HUD Reasonable Cause Guidance Memo

Directive Number: FR-4428-I-01

24 CFR Part 248

24 CFR Part 791 24 CFR Part 792

24 CFR Part 982

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 248, 791, 792 and 982

[Docket No. FR-4428-I-01]
RIN 2577-AB91

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

AGENCY: Office of the Secretary, HUD.

ACTION: Interim rule.

SUMMARY: This interim rule amends the regulations for the Section 8
tenant-based rental voucher program. These amendments implement
amendments of the United States Housing Act of 1937 by the Quality
Housing and Work Responsibility Act of 1998 and related changes. The
rule provides for the complete merger of the Section 8 tenant-based
Certificate and Voucher programs, into a new Housing Choice Voucher
Program.

DATES: Effective date: August 12, 1999. Comments due date: Comments on
the interim rule and the proposed information collection requirements
are due on or before: July 13, 1999.

ADDRESSES: Interested persons are invited to submit written comments
regarding this interim rule to the Rules Docket Clerk, Office of
General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC 20410. Comments
should refer to the above docket number and title. A copy of each
comment submitted will be available for public inspection and copying
between 7:30 a.m. and 5:30 p.m. weekdays at the above address.
Facsimile (FAX) comments will not be accepted.

FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Office of Public and
Indian Housing, Department of Housing and Urban Development, Room 4210,
451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708-0477
(this is not a toll-free number). Hearing or speech impaired
individuals may access this number via TTY by calling the toll-free
Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Section 8 Tenant-Based Program Statutory Provisions Implemented
in this Rule

    This interim rule implements most of the Section 8 tenant-based
program provisions contained in the Quality Housing and Work
Responsibility Act of 1998 (Title V of the FY 1999 HUD Appropriations
Act; Pub. L. 105-276, approved October 21, 1998; 112 Stat. 2461) (the
``1998 Act''). Section 502 of the 1998 Act states that a purpose of the
legislation is ``consolidating the voucher and certificate programs for
rental assistance under Section 8 of the United States Housing Act of
1937 (the ``USH Act'' (42 U.S.C. 1437f) ) into a single market-driven
program that will assist in making tenant-based rental assistance under
such section more successful at helping low-income families obtain
affordable housing and will increase housing choice for low-income
families.'' Of particular significance, this rule implements the merger
of the Section 8 tenant-based certificate and voucher programs (section
545 of the 1998 Act, amending 42 U.S.C. 1437f(o)).

A. Description of the Housing Choice Voucher Program implemented by
this rule

    This rule implements provisions of the 1998 Act which will complete
merger of the Section 8 certificate and voucher programs into a single
new Section 8 voucher program (authorized under Section 8(o) of the USH
Act, 42 U.S.C. 1437f(o)), entitled the Housing Choice Voucher Program.
HUD has previously promulgated regulations (known as the ``conforming
rule'') which combined and conformed rules for Section 8 tenant-based
assistance to the extent permitted by prior law. The Housing Choice
Voucher Program has features of the previously authorized certificate
and voucher programs, plus new features. The following summarizes major
features of the Housing Choice Voucher Program:
    1. Payment standards. The subsidy amount is based on a payment
standard set by the Public Housing Agency (PHA) anywhere between 90% to
110% of the HUD-published fair market rent (FMR). HUD may approve
payment standards lower than 90% of FMR and payment standards higher
than 110% of FMR. Prior HUD-approved area exception rents will continue
to apply in the new voucher program (unless withdrawn or modified by
HUD). HUD may require PHA payment standard changes because of incidence
of high rent burdens (Section 8(o)(1)(B), (D) and (E) of the USH Act;
42 U.S.C. 1437f(o)(1)(B), (D) and (E); 24 CFR 982.503).
    2. Tenant payment. A family renting a unit below the payment
standard pays as gross rent the highest of: 30% of monthly adjusted
income, 10% of monthly income (gross income), the welfare rent (in
States where the welfare payment is adjusted in accordance with actual
housing costs), or the PHA-established statutory minimum rent. There is
no voucher ``shopping incentive'' (for a family that rents a unit below
the payment standard). A family renting a unit above the payment
standard pays the highest of 30% of monthly adjusted income, 10% of
monthly income, the welfare rent, or minimum rent, plus any rent above
the payment standard (Section 8(o)(2) (A) and (B) of the USH Act, 42
U.S.C. 1437f(o)(2) (A) and (B); Sec. 982.506(b)).
    3. Maximum initial rent burden. A family must not pay more than 40%
of adjusted income for rent when the family first receives Section 8
tenant-based assistance for occupancy of a particular unit. This new
requirement only applies for a family that initially receives tenant-
based assistance for occupancy of a unit after the effective date of
this rule (called the ``merger date''). However, the maximum initial
rent burden requirement is not applicable if the family stays in the
same unit where the family initially received certificate or voucher
assistance for occupancy of the unit before the effective date of this
rule. The maximum initial rent burden requirement is applicable each
time a participant moves to a new unit. (Section 8(o)(3) of the USH
Act, 42 U.S.C. 1437f(o)(3); Sec. 982.508.)
    4. Income limits. Eligibility is limited to a:
    a. Very low-income family;
    b. Low-income family continuously assisted under the public
housing, Section 23, or Section 8 programs;
    c. Low-income family that is a nonpurchasing tenant in certain
homeownership programs;
    d. Low-income or moderate-income family that is displaced as a
result of the prepayment of the mortgage or voluntary termination of an
insurance contract on eligible low-income housing as defined at 24 CFR
248.101; or
    e. Low-income family that meets PHA-specified criteria. (Section
8(o)(4) of the USH Act, 42 U.S.C. 1437f(o)(4); Sec. 982.201(a)(1) of
the regulations.)
    5. Applicant selection. PHA applicant selection preferences must be
based on local housing needs and priorities. In determining the
preferences, the PHA must use ``generally accepted data sources''
including public comments on the PHA plan and the Consolidated Plan.
PHAs are urged to consider adopting admission preferences for victims
of domestic violence (Section 8(o)(6)(A) of the USH Act, 42 U.S.C.
1437f(o)(6)(A); Sec. 982.208).
    6. Optional PHA screening of applicants. Although the screening and
selection of tenants will remain the function of the owner, the PHA may
elect to screen applicants in accordance with any HUD requirements
(Section

[[Page 26633]]

8(o)(6)(B) of the USH Act, 42 U.S.C. 1437f(o)(6)(B);
Sec. 982.307(a)(1)).
    7. Optional PHA disapproval of owners. The PHA may refuse to enter
into new Section 8 Housing Assistance Payment (HAP) contracts with
owners who refuse (or have a history of refusing) to evict families for
drug-related or violent criminal activity, or for activity that
threatens the health, safety or right of peaceful enjoyment of the (1)
premises by tenants, PHA employees or owner employees, or (2) the
residences by neighbors (Section 8(o)(6)(C) of the USH Act, 42 U.S.C.
1437f(o)(6)(C); Sec. 982.306(c)(5)).
    8. Initial lease term. The PHA may approve an initial lease term of
less than 1 year if a lease of less than 1 year is prevailing local
practice and the PHA determines that the shorter term will improve
housing opportunities for the family (Section 8(o)(7)(A) of the USH
Act, 42 U.S.C. 1437f(o)(7)(A); Sec. 982.309(a)).
    9. Lease form and content. The lease form must be in the standard
form used in the locality by the owner. The lease must contain terms
that are consistent with State and local law, and that apply generally
to unassisted tenants in the same property. The HAP contract and the
lease must contain the HUD prescribed tenancy addendum (Section
8(o)(7)(B) and (F) of the USH Act, 42 U.S.C. 1437f(o)(7)(B) and (F);
Sec. 982.308).
    10. HQS. Units must pass the federally established HQS or
substitute local housing codes or codes adopted by PHAs. Substitute
local housing codes or codes adopted by PHAs: (a) cannot severely
restrict housing choice; and (b) must meet or exceed the HQS (unless
HUD approves a lower standard that does not adversely affect the health
or safety of families, and will significantly increase affordable
housing access and expand housing opportunities) (Section 8(o)(8)(B) of
the USH Act, 42 U.S.C. 1437f(o)(8)(B); Sec. 982.401(a)(4)).
    11. Fifteen calendar day initial HQS inspection deadline. PHAs with
1,250 or fewer tenant-based Section 8 units must conduct initial HQS
inspections within 15 days after receipt of an inspection request from
the family and owner. PHAs with more than 1,250 tenant-based Section 8
units must conduct initial HQS inspections within a ``reasonable
period'' of the family's and owner's inspection request (Section
8(o)(8)(C) of the USH Act, 42 U.S.C. 1437f(o)(8)(C);
Sec. 982.305(b)(2)).
    12. PHA penalties for late payment of housing assistance to owners.
In the future, the HAP contract will provide for penalties against the
PHA for late payment of the housing assistance payment to the owner.
Any late payment penalties may only be imposed in accordance with
generally accepted practices in the local housing market governing
penalties for late payment of rent by a tenant. For example, the PHA
may be required to pay a late fee to an owner if the housing assistance
payment is not paid by the tenth day of the month if it is local
practice that an unassisted tenant is charged a late fee when the rent
has not been paid in full by the tenth day of each month. A late
payment fee may only be paid from the PHA's administrative fee income
(including available amounts in the HA administrative fee reserve). The
PHA is not obligated to pay any late fee if HUD determines that the
late payment is due to factors beyond the control of the PHA (e.g.,
late receipt of the Section 8 funds from Treasury). The rule also
provides that the PHA may add HAP contract provisions which define when
the HAP payment by the PHA is deemed received by the owner (e.g., upon
mailing by the PHA or actual receipt by the owner). (Section
8(o)(10)(D) and (E) of the USH Act, 42 U.S.C. 1437f(o)(10)(D) and (E);
Sec. 982.451(b)(5).)
    13. HQS inspections and rent reasonableness determinations for PHA-
owned units. The local government or another independent entity
approved by HUD must conduct HQS inspections and rent reasonableness
determinations for PHA-owned units leased by voucher holders. The PHA
must pay any expenses associated with the performance of such
inspections and rent determinations. The PHA and the independent agency
may not charge the family any fee or charge for the services provided
by the independent agency. The HA may use administrative fee income to
compensate the independent agency for its services, but may not use
other program receipts for this purpose (Section 8(o)(11) of the USH
Act, 42 U.S.C. 1437f(o)(11); Sec. 982.352(b)).
    14. Subsidy amount for manufactured homeowners leasing pads. The
subsidy amount for expenses associated with pad leasing by a mobile
home owner are revised to mirror the subsidy calculation method for
families leasing ``regular'' units (Section 8(o)(12) of the USH Act, 42
U.S.C. 1437f(o)(12); Sec. 982.623).
    15. Income Targeting. Not less than 75% of new admissions to the
tenant-based voucher assistance program must have incomes at or below
30% of the area median income. Other admissions generally must be at or
below 80% of the area median. If two or more PHAs have identical
jurisdiction, those PHAs must jointly meet the targeting goals (section
513 of the 1998 Act; Sec. 982.201(a)(2) of the regulations).
    16. Section 8 PHA definition. For the administration of tenant-
based assistance only, a ``PHA'' includes:
    a. A consortia of PHAs,
    b. A nonprofit entity administering certificates or vouchers under
a contract with a PHA or HUD on enactment of the 1998 Act (on October
21, 1998); or
    c. For any area outside the jurisdiction of a PHA that is
administering a tenant-based program, or where HUD determines that such
PHA is not administering the program effectively, a private non-profit
entity or public body that would otherwise lack jurisdiction to
administer the program in such area (section 546 of the 1998 Act;
definition of ``public housing agency'' at Sec. 982.4 of the
regulations).
    17. Section 8 ``endless lease'' and owner termination notices. The
``endless lease'' provision and the 90-day owner termination notice are
permanently repealed (section 549 of the 1998 Act; revisions to
Secs. 982.310 and 982.454 ).
    18. Technical and conforming amendments including elimination of
Section 8 SRO approvals. The requirements for a HUD determination of a
significant demand for SROs, PHA and local government approval of SRO
use, and a PHA and local government certification that the SRO meets
local SRO health and safety standards have been eliminated (section 550
of the 1998 Act; revisions to Sec. 982.602).
    19. Portability. The 1998 Act grants the statutory right of
nationwide participant portability to the jurisdiction of any PHA that
is administering the Section 8 voucher program. This right was
previously established by HUD's program regulation. PHAs may opt to
require applicants who were nonresidents at the time of application to
live in the PHA's jurisdiction during the first year. PHAs must not
issue a participant a new voucher for a portable move if the family has
moved out of the family's unit in violation of the lease (section 553
of the 1998 Act; Sec. 982.353).
    20. Elimination of ``take-one, take-all'' provision. The ``take-
one, take-all'' provision is permanently eliminated. This provision
required that an owner who entered into a Section 8 HAP contract on
behalf of any tenant in a multifamily housing project could not refuse
to lease otherwise affordable units in all multifamily projects of the
owner if the reason for the refusal was that the family was a
certificate or voucher holder (section 554 of the 1998 Act permanently
repeals Section 8(t) of the USH Act, 42 U.S.C. 1437f(t); this rule
therefore removes the regulatory provision (prior Sec. 982.457) that
recited the prior take-one-take-all statutory requirement).

