Section 8 Tenant-Based Assistance; Statutory Merger of Section 8 Certificate and Voucher Programs

SUMMARY: This interim rule amends the regulations for the Section 8

tenant-based rental voucher program. These amendments implement

amendments of the United States Housing Act of 1937 by the Quality

Housing and Work Responsibility Act of 1998 and related changes. The

rule provides for the complete merger of the Section 8 tenant-based

Certificate and Voucher programs, into a new Housing Choice Voucher

Program.

DATES: Effective date: August 12, 1999. Comments due date: Comments on

the interim rule and the proposed information collection requirements

are due on or before: July 13, 1999.

ADDRESSES: Interested persons are invited to submit written comments

regarding this interim 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: Gerald J. Benoit, Office of Public and

Indian Housing, Department of Housing and Urban Development, Room 4210,

451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708-0477

(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.

SUPPLEMENTARY INFORMATION:

I. Section 8 Tenant-Based Program Statutory Provisions Implemented

in this Rule

This interim rule implements most of the Section 8 tenant-based

program provisions contained in the Quality Housing and Work

Responsibility Act of 1998 (Title V of the FY 1999 HUD Appropriations

Act; Pub. L. 105-276, approved October 21, 1998; 112 Stat. 2461) (the

``1998 Act''). Section 502 of the 1998 Act states that a purpose of the

legislation is ``consolidating the voucher and certificate programs for

rental assistance under Section 8 of the United States Housing Act of

1937 (the ``USH Act'' (42 U.S.C. 1437f)) into a single market-driven

program that will assist in making tenant-based rental assistance under

such section more successful at helping low-income families obtain

affordable housing and will increase housing choice for low-income

families.'' Of particular significance, this rule implements the merger

of the Section 8 tenant-based certificate and voucher programs (section

545 of the 1998 Act, amending 42 U.S.C. 1437f(o)).

A. Description of the Housing Choice Voucher Program implemented by

this rule

This rule implements provisions of the 1998 Act which will complete

merger of the Section 8 certificate and voucher programs into a single

new Section 8 voucher program (authorized under Section 8(o) of the USH

Act, 42 U.S.C. 1437f(o)), entitled the Housing Choice Voucher Program.

HUD has previously promulgated regulations (known as the ``conforming

rule'') which combined and conformed rules for Section 8 tenant-based

assistance to the extent permitted by prior law. The Housing Choice

Voucher Program has features of the previously authorized certificate

and voucher programs, plus new features. The following summarizes major

features of the Housing Choice Voucher Program:

1. Payment standards. The subsidy amount is based on a payment

standard set by the Public Housing Agency (PHA) anywhere between 90% to

110% of the HUD-published fair market rent (FMR). HUD may approve

payment standards lower than 90% of FMR and payment standards higher

than 110% of FMR. Prior HUD-approved area exception rents will continue

to apply in the new voucher program (unless withdrawn or modified by

HUD). HUD may require PHA payment standard changes because of incidence

of high rent burdens (Section 8(o)(1)(B), (D) and (E) of the USH Act;

42 U.S.C. 1437f(o)(1)(B), (D) and (E); 24 CFR 982.503).

2. Tenant payment. A family renting a unit below the payment

standard pays as gross rent the highest of: 30% of monthly adjusted

income, 10% of monthly income (gross income), the welfare rent (in

States where the welfare payment is adjusted in accordance with actual

housing costs), or the PHA-established statutory minimum rent. There is

no voucher ``shopping incentive'' (for a family that rents a unit below

the payment standard). A family renting a unit above the payment

standard pays the highest of 30% of monthly adjusted income, 10% of

monthly income, the welfare rent, or minimum rent, plus any rent above

the payment standard (Section 8(o)(2) (A) and (B) of the USH Act, 42

U.S.C. 1437f(o)(2) (A) and (B); Sec. 982.506(b)).

3. Maximum initial rent burden. A family must not pay more than 40%

of adjusted income for rent when the family first receives Section 8

tenant-based assistance for occupancy of a particular unit. This new

requirement only applies for a family that initially receives tenant-

based assistance for occupancy of a unit after the effective date of

this rule (called the ``merger date''). However, the maximum initial

rent burden requirement is not applicable if the family stays in the

same unit where the family initially received certificate or voucher

assistance for occupancy of the unit before the effective date of this

rule. The maximum initial rent burden requirement is applicable each

time a participant moves to a new unit. (Section 8(o)(3) of the USH

Act, 42 U.S.C. 1437f(o)(3); Sec. 982.508.)

4. Income limits. Eligibility is limited to a:

a. Very low-income family;

b. Low-income family continuously assisted under the public

housing, Section 23, or Section 8 programs;

c. Low-income family that is a nonpurchasing tenant in certain

homeownership programs;

d. Low-income or moderate-income family that is displaced as a

result of the prepayment of the mortgage or voluntary termination of an

insurance contract on eligible low-income housing as defined at 24 CFR

248.101; or

e. Low-income family that meets PHA-specified criteria. (Section

8(o)(4) of the USH Act, 42 U.S.C. 1437f(o)(4); Sec. 982.201(a)(1) of

the regulations.)

5. Applicant selection. PHA applicant selection preferences must be

based on local housing needs and priorities. In determining the

preferences, the PHA must use ``generally accepted data sources''

including public comments on the PHA plan and the Consolidated Plan.

PHAs are urged to consider adopting admission preferences for victims

of domestic violence (Section 8(o)(6)(A) of the USH Act, 42 U.S.C.

1437f(o)(6)(A); Sec. 982.208).

6. Optional PHA screening of applicants. Although the screening and

selection of tenants will remain the function of the owner, the PHA may

elect to screen applicants in accordance with any HUD requirements

(Section

[[Page 26633]]

8(o)(6)(B) of the USH Act, 42 U.S.C. 1437f(o)(6)(B);

Sec. 982.307(a)(1)).

7. Optional PHA disapproval of owners. The PHA may refuse to enter

into new Section 8 Housing Assistance Payment (HAP) contracts with

owners who refuse (or have a history of refusing) to evict families for

drug-related or violent criminal activity, or for activity that

threatens the health, safety or right of peaceful enjoyment of the (1)

premises by tenants, PHA employees or owner employees, or (2) the

residences by neighbors (Section 8(o)(6)(C) of the USH Act, 42 U.S.C.

1437f(o)(6)(C); Sec. 982.306(c)(5)).

8. Initial lease term. The PHA may approve an initial lease term of

less than 1 year if a lease of less than 1 year is prevailing local

practice and the PHA determines that the shorter term will improve

housing opportunities for the family (Section 8(o)(7)(A) of the USH

Act, 42 U.S.C. 1437f(o)(7)(A); Sec. 982.309(a)).

9. Lease form and content. The lease form must be in the standard

form used in the locality by the owner. The lease must contain terms

that are consistent with State and local law, and that apply generally

to unassisted tenants in the same property. The HAP contract and the

lease must contain the HUD prescribed tenancy addendum (Section

8(o)(7)(B) and (F) of the USH Act, 42 U.S.C. 1437f(o)(7)(B) and (F);

Sec. 982.308).

10. HQS. Units must pass the federally established HQS or

substitute local housing codes or codes adopted by PHAs. Substitute

local housing codes or codes adopted by PHAs: (a) cannot severely

restrict housing choice; and (b) must meet or exceed the HQS (unless

HUD approves a lower standard that does not adversely affect the health

or safety of families, and will significantly increase affordable

housing access and expand housing opportunities) (Section 8(o)(8)(B) of

the USH Act, 42 U.S.C. 1437f(o)(8)(B); Sec. 982.401(a)(4)).

11. Fifteen calendar day initial HQS inspection deadline. PHAs with

1,250 or fewer tenant-based Section 8 units must conduct initial HQS

inspections within 15 days after receipt of an inspection request from

the family and owner. PHAs with more than 1,250 tenant-based Section 8

units must conduct initial HQS inspections within a ``reasonable

period'' of the family's and owner's inspection request (Section

8(o)(8)(C) of the USH Act, 42 U.S.C. 1437f(o)(8)(C);

Sec. 982.305(b)(2)).

12. PHA penalties for late payment of housing assistance to owners.

In the future, the HAP contract will provide for penalties against the

PHA for late payment of the housing assistance payment to the owner.

Any late payment penalties may only be imposed in accordance with

generally accepted practices in the local housing market governing

penalties for late payment of rent by a tenant. For example, the PHA

may be required to pay a late fee to an owner if the housing assistance

payment is not paid by the tenth day of the month if it is local

practice that an unassisted tenant is charged a late fee when the rent

has not been paid in full by the tenth day of each month. A late

payment fee may only be paid from the PHA's administrative fee income

(including available amounts in the HA administrative fee reserve). The

PHA is not obligated to pay any late fee if HUD determines that the

late payment is due to factors beyond the control of the PHA (e.g.,

late receipt of the Section 8 funds from Treasury). The rule also

provides that the PHA may add HAP contract provisions which define when

the HAP payment by the PHA is deemed received by the owner (e.g., upon

mailing by the PHA or actual receipt by the owner). (Section

8(o)(10)(D) and (E) of the USH Act, 42 U.S.C. 1437f(o)(10)(D) and (E);

Sec. 982.451(b)(5).)

13. HQS inspections and rent reasonableness determinations for PHA-

owned units. The local government or another independent entity

approved by HUD must conduct HQS inspections and rent reasonableness

determinations for PHA-owned units leased by voucher holders. The PHA

must pay any expenses associated with the performance of such

inspections and rent determinations. The PHA and the independent agency

may not charge the family any fee or charge for the services provided

by the independent agency. The HA may use administrative fee income to

compensate the independent agency for its services, but may not use

other program receipts for this purpose (Section 8(o)(11) of the USH

Act, 42 U.S.C. 1437f(o)(11); Sec. 982.352(b)).

14. Subsidy amount for manufactured homeowners leasing pads. The

subsidy amount for expenses associated with pad leasing by a mobile

home owner are revised to mirror the subsidy calculation method for

families leasing ``regular'' units (Section 8(o)(12) of the USH Act, 42

U.S.C. 1437f(o)(12); Sec. 982.623).

15. Income Targeting. Not less than 75% of new admissions to the

tenant-based voucher assistance program must have incomes at or below

30% of the area median income. Other admissions generally must be at or

below 80% of the area median. If two or more PHAs have identical

jurisdiction, those PHAs must jointly meet the targeting goals (section

513 of the 1998 Act; Sec. 982.201(a)(2) of the regulations).

16. Section 8 PHA definition. For the administration of tenant-

based assistance only, a ``PHA'' includes:

a. A consortia of PHAs,

b. A nonprofit entity administering certificates or vouchers under

a contract with a PHA or HUD on enactment of the 1998 Act (on October

21, 1998); or

c. For any area outside the jurisdiction of a PHA that is

administering a tenant-based program, or where HUD determines that such

PHA is not administering the program effectively, a private non-profit

entity or public body that would otherwise lack jurisdiction to

administer the program in such area (section 546 of the 1998 Act;

definition of ``public housing agency'' at Sec. 982.4 of the

regulations).

17. Section 8 ``endless lease'' and owner termination notices. The

``endless lease'' provision and the 90-day owner termination notice are

permanently repealed (section 549 of the 1998 Act; revisions to

Secs. 982.310 and 982.454 ).

18. Technical and conforming amendments including elimination of

Section 8 SRO approvals. The requirements for a HUD determination of a

significant demand for SROs, PHA and local government approval of SRO

use, and a PHA and local government certification that the SRO meets

local SRO health and safety standards have been eliminated (section 550

of the 1998 Act; revisions to Sec. 982.602).

19. Portability. The 1998 Act grants the statutory right of

nationwide participant portability to the jurisdiction of any PHA that

is administering the Section 8 voucher program. This right was

previously established by HUD's program regulation. PHAs may opt to

require applicants who were nonresidents at the time of application to

live in the PHA's jurisdiction during the first year. PHAs must not

issue a participant a new voucher for a portable move if the family has

moved out of the family's unit in violation of the lease (section 553

of the 1998 Act; Sec. 982.353).

20. Elimination of ``take-one, take-all'' provision. The ``take-

one, take-all'' provision is permanently eliminated. This provision

required that an owner who entered into a Section 8 HAP contract on

behalf of any tenant in a multifamily housing project could not refuse

to lease otherwise affordable units in all multifamily projects of the

owner if the reason for the refusal was that the family was a

certificate or voucher holder (section 554 of the 1998 Act permanently

repeals Section 8(t) of the USH Act, 42 U.S.C. 1437f(t); this rule

therefore removes the regulatory provision (prior Sec. 982.457) that

recited the prior take-one-take-all statutory requirement).

