification that the recipient will maintain adequate

insurance coverage for housing units that are owned and operated or

assisted with grant amounts;

(3) A certification that policies are in effect and are available

for review by HUD and the public governing:

(i) The eligibility, admission, and occupancy of families for

housing assisted with grant amounts;

(ii) Rents charged, including the methods by which rents or

homebuyer payments are determined, for housing assisted with grant

amounts;

(iii) The management and maintenance of housing assisted with grant

amounts provided under this Act;

(4) If an IHP is submitted on behalf of a tribe by its tribally

designated housing entity (TDHE), the IHP must contain a certification

by the recognized tribal government that either:

(i) The tribe has had an opportunity to review the IHP and has

authorized its submission by the TDHE, or

(ii) The tribe has delegated to the TDHE the authority to submit an

IHP without prior review by the tribe;

(5) If an IHP that covers more than one Indian tribe is submitted

by a TDHE, each tribe covered by the IHP must submit as part of the IHP

the certification described in paragraph (4), immediately above;

(6) A certification that the governing body of the locality within

which any affordable housing to be assisted with the grant amounts will

be situated has entered into, or has begun negotiations, which must be

completed before any award of NAHASDA funds can be made, to enter into,

a local cooperation agreement with the recipient for the tribe

providing that:

(i) The affordable housing assisted with grant amounts received by

the recipient (exclusive of any portions not assisted with amounts

provided under NAHASDA) is exempt from all real and personal property

taxes levied or imposed by any State, tribe, city, county, or other

political subdivision; and

(ii) The recipient makes annual payments of user fees to compensate

such governments for the costs of providing governmental services,

including police and fire protection, roads, water and sewerage

systems, utilities systems and related facilities, or payments in lieu

of taxes to such taxing authority, in an amount equal to the greater of

$150 per dwelling unit or 10 percent of the difference between the

shelter rent and the utility cost, or such lesser amount as:

(A) Is prescribed by State, tribal, or local law;

(B) Is agreed to by the local governing body in the local

cooperation agreement; or

(C) The recipient and the local governing body agree in the local

cooperation agreement that such user fees or payments in lieu of taxes

shall not be made; or

(iii) If the affordable housing assisted with grant amounts

received by the recipient (exclusive of any portions not assisted with

amounts provided under NAHASDA) is not exempt from all real and

personal property taxes levied or imposed by any State, tribe, city,

county, or other political subdivision, that the tribe, State, city,

county, or other political subdivision in which the affordable housing

development is located contributes, in the form of cash or tax

remission, the amount by which the taxes paid with respect to the

development exceed the amounts prescribed in section (6)(ii) of the 1-

year plan requirements, above.

Question 4. What are the affordable housing activities that are

eligible for funding under NAHASDA?

Answer 4. Affordable housing activities are activities to develop

or to support affordable housing for rental or homeownership, or to

provide housing services with respect to affordable housing, for the

benefit of low-income Indian families on Indian reservations and other

Indian areas. In the case of a low-income family residing in a dwelling

unit assisted with NAHASDA grant amounts, affordable housing is housing

for which the monthly rent or homebuyer payment (as applicable) does

not exceed 30 percent of the family's monthly adjusted income. Eligible

affordable housing activities are described below in sections (a)

through (k) of this answer:

(a) Indian Housing Assistance--The provision of modernization or

operating assistance for housing previously developed or operated

pursuant to a contract between HUD and an Indian housing authority.

(b) Development--The acquisition, new construction, reconstruction,

or moderate or substantial rehabilitation of affordable housing, which

may include real property acquisition, site improvement, development of

utilities and utility services, conversion, demolition, financing,

administration and planning, and other related activities. Affordable

housing includes permanent housing for homeless persons who are persons

with disabilities, transitional housing, and single room occupancy

housing.

[[Page 4082]]

(c) Housing Services--The provision of housing-related services for

affordable housing, such as housing counseling in connection with

rental or homeownership assistance, establishment and support of

resident organizations and resident management corporations, energy

auditing, activities related to the provision of self-sufficiency and

other services, and other services related to assisting owners,

tenants, contractors, and other entities, participating or seeking to

participate in other housing activities assisted with grant amounts.

(d) Housing Management Services--The provision of management

services for affordable housing, including preparation of work

specifications, loan processing, inspections, tenant selection,

management of tenant-based rental assistance, and management of

affordable housing projects.

