Comprehensive Improvement Assistance Program

SUMMARY: This proposed rule would amend the regulations for the

Comprehensive Improvement Assistance Program (CIAP) to permit the non-

competitive distribution of CIAP funds to all eligible public housing

authorities (PHAs) based on two equally-weighted factors: a PHA's share

of the total number of units eligible for CIAP; and a PHA's share of

the total number of bedrooms in units eligible for CIAP (with studio

units counted as one-bedroom units). The purpose of this amendment is

to provide small PHAs the opportunity of a transition period to become

familiar with a non-competitive, capital funding process in

anticipation of formula funding in Federal Fiscal Year (FFY) 2000 under

new statutory authority.

DATES: Comments due date: June 1, 1999.

ADDRESSES: Interested persons are invited to submit written comments

regarding this proposed rule to the Rules Docket Clerk, Office of

General Counsel, Room 10276, Department of Housing and Urban

Development, 451 Seventh Street, SW, Washington, DC 20410. Comments

should refer to the above docket number and title. A copy of each

comment submitted will be available for public inspection and copying

between 7:30 a.m. and 5:30 p.m. weekdays at the above address.

Facsimile (FAX) comments will not be accepted.

FOR FURTHER INFORMATION CONTACT: William J. Flood, Director, Office of

Capital Improvements, Department of Housing and Urban Development, 451

Seventh Street, SW, Room 4134, Washington, D.C. 20410. Telephone (202)

708-1640. (This is not a toll free number.) Persons with hearing or

speech impediments may access this number via TTY by calling the

Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

The Comprehensive Improvement Assistance Program (CIAP) is

authorized under section 14 of the United States Housing Act of 1937

(1937 Act). CIAP provides modernization funds to public housing

authorities (PHAs) that own or operate less than 250 units of public

housing, to enable them to improve the physical condition and upgrade

the management and operations of existing public housing developments

to assure their continued availability for low-income families. In FFY

1999, a total of $2.895 billion is available for Modernization Programs

(CIAP and Comprehensive Grant Program (CGP)), of which approximately

$364 million will be available to CIAP PHAs. Modernization funds are

allocated between CIAP and CGP PHAs based on the relative shares of

backlog needs (weighted at 50%) and accrual needs (weighted at 50%), as

determined by field inspections conducted for the HUD-funded Abt

Associates study of modernization needs. This allocation results in

CIAP PHAs receiving approximately 12.5% and CGP PHAs receiving

approximately 87.5% of the total funds available. In previous years, an

allocation of CIAP funds has been made for each Field Office based, in

part, on the relative shares of backlog and accrual needs for CIAP

PHAs. After the assignment of funds to Field Offices, CIAP funds were

then distributed to PHAs pursuant to a competitive process, under which

applications submitted to HUD were rated and ranked. Awards were then

made in rank order to the extent that funds were available. Under this

system of distribution, not every PHA that submitted an acceptable

application was funded.

In lieu of the former distribution method, HUD proposes to continue

to use the formula allocation for CIAP described in 24 CFR 968.103 (but

not to assign CIAP funds to Field Offices and then distribute the CIAP

funds to PHAs by a competitive method) and to amend the CIAP

regulations to permit the distribution of funds after formula

allocation to all eligible PHAs on a non-competitive basis. Section 519

of the Quality Housing and Work Responsibility Act of 1998 (Pub.L. 105-

276, 112 Stat. 2461, approved October 21, 1998) (QHWRA), authorizes a

new system of funding capital improvement needs for all PHAs, large and

small, on a formula basis beginning in FFY 2000. The final year of CIAP

funding will be FFY 1999. HUD will be working with housing industry and

resident groups, and representatives of small, medium and large PHAs to

develop, using the negotiated rulemaking process, an entirely new

formula for capital funds distribution for all PHAs. Rather than have

PHAs that own or operate less than 250 units continue to plan for and

obtain capital funding on a competitive basis that will soon no longer

be available, HUD wishes to provide these small PHAs the opportunity of

a transition period in which funding is made available under a process

that is closer to the formula-based capital program that will apply to

all PHAs beginning in FFY 2000.