[[Page 26634]]

21. Intellectual property rights. The 1998 Act prohibits use of

program receipts to indemnify PHA contractors or subcontractors against

costs associated with any judgment of infringement of intellectual

property rights (section 510 of the 1998 Act; Sec. 982.157).

B. Transition to the New Housing Choice Voucher Program

The majority of changes necessary to merge the certificate and

voucher programs into a single tenant-based program were accomplished

by issuing the Section 8 certificate and voucher conforming rule

published in three phases: in 1994, 1995, and 1998. The remaining

significant differences between the certificate and voucher programs

are the subsidy amount, the maximum allowable initial contract rent

levels and contract rent adjustments. The treatment of these program

differences in the transition of pre-merger certificates and pre-merger

vouchers to the final merger of the two programs, as enacted by

Congress, is addressed below.

1. Requirement to only enter HAP contracts under the Housing Choice

Voucher Program in the future, and treatment of outstanding pre-merger

certificates. The new regulation becomes effective 90 days from

publication of this rule. This date is called the ``merger date''

(Sec. 982.4).

This rule provides that on and after the merger date, a PHA may

only enter HAP contracts under the Housing Choice Voucher Program

implemented by this rule. If an applicant family or a participant

wishing to move has been issued a pre-merger certificate, the PHA may

opt to: (a) let the family continue to search for housing during the

term of the pre-merger certificate; or (b) issue the family a voucher

under the Housing Choice Voucher Program for a new term.

In any event, the PHA may only enter into HAP contracts under the

Housing Choice Voucher Program on and after the merger date. Thus, an

applicant or participant family who received a pre-merger certificate

must be assisted under the Housing Choice Voucher Program if a tenant-

based HAP contract has not been executed on their behalf prior to the

merger date.

2. Treatment of pre-merger voucher assistance under the Housing

Choice Voucher Program. On the merger date, participants in the pre-

merger voucher program automatically become participants in the Housing

Choice Voucher Program. Existing voucher contracts provide that the

housing assistance payment must be calculated in accordance with HUD

requirements. However, the HAP contracts do not specify the amount of

or method of computing the housing assistance payment.

In accordance with Sec. 982.502 of the interim rule, the method of

calculating subsidy under the Housing Choice Voucher Program is applied

commencing at the effective date of the second regular reexamination of

family income and composition on or after the merger date. Thus, a

family receiving a shopping incentive under the pre-merger voucher

program will continue to receive any shopping incentive for the pre-

merger unit until the family's second regular reexamination on or after

the merger date. However, execution of a Housing Choice Voucher Program

HAP contract may be deferred until the next time a HAP contract would

otherwise be executed in accordance with program requirements.

3. Conversion of pre-merger over-FMR certificates to vouchers under

the Housing Choice Voucher Program. On the merger date, over-FMR

tenancy participants in the pre-merger certificate program

automatically become participants in the Housing Choice Voucher

Program. Existing HAP contracts for an over-FMR tenancy provide that

the housing assistance payment must be calculated in accordance with

HUD requirements. However, the HAP contracts do not specify the amount

of or method of computing the housing assistance payment. Consistent

with Sec. 982.502 of this interim rule, the new method of calculating

subsidy under the Housing Choice Voucher Program is applied commencing

at the effective date of the second regular reexamination of family

income and composition on or after the merger date.

Conversion of an over-FMR tenancy certificate unit to the Housing

Choice Voucher Program is not dependent upon execution of a Housing

Choice Voucher Program HAP contract. Execution of a Housing Choice

Voucher Program HAP contract may be deferred until the next time a HAP

contract would otherwise be executed in accordance with program

requirements.

4. Conversion of pre-merger regular tenancy certificate assistance

to voucher assistance under the Housing Choice Voucher Program. A

regular tenancy certificate participant will automatically become a

participant in the Housing Choice Voucher Program when the PHA executes

a new HAP contract on their behalf on or after the merger date--whether

for the same unit or for a new unit. The PHA must terminate assistance

under any outstanding regular certificate HAP contract (entered before

the merger date) at the effective date of the second regular

reexamination of family income and composition on or after the merger

date.

All existing certificate tenancies must be converted to the Housing

Choice Voucher Program (Sec. 982.502(d)). However, until conversion

there is no change in pre-merger certificate program requirements for

calculation of housing assistance payments, including annual

adjustments and special adjustments to the contract rent

(Secs. 982.507, 509, and 510 of the pre-merger regulations which are

renumbered as Secs. 982.518, 982.519, and 982.520 in the Housing Choice

Voucher Program regulations).

II. Section 8 Tenant-Based Program Statutory Provisions Not

Included in This Rule

This interim rule does not include every statutory change affecting

the Section 8 tenant-based programs. A listing of the implementation

method for tenant-based statutory provisions not included in this rule

follows.

A. Part 5 and Part 984 Regulations Being Published Separately

Other provisions of the 1998 Act affecting the Section 8

certificate and voucher programs are being addressed in a separate

proposed rule amending 24 CFRs parts 5 and 984. This rule was published

in the Federal Register on April 30, 1999 (64 FR 23460) and includes

the following provisions: the minimum rent requirements (section 507 of

the 1998 Act); elimination of federal preferences (section 514 of the

1998 Act); income targeting requirements (section 513 of the 1998 Act);

elimination of Section 8 selection preference for public housing

residents based on prior federal preference status (section 514 of the

1998 Act); elimination of the admission preference for elderly,

disabled and displaced persons before other single persons (section

506(2)(A) of the 1998 Act); computer matching income verification

information requirements (Section 8(o)(5)(A) of the USH Act, 42 U.S.C.

1437f(o)(5)(A)); revisions to the definitions of annual income and

adjusted income (section 508 of the 1998 Act); revision to the minimum

FSS program size (section 509 of the 1998 Act); and tenant rent welfare

sanctions (section 512 of the 1998 Act). Further, the regulatory

conforming changes to reflect the statutory revisions to restrictions

on assistance to noncitizens (section 592 of the 1998 Act) are being

addressed in a separate final rule.

[[Page 26635]]

B. Section 8 Tenant-Based Homeownership Program

Sections 545 and 555 of the 1998 Act provide that PHAs may opt to

implement a Section 8 tenant-based homeownership program. HUD is

issuing a separate proposed rule to implement the Section 8 tenant-

based homeownership program. The homeownership proposed rule was

published in the Federal Register on April 30, 1999 (64 FR 23488).

C. Section 8 Tenant-Based Renewal Funds

Section 556 of the 1998 Act requires HUD to establish the renewal

funding process for tenant-based assistance in a regulation. Beginning

October 1, 1998, HUD must renew expiring tenant-based Annual

Contributions Contracts (ACCs) by applying a localized inflation factor

to an allocation baseline that includes, at a minimum, ``amounts

sufficient to ensure continued assistance for the actual number of

families assisted on October 1, 1997, with appropriate upward

adjustments for incremental assistance and additional families

authorized subsequent to that date.'' HUD notice PIH 98-65 dated

December 30, 1998 outlines the tenant-based renewal funding allocation

policies for federal fiscal year 1999 assistance used to renew funding

increments expiring between January 1, 1999 and December 31, 1999.

Calendar year 2000 funding for the renewal of Section 8 certificate and

voucher ACCs will be allocated pursuant to a negotiated final rule

which will be published on or before October 21, 1999.

D. PHA Plan

The PHA Plan interim rule (section 511 of the 1998 Act) was

published in the Federal Register on February 18, 1999 (64 FR 8170).

E. Project-Based Vouchers

Revisions to the rules for the project-based voucher/certificate

program will be implemented in a future rulemaking (Section 8(o)(13) of

the USH Act).

F. PHA Access to Criminal Conviction Records and Crime and Alcohol

Abuse Provisions

PHA access to criminal conviction records for Section 8 applicants

and tenants (section 575 of the 1998 Act) and other crime and alcohol

abuse provisions will be implemented through future rulemaking or

guidance.

G. Other Miscellaneous Statutory Provisions

Initial guidance on the 1998 Act provisions that are already

effective was provided in notices published in the Federal Register on

February 18, 1999 (64 FR 8192) and April 30, 1999 (64 FR 23344). HUD

will continue to provide regulatory and other guidance, as appropriate,

for all remaining provisions of the 1998 Act.

III. Public Participation in This Rulemaking

HUD is issuing this interim rule under the statutory authority

provided by section 559 of the 1998 Act. Section 559 provides that the

Secretary of HUD ``shall issue such interim regulations as may be

necessary to implement the amendments made by [the 1998 Act] which

relate to Section 8(o) of the [USH Act].'' Section 559 also requires

that before the final rule is published, HUD will seek the

recommendations on the implementation of the new Housing Choice Voucher

Program from organizations representing: (1) State or local PHAs; (2)

Owners and managers of tenant-based housing assistance under Section 8

of the USH Act; and (3) legal services organizations. Section 559 also

requires HUD to convene not less than two public forums at which the

persons or organizations making recommendations may express their views

concerning the proposed disposition of their recommendations. The

dates, times and locations of the first two public forums were

announced in the Federal Register on April 27, 1999 (64 FR 22550).

In addition to the general solicitation of public comments on this

interim rule, HUD specifically seeks through this rulemaking

recommendations on implementation of the Housing Choice Voucher Program

from the four groups mentioned above: (1) State or local PHAs; (2)

Owners and managers of tenant-based housing assistance under section 8

of the USH Act; (3) families receiving tenant-based assistance under

section 8 of the USH Act; and (4) legal services organizations.

IV. Justification for Interim Rulemaking

HUD generally publishes a rule for public comment before issuing a

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

in 24 CFR part 10. Part 10, however, provides that prior notice and

public comment may be omitted if ``a statute expressly so authorizes''

(24 CFR 10.1). This interim rule implements those provisions of the

1998 Act which complete the merger of the Section 8 certificate and

voucher programs into a single new Section 8 voucher program

(authorized under Section 8(o) of the USH Act, 42 U.S.C. 1437f(o)),

entitled the Housing Choice Voucher Program. As noted above, section

559 of the 1998 Act provides that the Secretary of HUD ``shall issue

such interim regulations as may be necessary to implement the

amendments made by [the 1998 Act] which relate to Section 8(o) of the

[USH Act].'' Accordingly, HUD is issuing this interim rule for effect

without prior notice and comment.

HUD recognizes the value and necessity of public comment in the

development of its regulations. HUD has therefore issued these

regulations on an interim basis and has provided the public with a 60-

day comment period. Additionally, HUD has provided for a 90-day delayed

effective date for this interim rule (in contrast to the customary 30-

day delayed effective date for most HUD rules), in order to afford PHAs

additional time to prepare for the implementation of the interim rule.

Further, HUD has scheduled three public forums to discuss

implementation of the Housing Choice Voucher Program. HUD welcomes

comment on the regulatory amendments made by this interim rule. Public

comments will be addressed in the final rule.

V. Findings and Certifications

Paperwork Reduction Act

(a) The proposed information collection requirements contained in

this rule have been submitted to the Office of Management and Budget

(OMB) for review, under section 3507(d) of the Paperwork Reduction Act

of 1995 (44 U.S.C. Chapter 35). 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.

(b) In accordance with 5 CFR 1320.5(a)(1)(iv), HUD estimates that

the total reporting and recordkeeping burden that will result from the

proposed collection of information as follows:

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(c) In accordance with 5 CFR 1320.8(d)(1), the Department is

soliciting comments from members of the public and affected agencies

concerning the proposed collection of information to:

(1) Evaluate whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including whether the information will have practical utility;

(2) Evaluate the accuracy of the agency's estimate of the burden of

the proposed collection of information;

(3) Enhance the quality, utility, and clarity of the information to

be collected; and

(4) Minimize the burden of the collection of information on those

who are to respond; including through the use of appropriate automated

collection techniques or other forms of information technology, e.g.,

permitting electronic submission of responses.

Interested persons are invited to submit comments regarding the

information collection requirements in this proposal. Under the

provisions of 5 CFR part 1320, OMB is required to make a decision

concerning this collection of information between 30 and 60 days after

today's publication date. Therefore, a comment on the information

collection requirements is best assured of having its full effect if

OMB receives the comment within 30 days of today's publication. This

time frame does not affect the deadline for comments to the agency on

the interim rule, however. Comments must refer to the rule by name and

docket number (FR-4428) and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and

Budget, New Executive Office Building, Washington, DC 20503

and

Gerald J. Benoit, Office of Public and Indian Housing, Department of

Housing and Urban Development, Room 4210, 451 Seventh Street, SW,

Washington, DC 20410

Environmental Impact

A Finding of No Significant Impact with respect to the environment

was made in accordance with HUD regulations in 24 CFR part 50 that

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

1969 (42 U.S.C. 4223). The Finding is available for public inspection

between 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules

Docket Clerk, Office of General Counsel, Room 10276, Department of

Housing and Urban Development, 451 Seventh Street, SW, Washington, DC.