(e) Crime Prevention and Safety Activities--The provision of

safety, security, and law enforcement measures and activities

appropriate to protect residents of affordable housing from crime.

(f) Rental Assistance--The provision of tenant-based rental

assistance.

(g) Model Activities--Housing activities under model programs that

are designed to carry out the purposes of NAHASDA and are specifically

approved by HUD as appropriate for such purpose.

(h) Administrative Expenses--A percent of grant amounts, to be

determined in the final rule, may be used for any reasonable

administrative and planning expenses of a recipient relating to

carrying out NAHASDA and activities assisted with such amounts,

including costs for salaries of individuals engaged in administering

and managing affordable housing activities assisted with grant amounts

and the expenses of preparing an IHP.

Question 5. How may grant amounts be used to carry out eligible

activities?

Answer 5. In addition to being used to directly pay for eligible

activities, grant amounts may be used for affordable housing activities

through equity investments, interest-bearing loans or advances,

noninterest-bearing loans or advances, interest subsidies, leveraging

of private investments, or any other form of assistance that HUD

determines to be consistent with the purposes of NAHASDA. This answer

is provided from section 204--``Types of Investments''--of NAHASDA.

Guidance on the types of investments permissible under section 204 of

NAHASDA will be provided in the final regulations.

Question 6. When must the IHP required by these transition

requirements be submitted?

Answer 6. An IHP must be received by HUD no earlier than the

publication date of the final regulations implementing NAHASDA and no

later than July 1, 1998 in order to be considered for FY 1998 funding.

Question 53, below, also addresses this issue.

Question 7. Where must an IHP be submitted?

Answer 7. All IHPs must be submitted to the local Area Office of

Native American Programs as follows:

------------------------------------------------------------------------

Tribes and IHAs located ONAP address

------------------------------------------------------------------------

East of the Mississippi River Eastern/Woodlands Office of Native

(including all of Minnesota) American Programs, 5P, Metcalfe Federal

and Iowa. Building, 77 West Jackson Boulevard,

Chicago, Illinois 60604-3507, (312) 353-

1282 or (800) 735-3239, TTY Numbers: 1-

800-927-9275 or 312-886-3741.

Louisiana, Missouri, Kansas, Southern Plains Office of Native American

Oklahoma, and Texas except Programs, 6.IPI, 500 West Main Street,

for Yseleta del Sur. Suite 400, Oklahoma City, Oklahoma

73012, (405) 553-7520, 553-7480.

Colorado, Montana, Nebraska, Northern Plains Office of Native American

North Dakota, South Dakota, Programs, 8P, First Interstate Tower

Utah and Wyoming. North, 633 17th Street, Denver, Colorado

80202-3607, (303) 672-5462, TTY Number:

303-844-6158.

Arizona, California, New Southwest Office of Native American

Mexico, Nevada, and Yseleta Programs, 9EPI, Two Arizona Center, 400

del Sur in Texas. North Fifth Street, Suite 1650, Phoenix,

Arizona 85004-2361, (602) 379-4156, TTY

Number: 602-379-4461, or Albuquerque

Division of Native American Programs,

9EPIQ, Albuquerque Plaza, 201 3rd

Street, NW, Suite 1830, Albuquerque, New

Mexico 87102-3368, (505) 766-1372, TTY

Number: None.

Idaho, Oregon, and Washington Northwest Office of Native American

Programs, 10PI, 909 First Avenue, Suite

300, Seattle, Washington 98104-1000,

(206) 220-5270, TTY Number: (206) 220-

5185.

Alaska....................... Alaska Office of Native American

Programs, 10.1PI, 949 East 36th Avenue,

Suite 401, Anchorage, Alaska 99508-4399,

(907) 271-4633, TTY Number: (907) 271-

4328.

------------------------------------------------------------------------

Question 8. May an IHA continue to remain subject to the 1937 Act,

and convert to a PHA?

Answer 8. No, because the purpose and result of NAHASDA is the

exclusion of IHAs from the definition of a PHA as of September 30,

1997. After September 30, 1997, there may be IHAs that want to remain

subject to the 1937 Act, but the consequence of NAHASDA section 501 is

to make it impossible, after September 30, 1997, for an IHA to be

considered a PHA. Further, section 502(b) provides that any IHA housing

developed or operated under the 1937 Act must be considered and

maintained as affordable housing for purposes of NAHASDA, and precludes

the continued application of title I of the 1937 Act to IHAs after

September 30, 1997. Question 30, below, also addresses this issue.