[[Page 26634]]

    21. Intellectual property rights. The 1998 Act prohibits use of
program receipts to indemnify PHA contractors or subcontractors against
costs associated with any judgment of infringement of intellectual
property rights (section 510 of the 1998 Act; Sec. 982.157).

B. Transition to the New Housing Choice Voucher Program

    The majority of changes necessary to merge the certificate and
voucher programs into a single tenant-based program were accomplished
by issuing the Section 8 certificate and voucher conforming rule
published in three phases: in 1994, 1995, and 1998. The remaining
significant differences between the certificate and voucher programs
are the subsidy amount, the maximum allowable initial contract rent
levels and contract rent adjustments. The treatment of these program
differences in the transition of pre-merger certificates and pre-merger
vouchers to the final merger of the two programs, as enacted by
Congress, is addressed below.
    1. Requirement to only enter HAP contracts under the Housing Choice
Voucher Program in the future, and treatment of outstanding pre-merger
certificates. The new regulation becomes effective 90 days from
publication of this rule. This date is called the ``merger date''
(Sec. 982.4).
    This rule provides that on and after the merger date, a PHA may
only enter HAP contracts under the Housing Choice Voucher Program
implemented by this rule. If an applicant family or a participant
wishing to move has been issued a pre-merger certificate, the PHA may
opt to: (a) let the family continue to search for housing during the
term of the pre-merger certificate; or (b) issue the family a voucher
under the Housing Choice Voucher Program for a new term.
    In any event, the PHA may only enter into HAP contracts under the
Housing Choice Voucher Program on and after the merger date. Thus, an
applicant or participant family who received a pre-merger certificate
must be assisted under the Housing Choice Voucher Program if a tenant-
based HAP contract has not been executed on their behalf prior to the
merger date.
    2. Treatment of pre-merger voucher assistance under the Housing
Choice Voucher Program. On the merger date, participants in the pre-
merger voucher program automatically become participants in the Housing
Choice Voucher Program. Existing voucher contracts provide that the
housing assistance payment must be calculated in accordance with HUD
requirements. However, the HAP contracts do not specify the amount of
or method of computing the housing assistance payment.
    In accordance with Sec. 982.502 of the interim rule, the method of
calculating subsidy under the Housing Choice Voucher Program is applied
commencing at the effective date of the second regular reexamination of
family income and composition on or after the merger date. Thus, a
family receiving a shopping incentive under the pre-merger voucher
program will continue to receive any shopping incentive for the pre-
merger unit until the family's second regular reexamination on or after
the merger date. However, execution of a Housing Choice Voucher Program
HAP contract may be deferred until the next time a HAP contract would
otherwise be executed in accordance with program requirements.
    3. Conversion of pre-merger over-FMR certificates to vouchers under
the Housing Choice Voucher Program. On the merger date, over-FMR
tenancy participants in the pre-merger certificate program
automatically become participants in the Housing Choice Voucher
Program. Existing HAP contracts for an over-FMR tenancy provide that
the housing assistance payment must be calculated in accordance with
HUD requirements. However, the HAP contracts do not specify the amount
of or method of computing the housing assistance payment. Consistent
with Sec. 982.502 of this interim rule, the new method of calculating
subsidy under the Housing Choice Voucher Program is applied commencing
at the effective date of the second regular reexamination of family
income and composition on or after the merger date.
    Conversion of an over-FMR tenancy certificate unit to the Housing
Choice Voucher Program is not dependent upon execution of a Housing
Choice Voucher Program HAP contract. Execution of a Housing Choice
Voucher Program HAP contract may be deferred until the next time a HAP
contract would otherwise be executed in accordance with program
requirements.
    4. Conversion of pre-merger regular tenancy certificate assistance
to voucher assistance under the Housing Choice Voucher Program. A
regular tenancy certificate participant will automatically become a
participant in the Housing Choice Voucher Program when the PHA executes
a new HAP contract on their behalf on or after the merger date--whether
for the same unit or for a new unit. The PHA must terminate assistance
under any outstanding regular certificate HAP contract (entered before
the merger date) at the effective date of the second regular
reexamination of family income and composition on or after the merger
date.
    All existing certificate tenancies must be converted to the Housing
Choice Voucher Program (Sec. 982.502(d)). However, until conversion
there is no change in pre-merger certificate program requirements for
calculation of housing assistance payments, including annual
adjustments and special adjustments to the contract rent
(Secs. 982.507, 509, and 510 of the pre-merger regulations which are
renumbered as Secs. 982.518, 982.519, and 982.520 in the Housing Choice
Voucher Program regulations).

II. Section 8 Tenant-Based Program Statutory Provisions Not
Included in This Rule

    This interim rule does not include every statutory change affecting
the Section 8 tenant-based programs. A listing of the implementation
method for tenant-based statutory provisions not included in this rule
follows.

A. Part 5 and Part 984 Regulations Being Published Separately

    Other provisions of the 1998 Act affecting the Section 8
certificate and voucher programs are being addressed in a separate
proposed rule amending 24 CFRs parts 5 and 984. This rule was published
in the Federal Register on April 30, 1999 (64 FR 23460) and includes
the following provisions: the minimum rent requirements (section 507 of
the 1998 Act); elimination of federal preferences (section 514 of the
1998 Act); income targeting requirements (section 513 of the 1998 Act);
elimination of Section 8 selection preference for public housing
residents based on prior federal preference status (section 514 of the
1998 Act); elimination of the admission preference for elderly,
disabled and displaced persons before other single persons (section
506(2)(A) of the 1998 Act); computer matching income verification
information requirements (Section 8(o)(5)(A) of the USH Act, 42 U.S.C.
1437f(o)(5)(A)); revisions to the definitions of annual income and
adjusted income (section 508 of the 1998 Act); revision to the minimum
FSS program size (section 509 of the 1998 Act); and tenant rent welfare
sanctions (section 512 of the 1998 Act). Further, the regulatory
conforming changes to reflect the statutory revisions to restrictions
on assistance to noncitizens (section 592 of the 1998 Act) are being
addressed in a separate final rule.

[[Page 26635]]

B. Section 8 Tenant-Based Homeownership Program

    Sections 545 and 555 of the 1998 Act provide that PHAs may opt to
implement a Section 8 tenant-based homeownership program. HUD is
issuing a separate proposed rule to implement the Section 8 tenant-
based homeownership program. The homeownership proposed rule was
published in the Federal Register on April 30, 1999 (64 FR 23488).

C. Section 8 Tenant-Based Renewal Funds

    Section 556 of the 1998 Act requires HUD to establish the renewal
funding process for tenant-based assistance in a regulation. Beginning
October 1, 1998, HUD must renew expiring tenant-based Annual
Contributions Contracts (ACCs) by applying a localized inflation factor
to an allocation baseline that includes, at a minimum, ``amounts
sufficient to ensure continued assistance for the actual number of
families assisted on October 1, 1997, with appropriate upward
adjustments for incremental assistance and additional families
authorized subsequent to that date.'' HUD notice PIH 98-65 dated
December 30, 1998 outlines the tenant-based renewal funding allocation
policies for federal fiscal year 1999 assistance used to renew funding
increments expiring between January 1, 1999 and December 31, 1999.
Calendar year 2000 funding for the renewal of Section 8 certificate and
voucher ACCs will be allocated pursuant to a negotiated final rule
which will be published on or before October 21, 1999.

D. PHA Plan

    The PHA Plan interim rule (section 511 of the 1998 Act) was
published in the Federal Register on February 18, 1999 (64 FR 8170).

E. Project-Based Vouchers

    Revisions to the rules for the project-based voucher/certificate
program will be implemented in a future rulemaking (Section 8(o)(13) of
the USH Act).

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

    PHA access to criminal conviction records for Section 8 applicants
and tenants (section 575 of the 1998 Act) and other crime and alcohol
abuse provisions will be implemented through future rulemaking or
guidance.

G. Other Miscellaneous Statutory Provisions

    Initial guidance on the 1998 Act provisions that are already
effective was provided in notices published in the Federal Register on
February 18, 1999 (64 FR 8192) and April 30, 1999 (64 FR 23344). HUD
will continue to provide regulatory and other guidance, as appropriate,
for all remaining provisions of the 1998 Act.

III. Public Participation in This Rulemaking

    HUD is issuing this interim rule under the statutory authority
provided by section 559 of the 1998 Act. Section 559 provides that the
Secretary of HUD ``shall issue such interim regulations as may be
necessary to implement the amendments made by [the 1998 Act] which
relate to Section 8(o) of the [USH Act].'' Section 559 also requires
that before the final rule is published, HUD will seek the
recommendations on the implementation of the new Housing Choice Voucher
Program from organizations representing: (1) State or local PHAs; (2)
Owners and managers of tenant-based housing assistance under Section 8
of the USH Act; and (3) legal services organizations. Section 559 also
requires HUD to convene not less than two public forums at which the
persons or organizations making recommendations may express their views
concerning the proposed disposition of their recommendations. The
dates, times and locations of the first two public forums were
announced in the Federal Register on April 27, 1999 (64 FR 22550).
    In addition to the general solicitation of public comments on this
interim rule, HUD specifically seeks through this rulemaking
recommendations on implementation of the Housing Choice Voucher Program
from the four groups mentioned above: (1) State or local PHAs; (2)
Owners and managers of tenant-based housing assistance under section 8
of the USH Act; (3) families receiving tenant-based assistance under
section 8 of the USH Act; and (4) legal services organizations.

IV. Justification for Interim Rulemaking

    HUD generally publishes a rule for public comment before issuing a
rule for effect, in accordance with its own regulations on rulemaking
in 24 CFR part 10. Part 10, however, provides that prior notice and
public comment may be omitted if ``a statute expressly so authorizes''
(24 CFR 10.1). This interim rule implements those provisions of the
1998 Act which complete the merger of the Section 8 certificate and
voucher programs into a single new Section 8 voucher program
(authorized under Section 8(o) of the USH Act, 42 U.S.C. 1437f(o)),
entitled the Housing Choice Voucher Program. As noted above, section
559 of the 1998 Act provides that the Secretary of HUD ``shall issue
such interim regulations as may be necessary to implement the
amendments made by [the 1998 Act] which relate to Section 8(o) of the
[USH Act].'' Accordingly, HUD is issuing this interim rule for effect
without prior notice and comment.
    HUD recognizes the value and necessity of public comment in the
development of its regulations. HUD has therefore issued these
regulations on an interim basis and has provided the public with a 60-
day comment period. Additionally, HUD has provided for a 90-day delayed
effective date for this interim rule (in contrast to the customary 30-
day delayed effective date for most HUD rules), in order to afford PHAs
additional time to prepare for the implementation of the interim rule.
Further, HUD has scheduled three public forums to discuss
implementation of the Housing Choice Voucher Program. HUD welcomes
comment on the regulatory amendments made by this interim rule. Public
comments will be addressed in the final rule.

V. Findings and Certifications

Paperwork Reduction Act

    (a) The proposed information collection requirements contained in
this rule have been submitted to the Office of Management and Budget
(OMB) for review, under section 3507(d) of the Paperwork Reduction Act
of 1995 (44 U.S.C. Chapter 35). An agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information
unless the collection displays a valid control number.
    (b) In accordance with 5 CFR 1320.5(a)(1)(iv), HUD estimates that
the total reporting and recordkeeping burden that will result from the
proposed collection of information as follows:

BILLING CODE 4210-32-P

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    (c) In accordance with 5 CFR 1320.8(d)(1), the Department is
soliciting comments from members of the public and affected agencies
concerning the proposed collection of information to:
    (1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to
be collected; and
    (4) Minimize the burden of the collection of information on those
who are to respond; including through the use of appropriate automated
collection techniques or other forms of information technology, e.g.,
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the
information collection requirements in this proposal. Under the
provisions of 5 CFR part 1320, OMB is required to make a decision
concerning this collection of information between 30 and 60 days after
today's publication date. Therefore, a comment on the information
collection requirements is best assured of having its full effect if
OMB receives the comment within 30 days of today's publication. This
time frame does not affect the deadline for comments to the agency on
the interim rule, however. Comments must refer to the rule by name and
docket number (FR-4428) and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and
Budget, New Executive Office Building, Washington, DC 20503
    and
Gerald J. Benoit, Office of Public and Indian Housing, Department of
Housing and Urban Development, Room 4210, 451 Seventh Street, SW,
Washington, DC 20410

Environmental Impact

    A Finding of No Significant Impact with respect to the environment
was made in accordance with HUD regulations in 24 CFR part 50 that
implement section 102(2)(C) of the National Environmental Policy Act of
1969 (42 U.S.C. 4223). The Finding is available for public inspection
between 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules
Docket Clerk, Office of General Counsel, Room 10276, Department of
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. This interim rule does not impose
any Federal mandates on any State, local, or tribal governments or the
private sector within the meaning of Unfunded Mandates Reform Act of
1995.

