75188 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 970 

[Docket No. FR–4598–P–01; HUD–2004–

0013] 

RIN 2577–AC20 

Demolition or Disposition of Public 

Housing Projects

AGENCY: Office of the Assistant 

Secretary for Public and Indian 

Housing, HUD.

ACTION: Proposed rule.

SUMMARY: This proposed rule revises 

HUD’s regulations governing demolition 

or disposition of public housing 

projects. This rule establishes the 

general and specific requirements for 

HUD approval of demolition or 

disposition applications, relocation of 

residents, resident participation in the 

form of consultation and opportunity to 

purchase a public housing project, the 

replacement of units, and a new 

authority for a public housing agency 

(PHA) to demolish a small number of its 

units without a formal application 

under certain circumstances, referred to 

as ‘‘de minimis’’ demolition. This 

proposed rule seeks comments on these 

provisions as well as any other 

provision of this proposed rule.

DATES: Comment Due Date: February 14, 

2005.

ADDRESSES: Interested persons are 

invited to submit written comments 

regarding this proposed rule to the 

Regulations Division, Office of General 

Counsel, Room 10276, Department of 

Housing and Urban Development, 451 

Seventh Street, SW., Washington, DC 

20410–0500. Interested persons may 

also submit comments electronically 

through either: 

• The Federal eRulemaking Portal at: 

http://www.regulations.gov; or 

• The HUD electronic Web site at: 

http://www.epa.gov/feddocket. Follow 

the link entitled, ‘‘View Open HUD 

Dockets’’. Commenters should follow 

the instructions provided on that site to 

electronically submit their comments. 

Facsimile (FAX) comments are not

acceptable. In all cases, communications 

must refer to the above docket number 

and title. All comments and 

communications submitted will be 

available, without revision, for public 

inspection and copying between 8 a.m. 

and 5 p.m. weekdays at the above 

address. Copies are also available for 

inspection and downloading at http://

www.epa.gov/feddocket. Comments that 

are submitted electronically to the above 

Web sites, or that are submitted to the 

HUD Regulations Division at the above 

address, during the 60-day opportunity 

for notice and comment, are placed in 

the public rules docket and are available 

to the public for inspection and 

copying. As a result, these comments 

are in the public domain and will be 

treated by the Department as public 

comments.

FOR FURTHER INFORMATION CONTACT: For 

further information about this rule, 

contact Ainars Rodins, Director, Public 

and Indian Housing Special Application 

Center, Department of Housing and 

Urban Development, Ralph H. Metcalfe 

Federal Building, 77 West Jackson 

Boulevard, Room 2401, Chicago, IL 

60604–3507; telephone: (312) 353–6236 

(this is not a toll-free number). Persons 

with hearing or speech impairments 

may access that number toll-free 

through TTY by calling the Federal 

Relay Service at 800–877–8339.

SUPPLEMENTARY INFORMATION: 

I. Background—Changes to Demolition 

or Disposition Requirements Under the 

Quality Housing and Work 

Responsibility Act of 1998 

Section 531 of the Quality Housing 

and Work Responsibility Act of 1998 

(Pub. L. 105–276, approved October 21, 

1998) (QHWRA) amended the 

provisions on public housing 

demolition or disposition found in 

Section 18 of the United States Housing 

Act of 1937, 42 U.S.C. 1437p (Section 

18). QHWRA changed both the general 

standard for approval of applications for 

demolition or disposition of public 

housing stock, and many of the specific 

procedures for these actions. During the 

interim period between the effective 

date of QHWRA revisions, October 21, 

1998, and the publication of a final rule, 

PIH Notice 99–19, extended by PIH 

notices 2000–16, 2001–38, 2002–23, and 

most recently, 2003–9, implements 

Section 18 as amended. The notices are 

available from HUD’s Web site at

http://www.hud.gov, or through 

HUDclips, http://www.hudclips.org. In 

addition, a copy of the notice can be 

obtained by calling 800–767–7468 and 

asking for PIH Notice 99–19, as 

extended. 

Prior to QHWRA, HUD could not 

approve a demolition or disposition of 

a public housing project or portion of 

the project unless HUD determined that, 

in the case of an application for 

demolition, the project was obsolete and 

unusable for public housing, and that no 

reasonable program of modifications 

would be feasible to return the project 

to useful life. For a disposition 

application, the PHA, prior to QHWRA, 

had to determine that retention of the 

property was not in the best interests of 

the tenants or the PHA because (1) 

developmental changes in the area 

surrounding the project adversely 

affected the health or safety of the 

tenants or the feasible operation of the 

project by the PHA; (2) the disposition 

would have allowed the acquisition of 

better housing stock that would have 

been more effectively and efficiently 

operated as low-income housing 

available in the community; or (3) the 

Secretary determined other factors were 

consistent with the best interests of the 

tenants and PHA and not inconsistent 

with the U.S. Housing Act of 1937 (1937 

Act). 

Section 18 as amended alters these 

standards so that HUD is required to 

approve the demolition or disposition 

application if the PHA certifies to the 

existence of specified factors supporting 

those actions. HUD is not required to 

approve an application if HUD has 

information clearly inconsistent with 

the certification, or has information that 

the PHA has failed to comply with the 

consultation requirements. For 

demolition, the PHA has to certify that 

the project is ‘‘unsuitable’’ (rather than 

‘‘unusable’’) for public housing, and that 

no reasonable program of modifications 

is ‘‘cost-effective’’ (rather than 

‘‘feasible’’) to return the project to useful 

life. For disposition, the PHA must 

certify that retention of the project is not 

in the best interest of the residents or 

the PHA, for reasons specified in the 

statute. This procedure is similar to the 

procedure under prior law, except that 

the factors previously used have been 

revised to eliminate the requirement 

that disposition allow for the 

acquisition of replacement housing that 

will preserve the same total amount of 

low-income housing stock in the 

community, and to no longer require as 

a prerequisite ‘‘developmental changes’’ 

in the area surrounding the project. 

Under the current law, disposition is 

justified if the PHA can certify that 

conditions in the area surrounding the 

project adversely affect the health or 

safety of the residents or the feasible 

operation of the project, or disposition 

allows for the acquisition, development, 

or rehabilitation of other properties that 

will be more efficiently or effectively 

operated as low-income housing. In 

addition to these changes, QHWRA 

alters other procedures related to 

demolition and disposition, removes 

some former requirements, and adds 

new requirements as further discussed 

below.

QHWRA eliminates the one-for-one 

replacement requirement. One-for-one 

replacement of demolished units or 

those removed from a PHA’s inventory 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 75189

1See Sections 201(b) of the Omnibus 

Consolidated Rescissions and Appropriations Act of 

1996 (Pub. L. 104–134, approved April 26, 1996); 

201(b) of the Departments of Veterans Affairs and 

Housing and Urban Development, and Independent 

Agencies Appropriations Act, 1997 (Pub. L. 104–

204, approved September 26, 1996); and 201(a) of 

the Departments of Veterans Affairs and Housing 

and Urban Development, and Independent 

Agencies Appropriations Act, 1998 (Pub. L. 105–65, 

approved October 27, 1997).

through disposition was first eliminated 

in Section 1002 of the 1995 Rescissions 

Act (Pub. L. 104–19, approved July 27, 

1995), and that change was reenacted on 

a year-to-year basis until 1998.1 As a 

result of the elimination of one-for-one 

replacement, a replacement housing 

plan is no longer required as part of a 

demolition or disposition application.

QHWRA does contain very specific 

provisions regarding the notification 

and relocation of any residents living in 

a building that the PHA plans to 

demolish or remove from its inventory 

through disposition, while providing 

that the Uniform Relocation Act does 

not apply to demolition or disposition 

under Section 18. Except for when there 

is an imminent threat to health and 

safety, the PHA must notify each family 

living in a building that is subject to 

demolition or disposition 90 days prior 

to the displacement date of the 

impending action. The notice must state 

that the PHA will not commence 

demolition or complete disposition 

until all families have been relocated, 

and that each family will be offered 

‘‘comparable housing.’’ The notice must 

also state that the PHA will pay for the 

actual and reasonable relocation 

expenses of each resident to be 

displaced, and provide any necessary 

relocation counseling for residents who 

are displaced. 

‘‘Comparable Housing’’ consists of 

housing that meets housing quality 

standards and that is located in an area 

that is generally not less desirable than 

the location of the housing of the person 

to be displaced. The housing may 

consist of tenant-based assistance, 

project-based assistance, or another 

public housing unit, so long as the 

rental rate is comparable to the rental 

rate of the unit from which the family 

is being displaced. 

Section 18 provides that, prior to a 

disposition of all or a portion of a public 

housing project, ‘‘in appropriate 

circumstances’’ as determined by HUD, 

the PHA shall initially offer the property 

to any eligible resident organization, 

eligible resident management 

corporation, or nonprofit organization 

acting on behalf of the residents. In 

order to be eligible for such an offer, 

which would be to purchase the 

property for continued use as lowincome housing, the resident 

organization or other resident nonprofit 

entity must express an interest within 

30 days after the PHA notifies the entity 

of the proposed disposition. If the entity 

expresses an interest in writing, the 

disposition cannot occur for 60 days, 

beginning on the date of receipt of the 

written notice, to give the entity time to 

obtain a firm commitment for financing 

the purchase. Formerly, the statute 

required the PHA to offer the property 

to residents in the case of both a 

proposed demolition or disposition. 

Section 18 requires the number of 

units developed on the former site of a 

public housing project that was 

demolished pursuant to Section 18 to be 

‘‘significantly fewer’’ than the number 

of units on the site prior to the 

demolition. (See 42 U.S.C. 1437p(d).) 

This requirement was actually first 

instituted in 1995. (See Section 1002(f) 

of the 1995 Rescissions Act (Pub. L. 

104–19, approved July 27, 1995).) The 

statute does not specifically define what 

proportion or percentage constitutes 

‘‘significantly fewer.’’

Section 18 also allows for 

consolidation of occupancy within a 

building, among buildings, or between a 

project and other housing. The purpose 

of such consolidation must be to 

improve the living conditions of 

residents or to provide greater efficiency 

in serving the residents. (See 42 U.S.C. 

1437p(e).) 

