Uniform Physical Condition Standards and Physical Inspection Requirements for Certain HUD Housing

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Text

Part III

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Department of Housing and Urban Development

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24 CFR Parts 5, 207, et al.

Uniform Physical Condition Standards and Physical Inspection

Requirements for Certain HUD Housing; Proposed Rule

Proposed Rules

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 207, 266, 880, 881, 882, 883, 884, 886, 891, 965,

and 983

[Docket No. FR-4280-P-01]

RIN 2501-AC45

Uniform Physical Condition Standards and Physical Inspection

Requirements for Certain HUD Housing

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish for housing assisted under

certain HUD programs uniform physical condition standards. These

standards are intended to ensure that such housing is decent, safe,

sanitary and in good repair. HUD's Section 8 housing, Public Housing,

HUD-insured multifamily housing, and other HUD assisted housing

(collectively, HUD housing) currently must meet certain standards and

must undergo an annual physical inspection to determine that the

housing qualifies as decent, safe, sanitary and in good repair. The

description or components of what constitutes acceptable physical

housing quality and the physical inspection procedures by which the

standards are determined to be met, however, vary from HUD program to

HUD program. To the extent possible, HUD believes that housing assisted

under its programs should be subject to uniform physical standards,

regardless of the source of the subsidy or assistance. Additionally, to

the extent feasible, HUD believes that the physical inspection

procedures by which the standards will be assessed should be uniform in

the covered programs

, vary from HUD program to

HUD program. To the extent possible, HUD believes that housing assisted

under its programs should be subject to uniform physical standards,

regardless of the source of the subsidy or assistance. Additionally, to

the extent feasible, HUD believes that the physical inspection

procedures by which the standards will be assessed should be uniform in

the covered programs. Therefore, this rule proposes that certain HUD

housing, as defined in this rule, must meet uniform physical condition

standards to ensure that the HUD housing is decent, safe, sanitary and

in good repair. This rule also generally describes new physical

inspection procedures that will allow HUD to determine conformity with

such standards. This rule would not change the requirement for annual

physical inspections currently found in the covered HUD programs.

Additionally, this rule would not affect the existing requirements in

each covered HUD program regarding which entity is responsible for

conducting the physical inspection of the program.

DATES: Comments must be submitted on or before July 30, 1998.

ADDRESSES: Interested persons are invited to submit comments regarding

this proposed rule to the Regulations Division, Office of General

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

Seventh Street, SW, Washington, DC 20410. Communications should refer

to the above docket number and title. Facsimile (FAX) comments are not

acceptable. A copy of each communication submitted will be available

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

weekdays at the above address.

Office of General

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

Seventh Street, SW, Washington, DC 20410. Communications should refer

to the above docket number and title. Facsimile (FAX) comments are not

acceptable. A copy of each communication submitted will be available

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

weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: For further information, contact the

Real Estate Assessment Center, Attention: William Thorson, Department

of Housing and Urban Development, 4900 L'Enfant Plaza East, SW, Room

8204, Washington, DC 20410; telephone (202) 755-0102. Persons with

hearing and speech impairments may contact the Center via TTY by

calling the Federal Information Relay Service at (800) 877-8399.

SUPPLEMENTARY INFORMATION:

I. Background--Statutory Directive To Provide Decent, Safe, and

Sanitary Housing

``The Declaration of Policy'' in section 2 of the United States

Housing Act of 1937 (42 U.S.C. 1437) (1937 Act) provides in relevant

part as follows:

It is the policy of the United States to promote the general

welfare of the Nation by employing its funds and credit, as provided

in this Act, to assist the several States and their political

subdivisions to remedy the unsafe and unsanitary housing conditions

and the acute shortage of decent, safe, and sanitary dwellings for

families of lower income * * *. (Emphasis added)

More recently, in the Cranston-Gonzalez National Affordable Housing

Act (Pub. L. 101-625, approved November 28, 1990; 42 U.S.C. 12701 et

seq.), the Congress reaffirmed the nation's housing policy. Section 102

of this statute (42 U.S.C. 12702) states in relevant part as follows:

The objective of national housing policy shall be to reaffirm

the long-established national commitment to decent, safe, and

sanitary housing for every American by strengthening a nationwide

partnership of public and private institutions.

S.C. 12701 et

seq.), the Congress reaffirmed the nation's housing policy. Section 102

of this statute (42 U.S.C. 12702) states in relevant part as follows:

The objective of national housing policy shall be to reaffirm

the long-established national commitment to decent, safe, and

sanitary housing for every American by strengthening a nationwide

partnership of public and private institutions.

The housing standard set by the Congress as the standard for all

American families is one of decent, safe, and sanitary housing. As the

statutes cited above reflect, this is also the standard by which HUD

housing should be evaluated.

II. Current Requirements Governing Physical Condition and Property

Maintenance Standards for HUD Housing

The majority of HUD programs currently contain requirements

governing the physical condition and maintenance of the housing. In

discussing the various housing that is proposed to be covered by this

rule (Section 8 project-based housing, Public Housing, HUD-insured

multifamily housing, and other HUD-assisted housing) the term ``HUD

housing'' is used for purposes of brevity.

Current Standards Applicable to Section 8 Housing

HUD's Section 8 project-based assistance is provided under the

Section 8 New Construction, Substantial Rehabilitation, Loan Management

Set-Aside, Property Disposition, Moderate Rehabilitation (including the

Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) program

for homeless individuals), and project-based Certificate programs. The

statutory physical condition standard for all Section 8 housing is

``decent, safe, and sanitary.'' Specifically, section 2 of the 1937

Act, as noted above, declares the statutory policy to provide

assistance for low-income individuals in ``decent, safe, and sanitary''

dwellings in the Section 8 (and Public Housing) program

for homeless individuals), and project-based Certificate programs. The

statutory physical condition standard for all Section 8 housing is

``decent, safe, and sanitary.'' Specifically, section 2 of the 1937

Act, as noted above, declares the statutory policy to provide

assistance for low-income individuals in ``decent, safe, and sanitary''

dwellings in the Section 8 (and Public Housing) program. Additionally,

section 3(b)(1) of the 1937 Act defines the term ``low-income

housing,'' which term includes Public Housing and housing receiving

Section 8 assistance, as ``decent, safe, and sanitary dwellings

assisted under this Act.''

The various forms of Section 8 Housing Assistance Payments (HAP)

Contracts covering all of these Section 8 programs contain broad

references to the quality or the physical condition of the housing that

must be maintained, language that is similar to the 1937 Act language.

While there is some minor variation in language, these contracts

generally require owners to maintain project units and related premises

in decent, safe, and sanitary condition.

The program regulations for each of the Section 8 programs provide

the substantive physical condition standards for each program, but they

differ somewhat from one another. For the Section 8 New Construction

and Substantial Rehabilitation programs, the regulations provide that

housing is decent, safe, and sanitary if it is maintained in a

condition substantially the same as at the time of acceptance (see 24

CFR 880.201 and 881.201). Section 8 New Construction projects

ntive physical condition standards for each program, but they

differ somewhat from one another. For the Section 8 New Construction

and Substantial Rehabilitation programs, the regulations provide that

housing is decent, safe, and sanitary if it is maintained in a

condition substantially the same as at the time of acceptance (see 24

CFR 880.201 and 881.201). Section 8 New Construction projects

also must comply with HUD minimum property standards; 1

applicable State and local laws, codes, ordinances, and regulations;

HUD requirements pertaining to noise abatement and control; and HUD

requirements pursuant to section 209 of the Housing and Community

Development Act of 1974 for ``projects for the elderly or handicapped''

(24 CFR 880.207). Section 8 Substantial Rehabilitation projects must

comply with HUD minimum design standards for rehabilitation for

residential properties; 2 applicable State and local laws,

codes, ordinances, and regulations; HUD noise abatement and control

requirements; and HUD section 209 requirements (24 CFR 881.207). The

requirements in Secs. 880.207 and 881.207 generally relate to design,

construction, and rehabilitation standards, rather than to physical

maintenance requirements. This proposed rule only addresses physical

condition after completion of construction and/or rehabilitation. This

rule does not propose to revise the design, construction, and

rehabilitation standards currently found in HUD regulations.

