National Housing Law Project Housing Law Bulletin

Recent HUD Regulations and Notices

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 HUD 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.

Summary: This final rule implements a recent statutory amendment to HUD's Federal Housing Administration (FHA) Single Family Mortgage Insurance Program. The amendment requires an original lender to provide certain information, in the form of a disclosure notice, to

prospective borrowers who have applied for an FHA-insured home mortgage. HUD will be required to develop this disclosure notice. Through the disclosure notice, the lender must provide the prospective FHA borrower with an analysis comparing the mortgage costs of the FHA-insured mortgage with the mortgage costs of other similar conventional mortgage products that the lender offers and for which the borrower may qualify. The disclosure notice must also provide information about when the requirement to pay FHA mortgage insurance premiums terminates. This final rule takes into consideration public comment received on the February 16, 1999 proposed rule.

Effective date: July 2, 1999.

Summary: This rule amends the regulations for the Comprehensive Improvement Assistance Program (CIAP) to permit the non-competitive distribution of CIAP funds to all eligible public housing agencies (PHAs) based on two equally-weighted factors: a PHA's share of the total number of units eligible for CIAP; and a PHA's share of the total number of bedrooms in units eligible for CIAP (with studio units counted as one-bedroom units). The purpose of this amendment is to provide small PHAs the opportunity of a transition period to become familiar with a non-competitive, capital funding process in anticipation of formula funding in Federal Fiscal Year (FFY) 2000 under new statutory authority.

Effective date: July 23, 1999.

Summary: This document announces the fourth, fifth, and sixth meetings of the Negotiated Rulemaking Committee on Capital Fund Allocation. These meetings are sponsored by HUD for the purpose of discussing and negotiating a proposed rule that would change the current method of determining the payment of capital funds to public housing agencies (PHAs).

Dates: The fourth committee meeting was held on June 17 and June 18, 1999. The fifth committee meeting was held on June 23 and June 24, 1999. The sixth committee meeting was held on July 8 and July 9, 1999.

Summary: On May 18, 1999, HUD announced in the Federal Register the second, third, fourth, and fifth meetings of the Negotiated Rulemaking Committee on Section 8 Tenant-Based Contract Renewal Allocation. At that time, HUD was not yet able to provide the locations for the third, fourth and fifth committee meetings. The purpose of this document is to announce the location of these meetings.

Dates: The meeting dates announced in the May 18, 1999 document remain unchanged. The third committee meeting was held on June 21 and June 22, 1999. The fourth committee meeting was held on July 19 and July 20, 1999. The fifth committee meeting was held on August 19 and 20, 1999.

Summary: This document announces the fourth, fifth, and sixth meetings of the Negotiated Rulemaking Committee on Operating Fund Allocation. These meetings are sponsored by HUD for the purpose of discussing and negotiating a proposed rule that would change the current method of determining the payment of operating subsidies to public housing agencies (PHAs). This document also announces two changes to the membership of the negotiated rulemaking committee.

The Secretary of HUD has established the Negotiated Rulemaking Committee on Operating Fund Allocation to negotiate and develop a proposed rule that would change the current method of determining the payment of operating subsidies to PHAs. The establishment of the committee is required by the Quality Housing and Work Responsibility Act of 1996 (Pub. L. No. 105-276, approved October 21, 1998; 112 Stat. 2461) (Public Housing Reform Act). The Public Housing Reform Act makes extensive changes to HUD's public and assisted housing programs. These changes include the establishment of an Operating Fund for the purpose of making assistance available to PHAs for the operation and management of public housing. The Public Housing Reform Act requires that the assistance to be made available from the new Operating Fund be determined using a formula developed through negotiated rulemaking

procedures. The general effective date for the formula (the beginning date of the fiscal year for which PHAs will determine their subsidy eligibility using the new formula) is October 1, 1999.

On March 16, 1999 (64 Fed. Reg. 12,920), HUD announced in the Federal Register the establishment of HUD's Negotiated Rulemaking Committee on Operating Fund Allocation. The March 16, 1999 document also announced the membership list of the negotiated rulemaking committee.

Dates: The fourth committee meeting was held on June 15 and June 16, 1999. The fifth committee meeting was held on July 7 and July 8, 1999. The sixth committee meeting was held on August 11 and August 12, 1999.