Question 9. What happens to grants already made under the homeless,

Youthbuild and Indian HOME programs?

Answer 9. These grants continue to be governed by the statutes

authorizing the programs as those statutes read on September 30, 1997

and by the grant agreements. After completion of the funded activities,

the grants will be closed out in accordance with their program

requirements and grant agreements. Questions 37 and 38, below, also

address this issue.

General Impact on Housing and Funding

Question 10. On October 1, 1997, the Native American Housing

Assistance and Self-Determination Act of 1996 (NAHASDA) legislation

becomes effective. How does this impact the provision of housing

assistance to Native Americans?

Answer 10. NAHASDA terminates provision of housing assistance under

the United States Housing Act of 1937, as amended, (1937 Act) and

creates a new program of grants made directly to Indian tribes. The new

Indian Housing Block Grant (IHBG) is intended to provide greater

flexibility to tribes in determining how to address their housing needs

for low-income individuals within their jurisdiction.

[[Page 4083]]

Tribes assume a responsibility to maintain current housing stocks

developed under the 1937 Act.

Question 11. Does the change in governing legislation affect who

owns housing developed or assets and funds held by IHAs?

Answer 11. No. While IHA funds and assets become subject to the

requirements of NAHASDA on October 1, 1997, the ownership of the

housing funds and assets are not affected. Grants made to IHAs and the

assets of IHAs continue to belong to the IHA. IHAs that are created by

tribal ordinance are subject to the authority of the tribe. Tribes must

review their existing ordinances and other documents affecting the

organization and legal commitments of the tribe and its IHA to

determine how to transfer funds and assets of the IHA to the tribe or

its newly established tribally designated housing entity (TDHE).

Effect on 1937 Act Housing

Question 12. What happens to public housing units owned and

operated by IHAs?

Answer 12. All units owned by IHAs become ineligible for assistance

under the 1937 Act as of October 1, 1997. Public housing units owned

and operated by IHAs are considered Indian housing units and become

subject to NAHASDA on October 1, 1997.

Question 13. What happens to existing 1937 Act units if tribes in

those jurisdictions do not or cannot submit an IHP?

Answer 13. NAHASDA does not provide the statutory authority for HUD

to grant NAHASDA grant funds to an IHA, tribe or to a default TDHE

which cannot obtain a tribal certification, if the requisite IHP is not

submitted by a tribe or is determined to be out of compliance by HUD.

There may be circumstances where this may happen, and in those cases,

other methods of tribal, federal or private market support may have to

be sought to maintain and operate those 1937 Act units.

Question 14. Should the public housing stock owned by IHAs be

reflected in the current assisted stock element of the IHBG formula

under NAHASDA?

Answer 14. Yes.

Question 15. Will the housing units in the current development

pipeline be allowed to increase the 1937 Act count for NAHASDA formula

purposes?

Answer 15. Yes. Upon completion of housing units currently in the

development pipeline, HUD should be notified to adjust the information

reflected in the formula for existing 1937 Act units operated by the

IHA or recipient. The notification should take the same form as the

current notification for Date of Full Availability under the Indian

Housing program.

Question 16. What process would a tribe or TDHE follow in order to

admit over-income families to a vacant unit developed under the 1937

Act or for new units developed under the 1937 Act which will be counted

as Current Assisted Stock under the IHBG Formula?

Answer 16. Since the 1937 Act no longer applies to these units and

the NAHASDA final rule will only address the procedures for admitting

over-income families when using the recipient's annual grant amount,

there is a need to develop procedures for these units.

For units to be developed after September 30, 1997, with funds

provided under the 1937 Act, a recipient may use up to 10% of its funds

available from 1937 Act programs to admit families whose income fall

within 80 to 100% of median income without HUD approval. HUD approval

is required if a recipient plans to use more than 10% of its 1937 Act

funds for such assistance or to provide housing for families over 100%

of median income.

For vacancies in homeownership programs where the units were under

management as of September 30, 1997, occupancy by families whose income

falls within 80 to 100% of median income may not exceed 10% of the

dwelling units in the project or 5 dwelling units, whichever is

greater, without HUD approval. HUD approval is required if a recipient

plans to admit more than this amount in a project or to provide housing

for families over 100% of median income.

Question 17. Can an IHA or recipient develop additional units with

funds provided through the 1937 Act and have the extra units included

in the IHBG formula?