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on, and rehabilitation standards, rather than to physical

maintenance requirements. This proposed rule only addresses physical

condition after completion of construction and/or rehabilitation. This

rule does not propose to revise the design, construction, and

rehabilitation standards currently found in HUD regulations.

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\1\ The minimum property standards pertain to HUD requirements

for site design, building design, materials, and construction of

projects. An owner has the obligation to maintain a project

constructed in accordance with the minimum property standards in a

condition ``substantially the same as at the time of [its]

acceptance'' (24 CFR 880.201).

\2\ The HUD minimum design standards contain the basic HUD

requirements for the rehabilitation of projects. An owner has the

obligation to maintain a project rehabilitated in accordance with

the minimum design standards in a condition ``substantially the same

as at the time of [its] acceptance'' (Sec. 881.201).

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Additionally, this rule does not propose to revise the housing

quality standards (HQS) applicable to the Section 8 Certificates and

Vouchers program. As discussed later in this preamble, HQS will remain

applicable to the Section 8 Certificates and Vouchers Program.

Current Standards Applicable to Public Housing

HUD Public Housing is also subject to a standard of decent, safe,

and sanitary. Section 3(b)(1) of the 1937 Act provides in relevant part

as follows:

The term low-income housing means decent, safe, and sanitary

dwellings assisted under this Act. The term ``public housing'' means

low-income housing, and all necessary appurtenances thereto,

assisted under this Act other than under section 8.

HUD Public Housing is also subject to a standard of decent, safe,

and sanitary. Section 3(b)(1) of the 1937 Act provides in relevant part

as follows:

The term low-income housing means decent, safe, and sanitary

dwellings assisted under this Act. The term ``public housing'' means

low-income housing, and all necessary appurtenances thereto,

assisted under this Act other than under section 8.

Section 14 of the 1937 Act, which addresses Public Housing

modernization, also emphasizes a decent, safe, and sanitary housing

standard. Section 14(j)(2) provides, in relevant part, that ``the

Secretary shall issue rules and regulations establishing standards

which provide for decent, safe, and sanitary living conditions in low-

rent public housing projects * * *.'' In addition to the references to

the decent, safe, and sanitary standard, other sections of the 1937 Act

refer to the ``obligation'' of a public housing agency (PHA) to inspect

and maintain the Public Housing units in the PHA's projects. For

example, in connection with the Public Housing Management Assessment

Program (PHMAP), established by section 6(j) of the 1937 Act, section

6(j)(1)(G) requires the PHA to inspect the units to ascertain

``maintenance or modernization needs.''

The current regulatory provisions addressing the physical condition

of Public Housing projects are found in several sections of HUD's

regulations in Title IX of 24 CFR: Secs. 901.30 (of the PHMAP

regulations), 941.203 (of the Public Housing Development regulations),

965.704 (of the PHA-Owned or Leased Projects regulations), and 968.315

(of the Comprehensive Improvement Program Regulations). In the current

Public Housing Development regulations, Sec. 941.203 (Design and

construction standards) provides that Public Housing projects must

comply with a national building code; applicable State and local laws,

codes, ordinances, and regulations; and other Federal requirements,

including fire safety requirements and HUD minimum property standards

nsive Improvement Program Regulations). In the current

Public Housing Development regulations, Sec. 941.203 (Design and

construction standards) provides that Public Housing projects must

comply with a national building code; applicable State and local laws,

codes, ordinances, and regulations; and other Federal requirements,

including fire safety requirements and HUD minimum property standards.

(HUD's minimum property standards are found in 24 CFR part 200, subpart

S, and remain applicable to Public Housing as design and construction

standards.)

As noted earlier in this preamble, Public Housing is not only

currently subject to a standard of ``decent, safe, and sanitary''

housing, there is also a statutory obligation on the PHA to inspect

Public Housing units (see section 6(j) of the 1937 Act). This

requirement is found in the current Public Housing Management

Assessment Program (PHMAP) regulations (see 24 CFR 901.30). Section

901.30, captioned ``Indicator #5, Annual Inspection of Units and

Systems,'' provides in relevant part that: ``All occupied units are

required to be inspected.'' This proposed rule would not change the

current requirement that PHAs inspect all of their units annually to

determine maintenance and modernization needs. However, through a

separate rulemaking, HUD is proposing new assessment regulations for

Public Housing under which PHAs would be required to maintain their

units in accordance with the same decent, safe, and sanitary standard

proposed in part 5, subpart G of this rule.

Current Standards Applicable to Insured Multifamily Housing

units annually to

determine maintenance and modernization needs. However, through a

separate rulemaking, HUD is proposing new assessment regulations for

Public Housing under which PHAs would be required to maintain their

units in accordance with the same decent, safe, and sanitary standard

proposed in part 5, subpart G of this rule.

Current Standards Applicable to Insured Multifamily Housing

Generally, in HUD-insured multifamily housing, the mortgagors are

subject, by contract, to maintain the mortgaged premises,

accommodations, and the grounds appurtenant thereto, in good repair and

condition. Additionally, HUD's standard mortgage form requires the

mortgagor to keep the premises in good repair. Although existing FHA

regulations and supplementary materials (such as handbooks) do not

provide exact details on what is meant by ``good repair,'' the ``good

repair'' standard is very similar if not identical to the ``decent,

safe, and sanitary'' standard. For example, HUD Handbook 4350.1 REV-1,

Multifamily Asset Management and Project Servicing, provides that in

determining the level of management review HUD should perform on site,

it should review the mortgagee's annual physical inspection ``to

determine if the condition of the property is consistent with the

provision of ``decent, safe, and sanitary housing'' (emphasis added).

For HUD-owned projects, section 203 of the Housing and Community

Development Amendments of 1978 (12 U.S.C. 1701-z-11) provides that HUD

shall manage or dispose of HUD-owned projects and projects covered by a

HUD-held mortgage in a manner that will, in the least costly fashion

among reasonable available alternatives, address the goal of

maintaining existing housing stock in a ``decent, safe, and sanitary

condition,'' among other things.

Summary of Current Applicable Standards

ts of 1978 (12 U.S.C. 1701-z-11) provides that HUD

shall manage or dispose of HUD-owned projects and projects covered by a

HUD-held mortgage in a manner that will, in the least costly fashion

among reasonable available alternatives, address the goal of

maintaining existing housing stock in a ``decent, safe, and sanitary

condition,'' among other things.