Summary: This proposed rule would amend HUD’s regulations for tenant participation in multifamily housing projects. Specifically, the proposed rule would expand the number of categories of multifamily housing projects in which tenants have the right to establish and operate tenant organizations. The proposed rule would clarify the reasonable activities that the owner of a multifamily housing project, covered under this proposed rule, must allow tenants and tenant organizers to engage in while organizing their co-tenants and operating a tenant organization. The proposed rule would also clarify the requirements for establishing and operating a tenant organization.

Comments due date: August 16, 1999.

Summary: The proposed rule would amend the Public Housing Assessment System regulation at 24 C.F.R. Part 902 to provide additional information and revise certain procedures and establish others for the assessment of the physical condition, financial health, management operations and resident service and satisfaction in public housing, including the technical review of physical inspection results and appeals of PHAS scores. The purpose of the Public Housing Assessment System is to function as a comprehensive management tool that effectively and fairly measures a public housing agency’s (PHA’s) performance based on standards that are objective, uniform and verifiable. The rule would also implement certain recently enacted statutory amendments.

Comments due date: August 23, 1999.

Summary: This proposed rule would establish pet ownership requirements for residents of public housing other than federally assisted rental housing for the elderly or persons with disabilities. Regulations covering pet ownership requirements for residents of federally assisted rental housing for the elderly or persons with disabilities are located at 24 C.F.R. Part 5, subpart C. This proposed rule would not alter or affect these current regulations in any way.

Dates: Comments Due Date: August 23, 1999.

Summary: This proposed rule would implement section 2(b) of the United States Housing Act of 1937, which was added by section 505 of the Quality Housing and Work Responsibility Act of 1998 (the Public Housing Reform Act of 1998). Section 2(b) requires, with certain exceptions, that the membership of the board of directors or similar governing body of a public housing agency must contain not less than one member who is directly assisted by the public housing agency.

Comments due date: August 23, 1999.

64 Fed. Reg. 38853-38,854 (July 20, 1999)

Summary: This document announces two meetings of the Negotiated Rulemaking Committee on Capital Fund Allocation. These meetings are sponsored by HUD for the purpose of discussing and negotiating a proposed rule that would change the current method of determining the

payment of capital funds to public housing agencies (PHAs).

Dates: The first committee meeting announced by this notice was held on July 26 and July 27, 1999. The second committee meeting was held on August 3 and 4, 1999.

Summary: This proposed rule would amend the regulations for the public housing and Section 8 assisted housing programs, and for other HUD assisted housing programs, such as the Section 221(d)(3) below market interest rate (BMIR) program, Section 202 program for the elderly, Section 911 program for persons with disabilities, and Section 236 interest reduction program. All of these programs were affected by recent statutory amendments. These amendments give public housing agencies (PHAs) and assisted-housing owners the tools for adopting and implementing fair, effective, and comprehensive policies for denying admission to applicants who engage in illegal drug use or other criminal activity and for evicting or terminating assistance of persons who engage in such activity.

Comments due date: Comments on the proposed rule and the proposed information collection requirements are due on or before September 21, 1999.

Summary: This proposed rule implements a recent revision to the statute that authorizes the public housing and Section 8 housing assistance programs. The revision requires public housing agencies (PHAs) to identify distressed public housing developments that must be converted to tenant-based assistance. If it could be more expensive to modernize and operate a distressed development for its remaining useful life than to provide tenant-based assistance to all residents, or the PHA cannot assure the long-term viability of a distressed development, then it must develop and carry out a five-year plan to remove the development from its public housing inventory, and convert it to tenant-based assistance.

Comments due date: September 21, 1999.

Summary: This proposed rule implements a recent revision to the statute authorizing the public housing and Section 8 housing assistance programs to allow a public housing agency (PHA) to convert any public housing project it owns to tenant-based assistance where the conversion would satisfy statutory objectives. The PHA may convert the project if, after conducting a conversion assessment,it determines that the following conditions are met: conversion will not be more expensive than continued operation of the project; conversion will benefit residents and the community; and conversion will not adversely affect the availability of affordable housing in the community. The statute requires every PHA to conduct and submit to HUD a conversion assessment for its projects no later than October 1, 2001. However, while HUD has the authority to exclude developments or categories of developments from the assessment requirement, or to streamline the conversion assessment requirements, this rule does include streamlining for specified categories of developments.