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 interim 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 interim

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

determined that this interim 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 interim 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 interim rule

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

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

for HUD's determination are as follows:

(1) A Substantial Number of Small Entities Will Not be Affected.

The interim rule is exclusively concerned with public housing agencies

that administer tenant-based housing assistance under Section 8 of the

United States Housing Act of 1937. Specifically, the interim rule would

establish requirements governing tenant-based assistance for an

eligible family. Under the definition of ``Small governmental

jurisdiction'' in section 601(5) of the RFA, the provisions of the RFA

are applicable only to those few public housing agencies that are part

of a political jurisdiction with a population of under 50,000 persons.

The number of entities potentially affected by this rule is therefore

not substantial.

(2) No Significant Economic Impact. The interim regulatory

amendments would not change the amount of funding available under the

Section 8 voucher program. Accordingly, the economic impact of this

rule will not be significant, and it will not affect a substantial

number of small entities.

Notwithstanding HUD's determination that this rule will not have a

significant economic effect on a substantial number of small entities,

HUD specifically invites comments regarding any less burdensome

alternatives to this rule that will meet HUD's objectives as described

in this preamble.

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. No programmatic or

policy change under this rule will affect the relationship between the

Federal government and State and local governments.

Catalog of Domestic Assistance Numbers

The Catalog of Domestic Assistance numbers for the programs

affected by this interim rule are 14.146, 14.147, 14.850, 14.851,

14.852, 14.855, 14.857, and 15.141.

List of Subjects

24 CFR Part 248

Intergovernmental relations, Loan programs--housing and community

development, Low and moderate income housing, Mortgage insurance,

Reporting and recordkeeping requirements.

24 CFR Part 791

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

subsidies.

24 CFR Part 792

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

subsidies, Reporting and recordkeeping requirements.

24 CFR Part 982

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

subsidies.

For the reasons discussed in the preamble, HUD amends 24 CFR parts

248, 791, 792, and 982 as follows:

PART 248--PREPAYMENT OF LOW INCOME HOUSING MORTGAGES

1. The authority citation for part 248 continues to read as

follows:

Authority: 12 U.S.C. 1715l note, 4101 note, and 4101-4124; 42

U.S.C. 3535(d).

Sec. 248.101 [Amended]

2. Amend Sec. 248.101 as follows:

[[Page 26639]]

a. In the definition of ``Adjusted income'' revise the references

to ``Sec. 813.106'' and ``Sec. 813.102'' to read ``part 5''.

b. In the definition of ``Fair market rent'', revise the reference

to ``Sec. 882.102'' to read ``Sec. 982.4''; and

c. In the definition of ``Low Income Families'', revise the

reference to ``part 813'' to read ``part 5''.

d. In the definition of ``Section 8 assistance'', after the words

``880 through 887'', add the words ``and 982 and 983''.

e. In the definition of ``Special Needs Tenants'' revise the

reference to ``Sec. 812.2'' to read ``part 5''.

f. In the definition of ``Very Low Income Families'', revise the

reference to ``Sec. 813.102'' to ``part 5''.

Sec. 248.141 [Amended]

3. Amend Sec. 248.141(c)(3) by removing the reference to

``certificate and''.

Sec. 248.147 [Amended]

4. In Sec. 248.147(e)(1), revise the references to ``parts 882 and

887'' in the first and second sentences to read in each place ``part

982''.

5. Amend Sec. 248.165 as follows:

a. Revise paragraph (a) as set forth below; and

b. In paragraph (i), revise the reference to ``assistance under

parts 882 or 887 of this title'' to read ``tenant-based assistance

under the Housing Choice Voucher Program''.

Sec. 248.165 Assistance for displaced tenants.

(a) Section 8 assistance. Each low income family that is displaced

as a result of the prepayment of the mortgage, or voluntary termination

of an insurance contract, on eligible low income housing shall, subject

to the availability of funds, be offered the opportunity to receive

tenant-based assistance under the Housing Choice Voucher Program in

accordance with part 982 of this title.

* * * * *

6. Revise Sec. 248.173(m)(2) to read as follows:

Sec. 248.173 Resident homeownership program.

* * * * *

(m) * * *

(2) Section 8 assistance. If a tenant decides not to purchase a

unit, or is not qualified to do so, the Commissioner shall ensure that

tenant-based assistance under the Housing Choice Voucher Program in

accordance with part 982 of this title is available for use in that or

another property by each tenant that meets the eligibility requirements

thereunder.

* * * * *

Sec. 248.201 [Amended]

7. Amend Sec. 248.201 as follows:

a. In the definition of ``Low-income Families'', revise the

reference to ``part 813'' to read ``part 5'';

b. In the definition of ``Very Low Income Families'', revise the

reference to ``under Sec. 813.102 of this title'' to read ``under

section 3(b) of the 1937 Act (42 U.S.C. 1437a(b))''.

PART 791--ALLOCATIONS OF HOUSING ASSISTANCE FUNDS

8. Revise the heading of part 791 to read as set forth above.

9. The authority citation for part 791 continues to read as

follows:

Authority: 42 U.S.C. 1439 and 3535(d).

10. Revise Sec. 791.101 to read as follows:

Sec. 791.101 Applicability and scope.

This part describes the role and responsibility of HUD in

allocation of budget authority (pursuant to section 213 of the Housing

and Community Development Act of 1974 (42 U.S.C. 1439)) for housing

assistance under the United States Housing Act of 1937 (Section 8 and

public housing) and under section 101 of the Housing and Urban

Development Act of 1965 (12 U.S.C. 1701s), and of budget authority for

housing assistance under section 202 of the Housing Act of 1959 (12

U.S.C. 1710q). This part does not apply to budget authority for the

public housing operating fund or capital fund.

11. Amend Sec. 791.102 as follows:

a. Remove the definitions of ``Application for housing

assistance'', ``Chief executive officer'', ``Household type'',

``Housing type'', ``Local government'', ``Tenure type'', and ``Urban

county'';

b. Amend the definition of ``Allocation area'' by removing the

reference to ``or Indian areas''; and

c. Revise the definition of ``Public housing agency'' as set forth

below.

Sec. 791.102 Definitions.

* * * * *

Public housing agency (PHA). (1) Any State, county, municipality,

or other governmental entity or public body which is authorized to

administer a program under the 1937 Act (or an agency or

instrumentality of such an entity).

(2) In addition, for purposes of the program of Section 8 tenant-

based assistance under part 982 of this title, the term PHA also

includes any of the following:

(i) A consortia of housing agencies, each of which meets the

qualifications in paragraph (1) of this definition, that HUD determines

has the capacity and capability to efficiently administer the program

(in which case, HUD may enter into a consolidated ACC with any legal

entity authorized to act as the legal representative of the consortia

members);

(ii) Any other public or private non-profit entity that was

administering a Section 8 tenant-based assistance program pursuant to a

contract with the contract administrator of such program (HUD or a PHA)

in effect on October 21, 1998; or

(iii) For any area outside the jurisdiction of a PHA that is

administering a tenant-based program, or where HUD determines that such

PHA is not administering the program effectively, a private non-profit

entity or a governmental entity or public body that would otherwise

lack jurisdiction to administer the program in such area.

Subpart C--[Removed and Reserved]

12. Remove and reserve subpart C.

Sec. 791.401 [Amended]

13. In Sec. 791.401, revise the reference to ``Sec. 791.101(a)'' to

read ``Sec. 791.101''.

14. Amend Sec. 791.402 as follows:

a. Remove paragraph (c)(2) and redesignate paragraph (c)(1) as

paragraph (c); and

b. Revise paragraph (d) as set forth below.

Sec. 791.402 Determination of low-income housing needs.

* * * * *

(d) Based on the criteria in paragraphs (b) and (c) of this

section, the Assistant Secretary for Policy Development and Research

shall establish housing needs factors for each county and independent

city in the field office jurisdiction, and shall aggregate the factors

for such jurisdiction. The field office total for each factor is then

divided by the respective national total for that factor. The resulting

housing needs ratios under paragraph (b) of this section are then

weighted to provide housing needs percentages for each field office,

using the following weights: population--20 percent; poverty--20

percent; housing overcrowding--10 percent; housing vacancies--10

percent; substandard housing--20 percent; other objectively measurable

conditions--20 percent. For the section 202 elderly program, the two

criteria described in paragraph (c) of this section are weighted

equally.

* * * * *

[[Page 26640]]

15. Amend Sec. 791.403 to revise paragraphs (a) and (b)(1)(i) to

read as follows:

Sec. 791.403 Allocation of housing assistance.

(a) The total budget authority available for any fiscal year shall

be determined by adding any available unreserved budget authority from

prior fiscal years to any newly appropriated budget authority for each

housing program.

(b) * * *

(1) * * *

(i) Amendments of existing contracts, renewal of assistance

contracts, assistance to families that would otherwise lose assistance

due to the decision of the project owner to prepay the project mortgage

or not to renew the assistance contract, assistance to prevent

displacement or to provide replacement housing in connection with the

demolition or disposition of public housing, assistance in support of

the property disposition and loan management functions of the

Secretary;

* * * * *

16. Revise Sec. 791.404(c) to read as follows:

Sec. 791.404 Field Office allocation planning.

* * * * *

(c) Determining the amount of budget authority. Where the field

office establishes more than one allocation area, it shall determine

the amount of budget authority to be allocated to each allocation area,

based upon a housing needs percentage which represents the needs of

that area relative to the field office jurisdiction. For each program,

a composite housing needs percentage developed under Sec. 791.402 for

those counties and independent cities comprising the allocation area

shall be aggregated into allocation area totals.

* * * * *

PART 792--PUBLIC HOUSING AGENCY SECTION 8 FRAUD RECOVERIES

17. Revise the heading of part 792 to read as set forth above.

18. The authority citation for 24 CFR part 792 continues to read as

follows:

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

PART 792--[AMENDED]

19. In part 792, revise all references to ``HA'' to read ``PHA''.

20. Revise Sec. 792.101 to read as follows:

Sec. 792.101 Purpose.

The purpose of this part is to encourage public housing agencies

(PHAs) to investigate and pursue instances of tenant and owner fraud

and abuse in the operation of the Section 8 housing assistance payments

programs.

Sec. 792.102 [Amended]

21. Amend Sec. 792.102 as follows:

a. In paragraphs (a) and (b), revise the reference to ``an HA'' to

read ``a PHA''.

b. In paragraph (b), revise the reference to ``Sec. 882.216 or

887.405'' to read ``Sec. 982.555 of this title''.

22. Amend Sec. 792.103 as follows:

a. Remove the definition of ``HA (Housing Agency)'';

b. Add the definition of ``Public housing agency (PHA)'' in

alphabetical order as set forth below; and

c. In the definition of ``Repayment agreement'', revise the

reference to ``an HA'' to read ``a PHA''.

Sec. 792.103 Definitions.

* * * * *

Public housing agency (PHA). A public housing agency as defined in

Sec. 791.102.

* * * * *

Sec. 792.202 [Amended]

23. In Sec. 792.202(a)(1) and (a)(2), revise the reference to

``Sec. 882.216 or 887.405'' to read ``Sec. 982.555 of this title''.

PART 982--SECTION 8 TENANT BASED ASSISTANCE: HOUSING CHOICE VOUCHER

PROGRAM

24. Revise the heading of part 982 to read as set forth above.

25. The authority citation for part 982 continues to read as

follows:

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

PART 982--[AMENDED]

25a. In part 982, ``HA'' is removed and ``PHA'' is added in its

place wherever it appears, and ``an HA'' is removed and ``a PHA'' is

added in its place wherever it appears.

26. Amend Sec. 982.1 as follows:

a. Revise the section heading;

b. Revise paragraphs (a)(1), (a)(2), and (a)(4);

c. Amend paragraph (a)(3) by removing the reference to ``and is not

based on the actual rent of the leased unit'';

d. Amend paragraph (b)(1) by removing the reference to

``certificate or''; and

e. Revise paragraph (b)(2).

The revisions read as follows:

Sec. 982.1 Programs: Purpose and structure.

(a) General description. (1) In the HUD Housing Choice Voucher

Program (Voucher Program) and the HUD certificate program, HUD pays

rental subsidies so eligible families can afford decent, safe and

sanitary housing. Both programs are generally administered by State or

local governmental entities called public housing agencies (PHAs). HUD

provides housing assistance funds to the PHA. HUD also provides funds

for PHA administration of the programs. PHAs are no longer allowed to

enter into contracts for assistance in the certificate program.