Summary of Current Applicable Standards

While Section II of the preamble does not address all the various

HUD programs that contain housing physical condition standards and

physical inspection requirements, the section provides examples of the

similarities and differences in housing standards and inspection

requirements to which certain HUD subsidized, assisted, and/or insured

housing is currently subject under various HUD programs. These

standards are found throughout HUD regulations, and are also

supplemented by HUD handbooks, contracts, agreements, and other

documents. Although several sets of housing standards apply to HUD

housing, HUD finds it warranted, by the proper administration of its

duties, to apply a uniform set of physical condition standards to the

housing related to HUD's Section 8 (project-based assistance only),

Public Housing,

Section 202/811 Supportive Housing, and multifamily mortgage insurance

programs. (As described below, HUD's Section 8 Certificate and Voucher

Programs will continue to be subject to the existing housing quality

standards (HQS) set forth in HUD's regulations in 24 CFR part 982.)

However, in adopting uniform physical condition standards for HUD

housing, this proposed rule would not alter the statutory standard for

maintaining HUD housing. Instead, this proposed rule, by using the

statutory terminology, clearly acknowledges that the physical condition

of the housing that is to be met is one of ``decent, safe, and

sanitary.''

III. Proposed Uniform Physical Condition Standards

, in adopting uniform physical condition standards for HUD

housing, this proposed rule would not alter the statutory standard for

maintaining HUD housing. Instead, this proposed rule, by using the

statutory terminology, clearly acknowledges that the physical condition

of the housing that is to be met is one of ``decent, safe, and

sanitary.''

III. Proposed Uniform Physical Condition Standards

Through this rule, HUD proposes uniform physical condition

standards that will serve to determine whether certain HUD housing is

decent, safe, sanitary and in good repair. HUD also proposes that these

standards be evaluated through uniform physical inspection procedures.

These proposed standards and inspection process are intended to achieve

three significant objectives:

(1) Consistency in physical condition standards for HUD housing;

(2) Standardization of the inspection to be undertaken to determine

compliance with the standards; and

(3) Implementation of an electronically-based inspection system to

evaluate, rate and rank the physical condition of HUD housing

objectively.

HUD Programs Covered by the New Standards

The proposed new physical condition standards will apply to housing

assisted by HUD under the following programs (Section V of this

preamble discusses the specific regulatory parts and sections that are

proposed to be amended). In this rule, the various types of HUD housing

that are proposed to be subject to the new physical condition

standards, as set forth in paragraphs (1) through (3) below, are

collectively referred to as ``HUD housing.''

ly to housing

assisted by HUD under the following programs (Section V of this

preamble discusses the specific regulatory parts and sections that are

proposed to be amended). In this rule, the various types of HUD housing

that are proposed to be subject to the new physical condition

standards, as set forth in paragraphs (1) through (3) below, are

collectively referred to as ``HUD housing.''

1. Section 8 Project-Based and Other Assisted Housing

--Section 8 Project-Based Assistance, including the Section 8 New

Construction, Substantial Rehabilitation, Loan Management Set-Aside,

Property Disposition, Moderate Rehabilitation (including the Single

Room Occupancy program for homeless individuals), and project-based

Certificate programs;

--Section 202 Program of Supportive Housing for the Elderly;

--Section 811 Program of Supportive Housing for Persons with

Disabilities; and

--Section 202 Loan Program for Projects for the Elderly and Handicapped

(including 202/8 projects and 202/162 projects).

While this proposed rule covers Section 8 project-based assistance,

as described above, this proposed rule would not cover Section 8

tenant-based assistance (i.e., housing assisted by HUD's Section 8

Certificate and Vouchers Rental Assistance Program; see 24 CFR part

982). The housing quality standards (HQS) were originally established

by the Secretary for the purpose of Section 8 tenant-based housing

assistance. Unlike Section 8 project-based assistance, HUD is

continuously reviewing and approving new units into the Section 8

tenant-based assistance programs, and HUD has found that HQS is

appropriate for this purpose. As discussed earlier in this rule, HUD

believes that all of its programs should be subject to the same uniform

physical inspection requirements. HUD also believes that it would be

appropriate to require the Section 8 Certificate and Voucher (tenant-

based assistance) programs to be subject to the uniform standards

assistance programs, and HUD has found that HQS is

appropriate for this purpose. As discussed earlier in this rule, HUD

believes that all of its programs should be subject to the same uniform

physical inspection requirements. HUD also believes that it would be

appropriate to require the Section 8 Certificate and Voucher (tenant-

based assistance) programs to be subject to the uniform standards.

However, HUD is not proposing at this time to apply the new uniform

standards to such housing, but instead will consider doing so at a

later date.

2. FHA Multifamily Housing

The proposed standards also will apply to multifamily housing with

mortgages insured or held by HUD, or housing that is receiving

assistance from HUD, under the following authorities:

--Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 et

seq.) (Rental Housing Insurance);

--Section 213 of the NHA (Cooperative Housing Insurance);

--Section 220 of the NHA (Rehabilitation and Neighborhood Conservation

Housing Insurance);

--Section 221(d) (3) and (5) of the NHA (Housing for Moderate Income

and Displaced Families);

--Section 221(d)(4) of the NHA (Housing for Moderate Income and

Displaced Families);

--Section 231 of the NHA (Housing for Elderly Persons);

--Section 232 of the NHA (Mortgage Insurance for Nursing Homes,

Intermediate Care Facilities, Board and Care Homes);

--Section 234(d) of the NHA (Rental) (Mortgage Insurance for

Condominiums);

--Section 236 of the NHA (Rental and Cooperative Housing for Lower

Income Families);

--Section 241 of the NHA (Supplemental Loans for Multifamily Projects);

and

--Section 542(c) of the Housing and Community Development Act of 1992

(12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing Program).

ard and Care Homes);

--Section 234(d) of the NHA (Rental) (Mortgage Insurance for

Condominiums);

--Section 236 of the NHA (Rental and Cooperative Housing for Lower

Income Families);

--Section 241 of the NHA (Supplemental Loans for Multifamily Projects);

and

--Section 542(c) of the Housing and Community Development Act of 1992

(12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing Program).

The proposed standards would not apply to housing insured under

HUD's single family mortgage insurance programs. Section 5.701(b)(1) of

this proposed rule lists those sections of the National Housing Act

that specifically give the Secretary authority to insure mortgages.

Sections of the NHA that give the Secretary authority to insure

mortgages ``pursuant to'' another section of the NHA are not listed in

the coverage of Sec. 5.701 of this proposed rule, because HUD

ultimately has insured the mortgages under one of the listed statutory

sections.

3. Public Housing

--Housing receiving assistance under sections 5, 9 or 14 of the U.S.

Housing Act of 1937.

Through a separate rulemaking, HUD is proposing new assessment

regulations for Public Housing under which PHAs would be required to

maintain their units in accordance with the same decent, safe, and

sanitary standard proposed in part 5, subpart G of this rule. Under the

HUD 2020 Management Reform Plan, published in the Federal Register on

August 12, 1997 (62 FR 43204), HUD is seeking new tools to strengthen

its abilities to ensure the soundness and physical condition of Public

Housing. Consistent with HUD's responsibilities under the new Real

Estate Assessment Center, HUD intends to conduct independent

inspections of a statistically valid number of Public Housing units for

each PHA, in order to confirm compliance with the new uniform physical

condition standards

seeking new tools to strengthen

its abilities to ensure the soundness and physical condition of Public

Housing. Consistent with HUD's responsibilities under the new Real

Estate Assessment Center, HUD intends to conduct independent

inspections of a statistically valid number of Public Housing units for

each PHA, in order to confirm compliance with the new uniform physical

condition standards.