Answer 17. No. While developing the maximum number of affordable

housing units is encouraged, housing units over the number specified in

the original grant approval will not be included in the total number of

units developed with 1937 Act funds.

Question 18. Can an IHA be a NAHASDA sub-grantee of the tribe or

TDHE for the purpose of maintaining housing developed under the 1937

Act?

Answer 18. Yes. Additionally, an IHA could be a sub-grantee for the

purpose of developing and managing housing with NAHASDA funds.

Effect on 1937 Act Funding

Question 19. Must an IHA (or its successor entity) use grant funds

provided under the 1937 Act for the original purpose after October 1,

1997?

Answer 19. No. Funds provided to an IHA under the 1937 Act can be

used for any activity eligible under NAHASDA. An IHA (or its successor

entity) must honor existing contracts the IHA has entered into with

others prior to NAHASDA; however, an IHA may reprogram the use of funds

for eligible activities subject to written notification to HUD.

Question 20. Will Indian housing authorities (IHA), tribes or

tribally designated housing entities (TDHE) be eligible to apply for

assistance under any programs covered by the 1937 Act?

Answer 20. No. Section 501 of NAHASDA repealed Title II of the 1937

Act and made Titles I and III inapplicable to Indian housing after

September 30, 1997. Therefore, as of October 1, 1997, IHAs and tribes

are ineligible for funding for the following programs:

--New development

--Modernization (both the Comprehensive Improvement Assistance Program

and the Comprehensive Grant Program including the disaster/emergency

reserve)

--Operating subsidy

--HOPE for Public and Indian Housing Homeownership

--Indian Housing Childhood Development

--Section 8

Question 21. Will any operating subsidy be provided to IHAs after

October 1, 1997?

Answer 21. Yes. The Fiscal Year (FY) 1997 appropriation for

operating subsidy under Section 9 of the 1937 Act covers IHAs fiscal

years beginning (FYB) January 1, 1997 and ending December 31, 1997; FYB

April 1, 1997 and ending March 31, 1998; FYB July 1, 1997 and ending

June 30, 1998; and FYB October 1, 1997 and ending September 30, 1998.

IHAs are eligible for funds appropriated prior to FY 98, and therefore,

operating subsidy will be provided for the time periods stated in this

paragraph.

After September 30, 1997, financial assistance may not be provided

under the 1937 Act unless such assistance is provided from amounts made

available for FY 97 and pursuant to a commitment entered into before

September 30, 1997, therefore, all operating budgets for these periods

must have been approved prior to September 30, 1997 in order to be

eligible for funding. Operating budget adjustments or revisions after

October 1, 1997, cannot be processed.

[[Page 4084]]

Question 22. If an IHA has unobligated or unexpended funds in any

of the programs listed in Answer 19, how are they handled?

Answer 22. Any unobligated/unexpended funds which were approved for

new development, modernization, operations or HOPE can now be used for

any eligible NAHASDA activity. Section 8 contracts remain in effect and

the program is still governed by the 1937 Act and the existing contract

provisions.

Question 23. What is the definition of ``obligated'' as it relates

to the development and modernization programs?

Answer 23. Obligated means the cumulative amount of modernization

or development commitments entered into by the housing authority; i.e.,

contract execution for contract labor, materials or services; start and

continuation of physical work by force account labor; and start and

continuation of administrative expenses. Contract execution means

execution of the contract by both the housing authority and the

contractor. For force account work, all funds for a group of

sequentially-related physical work items are considered obligated when

the first work item is started, such as kitchen cabinet replacement

followed by kitchen floor replacement, but only where funds continue to

be expended at a reasonable rate. Where one force account physical work

item is started and is not sequentially related to other physical work

items, such as site improvements and kitchen remodeling, then only the

funds for the one physical work item started are considered obligated.

Question 24. Does an IHA need to enter into a new grant agreement

with HUD covering the use of existing 1937 Act grant funds?

Answer 24. In most instances, the requirement limiting use of grant

funds to eligible NAHASDA activities is self-implementing and does not

require a new grant agreement between HUD and the IHA. However, in

instances where a grant was never placed under annual contributions

contract or where a tribe or other organization becomes the successor

entity to an IHA, a grant agreement is required to obligate funds to

the IHA or to establish the tribe or other organization as the

successor entity to access IHA funds held by HUD.

Question 25. What Federal requirements apply after September 30,

1997 to funds provided under the 1937 Act?