(2) Families select and rent units that meet program housing

quality standards. If the PHA approves a family's unit and tenancy, the

PHA contracts with the owner to make rent subsidy payments on behalf of

the family. A PHA may not approve a tenancy unless the rents is

reasonable.

* * * * *

(4)(i) In the certificate program, the subsidy for most families is

the difference between the rent and 30 percent of adjusted monthly

income.

(ii) In the voucher program, the subsidy is based on a local

``payment standard'' that reflects the cost to lease a unit in the

local housing market. If the rent is less than the payment standard,

the family generally pays 30 percent of adjusted monthly income for

rent. If the rent is more than the payment standard, the family pays a

larger share of the rent.

* * * * *

(b) * * *

(2) To receive tenant-based assistance, the family selects a

suitable unit. After approving the tenancy, the PHA enters into a

contract to make rental subsidy payments to the owner to subsidize

occupancy by the family. The PHA contract with the owner only covers a

single unit and a specific assisted family. If the family moves out of

the leased unit, the contract with the owner terminates. The family may

move to another unit with continued assistance so long as the family is

complying with program requirements.

Sec. 982.2 [Amended]

27. In Sec. 982.2(a), remove the word ``rental'' in both places it

appears in the second sentence.

28. Amend Sec. 982.4 as follows:

a. Amend paragraph (a)(2) by removing the reference to ``Housing

agency (HA)'';

b. In paragraph (a)(4) revise the reference to ``utility allowance,

and utility reimbursement'' to read ``utility allowance'';

c. Amend paragraph (b) by removing the definitions of

``Amortization payment'', ``Certificate'', ``Certificate or voucher

holder'', ``Certificate program'',

[[Page 26641]]

``Contiguous MSA'', ``Contract authority'', ``Exception rent'', ``FMR/

exception rent limit'', ``Lease addendum'', ``Over-FMR tenancy'',

``Regular tenancy'', ``Set-up charges'', ``Utility hook-up charge'',

and ``Voucher program'';

d. Amend paragraph (b) by revising the definitions of ``Payment

standard'', and ``Tenant rent'';

e. Amend paragraph (b) by removing the reference to ``certificate

or'' from the definitions of the terms ``Receiving HA'' and

``Suspension''; and

f. Amend paragraph (b) by removing the phrase ``approval to lease a

unit'' in the definition of ``Suspension'' and adding in its place

``approval of the tenancy''.

g. Amend paragraph (b) by adding, in alphabetical order, the

definitions of the terms ``Merger date'', ``PHA plan'', ``Program'',

``Program receipts'', ``Public housing agency (PHA)'', ``Residency

preference'', ``Residency preference area'', ``Tenant rent'', and

``Voucher holder''.

Sec. 982.4 Definitions.

* * * * *

(b) * * *

Merger date. August 12, 1999.

* * * * *

Payment standard. The maximum monthly assistance payment for a

family assisted in the voucher program (before deducting the total

tenant payment by the family).

PHA plan. The annual plan and the 5-year plan as adopted by the PHA

and approved by HUD in accordance with part 903 of this chapter.

* * * * *

Program. The Section 8 tenant-based assistance program under this

part.

Program receipts. HUD payments to the PHA under the consolidated

ACC, and any other amounts received by the PHA in connection with the

program.

Public housing agency (PHA). PHA includes both:

(1) Any State, county, municipality, or other governmental entity

or public body which is authorized to administer the program (or an

agency or instrumentality of such an entity), or

(2) Any of the following:

(i) A consortia of housing agencies, each of which meets the

qualifications in paragraph (1) of this definition, that HUD determines

has the capacity and capability to efficiently administer the program

(in which case, HUD may enter into a consolidated ACC with any legal

entity authorized to act as the legal representative of the consortia

members);

(ii) Any other public or private non-profit entity that was

administering a Section 8 tenant-based assistance program pursuant to a

contract with the contract administrator of such program (HUD or a PHA)

on October 21, 1998; or

(iii) For any area outside the jurisdiction of a PHA that is

administering a tenant-based program, or where HUD determines that such

PHA is not administering the program effectively, a private non-profit

entity or a governmental entity or public body that would otherwise

lack jurisdiction to administer the program in such area.

* * * * *

Residency preference. A PHA preference for admission of families

that reside anywhere in a specified area, including families with a

member who works or has been hired to work in the area (``residency

preference area'').

Residency preference area. The specified area where families must

reside to qualify for a residency preference.

* * * * *

Tenant rent. For a tenancy in the certificate program: The total

tenant payment minus any utility allowance.

* * * * *

Voucher holder. A family holding a voucher with an unexpired term

(search time).

* * * * *

29. Revise Sec. 982.51(a) to read as follows:

Sec. 982.51 PHA authority to administer program.

(a) The PHA must have authority to administer the program. The PHA

must provide evidence, satisfactory to HUD, of its status as a PHA, of

its authority to administer the program, and of the PHA jurisdiction.

* * * * *

30. Amend Sec. 982.53 by revising paragraphs (b) and (c) and adding

paragraph (d) to read as follows:

Sec. 982.53 Equal opportunity requirements.

* * * * *

(b) Civil rights certification. The PHA must submit a signed

certification to HUD that:

(1) The PHA will administer the program in conformity with the Fair

Housing Act, Title VI of the Civil Rights Act of 1964, section 504 of

the Rehabilitation Act of 1973, and Title II of the Americans with

Disabilities Act.

(2) The PHA will affirmatively further fair housing in the

administration of the program.

(c) Obligation to affirmatively further fair housing. The PHA shall

be considered in compliance with the obligation to affirmatively

further fair housing if the PHA examines its programs or proposed

programs, identifies any impediments to fair housing choice within

those programs, addresses those impediments in a reasonable fashion in

view of the resources available, works with the local jurisdiction to

implement any of the local government's initiatives to affirmatively

further fair housing that require the PHA's involvement, and maintains

records reflecting these analyses and actions.

(d) State law. Nothing in part 982 is intended to pre-empt

operation of State laws that prohibit discrimination against a Section

8 voucher-holder because of status as a Section 8 voucher-holder.

However, such State laws shall not change or affect any requirement of

this part, or any other HUD requirements for administration or

operation of the program.

31. Amend Sec. 982.54 as follows:

a. Revise paragraphs (d)(1), (d)(2), (d)(14) and (d)(15);

b. Remove paragraph (d)(16);

c. Redesignate paragraphs (d)(17) through (d)(22) as paragraphs

(d)(16) through (d)(21) respectively; and

d. Add new paragraph (d)(27).

The revisions and addition read as follows:

Sec. 982.54 Administrative plan.

* * * * *

(d) * * *

(1) Selection and admission of applicants from the PHA waiting

list, including any PHA admission preferences, procedures for removing

applicant names from the waiting list, and procedures for closing and

reopening the PHA waiting list;

(2) Issuing or denying vouchers, including PHA policy governing the

voucher term and any extensions or suspensions of the voucher term.

``Suspension'' means stopping the clock on the term of a family's

voucher after the family submits a request for approval of the tenancy.

If the PHA decides to allow extensions or suspensions of the voucher

term, the PHA administrative plan must describe how the PHA determines

whether to grant extensions or suspensions, and how the PHA determines

the length of any extension or suspension;

* * * * *

(14) The process for establishing and revising voucher payment

standards;

(15) The method of determining that rent to owner is a reasonable

rent (initially and during the term of a HAP contract);

* * * * *

[[Page 26642]]

(22) Procedural guidelines and performance standards for conducting

required HQS inspections.

32. In Sec. 982.101, revise paragraph (a) and paragraph (b)(2)(i)

to read as follows:

Sec. 982.101 Allocation of funding.

(a) Allocation of funding. HUD allocates available budget authority

for the tenant-based assistance program to HUD field offices.

(b) * * *

(2) * * *

(i) Funding retained in a headquarters reserve for purposes

specified by law;

* * * * *

33. Amend Sec. 982.103 by revising paragraph (a) and adding

paragraph (c) to read as follows:

Sec. 982.103 HUD review of application.

(a) Competitive funding under NOFA. For competitive funding under a

NOFA, HUD must evaluate an application on the basis of the selection

criteria stated in the NOFA, and must consider the PHA's capacity and

capability to administer the program.

* * * * *

(c) PHA disqualification. HUD will not approve any PHA funding

application (including an application for competitive funding under a

NOFA) if HUD determines that the PHA is disbarred or otherwise

disqualified from providing assistance under the program.

34. Amend Sec. 982.151 as follows:

a. Amend paragraph (a)(1) by removing the reference to ``the

maximum annual payment by HUD, and'';

b. In paragraph (a)(2), revise the reference to ``certificate

program and voucher program'' to read ``tenant-based assistance

program''; and

c. Revise paragraph (b) to read as follows:

Sec. 982.151 Annual contributions contract.

* * * * *

(b) Budget authority. (1) Budget authority is the maximum amount

that may be paid by HUD to a PHA over the ACC term of a funding

increment. Before adding a funding increment to the consolidated ACC

for a PHA program, HUD reserves budget authority from amounts

authorized and appropriated by the Congress for the program.

(2) For each funding increment, the ACC specifies the term over

which HUD will make payments for the PHA program, and the amount of

available budget authority for each funding increment. The amount to be

paid to the PHA during each PHA fiscal year (including payment from the

ACC reserve account described in Sec. 982.154) must be approved by HUD.

35. Amend Sec. 982.152 by revising paragraphs (a)(1), (b)(1) and

(c) to read as follows:

Sec. 982.152 Administrative fee.

(a) Purposes of administrative fee. (1) HUD may approve

administrative fees to the PHA for any of the following purposes:

(i) Ongoing administrative fee;

(ii) Costs to help families who experience difficulty finding or

renting appropriate housing under the program;

(iii) The following types of extraordinary costs approved by HUD:

(A) Costs to cover necessary additional expenses incurred by the

PHA to provide reasonable accommodation for persons with disabilities

in accordance with part 8 of this title (e.g., additional counselling

costs), where the PHA is unable to cover such additional expenses from

ongoing administrative fee income or the PHA administrative fee

reserve;

(B) Costs of audit by an independent public accountant;

(C) Other extraordinary costs determined necessary by HUD

Headquarters;

(iv) Preliminary fee (in accordance with paragraph (c) of this

section);

(v) Costs to coordinate supportive services for families

participating in the family self-sufficiency (FSS) program.

* * * * *

(b) Ongoing administrative fee. (1) The PHA ongoing administrative

fee is paid for each program unit under HAP contract on the first day

of the month. The amount of the ongoing fee is determined by HUD in

accordance with Section 8(q)(1) of the 1937 Act (42 U.S.C.

1437f(q)(1)).

* * * * *

(c) Preliminary fee. (1) If the PHA was not administering a program

of Section 8 tenant-based assistance prior to the merger date, HUD will

pay a one-time fee in the amount of $500 in the first year the PHA

administers a program. The fee is paid for each new unit added to the

PHA program by the initial funding increment under the consolidated

ACC.

(2) The preliminary fee is used to cover expenses the PHA incurs to

help families who inquire about or apply for the program, and to lease

up new program units.

* * * * *

36. Revise Sec. 982.154 to read as follows:

Sec. 982.154 ACC reserve account.

(a) HUD may establish and maintain an unfunded reserve account for

the PHA program from available budget authority under the consolidated

ACC. This reserve is called the ``ACC reserve account'' (formerly

``project reserve''). There is a single ACC reserve account for the PHA

program.

(b) The amount in the ACC reserve account is determined by HUD. HUD

may approve payments for the PHA program, in accordance with the PHA's

HUD-approved budget, from available amounts in the ACC reserve account.

37. Amend Sec. 982.155 by revising the introductory text of

paragraph (a) to read as follows:

Sec. 982.155 Administrative fee reserve.

(a) The PHA must maintain an administrative fee reserve (formerly

``operating reserve'') for the program. There is a single

administrative fee reserve for the PHA program. The PHA must credit to

the administrative fee reserve the total of:

* * * * *

38. Amend Sec. 982.157 as follows:

a. Revise paragraph (b)(1) introductory text as set forth below;

and

b. Add paragraph (c).

Sec. 982.157 Budget and expenditures.

* * * * *

(b) PHA use of program receipts. (1) Program receipts must be used

in accordance with the PHA's HUD-approved budget. Such program receipts

may only be used for:

* * * * *

(c) Intellectual property rights. Program receipts may not be used

to indemnify contractors or subcontractors of the PHA against costs

associated with any judgment of infringement of intellectual property

rights.

39. Revise Sec. 982.162(a)(3) to read as follows:

Sec. 982.162 Use of HUD-required contracts and other forms.

(a) * * *

(3) The tenancy addendum required by HUD (which is included both in

the HAP contract and in the lease between the owner and the tenant).

