National Housing Law Project Housing Law Bulletin

The following are housing-related regulations and Notices that HUD has recently issued. For the most part, the summaries are taken directly from HUD’s summary of the regulation in the Federal Register. The Notice summaries are taken from each Notice’s introductory paragraphs.

Copies of the cited documents may be secured from various sources, including (1) the Handsnet folder at Legal Services/Substantive Law/Housing Forum, (2) the Government Printing Office’s spot on the World Wide Web,¹ (3) bound volumes of the Federal Register, (4) HUD Clips,² and (5) HUD.³ Citations are included with each document to help you secure copies.

HUD Regulations

Section 8 Housing Assistance Payments Program — Contract Rent Annual Adjustment Factors, Fiscal Year 1998
24 C.F.R. Part 888
63 Fed. Reg. 11,955-80 (Mar. 11, 1998)

Summary: The United States Housing Act of 1937 requires that assistance contracts signed by owners participating in the Department’s Section 8 Housing Assistance Payments (HAP) programs provide for annual adjustment in the monthly rentals for units covered by the contract. This notice announces revised Annual Adjustment Factors (AAFs) for adjustment of contract rents on assistance contract anniversaries. The factors are based on a formula using data on residential rent and utilities cost changes from the most current Bureau of Labor Statistics Consumer Price Index (CPI) survey and from HUD Random Digit Dialing (RDD) rent change surveys.

AAFs established by this Notice are used to adjust contract rents for units assisted in the Section 8 HAP programs. However, the specific application of the AAFs is determined by the law, the HAP contract, and appropriate program regulations or requirements. AAFs are not used for the Section 8 voucher program or for budget-based rent adjustments for projects receiving Section 8 Loan Management, Property Disposition and Section 8/202 projects. For the Section 8 Moderate Rehabilitation program, the AAF applies to the base rent component of the contract rent, not the full contract rent. The AAF is reduced by .01 for all units in the Section 8 certificate program, and for units occupied by the same families at the time of the last annual rent adjustment in other Section 8 programs.

Effective date: March 11, 1998.

Empowerment Zones: Rule Modifications for First-Round Designations
24 C.F.R. Part 597
63 Fed. Reg. 10,713-15 (Mar. 4, 199)

Summary: This final rule conforms HUD’s regulations to statutory changes that were to take effect on August 5, 1997. Provisions of the existing regulations are removed for the Empowerment Zones (EZs) and Enterprise Communities (ECs) that limit the number of EZs and ECs that can be designated under the regulations, since Section 951 of the Taxpayer Relief Act of 1997 authorized designation of two additional EZs before January 1, 2000.

Although the first six EZs to be designated received social services block grant funding from the Department of Health and Human Services, there is no such funding available this year for the two new EZs to be designated under this revised rule. The benefits that will accrue to these new zones will be the Empowerment Zone employment credit and accelerated depreciation tax benefits.

Effective date: April 3, 1998, but the amendments in this final rule apply retroactively to August 5, 1997.

HUD Federal Register Notices

Notice of Revocation and Redelegation of Authority Pertaining to HUD’s Fair Housing Complaint Processing Regulations
63 Fed. Reg. 11,904-05 (Mar. 11, 1998)

Summary: This redelegation pertains to determinations of reasonable cause and of no reasonable cause to believe that a discriminatory housing practice has occurred, implementing Section 810(g) of the Fair Housing Act. In this document, the authority to make determinations of reasonable cause and the authority to make determinations of no reasonable cause are being redelegated from the Assistant Secretary for Fair Housing and Equal Opportunity (FHEO) to the General Deputy Assistant Secretary and to FHEO HUB Directors in the field. This redelegation is prompted by changes to the field structure of the Office of Fair Housing and Equal Opportunity. As a result of the changes, the field structure will no longer be comprised of FHEO Fair Housing Enforcement Centers and FHEO Program Operations and Compliance Centers. Instead, the field will be divided into 10 geographic areas served by FHEO HUBs, and each HUB area will be subdivided by Program Center(s) and smaller Local FHEO Site(s). The reorganized FHEO field components will perform all core functions at the lowest organizational levels, thereby empowering field managers to choose from a range of civil rights actions in order to be most responsive to local clients. The delegation includes carrying out the following responsibilities:

(1) Making a determination that no reasonable cause exists to believe that a discriminatory housing practice has occurred or is about to occur;

(2) With the concurrence of the General Counsel, determining that reasonable cause exists to believe that a discriminatory housing practice has occurred or is about to occur, except in matters involving the legality of local zoning or land use laws or ordinances. Matters involving local zoning or land use laws or ordinances must be referred to the Attorney General.

(3) Upon receipt of concurrence by the General Counsel, directing the issuance of charges under 24 C.F.R. § 103.405.

The authority redelegated under 24 C.F.R. Part 8 includes, but is not limited to, the authority to act as the "responsible civil rights official" in requesting and receiving documents pursuant to 24 C.F.R. § 8.51(b); obtaining compliance reports from recipients pursuant to 24 C.F.R. § 8.55(b); being permitted access to sources of information by recipients pursuant to 24 C.F.R. § 8.55(c); performing periodic compliance reviews, including on-site reviews, pursuant to 24 C.F.R. § 8.56(a); and conducting investigations pursuant to 24 C.F.R. § 8.56(b).

Effective date: February 26, 1998.