Executive Order 12866

    The Office of Management and Budget (OMB) reviewed this interim
rule under Executive Order 12866, Regulatory Planning and Review. OMB
determined that this interim rule is a ``significant regulatory
action,'' as defined in section 3(f) of the Order (although not
economically significant, as provided in section 3(f)(1) of the Order).
Any changes made to the interim rule subsequent to its submission to
OMB are identified in the docket file, which is available for public
inspection in the office of the Department's Rules Docket Clerk, Room
10276, 451 Seventh Street, SW, Washington, DC 20410-0500.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) (the RFA), has reviewed and approved this interim rule
and in so doing certifies that this rule would not have a significant
economic impact on a substantial number of small entities. The reasons
for HUD's determination are as follows:
    (1) A Substantial Number of Small Entities Will Not be Affected.
The interim rule is exclusively concerned with public housing agencies
that administer tenant-based housing assistance under Section 8 of the
United States Housing Act of 1937. Specifically, the interim rule would
establish requirements governing tenant-based assistance for an
eligible family. Under the definition of ``Small governmental
jurisdiction'' in section 601(5) of the RFA, the provisions of the RFA
are applicable only to those few public housing agencies that are part
of a political jurisdiction with a population of under 50,000 persons.
The number of entities potentially affected by this rule is therefore
not substantial.
    (2) No Significant Economic Impact. The interim regulatory
amendments would not change the amount of funding available under the
Section 8 voucher program. Accordingly, the economic impact of this
rule will not be significant, and it will not affect a substantial
number of small entities.
    Notwithstanding HUD's determination that this rule will not have a
significant economic effect on a substantial number of small entities,
HUD specifically invites comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
in this preamble.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official for HUD under
section 6(a) of Executive Order 12612, Federalism, has determined that
this rule will not have federalism implications concerning the division
of local, State, and Federal responsibilities. No programmatic or
policy change under this rule will affect the relationship between the
Federal government and State and local governments.

Catalog of Domestic Assistance Numbers

    The Catalog of Domestic Assistance numbers for the programs
affected by this interim rule are 14.146, 14.147, 14.850, 14.851,
14.852, 14.855, 14.857, and 15.141.

List of Subjects

24 CFR Part 248

    Intergovernmental relations, Loan programs--housing and community
development, Low and moderate income housing, Mortgage insurance,
Reporting and recordkeeping requirements.

24 CFR Part 791

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

24 CFR Part 792

    Fraud, Grant programs--housing and community development, Rent
subsidies, Reporting and recordkeeping requirements.

24 CFR Part 982

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

    For the reasons discussed in the preamble, HUD amends 24 CFR parts
248, 791, 792, and 982 as follows:

PART 248--PREPAYMENT OF LOW INCOME HOUSING MORTGAGES

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

    Authority: 12 U.S.C. 1715l note, 4101 note, and 4101-4124; 42
U.S.C. 3535(d).

Sec. 248.101  [Amended]

    2. Amend Sec. 248.101 as follows:

[[Page 26639]]

    a. In the definition of ``Adjusted income'' revise the references
to ``Sec. 813.106'' and ``Sec. 813.102'' to read ``part 5''.
    b. In the definition of ``Fair market rent'', revise the reference
to ``Sec. 882.102'' to read ``Sec. 982.4''; and
    c. In the definition of ``Low Income Families'', revise the
reference to ``part 813'' to read ``part 5''.
    d. In the definition of ``Section 8 assistance'', after the words
``880 through 887'', add the words ``and 982 and 983''.
    e. In the definition of ``Special Needs Tenants'' revise the
reference to ``Sec. 812.2'' to read ``part 5''.
    f. In the definition of ``Very Low Income Families'', revise the
reference to ``Sec. 813.102'' to ``part 5''.

Sec. 248.141   [Amended]

    3. Amend Sec. 248.141(c)(3) by removing the reference to
``certificate and''.

Sec. 248.147   [Amended]

    4. In Sec. 248.147(e)(1), revise the references to ``parts 882 and
887'' in the first and second sentences to read in each place ``part
982''.
    5. Amend Sec. 248.165 as follows:
    a. Revise paragraph (a) as set forth below; and
    b. In paragraph (i), revise the reference to ``assistance under
parts 882 or 887 of this title'' to read ``tenant-based assistance
under the Housing Choice Voucher Program''.

Sec. 248.165  Assistance for displaced tenants.

    (a) Section 8 assistance. Each low income family that is displaced
as a result of the prepayment of the mortgage, or voluntary termination
of an insurance contract, on eligible low income housing shall, subject
to the availability of funds, be offered the opportunity to receive
tenant-based assistance under the Housing Choice Voucher Program in
accordance with part 982 of this title.
* * * * *
    6. Revise Sec. 248.173(m)(2) to read as follows:

Sec. 248.173  Resident homeownership program.

* * * * *
    (m) * * *
    (2) Section 8 assistance. If a tenant decides not to purchase a
unit, or is not qualified to do so, the Commissioner shall ensure that
tenant-based assistance under the Housing Choice Voucher Program in
accordance with part 982 of this title is available for use in that or
another property by each tenant that meets the eligibility requirements
thereunder.
* * * * *

Sec. 248.201   [Amended]

    7. Amend Sec. 248.201 as follows:
    a. In the definition of ``Low-income Families'', revise the
reference to ``part 813'' to read ``part 5'';
    b. In the definition of ``Very Low Income Families'', revise the
reference to ``under Sec. 813.102 of this title'' to read ``under
section 3(b) of the 1937 Act (42 U.S.C. 1437a(b))''.

PART 791--ALLOCATIONS OF HOUSING ASSISTANCE FUNDS

    8. Revise the heading of part 791 to read as set forth above.
    9. The authority citation for part 791 continues to read as
follows:

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

    10. Revise Sec. 791.101 to read as follows:

Sec. 791.101  Applicability and scope.

    This part describes the role and responsibility of HUD in
allocation of budget authority (pursuant to section 213 of the Housing
and Community Development Act of 1974 (42 U.S.C. 1439)) for housing
assistance under the United States Housing Act of 1937 (Section 8 and
public housing) and under section 101 of the Housing and Urban
Development Act of 1965 (12 U.S.C. 1701s), and of budget authority for
housing assistance under section 202 of the Housing Act of 1959 (12
U.S.C. 1710q). This part does not apply to budget authority for the
public housing operating fund or capital fund.
    11. Amend Sec. 791.102 as follows:
    a. Remove the definitions of ``Application for housing
assistance'', ``Chief executive officer'', ``Household type'',
``Housing type'', ``Local government'', ``Tenure type'', and ``Urban
county'';
    b. Amend the definition of ``Allocation area'' by removing the
reference to ``or Indian areas''; and
    c. Revise the definition of ``Public housing agency'' as set forth
below.

Sec. 791.102  Definitions.

* * * * *
    Public housing agency (PHA). (1) Any State, county, municipality,
or other governmental entity or public body which is authorized to
administer a program under the 1937 Act (or an agency or
instrumentality of such an entity).
    (2) In addition, for purposes of the program of Section 8 tenant-
based assistance under part 982 of this title, the term PHA also
includes any of the following:
    (i) A consortia of housing agencies, each of which meets the
qualifications in paragraph (1) of this definition, that HUD determines
has the capacity and capability to efficiently administer the program
(in which case, HUD may enter into a consolidated ACC with any legal
entity authorized to act as the legal representative of the consortia
members);
    (ii) Any other public or private non-profit entity that was
administering a Section 8 tenant-based assistance program pursuant to a
contract with the contract administrator of such program (HUD or a PHA)
in effect on October 21, 1998; or
    (iii) For any area outside the jurisdiction of a PHA that is
administering a tenant-based program, or where HUD determines that such
PHA is not administering the program effectively, a private non-profit
entity or a governmental entity or public body that would otherwise
lack jurisdiction to administer the program in such area.

Subpart C--[Removed and Reserved]

    12. Remove and reserve subpart C.

Sec. 791.401  [Amended]

    13. In Sec. 791.401, revise the reference to ``Sec. 791.101(a)'' to
read ``Sec. 791.101''.
    14. Amend Sec. 791.402 as follows:
    a. Remove paragraph (c)(2) and redesignate paragraph (c)(1) as
paragraph (c); and
    b. Revise paragraph (d) as set forth below.

Sec. 791.402  Determination of low-income housing needs.

* * * * *
    (d) Based on the criteria in paragraphs (b) and (c) of this
section, the Assistant Secretary for Policy Development and Research
shall establish housing needs factors for each county and independent
city in the field office jurisdiction, and shall aggregate the factors
for such jurisdiction. The field office total for each factor is then
divided by the respective national total for that factor. The resulting
housing needs ratios under paragraph (b) of this section are then
weighted to provide housing needs percentages for each field office,
using the following weights: population--20 percent; poverty--20
percent; housing overcrowding--10 percent; housing vacancies--10
percent; substandard housing--20 percent; other objectively measurable
conditions--20 percent. For the section 202 elderly program, the two
criteria described in paragraph (c) of this section are weighted
equally.
* * * * *

[[Page 26640]]

    15. Amend Sec. 791.403 to revise paragraphs (a) and (b)(1)(i) to
read as follows:

Sec. 791.403  Allocation of housing assistance.

    (a) The total budget authority available for any fiscal year shall
be determined by adding any available unreserved budget authority from
prior fiscal years to any newly appropriated budget authority for each
housing program.
    (b) * * *
    (1) * * *
    (i) Amendments of existing contracts, renewal of assistance
contracts, assistance to families that would otherwise lose assistance
due to the decision of the project owner to prepay the project mortgage
or not to renew the assistance contract, assistance to prevent
displacement or to provide replacement housing in connection with the
demolition or disposition of public housing, assistance in support of
the property disposition and loan management functions of the
Secretary;
* * * * *
    16. Revise Sec. 791.404(c) to read as follows:

Sec. 791.404  Field Office allocation planning.

* * * * *
    (c) Determining the amount of budget authority. Where the field
office establishes more than one allocation area, it shall determine
the amount of budget authority to be allocated to each allocation area,
based upon a housing needs percentage which represents the needs of
that area relative to the field office jurisdiction. For each program,
a composite housing needs percentage developed under Sec. 791.402 for
those counties and independent cities comprising the allocation area
shall be aggregated into allocation area totals.
* * * * *

PART 792--PUBLIC HOUSING AGENCY SECTION 8 FRAUD RECOVERIES

    17. Revise the heading of part 792 to read as set forth above.
    18. The authority citation for 24 CFR part 792 continues to read as
follows:

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

PART 792--[AMENDED]

    19. In part 792, revise all references to ``HA'' to read ``PHA''.
    20. Revise Sec. 792.101 to read as follows:

Sec. 792.101  Purpose.

    The purpose of this part is to encourage public housing agencies
(PHAs) to investigate and pursue instances of tenant and owner fraud
and abuse in the operation of the Section 8 housing assistance payments
programs.

Sec. 792.102  [Amended]

    21. Amend Sec. 792.102 as follows:
    a. In paragraphs (a) and (b), revise the reference to ``an HA'' to
read ``a PHA''.
    b. In paragraph (b), revise the reference to ``Sec. 882.216 or
887.405'' to read ``Sec. 982.555 of this title''.
    22. Amend Sec. 792.103 as follows:
    a. Remove the definition of ``HA (Housing Agency)'';
    b. Add the definition of ``Public housing agency (PHA)'' in
alphabetical order as set forth below; and
    c. In the definition of ``Repayment agreement'', revise the
reference to ``an HA'' to read ``a PHA''.

Sec. 792.103  Definitions.

* * * * *
    Public housing agency (PHA). A public housing agency as defined in
Sec. 791.102.
* * * * *

Sec. 792.202  [Amended]

    23. In Sec. 792.202(a)(1) and (a)(2), revise the reference to
``Sec. 882.216 or 887.405'' to read ``Sec. 982.555 of this title''.

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

    24. Revise the heading of part 982 to read as set forth above.
    25. The authority citation for part 982 continues to read as
follows:

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

PART 982--[AMENDED]

    25a. In part 982, ``HA'' is removed and ``PHA'' is added in its
place wherever it appears, and ``an HA'' is removed and ``a PHA'' is
added in its place wherever it appears.
    26. Amend Sec. 982.1 as follows:
    a. Revise the section heading;
    b. Revise paragraphs (a)(1), (a)(2), and (a)(4);
    c. Amend paragraph (a)(3) by removing the reference to ``and is not
based on the actual rent of the leased unit'';
    d. Amend paragraph (b)(1) by removing the reference to
``certificate or''; and
    e. Revise paragraph (b)(2).
    The revisions read as follows:

Sec. 982.1  Programs: Purpose and structure.