Section 18 contains a so-called ‘‘de 

minimis’’ exception from the statute’s 

requirements. This provision allows a 

PHA to demolish the lesser of five units 

or five percent of the total number of 

dwelling units owned by the PHA in 

any five-year period, if the space 

occupied by the demolished unit or 

units is used for meeting the service or 

other needs of the residents or if the 

unit or units are beyond repair. The 

statute does not define what condition 

constitutes ‘‘beyond repair.’’

In the case of disposition only, the 

law prior to QHWRA required that the 

net proceeds of the disposition be used 

to pay the development cost for the 

project or to retire any outstanding 

obligations issued to finance the 

project’s development or modernization. 

Section 18 now requires that the net 

proceeds of disposition be used to retire 

outstanding obligations issued to 

finance the original development or 

modernization. Section 18 also gives the 

Secretary the discretion to waive that 

repayment requirement. Any proceeds 

of disposition not used for debt are 

permitted to be used for broadly defined 

purposes: to provide low-income 

housing, to benefit the residents of the 

PHA, or to leverage amounts to secure 

commercial enterprises, on site in 

public housing projects, appropriate to 

serve the needs of the PHA’s residents. 

II. This Proposed Rule 

A. Purpose, Applicability, and 

Definitions 

This proposed rule would retain the 

following sections from the existing 

regulations with some adjustments and 

clarifications. 

Proposed § 970.3(b), which sets forth 

transactions and situations to which this 

rule would not apply, would revise 

current § 970.2(a) (which discusses 

applicability) to address changes made 

by QHWRA as well as to clarify areas 

where questions about applicability 

have been raised in the past. For 

clarification purposes, a new 

§ 970.3(b)(5) has been added and 

subsequent paragraphs redesignated, 

making clear that this rule does not 

apply to provision of space within a 

project for Family Self Sufficiency 

program purposes under 42 U.S.C. 

1437u(j). 

Another point of clarification would 

be made in proposed § 970.3(b)(8), 

which states that condemnations and 

eminent domain takings by state and 

local authorities are not covered. In 

order to qualify as an exempt taking or 

exercise of eminent domain authority, 

the taking body must be authorized to 

acquire real property by eminent 

domain under state law, and must show 

its intent to use its power of eminent 

domain by taking the first step 

necessary under state law for an 

eminent domain taking. HUD must be a 

party to any condemnation proceeding 

because of its interest under the ACC 

(Annual Contributions Contract, defined 

at 24 CFR 5.403) and Declaration of 

Trust. HUD approval is required of any 

out-of-court settlement for the transfer 

of PHA-owned property under eminent 

domain due to the federal interest in the 

property under the ACC, and as 

specified in the Declaration of Trust. 

Additional adjustments would be made 

to account for changes in law. 

A reference to one-for-one 

replacement housing would be 

eliminated from § 970.2(a)(7) (this 

material is found in proposed 

§ 970.3(b)(8)), because one-for-one 

replacement of units demolished or 

disposed of is no longer required. 

The list of transactions to which the 

rule does not apply would be revised to 

include the new provision for de 

minimis demolitions under 42 U.S.C. 

1437p(f) as well as demolitions of 

severely distressed public housing units 

as part of a HOPE VI revitalization plan 

approved after the effective date of 

75190 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 

QHWRA, and demolition of public 

housing developments removed from a 

PHA’s inventory under Section 33 of the 

1937 Act, 42 U.S.C. 1437z–5. These 

matters are included in proposed 

§§ 970.3(b)(13), (14), and (15).

A definition would be added for 

housing construction cost (HCC) by 

cross-reference to reflect that this rule 

proposes using the concept of HCC to 

help PHAs determine whether there are 

any modifications that would be costeffective to return a building to useful 

life under 42 U.S.C. 1437p(a)(1)(A)(ii). 

Section 970.15 of this proposed rule 

expresses cost-effectiveness as a 

percentage of HCC. The definition of 

HCC is found in 24 CFR 941.103 (67 FR 

76102) and is cross-referenced in this 

proposed rule at § 970.5. 

B. Section 970.7 General Requirements 

for a Demolition or Disposition 

Application 

This proposed section clarifies that 

HUD funds may not be used to 

reimburse the PHA for the costs of a 

demolition or disposition undertaken 

without the necessary written approval 

from HUD. Proposed § 970.7(a)(1) states 

that HUD will not approve an 

application unless it contains a 

certification that the PHA’s approved 

annual plan under 24 CFR part 903 

includes a description of and the 

timetable for any demolition or 

disposition for which the PHA has 

applied or will apply for approval under 

Section 18 and these regulations (except 

in the case of small- or high-performing 

PHAs eligible for streamlined annual 

plan treatment). This description and 

timetable must be the same in the 

annual plan and the application, and 

otherwise comply with Section 18 of the 

1937 Act and these regulations. The 

remainder of proposed 24 CFR 970.7(a) 

states various application requirements, 

including a description of the property 

to be demolished or disposed; a 

description of the specific action 

proposed, such as demolition, 

disposition, or a combination; a 

proposed timetable for the action; a 

statement supporting the proposed 

action under the regulatory criteria; a 

plan for the relocation of any tenants 

who would be displaced by the action; 

and other such information 

demonstrating that the proposed action 

is legally supportable and financially 

viable. 

Approvals for the demolition or 

disposition of public housing units are 

for specific units, which cannot be 

substituted for other units. Furthermore, 

since the PHA is required to certify that 

specified conditions justify demolition 

or disposition, HUD must be able to rely 

on the PHA certification as being 

consistent with available information or 

data. Since HUD will not approve a 

certification that it determines to be 

incorrect, or that is clearly inconsistent 

with information available to or 

requested by HUD, the PHA cannot 

substitute or add other units not covered 

by the application or approval. Rather, 

in such a case, proposed § 970.7(b)(3) 

states that the PHA must submit a new 

application. Under proposed 

§ 970.7(b)(1), a PHA must complete its 

action within two years of the date of 

HUD approval. If a PHA decides it no 

longer wants to demolish or dispose of 

units that have been approved for 

demolition or disposition, it must 

submit a resolution of its Board of 

Commissioners and show that the 

conditions originally requiring 

demolition or disposition have changed 

(see proposed § 970.7(b)(2)). 

C. Section 970.9 Resident 

Participation Consultation and 

Opportunity To Purchase 

Consultation is an extremely 

important part of the process of 

applying for demolition or disposition 

of public housing. QHWRA requires

(1) that the demolition or disposition 

application be developed in 

consultation with affected residents, any 

resident advisory board and resident 

council of the development that will be 

affected by the proposed demolition or 

disposition, and appropriate 

government officials, and (2), in the case 

of a proposed disposition, that eligible 

resident organizations must be given an 

opportunity for 30 days to indicate an 

interest in purchasing the development 

after they are notified of the sale.

This proposed rule would implement 

these consultation and participation 

requirements in 24 CFR 970.9. Elements 

of these requirements were found in the 

existing regulation at 24 CFR 970.4, 

970.8, and 970.13. Proposed § 970.9, 

similar to § 970.8(e) of the existing 

regulation, requires that the PHA submit 

with the application a description of the 

consultations with the residents affected 

by the proposed demolition or 

disposition, each resident advisory 

board, and any resident councils of the 

project that will be affected by the 

proposed demolition or disposition. 

Like § 970.8(e) of the existing regulation, 

§ 970.9 would also require that the PHA 

submit to HUD copies of any written 

comments submitted to the PHA and 

any evaluation the PHA has made of 

those comments. 

At § 970.9(b), this rule proposes to 

implement the statutory requirement 

that a PHA seeking to dispose of a 

public housing development, in 

appropriate circumstances, offer it first 

to a resident organization, resident 

management corporation, or nonprofit 

corporation acting on behalf of residents 

at the development involved in the 

action. Notably, since the statute now 

applies only the resident offer 

requirements to proposed disposition, 

and not demolition, the portions of 

current § 970.13(a) that involve offering 

to-be-demolished properties to the 

residents are not implemented in the 

proposed rule. 

This proposed rule also varies from 

the existing regulation in that it would 

omit the provision at § 970.13(b) that, in 

cases where there is no resident 

organization, the PHA must inform the 

residents and give them a chance to 

organize. The reason for this change is 

two-fold. First of all, by this time most 

residents have had an opportunity to 

form resident organizations. Secondly, 

the procedure has proven overly timeconsuming and unworkable in those few 

situations where there is not yet a 

resident organization. 

As in the existing regulations, the 

proposed rule would provide for HUD 

discretion as to the circumstances in 

which such a resident offer is made, in 

that it is only required ‘‘in appropriate 

circumstances.’’ (See proposed 

§ 970.9(b)(1).) HUD would define the 

‘‘appropriate circumstances.’’ The cases 

that would not present appropriate 

circumstances for the offer include the 

same ones listed in current 

§ 970.13(a)(2)(v) and (vi). (See proposed 

§ 970.9(b)(3).) Other subsections 

defining ‘‘appropriate circumstances’’ in 

the current rule relate to demolitions, 

and so are omitted from the proposed 

rule. New circumstances in which a 

PHA will not make an offering to 

residents have been added at proposed 

§ 970.9(b)(3) to take into account HOPE 

VI revitalization (see 42 U.S.C. 1437v), 

mandatory removal from inventory of 

distressed units for which there is no 

potential to revitalize under 24 CFR part 

971 (authorized by the 1996 Omnibus 

Consolidated Rescissions and 

Appropriations Act, Pub. Law 104–134, 

approved April 26, 1996), and the 

required conversion of distressed 

housing to tenant-based assistance 

under 42 U.S.C. 1437z–5. 

If an offer is made, the proposed rule 

would require, in accordance with the 

statute, that the resident organization or 

entity express its interest within 30 days 

after receiving the notice from the PHA 

of the upcoming sale, and be given 60 

days from the date the PHA receives the 

residents’ expression of interest to 

submit a formal proposal to the PHA 

and to obtain firm commitments for the 

necessary financing. (See proposed 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 75191

§§ 970.11(a)–(c).) Proposed § 970.11(d) 

contains the required contents of the 

initial written notice of sale. Proposed 

§ 970.11(i) would detail the minimum 

contents of the tenant organization’s 

formal purchase proposal, if any. 