Answer 25. Funds are subject to applicable Federal requirements

which include but are not limited to:

procurement requirements as listed under 24 CFR part 85 or

as specified in the grantee's HUD approved procurement policy;

environmental requirements as listed under 24 CFR part 58;

labor requirements of Sec. 104(b) of NAHASDA;

tenant or homebuyer selection requirements contained in

the grantee's HUD approved admissions policy or which comply with

Sections 203, 205 and 207(b) of NAHASDA;

financial controls requirements specified at 24 CFR Part

85.

Question 26. Do the Federal requirements listed in Question 25

apply to IHAs if they are not designated as a TDHE?

Answer 26. Yes.

Question 27. Are there any reporting requirements after September

30, 1997 for grant funds provided under the 1937 Act?

Answer 27. Yes. When a recipient includes funds provided to an IHA

in its IHP, reporting is included in the Annual Report and fiscal audit

requirements under NAHASDA.

When funds provided to an IHA are not included in a recipient's

IHP, reporting requirements in effect on September 30, 1997, continue

to apply until the close-out of the grant activity or until the IHA

notifies HUD and HUD acknowledges that the grant funds have been

reprogrammed for eligible activities which support the regular

operation of the IHA. This requirement applies only to categorical

grants provided for specific purposes such as development or

modernization grants and not to regular operating activities of the

IHA. Please note that the modernization reporting requirements have

been simplified and guidance has been provided to tribes, TDHEs, IHAs

and Area ONAPs.

Question 28. What audit requirements apply to grants funded under

the 1937 Act?

Answer 28. IHAs (or their successor entities) are responsible for

providing HUD with audits of program activities in accordance with OMB

Circulars A-128 and A-133 for any period prior to October 1, 1997, the

effective date of NAHASDA. Notice PIH 97-30 (HA) provides the

compliance supplement for annual audits of Indian housing authorities.

This requirement includes any overdue audits. Additionally, any grant

not included by the recipient in its IHP is subject to these audit

requirements for the grant activity until all grant activities are

completed and the grant is closed.

Question 29. What process does an IHA (or its successor entity)

follow to close grants originally funded with 1937 Act monies?

Answer 29. Where grant activities are essentially completed and the

IHA and HUD are in the process of closing the grant, the procedures for

establishing actual grant costs in effect as of September 30, 1997, for

the grant program are to be followed. This includes the requirement for

audit verification of expenditures and final financial settlement

between the IHA and HUD. Upon completion of the final financial

settlement, HUD will adjust its financial records to reflect the actual

cost of the grant.

Where grant activities are not completed, final settlement

procedures are dependent upon whether the NAHASDA recipient assumes

control of the grant funding. If the recipient does not assume

responsibility for funds provided by the 1937 Act, procedures for

closing grants are the same as stated in the above paragraph. Where the

NAHASDA recipient assumes control of the grant funding, close-out

procedures established for NAHASDA grants are to be followed even if a

significant portion of the grant activities are completed prior to

October 1, 1997.

Question 30. If an IHA wants to remain subject to the 1937 Act

after October 1, 1997, can it be converted to a PHA?

Answer 30. No. To be eligible for Indian Housing under the 1937

Act, tribal and state enabling legislation allowed for the creation of

housing authorities for the express benefit of Indians. IHAs that were

created for the benefit of Indians are ineligible for funding under the

1937 Act after October 1, 1997. They cannot choose to be converted to

PHAs.

Effect on ACCs

Question 31. Does the repeal of the 1937 Act terminate existing

Annual Contributions Contracts (ACCs)?

Answer 31. Section 502(b) of NAHASDA states that Indian housing

developed pursuant to an ACC ``shall not be subject to any provision of

[the 1937 Act] or any [ACC] or other agreement pursuant to such Act.''

Based on this language, existing ACCs are terminated with two

exceptions (bond financed projects and Section 8) which are explained

below in Questions 32 and 33.

Question 32. Can HUD continue funding for bond-financed projects in

which the bonds were secured by ACCs?

Answer 32. Section 507 of NAHASDA addresses bond-financed projects.

Annual contributions can be made by HUD, consistent with Section 507,

to continue payments to trustees on behalf

[[Page 4085]]

of holders of bonds issued, and outstanding, in connection with the

development of Indian housing projects.

Section 8

Question 33. Are Section 8 ACCs terminated?

