[Federal Register Volume 63, Number 125 (Tuesday, June 30, 1998)]
[Proposed Rules]
[Pages 35650-35660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17271]



[[Page 35649]]

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Part III

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Department of Housing and Urban Development





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24 CFR Parts 5, 207, et al.



Uniform Physical Condition Standards and Physical Inspection 
Requirements for Certain HUD Housing; Proposed Rule

Federal Register / Vol. 63, No. 125 / Tuesday, June 30, 1998 / 
Proposed Rules

[[Page 35650]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 207, 266, 880, 881, 882, 883, 884, 886, 891, 965, 
and 983

[Docket No. FR-4280-P-01]
RIN 2501-AC45


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

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish for housing assisted under 
certain HUD programs uniform physical condition standards. These 
standards are intended to ensure that such housing is decent, safe, 
sanitary and in good repair. HUD's Section 8 housing, Public Housing, 
HUD-insured multifamily housing, and other HUD assisted housing 
(collectively, HUD housing) currently must meet certain standards and 
must undergo an annual physical inspection to determine that the 
housing qualifies as decent, safe, sanitary and in good repair. The 
description or components of what constitutes acceptable physical 
housing quality and the physical inspection procedures by which the 
standards are determined to be met, however, vary from HUD program to 
HUD program. To the extent possible, HUD believes that housing assisted 
under its programs should be subject to uniform physical standards, 
regardless of the source of the subsidy or assistance. Additionally, to 
the extent feasible, HUD believes that the physical inspection 
procedures by which the standards will be assessed should be uniform in 
the covered programs. Therefore, this rule proposes that certain HUD 
housing, as defined in this rule, must meet uniform physical condition 
standards to ensure that the HUD housing is decent, safe, sanitary and 
in good repair. This rule also generally describes new physical 
inspection procedures that will allow HUD to determine conformity with 
such standards. This rule would not change the requirement for annual 
physical inspections currently found in the covered HUD programs. 
Additionally, this rule would not affect the existing requirements in 
each covered HUD program regarding which entity is responsible for 
conducting the physical inspection of the program.

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

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

FOR FURTHER INFORMATION CONTACT: For further information, contact the 
Real Estate Assessment Center, Attention: William Thorson, Department 
of Housing and Urban Development, 4900 L'Enfant Plaza East, SW, Room 
8204, Washington, DC 20410; telephone (202) 755-0102. Persons with 
hearing and speech impairments may contact the Center via TTY by 
calling the Federal Information Relay Service at (800) 877-8399.

SUPPLEMENTARY INFORMATION:

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

    ``The Declaration of Policy'' in section 2 of the United States 
Housing Act of 1937 (42 U.S.C. 1437) (1937 Act) provides in relevant 
part as follows:

    It is the policy of the United States to promote the general 
welfare of the Nation by employing its funds and credit, as provided 
in this Act, to assist the several States and their political 
subdivisions to remedy the unsafe and unsanitary housing conditions 
and the acute shortage of decent, safe, and sanitary dwellings for 
families of lower income * * *. (Emphasis added)

    More recently, in the Cranston-Gonzalez National Affordable Housing 
Act (Pub. L. 101-625, approved November 28, 1990; 42 U.S.C. 12701 et 
seq.), the Congress reaffirmed the nation's housing policy. Section 102 
of this statute (42 U.S.C. 12702) states in relevant part as follows:

    The objective of national housing policy shall be to reaffirm 
the long-established national commitment to decent, safe, and 
sanitary housing for every American by strengthening a nationwide 
partnership of public and private institutions.

    The housing standard set by the Congress as the standard for all 
American families is one of decent, safe, and sanitary housing. As the 
statutes cited above reflect, this is also the standard by which HUD 
housing should be evaluated.

II. Current Requirements Governing Physical Condition and Property 
Maintenance Standards for HUD Housing

    The majority of HUD programs currently contain requirements 
governing the physical condition and maintenance of the housing. In 
discussing the various housing that is proposed to be covered by this 
rule (Section 8 project-based housing, Public Housing, HUD-insured 
multifamily housing, and other HUD-assisted housing) the term ``HUD 
housing'' is used for purposes of brevity.

Current Standards Applicable to Section 8 Housing

    HUD's Section 8 project-based assistance is provided under the 
Section 8 New Construction, Substantial Rehabilitation, Loan Management 
Set-Aside, Property Disposition, Moderate Rehabilitation (including the 
Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) program 
for homeless individuals), and project-based Certificate programs. The 
statutory physical condition standard for all Section 8 housing is 
``decent, safe, and sanitary.'' Specifically, section 2 of the 1937 
Act, as noted above, declares the statutory policy to provide 
assistance for low-income individuals in ``decent, safe, and sanitary'' 
dwellings in the Section 8 (and Public Housing) program. Additionally, 
section 3(b)(1) of the 1937 Act defines the term ``low-income 
housing,'' which term includes Public Housing and housing receiving 
Section 8 assistance, as ``decent, safe, and sanitary dwellings 
assisted under this Act.''
    The various forms of Section 8 Housing Assistance Payments (HAP) 
Contracts covering all of these Section 8 programs contain broad 
references to the quality or the physical condition of the housing that 
must be maintained, language that is similar to the 1937 Act language. 
While there is some minor variation in language, these contracts 
generally require owners to maintain project units and related premises 
in decent, safe, and sanitary condition.
    The program regulations for each of the Section 8 programs provide 
the substantive physical condition standards for each program, but they 
differ somewhat from one another. For the Section 8 New Construction 
and Substantial Rehabilitation programs, the regulations provide that 
housing is decent, safe, and sanitary if it is maintained in a 
condition substantially the same as at the time of acceptance (see 24 
CFR 880.201 and 881.201). Section 8 New Construction projects