Comments due date: September 21, 1999.

Summary: This document announces the (1) exact location of the public forum to be held in Syracuse, New York, on HUD’s Public Housing Agency (PHA) Plan interim rule that was published on February 18, 1999, and on HUD’s Section 8 certificate and voucher merger interim rule (Section 8 merger) that was published on May 14, 1999; and (2) an additional public forum to be held on both rules in Washington, DC. The statute authorizing these two rules requires that before issuing final rules on these subjects, HUD will convene at least two public forums for each rule, and specifically seek recommendations from certain organizations and individuals.

Dates: June 28 and July 29, 1999.

Submission for OMB Review--Customer Survey of Households Living in Federally Assisted Units; Notice

Summary: HUD recently developed and tested a cost-effective mail survey instrument for assessing resident satisfaction and rating of housing units assisted through Section 8 Certificate and Voucher programs. This survey yielded high response rates which corresponded closely to independent condition ratings by professional inspectors. HUD plans to implement this survey as an ongoing tool. For limited evaluative or comparison purposes, HUD may also use this survey to assess resident ratings of other Federal housing assistance programs. This survey will allow HUD to provide feedback to help local housing agencies improve their Section 8 programs, and it will help HUD to focus its monitoring and technical assistance resources where program performance most needs improvement. It will provide HUD's policy, program, and budget managers with improved measures for tracking national housing conditions over time. The proposed information collection requirement described below has been submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.

Comments due date: August 6, 1999.

Summary: The Rural Housing Service (RHS) is issuing final regulations for the Guaranteed Rural Rental Housing Program (GRRHP). This action is taken to implement the Housing Opportunity Program Extension Act of 1996. The program is intended to increase the supply of affordable rural multifamily housing through partnerships between the Agency and major lending sources, including banks, state and local housing finance agencies, and bond issuers.

Effective date: July 16, 1999.

HUD Notices

Summary: Twenty-five years ago, the Federal Government created the Section 8 Housing Assistance Payments Program. The program now faces a major challenge: it risks losing some of the best of its housing through owner opt-outs of project-based Section 8 contracts with below-market rents. When Section 8 rents are below market, owners may find it financially attractive to opt out of the program and convert their properties to market-rate operations. HUD developed this Emergency Initiative to increase the Section 8 rents of certain properties to market rate in order to limit the incentive to opt out and preserve vital affordable housing stock.

The cost of marking up all below-market Section 8 properties would be prohibitive and unnecessary. HUD research shows that the owners of assisted properties in high-rent areas are those most likely to opt out of the Section 8 program. Therefore, the Department has targeted a limited universe of affordable housing stock in high-rent areas for the Emergency Initiative. HUD defines high-rent areas as those where comparable market rents are at or above 110 percent of the fair market rent (FMR). However, because of the cost, this Emergency Initiative will limit rent increases to a maximum of comparable market rents or 150 percent of the published FMRS, [sic] whichever is lower.

HUD Notice H 98-34, "Project-based Section 8 Contracts Expiring in Fiscal Year 1999," stated that contract renewals are authorized under two provisions of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (hereafter referred to as "MAHRA" or "the Act")-- Sections 524(a)(1) and 524(a)(2). Section 524(a)(1) allows for the renewal of expiring Section 8 contracts at levels that do not exceed comparable market rents for the local area. Under Notice H 98-34, owners requesting contract renewals under the 524(a)(1) provisions must submit a rent comparability study and, if current rents are at or below comparable market rents, the contract will be renewed at the current rent level. If owners believe that a rent increase is needed to support project operations, they can submit a budget-based rent increase request at the time of renewal. Projects with rents above the comparable market rents are generally referred to the Office of Multifamily Housing Assistance Restructuring (OMHAR).

Owners requesting contract renewals under Section 524(a)(2) will receive initial renewal rents at the lesser of current rent levels adjusted by an Operating Cost Adjustment Factor (OCAF) or the two budget-based rent level. Rents for projects in categories 524(a)(2)(A) through (D) are not capped at the market rent levels. Projects eligible for renewal under 524(a)(2) also have the option of renewing under 524(a)(1) (please refer to HUD Notice H 98-34 for further details).