Although HUD encourages PHAs to use its inspection software during

the course of their own annual inspections in order to promote

uniformity in inspections, HUD is not proposing at this time to require

PHAs to use HUD's inspection software for two reasons. First, PHAs may

have existing software for operations (e.g., work order systems) that

may be incompatible with the HUD software. It would be unreasonable and

uneconomical to require PHAs to change their existing systems. Second,

PHAs may, as a part of their operating procedures, combine other

inspections (e.g., housekeeping, preventative

maintenance) with their annual unit inspections. HUD believes that its

role, consistent with section 2 of the U.S. Housing Act of 1937 (42

U.S.C. 1437), is to prescribe broad standards, giving PHAs maximum

latitude as to how best to meet those standards consistent with

existing statutes, regulations, and their own operating procedures and

practices. HUD has no objection, however, if the PHA determines that

use of the HUD software for its own purposes is in its best interests.

Standards for Determining Housing That Is Decent, Safe, Sanitary and in

Good Repair

road standards, giving PHAs maximum

latitude as to how best to meet those standards consistent with

existing statutes, regulations, and their own operating procedures and

practices. HUD has no objection, however, if the PHA determines that

use of the HUD software for its own purposes is in its best interests.

Standards for Determining Housing That Is Decent, Safe, Sanitary and in

Good Repair

The uniform standards in this proposed rule would set parameters

under which the HUD housing must be maintained and will be evaluated.

These standards are designed to analyze, score, and rank the overall

and general physical condition of a project. This evaluation would not

focus on a single element, but would take into consideration

significant observable deficiencies and score compliance taken as a

whole. A single critical element with a major defect (for example, an

inoperable heating system), however, could have a significant impact on

a project's overall evaluation. The proposed standards emphasize health

and safety considerations as essential to housing that is decent, safe,

sanitary and in good repair.

The physical condition standards are intentionally broad and are

defined with terms such as in ``proper operating condition,''

``adequately functional,'' and ``free of health and safety hazards.''

Given the differences in construction and design of HUD housing, and

the different types of electrical and utility systems that an inspector

will encounter, the rule cannot define or describe proper operating

condition for every type of system. For example, an inspection of

whether an electrical heating system is operating properly might be

different from an inspection of whether an oil-based heating system is

operating properly. This would not mean, however, that these two

systems should be subject to a different physical condition standard.

The standard--proper operating condition--is the same for both types of

systems and is the same for all heating systems

whether an electrical heating system is operating properly might be

different from an inspection of whether an oil-based heating system is

operating properly. This would not mean, however, that these two

systems should be subject to a different physical condition standard.

The standard--proper operating condition--is the same for both types of

systems and is the same for all heating systems.

The uniform physical condition standards in this proposed rule do

not include design or configuration requirements for housing (e.g.,

these standards do not require that every unit have a kitchen). The

regulations for the individual housing programs will continue to

contain any such design or configuration requirements. The uniform

physical condition standards in this proposed rule are structured so

that regardless of the configuration of a particular project or unit

(for example, a shared kitchen versus private kitchens), the project or

unit would be inspected under the uniform standards. Similarly, the

proposed standards do not address occupancy requirements of a dwelling

unit, that is, the number of residents per unit. The proposed standards

are solely concerned with the physical condition of the housing and the

operational state of its various elements, to the extent relevant.

The proposed new standards address six major areas of the HUD

housing:

(1) Site;

(2) Building exterior;

(3) Building systems;

(4) Dwelling units;

(5) Common areas; and

a dwelling

unit, that is, the number of residents per unit. The proposed standards

are solely concerned with the physical condition of the housing and the

operational state of its various elements, to the extent relevant.

The proposed new standards address six major areas of the HUD

housing:

(1) Site;

(2) Building exterior;

(3) Building systems;

(4) Dwelling units;

(5) Common areas; and

(6) Health and safety.

Under this proposed rule, the major areas of the HUD housing and

their related elements are to be maintained in a manner that is decent,

safe, sanitary and in good repair. Intrinsic to all these areas are

health and safety considerations. However, there are other broad health

and safety concerns that HUD will evaluate at any time they are

observed. Since HUD places such a high priority on health and safety

concerns, this proposed rule identifies them separately.

1. Site. The site components, such as fencing and retaining walls,

grounds, lighting, mailboxes/project signs, parking lots/driveways,

play areas and equipment, refuse disposal, roads, storm drainage and

walkways must be free of health and safety hazards and be in good

repair. The site must not be subject to material adverse conditions,

such as abandoned vehicles, dangerous walks or steps, poor drainage,

septic tank back-ups, sewer hazards, excess accumulations of trash,

vermin or rodent infestation or fire hazards.

2. Building Exterior. Each building on the site must be

structurally sound, secure, habitable, and in good repair. Each

building's doors, fire escapes, foundations, lighting, roofs, walls,

and windows, where applicable, must be free of health and safety

hazards, operable, and in good repair.

3. Building Systems. Each building's domestic water, electrical

system, elevators, emergency power, fire protection, HVAC, and sanitary

system must be free of health and safety hazards, functionally

adequate, operable, and in good repair.

4. Dwelling Units

dations, lighting, roofs, walls,

and windows, where applicable, must be free of health and safety

hazards, operable, and in good repair.

3. Building Systems. Each building's domestic water, electrical

system, elevators, emergency power, fire protection, HVAC, and sanitary

system must be free of health and safety hazards, functionally

adequate, operable, and in good repair.

4. Dwelling Units. Each dwelling unit within a building must be

structurally sound, habitable, and in good repair. All areas and

aspects of the dwelling unit must be free of health and safety hazards.

The unit's bathroom, call-for-aid, ceiling, doors, electrical systems,

floors, hot water heater, HVAC, kitchen, lighting, outlets/switches,

patio/porch/balcony, smoke detectors, stairs, walls, and windows (where

applicable) must be free of health and safety hazards, functionally

adequate, operable, and in good repair. Where applicable, the dwelling

unit must have hot and cold running water, including an adequate source

of potable water (note for example that single room occupancy units may

not contain water facilities). If the dwelling unit includes its own

sanitary facility, it must be in proper operating condition, usable in

privacy, and adequate for personal hygiene and the disposal of human

waste. The dwelling unit must include at least one battery-operated or

hard-wired smoke detector, in proper working condition, on each level

of the unit. Properties that are subject to the specific requirements

of the Fire Administration Authorization Act must also comply with

those requirements.

5. Common Areas. The common areas must be structurally sound,

secure, and functionally adequate for the purposes intended. The

basement/garage/carport, restrooms, closets, utility, mechanical,

community rooms, day care, halls/corridors, stairs, kitchens, laundry

rooms, office, porch, patio, balcony, and trash collection areas, if

applicable, must be free of health and safety hazards, operable, and in

good repair

common areas must be structurally sound,

secure, and functionally adequate for the purposes intended. The

basement/garage/carport, restrooms, closets, utility, mechanical,

community rooms, day care, halls/corridors, stairs, kitchens, laundry

rooms, office, porch, patio, balcony, and trash collection areas, if

applicable, must be free of health and safety hazards, operable, and in

good repair. All common area ceilings, doors, floors, HVAC, lighting,

outlets/switches, smoke detectors, stairs, walls, and windows, to the

extent applicable, must be free of health and safety hazards, operable,

and in good repair. These standards for common areas would apply, to a

varying extent, to all HUD housing, but will be particularly relevant

to congregate housing, independent group homes/residences, and single

room occupancy units, in which the individual dwelling units (sleeping

areas) do not contain kitchen and/or bathroom facilities.