Proposed § 970.11(g) would provide that 

the PHA has 60 days to review the 

resident purchase proposal, and, if the 

PHA determines that it meets the terms 

of sale, 14 days to notify the resident 

organization that the proposal has been 

accepted. If the PHA determines that the 

purchase offer differs from the terms of 

sale, the PHA has discretion to accept or 

reject the offer.

Proposed § 970.11(h) would provide 

for an appeal to HUD in cases where the 

resident organization’s proposal to 

purchase is rejected. The proposed rule 

would revise the appeals process for 

disputes arising from the PHA’s 

decision on residents’ offers to 

purchase. The current appeals process 

has been workable because it has been 

rarely utilized. HUD believes that it may 

be inadequate if it becomes frequently 

used, and so proposes two major 

changes for public comment. One such 

change is that HUD will be able to 

extend the time to provide an initial 

decision from 30 days to 120 days, in 

30-day increments. If there are few 

cases, HUD should have no problem 

meeting the 30-day time frame; 

however, this time frame could be 

unrealistic if HUD becomes 

overburdened with appeals. Secondly, 

the rule explicitly provides for 

administrative finality. HUD hopes that 

this will result in more efficient 

resolution of disputes at the 

administrative level, avoiding timeconsuming and resource-intensive court 

litigation. 

D. Criteria for Approval and 

Disapproval of Demolition or 

Disposition Applications (§§ 970.15, 

970.17, and 970.29) 

This proposed rule, in accordance 

with the statute, would place in the 

hands of PHAs much of the 

responsibility for determining whether a 

project is suitable for demolition or 

disposition. This rule at § 970.15(a) and 

§ 970.17 proposes to implement the 

statutory standard by requiring HUD to 

approve the request based on the PHA’s 

certification, unless HUD has 

information that the PHA’s certification 

is incorrect. In the case of requested 

demolition, the PHA must certify that 

the development is physically obsolete 

and no reasonable program of 

modifications will be cost-effective to 

return the development to useful life. 

Section 970.15(b) indicates major 

problems that HUD would consider to 

indicate obsolescence. In the case of 

requested disposition, the rule proposes 

that the PHA must certify either that (1) 

conditions in the area adversely affect 

the health or safety of the residents or 

the feasible operation of the project, (2) 

disposition will allow the development, 

rehabilitation, or acquisition of other 

property that will be more efficiently or 

effectively operated as public housing, 

or (3) that disposition is otherwise in 

the best interests of the residents and 

the PHA, consistent with the goals of 

the PHA and the PHA Plan, and 

otherwise consistent with the statute. 

Section 970.17(d) would also implement 

the statutory provision on disposition of 

non-dwelling facilities and vacant land. 

The proposed rule would also 

indicate the permissible bases for HUD 

to disapprove an application for 

demolition or disposition. (See

proposed § 970.29.) HUD would 

disapprove such an application if the 

information to which the PHA certifies 

is clearly inconsistent with information 

available to HUD. HUD’s information for 

this purpose can, by statute, include 

information that HUD requests. (See 42 

U.S.C. 1437p(b)(1).) As this statutory 

provision implies, HUD has discretion 

to request information. (See proposed 24 

CFR 970.7, ‘‘general requirements for 

PHA demolition/disposition application 

for HUD approval.’’) The other statutory 

reason for disapproval is failure of the 

applicant to follow the statutory 

consultation process. (See 42 U.S.C. 

1437p(b)(2).) (See proposed § 970.29(b).) 

E. Environmental Review 

The proposed environmental review 

requirements for demolition or 

disposition have been placed in a standalone section in this proposed rule, 

§ 970.13. Environmental review 

requirements apply to all demolitions or 

dispositions under this part, including 

de minimis demolitions pursuant to 

§ 970.27. The environmental review 

shall assess the impacts of known future 

site reuse. Factors that indicate that the 

future site reuse can reasonably be 

considered to be known include the 

following: (1) Private, federal, state, or 

local funding for the site reuse has been 

committed; (2) a grant application 

involving the site has been filed with 

the federal government or a state or 

local unit of government; (3) the federal 

government or a state or unit of local 

government has made a commitment to 

take an action, including a physical 

action, that will facilitate a particular 

reuse of the site; and (4) architectural, 

engineering or design plans for the reuse 

exist that go beyond preliminary stages. 

On the other hand, potential reuse of 

the site would not be considered to be 

known, and thus no environmental 

review of the reuse would be required 

before the time of demolition or 

disposition, if the reuse is a use: (1) For 

which no private, federal, state, or local 

funds have been committed; and (2) 

which is not the subject of any grant 

application to the federal government or 

a state or a unit of local government; (3) 

which neither the federal government 

nor a state or a unit of local government 

has made a commitment to take an 

action to facilitate, including a physical 

action; and (4) which has not been 

delineated in any architectural, 

engineering, or design plans that go 

beyond a preliminary stage. Information 

about the reuse of the site should be 

sought from the transferee or other 

sources. In addition, in the case of a 

demolition or disposition made 

necessary by a declared natural disaster, 

this proposed rule references certain 

available expedited review procedures. 

F. Relocation of Tenants 

Proposed §§ 970.21 and 970.23 would 

implement the statutory provisions 

regarding relocation of residents of 

public housing who will be displaced 

by demolition or disposition. By statute, 

such residents must be offered 

comparable housing that meets housing 

quality standards (HQS) and is located 

in an area generally no less desirable 

than the location of the displaced 

person’s housing. (See 42 U.S.C. 

1437p(a)(4)(A)(iii)). If the relocated 

residents are persons with disabilities 

being displaced from units with 

reasonable accommodations, 

comparable housing includes housing 

with reasonable accommodations. 

Relocation housing may be in the form 

of tenant- or project-based Section 8 

vouchers, or occupancy in another of 

the PHA’s units at a rental rate that is 

comparable to the rental rate of the unit 

from which the resident was moved. 

The statute provides that the PHA 

will pay for the actual and reasonable 

costs of relocation of each resident. (See

42 U.S.C. 1437p(a)(4)(B).) ‘‘Actual and 

reasonable costs of relocation’’ includes 

the costs of transporting and moving 

persons with disabilities, including any 

reasonable accommodations to their 

disabilities. This rule proposes that the 

PHA may pay those costs from a variety 

of sources, including HUD funds. (See

proposed § 970.23.) Also, as required by 

the statute, the rule would require the 

PHA, except in emergency situations, to 

give notice to residents 90 days before 

the date of displacement, to provide 

relocation counseling, and to refrain 

from taking any action until all the 

residents of the affected building or 

buildings have been relocated. (See 42 

75192 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 

U.S.C. 1437p(a)(4)(A), proposed 24 CFR 

970.21(e).) In addition, the PHA must 

have a relocation plan indicating the 

number of residents to be displaced, the 

type of counseling services that the PHA 

will provide, the housing resources 

expected to be available for the 

residents, and the estimated costs of the 

relocation expenses and the counseling 

services, and the source of funds to pay 

those costs. 

G. De minimis Exception 

By statute, in any five-year period a 

PHA may demolish the lesser of five 

percent of its dwelling units or five of 

its dwelling units, if the space occupied 

by the units is used for meeting service 

or other needs of the public housing 

residents or the units are beyond repair. 

This statutory provision is proposed to 

be implemented in § 970.27. The rule 

would make clear that the five years are 

counted backward from the date of the 

new proposed demolition under this 

section, and that demolitions prior to 

the effective date of QHWRA will not be 

counted in the calculation. 

Environmental review provisions apply 

to demolitions pursuant to this section.

H. Actions With Respect to Units To Be 

Demolished or Sold, Prior to 

Application Approval 

Where a PHA plans to demolish or 

sell units, but has either applied and not 

yet received approval or has not yet 

applied, an issue arises regarding the 

PHA’s obligation to maintain those units 

in operating condition. Since the PHA 

continues to receive subsidy to operate 

those units, the PHA has an obligation 

to maintain and operate the units as 

housing for low-income families. This 

proposed rule codifies this obligation at 

§ 970.25. The PHA may conduct 

planning activities including studies 

and consultation regarding demolition, 

but must continue to provide full 

housing services to residents in place. 

While HUD is actually considering the 

application, if there is unit turnover, the 

PHA should not re-rent the units from 

which residents have moved. After 

approval of a PHA’s demolition or 

disposition application, a PHA is 

required to operate all units as public 

housing and will receive operating 

subsidy in accordance with HUD’s 

operating subsidy regulations at 24 CFR 

part 990. 

I. Consolidation of Occupancy 

A PHA may consolidate occupancy 

within or among buildings of a 

development in order to more efficiently 

serve the residents, without filing a 

demolition or disposition application. 

(See proposed § 970.25(b).) 

J. Use of Proceeds of Disposition 

This proposed rule would amend 24 

CFR 970.19 to reflect the fact that 

QHWRA provides more flexibility than 

previously existed for use of the 

proceeds from disposition. After 

disposing of the property, either at fair 

market value by public solicitation or by 

another method approved by HUD, and 

paying approved costs of the 

disposition, the PHA may apply for a 

waiver by HUD of the obligation to use 

the proceeds from disposition for the 

retirement of debt obligations used to 

finance the original construction or for 

the subsequent modernization of the 

public housing development. To the 

extent that proceeds not used to pay off 

obligations remain, they can be used 

either to provide low-income housing to 

benefit the residents of the public 

housing agency or to leverage funds to 

secure on-site commercial enterprises 

appropriate to serve the needs of the 

residents. (42 U.S.C. 1437p(a)(5)(B).) 

III. Supplementary Information 

Paperwork Reduction Act 

This rule contains collection of 

information requirements, which have 

been submitted to OMB for review 

under Section 3507(d) of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35). These new collection of 

information requirements are not 

effective until such time that OMB 

grants its approval. The approval 

numbers will be published in the 

Federal Register through separate 

notice. Information on these 

requirements is provided as follows: 

Estimates of the total reporting and 

recordkeeping burden that will result 

from the collection of information are as 

follows: 

For demolition or disposition, the 

total estimated paperwork burden is 

1321.25 hours. The information 

required in 24 CFR 970.7(a)(2), a 

description of the existing project, in 

each case is already contained in the 

electronic system into which the 

required information will be submitted, 

and so is not expected to impose any 

additional paperwork burden. 