    (a) General description. (1) In the HUD Housing Choice Voucher
Program (Voucher Program) and the HUD certificate program, HUD pays
rental subsidies so eligible families can afford decent, safe and
sanitary housing. Both programs are generally administered by State or
local governmental entities called public housing agencies (PHAs). HUD
provides housing assistance funds to the PHA. HUD also provides funds
for PHA administration of the programs. PHAs are no longer allowed to
enter into contracts for assistance in the certificate program.
    (2) Families select and rent units that meet program housing
quality standards. If the PHA approves a family's unit and tenancy, the
PHA contracts with the owner to make rent subsidy payments on behalf of
the family. A PHA may not approve a tenancy unless the rents is
reasonable.
* * * * *
    (4)(i) In the certificate program, the subsidy for most families is
the difference between the rent and 30 percent of adjusted monthly
income.
    (ii) In the voucher program, the subsidy is based on a local
``payment standard'' that reflects the cost to lease a unit in the
local housing market. If the rent is less than the payment standard,
the family generally pays 30 percent of adjusted monthly income for
rent. If the rent is more than the payment standard, the family pays a
larger share of the rent.
* * * * *
    (b) * * *
    (2) To receive tenant-based assistance, the family selects a
suitable unit. After approving the tenancy, the PHA enters into a
contract to make rental subsidy payments to the owner to subsidize
occupancy by the family. The PHA contract with the owner only covers a
single unit and a specific assisted family. If the family moves out of
the leased unit, the contract with the owner terminates. The family may
move to another unit with continued assistance so long as the family is
complying with program requirements.

Sec. 982.2  [Amended]

    27. In Sec. 982.2(a), remove the word ``rental'' in both places it
appears in the second sentence.
    28. Amend Sec. 982.4 as follows:
    a. Amend paragraph (a)(2) by removing the reference to ``Housing
agency (HA)'';
    b. In paragraph (a)(4) revise the reference to ``utility allowance,
and utility reimbursement'' to read ``utility allowance'';
    c. Amend paragraph (b) by removing the definitions of
``Amortization payment'', ``Certificate'', ``Certificate or voucher
holder'', ``Certificate program'',

[[Page 26641]]

``Contiguous MSA'', ``Contract authority'', ``Exception rent'', ``FMR/
exception rent limit'', ``Lease addendum'', ``Over-FMR tenancy'',
``Regular tenancy'', ``Set-up charges'', ``Utility hook-up charge'',
and ``Voucher program'';
    d. Amend paragraph (b) by revising the definitions of ``Payment
standard'', and ``Tenant rent'';
    e. Amend paragraph (b) by removing the reference to ``certificate
or'' from the definitions of the terms ``Receiving HA'' and
``Suspension''; and
    f. Amend paragraph (b) by removing the phrase ``approval to lease a
unit'' in the definition of ``Suspension'' and adding in its place
``approval of the tenancy''.
    g. Amend paragraph (b) by adding, in alphabetical order, the
definitions of the terms ``Merger date'', ``PHA plan'', ``Program'',
``Program receipts'', ``Public housing agency (PHA)'', ``Residency
preference'', ``Residency preference area'', ``Tenant rent'', and
``Voucher holder''.

Sec. 982.4  Definitions.

* * * * *
    (b) * * *
    Merger date. August 12, 1999.
* * * * *
    Payment standard. The maximum monthly assistance payment for a
family assisted in the voucher program (before deducting the total
tenant payment by the family).
    PHA plan. The annual plan and the 5-year plan as adopted by the PHA
and approved by HUD in accordance with part 903 of this chapter.
* * * * *
    Program. The Section 8 tenant-based assistance program under this
part.
    Program receipts. HUD payments to the PHA under the consolidated
ACC, and any other amounts received by the PHA in connection with the
program.
    Public housing agency (PHA). PHA includes both:
    (1) Any State, county, municipality, or other governmental entity
or public body which is authorized to administer the program (or an
agency or instrumentality of such an entity), or
    (2) Any of the following:
    (i) A consortia of housing agencies, each of which meets the
qualifications in paragraph (1) of this definition, that HUD determines
has the capacity and capability to efficiently administer the program
(in which case, HUD may enter into a consolidated ACC with any legal
entity authorized to act as the legal representative of the consortia
members);
    (ii) Any other public or private non-profit entity that was
administering a Section 8 tenant-based assistance program pursuant to a
contract with the contract administrator of such program (HUD or a PHA)
on October 21, 1998; or
    (iii) For any area outside the jurisdiction of a PHA that is
administering a tenant-based program, or where HUD determines that such
PHA is not administering the program effectively, a private non-profit
entity or a governmental entity or public body that would otherwise
lack jurisdiction to administer the program in such area.
* * * * *
    Residency preference. A PHA preference for admission of families
that reside anywhere in a specified area, including families with a
member who works or has been hired to work in the area (``residency
preference area'').
    Residency preference area. The specified area where families must
reside to qualify for a residency preference.
* * * * *
    Tenant rent. For a tenancy in the certificate program: The total
tenant payment minus any utility allowance.
* * * * *
    Voucher holder. A family holding a voucher with an unexpired term
(search time).
* * * * *
    29. Revise Sec. 982.51(a) to read as follows:

Sec. 982.51  PHA authority to administer program.

    (a) The PHA must have authority to administer the program. The PHA
must provide evidence, satisfactory to HUD, of its status as a PHA, of
its authority to administer the program, and of the PHA jurisdiction.
* * * * *
    30. Amend Sec. 982.53 by revising paragraphs (b) and (c) and adding
paragraph (d) to read as follows:

Sec. 982.53  Equal opportunity requirements.

* * * * *
    (b) Civil rights certification. The PHA must submit a signed
certification to HUD that:
    (1) The PHA will administer the program in conformity with the Fair
Housing Act, Title VI of the Civil Rights Act of 1964, section 504 of
the Rehabilitation Act of 1973, and Title II of the Americans with
Disabilities Act.
    (2) The PHA will affirmatively further fair housing in the
administration of the program.
    (c) Obligation to affirmatively further fair housing. The PHA shall
be considered in compliance with the obligation to affirmatively
further fair housing if the PHA examines its programs or proposed
programs, identifies any impediments to fair housing choice within
those programs, addresses those impediments in a reasonable fashion in
view of the resources available, works with the local jurisdiction to
implement any of the local government's initiatives to affirmatively
further fair housing that require the PHA's involvement, and maintains
records reflecting these analyses and actions.
    (d) State law. Nothing in part 982 is intended to pre-empt
operation of State laws that prohibit discrimination against a Section
8 voucher-holder because of status as a Section 8 voucher-holder.
However, such State laws shall not change or affect any requirement of
this part, or any other HUD requirements for administration or
operation of the program.
    31. Amend Sec. 982.54 as follows:
    a. Revise paragraphs (d)(1), (d)(2), (d)(14) and (d)(15);
    b. Remove paragraph (d)(16);
    c. Redesignate paragraphs (d)(17) through (d)(22) as paragraphs
(d)(16) through (d)(21) respectively; and
    d. Add new paragraph (d)(27).
    The revisions and addition read as follows:

Sec. 982.54  Administrative plan.

* * * * *
    (d) * * *
    (1) Selection and admission of applicants from the PHA waiting
list, including any PHA admission preferences, procedures for removing
applicant names from the waiting list, and procedures for closing and
reopening the PHA waiting list;
    (2) Issuing or denying vouchers, including PHA policy governing the
voucher term and any extensions or suspensions of the voucher term.
``Suspension'' means stopping the clock on the term of a family's
voucher after the family submits a request for approval of the tenancy.
If the PHA decides to allow extensions or suspensions of the voucher
term, the PHA administrative plan must describe how the PHA determines
whether to grant extensions or suspensions, and how the PHA determines
the length of any extension or suspension;
* * * * *
    (14) The process for establishing and revising voucher payment
standards;
    (15) The method of determining that rent to owner is a reasonable
rent (initially and during the term of a HAP contract);
* * * * *

[[Page 26642]]

    (22) Procedural guidelines and performance standards for conducting
required HQS inspections.
    32. In Sec. 982.101, revise paragraph (a) and paragraph (b)(2)(i)
to read as follows:

Sec. 982.101  Allocation of funding.

    (a) Allocation of funding. HUD allocates available budget authority
for the tenant-based assistance program to HUD field offices.
    (b) * * *
    (2) * * *
    (i) Funding retained in a headquarters reserve for purposes
specified by law;
* * * * *
    33. Amend Sec. 982.103 by revising paragraph (a) and adding
paragraph (c) to read as follows:

Sec. 982.103  HUD review of application.

    (a) Competitive funding under NOFA. For competitive funding under a
NOFA, HUD must evaluate an application on the basis of the selection
criteria stated in the NOFA, and must consider the PHA's capacity and
capability to administer the program.
* * * * *
    (c) PHA disqualification. HUD will not approve any PHA funding
application (including an application for competitive funding under a
NOFA) if HUD determines that the PHA is disbarred or otherwise
disqualified from providing assistance under the program.
    34. Amend Sec. 982.151 as follows:
    a. Amend paragraph (a)(1) by removing the reference to ``the
maximum annual payment by HUD, and'';
    b. In paragraph (a)(2), revise the reference to ``certificate
program and voucher program'' to read ``tenant-based assistance
program''; and
    c. Revise paragraph (b) to read as follows:

Sec. 982.151  Annual contributions contract.

* * * * *
    (b) Budget authority. (1) Budget authority is the maximum amount
that may be paid by HUD to a PHA over the ACC term of a funding
increment. Before adding a funding increment to the consolidated ACC
for a PHA program, HUD reserves budget authority from amounts
authorized and appropriated by the Congress for the program.
    (2) For each funding increment, the ACC specifies the term over
which HUD will make payments for the PHA program, and the amount of
available budget authority for each funding increment. The amount to be
paid to the PHA during each PHA fiscal year (including payment from the
ACC reserve account described in Sec. 982.154) must be approved by HUD.
    35. Amend Sec. 982.152 by revising paragraphs (a)(1), (b)(1) and
(c) to read as follows:

Sec. 982.152  Administrative fee.

    (a) Purposes of administrative fee. (1) HUD may approve
administrative fees to the PHA for any of the following purposes:
    (i) Ongoing administrative fee;
    (ii) Costs to help families who experience difficulty finding or
renting appropriate housing under the program;
    (iii) The following types of extraordinary costs approved by HUD:
    (A) Costs to cover necessary additional expenses incurred by the
PHA to provide reasonable accommodation for persons with disabilities
in accordance with part 8 of this title (e.g., additional counselling
costs), where the PHA is unable to cover such additional expenses from
ongoing administrative fee income or the PHA administrative fee
reserve;
    (B) Costs of audit by an independent public accountant;
    (C) Other extraordinary costs determined necessary by HUD
Headquarters;
    (iv) Preliminary fee (in accordance with paragraph (c) of this
section);
    (v) Costs to coordinate supportive services for families
participating in the family self-sufficiency (FSS) program.
* * * * *
    (b) Ongoing administrative fee. (1) The PHA ongoing administrative
fee is paid for each program unit under HAP contract on the first day
of the month. The amount of the ongoing fee is determined by HUD in
accordance with Section 8(q)(1) of the 1937 Act (42 U.S.C.
1437f(q)(1)).
* * * * *
    (c) Preliminary fee. (1) If the PHA was not administering a program
of Section 8 tenant-based assistance prior to the merger date, HUD will
pay a one-time fee in the amount of $500 in the first year the PHA
administers a program. The fee is paid for each new unit added to the
PHA program by the initial funding increment under the consolidated
ACC.
    (2) The preliminary fee is used to cover expenses the PHA incurs to
help families who inquire about or apply for the program, and to lease
up new program units.
* * * * *
    36. Revise Sec. 982.154 to read as follows:

Sec. 982.154  ACC reserve account.

    (a) HUD may establish and maintain an unfunded reserve account for
the PHA program from available budget authority under the consolidated
ACC. This reserve is called the ``ACC reserve account'' (formerly
``project reserve''). There is a single ACC reserve account for the PHA
program.
    (b) The amount in the ACC reserve account is determined by HUD. HUD
may approve payments for the PHA program, in accordance with the PHA's
HUD-approved budget, from available amounts in the ACC reserve account.
    37. Amend Sec. 982.155 by revising the introductory text of
paragraph (a) to read as follows:

Sec. 982.155  Administrative fee reserve.

    (a) The PHA must maintain an administrative fee reserve (formerly
``operating reserve'') for the program. There is a single
administrative fee reserve for the PHA program. The PHA must credit to
the administrative fee reserve the total of:
* * * * *
    38. Amend Sec. 982.157 as follows:
    a. Revise paragraph (b)(1) introductory text as set forth below;
and
    b. Add paragraph (c).

Sec. 982.157  Budget and expenditures.