6. Health and Safety Considerations. All areas and components of

the housing must be free of health and safety hazards. As discussed in

the preceding section, the five other major inspectable areas contain

health and safety considerations that will be evaluated in the

applicable areas. In addition, there are broad health and safety

concerns by which HUD will evaluate the housing. These areas include,

but are not limited to, air quality, electrical hazards, elevators,

emergency/fire exits, flammable materials, garbage and debris, handrail

hazards, infestation, and lead-based

table areas contain

health and safety considerations that will be evaluated in the

applicable areas. In addition, there are broad health and safety

concerns by which HUD will evaluate the housing. These areas include,

but are not limited to, air quality, electrical hazards, elevators,

emergency/fire exits, flammable materials, garbage and debris, handrail

hazards, infestation, and lead-based

paint. For example, the buildings must have fire exits that are not

blocked and are accessible to all residents, and have hand rails that

are undamaged and have no other observable deficiencies. The housing

must have no evidence of infestation by rats, mice, or other vermin, or

of garbage and debris. The housing must have no evidence of electrical

hazards, natural hazards, or fire hazards. The dwelling units and

common areas must have proper ventilation and be free of mold, odor, or

other observable deficiencies. The housing must comply with all

requirements related to the evaluation and reduction of lead-based

paint hazards and have available proper certifications of such.

With regard to the evaluation and reduction of lead-based paint

hazards, HUD is developing consolidated final regulations to implement

sections 1012 and 1013 of the Residential Lead-Based Paint Hazard

Reduction Act of 1992, which is Title X of the Housing and Community

Development Act of 1992 (42 U.S.C 4851 et seq.). These final

regulations will be based upon a proposed rule published on June 7,

1996 (61 FR 29170), and will be codified in 24 CFR part 35.

No Preemption of State and Local Building and Maintenance Codes.

The new uniform physical condition standards in this rule would not

supersede or preempt State and local building and maintenance codes

with which HUD housing must comply. HUD housing must continue to adhere

to these codes.

IV. Proposed Uniform Physical Inspection Requirements

Frequency of Inspection

odified in 24 CFR part 35.

No Preemption of State and Local Building and Maintenance Codes.

The new uniform physical condition standards in this rule would not

supersede or preempt State and local building and maintenance codes

with which HUD housing must comply. HUD housing must continue to adhere

to these codes.

IV. Proposed Uniform Physical Inspection Requirements

Frequency of Inspection

To make a determination of whether the owner is providing HUD

housing that is decent, safe, sanitary and in good repair, this rule

proposes to continue the practice currently found in HUD programs of

requiring a physical inspection of each HUD housing structure (except

that Public Housing shall be inspected as described below). This

proposed rule would require such inspections annually, unless HUD

provides notice to the contrary. HUD housing is currently subject to an

annual inspection requirement; therefore, an annual inspection would

impose no new requirement.

The New Inspection Protocol

Along with the uniform physical condition standards proposed in

this rule, HUD intends to implement a new computer-driven physical

inspection protocol. The inspection would not have to be performed by

an engineer or architect, but may be performed by a person who is

generally familiar with real estate of the type to be inspected. Any

eligible individual who is trained and certified under HUD auspices to

use the new HUD computer program may conduct the inspection. The

inspector will complete the inspection using a hand-held computer that

uses the HUD software. The new HUD computer program would guide the

inspector through the inspection, prompting the necessary observations

to be made regarding the condition of the property. The computer

program is based on substantially objective observations, which will

tend to eliminate the uncertainty of subjective interpretation of the

physical condition standards

and-held computer that

uses the HUD software. The new HUD computer program would guide the

inspector through the inspection, prompting the necessary observations

to be made regarding the condition of the property. The computer

program is based on substantially objective observations, which will

tend to eliminate the uncertainty of subjective interpretation of the

physical condition standards. The results of the inspection will be

electronically transferred to HUD and will be processed and scored by

electronic means and recorded in a Central Integrated Data Repository.

Determining Whether HUD Housing Meets the New Physical Condition

Standards

The determination of whether the HUD housing meets the standard of

decent, safe, sanitary and in good repair would be based on a review of

observable deficiencies of the health and safety conditions, the site,

the building, the dwelling units, and the common areas of such housing.

The computer program will generate a score for these major areas and

their respective elements. The scores will allow HUD to rank the

housing according to physical condition as determined by the computer-

based inspection.

Inherent in such a scoring system is the weighting of factors that

make up the physical condition standards. For instance, health and

safety hazards are of utmost importance to HUD; therefore, these

factors, as well as other key components of the building (i.e., roof,

walls, heating) might be more heavily weighted in the scoring. Other

factors that are less crucial to health and safety, although still

related to housing that is decent, safe, sanitary and in good repair,

might receive a lower weight. For example, a faulty roof would

generally be weighed more heavily than a faulty sidewalk, because it

could generally have a greater impact on the residents' health and

safety. The evaluation system will create a composite score for HUD

housing by calculating the component scores on a weighted average

basis.

V. Regulatory Amendments

sanitary and in good repair,

might receive a lower weight. For example, a faulty roof would

generally be weighed more heavily than a faulty sidewalk, because it

could generally have a greater impact on the residents' health and

safety. The evaluation system will create a composite score for HUD

housing by calculating the component scores on a weighted average

basis.

V. Regulatory Amendments

New Subpart for Physical Condition Standards and Inspection

Requirements

This rule proposes to create a new subpart G in 24 CFR part 5. The

regulations in part 5 represent HUD's general program requirements, as

well as requirements that cut across one or more HUD programs. This new

subpart G would consist of three sections. Section 5.701 would provide

the lists of the types of HUD housing to which the uniform physical

condition standards and inspection requirements would apply. This

section also would describe the unique applicability of the proposed

requirements to the Public Housing program, as described above.

Section 5.703 would contain the physical condition standards for

HUD housing that is decent, safe, sanitary and in good repair. These

are the standards to which HUD housing must be maintained. Section

5.705 would simply provide that any entity responsible for conducting a

physical inspection of HUD housing must inspect such housing annually

(unless HUD provides notice to the contrary), in accordance with HUD-

prescribed physical inspection procedures. This rule would not affect

the existing requirements under each covered HUD program regarding

which entity is responsible for conducting the physical inspection. HUD

intends to provide more details with respect to the implementation of

its physical inspection system through notices and other guidance

materials.

Conforming Amendments in Program Regulations

ibed physical inspection procedures. This rule would not affect

the existing requirements under each covered HUD program regarding

which entity is responsible for conducting the physical inspection. HUD

intends to provide more details with respect to the implementation of

its physical inspection system through notices and other guidance

materials.

Conforming Amendments in Program Regulations

In accordance with the proposed physical condition standards and

inspection requirements, this rule also proposes to make several

conforming amendments to HUD's program regulations.

1. 24 CFR part 207; Multifamily Housing Mortgage Insurance. This

rule proposes to add a new Sec. 207.260, which will provide that for

FHA-insured multifamily properties, the mortgagor must maintain the

insured project in accordance with the physical condition standards in

the new subpart G of part 5. This section would also require the

mortgagee to inspect the project in accordance with the requirements in

subpart G of part 5. As described above, the requirements for the

mortgagor to maintain the property in a condition that is decent, safe,

sanitary and in good repair (and for the mortgagee to inspect the

property) are not new. This rule provides a clear set of physical

condition standards and inspection requirements to help ensure that

these

properties are maintained in accordance with such obligations.