* * * * *

40. Amend Sec. 982.201 as follows:

a. In paragraph (a), revise the reference to ``a program'' to read

``the program'';

b. Revise paragraphs (b) and (f)(2) as set forth below; and

c. Remove the reference to ``certificate or'' in paragraphs (d)(1),

(d)(2) and (e).

Sec. 982.201 Eligibility.

* * * * *

(b) Income. (1) Income-eligibility. To be income-eligible, the

applicant must

[[Page 26643]]

be a family in any of the following categories:

(i) A ``very low income'' family;

(ii) A low-income family that is ``continuously assisted'' under

the 1937 Housing Act;

(iii) A low-income family that meets additional eligibility

criteria specified in the PHA administrative plan. Such additional PHA

criteria must be consistent with the PHA plan and with the consolidated

plans for local governments in the PHA jurisdiction;

(iv) A low-income family that qualifies for voucher assistance as a

non-purchasing family residing in a HOPE 1 (HOPE for public housing

homeownership) or HOPE 2 (HOPE for homeownership of multifamily units)

project. (Section 8(o)(4)(D) of the 1937 Act (42 U.S.C.

1437f(o)(4)(D));

(v) A low-income or moderate-income family that is displaced as a

result of the prepayment of the mortgage or voluntary termination of an

insurance contract on eligible low-income housing as defined in

Sec. 248.101 of this title;

(vi) A low-income family that qualifies for voucher assistance as a

non-purchasing family residing in a project subject to a resident

homeownership program under Sec. 248.173 of this title.

(2) Income-targeting. (i) Not less than 75 percent of the families

admitted to a PHA's tenant-based voucher program during the PHA fiscal

year shall be targeted to families whose annual income does not exceed

the following amounts as determined by HUD:

(A) 30 percent of the area median income, with adjustments for

smaller and larger families; or

(B) A higher or lower percent of the area median income, if HUD

determines that a higher or lower percent is necessary because of

unusually high or low family incomes.

(ii) Conversion of assistance for a participant in the PHA

certificate program to assistance in the PHA voucher program does not

count as an ``admission,'' and is not subject to targeting under

paragraph (b)(2)(i) of this section.

(iii) Admission of families as described in paragraphs (b)(1)(ii)

or (b)(1)(v) of this section is not subject to targeting under

paragraph (b)(2)(i) of this section.

(iv) If two or more PHAs that administer section 8 tenant-based

assistance have an identical jurisdiction, such PHAs shall be treated

as a single PHA for purposes of targeting under paragraph (b)(2)(i) of

this section. In such a case, the PHAs shall cooperate to assure that

aggregate admissions by such PHAs comply with the targeting

requirement. If such PHAs do not have a single fiscal year, HUD will

determine which PHA's fiscal year is used for this purpose.

(3) The annual income (gross income) of an applicant family is used

both for determination of income-eligibility under paragraph (b)(1) of

this section, and for targeting under paragraph (b)(2)(i) of this

section.

(4) The applicable income limit for issuance of a voucher when a

family is selected for the program is the highest income limit (for the

family unit size) for areas in the PHA jurisdiction. The applicable

income limit for admission to the program is the income limit for the

area where the family is initially assisted in the program. The family

may only use the voucher to rent a unit in an area where the family is

income eligible at admission to the program.

* * * * *

(f) * * *

(2) For description of the grounds for denying assistance because

of action or inaction by the applicant, see Sec. 982.552(b) and (c)

(requirement and authority to deny admission) and Sec. 982.553(a)

(crime by family members).

41. Amend Sec. 982.202 as follows:

a. Remove paragraph (b)(1);

b. Redesignate paragraphs (b)(2), (b)(3), and (b)(4) as paragraphs

(b)(1), (b)(2), and (b)(3), respectively; and

c. Revise the introductory text of the newly designated paragraph

(b)(3) as set forth below; and

d. Revise paragraph (d) as set forth below.

Sec. 982.202 How applicants are selected: General requirements.

* * * * *

(b) * * *

(3) Family characteristics. The PHA preference system may provide a

preference for admission of families with certain characteristics from

the PHA waiting list. However, admission to the program may not be

based on:

* * * * *

(d) Admission policy.

The PHA must admit applicants for participation in accordance with

HUD regulations and other requirements, and with PHA policies stated in

the PHA administrative plan and the PHA plan. The PHA admission policy

must state the system of admission preferences that the PHA uses to

select applicants from the waiting list, including any residency

preference or other local preference.

Sec. 982.20 [Amended]

42. In Sec. 982.203(b)(1), remove the words ``or Indian''.

43. In Sec. 982.204, revise paragraph (b)(4), amend paragraph

(b)(5) to remove the phrase ``ranking preference or'' and add a new

paragraph (f) to read as follows:

Sec. 982.204 Waiting list: Administration of waiting list.

* * * * *

(b) * * *

(4) Qualification for any local preference;

* * * * *

(f) Number of waiting lists. A PHA must use a single waiting list

for admission to its Section 8 tenant-based assistance program.

However, the PHA may use a separate single waiting list for such

admissions for a county or municipality.

Sec. 982.205 [Amended]

44. Amend Sec. 982.205 as follows:

a. Remove paragraph (a);

b. Redesignate paragraphs (b) and (c) as paragraphs (a) and (b),

respectively;

c. In newly designated paragraph (a)(2), revise all references to

``project-based certificate program'' to read ``project-based voucher

program'', and remove all references to ``or Indian'';

d. In newly designated paragraph (b)(1), remove the reference to

``or Indian''; and

e. In newly designated paragraph (b)(3), revise the reference to

``paragraph (c)(2)'' to read ``paragraph (b)(2)'', and remove the

reference to ``both the certificate program and''.

45. Amend Sec. 982.206 as follows:

a. Revise paragraph (b)(2) as set forth below;

b. Remove paragraph (c)(2); and

c. Redesignate paragraph (c)(1) as paragraph (c).

Sec. 982.206 Waiting list: Opening and closing; Public notice.

* * * * *

(b) * * *

(2) If the waiting list is open, the PHA must accept applications

from families for whom the list is open unless there is good cause for

not accepting the application (such as denial of assistance because of

action or inaction by members of the family) for the grounds stated in

Secs. 982.552 and 982.553.

* * * * *

46. Revise Sec. 982.207 to read as follows:

Sec. 982.207 Waiting list: Local preferences in admission to program.

(a) Establishment of PHA local preferences. (1) The PHA may

establish a system of local preferences for selection of families

admitted to the program. PHA selection preferences must be described in

the PHA administrative plan. The system of local

[[Page 26644]]

preferences must be consistent with the PHA plan (see part 903 of this

title), and with the consolidated plans for local governments in the

PHA jurisdiction.

(2) The PHA system of local preferences must be based on local

housing needs and priorities, as determined by the PHA. In determining

such needs and priorities, the PHA shall use generally accepted data

sources. The PHA shall consider public comment on the proposed public

housing agency plan (as received pursuant to Sec. 903.17 of this

chapter) and on the consolidated plan for the relevant jurisdiction (as

received pursuant to part 91 of this title).

(3) The PHA may limit the number of applicants that may qualify for

any local preference.

(b) Residency preferences. (1) If approved by HUD, the PHA may

adopt a residency preference that establishes a county or municipality

as a residency preference area. A PHA may not adopt a residency

preference for an area smaller than a county or municipality.

(2) A residency preference must apply to families with a member who

works or who has been hired to work anywhere in a residency preference

area. In applying the residency preference, such families must be

treated like families that reside in the residency preference area.

(3) A residency preference may not be based on how long the

applicant has resided in or worked in the PHA jurisdiction or residency

preference area.

(c) Selection among families with preference. The PHA system of

preferences may use either of the following to select among applicants

on the waiting list with the same preference status:

(1) Date and time of application; or

(2) A drawing or other random choice technique.

(d) Preference for person with disabilities. The PHA may give a

preference for admission of families that include a person with

disabilities. However, the PHA may not give a preference for admission

of persons with a specific disability.

(e) Verification of selection method. The method for selecting

applicants from a preference category must leave a clear audit trail

that can be used to verify that each applicant has been selected in

accordance with the method specified in the administrative plan.

47. Amend Sec. 982.301 as follows:

a. In paragraph (b)(1), remove the reference to ``certificate or'';

and

b. Revise paragraphs (b)(2), (b)(5) and (b)(6) as set forth below.

Sec. 982.301 Information when family is selected.

* * * * *

(b) * * *

(2) How the PHA determines the amount of the housing assistance

payment for a family, including:

(i) How the PHA determines the payment standard for a family; and

(ii) How the PHA determines the total tenant payment for a family.

* * * * *

(5) The HUD-required ``tenancy addendum'' that must be included in

the lease;

(6) The form that the family uses to request PHA approval of the

assisted tenancy, and an explanation of how to request such approval;

* * * * *

48. Revise Sec. 982.302 to read as follows:

Sec. 982.302 Issuance of voucher; Requesting PHA approval of assisted

tenancy.

(a) When a family is selected, or when a participant family wants

to move to another unit, the PHA issues a voucher to the family. The

family may search for a unit.

(b) If the family finds a unit, and the owner is willing to lease

the unit under the program, the family may request PHA approval of the

tenancy. The PHA has the discretion whether to permit the family to

submit more than one request at a time.

(c) The family must submit to the PHA a request for approval of the

tenancy and a copy of the lease, including the HUD-prescribed tenancy

addendum. The request must be submitted during the term of the voucher.

(d) The PHA specifies the procedure for requesting approval of the

tenancy. The family must submit the request for approval of the tenancy

in the form and manner required by the PHA.

Sec. 982.303 [Amended]

49. Amend Sec. 982.303 as follows:

a. Revise the section heading to read ``Term of voucher'';

b. Remove all references to ``certificate or''; and

c. In paragraph (c), revise both references to ``request for lease

approval'' to read ``request for approval of the tenancy''.

50. Amend Sec. 982.305 as follows:

a. Revise the section heading to read ``PHA approval of assisted

tenancy'';

b. In the introductory text of paragraph (a), revise the reference

to ``to lease a dwelling unit'' to read ``of the assisted tenancy'';

c. Remove paragraph (a)(5);

d. Revise paragraphs (a)(3), (a)(4) and (b) as set forth below;

e. In paragraphs (d) and (e), revise the references to ``to lease a

unit'' to read ``of the assisted tenancy''.

Sec. 982.305 PHA approval of assisted tenancy.

(a) * * *

(3) The lease includes the tenancy addendum; and

(4) The rent to owner is reasonable.

(b) Actions before lease term. (1) All of the following must always

be completed before the beginning of the initial term of the lease for

a unit:

(i) The PHA has inspected the unit and has determined that the unit

satisfies the HQS;

(ii) The landlord and the tenant have executed the lease (including

the HUD-prescribed tenancy addendum); and

(iii) The PHA has approved leasing of the unit in accordance with

program requirements.

(2)(i) The PHA must inspect the unit, determine whether the unit

satisfies the HQS, and notify the family and owner of the

determination:

(A) In the case of a PHA with up to 1250 budgeted units in its

tenant-based program, within fifteen days after the family and the

owner submit a request for approval of the tenancy.

(B) In the case of a PHA with more than 1250 budgeted units in its

tenant-based program, within a reasonable time after the family submits

a request for approval of the tenancy. To the extent practicable, such

inspection and determination must be completed within fifteen days

after the family and the owner submit a request for approval of the

tenancy.

(ii) The fifteen day clock (under paragraph (b)(2)(i)(A) or

paragraph (b)(2)(i)(B) of this section) is suspended during any period

when the unit is not available for inspection.

* * * * *

51. Amend Sec. 982.306 as follows:

a. In paragraph (a) and the introductory text of paragraph (b),

revise the references to ``a unit'' to read ``an assisted tenancy'';

b. In the introductory text of paragraph (c), revise the reference

to ``to lease a unit from an owner'' to read ``of an assisted

tenancy'';

c. Revise paragraph (c)(3) as set forth below;

d. Redesignate paragraphs (c)(5) and (c)(6) as paragraphs (c)(6)

and (c)(7), respectively; and

e. Add new paragraph (c)(5) as set forth below.

Sec. 982.306 PHA disapproval of owner.

* * * * *

[[Page 26645]]

(c) * * *

(3) The owner has engaged in any drug-related criminal activity or

any violent criminal activity;

* * * * *

(5) The owner has a history or practice of failing to terminate

tenancy of tenants of units assisted under Section 8 or any other

federally assisted housing program for activity by the tenant, any

member of the household, a guest or another person under the control of

any member of the household that:

(i) Threatens the right to peaceful enjoyment of the premises by

other residents;

(ii) Threatens the health or safety of other residents, of

employees of the PHA, or of owner employees or other persons engaged in

management of the housing;

(iii) Threatens the health or safety of, or the right to peaceful

enjoyment of their residences, by persons residing in the immediate

vicinity of the premises; or

(iv) Is drug-related criminal activity or violent criminal

activity; or

* * * * *

52. In Sec. 982.307 revise the section heading and paragraph (a) to

read as follows:

Sec. 982.307 Tenant screening.