Therefore, even though it is a regulatory 

requirement, that section is not listed 

herein. 

The burden of information collection 

in this proposed rule is estimated as 

follows:

Section No. and procedure 

Number of 

persons affected 

Number of 

minutes per 

procedure 

Burden hours 

970.7(a)(1) HA plan certification .................................................................................................. 243 10 40.50

970.7(a)(2) Description of property ............................................................................................. 243 1 0 0

970.7(a)(3) Description of proposed action ................................................................................. 243 15 60.75

970.7(a)(4) Timetable .................................................................................................................. 243 5 20.25

970.7(a)(5) Justification ............................................................................................................... 243 45 182.25

970.7(a)(6) Relocation plan, if needed ........................................................................................ 243 45 182.25

970.7(a)(7) Description of resident consultation ......................................................................... 243 30 121.50

970.7(a)(10) Appraisal in the case of disposition ........................................................................ 171 5 14.25

970.7(a)(11) Estimate of proceeds, use of proceeds in the case of disposition ........................ 171 30 85.50

970.7(a)(12) Estimate of costs for any required relocation housing, moving costs, and counseling ........................................................................................................................................ 243 30 121.50

970.7(a)(13) Request to waive debt ............................................................................................ 171 5 14.25

970.7(a)(14) Board resolution ...................................................................................................... 243 5 20.25

970.7(a)(15) Evidence of government consultation .................................................................... 243 5 20.25

970.7(a)(16) Environmental review ............................................................................................. 243 5 20.25

970.7(a)(17) FH&EO certification ................................................................................................ 243 5 20.25

970.9(a) Evidence of resident consultation & evaluation ............................................................ 243 60 243.00

970.9(b)(4) Evidence of nonapplicability to make the offer to sell to RO ................................... 171 10 28.50

970.11 (same information as 970.7(a)(8) Offer to sell (less than 25% of disposition applications do not take the exception) .............................................................................................. 43 60 43.00

970.27(e) De minimis recordkeeping submission ....................................................................... 7 15 1.75

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 75193

Section No. and procedure 

Number of 

persons affected 

Number of 

minutes per 

procedure 

Burden hours 

970.35 Required reports .............................................................................................................. 243 20 81.00

Total Reporting and Recordkeeping Burden (hours) ....................................................... ........................ ........................ 1321.25

1From PIC. 

In accordance with 5 CFR 

1320.8(d)(1), HUD is soliciting 

comments from members of the public 

and affected agencies concerning this 

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; 

(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. Comments must be 

received within 30 days from the date 

of this proposal. Comments must refer 

to the proposal by name and docket 

number (FR–4598–P–01) and must be 

sent to:

Mark D. Menchik, HUD Desk Officer, 

Office of Management and Budget, 

New Executive Office Building, 

Washington, DC 20503, Fax number: 

(202) 395–6947, e-mail: 

Mark_D._Menchik@omb.eop.gov; 

and 

Sherry Fobear-McCown, Reports Liaison 

Officer, Office of the Assistant 

Secretary for Public and Indian 

Housing, Department of Housing and 

Urban Development, 451 Seventh 

Street SW., Room 9116, Washington, 

DC 20410. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531–

1538) (UMRA) establishes requirements 

for federal agencies to assess the effects 

of their regulatory actions on state, 

local, and tribal governments and the 

private sector. This proposed rule does 

not impose any federal mandates on any 

state, local, or tribal government or the 

private sector within the meaning of 

UMRA. 

Environmental Impact 

A Finding of No Significant Impact 

(FONSI) with respect to the 

environment has been 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. 

4332(2)(C)). The finding of no 

significant impact is available for public 

inspection between 8 a.m. and 5 p.m. 

weekdays in the Regulations Division, 

Office of General Counsel, Room 10276, 

U.S. Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Washington, DC 20410–0500. 

Impact on Small Entities 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.), generally requires 

an agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. 

This rule is concerned solely with the 

requirements for PHAs to apply for 

demolition or disposition of the public 

housing developments that they 

administer. However, many of the 

requirements of this rule were already 

present under the existing regulations 

regarding public housing demolition or 

disposition. To the extent that this rule 

would alter the previous requirements, 

it would do so in ways that are likely 

to either leave the economic impact 

unchanged or lower such impact. For 

example, because of a statutory change, 

the rule would no longer require PHAs 

to have a replacement housing plan. The 

rule would provide greater flexibility 

than before in how PHAs can use the 

proceeds from disposition of a property. 

The rule would provide for demolition 

of a minimal number of units without 

submitting an application. Thus, the 

rule certainly would not impose a 

greater administrative burden on 

entities than previously, and in some 

ways would lower the administrative 

requirements for demolishing or 

disposing of public housing units. 

Therefore, the undersigned certifies that 

this proposed rule will not have a 

significant economic impact on a 

substantial number of small entities, 

and an initial regulatory flexibility 

analysis is not required. 

Notwithstanding the determination 

that this rule would not have a 

significant economic impact on a 

substantial number of small entities, 

HUD specifically invites comments 

regarding less burdensome alternatives 

to this rule that will meet HUD’s 

objectives as described in this preamble. 

Federalism Impact 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits, to the extent 

practicable and permitted by law, an 

agency from promulgating a regulation 

that has federalism implications and 

either imposes substantial direct 

compliance costs on state and local 

governments and is not required by 

statute, or preempts state law, unless the 

relevant requirements of Section 6 of the 

executive order are met. This rule does 

not have federalism implications and 

does not impose substantial direct 

compliance costs on state and local 

governments or preempt state law 

within the meaning of the executive 

order. 

Executive Order 12866, Regulatory 

Planning and Review 

OMB reviewed this proposed rule 

under Executive Order 12866 (entitled 

‘‘Regulatory Planning and Review’’). 

OMB determined that this proposed rule 

is a ‘‘significant regulatory action,’’ as 

defined in Section 3(f) of the order 

(although not economically significant, 

as provided in Section 3(f)(1) of the 

order). Any changes made to the 

proposed rule subsequent to its 

submission to OMB are identified in the 

docket file, which is available for public 

inspection in the Regulations Division, 

Office of General Counsel Room 10276, 

U.S. Department of Housing and Urban 

Development, 451 Seventh Street, SW., 

Washington, DC 20410–0500.

List of Subjects in 24 CFR Part 970

Grant programs—housing and 

community development, Public 

housing, Reporting and recordkeeping 

requirements.

75194 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 

The Catalog of Federal Domestic 

Assistance program number for the 

program affected by this proposed rule 

is 14.850. 

For the reasons stated in the 

preamble, HUD proposes to amend 24 

CFR part 970 as follows: 

1. 24 CFR part 970 is revised to read 

as follows:

PART 970—PUBLIC HOUSING 

PROGRAM—DEMOLITION OR 

DISPOSITION OF PUBLIC HOUSING 

PROJECTS

Sec. 

970.1 Purpose. 

970.3 Applicability. 

970.5 Definitions. 

970.7 General requirements for HUD 

approval of a PHA demolition/

disposition application. 

970.9 Resident participation—consultation 

and opportunity to purchase. 

970.11 Procedures for the offer of sale to 

established eligible organizations.

970.13 Environmental review requirements. 

970.15 Specific criteria for HUD approval of 

demolition requests. 

970.17 Specific criteria for HUD approval of 

disposition requests. 

970.19 Disposition of property; use of 

proceeds. 

970.21 Relocation of residents. 

970.23 Costs of demolition and relocation 

of displaced tenants. 

970.25 Required and permitted actions 

prior to approval. 

970.27 De minimis exception to demolition 

requirements. 

970.29 Criteria for disapproval of 

demolition or disposition applications. 

970.31 Replacement units. 

970.33 Effect on Operating Fund Program 

and Capital Fund Program. 

970.35 Reports and records.

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

§ 970.1 Purpose. 

This part states requirements for HUD 

approval of a public housing agency’s 

application for demolition or 

disposition (in whole or in part) of 

public housing developments assisted 

under Title I of the U.S. Housing Act of 

1937 (Act). The rules and procedures in 

24 CFR part 85 are not applicable to this 

part.

§ 970.3 Applicability. 

(a) This part applies to public housing 

developments that are owned by public 

housing agencies (PHAs) and that are 

subject to Annual Contributions 

Contracts (ACCs) under the Act. 

(b) This part does not apply to the 

following: 

(1) PHA-owned Section 8 housing, or 

housing leased under former Sections 

10(c) or 23 of the Act; 

(2) Demolition or disposition before 

the end of the initial operating period 

(EIOP), as determined under the ACC, of 

property acquired incident to the 

development of a public housing project 

(however, this exception shall not apply 

to dwelling units under ACC); 

(3) The conveyance of public housing 

for the purpose of providing 

homeownership opportunities for lower 

income families under Sections 21 and 

32 of the Act, the homeownership 

program under former Section 5(h) of 

the Act, or other predecessor 

homeownership programs; 

(4) The leasing of dwelling or nondwelling space incident to the normal 

operation of the project for public 

housing purposes, as permitted by the 

ACC; 

(5) Making available common areas 

and unoccupied dwelling units in 

public housing projects to provide 

supportive services incident to an 

approved local Family Self Sufficiency 

program under 24 CFR part 984; 

(6) The reconfiguration of the interior 

space of buildings (e.g., moving or 

removing interior walls to change the 

design, sizes, or number of units) 

without ‘‘demolition,’’ as defined in 

§ 970.5. (This includes the conversion of 

bedroom size, occupancy type, changing 

the status of unit from dwelling to nondwelling.); 

(7) Easements, rights-of-way, and 

transfers of utility systems incident to 

the normal operation of the 

development for public housing 

purposes, as permitted by the ACC; 

(8) A whole or partial taking by a 

public or quasi-public entity (taking 

agency) authorized to take real property 

by its use of police power or exercise of 

its power of eminent domain under state 

law. A taking does not qualify for the 

exception under this paragraph unless: 

(i) The taking agency has been 

authorized to acquire real property by 

use of its police power or power of 

eminent domain under its state law;

(ii) The taking agency has taken at 

least the first step in formal proceedings 

under its state law; and 

(iii) If the taking is for a federally 

assisted project, the Uniform Relocation 

Act (URA) applies to any resulting 

displacement of residents and it is the 

responsibility of the taking agency to 

comply with applicable URA 

requirements. 