* * * * *
    (b) PHA use of program receipts. (1) Program receipts must be used
in accordance with the PHA's HUD-approved budget. Such program receipts
may only be used for:
* * * * *
    (c) Intellectual property rights. Program receipts may not be used
to indemnify contractors or subcontractors of the PHA against costs
associated with any judgment of infringement of intellectual property
rights.
    39. Revise Sec. 982.162(a)(3) to read as follows:

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

    (a) * * *
    (3) The tenancy addendum required by HUD (which is included both in
the HAP contract and in the lease between the owner and the tenant).
* * * * *
    40. Amend Sec. 982.201 as follows:
    a. In paragraph (a), revise the reference to ``a program'' to read
``the program'';
    b. Revise paragraphs (b) and (f)(2) as set forth below; and
    c. Remove the reference to ``certificate or'' in paragraphs (d)(1),
(d)(2) and (e).

Sec. 982.201  Eligibility.

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

[[Page 26643]]

be a family in any of the following categories:
    (i) A ``very low income'' family;
    (ii) A low-income family that is ``continuously assisted'' under
the 1937 Housing Act;
    (iii) A low-income family that meets additional eligibility
criteria specified in the PHA administrative plan. Such additional PHA
criteria must be consistent with the PHA plan and with the consolidated
plans for local governments in the PHA jurisdiction;
    (iv) A low-income family that qualifies for voucher assistance as a
non-purchasing family residing in a HOPE 1 (HOPE for public housing
homeownership) or HOPE 2 (HOPE for homeownership of multifamily units)
project. (Section 8(o)(4)(D) of the 1937 Act (42 U.S.C.
1437f(o)(4)(D));
    (v) A low-income or moderate-income family that is displaced as a
result of the prepayment of the mortgage or voluntary termination of an
insurance contract on eligible low-income housing as defined in
Sec. 248.101 of this title;
    (vi) A low-income family that qualifies for voucher assistance as a
non-purchasing family residing in a project subject to a resident
homeownership program under Sec. 248.173 of this title.
    (2) Income-targeting. (i) Not less than 75 percent of the families
admitted to a PHA's tenant-based voucher program during the PHA fiscal
year shall be targeted to families whose annual income does not exceed
the following amounts as determined by HUD:
    (A) 30 percent of the area median income, with adjustments for
smaller and larger families; or
    (B) A higher or lower percent of the area median income, if HUD
determines that a higher or lower percent is necessary because of
unusually high or low family incomes.
    (ii) Conversion of assistance for a participant in the PHA
certificate program to assistance in the PHA voucher program does not
count as an ``admission,'' and is not subject to targeting under
paragraph (b)(2)(i) of this section.
    (iii) Admission of families as described in paragraphs (b)(1)(ii)
or (b)(1)(v) of this section is not subject to targeting under
paragraph (b)(2)(i) of this section.
    (iv) If two or more PHAs that administer section 8 tenant-based
assistance have an identical jurisdiction, such PHAs shall be treated
as a single PHA for purposes of targeting under paragraph (b)(2)(i) of
this section. In such a case, the PHAs shall cooperate to assure that
aggregate admissions by such PHAs comply with the targeting
requirement. If such PHAs do not have a single fiscal year, HUD will
determine which PHA's fiscal year is used for this purpose.
    (3) The annual income (gross income) of an applicant family is used
both for determination of income-eligibility under paragraph (b)(1) of
this section, and for targeting under paragraph (b)(2)(i) of this
section.
    (4) The applicable income limit for issuance of a voucher when a
family is selected for the program is the highest income limit (for the
family unit size) for areas in the PHA jurisdiction. The applicable
income limit for admission to the program is the income limit for the
area where the family is initially assisted in the program. The family
may only use the voucher to rent a unit in an area where the family is
income eligible at admission to the program.
* * * * *
    (f) * * *
    (2) For description of the grounds for denying assistance because
of action or inaction by the applicant, see Sec. 982.552(b) and (c)
(requirement and authority to deny admission) and Sec. 982.553(a)
(crime by family members).
    41. Amend Sec. 982.202 as follows:
    a. Remove paragraph (b)(1);
    b. Redesignate paragraphs (b)(2), (b)(3), and (b)(4) as paragraphs
(b)(1), (b)(2), and (b)(3), respectively; and
    c. Revise the introductory text of the newly designated paragraph
(b)(3) as set forth below; and
    d. Revise paragraph (d) as set forth below.

Sec. 982.202  How applicants are selected: General requirements.

* * * * *
    (b) * * *
    (3) Family characteristics. The PHA preference system may provide a
preference for admission of families with certain characteristics from
the PHA waiting list. However, admission to the program may not be
based on:
* * * * *
    (d) Admission policy.
    The PHA must admit applicants for participation in accordance with
HUD regulations and other requirements, and with PHA policies stated in
the PHA administrative plan and the PHA plan. The PHA admission policy
must state the system of admission preferences that the PHA uses to
select applicants from the waiting list, including any residency
preference or other local preference.

Sec. 982.20  [Amended]

    42. In Sec. 982.203(b)(1), remove the words ``or Indian''.
    43. In Sec. 982.204, revise paragraph (b)(4), amend paragraph
(b)(5) to remove the phrase ``ranking preference or'' and add a new
paragraph (f) to read as follows:

Sec. 982.204  Waiting list: Administration of waiting list.

* * * * *
    (b) * * *
    (4) Qualification for any local preference;
* * * * *
    (f) Number of waiting lists. A PHA must use a single waiting list
for admission to its Section 8 tenant-based assistance program.
However, the PHA may use a separate single waiting list for such
admissions for a county or municipality.

Sec. 982.205  [Amended]

    44. Amend Sec. 982.205 as follows:
    a. Remove paragraph (a);
    b. Redesignate paragraphs (b) and (c) as paragraphs (a) and (b),
respectively;
    c. In newly designated paragraph (a)(2), revise all references to
``project-based certificate program'' to read ``project-based voucher
program'', and remove all references to ``or Indian'';
    d. In newly designated paragraph (b)(1), remove the reference to
``or Indian''; and
    e. In newly designated paragraph (b)(3), revise the reference to
``paragraph (c)(2)'' to read ``paragraph (b)(2)'', and remove the
reference to ``both the certificate program and''.
    45. Amend Sec. 982.206 as follows:
    a. Revise paragraph (b)(2) as set forth below;
    b. Remove paragraph (c)(2); and
    c. Redesignate paragraph (c)(1) as paragraph (c).

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

* * * * *
    (b) * * *
    (2) If the waiting list is open, the PHA must accept applications
from families for whom the list is open unless there is good cause for
not accepting the application (such as denial of assistance because of
action or inaction by members of the family) for the grounds stated in
Secs. 982.552 and 982.553.
* * * * *
    46. Revise Sec. 982.207 to read as follows:

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

    (a) Establishment of PHA local preferences. (1) The PHA may
establish a system of local preferences for selection of families
admitted to the program. PHA selection preferences must be described in
the PHA administrative plan. The system of local

[[Page 26644]]

preferences must be consistent with the PHA plan (see part 903 of this
title), and with the consolidated plans for local governments in the
PHA jurisdiction.
    (2) The PHA system of local preferences must be based on local
housing needs and priorities, as determined by the PHA. In determining
such needs and priorities, the PHA shall use generally accepted data
sources. The PHA shall consider public comment on the proposed public
housing agency plan (as received pursuant to Sec. 903.17 of this
chapter) and on the consolidated plan for the relevant jurisdiction (as
received pursuant to part 91 of this title).
    (3) The PHA may limit the number of applicants that may qualify for
any local preference.
    (b) Residency preferences. (1) If approved by HUD, the PHA may
adopt a residency preference that establishes a county or municipality
as a residency preference area. A PHA may not adopt a residency
preference for an area smaller than a county or municipality.
    (2) A residency preference must apply to families with a member who
works or who has been hired to work anywhere in a residency preference
area. In applying the residency preference, such families must be
treated like families that reside in the residency preference area.
    (3) A residency preference may not be based on how long the
applicant has resided in or worked in the PHA jurisdiction or residency
preference area.
    (c) Selection among families with preference. The PHA system of
preferences may use either of the following to select among applicants
on the waiting list with the same preference status:
    (1) Date and time of application; or
    (2) A drawing or other random choice technique.
    (d) Preference for person with disabilities. The PHA may give a
preference for admission of families that include a person with
disabilities. However, the PHA may not give a preference for admission
of persons with a specific disability.
    (e) Verification of selection method. The method for selecting
applicants from a preference category must leave a clear audit trail
that can be used to verify that each applicant has been selected in
accordance with the method specified in the administrative plan.
    47. Amend Sec. 982.301 as follows:
    a. In paragraph (b)(1), remove the reference to ``certificate or'';
and
    b. Revise paragraphs (b)(2), (b)(5) and (b)(6) as set forth below.

Sec. 982.301  Information when family is selected.

* * * * *
    (b) * * *
    (2) How the PHA determines the amount of the housing assistance
payment for a family, including:
    (i) How the PHA determines the payment standard for a family; and
    (ii) How the PHA determines the total tenant payment for a family.
* * * * *
    (5) The HUD-required ``tenancy addendum'' that must be included in
the lease;
    (6) The form that the family uses to request PHA approval of the
assisted tenancy, and an explanation of how to request such approval;
* * * * *
    48. Revise Sec. 982.302 to read as follows:

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

    (a) When a family is selected, or when a participant family wants
to move to another unit, the PHA issues a voucher to the family. The
family may search for a unit.
    (b) If the family finds a unit, and the owner is willing to lease
the unit under the program, the family may request PHA approval of the
tenancy. The PHA has the discretion whether to permit the family to
submit more than one request at a time.
    (c) The family must submit to the PHA a request for approval of the
tenancy and a copy of the lease, including the HUD-prescribed tenancy
addendum. The request must be submitted during the term of the voucher.
    (d) The PHA specifies the procedure for requesting approval of the
tenancy. The family must submit the request for approval of the tenancy
in the form and manner required by the PHA.

Sec. 982.303  [Amended]

    49. Amend Sec. 982.303 as follows:
    a. Revise the section heading to read ``Term of voucher'';
    b. Remove all references to ``certificate or''; and
    c. In paragraph (c), revise both references to ``request for lease
approval'' to read ``request for approval of the tenancy''.
    50. Amend Sec. 982.305 as follows:
    a. Revise the section heading to read ``PHA approval of assisted
tenancy'';
    b. In the introductory text of paragraph (a), revise the reference
to ``to lease a dwelling unit'' to read ``of the assisted tenancy'';
    c. Remove paragraph (a)(5);
    d. Revise paragraphs (a)(3), (a)(4) and (b) as set forth below;
    e. In paragraphs (d) and (e), revise the references to ``to lease a
unit'' to read ``of the assisted tenancy''.

Sec. 982.305  PHA approval of assisted tenancy.

    (a) * * *
    (3) The lease includes the tenancy addendum; and
    (4) The rent to owner is reasonable.
    (b) Actions before lease term. (1) All of the following must always
be completed before the beginning of the initial term of the lease for
a unit:
    (i) The PHA has inspected the unit and has determined that the unit
satisfies the HQS;
    (ii) The landlord and the tenant have executed the lease (including
the HUD-prescribed tenancy addendum); and
    (iii) The PHA has approved leasing of the unit in accordance with
program requirements.
    (2)(i) The PHA must inspect the unit, determine whether the unit
satisfies the HQS, and notify the family and owner of the
determination:
    (A) In the case of a PHA with up to 1250 budgeted units in its
tenant-based program, within fifteen days after the family and the
owner submit a request for approval of the tenancy.
    (B) In the case of a PHA with more than 1250 budgeted units in its
tenant-based program, within a reasonable time after the family submits
a request for approval of the tenancy. To the extent practicable, such
inspection and determination must be completed within fifteen days
after the family and the owner submit a request for approval of the
tenancy.
    (ii) The fifteen day clock (under paragraph (b)(2)(i)(A) or
paragraph (b)(2)(i)(B) of this section) is suspended during any period
when the unit is not available for inspection.
* * * * *
    51. Amend Sec. 982.306 as follows:
    a. In paragraph (a) and the introductory text of paragraph (b),
revise the references to ``a unit'' to read ``an assisted tenancy'';
    b. In the introductory text of paragraph (c), revise the reference
to ``to lease a unit from an owner'' to read ``of an assisted
tenancy'';
    c. Revise paragraph (c)(3) as set forth below;
    d. Redesignate paragraphs (c)(5) and (c)(6) as paragraphs (c)(6)
and (c)(7), respectively; and
    e. Add new paragraph (c)(5) as set forth below.

Sec. 982.306  PHA disapproval of owner.