(a) PHA option and owner responsibility. (1) The PHA may opt to

screen family behavior or suitability for tenancy. However, the PHA has

no liability or responsibility to the owner or other persons for the

family's behavior or the family's conduct in tenancy.

(2) The owner is responsible for screening and selection of the

family to occupy the owner's unit. At or before PHA approval of the

tenancy, the PHA must inform the owner that screening and selection for

tenancy is the responsibility of the owner.

(3) The owner is responsible for screening of families on the basis

of their tenancy histories. An owner may consider a family's background

with respect to such factors as:

(i) Payment of rent and utility bills;

(ii) Caring for a unit and premises;

(iii) Respecting the rights of other residents to the peaceful

enjoyment of their housing;

(iv) Drug-related criminal activity or other criminal activity that

is a threat to the health, safety or property of others; and

(v) Compliance with other essential conditions of tenancy.

* * * * *

53. Revise Sec. 982.308 to read as follows:

Sec. 982.308 Lease and tenancy.

(a) Tenant's legal capacity to enter lease. The tenant must have

legal capacity to enter a lease under State and local law.

(b) Owner lease. The tenant and owner must enter a lease for the

unit. The HAP contract shall contain owner's certification that:

(1) The lease between the tenant and the owner is in a standard

form used in the locality by the owner and that is generally used for

other unassisted tenants in the premises.

(2) The terms and conditions of the lease are consistent with State

and local law.

(c) State and local law. The PHA may review the lease to determine

if the lease complies with State and local law. The PHA may decline to

approve the tenancy if the PHA determines that the lease does not

comply with State or local law.

(d) Utilities and appliances. The lease must specify what utilities

and appliances are to be supplied by the owner, and what utilities and

appliances are to be supplied by the family.

(e) Reasonable rent. The rent to owner must be reasonable (see

Sec. 982.507).

(f) Tenancy addendum. The HAP contract form required by HUD shall

include an addendum (the ``tenancy addendum''), that sets forth tenancy

requirements for the program (in accordance with Secs. 982.308, 982.309

and 982.310). All provisions of the HUD-required tenancy addendum must

be added word-for-word to the owner's standard form lease that is used

by the owner for unassisted tenants. The tenant shall have the right to

enforce the tenancy addendum against the owner, and the terms of the

tenancy addendum shall prevail over any other provisions of the lease.

54. Revise Sec. 982.309 to read as follows:

Sec. 982.309 Term of assisted tenancy.

(a) Initial term of lease. (1) Except as provided in paragraph

(a)(2) of this section, the initial lease term must be for at least one

year.

(2) The PHA may approve a shorter initial lease term if the PHA

determines that:

(i) Such shorter term would improve housing opportunities for the

tenant; and

(ii) Such shorter term is the prevailing local market practice.

(3) During the initial term of the lease, the owner may not raise

the rent to owner.

(4) The PHA may execute the HAP contract even if there is less than

one year remaining from the beginning of the initial lease term to the

end of the last expiring funding increment under the consolidated ACC.

(b) Term of HAP contract. (1) The term of the HAP contract begins

on the first day of the lease term and ends on the last day of the

lease term.

(2) The HAP contract terminates if any of the following occurs:

(i) The lease is terminated by the owner or the tenant;

(ii) The PHA terminates the HAP contract; or

(iii) The PHA terminates assistance for the family.

(c) Family responsibility. (1) If the family terminates the lease

on notice to the owner, the family must give the PHA a copy of the

notice of termination at the same time. Failure to do this is a breach

of family obligations under the program.

(2) The family must notify the PHA and the owner before the family

moves out of the unit. Failure to do this is a breach of family

obligations under the program.

55. Amend Sec. 982.310 as follows:

a. Revise paragraphs (a)(1) and (d)(1)(iv) as set forth below;

b. In paragraph (d)(2), revise the reference to ``During the first

year of the lease term'' to read ``During the initial lease term,'';

and

c. Remove paragraph (e)(3).

Sec. 982.310 Owner termination of tenancy.

(a) * * *

(1) Serious violation (including but not limited to failure to pay

rent or other amounts due under the lease) or repeated violation of the

terms and conditions of the lease;

* * * * *

(d) * * *

(1) * * *

(iv) A business or economic reason for termination of the tenancy

(such as sale of the property, renovation of the unit, or desire to

lease the unit at a higher rental).

* * * * *

56. Amend Sec. 982.352 by revising paragraph (b)(1) to read as

follows:

Sec. 982.352 Eligible housing.

* * * * *

(b) PHA-owned housing. (1) A unit that is owned by the PHA that

administers the assistance under the consolidated ACC (including a unit

owned by an entity substantially controlled by the PHA) may only be

assisted under the tenant-based program if all the following conditions

are satisfied:

(i) The PHA must inform the family, both orally and in writing,

that the

[[Page 26646]]

family has the right to select any eligible unit available for lease,

and a PHA-owned unit is freely selected by the family, without PHA

pressure or steering.

(ii) The unit is not ineligible housing.

(iii) During assisted occupancy, the family may not benefit from

any form of housing subsidy that is prohibited under paragraph (c) of

this section.

(iv)(A) The PHA must obtain the services of an independent entity

to perform the following PHA functions as required under the program

rule:

(1) To determine rent reasonableness in accordance with

Sec. 982.507. The independent agency shall communicate the rent

reasonableness determination to the family and the PHA.

(2) To assist the family negotiate the rent to owner in accordance

with Sec. 982.506.

(3) To inspect the unit for compliance with the HQS in accordance

with Sec. 982.305(a) and Sec. 982.405 (except that Sec. 982.405(e) is

not applicable). The independent agency shall communicate the results

of each such inspection to the family and the PHA.

(B) The independent agency used to perform these functions must be

approved by HUD. The independent agency may be the unit of general

local government for the PHA jurisdiction (unless the PHA is itself the

unit of general local government or an agency of such government), or

may be another HUD-approved independent agency.

(C) The PHA may compensate the independent agency from PHA ongoing

administrative fee income for the services performed by the independent

agency. The PHA may not use other program receipts to compensate the

independent agency for such services. The PHA and the independent

agency may not charge the family any fee or charge for the services

provided by the independent agency.

* * * * *

57. Amend Sec. 982.353 as follows:

a. Revise paragraphs (b), (c)(2), and (d) as set forth below; and

b. In paragraph (f), remove the references to ``contract rent

(certificate program) or'' and ``(voucher program)''.

Sec. 982.353 Where family can lease a unit with tenant-based

assistance.

* * * * *

(b) Portability: Assistance outside the initial PHA jurisdiction.

Subject to paragraph (c) of this section, and to Sec. 982.552 and

Sec. 982.553, a voucher-holder or participant family has the right to

receive tenant-based voucher assistance in accordance with requirements

of this part to lease a unit outside the initial PHA jurisdiction,

anywhere in the United States, in the jurisdiction of a PHA with a

tenant-based program under this part. The initial PHA must not provide

such portable assistance for a participant if the family has moved out

of its assisted unit in violation of the lease.

* * * * *

(c) * * *

(2) The following apply during the 12 month period from the time

when a family described in paragraph (c)(1) of this section is admitted

to the program:

(i) The family may lease a unit anywhere in the jurisdiction of the

initial PHA;

(ii) The family does not have any right to portability;

(iii) The initial PHA may choose to allow portability during this

period.

* * * * *

(d) Income eligibility. (1) For admission to the program, a family

must be income eligible in the area where the family initially leases a

unit with assistance under the program.

(2) If a portable family is a participant in the initial PHA

Section 8 tenant-based program (either the PHA voucher program or the

PHA certificate program), income eligibility is not redetermined when

the family moves to the receiving PHA program under portability

procedures.

(3) Except as provided in paragraph (d)(2) of this section, a

portable family must be income eligible for admission to the voucher

program in the area where the family leases a unit under portability

procedures.

* * * * *

Sec. 982.354 [Removed]

58. Remove Sec. 982.354.

59. Amend Sec. 982.355 as follows:

a. Revise paragraphs (b), (c)(1) and (c)(6) as set forth below;

b. Amend paragraph (c)(4) by removing the reference to ``or

certificate'',

c. In paragraph (c)(8), revise the reference to ``request for lease

approval'' to read ``request for approval of the tenancy'' and remove

the reference to ``certificate or'';

d. In paragraph (d)(1), remove the two references to ``certificate

or''; and

e. In paragraph (d)(6), revise the word ``programs'' to read

``program''.

Sec. 982.355 Portability: Administration by receiving PHA.

* * * * *

(b) In the conditions described in paragraph (a) of this section, a

PHA with jurisdiction in the area where the family wants to lease a

unit must issue a voucher to the family. If there is more than one such

PHA, the initial PHA may choose the receiving PHA.

(c) Portability procedures. (1) The receiving PHA does not

redetermine elibilibility for a portable family that was already

receiving assistance in the initial PHA Section 8 tenant-based program

(either the PHA voucher program or certificate program). However, for a

portable family that was not already receiving assistance in the PHA

tenant-based program, the initial PHA must determine whether the family

is eligible for admission to the receiving PHA voucher program.

* * * * *

(6) The receiving PHA must issue a voucher to the family. The term

of the receiving PHA voucher may not expire before the expiration date

of any initial PHA voucher. The receiving PHA must determine whether to

extend the voucher term. The family must submit a request for approval

of the tenancy to the receiving PHA during the term of the receiving

PHA voucher.

* * * * *

60. Revise Sec. 982.401(a)(4) to read as follows:

Sec. 982.401 Housing quality standards (HQS).

(a) * * *

(4)(i) In addition to meeting HQS performance requirements, the

housing must meet the acceptability criteria stated in this section,

unless variations are approved by HUD.

(ii) HUD may approve acceptability criteria variations for the

following purposes:

(A) Variations which apply standards in local housing codes or

other codes adopted by the PHA; or

(B) Variations because of local climatic or geographic conditions.

(iii) Acceptability criteria variations may only be approved by HUD

pursuant to paragraph (a)(4)(ii) of this section if such variations

either:

(A) Meet or exceed the acceptability criteria; or

(B) Significantly expand affordable housing opportunities for

families assisted under the program.

(iv) HUD will not approve any acceptability criteria variation if

HUD believes that such variation is likely to adversely affect the

health or safety of participant families, or severely restrict housing

choice.

* * * * *

61. Amend Sec. 982.402 as follows:

a. Amend paragraph (a)(3) by removing the references to

``certificate or'' and ``or certificate'';

b. Revise paragraph (c) to read as follows:

[[Page 26647]]

Sec. 982.402 Subsidy standards.

* * * * *

(c) Effect of family unit size-maximum subsidy in voucher program.

The family unit size as determined for a family under the PHA subsidy

standard is used to determine the maximum rent subsidy for a family

assisted in the voucher program. For a voucher tenancy, the PHA

establishes payment standards by number of bedrooms. The payment

standard for a family shall be the lower of:

(1) The payment standard amount for the family unit size; or

(2) The payment standard amount for the unit size of the unit

rented by the family.

* * * * *

62. Amend Sec. 982.403 as follows:

a. Revise the section heading to read ``Terminating HAP contract

when unit is too small'';

b. Remove paragraph (a)(1);

c. Redesignate paragraphs (a)(2) and (a)(3) as paragraphs (a)(1)

and (a)(2), respectively;

d. Amend redesignated paragraph (a)(1) by removing the reference to

``certificate or'';

e. Amend paragraph (b)(2) by replacing the word ``certificate''

with ``voucher''.

f. Amend paragraph (b)(4) by removing the phrase ``within the FMR/

exception rent limit''; and

g. Revise the introductory text of redesignated paragraph (c) as

set forth below.

Sec. 982.403 Terminating HAP contract when unit is too small.

* * * * *

(c) Termination. When the PHA terminates the HAP contract under

paragraph (a) of this section:

* * * * *

63. Amend Sec. 982.405 as follows:

a. Revise the section heading and paragraph (a) as set forth below;

and

b. Add paragraph (f) as set forth below.

Sec. 982.405 PHA initial and periodic unit inspection.

(a) The PHA must inspect the unit leased to a family prior to the

initial term of the lease, at least annually during assisted occupancy,

and at other times as needed, to determine if the unit meets the HQS.

(See Sec. 982.305(b)(2) concerning timing of initial inspection by the

PHA.)