Unlike the specific statutory language for establishing renewal rents under 524(a)(2), statutory guidance for setting renewal rents under the 524(a)(1) provision is limited. The MAHRA legislation simply states that renewals shall not exceed comparable market rents. While Section 524(a)(1) does not prohibit HUD from allowing rents to be marked up to market, the Department must work within its budgetary constraints. Therefore, the Emergency Initiative must preserve below-market project-based Section 8 housing stock at a reasonable cost to the Federal government. This Notice provides guidance on what the Department has determined is the most effective means to allocate limited housing assistance resources by targeting those properties most likely to opt out and by setting a reasonable cap on the rents that will be paid.

As a result of the Emergency Initiative, changes have been made to attachment 4 of HUD Notice H 98-34 and HUD Notice H 99-08. A new Option 4 and worksheet have been added to the Owner's Checklist.

Notice H 99-17 (HUD) (July 8, 1999)

Summary: Notice H 98-03 , issued January 23, 1998, provides instructions for statutory rent adjustment procedures for Section 8 projects that use the HUD-published Annual Adjustment Factors (AAF) for adjustment of the contract rent. The Notice extended and made permanent procedures outlined in HUD Notice H 97-14, issued March 17, 1997.

This Notice reinstates and extends HUD Notice H 98-03, Annual Adjustment Factors (AAF).

Notice PIH 99-23 (HUD) (June 9, 1999)

Summary: The Department currently has a Government Performance Results Act (GPRA) goal for getting low income families into homes of their own. This has been translated into a Business and Operating Plan (BOP) goal for the Department, and for the Secretary’s Representative, Area/State Coordinators, Public Housing Directors, and Community Builders individually. As part of their reporting activity, each office must ensure that the Integrated Business System (IBS) data is consistent with what they are reporting in their BOP, and must also show how many units are approved for home ownership in order to project if the national goal will be met. ONAP will be providing their home ownership information through their own reporting system, so this Notice does not apply to ONAP.

To accomplish this, HUD will enter into their system all home ownership plans approved after October 1, 1992, as was done by the Headquarters staff when the IBS Demolition/Disposition module came on line. The Special Applications Center (SAC) staff have already entered HOPE I data into the system, because the department had those files in Headquarters and have moved them to Chicago for the SAC's files. The SAC staff will be following up with those field offices to complete the data input.

Within 30 days of the date of this Notice, offices are directed to provide a list of HAs for which they have approved plans and their schedule for getting them into the system. For questions about this requirement, please contact Ainars Rodins, Director of the SAC at (312)886-9754 x2816.

Notice H 99-26 (HA) (July 1, 1999)

Summary: The purpose of this Notice is to advise public housing agencies (PHAs) of the availability of approximately $80 million in one-year budget authority that will fund approximately 14,000 Section 8 rental vouchers to assist PHAs with relocation or replacement housing needs resulting from the demolition, disposition or mandatory conversion of public housing units. In addition, this Notice advises PHAs and HUD's local Field Offices of the procedures for submitting a request for rental vouchers and the processing requirements.

The term "local HUD Field Office" will be used throughout this Notice to mean the local HUD Field Office HUB or local HUD Field Office Program Center.

Categories of Eligibility: PHAs that qualify under either of the two categories listed below are eligible to submit an application for Section 8 rental voucher funding for relocation or replacement units:

a. The PHA has a HUD-approved application for demolition or disposition; a HUD-approved HOPE VI Revitalization Plan (with demolition plan approved after October 21, 1998); or a HUD-approved plan for removal (mandatory conversion) of public housing units under Section 33 of the U.S. Housing Act of 1937, as amended.

b. The PHA has reported to HUD's Special Applications Center (SAC) on form HUD-52860, Demolition/Disposition Application, that it is demolishing the lesser of 5 units or 5 percent of the units in its inventory during a five year period, where the vacant space will be used for meeting the service needs of public housing residents, or the units to be demolished are beyond repair. (An application requesting HUD's approval of demolition in such instances is not required, based upon provisions in Section 531 of the Quality Housing and Work Responsibility Act (QHWRA) of 1998 (PL 105-276) effective as of the date of the publication of the QHWRA of 1998; Initial Guidance; Notice in the Federal Register on February 18,1999.)