* * * * *

[[Page 26645]]

    (c) * * *
    (3) The owner has engaged in any drug-related criminal activity or
any violent criminal activity;
* * * * *
    (5) The owner has a history or practice of failing to terminate
tenancy of tenants of units assisted under Section 8 or any other
federally assisted housing program for activity by the tenant, any
member of the household, a guest or another person under the control of
any member of the household that:
    (i) Threatens the right to peaceful enjoyment of the premises by
other residents;
    (ii) Threatens the health or safety of other residents, of
employees of the PHA, or of owner employees or other persons engaged in
management of the housing;
    (iii) Threatens the health or safety of, or the right to peaceful
enjoyment of their residences, by persons residing in the immediate
vicinity of the premises; or
    (iv) Is drug-related criminal activity or violent criminal
activity; or
* * * * *
    52. In Sec. 982.307 revise the section heading and paragraph (a) to
read as follows:

Sec. 982.307  Tenant screening.

    (a) PHA option and owner responsibility. (1) The PHA may opt to
screen family behavior or suitability for tenancy. However, the PHA has
no liability or responsibility to the owner or other persons for the
family's behavior or the family's conduct in tenancy.
    (2) The owner is responsible for screening and selection of the
family to occupy the owner's unit. At or before PHA approval of the
tenancy, the PHA must inform the owner that screening and selection for
tenancy is the responsibility of the owner.
    (3) The owner is responsible for screening of families on the basis
of their tenancy histories. An owner may consider a family's background
with respect to such factors as:
    (i) Payment of rent and utility bills;
    (ii) Caring for a unit and premises;
    (iii) Respecting the rights of other residents to the peaceful
enjoyment of their housing;
    (iv) Drug-related criminal activity or other criminal activity that
is a threat to the health, safety or property of others; and
    (v) Compliance with other essential conditions of tenancy.
* * * * *
    53. Revise Sec. 982.308 to read as follows:

Sec. 982.308  Lease and tenancy.

    (a) Tenant's legal capacity to enter lease. The tenant must have
legal capacity to enter a lease under State and local law.
    (b) Owner lease. The tenant and owner must enter a lease for the
unit. The HAP contract shall contain owner's certification that:
    (1) The lease between the tenant and the owner is in a standard
form used in the locality by the owner and that is generally used for
other unassisted tenants in the premises.
    (2) The terms and conditions of the lease are consistent with State
and local law.
    (c) State and local law. The PHA may review the lease to determine
if the lease complies with State and local law. The PHA may decline to
approve the tenancy if the PHA determines that the lease does not
comply with State or local law.
    (d) Utilities and appliances. The lease must specify what utilities
and appliances are to be supplied by the owner, and what utilities and
appliances are to be supplied by the family.
    (e) Reasonable rent. The rent to owner must be reasonable (see
Sec. 982.507).
    (f) Tenancy addendum. The HAP contract form required by HUD shall
include an addendum (the ``tenancy addendum''), that sets forth tenancy
requirements for the program (in accordance with Secs. 982.308, 982.309
and 982.310). All provisions of the HUD-required tenancy addendum must
be added word-for-word to the owner's standard form lease that is used
by the owner for unassisted tenants. The tenant shall have the right to
enforce the tenancy addendum against the owner, and the terms of the
tenancy addendum shall prevail over any other provisions of the lease.
    54. Revise Sec. 982.309 to read as follows:

Sec. 982.309  Term of assisted tenancy.

    (a) Initial term of lease. (1) Except as provided in paragraph
(a)(2) of this section, the initial lease term must be for at least one
year.
    (2) The PHA may approve a shorter initial lease term if the PHA
determines that:
    (i) Such shorter term would improve housing opportunities for the
tenant; and
    (ii) Such shorter term is the prevailing local market practice.
    (3) During the initial term of the lease, the owner may not raise
the rent to owner.
    (4) The PHA may execute the HAP contract even if there is less than
one year remaining from the beginning of the initial lease term to the
end of the last expiring funding increment under the consolidated ACC.
    (b) Term of HAP contract. (1) The term of the HAP contract begins
on the first day of the lease term and ends on the last day of the
lease term.
    (2) The HAP contract terminates if any of the following occurs:
    (i) The lease is terminated by the owner or the tenant;
    (ii) The PHA terminates the HAP contract; or
    (iii) The PHA terminates assistance for the family.
    (c) Family responsibility. (1) If the family terminates the lease
on notice to the owner, the family must give the PHA a copy of the
notice of termination at the same time. Failure to do this is a breach
of family obligations under the program.
    (2) The family must notify the PHA and the owner before the family
moves out of the unit. Failure to do this is a breach of family
obligations under the program.
    55. Amend Sec. 982.310 as follows:
    a. Revise paragraphs (a)(1) and (d)(1)(iv) as set forth below;
    b. In paragraph (d)(2), revise the reference to ``During the first
year of the lease term'' to read ``During the initial lease term,'';
and
    c. Remove paragraph (e)(3).

Sec. 982.310  Owner termination of tenancy.

    (a) * * *
    (1) Serious violation (including but not limited to failure to pay
rent or other amounts due under the lease) or repeated violation of the
terms and conditions of the lease;
* * * * *
    (d) * * *
    (1) * * *
    (iv) A business or economic reason for termination of the tenancy
(such as sale of the property, renovation of the unit, or desire to
lease the unit at a higher rental).
* * * * *
    56. Amend Sec. 982.352 by revising paragraph (b)(1) to read as
follows:

Sec. 982.352  Eligible housing.

* * * * *
    (b) PHA-owned housing. (1) A unit that is owned by the PHA that
administers the assistance under the consolidated ACC (including a unit
owned by an entity substantially controlled by the PHA) may only be
assisted under the tenant-based program if all the following conditions
are satisfied:
    (i) The PHA must inform the family, both orally and in writing,
that the

[[Page 26646]]

family has the right to select any eligible unit available for lease,
and a PHA-owned unit is freely selected by the family, without PHA
pressure or steering.
    (ii) The unit is not ineligible housing.
    (iii) During assisted occupancy, the family may not benefit from
any form of housing subsidy that is prohibited under paragraph (c) of
this section.
    (iv)(A) The PHA must obtain the services of an independent entity
to perform the following PHA functions as required under the program
rule:
    (1) To determine rent reasonableness in accordance with
Sec. 982.507. The independent agency shall communicate the rent
reasonableness determination to the family and the PHA.
    (2) To assist the family negotiate the rent to owner in accordance
with Sec. 982.506.
    (3) To inspect the unit for compliance with the HQS in accordance
with Sec. 982.305(a) and Sec. 982.405 (except that Sec. 982.405(e) is
not applicable). The independent agency shall communicate the results
of each such inspection to the family and the PHA.
    (B) The independent agency used to perform these functions must be
approved by HUD. The independent agency may be the unit of general
local government for the PHA jurisdiction (unless the PHA is itself the
unit of general local government or an agency of such government), or
may be another HUD-approved independent agency.
    (C) The PHA may compensate the independent agency from PHA ongoing
administrative fee income for the services performed by the independent
agency. The PHA may not use other program receipts to compensate the
independent agency for such services. The PHA and the independent
agency may not charge the family any fee or charge for the services
provided by the independent agency.
* * * * *
    57. Amend Sec. 982.353 as follows:
    a. Revise paragraphs (b), (c)(2), and (d) as set forth below; and
    b. In paragraph (f), remove the references to ``contract rent
(certificate program) or'' and ``(voucher program)''.

Sec. 982.353  Where family can lease a unit with tenant-based
assistance.

* * * * *
    (b) Portability: Assistance outside the initial PHA jurisdiction.
Subject to paragraph (c) of this section, and to Sec. 982.552 and
Sec. 982.553, a voucher-holder or participant family has the right to
receive tenant-based voucher assistance in accordance with requirements
of this part to lease a unit outside the initial PHA jurisdiction,
anywhere in the United States, in the jurisdiction of a PHA with a
tenant-based program under this part. The initial PHA must not provide
such portable assistance for a participant if the family has moved out
of its assisted unit in violation of the lease.
* * * * *
    (c) * * *
    (2) The following apply during the 12 month period from the time
when a family described in paragraph (c)(1) of this section is admitted
to the program:
    (i) The family may lease a unit anywhere in the jurisdiction of the
initial PHA;
    (ii) The family does not have any right to portability;
    (iii) The initial PHA may choose to allow portability during this
period.
* * * * *
    (d) Income eligibility. (1) For admission to the program, a family
must be income eligible in the area where the family initially leases a
unit with assistance under the program.
    (2) If a portable family is a participant in the initial PHA
Section 8 tenant-based program (either the PHA voucher program or the
PHA certificate program), income eligibility is not redetermined when
the family moves to the receiving PHA program under portability
procedures.
    (3) Except as provided in paragraph (d)(2) of this section, a
portable family must be income eligible for admission to the voucher
program in the area where the family leases a unit under portability
procedures.
* * * * *

Sec. 982.354  [Removed]

    58. Remove Sec. 982.354.
    59. Amend Sec. 982.355 as follows:
    a. Revise paragraphs (b), (c)(1) and (c)(6) as set forth below;
    b. Amend paragraph (c)(4) by removing the reference to ``or
certificate'',
    c. In paragraph (c)(8), revise the reference to ``request for lease
approval'' to read ``request for approval of the tenancy'' and remove
the reference to ``certificate or'';
    d. In paragraph (d)(1), remove the two references to ``certificate
or''; and
    e. In paragraph (d)(6), revise the word ``programs'' to read
``program''.

Sec. 982.355  Portability: Administration by receiving PHA.

* * * * *
    (b) In the conditions described in paragraph (a) of this section, a
PHA with jurisdiction in the area where the family wants to lease a
unit must issue a voucher to the family. If there is more than one such
PHA, the initial PHA may choose the receiving PHA.
    (c) Portability procedures. (1) The receiving PHA does not
redetermine elibilibility for a portable family that was already
receiving assistance in the initial PHA Section 8 tenant-based program
(either the PHA voucher program or certificate program). However, for a
portable family that was not already receiving assistance in the PHA
tenant-based program, the initial PHA must determine whether the family
is eligible for admission to the receiving PHA voucher program.
* * * * *
    (6) The receiving PHA must issue a voucher to the family. The term
of the receiving PHA voucher may not expire before the expiration date
of any initial PHA voucher. The receiving PHA must determine whether to
extend the voucher term. The family must submit a request for approval
of the tenancy to the receiving PHA during the term of the receiving
PHA voucher.
* * * * *
    60. Revise Sec. 982.401(a)(4) to read as follows:

Sec. 982.401  Housing quality standards (HQS).

    (a) * * *
    (4)(i) In addition to meeting HQS performance requirements, the
housing must meet the acceptability criteria stated in this section,
unless variations are approved by HUD.
    (ii) HUD may approve acceptability criteria variations for the
following purposes:
    (A) Variations which apply standards in local housing codes or
other codes adopted by the PHA; or
    (B) Variations because of local climatic or geographic conditions.
    (iii) Acceptability criteria variations may only be approved by HUD
pursuant to paragraph (a)(4)(ii) of this section if such variations
either:
    (A) Meet or exceed the acceptability criteria; or
    (B) Significantly expand affordable housing opportunities for
families assisted under the program.
    (iv) HUD will not approve any acceptability criteria variation if
HUD believes that such variation is likely to adversely affect the
health or safety of participant families, or severely restrict housing
choice.
* * * * *
    61. Amend Sec. 982.402 as follows:
    a. Amend paragraph (a)(3) by removing the references to
``certificate or'' and ``or certificate'';
    b. Revise paragraph (c) to read as follows:

[[Page 26647]]

Sec. 982.402  Subsidy standards.

* * * * *
    (c) Effect of family unit size-maximum subsidy in voucher program.
The family unit size as determined for a family under the PHA subsidy
standard is used to determine the maximum rent subsidy for a family
assisted in the voucher program. For a voucher tenancy, the PHA
establishes payment standards by number of bedrooms. The payment
standard for a family shall be the lower of:
    (1) The payment standard amount for the family unit size; or
    (2) The payment standard amount for the unit size of the unit
rented by the family.
* * * * *
    62. Amend Sec. 982.403 as follows:
    a. Revise the section heading to read ``Terminating HAP contract
when unit is too small'';
    b. Remove paragraph (a)(1);
    c. Redesignate paragraphs (a)(2) and (a)(3) as paragraphs (a)(1)
and (a)(2), respectively;
    d. Amend redesignated paragraph (a)(1) by removing the reference to
``certificate or'';
    e. Amend paragraph (b)(2) by replacing the word ``certificate''
with ``voucher''.
    f. Amend paragraph (b)(4) by removing the phrase ``within the FMR/
exception rent limit''; and
    g. Revise the introductory text of redesignated paragraph (c) as
set forth below.

Sec. 982.403  Terminating HAP contract when unit is too small.

* * * * *
    (c) Termination. When the PHA terminates the HAP contract under
paragraph (a) of this section:
* * * * *
    63. Amend Sec. 982.405 as follows:
    a. Revise the section heading and paragraph (a) as set forth below;
and
    b. Add paragraph (f) as set forth below.

Sec. 982.405  PHA initial and periodic unit inspection.