* * * * *

(f) The PHA must adopt procedural guidelines and performance

standards for conducting required HQS inspections. The PHA guidelines

and standards must conform with practices utilized in the private

housing market, and facilitate efficient administration of assistance

under the program. The PHA administrative plan shall state the PHA

guidelines and standards for conducting HQS inspections.

64. Revise Sec. 982.451(b)(5) to read as follows:

Sec. 982.451 Housing assistance payments contract.

* * * * *

(b) * * *

(5)(i) The PHA must pay the housing assistance payment promptly

when due to the owner in accordance with the HAP contract.

(ii) The HAP contract shall provide for penalties against the PHA

for late payment of housing assistance payments due to the owner under

the contract, where such penalties are in accordance with generally

accepted practices and law, as applicable in the local housing market,

governing penalties for late payment of rent by a tenant. However, the

PHA shall not be obligated to pay any late payment penalty if HUD

determines that late payment by the PHA is due to factors beyond the

PHA's control. The PHA may add HAP contract provisions which define

when the HAP payment by the PHA is deemed received by the owner (e.g.

upon mailing by the PHA or actual receipt by the owner).

(iii) The PHA may only use the following sources to pay a late

payment penalty from program receipts under the consolidated ACC:

administrative fee income for the program; or the administrative fee

reserve for the program. The PHA may not use other program receipts for

this purpose.

Sec. 982.452 [Amended]

65. Amend Sec. 982.452(b)(1) by removing the reference to

``certificate-holder or''.

Sec. 982.453 [Amended]

66. In Sec. 982.453(a)(5), revise the reference to ``drug-

trafficking'' to read ``drug-related criminal activity''.

Sec. 982.454 [Amended]

67. Amend Sec. 982.454 by removing the last sentence.

68. Revise Sec. 982.455 to read as follows:

Sec. 982.455 Automatic termination of HAP contract.

The HAP contract terminates automatically 180 calendar days after

the last housing assistance payment to the owner.

69. Revise Sec. 982.456(b) to read as follows:

Sec. 982.456 Third parties.

* * * * *

(b)(1) The family is not a party to or third party beneficiary of

the HAP contract. Except as provided in paragraph (b)(2) of this

section, the family may not exercise any right or remedy against the

owner under the HAP contract.

(2) The tenant may exercise any right or remedy against the owner

under the lease between the tenant and the owner, including enforcement

of the owner's obligations under the tenancy addendum (which is

included both in the HAP contract between the PHA and the owner; and in

the lease between the tenant and the owner.)

* * * * *

Secs. 982.457, 982.504, 982.505, 982.506, 982.508 and

982.512 [Removed]

70. Remove Secs. 982.457, 982.504, 982.505, 982.506, 982.508, and

982.512.

71. Revise the table of contents for Subpart K to read as follows:

Subpart K--Rent and Housing Assistance Payment

982.501 Overview.

982.502 Conversion to voucher program.

982.503 Voucher tenancy: Payment standard amount and schedule.

982.504 Voucher tenancy: Payment standard for family in

restructured subsidized multifamily project.

982.505 Voucher tenancy: How to calculate housing assistance

payment.

982.506 Negotiating rent to owner.

982.507 Rent to owner; Reasonable rent.

982.508 Rent to owner: Maximum rent at initial occupancy.

982.509 Rent to owner in subsidized projects.

982.513 Other fees and charges.

982.516 Family income and composition: Regular and interim

examinations.

982.517 Utility allowance schedule.

982.518 Regular tenancy: How to calculate housing assistance

payment.

982.519 Regular tenancy: Annual adjustment of rent to owner.

982.520 Regular tenancy: Special adjustment of rent to owner.

982.521 Regular tenancy: Rent to owner in subsidized project.

72. Revise Sec. 982.501 to read as follows:

Sec. 982.501 Overview.

(a) This subpart describes program requirements concerning the

housing assistance payment and rent to owner. These requirements apply

to the Section 8 tenant-based program.

(b) There are two types of tenancies in the Section 8 tenant-based

program:

(1) A tenancy under the voucher program.

(2) A tenancy under the certificate program (commenced before

merger of the certificate and voucher programs on the merger date).

[[Page 26648]]

(c) Unless specifically stated, requirements of this part are the

same for all tenancies. Sections 982.503, 982.504, and 982.505 only

apply to a voucher tenancy. Sections 982.518, 982.519, 982.520, and

982.521 only apply to a tenancy under the certificate program.

Secs. 982.502, 982.503, 982.507, 982.509, 982.510, 982.511, and

982.513 [Redesignated as Secs. 982.506, 982.507, 982.518, 982.519,

982.520, 982.509 and 982.510, respectively]

73. Redesignate Secs. 982.502, 982.503, 982.507, 982.509, 982.510,

982.511, and 982.513 as Secs. 982.506, 982.507, 982.518, 982.519,

982.520, 982.509, and 982.510, respectively.

74. Add new Secs. 982.502, 982.503, 982.504, 982.505, and 982.508

to read as follows:

Sec. 982.502 Conversion to voucher program.

(a) New HAP contracts. On and after the merger date, the PHA may

only enter into a HAP contract for a tenancy under the voucher program,

and may not enter into a new HAP contract for a tenancy under the

certificate program.

(b) Over-FMR tenancy. If the PHA had entered into any HAP contract

for an over-FMR tenancy under the certificate program prior to the

merger date, on and after the merger date such tenancy shall be

considered and treated as a tenancy under the voucher program, and

shall be subject to the voucher program requirements under this part,

including calculation of the voucher housing assistance payment in

accordance with Sec. 982.505. However, Sec. 982.505(b)(2) shall not be

applicable for calculation of the housing assistance payment prior to

the effective date of the second regular reexamination of family income

and compostion on or after the merger date.

(c) Voucher tenancy. If the PHA had entered into any HAP contract

for a voucher tenancy prior to the merger date, on and after the merger

date such tenancy shall continue to be considered and treated as a

tenancy under the voucher program, and shall be subject to the voucher

program requirements under this part, including calculation of the

voucher housing assistance payment in accordance with Sec. 982.505.

However, Sec. 982.505(b)(2) shall not be applicable for calculation of

the housing assistance payment prior to the effective date of the

second regular reexamination of family income and composition on or

after the merger date.

(d) Regular certificate tenancy. The PHA must terminate program

assistance under any outstanding HAP contract for a regular tenancy

under the certificate program (entered prior to the merger date) at the

effective date of the second regular reexamination of family income and

composition on or after the merger date. Upon such termination of

assistance, the HAP contract for such tenancy terminates automatically.

The PHA must give at least 120 days written notice of such termination

to the family and the owner, and the PHA must offer the family the

opportunity for continued tenant-based assistance under the voucher

program. The PHA may deny the family the opportunity for continued

assistance in accordance with Secs. 982.552 and 982.553.

Sec. 982.503 Voucher tenancy: Payment standard amount and schedule.

(a) Payment standard schedule. (1) HUD publishes the fair market

rents for each market area in the United States (see part 888 of this

title). The PHA must adopt a payment standard schedule that establishes

voucher payment standard amounts for each FMR area in the PHA

jurisdiction. For each FMR area, the PHA must establish payment

standard amounts for each ``unit size.'' Unit size is measured by

number of bedrooms (zero-bedroom, one-bedroom, and so on).

(2) The payment standard amounts on the PHA schedule are used to

calculate the monthly housing assistance payment for a family

(Sec. 982.505).

(3) The PHA voucher payment standard schedule shall establish a

single payment standard for each unit size in an FMR area and, if

applicable, in an exception payment standard area within an FMR area.

(b) Establishing payment standard amounts. (1)(i) The PHA may

establish the payment standard amount for a unit size at any level

between 90 percent and 110 percent of the published FMR for that unit

size. HUD approval is not required to establish a payment standard

amount in that range (``basic range'').

(ii) The PHA may establish a separate payment standard within the

basic range for a designated part of an FMR area.

(2) The PHA must request HUD approval to establish a payment

standard amount that is higher or lower than the basic range. HUD has

sole discretion to grant or deny approval of a higher or lower payment

standard amount. Paragraph (c) of this section describes the

requirements for approval of a higher payment standard amount

(``exception payment standard amount'').

(c) HUD approval of exception payment standard amount. (1) HUD

discretion. At HUD's sole discretion, HUD may approve a payment

standard amount that is higher than the basic range for a designated

part of the fair market rent area (called an ``exception area''). HUD

may approve an exception payment standard amount in accordance with

this paragraph (c) of this section for all units, or for all units of a

given unit size, leased by program families in the exception area. Any

PHA with jurisdiction in the exception area may use the HUD-approved

exception payment standard amount.

(2) Above 110 percent of FMR to 120 percent of FMR. The HUD Field

Office may approve an exception payment standard amount from above 110

percent of the published FMR to 120 percent of the published FMR if

such office determines that such approval is justified by either the

median rent method or the 40th percentile rent as described below (and

that such approval is also supported by an appropriate program

justification in accordance with paragraph (c)(4) of this section).

(i) Median rent method. In the median rent method, HUD determines

the exception payment standard amount by multiplying the FMR times a

fraction of which the numerator is the median gross rent of the

exception area and the denominator is the median gross rent of the

entire FMR area. In this method, HUD uses median gross rent data from

the most recent decennial United States census, and the exception area

may be any geographic entity within the FMR area (or any combination of

such entities) for which median gross rent data is provided in

decennial census products.

(ii) 40th percentile rent method. In this method, HUD determines

that the area exception rent equals the 40th percentile of rents to

lease standard quality rental housing in the exception area. HUD

determines the 40th percentile rent in accordance with the methodology

described in Sec. 888.113 of this title for determining fair market

rents. A PHA must present statistically representative rental housing

survey data to justify HUD approval.

(3) Above 120 percent of FMR. (i) At the request of a PHA, the

Assistant Secretary for Public and Indian Housing may approve an

exception payment standard amount for the total area of a county, PHA

jurisdiction, or place if the Assistant Secretary determines that:

(A) Such approval is necessary to prevent financial hardship for

families;

(B) Such approval is supported by statistically representative

rental housing survey data to justify HUD approval in accordance with

the methodology described in Sec. 888.113 of this title; and

[[Page 26649]]

(C) Such approval is also supported by an appropriate program

justification in accordance with paragraph (c)(4) of this section.

(ii) For purposes of paragraph (c)(3) of this section, the term

``place'' is an incorporated place or a U.S. Census designated place.

An incorporated place is established by State law and includes cities,

boroughs, towns, and villages. A U.S. Census designated place is the

statistical counterpart of an incorporated place.

(4) Program justification. (i) HUD will only approve an exception

payment standard amount (pursuant to paragraph (c)(2) or paragraph

(c)(3) of this section) if HUD determines that approval of such higher

amount is needed either:

(A) To help families find housing outside areas of high poverty, or

(B) Because voucher holders have trouble finding housing for lease

under the program within the term of the voucher.

(ii) HUD will only approve an exception payment standard amount

(pursuant to paragraph (c)(3) of this section) after six months from

the date of HUD approval of an exception payment standard pursuant to

paragraph (c)(2) of this section for the area.

(5) Population. The total population of HUD-approved exception

areas in an FMR area may not include more than 50 percent of the

population of the FMR area.

(6) Withdrawal or modification. At any time, HUD may withdraw or

modify approval to use an exception payment standard amount.

(7) Transition: Area exception rents approved prior to merger date.

Subject to paragraph (c)(6) of this section, the PHA may establish an

exception payment standard amount up to the amount of a HUD-approved

area exception rent in effect at the merger date.

(d) HUD review of PHA payment standard schedule. (1) HUD will

monitor rent burdens of families assisted in a PHA's voucher program.

If 40 percent or more of such families occupying units of any

particular unit size pay more than 30 percent of adjusted income as the

family's share, HUD will review the PHA payment standard amount for

that unit size, and may require the PHA to establish an increased

payment standard amount within the basic range.

(2) Upon such HUD review, HUD may require the PHA to modify the

payment standard amounts on the PHA payment standard schedule.

Sec. 982.504 Voucher tenancy: Payment standard for family in

restructured subsidized multifamily project.

(a) This section applies to tenant-based assistance under the

voucher program if all the following conditions are applicable:

(1) Such tenant-based voucher assistance is provided to a family

pursuant to Sec. 401.421 of this title when HUD has approved a

restructuring plan, and the participating administrative entity has

approved the use of tenant-based assistance to provide continued

assistance for such families. Such tenant-based voucher assistance is

provided for a family previously receiving project-based assistance in

an eligible project (as defined in Sec. 401.2 of this title) at the

time when the project-based assistance terminates.

(2) The family chooses to remain in the restructured project with

tenant-based assistance under the program and leases a unit that does

not exceed the family unit size;

(3) The lease for such assisted tenancy commences during the first

year after the project-based assistance terminates.