(9) Demolition after conveyance of a 

public housing project to a non-PHA 

entity in accordance with an approved 

homeownership program under Title III 

of the Cranston-Gonzalez National 

Affordable Housing Act (HOPE I), 42 

U.S.C. 1437aaa note; 

(10) Units leased for non-dwelling 

purposes for one year or less; 

(11) A public housing development 

that is conveyed by a PHA prior to date 

of funding availability (DOFA) to enable 

an owner entity to develop the property 

using the mixed-finance development 

method; 

(12) Disposition of public housing 

units after DOFA for development 

pursuant to the mixed-finance 

development method at 24 CFR part 

941, subpart F; 

(13) Demolition under the de minimis

exception in § 970.27, except that the 

environmental review provisions apply, 

including the provisions at 

§§ 970.7(a)(16) and 970.13(b) of this 

part; 

(14) Demolition (but not disposition) 

of severely distressed units as part of a 

revitalization plan under Section 24 of 

the Act, 42 U.S.C. 1437v (HOPE VI) 

approved after October 21, 1998; 

(15) Demolition (but not disposition) 

of public housing developments 

removed from a PHA’s inventory under 

Section 33 of the Act, 42 U.S.C. 1437z–

5.

§ 970.5 Definitions. 

ACC, or Annual Contributions 

Contract, is defined in 24 CFR 5.403. 

Act means the United States Housing 

Act of 1937, 42 U.S.C. 1437 et seq.

Appropriate government officials

mean the Chief Executive Officer or 

officers of a unit of general local 

government. 

Assistant Secretary means the 

Assistant Secretary for Public and 

Indian Housing at HUD. 

Chief Executive Officer of a unit of 

general local government means the 

elected official or the legally designated 

official, who has the primary 

responsibility for the conduct of that 

entity’s governmental affairs. Examples 

of the ‘‘chief executive officer of a unit 

of general local government’’ are: the 

elected mayor of a municipality; the 

elected county executive of a county; 

the chairperson of a county commission 

or board in a county that has no elected 

county executive; and the official 

designated pursuant to law by the 

governing body of a unit of general local 

government. 

Demolition means the removal by 

razing or other means, in whole or in 

part, of one or more permanent 

buildings of a public housing 

development. A demolition involves 

any four or more of the following: 

(1) Envelope removal (roof, windows, 

exterior walls); 

(2) Kitchen removal; 

(3) Bathroom removal; 

(4) Electrical system removal (unit 

service panels and distribution circuits); 

or 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 75195

(5) Plumbing system removal (e.g., 

either the hot water heater or 

distribution piping in the unit, or both).

Disposition means the conveyance or 

other transfer by the PHA, by sale or 

other transaction, of any interest in the 

real estate of a public housing 

development, subject to the exceptions 

stated in § 970.3. 

DOFA, or date of full availability, 

means the last day of the month in 

which substantially all (95 percent or 

more) of the units in a housing 

development are available for 

occupancy. 

EIOP means the end of the initial 

operating period. If 95 percent or more 

of the units in a development are 

occupied, EIOP is the last day of the 

first calendar quarter after DOFA. If the 

development does not achieve 95 

percent occupancy by this date, EIOP is 

the last day of the second calendar 

quarter after DOFA. 

Firm financial commitment means a 

commitment that obligates a creditable 

source, lender, or equity provider, to the 

lending or equity investment of a 

specific sum of funds to be made on or 

before a specific date(s) and may 

contain contingencies or conditions 

which must be satisfied by the borrower 

(or entity receiving equity investments) 

before the closing of the transaction. 

The condition of a firm commitment 

must be that it is enforceable by the 

borrower (or entity receiving the equity 

investment) upon the satisfaction of all 

contingencies or conditions. 

Housing Construction Cost (HCC) has 

the same meaning as in § 941.103 of this 

title. 

PHA Plan—Means the PHA’s initial, 

annual, and five-year submissions under 

section 5A of the U.S. Housing Act of 

1937, 42 U.S.C. 1437c–1. 

Resident Advisory Board (RAB) has 

the same meaning as in § 903.13(a) of 

this title. 

Resident Council means a resident 

organization, the role and requirements 

of which are as described in 24 CFR part 

964.

§ 970.7 General requirements for HUD 

approval of a PHA demolition/disposition 

application. 

(a) Application for HUD Approval. A 

PHA must obtain written approval from 

HUD before undertaking any transaction 

involving demolition or disposition of 

PHA-owned property under the ACC. 

Where a PHA demolishes or disposes of 

public housing property without HUD 

approval, no HUD funds may be used to 

fund the costs of demolition or 

disposition or reimburse the PHA for 

those costs. HUD will approve an 

application for demolition or 

disposition upon the PHA’s submission 

of an application with the required 

certifications and the supporting 

information required by this section and 

§§ 970.15 or 970.17. Section 970.29 

specifies criteria for disapproval of an 

application. Approval of the application 

under this part does not imply approval 

of a request for additional funding, 

which the PHA must make separately 

under a program that makes available 

funding for this purpose. The PHA shall 

submit the application for demolition or 

disposition and the timetable in a time 

and manner and in a form prescribed by 

HUD. The supporting information shall 

include: 

(1) A certification that the PHA has 

described the demolition or disposition 

in the approved PHA Annual Plan and 

timetable under 24 CFR part 903 (except 

in the case of small or high-performing 

PHAs eligible for streamlined annual 

plan treatment), and that the description 

in the approved PHA Annual Plan is 

identical to the application submitted 

pursuant to this part and otherwise 

complies with Section 18 of the Act, 42 

U.S.C. 1437p, and this part; 

(2) A description of all identifiable 

property, by development, including 

land, dwelling units, and other 

improvements, involved in the 

proposed demolition or disposition; 

(3) A description of the specific action 

proposed, such as: 

(i) Demolition, disposition, or 

demolition with disposition;

(ii) If disposition is involved, the 

method of sale; 

(4) A general timetable for the 

proposed action(s) including the initial 

contract for demolition, the actual 

demolition, and, if applicable, the 

closing of sale or other form of 

disposition; 

(5) A statement justifying the 

proposed demolition or disposition 

under the applicable criteria of 

§§ 970.15 or 970.17; 

(6) If applicable, a plan for the 

relocation of tenants who would be 

displaced by the proposed demolition or 

disposition (including a relocation 

timetable as prescribed in § 970.21); 

(7) A description with supporting 

evidence of the PHA’s consultations 

with residents, any resident 

organizations, and the Resident 

Advisory Board, as required under 

§ 903.9 of this title; 

(8) In the case of disposition only, 

evidence of compliance with the 

offering to resident organizations, as 

required under § 970.9; 

(9) In the case of disposition, the 

estimated balance of project debt, under 

the ACC, for development and 

modernization; 

(10) In the case of disposition, an 

estimate of the fair market value of the 

property, established on the basis of one 

independent appraisal, unless otherwise 

determined by HUD, as described in 

§ 970.19(c); 

(11) In the case of disposition, 

estimates of the gross and net proceeds 

to be realized, with an itemization of 

estimated costs to be paid out of gross 

proceeds and the proposed use of any 

net proceeds in accordance with 

§ 970.19; 

(12) An estimate of costs for any 

required relocation housing, moving 

costs, and counseling. 

(13) Where the PHA is requesting a 

waiver of the requirement for the 

application of proceeds for repayment of 

outstanding debt, the PHA must request 

such a waiver in its application, along 

with a description of the proposed use 

of the proceeds; 

(14) A copy of a resolution by the 

PHA’s Board of Commissioners 

approving the specific demolition or 

disposition application (or, in the case 

of the report required under § 970.27(e) 

for ‘‘de minimis’’ demolitions, the Board 

of Commissioners’ resolution approving 

the ‘‘de minimis’’ action) for that 

development or developments or 

portions thereof. The resolution must be 

signed and dated after all resident and 

local government consultation has been 

completed; 

(15) Evidence that the application was 

developed in consultation with 

appropriate government officials as 

defined in § 970.5, including: 

(i) A description of the process of 

consultation with local government 

officials, which summarizes dates, 

meetings, and issues raised by the local 

government officials and the PHA’s 

responses to those issues; 

(ii) A signed and dated letter in 

support of the application from the 

Chief Executive Officer of the unit of 

local government which demonstrates 

that the PHA has consulted with the 

appropriate local government officials 

on the proposed demolition or 

disposition; 

(iii) Where the local government 

consistently fails to respond to the 

PHA’s attempts at consultation 

including letters, requests for meetings, 

public notices, and other reasonable 

efforts, documentation of those 

attempts; 

(iv) Where the PHA covers multiple 

jurisdictions (such as a regional housing 

authority), the PHA must meet these 

requirements for each of the 

jurisdictions where the PHA is 

proposing demolition or disposition of 

PHA property;

75196 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 

(16) An approved Environmental 

Review of the proposed demolition or 

disposition in accordance with 24 CFR 

parts 50 or 58 for any demolition or 

disposition of public housing property 

covered under this part, as required 

under 24 CFR 970.13; 

(17) A certification that the 

demolition or disposition application 

does not violate any remedial civil 

rights order or agreement, voluntary 

compliance agreement, final judgment, 

consent decree, settlement agreement, or 

other court order or agreement; 

(18) Any additional information 

necessary to support the application and 

assist HUD in making determinations 

under this part. 

(b) Completion of demolition/

disposition or rescissions of approval.

(1) A PHA must complete any approved 

demolition or disposition within two 

years of the date of HUD’s approval. 

(2) HUD will consider a PHA’s request 

to rescind an earlier approval to 

demolish or dispose of public housing 

property, where a PHA submits a 

resolution from the Board of 

Commissioners and documentation that 

the conditions that originally led to the 

request for demolition or disposition 

have significantly changed or been 

removed. 

(3) The Assistant Secretary will not 

approve any request by the PHA to 

either substitute units or add units to 

those originally included in the 

approved demolition or disposition 

application, unless the PHA submits a 

new application for those units that 

meet the requirements of this part.

§ 970.9 Resident participation—

consultation and opportunity to purchase. 