2. 24 CFR part 266; Housing Finance Agency (HFA) Risk-Sharing. This

rule proposes to add a new Sec. 266.507 to provide that the mortgagor

must maintain the project in accordance with the new physical condition

standards in subpart G of part 5. This new section would apply the new

standards to all projects insured previously or in the future. This

rule also proposes to remove Sec. 266.505(b)(6) regarding the

maintenance requirements of the Regulatory Agreement between the HFA

and the mortgagor, since the maintenance requirements would be in the

new Sec. 266.507. This rule would also amend Sec

ition

standards in subpart G of part 5. This new section would apply the new

standards to all projects insured previously or in the future. This

rule also proposes to remove Sec. 266.505(b)(6) regarding the

maintenance requirements of the Regulatory Agreement between the HFA

and the mortgagor, since the maintenance requirements would be in the

new Sec. 266.507. This rule would also amend Sec. 266.510(a) to require

HFAs to perform their inspections in accordance with the inspection

requirements in subpart G of part 5.

3. 24 CFR part 880; Section 8 New Construction. This rule proposes

to amend Sec. 880.201 to revise the definition of the term ``Decent,

safe, and sanitary.'' This rule would provide that decent, safe, and

sanitary housing is housing that meets the requirements of subpart G of

part 5. This rule also proposes to remove paragraph (a) of Sec. 880.207

regarding HUD's minimum property standards, since compliance with the

new subpart G of part 5 would replace the continuing requirement to

comply with these standards.

4. 24 CFR part 881; Section 8 Substantial Rehabilitation. This rule

proposes to amend Sec. 881.201 to revise the definition of the term

``Decent, safe, and sanitary.'' This rule would provide that decent,

safe, and sanitary housing is housing that meets the requirements of

subpart G of part 5. This rule also proposes to remove paragraph (a) of

Sec. 881.207 regarding HUD's minimum design standards, since compliance

with the new subpart G of part 5 would replace the continuing

requirement to comply with these standards.

5. 24 CFR part 882; Section 8 (Project-Based) Moderate

Rehabilitation (including the Single Room Occupancy program for

homeless individuals). HUD recently amended its regulations in part 882

to remove the regulatory provisions on certificates. These provisions

are now in part 982

liance

with the new subpart G of part 5 would replace the continuing

requirement to comply with these standards.

5. 24 CFR part 882; Section 8 (Project-Based) Moderate

Rehabilitation (including the Single Room Occupancy program for

homeless individuals). HUD recently amended its regulations in part 882

to remove the regulatory provisions on certificates. These provisions

are now in part 982. (Please see the Section 8 Certificate and Voucher

Programs Conforming Rule, published in the Federal Register on April

30, 1998, 63 FR 23826.) The only regulatory provisions remaining in

part 882 are for two Section 8 project-based programs--Moderate

Rehabilitation and Single Room Occupancy for homeless individuals.

This rule proposes to amend part 882 further to recognize the new

uniform physical condition standards. This rule would amend

Sec. 882.102 to revise the definition of the term ``Decent, safe, and

sanitary.'' This rule would provide that decent, safe, and sanitary

housing is housing that meets the requirements of subpart G of part 5.

This rule would also remove the definition of ``Housing Quality

Standards'' from Sec. 882.102, since those standards would be replaced

by the new uniform physical condition standards in this proposed rule.

This rule would then amend Sec. 882.404 by replacing the Housing

Quality Standards with references to the new physical condition

standards in subpart G of part 5. This rule would retain, however, the

lead-based paint requirements that are otherwise embedded in the

Housing Quality Standards. This rule would not affect the applicability

of HUD's lead-based paint requirements (although please see the

reference above to the separate regulations that are under development

for lead-based paint). Similarly, this rule would also amend

Sec. 882.803(b) for the SRO program by replacing references to the

Housing Quality Standards with references to Sec. 882.404.

6. 24 CFR part 883; Section 8 State Housing Agencies. This rule

proposes to amend Sec

-based paint requirements (although please see the

reference above to the separate regulations that are under development

for lead-based paint). Similarly, this rule would also amend

Sec. 882.803(b) for the SRO program by replacing references to the

Housing Quality Standards with references to Sec. 882.404.

6. 24 CFR part 883; Section 8 State Housing Agencies. This rule

proposes to amend Sec. 883.302 to add a definition of the term

``Decent, safe, and sanitary.'' This rule would provide that decent,

safe, and sanitary housing is housing that meets the requirements of

subpart G of part 5. This rule also proposes to remove the definition

of ``MPS (Minimum Property Standards)'' in Sec. 883.302, and paragraphs

(a)(1) and (b)(1) of Sec. 883.310 regarding HUD's minimum property and

design standards, since compliance with the new subpart G of part 5

would replace the continuing requirement to comply with these

standards.

7. 24 CFR part 884; Section 8 New Construction Set-Aside for Rural

Rental Housing. This rule proposes to amend Sec. 884.102 to revise the

definition of the term ``Decent, safe, and sanitary.'' This rule would

provide that decent, safe, and sanitary housing is housing that meets

the requirements of subpart G of part 5. This rule also proposes to

remove the definition of ``Minimum property standards'' in

Sec. 884.102, and paragraph (b)(1) of Sec. 884.110 regarding HUD's

minimum property standards, since compliance with the new subpart G of

part 5 would replace the continuing requirement to comply with those

standards.

8. 24 CFR part 886; Section 8 Special Allocations (Loan Management

Set-Aside (LMSA) and Property Disposition (PD)). This rule proposes to

amend Secs. 886.102 (LMSA) and 886.302 (PD) to revise the definition of

the term ``Decent, safe, and sanitary.'' This rule would provide that

decent, safe, and sanitary housing is housing that meets the

requirements of subpart G of part 5. This rule also would amend

Secs

886; Section 8 Special Allocations (Loan Management

Set-Aside (LMSA) and Property Disposition (PD)). This rule proposes to

amend Secs. 886.102 (LMSA) and 886.302 (PD) to revise the definition of

the term ``Decent, safe, and sanitary.'' This rule would provide that

decent, safe, and sanitary housing is housing that meets the

requirements of subpart G of part 5. This rule also would amend

Secs. 886.113 (LMSA) and 886.307 (PD) by replacing the Housing Quality

Standards with references to the new physical condition standards in

subpart G of part 5. This rule would retain, however, the specific

occupancy requirements (i.e., the number of tenants per dwelling unit);

such requirements are not addressed by the new uniform physical

condition standards. This rule also would retain the lead-based paint

requirements that are otherwise embedded in the Housing Quality

Standards. This rule would not affect the applicability of HUD's lead-

based paint requirements (although please see the reference above to

the separate regulations that are under development for lead-based

paint).

9. 24 CFR part 891; Supportive Housing for the Elderly and Persons

with Disabilities. This rule would add a new Sec. 891.180 to provide

that housing assisted under these supportive housing programs must be

maintained and inspected in accordance with the proposed physical

condition standards and inspection requirements in subpart G of part 5.

10. 24 CFR part 965; PHA-Owned or Leased Projects--General

Provisions. This rule proposes to add a new subpart F (consisting of

Sec. 965.601) to part 965. Section 965.601 would require that housing

that is owned or leased by a PHA must be maintained in accordance with

the new uniform physical condition standards

physical

condition standards and inspection requirements in subpart G of part 5.