(b) The initial payment standard for the family under such initial

lease is the sum of the reasonable rent to owner for the unit plus the

utility allowance for tenant-paid utilities. (Determination of such

initial payment standard for the family is not subject to paragraphs

(c)(1) and (c)(2) of Sec. 982.505. Except for determination of the

initial payment standard as specifically provided in paragraph (b) of

this section, the payment standard and housing assistance payment for

the family during the HAP contract term shall be determined in

accordance with Sec. 982.505.)

Sec. 982.505 Voucher tenancy: How to calculate housing assistance

payment.

(a) Use of payment standard. A payment standard is used to

calculate the monthly housing assistance payment for a family. The

``payment standard'' is the maximum monthly subsidy payment.

(b) Amount of monthly housing assistance payment. The PHA shall pay

a monthly housing assistance payment on behalf of the family that is

equal to the lower of:

(1) The payment standard minus the total tenant payment; or

(2) The gross rent minus the total tenant payment.

(c) Payment standard for family. (1) The payment standard is the

lower of:

(i) The payment standard amount for the family unit size; or

(ii) The payment standard amount for the size of the dwelling unit

rented by the family.

(2) If the dwelling unit is located in an exception area, the PHA

must use the appropriate payment standard amount for the exception

area.

(3) During the HAP contract term, the payment standard for a family

is the higher of:

(i) The initial payment standard (at the beginning of the HAP

contract term), as determined in accordance with paragraphs (c)(1) and

(c)(2) of this section, minus any amount by which the initial rent to

owner exceeds the current rent to owner; or

(ii) The payment standard, as determined in accordance with

paragraphs (c)(1) and (c)(2) of this section, as determined at the most

recent regular reexamination of family income and composition effective

after the beginning of the HAP contract term.

(4) At the next regular reexamination following a change in family

size or composition that causes a change in family unit size during the

HAP contract term, and for any examination thereafter during the term:

(i) Paragraph (c)(3)(i) of this section does not apply; and

(ii) The new family unit size must be used to determine the payment

standard.

Sec. 982.508 Rent to owner: maximum rent at initial occupancy.

At the time a family initially receives tenant-based assistance for

occupancy of a dwelling unit, the family share may not exceed 40

percent of the family's monthly adjusted income.

Sec. 982.509 [Amended]

74a. Revise the section heading of newly designated Sec. 982.509 to

read ``Rent to owner in subsidized projects.''

75. Amend Sec. 982.516 as follows:

a. Revise paragraph (d)(2) as set forth below;

b. Amend paragraph (e) by removing the reference to ``and family

unit size''; and

c. Add paragraph (f) as set forth below.

Sec. 982.516 Family income and composition: Regular and interim

examinations.

* * * * *

(d) * * *

(2) At the effective date of a regular or interim reexamination,

the PHA must make appropriate adjustments in the housing assistance

payment. (For a voucher tenancy, the housing assistance payment shall

be calculated in accordance with Sec. 982.505. For a certificate

tenancy, the housing assistance payment shall be calculated in

accordance with Sec. 982.518.)

* * * * *

(f) Accuracy of family income data. The PHA must establish

procedures that

[[Page 26650]]

are appropriate and necessary to assure that income data provided by

applicant or participant families is complete and accurate.

76. Add Sec. 982.521 to read as follows:

Sec. 982.521 Regular tenancy: Rent to owner in subsidized project.

For a certificate tenancy in an insured or non-insured Section 236

project, a Section 515 project of the Rural Development Administration,

a Section 202 project or a Section 221(d)(3) below market interest rate

project, the rent to owner is the basic rental charge (as defined in 12

U.S.C. 1715z-1(f)(1), minus any utility allowance for tenant-paid

utilities). The rent to owner may not be adjusted by applying the

published Section 8 annual adjustment factor, and a special adjustment

may not be approved.

Sec. 982.551 [Amended]

77. In Sec. 982.551, amend paragraph (b)(2) by removing the second

sentence, and in paragraph (b)(3) remove the phrase ``and 24 CFR part

813''.

78. Amend Sec. 982.552 as follows:

a. Amend paragraph (a)(2) to remove the phrase ``certificate or'';

b. Revise paragraphs (b) and (c) as set forth below;

c. Remove paragraphs (d) and (e); and

d. Redesignate paragraph (f) as paragraph (d).

Sec. 982.552 PHA denial or termination of assistance for family.

* * * * *

(b) Requirement to deny admission or terminate assistance. (1)

During a reasonable time period determined by the PHA, the PHA may not

admit a family to the program if any member of the family has been

evicted from federally assisted housing for serious violation of the

lease.

(2) The PHA must terminate program assistance for a family evicted

from housing assisted under the program for serious violation of the

lease.

(3) The PHA must deny admission to the program for an applicant, or

terminate program assistance for a participant, if any member of the

family fails to sign and submit consent forms for obtaining information

in accordance with part 5, subparts B and F of this title.

(4) The family must submit required evidence of citizenship or

eligible immigration status. See part 5 of this title for a statement

of circumstances in which the PHA must deny admission or terminate

program assistance because a family member does not establish

citizenship or eligible immigration status, and the applicable informal

hearing procedures.

(c) Authority to deny admission or terminate assistance. (1)

Grounds for denial or termination of assistance. The PHA may at any

time deny program assistance for an applicant, or terminate program

assistance for a participant, for any of the following grounds:

(i) If the family violates any family obligations under the program

(see Sec. 982.551). See Sec. 982.553 concerning denial or termination

of assistance for crime by family members.

(ii) If any member of the family has ever been evicted from public

housing.

(iii) If a PHA has ever terminated assistance under the program for

any member of the family.

(iv) If any member of the family has committed fraud, bribery, or

any other corrupt or criminal act in connection with any Federal

housing program.

(v) If the family currently owes rent or other amounts to the PHA

or to another PHA in connection with Section 8 or public housing

assistance under the 1937 Act.

(vi) If the family has not reimbursed any PHA for amounts paid to

an owner under a HAP contract for rent, damages to the unit, or other

amounts owed by the family under the lease.

(vii) If the family breaches an agreement with the PHA to pay

amounts owed to a PHA, or amounts paid to an owner by a PHA. (The PHA,

at its discretion, may offer a family the opportunity to enter an

agreement to pay amounts owed to a PHA or amounts paid to an owner by a

PHA. The PHA may prescribe the terms of the agreement.)

(viii) If a family participating in the FSS program fails to

comply, without good cause, with the family's FSS contract of

participation.

(ix) If the family has engaged in or threatened abusive or violent

behavior toward PHA personnel.

(x) If the family fails to fulfill its obligations under the

Section 8 welfare-to-work voucher program.

(2) PHA discretion to consider circumstances. In deciding whether

to deny admission or terminate assistance because of action or failure

to act by members of the family, the PHA has discretion to consider all

of the circumstances in each case, including the seriousness of the

case, the extent of participation or culpability of individual family

members, and the effects of denial or termination of assistance on

other family members who were not involved in the action or failure.

(3) Exclusion of family members. In determining whether to deny

admission or terminate assistance, the PHA may impose, as a condition

of continued assistance for other family members, a requirement that

family members who participated in or were culpable for the action or

failure will not reside in the unit. The PHA may permit the other

members of a participant family to continue receiving assistance.

* * * * *

79. Amend Sec. 982.554 as follows:

a. In paragraph (c)(4), remove the phrase ``certificate or'';

b. Revise paragraph (c)(5) to read as follows:

Sec. 982.554 Informal review for applicant.

* * * * *

(c) * * *

(5) A PHA determination not to grant approval of the tenancy.

* * * * *

Sec. 982.555 [Amended]

80. In Sec. 982.555, amend paragraph (b)(4) by removing the phrase

``certificate or''.

81. Revise Sec. 982.602 to read as follows:

Sec. 982.602 SRO: Who may reside in an SRO?

A single person may reside in an SRO housing unit.

82. Revise Sec. 982.604 to read as follows:

Sec. 982.604 SRO: Voucher housing assistance payment.

(a) For a person residing in SRO housing, the payment standard is

75 percent of the zero-bedroom payment standard amount on the PHA

payment standard schedule. For a person residing in SRO housing in an

exception area, the payment standard is 75 percent of the HUD-approved

zero-bedroom exception payment standard amount.

(b) The utility allowance for an assisted person residing in SRO

housing is 75 percent of the zero bedroom utility allowance.

83. In Sec. 982.608 revise the section heading and paragraph (a) to

read as follows:

Sec. 982.608 Congregate housing: Voucher housing assistance payment.

(a) Unless there is a live-in aide:

(1) For a family residing in congregate housing, the payment

standard is the zero-bedroom payment standard amount on the PHA payment

standard schedule. For a family residing in congregate housing in an

exception area, the payment standard is the HUD-approved zero-bedroom

exception payment standard amount.

(2) However, if there are two or more rooms in the unit (not

including kitchen or sanitary facilities), the payment standard for a

family residing in

[[Page 26651]]

congregate housing is the one-bedroom payment standard amount.

* * * * *

84. Amend Sec. 982.613 as follows:

a. Revise the section heading as set forth below;

b. In paragraph (b)(2), revise the reference to ``Sec. 982.503'' to

read ``Sec. 982.507''; and

Revise paragraph (c) as set forth below.

Sec. 982.613 Group home: Rent and voucher housing assistance payment.

* * * * *

(c) Payment standard. (1) Family unit size. (i) Unless there is a

live-in aide, the family unit size is zero or one bedroom.

(ii) If there is a live-in aide, the live-in aide must be counted

in determining the family unit size.

(2) The payment standard for a person who resides in a group home

is the lower of:

(i) The payment standard amount on the PHA payment standard

schedule for the family unit size; or (ii) The pro-rata portion of the

payment standard amount on the PHA payment standard schedule for the

group home size.

(iii) If there is a live-in aide, the live-in aide must be counted

in determining the family unit size.

* * * * *

85. Amend Sec. 982.617 as follows:

a. Revise the section heading to read as set forth below;

b. In paragraph (b)(2) revise the reference to ``Sec. 982.503'' to

read ``Sec. 982.507''; and

c. Revise paragraph (c) to read as follows:

Sec. 982.617 Shared housing: Rent and voucher housing assistance

payment.

* * * * *

(c) Payment standard. The payment standard for a family that

resides in a shared housing is the lower of:

(1) The payment standard amount on the PHA payment standard

schedule for the family unit size; or

(2) The pro-rata portion of the payment standard amount on the PHA

payment standard schedule for the size of the shared housing unit.

* * * * *

Sec. 982.619 [Amended]

86. Amend Sec. 982.619 as follows:

a. In paragraph (b)(1), revise the reference to ``Sec. 982.503'' to

read ``Sec. 982.507''; and

b. In paragraph (b)(4), revise the reference to ``Sec. 982.509'' to

read ``Sec. 982.519'' and revise the reference to ``Sec. 982.510'' to

read ``Sec. 982.520''.

87. Revise Sec. 982.623 to read as follows:

Sec. 982.623 Manufactured home space rental: Housing assistance

payment.

(a) Fair market rent. The FMR for a manufactured home space is

determined in accordance with Sec. 888.113(e) of this title.

(b) Housing assistance payment: For certificate tenancy. (1) During

the term of a certificate tenancy (entered prior to the merger date),

the amount of the monthly housing assistance payment equals the lesser

of the amounts specified in paragraphs (b)(1)(i) or (b)(1)(ii) of this

section:

(i) Manufactured home space cost minus the total tenant payment.

(ii) The rent to owner for the manufactured home space.

(2) ``Manufactured home space cost'' means the sum of:

(i) The amortization cost,

(ii) The utility allowance, and

(iii) The rent to owner for the manufactured home space.

(c) Housing assistance payment for voucher tenancy. (1) There is a

separate FMR for a family renting a manufactured home space. The FMR

for rental of a manufactured home space is 30 percent of the published

FMR for a two-bedroom unit (see FMR notices published by HUD pursuant

to part 888 of this title).

(2) The payment standard shall be determined in accordance with

Sec. 982.505.

(3) The PHA shall pay a monthly housing assistance payment on

behalf of the family that is equal to the lower of:

(i) The payment standard minus the total tenant payment; or

(ii) The rent paid for rental of the real property on which the

manufactured home owned by the family is located (``space rent'') minus

the total tenant payment.

(4) The space rent is the sum of the following as determined by the

PHA:

(i) Rent to owner for the manufactured home space;

(ii) Owner maintenance and management charges for the space;

(iii) The utility allowance for tenant-paid utilities.

Dated: April 21, 1999

Andrew Cuomo,

Secretary.

[FR Doc. 99-12082 Filed 5-13-99; 8:45 am]

BILLING CODE 4210-32-P