If the PHA has already been fully funded for relocation or replacement housing units through Section 8, public housing development, vacancy consolidation, condemnation proceeds,

replacement insurance, Major Reconstruction of Obsolete Projects (MROP, HOPE VI, Comprehensive Improvement Assistance Program (CIAP), Comprehensive Grant Program (CGP), or the Replacement Housing Factor at the development, it will not be eligible for

Section 8 rental voucher funding for relocation or replacement housing. For example, if a PHA received Section 8 funding for relocation of a public housing resident living in a public housing unit to be demolished, the PHA is not eligible to receive Section 8 replacement funding for the same unit. Similarly, if a PHA received public housing development funds to replace a demolished public housing unit, the PHA is not eligible to receive Section 8 relocation or replacement funding for the same unit.

Summary: This notice provides instructions for reviewing applications and providing funding under the FY 1999 Section 8 FSS Program Coordinator Notice of Funding Availability (NOFA) FR-4416 (hereinafter referred to as "the NOFA"), which was published in the Federal Register on March 8, 1999.

Background: Funding under the NOFA is available only to: (1) those public housing agencies (PHAs) that were awarded FSS program coordinator funding under the FY 1998 NOFA; and (2) those other HAs, including state and regional HAs and joint applicants, that did not receive funding under the FY 1998 NOFA, if authorized through their HUD-approved FSS Action Plan to administer Section 8 FSS programs of at least 25 FSS slots. Under the NOFA, both the voluntary Section 8 FSS slots and the mandatory Section 8 FSS slots reflected in the HA's HUD-approved FSS Action Plan are counted in determining the HA's Section 8 FSS program size. There is no maximum Section 8 program size limit for HAs eligible to apply for funding under the NOFA. HUD is opening eligibility for funding under the NOFA to HAs with larger Section 8 rental certificate/voucher programs because it believes that this action will support welfare reform activities across the nation.

No rating or ranking of applications is required since the funds available under the NOFA are not being awarded on a competitive basis. Instead, the Office of Public Housing staff in the local HUD field office HUB or local HUD field office Program Center will review the applications to determine if they are complete and technically adequate based on the NOFA's requirements. The Grants Management Center (GMC) will fund all technically adequate applications to the extent funds are available in accordance with the NOFA.

Summary: The Department of Justice (DOJ) published in the Federal Register on May 26, 1999 (64 Fed. Reg. 28,676) a proposed rule that establishes clear standards governing whether an alien is inadmissible to the United States, ineligible to adjust immigration status, or has become deportable, on the grounds that he or she is likely to be or is a "public charge." The Immigration and Naturalization Service (INS) also published Field Guidance in the same Federal Register (64 Fed. Reg. 28,689), and the Department of State (DOS) has issued a cable to all embassies, implementing immediately the policy set forth in the proposed rule.

There has been some confusion among immigrant families, and service and benefit providers, regarding how the receipt of different benefits and services by immigrants and their family members will be treated for public charge purposes. The proposed rule, along with the INS guidance, clarifies the limited number of benefits that may be considered by immigration officials in making public charge determinations.

With regard to the Department of Housing and Urban Development (HUD), the effect of the proposed rule and the INS guidance is to provide that an otherwise eligible noncitizen can receive benefits/services under HUD's programs and such receipt will not be considered by immigration officials as part of a public charge determination.

The DOJ proposes to define public charge to mean an alien who has become (for purposes of deportation) or is likely to become (for purposes of admissibility or adjustment) "primarily dependent on the Government for subsistence, as demonstrated by either the receipt of public cash assistance for income maintenance or institutionalization for long-term care at Government expense." Cash benefits for income maintenance include the following: (1) Supplemental Security Income (SSI); (2) Temporary Assistance for Needy Families (TANF), but not including supplemental cash benefits excluded from the term "assistance" under TANF program rules or any non-cash benefits and services provided by the TANF program; (3) state and local cash benefit programs that are for the purpose of income maintenance (often called "General Assistance" but which may exist under other names).

The sole exception to the focus on cash assistance is an instance in which Medicaid or a related program would meet this definition by paying for the cost of a person's institutionalization for long-term care. The proposed rule and Guidance clarify that receipt of cash welfare assistance (SSI, TANF, or state/local equivalents) cannot automatically result in a public charge inadmissibility determination. The INS and DOS officers must still apply a "totality of the circumstances" test which may include receipt of cash assistance for income maintenance purposes, but also must include several mandatory factors, including age, health, family status, assets and resources, financial status, education, and skills.

Notes

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.

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