10. 24 CFR part 965; PHA-Owned or Leased Projects--General

Provisions. This rule proposes to add a new subpart F (consisting of

Sec. 965.601) to part 965. Section 965.601 would require that housing

that is owned or leased by a PHA must be maintained in accordance with

the new uniform physical condition standards. Section 965.601 would

also provide that for each PHA, HUD intends to perform independent

inspections to confirm that Public Housing is being maintained in

accordance with the new uniform physical condition standards using the

proposed new inspection system, based upon a statistically valid sample

of Public Housing units for each PHA.

11. 24 CFR part 983; Section 8 Project-Based Certificate Program.

This rule proposes to amend Sec. 983.5 by replacing the Housing Quality

Standards with references to the new physical condition standards in

subpart G of part 5. This rule would retain, however, the specific

occupancy requirements, since these requirements are not addressed by

the new uniform physical condition standards. This rule also would

retain the lead-based paint requirements that are otherwise embedded in

the Housing Quality Standards. This rule would not affect the

applicability of HUD's lead-based paint requirements (although please

see the reference above to the

separate regulations that are under development for lead-based paint).

VI. Justification for 30-Day Comment Period

al condition standards. This rule also would

retain the lead-based paint requirements that are otherwise embedded in

the Housing Quality Standards. This rule would not affect the

applicability of HUD's lead-based paint requirements (although please

see the reference above to the

separate regulations that are under development for lead-based paint).

VI. Justification for 30-Day Comment Period

In general, it is HUD's policy that notices of proposed rulemaking

are to afford the public not less than 60 days for submission of

comments, in accordance with its regulations on rulemaking in 24 CFR

part 10. However, HUD has determined that there is good cause to reduce

the public comment period for this proposed rule to 30 days. As

discussed in more detail earlier in this preamble, the announcement,

through this rule, of HUD's proposal to establish a uniform set of

physical condition standards and to establish a uniform inspection

protocol has been developed with the participation of HUD's program

participants, industry leaders, and experts in the real estate

inspection industries. As also discussed in the preamble, in adopting

uniform physical condition standards for HUD housing, this proposed

rule would not alter the statutory standard for the maintenance of HUD

housing, nor the existing requirement to conduct property inspection.

HUD anticipates that making these standards uniform and consistent will

ease the administrative burden for participants in the covered HUD

programs, and therefore there is a benefit to making this standard

effective at the earliest date possible. Given these reasons, HUD has

determined that the 30-day comment period for this proposed rule should

provide sufficient notice and opportunity for interested entities to

comment. In order to provide the fullest and most expedient access to

the provisions of this proposed rule, HUD will make it available on the

HUD Home Page on the World Wide Web at http://www.hud.gov, on the date

of publication in the Federal Register

determined that the 30-day comment period for this proposed rule should

provide sufficient notice and opportunity for interested entities to

comment. In order to provide the fullest and most expedient access to

the provisions of this proposed rule, HUD will make it available on the

HUD Home Page on the World Wide Web at http://www.hud.gov, on the date

of publication in the Federal Register. HUD will also directly notify

entities that have expressed a significant interest to HUD by sending

such entities a copy of this proposed rule.

VII. Findings and Certifications

Executive Order 12866

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

rule under Executive Order 12866, Regulatory Planning and Review,

issued by the President on September 30, 1993. OMB determined that this

proposed rule is a ``significant regulatory action,'' as defined in

section 3(f) of the Order (although not economically significant, as

provided in section 3(f)(1) of the Order). Any changes made in this

proposed rule subsequent to its submission to OMB are identified in the

docket file, which 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.

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.

Regulatory Flexibility Act

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.

Regulatory Flexibility Act

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

U.S.C. 605(b)), has reviewed this proposed rule before publication and

by approving it certifies that this proposed rule is not anticipated to

have a significant economic impact on a substantial number of small

entities. All HUD housing is currently subject to physical condition

standards and a physical inspection requirement. As discussed in the

preamble to this proposed rule, there are statutory directives to

maintain HUD housing in a condition that is decent, safe, and sanitary.

Accordingly, this proposed rule does not alter that requirement, nor

does the proposed rule shift responsibility with respect to who

conducts the physical inspection of the property. The entities and

individuals currently responsible for the inspection of HUD subsidized

properties would remain responsible. The proposed rule, however,

provides for uniform physical inspection standards for the majority of

HUD programs. These standards would not be significantly different from

those standards to which HUD housing is currently subject. The existing

applicable standards are similar but there are some variations from HUD

program to program. HUD anticipates that making these standards uniform

and consistent for the HUD programs covered by this rule will ease the

administrative burden for participants in the covered HUD programs,

including and particularly small entities

hose standards to which HUD housing is currently subject. The existing

applicable standards are similar but there are some variations from HUD

program to program. HUD anticipates that making these standards uniform

and consistent for the HUD programs covered by this rule will ease the

administrative burden for participants in the covered HUD programs,

including and particularly small entities. As with the implementation

of any new or modified program requirement, HUD intends to provide

guidance to the covered entities, particularly small entities, to

assist them in understanding the changes being made.

Notwithstanding HUD's determination that this proposed rule would

not have a significant economic impact on small entities, HUD

specifically invites comments regarding alternatives to this proposed

rule that would meet HUD's objectives as described in this preamble.

Executive Order 12612, Federalism

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

of Executive Order 12612, Federalism, has determined that the policies

contained in this proposed rule would not have substantial direct

effects on States or their political subdivisions, on the relationship

between the Federal Government and the States, or on the distribution

of power and responsibilities among the various levels of government.

This proposed rule would provide a uniform set of physical condition

standards and physical inspection requirements for HUD housing, which

would make HUD's requirements clearer and more objective. As a result,

the proposed rule is not subject to review under the Order.

Unfunded Mandates Reform Act

s, or on the distribution

of power and responsibilities among the various levels of government.

This proposed rule would provide a uniform set of physical condition

standards and physical inspection requirements for HUD housing, which

would make HUD's requirements clearer and more objective. As a result,

the proposed rule is not subject to review under the Order.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-

4; approved March 22, 1995) (UMRA) establishes requirements for Federal

agencies to assess the effects of their regulatory actions on State,

local, and tribal governments, and the private sector. This proposed

rule would not impose any Federal mandates on any State, local, or

tribal governments, or on the private sector, within the meaning of the

UMRA.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance numbers for the programs

that would be affected by this proposed rule are:

14.126--Mortgage Insurance--Cooperative Projects (Section 213)

14.129--Mortgage Insurance--Nursing Homes, Intermediate Care

Facilities, Board and Care Homes and Assisted Living Facilities

(Section 232)

14.134--Mortgage Insurance--Rental Housing (Section 207)

14.135--Mortgage Insurance--Rental and Cooperative Housing for Moderate

Income Families and Elderly, Market Rate Interest (Sections 221(d) (3)

and (4))

14.138--Mortgage Insurance--Rental Housing for Elderly (Section 231)

14.139--Mortgage Insurance--Rental Housing in Urban Areas (Section 220

Multifamily)

14.157--Supportive Housing for the Elderly (Section 202)

14.181--Supportive Housing for Persons with Disabilities (Section 811)

14.188--Housing Finance Agency (HFA) Risk Sharing Pilot Program

(Section 542(c))

14.856--Lower Income Housing Assistance Program--Section 8 Moderate

Rehabilitation

List of Subjects

24 CFR Part 5

gage Insurance--Rental Housing in Urban Areas (Section 220

Multifamily)

14.157--Supportive Housing for the Elderly (Section 202)

14.181--Supportive Housing for Persons with Disabilities (Section 811)

14.188--Housing Finance Agency (HFA) Risk Sharing Pilot Program

(Section 542(c))

14.856--Lower Income Housing Assistance Program--Section 8 Moderate

Rehabilitation

List of Subjects

24 CFR Part 5

Administrative practice and procedure, Aged, Claims, Drug abuse,

Drug traffic control, Grant programs--housing and community

development, Grant programs--Indians, Individuals with disabilities,

Loan programs--housing and community development, Low- and moderate-

income housing, Mortgage insurance, Pets, Public housing, Rent

subsidies, Reporting and recordkeeping requirements.