This rule would amend 24 CFR 968.210 to remove the provisions that

require competitive funding and to add a provision that permits funding

distributions on the basis described below. To initiate the

distribution process, HUD will notify PHAs of their estimated dollar

amount and the time frame for submission of the CIAP application and

other pertinent information. Every eligible PHA (owning or operating

less than 250 units) that responds to the notice would then receive a

distribution based on two equally-weighted factors: (1) A PHA's share

of the total number of units eligible for CIAP; and (2) a PHA's share

of the total number of bedrooms in units eligible for CIAP (with studio

units counted as one-bedroom units). HUD currently estimates that for a

given PHA, each unit would receive between $1250 and $2250 per unit of

CIAP funding under this proposed system, and that for most PHAs, the

per unit funding will be between $1600 and $2000 per unit.

This proposed rule would also provide for the preferences under

section 14(h) of the 1937 Act. Under section 14(h), preferences are

given to small PHAs for projects having conditions which threaten the

health or safety of the tenants (emergency modernization preference) or

having a significant number of vacant, substandard units (vacancy

preference), and that also have demonstrated modernization capability.

Under the competitive system of distributing CIAP funds, emergency

modernization was funded as Group 1 during the competition or during

the course of the year from the emergency reserve under 24 CFR 968.104.

For the vacancy preference, HUD provided for extra points in the CIAP

NOFAs to PHAs that demonstrated the high priority needs and

modernization capability required for the vacancy preference.

The emergency modernization preference will be satisfied by

processing all emergency modernization under existing procedures in 24

CFR 968.104. In addition, HUD will set-aside

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from the CIAP distribution approximately $6.1 million for the East

Texas housing authorities (those with less than 250 public housing

units) involved in the Young v. Cuomo civil rights case, to meet the

requirements of the settlement agreement, which is subject to judicial

oversight.

Because CIAP funds would not be distributed competitively under

this rule, the vacancy preference cannot be implemented by providing

extra points. This rule applies the vacancy preference by providing an

additional increment of funding to PHAs that have modernization

capability and demonstrate that at least 25% of their units are vacant,

substandard units (where vacancies are not due to insufficient demand).

A PHA has modernization capability if it has previously received CIAP

funding and meets the requirements of Modernization capability as

defined at Sec. 968.205. PHAs must apply for the vacancy preference

incremental assistance as part of the CIAP application (to be provided

by HUD under the notification required by 24 CFR 968.210(a)).

As an additional matter, this rule would make a technical

correction to Sec. 968.110(a), replacing a citation to ``section 503 of

the Rehabilitation Act of 1973'' with ``section 504 of the

Rehabilitation Act of 1973''.

II. Findings and Certifications

Justification for Shortened Comment Period

It is the general practice of the Department to provide a 60-day

public comment period on all proposed rules. However, in order to

provide a sufficient transition period for small PHAs to become

familiar with working under a new statutory system of funding capital

improvement needs on a formula basis rather than a competitive basis,

the Department is shortening its usual 60-day public comment period to

30 days.

Paperwork Reduction Act Statement

The information collection requirements of the Comprehensive

Improvement Assistance Program have been approved by the Office of

Management and Budget under OMB Approval No. 2577-0044. 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.

Environmental Impact

In accordance with 40 CFR 1508.4 of the regulations of the Council

on Environmental Quality and 24 CFR 50.19(c)(2) of the HUD regulations,

this rule amends an existing document, the regulations at 24 CFR part

968, which as a whole would not fall within an exclusion, but the

amendment by itself would do so. Therefore, the actions proposed in

this document are determined not to have the potential of having a

significant impact on the quality of the human environment and further

review under the National Environmental Policy Act is not necessary. A

Finding of No Significant Impact (FONSI) is not required.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.

1531-1538) establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. This proposed rule does not impose

any Federal mandates on any State, local, or tribal governments or the

private sector within the meaning of Unfunded Mandates Reform Act of

1995.

Executive Order 12866

The Office of Management and Budget (OMB) reviewed this proposed

rule under executive Order 12866, Regulatory Planning and Review. OMB

determined that this proposed rule is a ``significant regulatory

action,'' as defined in section 3(f) of the Order (although not

economically significant, as provided in section 3(f)(1) of the Order).