    (a) The PHA must inspect the unit leased to a family prior to the
initial term of the lease, at least annually during assisted occupancy,
and at other times as needed, to determine if the unit meets the HQS.
(See Sec. 982.305(b)(2) concerning timing of initial inspection by the
PHA.)
* * * * *
    (f) The PHA must adopt procedural guidelines and performance
standards for conducting required HQS inspections. The PHA guidelines
and standards must conform with practices utilized in the private
housing market, and facilitate efficient administration of assistance
under the program. The PHA administrative plan shall state the PHA
guidelines and standards for conducting HQS inspections.
    64. Revise Sec. 982.451(b)(5) to read as follows:

Sec. 982.451  Housing assistance payments contract.

* * * * *
    (b) * * *
    (5)(i) The PHA must pay the housing assistance payment promptly
when due to the owner in accordance with the HAP contract.
    (ii) The HAP contract shall provide for penalties against the PHA
for late payment of housing assistance payments due to the owner under
the contract, where such penalties are in accordance with generally
accepted practices and law, as applicable in the local housing market,
governing penalties for late payment of rent by a tenant. However, the
PHA shall not be obligated to pay any late payment penalty if HUD
determines that late payment by the PHA is due to factors beyond the
PHA's control. The PHA may add HAP contract provisions which define
when the HAP payment by the PHA is deemed received by the owner (e.g.
upon mailing by the PHA or actual receipt by the owner).
    (iii) The PHA may only use the following sources to pay a late
payment penalty from program receipts under the consolidated ACC:
administrative fee income for the program; or the administrative fee
reserve for the program. The PHA may not use other program receipts for
this purpose.

Sec. 982.452  [Amended]

    65. Amend Sec. 982.452(b)(1) by removing the reference to
``certificate-holder or''.

Sec. 982.453  [Amended]

    66. In Sec. 982.453(a)(5), revise the reference to ``drug-
trafficking'' to read ``drug-related criminal activity''.

Sec. 982.454  [Amended]

    67. Amend Sec. 982.454 by removing the last sentence.
    68. Revise Sec. 982.455 to read as follows:

Sec. 982.455  Automatic termination of HAP contract.

    The HAP contract terminates automatically 180 calendar days after
the last housing assistance payment to the owner.
    69. Revise Sec. 982.456(b) to read as follows:

Sec. 982.456  Third parties.

* * * * *
    (b)(1) The family is not a party to or third party beneficiary of
the HAP contract. Except as provided in paragraph (b)(2) of this
section, the family may not exercise any right or remedy against the
owner under the HAP contract.
    (2) The tenant may exercise any right or remedy against the owner
under the lease between the tenant and the owner, including enforcement
of the owner's obligations under the tenancy addendum (which is
included both in the HAP contract between the PHA and the owner; and in
the lease between the tenant and the owner.)
* * * * *

Secs. 982.457, 982.504, 982.505, 982.506, 982.508 and
982.512  [Removed]

    70. Remove Secs. 982.457, 982.504, 982.505, 982.506, 982.508, and
982.512.
    71. Revise the table of contents for Subpart K to read as follows:

Subpart K--Rent and Housing Assistance Payment

982.501  Overview.
982.502  Conversion to voucher program.
982.503   Voucher tenancy: Payment standard amount and schedule.
982.504   Voucher tenancy: Payment standard for family in
restructured subsidized multifamily project.
982.505   Voucher tenancy: How to calculate housing assistance
payment.
982.506   Negotiating rent to owner.
982.507   Rent to owner; Reasonable rent.
982.508   Rent to owner: Maximum rent at initial occupancy.
982.509   Rent to owner in subsidized projects.
982.513   Other fees and charges.
982.516  Family income and composition: Regular and interim
examinations.
982.517  Utility allowance schedule.
982.518  Regular tenancy: How to calculate housing assistance
payment.
982.519  Regular tenancy: Annual adjustment of rent to owner.
982.520  Regular tenancy: Special adjustment of rent to owner.
982.521  Regular tenancy: Rent to owner in subsidized project.

    72. Revise Sec. 982.501 to read as follows:

Sec. 982.501  Overview.

    (a) This subpart describes program requirements concerning the
housing assistance payment and rent to owner. These requirements apply
to the Section 8 tenant-based program.
    (b) There are two types of tenancies in the Section 8 tenant-based
program:
    (1) A tenancy under the voucher program.
    (2) A tenancy under the certificate program (commenced before
merger of the certificate and voucher programs on the merger date).

[[Page 26648]]

    (c) Unless specifically stated, requirements of this part are the
same for all tenancies. Sections 982.503, 982.504, and 982.505 only
apply to a voucher tenancy. Sections 982.518, 982.519, 982.520, and
982.521 only apply to a tenancy under the certificate program.

Secs. 982.502, 982.503, 982.507, 982.509, 982.510, 982.511, and
982.513  [Redesignated as Secs. 982.506, 982.507, 982.518, 982.519,
982.520, 982.509 and 982.510, respectively]

    73. Redesignate Secs. 982.502, 982.503, 982.507, 982.509, 982.510,
982.511, and 982.513 as Secs. 982.506, 982.507, 982.518, 982.519,
982.520, 982.509, and 982.510, respectively.
    74. Add new Secs. 982.502, 982.503, 982.504, 982.505, and 982.508
to read as follows:

Sec. 982.502  Conversion to voucher program.

    (a) New HAP contracts. On and after the merger date, the PHA may
only enter into a HAP contract for a tenancy under the voucher program,
and may not enter into a new HAP contract for a tenancy under the
certificate program.
    (b) Over-FMR tenancy. If the PHA had entered into any HAP contract
for an over-FMR tenancy under the certificate program prior to the
merger date, on and after the merger date such tenancy shall be
considered and treated as a tenancy under the voucher program, and
shall be subject to the voucher program requirements under this part,
including calculation of the voucher housing assistance payment in
accordance with Sec. 982.505. However, Sec. 982.505(b)(2) shall not be
applicable for calculation of the housing assistance payment prior to
the effective date of the second regular reexamination of family income
and compostion on or after the merger date.
    (c) Voucher tenancy. If the PHA had entered into any HAP contract
for a voucher tenancy prior to the merger date, on and after the merger
date such tenancy shall continue to be considered and treated as a
tenancy under the voucher program, and shall be subject to the voucher
program requirements under this part, including calculation of the
voucher housing assistance payment in accordance with Sec. 982.505.
However, Sec. 982.505(b)(2) shall not be applicable for calculation of
the housing assistance payment prior to the effective date of the
second regular reexamination of family income and composition on or
after the merger date.
    (d) Regular certificate tenancy. The PHA must terminate program
assistance under any outstanding HAP contract for a regular tenancy
under the certificate program (entered prior to the merger date) at the
effective date of the second regular reexamination of family income and
composition on or after the merger date. Upon such termination of
assistance, the HAP contract for such tenancy terminates automatically.
The PHA must give at least 120 days written notice of such termination
to the family and the owner, and the PHA must offer the family the
opportunity for continued tenant-based assistance under the voucher
program. The PHA may deny the family the opportunity for continued
assistance in accordance with Secs. 982.552 and 982.553.

Sec. 982.503  Voucher tenancy: Payment standard amount and schedule.

    (a) Payment standard schedule. (1) HUD publishes the fair market
rents for each market area in the United States (see part 888 of this
title). The PHA must adopt a payment standard schedule that establishes
voucher payment standard amounts for each FMR area in the PHA
jurisdiction. For each FMR area, the PHA must establish payment
standard amounts for each ``unit size.'' Unit size is measured by
number of bedrooms (zero-bedroom, one-bedroom, and so on).
    (2) The payment standard amounts on the PHA schedule are used to
calculate the monthly housing assistance payment for a family
(Sec. 982.505).
    (3) The PHA voucher payment standard schedule shall establish a
single payment standard for each unit size in an FMR area and, if
applicable, in an exception payment standard area within an FMR area.
    (b) Establishing payment standard amounts. (1)(i) The PHA may
establish the payment standard amount for a unit size at any level
between 90 percent and 110 percent of the published FMR for that unit
size. HUD approval is not required to establish a payment standard
amount in that range (``basic range'').
    (ii) The PHA may establish a separate payment standard within the
basic range for a designated part of an FMR area.
    (2) The PHA must request HUD approval to establish a payment
standard amount that is higher or lower than the basic range. HUD has
sole discretion to grant or deny approval of a higher or lower payment
standard amount. Paragraph (c) of this section describes the
requirements for approval of a higher payment standard amount
(``exception payment standard amount'').
    (c) HUD approval of exception payment standard amount. (1) HUD
discretion. At HUD's sole discretion, HUD may approve a payment
standard amount that is higher than the basic range for a designated
part of the fair market rent area (called an ``exception area''). HUD
may approve an exception payment standard amount in accordance with
this paragraph (c) of this section for all units, or for all units of a
given unit size, leased by program families in the exception area. Any
PHA with jurisdiction in the exception area may use the HUD-approved
exception payment standard amount.
    (2) Above 110 percent of FMR to 120 percent of FMR. The HUD Field
Office may approve an exception payment standard amount from above 110
percent of the published FMR to 120 percent of the published FMR if
such office determines that such approval is justified by either the
median rent method or the 40th percentile rent as described below (and
that such approval is also supported by an appropriate program
justification in accordance with paragraph (c)(4) of this section).
    (i) Median rent method. In the median rent method, HUD determines
the exception payment standard amount by multiplying the FMR times a
fraction of which the numerator is the median gross rent of the
exception area and the denominator is the median gross rent of the
entire FMR area. In this method, HUD uses median gross rent data from
the most recent decennial United States census, and the exception area
may be any geographic entity within the FMR area (or any combination of
such entities) for which median gross rent data is provided in
decennial census products.
    (ii) 40th percentile rent method. In this method, HUD determines
that the area exception rent equals the 40th percentile of rents to
lease standard quality rental housing in the exception area. HUD
determines the 40th percentile rent in accordance with the methodology
described in Sec. 888.113 of this title for determining fair market
rents. A PHA must present statistically representative rental housing
survey data to justify HUD approval.
    (3) Above 120 percent of FMR. (i) At the request of a PHA, the
Assistant Secretary for Public and Indian Housing may approve an
exception payment standard amount for the total area of a county, PHA
jurisdiction, or place if the Assistant Secretary determines that:
    (A) Such approval is necessary to prevent financial hardship for
families;
    (B) Such approval is supported by statistically representative
rental housing survey data to justify HUD approval in accordance with
the methodology described in Sec. 888.113 of this title; and

[[Page 26649]]

    (C) Such approval is also supported by an appropriate program
justification in accordance with paragraph (c)(4) of this section.
    (ii) For purposes of paragraph (c)(3) of this section, the term
``place'' is an incorporated place or a U.S. Census designated place.
An incorporated place is established by State law and includes cities,
boroughs, towns, and villages. A U.S. Census designated place is the
statistical counterpart of an incorporated place.
    (4) Program justification. (i) HUD will only approve an exception
payment standard amount (pursuant to paragraph (c)(2) or paragraph
(c)(3) of this section) if HUD determines that approval of such higher
amount is needed either:
    (A) To help families find housing outside areas of high poverty, or
    (B) Because voucher holders have trouble finding housing for lease
under the program within the term of the voucher.
    (ii) HUD will only approve an exception payment standard amount
(pursuant to paragraph (c)(3) of this section) after six months from
the date of HUD approval of an exception payment standard pursuant to
paragraph (c)(2) of this section for the area.
    (5) Population. The total population of HUD-approved exception
areas in an FMR area may not include more than 50 percent of the
population of the FMR area.
    (6) Withdrawal or modification. At any time, HUD may withdraw or
modify approval to use an exception payment standard amount.
    (7) Transition: Area exception rents approved prior to merger date.
Subject to paragraph (c)(6) of this section, the PHA may establish an
exception payment standard amount up to the amount of a HUD-approved
area exception rent in effect at the merger date.
    (d) HUD review of PHA payment standard schedule. (1) HUD will
monitor rent burdens of families assisted in a PHA's voucher program.
If 40 percent or more of such families occupying units of any
particular unit size pay more than 30 percent of adjusted income as the
family's share, HUD will review the PHA payment standard amount for
that unit size, and may require the PHA to establish an increased
payment standard amount within the basic range.
    (2) Upon such HUD review, HUD may require the PHA to modify the
payment standard amounts on the PHA payment standard schedule.

Sec. 982.504  Voucher tenancy: Payment standard for family in
restructured subsidized multifamily project.

    (a) This section applies to tenant-based assistance under the
voucher program if all the following conditions are applicable:
    (1) Such tenant-based voucher assistance is provided to a family
pursuant to Sec. 401.421 of this title when HUD has approved a
restructuring plan, and the participating administrative entity has
approved the use of tenant-based assistance to provide continued
assistance for such families. Such tenant-based voucher assistance is
provided for a family previously receiving project-based assistance in
an eligible project (as defined in Sec. 401.2 of this title) at the
time when the project-based assistance terminates.
    (2) The family chooses to remain in the restructured project with
tenant-based assistance under the program and leases a unit that does
not exceed the family unit size;
    (3) The lease for such assisted tenancy commences during the first
year after the project-based assistance terminates.
    (b) The initial payment standard for the family under such initial
lease is the sum of the reasonable rent to owner for the unit plus the
utility allowance for tenant-paid utilities. (Determination of such
initial payment standard for the family is not subject to paragraphs
(c)(1) and (c)(2) of Sec. 982.505. Except for determination of the
initial payment standard as specifically provided in paragraph (b) of
this section, the payment standard and housing assistance payment for
the family during the HAP contract term shall be determined in
accordance with Sec. 982.505.)