(a) Resident consultation. PHAs must 

consult with residents who will be 

affected by the proposed action with 

respect to all demolition or disposition 

applications. The PHA must provide 

with its application evidence that the 

application was developed in 

consultation with residents who will be 

affected by the proposed action, any 

resident organizations for the 

development, PHA-wide resident 

organizations that will be affected by the 

demolition or disposition, and the 

Resident Advisory Board (RAB). The 

PHA must also submit copies of any 

written comments submitted to the PHA 

and any evaluation that the PHA has 

made of the comments. 

(b) Resident organization offer to 

sell—applicability. In the situation 

where the PHA applies to dispose of a 

development or portion of a 

development: 

(1) The PHA shall, in appropriate 

circumstances as determined by the 

Assistant Secretary, initially offer the 

property proposed for disposition to any 

eligible resident organization, eligible 

resident management corporation as 

defined in 24 CFR part 964, or to a 

nonprofit organization acting on behalf 

of the residents at any development 

proposed for disposition, if the resident 

entity has expressed an interest in 

purchasing the property for continued 

use as low-income housing. The entity 

must make the request in writing to the 

PHA, no later than 30 days after the 

resident entity has received the 

notification of sale from the PHA; 

(2) If the resident entity has expressed 

an interest in purchasing the property 

for continued use as low-income 

housing, the entity, in order for its 

purchase offer to be considered, must: 

(i) In the case of a nonprofit 

organization, be acting on behalf of the 

residents of the development; and 

(ii) Demonstrate that it has obtained a 

firm commitment for the necessary 

financing within 60 days of serving its 

written notice of interest under 

paragraph (b)(1) of this section. 

(3) The requirements of this section 

do not apply to the following cases, 

which have been determined not to 

present an appropriate opportunity for 

purchase by a resident organization:

(i) A unit of state or local government 

requests to acquire vacant land that is 

less than two acres in order to build or 

expand its public services (a local 

government wishes to use the land to 

build or establish a police substation); 

or 

(ii) A PHA seeks disposition outside 

the public housing program to privately 

finance or otherwise develop a facility 

to benefit low-income families (e.g., day 

care center, administrative building, or 

other types of low-income housing); 

(iii) Units that have been legally 

vacated in accordance with 24 CFR part 

970 (HOPE VI) or 24 CFR part 971 

(Section 202 Mandatory Conversion), 

excluding developments where the PHA 

has consolidated vacancies; 

(iv) Distressed units required to be 

converted to tenant-based assistance 

under 42 U.S.C. 1437z–5; or 

(vi) Disposition of non-dwelling 

properties including administration and 

community buildings, and maintenance 

facilities. 

(4) If the requirements of this section 

are not applicable, as provided in 

paragraph (b)(3) of this section, the PHA 

may proceed to submit to HUD its 

application under this part to dispose of 

the property, or a portion of the 

property, without affording an 

opportunity for purchase by a resident 

organization. However, PHAs must 

consult with their residents in 

accordance with paragraph (a) of this 

section. The PHA must submit 

documentation with date and signatures 

to support the applicability of one of the 

exceptions in paragraph (b)(3) of this 

section. Examples of appropriate 

documentation include but are not 

limited to: a letter from the public body 

that wants to acquire the land, copies of 

memoranda or letters approving the 

PHA’s previous application under part 

970 or mandatory conversion plan; and 

the HUD transmittal document 

approving the proposed revitalization 

plan. 

(c) Established eligible organizations.

Where there are eligible resident 

organizations, eligible resident 

management corporations as defined in 

24 CFR part 964, or nonprofit 

organizations acting on behalf of the 

residents (collectively, ‘‘established 

eligible organizations’’), that have 

expressed an interest, in writing, to the 

PHA within 30 days of the date of 

notification of the proposed sale, in 

purchasing the property for continued 

use a low-income housing at the 

affected development, the PHA shall 

follow the procedures for making the 

offer described in § 970.11.

§ 970.11 Procedures for the offer of sale to 

established eligible organizations. 

In making an offer of sale to establish 

eligible organizations as defined in 

§ 970.9(c), in the case of proposed 

disposition, the PHA shall proceed as 

follows: 

(a) Initial written notification of sale 

of property. The PHA shall send an 

initial written notification to each 

established eligible organization (for 

purposes of this section, an established 

eligible organization that has been so 

notified is a ‘‘notified eligible 

organization’’) of the proposed sale of 

the property. The notice of sale must 

include, at a minimum, the information 

listed in paragraph (d) of this section; 

(b) Initial expression of interest. All 

notified eligible organizations shall have 

30 days to initially express an interest, 

in writing, in the offer (‘‘initial 

expression of interest’’). The initial 

expression of interest need not contain 

details regarding financing, acceptance 

of an offer of sale, or any other terms of 

sale. 

(c) Opportunity to obtain firm 

financial commitment by interested 

entity. If a notified eligible organization 

expresses interest in writing during the 

30-day period referred to in paragraph 

(b) of this section, no disposition of the 

property shall occur during the 60-day 

period beginning on the date of the 

receipt of the written notice of interest. 

During this period, the PHA must give 

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the entity expressing interest an 

opportunity to obtain a firm financial 

commitment as defined in § 970.5 for 

the financing necessary to purchase the 

property; 

(d) Contents of initial written 

notification. The initial written 

notification to established eligible 

organizations under paragraph (a) of this 

section must include at a minimum the 

following: 

(1) An identification of the 

development, or portion of the 

development, involved in the proposed 

disposition, including the development 

number and location, the number of 

units and bedroom configuration, the 

amount and use of non-dwelling space, 

the current physical condition (fire 

damaged, friable asbestos, lead-based 

paint test results), and percent of 

occupancy; 

(2) A copy of the appraisal of the 

property and any terms of sale; 

(3) Disclosure and description of the 

PHA’s plans for reuse of land, if any, 

after the proposed disposition; 

(4) An identification of available 

resources (including its own and HUD’s) 

to provide technical assistance to the 

organization to help it to better 

understand its opportunity to purchase 

the development, the development’s 

value, and potential use; 

(5) A statement that public housing 

developments sold to resident 

organizations will not continue to 

receive capital and operating subsidy 

after the completion of the sale; 

(6) Any and all terms of sale that the 

PHA will require, including a statement 

that the purchaser must use the property 

for low-income housing. If the PHA 

does not know all the terms of the offer 

of sale at the time of the notice of sale, 

the PHA shall include all the terms of 

sale of which it is aware. The PHA must 

supply the totality of all the terms of 

sale and all necessary materials to the 

residents no later than the day it 

receives the residents’ initial expression 

of interest;

(7) A date by which an established 

eligible organization must express its 

interest, in writing, in response to the 

PHA’s offer to sell the property 

proposed for demolition or disposition, 

which shall be up to 30 days from the 

date of the official written offer of sale 

from the PHA; 

(8) A statement that the established 

eligible organization will be given 60 

days from the date of the PHA’s receipt 

of its letter expressing interest to 

develop and submit a proposal to the 

PHA to purchase the property and to 

obtain a firm financial commitment, as 

defined in § 970.5. The statement shall 

explain that the PHA shall approve the 

proposal from an organization if the 

proposal meets the terms of sale and is 

supported by a firm commitment for 

financing. The statement shall also 

provide that the PHA can consider 

accepting an offer from the organization 

that differs from the terms of sale. The 

statement shall explain that if the PHA 

receives proposals from more than one 

organization, the PHA shall select the 

proposal that meets the terms of sale, if 

any. In the event that two proposals 

from the development to be sold meet 

the terms of sale, the PHA shall chose 

the best proposal. If no proposal meets 

the terms of sale, the PHA in its 

discretion may or may not select the 

best proposal. 

(e) Response to the notice of sale. The 

established eligible organization or 

organizations have up to 30 days to 

respond to the notice of sale from the 

PHA. The established eligible 

organization shall respond to the PHA’s 

notice of sale by means of an initial 

expression of interest under paragraph 

(b) of this section. 

(f) Resident proposal. The established 

eligible organization has up to 60 days 

from the date the PHA receives its 

initial expression of interest and 

provides all necessary terms and 

information to prepare and submit a 

proposal to the PHA for the purchase of 

the property of which the PHA plans to 

dispose, and to obtain a firm 

commitment for financing. The 

resident’s proposal shall provide all the 

information requested in paragraph (i) 

of this section. 

(g) PHA Review of Proposals. The 

PHA has up to 60 days from the date of 

receipt of the proposal or proposals to 

review the proposals and determine 

whether they meet the terms of sale 

described in the PHA’s offer or offers. If 

the PHA determines that the proposal 

meets the terms of sale, within 14 days 

of the date of this determination, the 

PHA shall notify the organization of that 

fact and that the proposal has been 

accepted. If the PHA determines that the 

proposal differs from the terms of sale, 

the PHA may accept or reject the 

proposal in its discretion; 

(h) Appeals. The established eligible 

organization has the right to appeal the 

PHA’s decision to the Assistant 

Secretary for Public and Indian 

Housing, or his designee, by sending a 

letter of appeal within 30 days of the 

PHA’s decision to the field office 

director. The letter of appeal must 

include copies of the proposal and any 

related correspondence, along with a 

statement of reasons why the 

organization believes the PHA should 

have decided differently. HUD shall 

render a decision within 30 days, and 

notify the organization and the PHA by 

letter within 14 days of such decision. 

If HUD cannot render a decision within 

30 days, HUD will so notify the PHA 

and the established eligible organization 

in writing, in which case HUD will have 

an additional 30 days in which to 

render a decision. HUD may continue to 

extend its time for decision in 30-day 

increments for a total of 120 days. Once 

HUD renders its decision, there is no 

further administrative appeal or remedy 

available. 