Any changes made to the proposed rule subsequent to its submission to

OMB are identified in the docket file, which is available for public

inspection in the office of the Department's Rules Docket Clerk, Room

10276, 451 Seventh Street, SW, Washington, DC 20410-0500.

Impact on Small Entities

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

U.S.C. 605(b)) (the RFA), has reviewed and approved this proposed rule

and in so doing certifies that this rule will not have a significant

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

would only modify the funding process for the final year of the CIAP to

provide small PHAs with a transition period to become familiar with a

non-competitive capital funding process. Small businesses are

specifically invited, however, to comment on whether this rule will

significantly affect them, and persons are invited to submit comments

according to the instructions in the DATES and COMMENTS sections in the

preamble of this proposed rule.

Executive Order 12612, Federalism

The General Counsel, as the Designated Official for HUD under

section 6(a) of Executive Order 12612, Federalism, has determined that

this rule will not have federalism implications concerning the division

of local, State, and Federal responsibilities. The rule would only

modify the funding process for the final year of the CIAP to provide

small PHAs with a transition period to become familiar with a non-

competitive capital funding process.

Catalog of Domestic Assistance Numbers

The Catalog of Domestic Assistance numbers for the Comprehensive

Improvement Assistance Program is 14.852.

List of Subjects in 24 CFR Part 968

Grant programs--housing and community development, Indians, Loan

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

and recordkeeping requirements.

Accordingly, 24 CFR part 968 is amended, as follows:

PART 968--PUBLIC HOUSING MODERNIZATION

1. The authority citation for 24 CFR part 968 continues to read as

follows:

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

2. In Sec. 963.110, paragraph (a) is revised to read as follows:

Sec. 968.110 Other program requirements.

* * * * *

(a) Nondiscrimination and equal opportunity. The PHA shall comply

with Title II of the Americans with Disabilities Act and 28 CFR part

35; section 504 of the Rehabilitation Act of 1973 and 41 CFR chapter

60-471; and the Architectural Barriers Act of 1968 (42 U.S.C. 4151-

4157) and 24 CFR part 40.

* * * * *

3. Section 968.210 is revised to read as follows:

Sec. 968.210 Procedures for obtaining approval of a modernization

program.

(a) HUD notification. After modernization funds for a particular

FFY become available, HUD will notify PHAs of the time frame for

submission of the CIAP application and other pertinent information.

(b) Distribution of funding. HUD will distribute the available

funding under this subpart to every eligible PHA that

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responds to the notice issued pursuant to paragraph (a) of this section

based on two equally-weighted factors: A PHA's share of the total

number of units eligible for CIAP; and a PHA's share of the total

number of bedrooms in units eligible for CIAP (with studio units

counted as one-bedroom units). HUD will also provide a vacancy

preference, consisting of an additional increment of funding, to PHAs

that have modernization capability and demonstrate that at least 25% of

their units are vacant, substandard units (where vacancies are not due

to insufficient demand). A PHA has modernization capability if it has

previously received CIAP funding and meets the requirements of

Modernization capability as defined at Sec. 968.205.

(c) ACC amendment. HUD and the PHA shall enter into an ACC

amendment in order for the PHA to draw down modernization funds. The

ACC amendment shall require low-income use of the housing for not less

than 20 years from the date of the ACC amendment (subject to sale of

homeownership units in accordance with the terms of the ACC). The PHA

Executive Director, where authorized by the Board of Commissioners and

permitted by State law, may sign the ACC amendment on behalf of the

PHA. HUD has the authority to condition an ACC amendment (e.g., to

require a PHA to hire a modernization coordinator or contract

administrator to administer its modernization program).

(d) Declaration of trust. As HUD may require, the PHA shall execute

and file for record a Declaration of Trust, as provided under the ACC,

to protect the rights and interests of HUD throughout the 20-year

period during which the PHA is obligated to operate its developments in

accordance with the ACC, the Act, and HUD regulations and requirements.

Dated: March 25, 1999.

Harold Lucas,

Assistant Secretary for Public and Indian Housing.

[FR Doc. 99-10464 Filed 4-29-99; 8:45 am]

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