Answer 33. No. Section 503 of NAHASDA governs the provision of

Section 8 rental assistance for units for which a contract was entered

into before October 1, 1997. This section states that after September

30, 1997, financial assistance for rental housing assistance may not be

provided to an IHA or TDHE, unless such assistance is provided pursuant

to a contract for such assistance before October 1, 1997. Any such

assistance shall be governed by the provisions of the 1937 Act and the

provisions of such contract.

In other words, if an existing Section 8 contract does not expire

until after October 1, 1997, funding will continue to be provided until

the expiration date of the contract. This may be as late as fiscal year

(FY) 2000. The program is to be operated in accordance with the

existing ACC and HAP contract.

Question 34. What will happen to any remaining Section 8 operating

reserves after the Section 8 contracts expire?

Answer 34. Section 8 operating reserves will remain with the entity

administering the Section 8 program. Once the contract expires, the

reserves shall be used for eligible activities under NAHASDA.

Question 35. What will happen to any remaining Section 8 program or

project reserves?

Answer 35. Section 8 program or project reserves are those funds

held by HUD to fund monthly housing assistance payments. When the

contract expires, any remaining funds will remain with the Department.

Question 36. If a Tribe or TDHE chooses not to continue a Section 8

program after the current contract expires, is there a requirement to

notify program participants of its intent to discontinue the program?

Answer 36. Yes, IHAs administering Section 8 rental certificates

and rental voucher programs for which the ACC term will expire after

September 30, 1997, must immediately notify Section 8 participants

(including families that have exercised the portability provisions of

the Section 8 program and have not been absorbed by the receiving

housing authority) that their Section 8 assistance will end upon

expiration of the ACC in accordance with the Housing Assistance Payment

(HAP) contract, part B, Subpart 6, Paragraph iv.

Owners of Section 8 moderate rehabilitation units must also be

notified that after September 30, 1997, HAP contracts will not be

renewed upon the expiration of their current HAP contracts. Owners

should be advised that they must provide written notice of the

impending HAP contract expiration to each Section 8 family 180 days

before the contract expires. A copy of the written notice must also be

sent to the appropriate housing authority in accordance with Section

8(c)(9) of the 1937 Act, as amended. See PIH Notice 97-50, ``Expiration

of Section 8 Annual Contributions Contracts between the Department of

Housing and Urban Development and Indian housing authorities'' dated

September 19, 1997, for further guidance.

Programs Under the Cranston-Gonzalez National Affordable Housing

Act or the Stewart B. McKinney Homeless Assistance Act

Question 37. Will IHAs or tribes be eligible for programs funded

under the Cranston-Gonzalez National Affordable Housing Act or the

Stewart B. McKinney Homeless Assistance Act?

Answer 37. No. As of October 1, 1997, IHAs or tribes are no longer

eligible for the following programs:

--Youth Sports

--Youthbuild

--HOME (Although tribes or IHAs are not eligible as direct grantees for

HOME funds, States may choose to fund them if the needs of the tribes

are reflected in the State's Consolidated Plan.)

--Housing Assistance for the Homeless which includes: Comprehensive

Homeless Assistance Plan; Emergency Shelter Grants; Supportive Housing

Programs; Safe Havens for Homeless Individuals Demonstration Program;

Shelter Plus Care; Rural Homeless Housing Assistance; and Innovative

Homeless Demonstration.

Question 38. If an IHA or tribe has unobligated or unexpended funds

in any of the programs listed in Question 37, how are they handled?

Answer 38. Youth Sports, Youthbuild, HOME and the Housing

Assistance for the Homeless Programs continue to be governed by the

provisions of the statutes in effect at the time of funding. The

program shall continue to be operated under existing program

provisions. After completion of the funded activities, the grants will

be closed out in accordance with their program requirements and grant

agreements.

Question 39. What will happen to the Drug Elimination Program?

Answer 39. Section 704 of NAHASDA amends the Public and Assisted

Housing Drug Elimination Act of 1990 to exclude IHAs as eligible

applicants. However, TDHEs are now eligible applicants. The language in

NAHASDA does not include tribes as eligible applicants.

Other Programs and Funds

Question 40. Will tribes be eligible for the Economic Development

and Supportive Services (EDSS) Program?

Answer 40. The EDSS program is created by annual appropriations.

The appropriation language currently makes IHAs and public housing

agencies eligible for this program. Continued eligibility for IHAs will

depend on future appropriation language. The language will need to be

changed to include tribes and TDHEs. For those with existing EDSS

grants, the program should continue to be operated under existing

program provisions.