(i) Contents of the organization’s 

proposal. The established eligible 

organization’s proposal shall at a 

minimum include the following: 

(1) The length of time the organization 

has been in existence;

(2) A description of current or past 

activities which demonstrate the 

organization’s organizational and 

management capability, or the planned 

acquisition of such capability through a 

partner or other outside entities (in 

which case the proposal should state 

how the partner or outside entity meets 

this requirement); 

(3) To the extent not included in 

paragraph (i)(2) of this section, the 

organization’s experience in the 

development of low-income housing, or 

planned arrangements with partners or 

outside entities with such experience 

(in which case the proposal should state 

how the partner or outside entity meets 

this requirement); 

(4) A statement of financial capability; 

(5) A description of involvement of 

any non-resident organization (such as 

non-profit, for-profit, governmental or 

other entities), if any, the proposed 

division of responsibilities between the 

non-resident organization and the 

established eligible organization, and 

the non-resident organization’s financial 

capabilities; 

(6) A plan for financing the purchase 

of the property and a firm financial 

commitment as stated in paragraph (c) 

of this section for funding resources 

necessary to purchase the property and 

pay for any necessary repairs; 

(7) A plan for using the property for 

low-income housing; 

(8) The proposed purchase price in 

relation to the appraised value; 

(9) Justification for purchase at less 

than the fair market value in accordance 

with § 970.19(a), if appropriate; 

(10) Estimated time schedule for 

completing the transaction; 

(11) Any additional items necessary to 

respond fully to the PHA’s terms of sale; 

(12) A resolution from the resident 

organization approving the proposal; 

and 

(13) A proposed date of settlement, 

generally not to exceed six months from 

75198 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 

the date of PHA approval of the 

proposal, or such period as the PHA 

may determine to be reasonable. 

(j) PHA obligations. The PHA must: 

(1) Prepare and distribute the initial 

notice of sale pursuant to 24 CFR 

970.11(a), and, if any established 

eligible organization expresses an 

interest, any further documents 

necessary to enable the organization or 

organizations to make an offer to 

purchase; 

(2) Evaluate proposals received, make 

the selection based on the 

considerations set forth in paragraph (b) 

of this section, and issue letters of 

acceptance or rejection; 

(3) Prepare certifications, where 

appropriate, as provided in paragraph 

(k) of this section; 

(4) Comply with its obligations under 

§ 970.7(a) regarding tenant consultation 

and provide evidence to HUD that the 

PHA has met those obligations. The 

PHA shall not act in an arbitrary manner 

and shall give full and fair consideration 

to any offer from a qualified resident 

management corporation, resident 

council of the affected development or 

a nonprofit organization acting on 

behalf of the residents and accept the 

proposal if the proposal meets the terms 

of sale. 

(k) PHA post-offer requirements. After 

the resident offer, if any, is made, the 

PHA shall: 

(1) Submit its disposition application 

to HUD in accordance with Section 18 

of the Act and this part. The disposition 

application must include complete 

documentation that the resident offer 

provisions of this part have been met. 

This documentation shall include: 

(i) A copy of the signed and dated 

PHA notification letter(s) to each 

established eligible organization 

informing them of the PHA’s intention 

to submit an application for disposition, 

the organization’s right to purchase the 

property to be disposed of; and 

(ii) The responses from each 

organization.

(2)(i) If the PHA accepts the proposal 

of an established eligible organization, 

the PHA shall submit revisions to its 

disposition application to HUD in 

accordance with Section 18 of the Act 

and this part reflecting the arrangement 

with the resident organization, with 

appropriate justification for a negotiated 

sale and for sale at less than fair market 

value, if applicable. 

(ii) If the PHA rejects the proposal of 

the resident organization, the resident 

organization may appeal as provided in 

paragraph (h) of this section. Once the 

appeal is resolved, or, if there is no 

appeal, the 30 days allowed for appeal 

has passed, HUD shall proceed to 

approve or disapprove the application. 

(3) HUD will not process an 

application for disposition unless the 

PHA provides HUD with one of the 

following: 

(i) An official board resolution or its 

equivalent from each established 

eligible organization stating that such 

organization has received the PHA offer, 

and that it understands the offer and 

waives its opportunity to purchase the 

project, or portion of the project, 

covered by the disposition application; 

(ii) A certification from the executive 

director or board of commissioners of 

the PHA that the 30-day time frame to 

express interest has expired and no 

response was received to its offer; or 

(iii) A certification from the executive 

director or board of commissioners of 

the PHA with supporting 

documentation that the offer was 

otherwise rejected.

§ 970.13 Environmental review 

requirements. 

(a) Activities under this part 

(including de minimis demolition 

pursuant to § 970.27) are subject to HUD 

environmental regulations in 24 CFR 

part 58. However, HUD may make a 

finding in accordance with § 58.11(d) of 

this title and may itself perform the 

environmental review under the 

provisions of 24 CFR part 50 if a PHA 

objects in writing to the responsible 

entity performing the review under 24 

CFR part 58. 

(b) The environmental review is 

limited to the demolition or disposition 

action and any known re-use, and is not 

required for any unknown future re-use. 

(c) In the case of a demolition or 

disposition made necessary by a disaster 

that the President has declared under 

the Robert T. Stafford Disaster Relief 

and Emergency Assistance Act, 42 

U.S.C. 5121 et seq., or a disaster that has 

been declared under state law by the 

officer or entity with legal authority to 

make such declaration, pursuant to 24 

CFR 50.43 and 24 CFR 58.33, the 

provisions of 40 CFR 1506.11 will 

apply.

§ 970.15 Specific criteria for HUD approval 

of demolition requests. 

(a) In addition to other applicable 

requirements of this part, HUD will 

approve an application for demolition 

upon the PHA’s certification that it 

meets the following statutory criteria, 

unless the PHA’s certification is clearly 

inconsistent with information or data 

available to HUD or requested by HUD: 

(1) In the case of demolition of all or 

a portion of a development, the 

development, or portion of the 

development, is obsolete as to physical 

condition, location, or other factors, 

making it unsuitable for housing 

purposes; and 

(2) No reasonable program of 

modifications is cost-effective to return 

the development or portion of the 

development to useful life. HUD 

generally shall not consider a program 

of modifications to be cost-effective if 

the costs of such program exceed the 

HCC in effect at the time the application 

is submitted to HUD. 

(b) Major problems indicative of 

obsolescence are:

(1) As to physical condition: 

Structural deficiencies that cannot be 

corrected in a cost-effective manner 

(settlement of earth below the building 

caused by inadequate structural fills, 

faulty structural design, or settlement of 

floors), or other design or site problems 

(severe erosion or flooding); 

(2) As to location: physical 

deterioration of the neighborhood; 

change from residential to industrial or 

commercial development; or 

environmental conditions as determined 

by HUD environmental review in accord 

with 24 CFR part 50, which jeopardize 

the suitability of the site or a portion of 

the site and its housing structures for 

residential use; 

(3) Other factors which have seriously 

affected the marketability, usefulness, or 

management of the property. 

(c) In the case of demolition of only 

a portion of a development, the 

demolition will help to ensure the 

viability of the remaining portion of the 

project (to reduce development density 

to permit better access by emergency, 

fire, or rescue services, or to improve 

marketability by reducing the density to 

that of the neighborhood or other 

developments in the PHA’s inventory).

§ 970.17 Specific criteria for HUD approval 

of disposition requests. 

In addition to other applicable 

requirements of this part, HUD will 

approve a request for disposition by sale 

or other transfer of a public housing 

project or other real property if the PHA 

certifies that the retention of the 

property is not in the best interests of 

the residents or the PHA for at least one 

of the following reasons, unless 

information available to HUD is 

inconsistent with the certification: 

(a) Conditions in the area surrounding 

the project (density, or industrial or 

commercial development) adversely 

affect the health or safety of the tenants 

or the feasible operation of the project 

by the PHA; 

(b) Disposition allows the acquisition, 

development, or rehabilitation of other 

properties that will be more efficiently 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 75199

or effectively operated as low-income 

housing developments; 

(c) The PHA has otherwise 

determined the disposition to be 

appropriate for reasons that are 

consistent with the goals of the PHA 

and the PHA Plan and that are 

otherwise consistent with the Act; 

(d) In the case of disposition of 

property other than dwelling units 

(community facilities or vacant land), 

the PHA certifies that: 

(1) The non-dwelling facilities or land 

exceeds the needs of the development 

(after EIOP); or 

(2) The disposition of the property is 

incidental to, or does not interfere with, 

continued operation of the remaining 

portion of the development.

§ 970.19 Disposition of property; use of 

proceeds. 

(a) Where HUD approves the 

disposition of real property of a 

development, in whole or in part, the 

PHA shall dispose of the property 

promptly by public solicitation of bids 

for not less than fair market value, 

unless HUD authorizes negotiated sale 

for reasons found to be in the best 

interests of the PHA or the federal 

government, or sale for less than fair 

market value (where permitted by state 

law), based on commensurate public 

benefits to the community, the PHA, or 

the federal government justifying such 

an exception. General public 

improvements such as streets and 

bridges do not qualify as commensurate 

public benefits. 

(b) A PHA may pay the reasonable 

costs of disposition, and of relocation of 

displaced tenants allowable under 

§ 970.21, out of the gross proceeds, as 

approved by HUD.

(c) To obtain an estimate of the fair 

market value before the property is 

advertised for bid, the PHA shall have 

one independent appraisal performed 

on the property proposed for 

disposition, unless HUD determines 

that: 

(1) More than one appraisal is 

warranted; or 

(2) Another method of valuation is 

clearly sufficient and the expense of an 

independent appraisal is unjustified 

because of the limited nature of the 

property interest involved or other 

available data. 

(d) To obtain an estimate of the fair 

market value when a property is not 

publicly advertised for bid, HUD may 

accept a reasonable valuation of the 

property. 

(e) A PHA shall use net proceeds, 

including any interest earned on the 

proceeds (after payment of HUDapproved costs of disposition and 

relocation under paragraph (a) of this 

section), subject to HUD approval as 

follows: 

(1) Unless waived by HUD, for the 

retirement of outstanding obligations, if 

any, issued to finance original 

development or modernization of the 

project; and 

(2) To the extent that any net proceeds 

remain, after the application of proceeds 

in accordance with paragraph (e)(1) of 

this section, for: 

(i) The provision of low-income 

housing or to benefit the residents of the 

PHA, through such measures as 

modernization of lower income housing 

or the acquisition, development, or 

rehabilitation of other properties to 

operate as lower income housing; or 

(ii) Leveraging amounts for securing 

commercial enterprises, on-site in 

public housing developments of the 

PHA, appropriate to serve the needs of 

the residents. 