Notice of Operating Cost Adjustment Factors for Low-Income Housing Preservation and Resident Homeownership Projects Assisted with Section 8 Housing Assistance Payments
63 Fed. Reg. 8,573-75 (Feb. 25, 1998)

Summary: The Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA) requires that future rent adjustments for LIHPRHA projects be made by applying an annual factor, to be determined by the Secretary, to the portion of rent attributable to operating expenses for the project and, where the owner is a priority purchaser, to the portion of rent attributable to project oversight costs. This Notice announces Operating Cost Adjustment Factors (OCAFs) to be used for rent increases under LIHPRHA, which are based on a formula using data from the Bureau of Labor Statistics that measure changes in wages and the costs of non-food consumer goods. The most recent published OCAF will be applied on the anniversary date of the Housing Assistance Payments contract. An explanation of the methodology employed to develop the OCAFs is set forth in the Notice.

HUD Notices

Form HUD-50058 — Special Instructions for the Section 8 Certificate Over-FMR Tenancy
Option Notice PIH 98-13 (HA) (Feb. 20, 1998)

Summary: This Notice provides the over-FMR tenancy rent calculation formula and special instructions for completing Form HUD-50058, Family Report, for Section 8 certificate families who choose an over-FMR tenancy. A housing authority may approve over-FMR tenancies for up to 10 percent of its incremental certificate units under new provisions in the third part of the Section 8 tenant-based conforming rule (24 C.F.R. §§ 982.505 and 982.506), which are scheduled for publication in March 1998, and will take effect 30 days after publication.

Public Housing, Native American and Section 8 Fiscal Year 1998 Appropriations Act and Balanced Budget Act of 1997 Provisions
Notice PIH 98-4 (HA) (Jan. 26, 1998)

Summary: This Notice describes the Fiscal Year 1998 funding for public housing, Native American housing assistance, and the Section 8 program. This Notice also describes the administrative provisions of the Balanced Budget Act of 1997 enacted on August 7, 1997, as Pub. L. No. 105-33, and HUD’s Fiscal Year 1998 Appropriations Act enacted on October 27, 1997, as Pub. L. No. 105-65. Most of the FY 1996 and FY 1997 Appropriations Acts’ administrative provisions have been extended one year, until September 30, 1998. Here are some of the points made in the Notice:

Public Housing Requirements:

The federal preferences suspension; suspension of the "one-for-one" replacement housing requirement; ceiling rents; and definition of adjusted income (HA option to adopt additional adjustments to earned income). Legislative provisions that became applicable during federal Fiscal Years 1996 and 1997 have been extended through September 30, 1998, without change.

As in federal FY 1997, each public housing resident and Section 8 participant is required to pay a monthly "minimum rent" of up to $50, as determined by the HA. Changes to the current minimum rent policy must be implemented by amending the HA admission and occupancy policy. HAs that implement a minimum rent are encouraged to consider adopting a policy that provides for hardship exemptions for classes of households (e.g., homeless individuals with minimal income, families with minimal income awaiting determination of eligibility for public assistance, families with minimal income in states without General Assistance benefits, elderly families ineligible for Supplemental Security Income (SSI) benefits, and large families with minimal income in states with particularly low Temporary Assistance to Needy Families benefits).

The Fiscal Year 1998 Appropriations Act did not extend Section 14(q) of the United States Housing Act of 1937 which authorized HA use of modernization funds for development activities, development funds for modernization activities, and up to 10 percent of modernization and development funds for operations.

Section 8 Certificate, Voucher and Moderate Rehabilitation Requirements:

The federal preferences suspension, the three-month reissuance delay of turnover certificates and vouchers, the "take-one, take-all" suspension, the "endless lease" elimination; and the suspension of the owner termination notice to HUD are all legislative provisions that became applicable during federal Fiscal Year 1996 and that have been extended through September 30, 1998, without change.

Calculating and Retaining Section 236 Excess Income
Notice H 98-10 (HUD) (Feb. 26, 1998)

Summary: Section 221(c) of HUD’s Fiscal Year 1997 Appropriations Act, Pub. L. No. 104-204, amended Section 236(g) of the National Housing Act to require that excess income (rent collected in excess of basic rent) be computed on a unit-by-unit basis and to permit project owners with mortgages insured under Section 236 to retain some or all of their excess income if pre-authorized by HUD and under such terms and conditions as HUD establishes. Excess income consists of cash collected as rent from the residents by the mortgagor, on a unit-by-unit basis, that is in excess of the HUD-approved basic rent. The Secretary is authorized to allow deserving and reliable owners of projects whose mortgages are presently insured under Section 236 to retain excess income in order to maintain adequately the low- and moderate-income character of the projects and for other purposes deemed to benefit the project and its tenants. Only Section 236 projects with mortgages currently insured (not HUD-held or State Agency non-insured projects) may participate in retaining some excess income. HUD is implementing this requirement effective with rent collections for the month of March 1998.

HUD sought and obtained comments and suggestions from the affected industry groups about what criteria the Department should establish to permit retention of excess income. HUD tried to accommodate the industry to the greatest extent possible in issuing this Notice.

1. At http://www.access.gpo.gov/su_docs.
2. At http://www.hudclips.org/cgi/index.cgi.
3. To order Notices and Handbooks from HUD, call (800) 767-7468 or fax (202) 708-2313.