Question 41. Is the same true for the Tenant Opportunity Program

(TOP) as for the EDSS Program under Question 40?

Answer 41. Yes.

Question 42. What happens to rental and homeownership operating

reserves, mutual help equity accounts under the Mutual Help

Homeownership Opportunity Program, earned home payment accounts under

the Turnkey III programs and proceeds from the sale of homeownership

units?

Answer 42. These funds can now be used for any eligible NAHASDA

activity subject to any conditions imposed by the contract or agreement

between the IHA and the homebuyer.

Question 43. Do tenant leases and homeownership agreements for the

Mutual Help and Turnkey III Programs remain in effect?

Answer 43. Yes. For the rental program, leases remain in effect

until the lease term expires. At that time, the tribe, TDHE, or IHA

operate the units under the regulations governing NAHASDA. For

homeownership programs, the agreements remain in effect until the

contract term expires or modifications may be made to the agreement if

these changes are acceptable to both parties. Modifications to the

agreement must be in accordance with NAHASDA.

Question 44. What happens to tenant accounts receivables?

Answer 44. Since the terms of the rental leases and homeownership

agreements remain in effect, the tenant accounts receivable are still

due based on current program requirements. New policies regarding

payment requirements for units developed under NAHASDA can be adopted

by the tribe or TDHE.

[[Page 4086]]

Other Pre-NAHASDA Requirements

Question 45. What happens to the current regulations governing the

Indian housing program, 24 CFR 950?

Answer 45. As of October 1, 1997, the regulations are cancelled.

Question 46. What cash management and investment policies and

procedures are in effect as of October 1, 1997?

Answer 46. Current procedures outlined in PIH Notice 96-33 (HA),

extended by Notice 97-41 (HA) dated July 21, 1997, titled ``Required HA

Cash Management and Investment Policies and Procedures'' will continue

to apply until the effective date of the NAHASDA final regulation.

Question 47. Are IHAs responsible for resolving audit findings

which were issued pursuant to activities prior to October 1, 1997?

Answer 47. Yes. Audit findings are open until closed. Findings that

are based on operating policies or procedures can be resolved between

an IHA (or its successor entity) and HUD by identifying such findings

and agreeing that the correction of deficiencies is no longer required

by statute or regulation. Findings that are not based on operating

policies or procedures such as instances of fraud, criminal activities

or ineligible program activities including repayment of any outstanding

amounts due the Department, must be resolved between the IHA (or its

successor entity) and HUD before the audit finding can be closed.

Question 48. Will financial statements be required when the IHA's

FY ends?

Answer 48. The requirement to submit financial statements ended on

September 30, 1997.

Question 49. Will the tribe or TDHE be required to submit the

Multifamily Tenant Characteristic Reports, HUD 50058, as of 10-1-97?

Answer 49. As of October 1, 1997, the HUD 50058 does not need to be

submitted for the rental and homeownership programs. The form is still

required for the Section 8 program until the contract term expires.

Question 50. Will LOCCS access to funds be changed for IHAs on

October 1, 1997?

Answer 50. No. LOCCS access to funds will be modified only if a

recipient assumes responsibility for a grant. At that time, HUD must be

notified of the change in responsibility so that access to the grant

funds can be provided to the recipient.

LOCCS provides for the disbursement of funds by certain line items

contained in program budgets. Since budgets are no longer required, the

Area ONAP will enter the entire grant amount under account 1500 when

they establish a project in LOCCS. This will obviate the need to

provide budget information to the Area ONAP. For grants already

established in LOCCS, the grantee can request the Area ONAP to transfer

funds to line 1500 to enable access to the funds. The request to

transfer funds can be in writing or by telephone.

Question 51. If an IHA is declared ``high risk'' under the

provisions of 24 CFR 950.135, will this designation continue as of

October 1, 1997?

Answer 51. No. There is no basis or authority for allowing the

designation of ``high risk'' to continue because this designation was

based on failure to comply with the 1937 Act, implementing regulations

or the ACC. Regulations are being developed under NAHASDA which will

outline corrective action under the new program.

Question 52. Are cooperation agreements transferable to a successor

agency without requiring any action on the agreement by the local

government or the successor agency?

Answer 52. Cooperation agreements may be transferable to a

successor agency by their terms. However, it is also possible that the

agreement is not transferable in which case a new agreement would have

to be negotiated. Generally, if the current IHA becomes the TDHE, a new

agreement is not needed because the designation of the IHA as a TDHE

does not create a new legal entity. However, an IHA's cooperation

agreement does not automatically become the Tribe's.