Sec. 982.505  Voucher tenancy: How to calculate housing assistance
payment.

    (a) Use of payment standard. A payment standard is used to
calculate the monthly housing assistance payment for a family. The
``payment standard'' is the maximum monthly subsidy payment.
    (b) Amount of monthly housing assistance payment. The PHA shall pay
a monthly housing assistance payment on behalf of the family that is
equal to the lower of:
    (1) The payment standard minus the total tenant payment; or
    (2) The gross rent minus the total tenant payment.
    (c) Payment standard for family. (1) The payment standard is the
lower of:
    (i) The payment standard amount for the family unit size; or
    (ii) The payment standard amount for the size of the dwelling unit
rented by the family.
    (2) If the dwelling unit is located in an exception area, the PHA
must use the appropriate payment standard amount for the exception
area.
    (3) During the HAP contract term, the payment standard for a family
is the higher of:
    (i) The initial payment standard (at the beginning of the HAP
contract term), as determined in accordance with paragraphs (c)(1) and
(c)(2) of this section, minus any amount by which the initial rent to
owner exceeds the current rent to owner; or
    (ii) The payment standard, as determined in accordance with
paragraphs (c)(1) and (c)(2) of this section, as determined at the most
recent regular reexamination of family income and composition effective
after the beginning of the HAP contract term.
    (4) At the next regular reexamination following a change in family
size or composition that causes a change in family unit size during the
HAP contract term, and for any examination thereafter during the term:
    (i) Paragraph (c)(3)(i) of this section does not apply; and
    (ii) The new family unit size must be used to determine the payment
standard.

Sec. 982.508  Rent to owner: maximum rent at initial occupancy.

    At the time a family initially receives tenant-based assistance for
occupancy of a dwelling unit, the family share may not exceed 40
percent of the family's monthly adjusted income.

Sec. 982.509  [Amended]

    74a. Revise the section heading of newly designated Sec. 982.509 to
read ``Rent to owner in subsidized projects.''
    75. Amend Sec. 982.516 as follows:
    a. Revise paragraph (d)(2) as set forth below;
    b. Amend paragraph (e) by removing the reference to ``and family
unit size''; and
    c. Add paragraph (f) as set forth below.

Sec. 982.516  Family income and composition: Regular and interim
examinations.

* * * * *
    (d) * * *
    (2) At the effective date of a regular or interim reexamination,
the PHA must make appropriate adjustments in the housing assistance
payment. (For a voucher tenancy, the housing assistance payment shall
be calculated in accordance with Sec. 982.505. For a certificate
tenancy, the housing assistance payment shall be calculated in
accordance with Sec. 982.518.)
* * * * *
    (f) Accuracy of family income data. The PHA must establish
procedures that

[[Page 26650]]

are appropriate and necessary to assure that income data provided by
applicant or participant families is complete and accurate.
    76. Add Sec. 982.521 to read as follows:

Sec. 982.521  Regular tenancy: Rent to owner in subsidized project.

    For a certificate tenancy in an insured or non-insured Section 236
project, a Section 515 project of the Rural Development Administration,
a Section 202 project or a Section 221(d)(3) below market interest rate
project, the rent to owner is the basic rental charge (as defined in 12
U.S.C. 1715z-1(f)(1), minus any utility allowance for tenant-paid
utilities). The rent to owner may not be adjusted by applying the
published Section 8 annual adjustment factor, and a special adjustment
may not be approved.

Sec. 982.551   [Amended]

    77. In Sec. 982.551, amend paragraph (b)(2) by removing the second
sentence, and in paragraph (b)(3) remove the phrase ``and 24 CFR part
813''.
    78. Amend Sec. 982.552 as follows:
    a. Amend paragraph (a)(2) to remove the phrase ``certificate or'';
    b. Revise paragraphs (b) and (c) as set forth below;
    c. Remove paragraphs (d) and (e); and
    d. Redesignate paragraph (f) as paragraph (d).

Sec. 982.552  PHA denial or termination of assistance for family.

* * * * *
    (b) Requirement to deny admission or terminate assistance. (1)
During a reasonable time period determined by the PHA, the PHA may not
admit a family to the program if any member of the family has been
evicted from federally assisted housing for serious violation of the
lease.
    (2) The PHA must terminate program assistance for a family evicted
from housing assisted under the program for serious violation of the
lease.
    (3) The PHA must deny admission to the program for an applicant, or
terminate program assistance for a participant, if any member of the
family fails to sign and submit consent forms for obtaining information
in accordance with part 5, subparts B and F of this title.
    (4) The family must submit required evidence of citizenship or
eligible immigration status. See part 5 of this title for a statement
of circumstances in which the PHA must deny admission or terminate
program assistance because a family member does not establish
citizenship or eligible immigration status, and the applicable informal
hearing procedures.
    (c) Authority to deny admission or terminate assistance. (1)
Grounds for denial or termination of assistance. The PHA may at any
time deny program assistance for an applicant, or terminate program
assistance for a participant, for any of the following grounds:
    (i) If the family violates any family obligations under the program
(see Sec. 982.551). See Sec. 982.553 concerning denial or termination
of assistance for crime by family members.
    (ii) If any member of the family has ever been evicted from public
housing.
    (iii) If a PHA has ever terminated assistance under the program for
any member of the family.
    (iv) If any member of the family has committed fraud, bribery, or
any other corrupt or criminal act in connection with any Federal
housing program.
    (v) If the family currently owes rent or other amounts to the PHA
or to another PHA in connection with Section 8 or public housing
assistance under the 1937 Act.
    (vi) If the family has not reimbursed any PHA for amounts paid to
an owner under a HAP contract for rent, damages to the unit, or other
amounts owed by the family under the lease.
    (vii) If the family breaches an agreement with the PHA to pay
amounts owed to a PHA, or amounts paid to an owner by a PHA. (The PHA,
at its discretion, may offer a family the opportunity to enter an
agreement to pay amounts owed to a PHA or amounts paid to an owner by a
PHA. The PHA may prescribe the terms of the agreement.)
    (viii) If a family participating in the FSS program fails to
comply, without good cause, with the family's FSS contract of
participation.
    (ix) If the family has engaged in or threatened abusive or violent
behavior toward PHA personnel.
    (x) If the family fails to fulfill its obligations under the
Section 8 welfare-to-work voucher program.
    (2) PHA discretion to consider circumstances. In deciding whether
to deny admission or terminate assistance because of action or failure
to act by members of the family, the PHA has discretion to consider all
of the circumstances in each case, including the seriousness of the
case, the extent of participation or culpability of individual family
members, and the effects of denial or termination of assistance on
other family members who were not involved in the action or failure.
    (3) Exclusion of family members. In determining whether to deny
admission or terminate assistance, the PHA may impose, as a condition
of continued assistance for other family members, a requirement that
family members who participated in or were culpable for the action or
failure will not reside in the unit. The PHA may permit the other
members of a participant family to continue receiving assistance.
* * * * *
    79. Amend Sec. 982.554 as follows:
    a. In paragraph (c)(4), remove the phrase ``certificate or'';
    b. Revise paragraph (c)(5) to read as follows:

Sec. 982.554  Informal review for applicant.

* * * * *
    (c) * * *
    (5) A PHA determination not to grant approval of the tenancy.
* * * * *

Sec. 982.555   [Amended]

    80. In Sec. 982.555, amend paragraph (b)(4) by removing the phrase
``certificate or''.
    81. Revise Sec. 982.602 to read as follows:

Sec. 982.602  SRO: Who may reside in an SRO?

    A single person may reside in an SRO housing unit.
    82. Revise Sec. 982.604 to read as follows:

Sec. 982.604 SRO: Voucher housing assistance payment.

    (a) For a person residing in SRO housing, the payment standard is
75 percent of the zero-bedroom payment standard amount on the PHA
payment standard schedule. For a person residing in SRO housing in an
exception area, the payment standard is 75 percent of the HUD-approved
zero-bedroom exception payment standard amount.
    (b) The utility allowance for an assisted person residing in SRO
housing is 75 percent of the zero bedroom utility allowance.
    83. In Sec. 982.608 revise the section heading and paragraph (a) to
read as follows:

Sec. 982.608  Congregate housing: Voucher housing assistance payment.

    (a) Unless there is a live-in aide:
    (1) For a family residing in congregate housing, the payment
standard is the zero-bedroom payment standard amount on the PHA payment
standard schedule. For a family residing in congregate housing in an
exception area, the payment standard is the HUD-approved zero-bedroom
exception payment standard amount.
    (2) However, if there are two or more rooms in the unit (not
including kitchen or sanitary facilities), the payment standard for a
family residing in

[[Page 26651]]

congregate housing is the one-bedroom payment standard amount.
* * * * *
    84. Amend Sec. 982.613 as follows:
    a. Revise the section heading as set forth below;
    b. In paragraph (b)(2), revise the reference to ``Sec. 982.503'' to
read ``Sec. 982.507''; and
    Revise paragraph (c) as set forth below.

Sec. 982.613  Group home: Rent and voucher housing assistance payment.

* * * * *
    (c) Payment standard. (1) Family unit size. (i) Unless there is a
live-in aide, the family unit size is zero or one bedroom.
    (ii) If there is a live-in aide, the live-in aide must be counted
in determining the family unit size.
    (2) The payment standard for a person who resides in a group home
is the lower of:
    (i) The payment standard amount on the PHA payment standard
schedule for the family unit size; or (ii) The pro-rata portion of the
payment standard amount on the PHA payment standard schedule for the
group home size.
    (iii) If there is a live-in aide, the live-in aide must be counted
in determining the family unit size.
* * * * *
    85. Amend Sec. 982.617 as follows:
    a. Revise the section heading to read as set forth below;
    b. In paragraph (b)(2) revise the reference to ``Sec. 982.503'' to
read ``Sec. 982.507''; and
    c. Revise paragraph (c) to read as follows:

Sec. 982.617  Shared housing: Rent and voucher housing assistance
payment.

* * * * *
    (c) Payment standard. The payment standard for a family that
resides in a shared housing is the lower of:
    (1) The payment standard amount on the PHA payment standard
schedule for the family unit size; or
    (2) The pro-rata portion of the payment standard amount on the PHA
payment standard schedule for the size of the shared housing unit.
* * * * *

Sec. 982.619  [Amended]

    86. Amend Sec. 982.619 as follows:
    a. In paragraph (b)(1), revise the reference to ``Sec. 982.503'' to
read ``Sec. 982.507''; and
    b. In paragraph (b)(4), revise the reference to ``Sec. 982.509'' to
read ``Sec. 982.519'' and revise the reference to ``Sec. 982.510'' to
read ``Sec. 982.520''.
    87. Revise Sec. 982.623 to read as follows:

Sec. 982.623  Manufactured home space rental: Housing assistance
payment.

    (a) Fair market rent. The FMR for a manufactured home space is
determined in accordance with Sec. 888.113(e) of this title.
    (b) Housing assistance payment: For certificate tenancy. (1) During
the term of a certificate tenancy (entered prior to the merger date),
the amount of the monthly housing assistance payment equals the lesser
of the amounts specified in paragraphs (b)(1)(i) or (b)(1)(ii) of this
section:
    (i) Manufactured home space cost minus the total tenant payment.
    (ii) The rent to owner for the manufactured home space.
    (2) ``Manufactured home space cost'' means the sum of:
    (i) The amortization cost,
    (ii) The utility allowance, and
    (iii) The rent to owner for the manufactured home space.
    (c) Housing assistance payment for voucher tenancy. (1) There is a
separate FMR for a family renting a manufactured home space. The FMR
for rental of a manufactured home space is 30 percent of the published
FMR for a two-bedroom unit (see FMR notices published by HUD pursuant
to part 888 of this title).
    (2) The payment standard shall be determined in accordance with
Sec. 982.505.
    (3) The PHA shall pay a monthly housing assistance payment on
behalf of the family that is equal to the lower of:
    (i) The payment standard minus the total tenant payment; or
    (ii) The rent paid for rental of the real property on which the
manufactured home owned by the family is located (``space rent'') minus
the total tenant payment.
    (4) The space rent is the sum of the following as determined by the
PHA:
    (i) Rent to owner for the manufactured home space;
    (ii) Owner maintenance and management charges for the space;
    (iii) The utility allowance for tenant-paid utilities.

    Dated: April 21, 1999
Andrew Cuomo,
Secretary.

[FR Doc. 99-12082 Filed 5-13-99; 8:45 am]

BILLING CODE 4210-32-P