24 CFR Part 207

Manufactured homes, Mortgage insurance, Reporting and recordkeeping

requirements, Solar energy.

24 CFR Part 266

Aged, Fair housing, Intergovernmental relations, Mortgage

insurance, Low and moderate income housing, Reporting and recordkeeping

requirements.

24 CFR Part 880

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

Reporting and recordkeeping requirements.

24 CFR Part 881

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

Reporting and recordkeeping requirements.

24 CFR Part 882

Grant programs--housing and community development, Homeless, Lead

poisoning, Manufactured homes, Rent subsidies, Reporting and

recordkeeping requirements.

24 CFR Part 883

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

Reporting and recordkeeping requirements.

24 CFR Part 884

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

Reporting and recordkeeping requirements, Rural areas.

24 CFR Part 886

Grant programs--housing and community development, Lead poisoning,

Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Part 891

subpart G is added to part 5 to read as follows:

Subpart G--Physical Condition Standards and Inspection Requirements

Sec.

5.701 Applicability.

5.703 Physical condition standards for HUD housing that is decent,

safe, sanitary and in good repair (DSS/GR).

5.705 Uniform physical inspection requirements.

Subpart G--Physical Condition Standards and Inspection Requirements

Sec. 5.701 Applicability.

(a) This subpart applies to housing assisted by HUD under the

following programs:

(1) All Section 8 project-based assistance. ``Project-based

assistance'' means Section 8 assistance that is attached to the

structure (see Sec. 982.1(b)(1) regarding the distinction between

``project-based'' and ``tenant-based'' assistance);

(2) Section 202 Program of Supportive Housing for the Elderly;

(3) Section 811 Program of Supportive Housing for Persons with

Disabilities;

(4) Section 202 loan program for projects for the elderly and

handicapped (including 202/8 projects and 202/162 projects).

(b) This subpart also applies to housing with mortgages insured or

held by HUD, or housing that is receiving assistance from HUD, under

the following authorities:

(1) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701

et seq.) (Rental Housing Insurance);

(2) Section 213 of the NHA (Cooperative Housing Insurance);

(3) Section 220 of the NHA (Rehabilitation and Neighborhood

Conservation Housing Insurance);

(4) Section 221(d)(3) and (5) of the NHA (Housing for Moderate

Income and Displaced Families);

(5) Section 221(d)(4) of the NHA (Housing for Moderate Income and

Displaced Families);

(6) Section 231 of the NHA (Housing for Elderly Persons);

(7) Section 232 of the NHA (Mortgage Insurance for Nursing Homes,

Intermediate Care Facilities, Board and Care Homes);

(8) Section 234(d) of the NHA (Rental) (Mortgage Insurance for

Condominiums);

(9) Section 236 of the NHA (Rental and Cooperative Housing for

Lower Income Families);

(10) Section 241 of the NHA (Supplemental Loans for Multifamily

Projects); and

Housing for Elderly Persons);

(7) Section 232 of the NHA (Mortgage Insurance for Nursing Homes,

Intermediate Care Facilities, Board and Care Homes);

(8) Section 234(d) of the NHA (Rental) (Mortgage Insurance for

Condominiums);

(9) Section 236 of the NHA (Rental and Cooperative Housing for

Lower Income Families);

(10) Section 241 of the NHA (Supplemental Loans for Multifamily

Projects); and

(11) Section 542(c) of the Housing and Community Development Act of

1992 (12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing

Program).

assistance under sections 5, 9, or 14 of the U.S. Housing Act of 1937).

(d) For purposes of this subpart, the term ``HUD housing'' means

the types of housing listed in paragraphs (a), (b), and (c) of this

section.

Sec. 5.703 Physical condition standards for HUD housing that is

decent, safe, sanitary and in good repair (DSS/GR).

HUD housing must be decent, safe, sanitary and in good repair.

Owners of housing described in Sec. 5.701(a), mortgagors of housing

described in Sec. 5.701(b), and PHAs and other entities approved by HUD

owning housing described in Sec. 5.701(c) must maintain such housing in

a manner that meets the physical condition standards set forth in this

section in order to be considered decent, safe, sanitary and in good

repair.

These standards address the major areas of the HUD housing: the site;

the building exterior; the building systems; the dwelling units; the

common areas; and health and safety considerations.

escribed in Sec. 5.701(c) must maintain such housing in

a manner that meets the physical condition standards set forth in this

section in order to be considered decent, safe, sanitary and in good

repair.

These standards address the major areas of the HUD housing: the site;

the building exterior; the building systems; the dwelling units; the

common areas; and health and safety considerations.

(a) Site. The site components, such as fencing and retaining walls,

grounds, lighting, mailboxes/project signs, parking lots/driveways,

play areas and equipment, refuse disposal, roads, storm drainage and

walkways must be free of health and safety hazards and be in good

repair. The site must not be subject to material adverse conditions,

such as abandoned vehicles, dangerous walks or steps, poor drainage,

septic tank back-ups, sewer hazards, excess accumulations of trash,

vermin or rodent infestation or fire hazards.

(b) Building exterior. Each building on the site must be

structurally sound, secure, habitable, and in good repair. Each

building's doors, fire escapes, foundations, lighting, roofs, walls,

and windows, where applicable, must be free of health and safety

hazards, operable, and in good repair.

system, elevators, emergency power, fire protection, HVAC, and sanitary

system must be free of health and safety hazards, functionally

adequate, operable, and in good repair.

fire escapes, foundations, lighting, roofs, walls,

and windows, where applicable, must be free of health and safety

hazards, operable, and in good repair.

system, elevators, emergency power, fire protection, HVAC, and sanitary

system must be free of health and safety hazards, functionally

adequate, operable, and in good repair.

(d) Dwelling units. (1) Each dwelling unit within a building must

be structurally sound, habitable, and in good repair. All areas and

aspects of the dwelling unit (for example, the unit's bathroom, call-

for-aid, ceiling, doors, electrical systems, floors, hot water heater,

HVAC (where individual units are provided), kitchen, lighting, outlets/

switches, patio/porch/balcony, smoke detectors, stairs, walls, and

windows) must be free of health and safety hazards, functionally

adequate, operable, and in good repair.

(2) Where applicable, the dwelling unit must have hot and cold

running water, including an adequate source of potable water (note for

example that single room occupancy units may not contain water

facilities).

(3) If the dwelling unit includes its own sanitary facility, it

must be in proper operating condition, usable in privacy, and adequate

for personal hygiene and the disposal of human waste.

(4) The dwelling unit must include at least one battery-operated or

hard-wired smoke detector, in proper working condition, on each level

of the unit.

om occupancy units may not contain water

facilities).

(3) If the dwelling unit includes its own sanitary facility, it

must be in proper operating condition, usable in privacy, and adequate

for personal hygiene and the disposal of human waste.

(4) The dwelling unit must include at least one battery-operated or

hard-wired smoke detector, in proper working condition, on each level

of the unit.

(e) Common areas. The common areas must be structurally sound,