New Program Under NAHASDA

Question 53. What is the IHP submission deadline?

Answer 53. On January 27, 1997, a transition notice was published

in the Federal Register which established the original IHP deadline

submission date of June 1, 1997. Based on public comment, this date was

later amended to extend the deadline to November 3, 1997. With the

publication of the proposed rule, many commenters indicated that the

deadline did not provide sufficient time to prepare an IHP. Therefore,

it is unreasonable to expect a recipient to submit a plan prior to

publication date of the program regulations.

Based on the above, this transition notice is establishing new IHP

submission dates for Fiscal Year 1998 only. An IHP can be submitted no

earlier than the publication date of the final regulations implementing

NAHASDA and no later than July 1, 1998. The July 1, 1998, date is

necessary in order to provide for a 60-day review period by Office of

Native American Program (ONAP) field staff and reservation of funds

prior to September 30, 1998. The final regulations will establish IHP

submission dates for all future years.

Question 54. Will ONAP develop a model IHP as an example or guide

for tribes or TDHEs? Is so, will it be available in a diskette format?

Answer 54. A draft IHP format has been developed and submitted to

the Office of Management and Budget (OMB) for approval. This form was

also mailed to all tribes and IHAs in August 1997.

To assist with the submission of the IHP, the Department is

offering three ways in which to submit the IHP. The first is via the

Internet. It is anticipated that this will be the easiest method and it

will also provide you with on-line resources such as reviewing plan

status. You may also develop your plan using a diskette which contains

a template of the IHP in a Microsoft Word 6.0 format. Once completed,

this diskette is submitted to the Area ONAP. The diskette and internet

instructions were sent to all eligible recipients on July 24, 1997. Of

course, a hard copy of the plan will also be accepted for the first

several years of the program.

Question 55. Are costs incurred prior to the receipt of a FY 1998

Indian Housing Block Grant (IHBG) which are related to the development

and preparation of an IHP (including the challenge of data) eligible

for reimbursement from an IHBG?

Answer 55. Yes. Under the provisions of paragraph 32 of OMB

Circular A-87, pre-award planning and administrative costs incurred by

a recipient which are directly related to the development and

preparation of its IHP (including the challenge of data) will be

considered eligible IHBG expenditures under the following conditions:

(a) The costs would have been allowable if they had been incurred

after the date of the award of the IHBG; and,

(b) The costs do not exceed more than 20% of the recipient's

anticipated FY 1998 IHBG (or such other amounts approved in the IHP).

Question 56. Can an IHA which currently represents more than one

tribe be designated by more than one tribe as their TDHE?

Answer 56. Yes.

Question 57. If a TDHE represents more than one tribe, do

individual IHPs need to be submitted?

Answer 57. If a TDHE has been designated by more than one Indian

[[Page 4087]]

tribe, the TDHE can submit a separate IHP for each Indian tribe or it

may submit a single IHP that covers two or more tribes. However, the

IHP must contain a separate certification in accordance with Section

102(d) of NAHASDA and the IHP Tables when requested by such tribes.

Question 58. What happens if a tribe had two IHAs as of September

30, 1996?

Answer 58. Tribes which had established and were operating two IHAs

as of September 30, 1996, under the 1937 Act shall be allowed to form

and operate two TDHEs under NAHASDA. Nothing in this section shall

affect the allocation of funds otherwise due to a tribe under the

formula.

Question 59. Who is considered as a tribe in Alaska?

Answer 59. The definition of Federally recognized tribe in NAHASDA

reads: ``The term `federally recognized tribe' means any Indian tribe,

band, nation, or other organized group or community of Indians,

including any Alaska Native village or regional or village corporation

as defined in or established pursuant the Alaska Native Claims

Settlement Act, that is recognized as eligible for the special programs

and services provided by the United States to Indians because of their

status as Indians pursuant to the Indian Self-Determination and

Education Assistance Act of 1975.''

Authority: Section 106 of the Native American Housing Assistance

and Self-Determination Act of 1996 (NAHASDA) (Pub. L. 104-330,

approved October 26, 1996).

Dated: January 15, 1998.

Kevin Emanuel Marchman,

Assistant Secretary for Public and Indian Housing.

[FR Doc. 98-1939 Filed 1-26-98; 8:45 am]

BILLING CODE 4210-33-P