(f) For dispositions for the purpose 

stated in § 970.17(b), a PHA must 

demonstrate to the satisfaction of HUD 

that the replacement units are being 

provided in connection with the 

disposition of the property. A PHA may 

use sale proceeds in accordance with 

paragraph (e) to fund the replacement 

units.

§ 970.21 Relocation of residents. 

(a) Relocation of residents on a 

nondiscriminatory basis and relocation 

resources. A PHA must offer each family 

displaced by demolition or disposition 

comparable housing that meets housing 

quality standards (HQS); and is located 

in an area that is generally not less 

desirable than the location of the 

displaced persons. The housing must be 

offered on a nondiscriminatory basis, 

without regard to race, color, religion, 

creed, national origin, handicap, age, 

familial status, or gender, in compliance 

with applicable federal and state laws. 

For persons with disabilities displaced 

from a unit with reasonable 

accommodations, comparable housing 

should include similar 

accommodations. Such housing may 

include: 

(1) Tenant-based assistance, such as 

assistance under the Housing Choice 

Voucher Program, 24 CFR part 982, 

except that such assistance will not be 

considered ‘‘comparable housing’’ until 

the family is actually relocated into 

such housing; and 

(2) Project-based assistance; or 

(3) Occupancy in a unit operated or 

assisted by the PHA at a rental rate paid 

by the family that is comparable to the 

rental rate applicable to the unit from 

which the family is vacated. 

(b) In-place tenants. A PHA may not 

complete disposition of a building until 

all tenants residing in the building are 

relocated. 

(c) Financial resources. (1) Sources of 

funding for relocation costs related to 

demolition or disposition may include 

but are not limited to capital funds or 

other federal funds currently available 

for this purpose;

(2) If CDBG funds (see 24 CFR part 

570) are used to pay any part of the cost 

of the demolition or the cost of a project 

for which the property is acquired, the 

transaction is subject to the Residential 

Anti-Displacement and Relocation 

Assistance Plan, as described in the 

applicable regulations. 

(d) Relocation timetable. For the 

purpose of determining operating 

subsidy eligibility under 24 CFR part 

990, a PHA must provide the following 

information in the application or 

immediately following application 

submission: 

(1) The number of occupied units at 

the time of demolition/disposition 

application approval; 

(2) A schedule for the relocation of 

those residents on a month-by-month 

basis. 

(e) The PHA is responsible for the 

following: 

(1) Notifying each family residing in 

the development of the proposed 

demolition or disposition 90 days prior 

to the displacement date, except in 

cases of imminent threat to health and 

safety. The notification must include a 

statement that: 

(i) The development or portion of the 

development will be demolished or 

disposed of; 

(ii) The demolition of the building in 

which the family resides will not 

commence until each resident of the 

building has been relocated; 

(iii) Each family displaced by such 

action will be provided comparable 

housing, which may include housing 

with reasonable accommodations for 

disability, if required under section 504 

of the Rehabilitation Act of 1973 and 

HUD’s regulations, as described in 

paragraph (a) of this section; 

(2) Providing for the payment of the 

actual and reasonable relocation 

expenses of each resident to be 

displaced, including residents requiring 

reasonable accommodations because of 

disabilities; 

(3) Ensuring that each displaced 

resident is offered comparable 

replacement housing as described in 

paragraph (b) of this section; and 

(4) Providing any necessary 

counseling for residents that are 

displaced. 

75200 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 

(f) In addition, the PHA’s plan for the 

relocation of residents who would be 

displaced by the proposed demolition or 

disposition must indicate: 

(1) The number of individual 

residents to be displaced; 

(2) The type of counseling and 

advisory services the PHA plans to 

provide; 

(3) What housing resources are 

expected to be available to provide 

housing for displaced residents; and 

(4) An estimate of the costs for 

counseling and advisory services and 

resident moving expenses, and the 

expected source for payment of these 

costs. 

(g) The Uniform Relocation Act does 

not apply to demolitions and 

dispositions under this part.

§ 970.23 Costs of demolition and 

relocation of displaced tenants. 

Where HUD has approved demolition 

of a project, or a portion of a project, 

and the proposed action is part of a 

program under the Capital Fund 

Program (24 CFR part 905), the costs of 

demolition and of relocation of 

displaced residents may be included in 

the budget funded with capital funds 

pursuant to Section 9(d) of the Act, 42 

U.S.C. 1437g(d), or awarded HOPE VI or 

other eligible HUD funds.

§ 970.25 Required and permitted actions 

prior to approval.

(a) A PHA may not take any action to 

demolish or dispose of a public housing 

development or a portion of a public 

housing development without obtaining 

HUD approval under this part. HUD 

funds may not be used to pay for the 

cost to demolish or dispose of a public 

housing development or a portion of a 

public housing development, unless 

HUD approval has been obtained under 

this part. Until the PHA receives HUD 

approval, the PHA shall continue to 

meet its ACC obligations to maintain 

and operate the property as housing for 

lower income families. However, the 

PHA may engage in planning activities, 

analysis, or consultations without 

seeking HUD approval. Planning 

activities may include project viability 

studies, capital planning, or 

comprehensive occupancy planning. 

The PHA must continue to provide full 

housing services to all residents that 

remain in the development. A PHA 

should not re-rent these units at 

turnover while HUD is considering its 

application for demolition or 

disposition. However, the PHA’s 

operating subsidy eligibility will 

continue to be calculated as stated in 24 

CFR part 990. 

(b) A PHA may consolidate 

occupancy within or among buildings of 

a development, or among developments, 

or with other housing for the purposes 

of improving living conditions of, or 

providing more efficient services to 

residents, without submitting a 

demolition or disposition application.

§ 970.27 De minimis exception to 

demolition requirements. 

(a) A PHA may demolish units 

without submitting an application if the 

PHA is proposing to demolish not more 

than the lesser of: 

(1) Five dwelling units; or 

(2) Five percent of the total dwelling 

units owned by the PHA over any fiveyear period. 

(b) The five-year period referred to in 

paragraph (a)(2) of this section is the 

five years counting backwards from the 

date of the proposed de minimis

demolition, except that any demolition 

performed prior to October 21, 1998, 

will not be counted against the five 

units or five percent of the total, as 

applicable. For example, if a PHA that 

owns 1,000 housing units wishes to 

demolish units under this de minimis

provision on July 1, 2004, and 

previously demolished two units under 

this provision on September 1, 2000, 

and two more units on July 1, 2001, the 

PHA would be able to demolish one 

additional unit for a total of five in the 

preceding five years. As another 

example, if a PHA that owns 60 housing 

units as of July 1, 2004, had demolished 

two units on September 1, 2000, and 

one unit on July 1, 2001, that PHA 

would not be able to demolish any 

further units under this ‘‘de minimis’’

provision until after September 1, 2005, 

because it would have already 

demolished five percent of its total. 

(c)(1) In order to qualify for this 

exemption, the space occupied by the 

demolished unit must be used for 

meeting the service or other needs of 

public housing residents (use of space to 

construct a laundry, community center, 

child care facility, office space for a 

general provider; or for use as open 

space, or garden); or 

(2) The unit being demolished must 

be beyond repair. Beyond repair means 

physical improvement or rehabilitation 

costs which exceed the computed HCC 

for a new development with the same 

structure type and number and size of 

units in the market area. 

(d) The environmental review 

requirements at § 970.13 shall apply to 

demolitions under this section. 

(e) For recordkeeping purposes, PHAs 

that wish to demolish units under this 

section shall submit the information 

required in § 970.7(a)(1), (2), (12), (13), 

and (14). HUD will accept a certification 

from the PHA that one of the two 

conditions in paragraph (c) of this 

section apply unless HUD has 

independent information that 

requirements for ‘‘de minimis’’

demolition have not been met.

§ 970.29 Criteria for disapproval of 

demolition or disposition applications. 

HUD will disapprove of an 

application if HUD determines that:

(a) Any certification made by the PHA 

under this part is clearly inconsistent 

with: 

(1) The approved PHA Plan; 

(2) Any information and data 

available to HUD related to the 

requirements of this part, such as failure 

to meet the requirements for the 

justification for demolition or 

disposition as found in §§ 970.15 and 

970.17; or 

(3) information or data requested by 

HUD; or 

(b) The application was not developed 

in consultation with: 

(1) Residents who will be affected by 

the proposed demolition or disposition 

as required in § 970.9; and 

(2) Each resident advisory board and 

resident council, if any, of the project 

(or portion thereof) that will be affected 

by the proposed demolition or 

disposition as required in § 970.9, and 

appropriate government officials as 

required in § 970.7.

§ 970.31 Replacement units. 

Replacement public housing units 

may be built on the original public 

housing location or in the same 

neighborhood as the original public 

housing location if the number of the 

replacement public housing units is 

significantly fewer than the number of 

units demolished. Such development 

must comply with 24 CFR part 905, 

Public Housing Capital Fund Program, 

as well as 24 CFR part 941.

§ 970.33 Effect on the Operating Fund 

Program and Capital Fund Program.

The provisions of 24 CFR part 990, 

the Public Housing Operating Fund 

Program, and 24 CFR part 905, the 

Public Housing Capital Fund Program, 

apply.

§ 970.35 Reports and records. 

(a) After HUD approval of demolition 

or disposition of all or part of a project, 

the PHA shall provide information on 

the following: 

(1) Actual completion of each 

demolition contract by entering the 

appropriate information into HUD’s 

applicable data system, or providing the 

information by another method HUD 

may require, within a week of making 

the final payment to the demolition 

contractor, or expending the last 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Proposed Rules 75201

remaining funds if funded by force 

account; 

(2) Execution of sales or lease 

contracts by entering the appropriate 

information into HUD’s applicable data 

system, or providing the information by 

another method HUD may require, 

within a week of execution; 

(3) The PHA’s use of the proceeds of 

sale by providing a financial statement 

showing how the funds were expended 

by item and dollar amount; 

(4) Amounts expended for closing 

costs and relocation expenses, by 

providing a financial statement showing 

this information for each property sold; 

(5) Such other information as HUD 

may from time to time require. 

(b) [Reserved]

Dated: December 6, 2004. 

Michael Liu, 

Assistant Secretary for Public and Indian 

Housing.

[FR Doc. 04–27206 Filed 12–14–04; 8:45 am] 

BILLING CODE 4210–33–P