[[Page 35651]]

also must comply with HUD minimum property standards; <SUP>1</SUP> 
applicable State and local laws, codes, ordinances, and regulations; 
HUD requirements pertaining to noise abatement and control; and HUD 
requirements pursuant to section 209 of the Housing and Community 
Development Act of 1974 for ``projects for the elderly or handicapped'' 
(24 CFR 880.207). Section 8 Substantial Rehabilitation projects must 
comply with HUD minimum design standards for rehabilitation for 
residential properties; <SUP>2</SUP> applicable State and local laws, 
codes, ordinances, and regulations; HUD noise abatement and control 
requirements; and HUD section 209 requirements (24 CFR 881.207). The 
requirements in Secs. 880.207 and 881.207 generally relate to design, 
construction, and rehabilitation standards, rather than to physical 
maintenance requirements. This proposed rule only addresses physical 
condition after completion of construction and/or rehabilitation. This 
rule does not propose to revise the design, construction, and 
rehabilitation standards currently found in HUD regulations.
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    \1\ The minimum property standards pertain to HUD requirements 
for site design, building design, materials, and construction of 
projects. An owner has the obligation to maintain a project 
constructed in accordance with the minimum property standards in a 
condition ``substantially the same as at the time of [its] 
acceptance'' (24 CFR 880.201).
    \2\ The HUD minimum design standards contain the basic HUD 
requirements for the rehabilitation of projects. An owner has the 
obligation to maintain a project rehabilitated in accordance with 
the minimum design standards in a condition ``substantially the same 
as at the time of [its] acceptance'' (Sec. 881.201).
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    Additionally, this rule does not propose to revise the housing 
quality standards (HQS) applicable to the Section 8 Certificates and 
Vouchers program. As discussed later in this preamble, HQS will remain 
applicable to the Section 8 Certificates and Vouchers Program.

Current Standards Applicable to Public Housing

    HUD Public Housing is also subject to a standard of decent, safe, 
and sanitary. Section 3(b)(1) of the 1937 Act provides in relevant part 
as follows:

    The term low-income housing means decent, safe, and sanitary 
dwellings assisted under this Act. The term ``public housing'' means 
low-income housing, and all necessary appurtenances thereto, 
assisted under this Act other than under section 8.

    Section 14 of the 1937 Act, which addresses Public Housing 
modernization, also emphasizes a decent, safe, and sanitary housing 
standard. Section 14(j)(2) provides, in relevant part, that ``the 
Secretary shall issue rules and regulations establishing standards 
which provide for decent, safe, and sanitary living conditions in low-
rent public housing projects * * *.'' In addition to the references to 
the decent, safe, and sanitary standard, other sections of the 1937 Act 
refer to the ``obligation'' of a public housing agency (PHA) to inspect 
and maintain the Public Housing units in the PHA's projects. For 
example, in connection with the Public Housing Management Assessment 
Program (PHMAP), established by section 6(j) of the 1937 Act, section 
6(j)(1)(G) requires the PHA to inspect the units to ascertain 
``maintenance or modernization needs.''
    The current regulatory provisions addressing the physical condition 
of Public Housing projects are found in several sections of HUD's 
regulations in Title IX of 24 CFR: Secs. 901.30 (of the PHMAP 
regulations), 941.203 (of the Public Housing Development regulations), 
965.704 (of the PHA-Owned or Leased Projects regulations), and 968.315 
(of the Comprehensive Improvement Program Regulations). In the current 
Public Housing Development regulations, Sec. 941.203 (Design and 
construction standards) provides that Public Housing projects must 
comply with a national building code; applicable State and local laws, 
codes, ordinances, and regulations; and other Federal requirements, 
including fire safety requirements and HUD minimum property standards. 
(HUD's minimum property standards are found in 24 CFR part 200, subpart 
S, and remain applicable to Public Housing as design and construction 
standards.)
    As noted earlier in this preamble, Public Housing is not only 
currently subject to a standard of ``decent, safe, and sanitary'' 
housing, there is also a statutory obligation on the PHA to inspect 
Public Housing units (see section 6(j) of the 1937 Act). This 
requirement is found in the current Public Housing Management 
Assessment Program (PHMAP) regulations (see 24 CFR 901.30). Section 
901.30, captioned ``Indicator #5, Annual Inspection of Units and 
Systems,'' provides in relevant part that: ``All occupied units are 
required to be inspected.'' This proposed rule would not change the 
current requirement that PHAs inspect all of their units annually to 
determine maintenance and modernization needs. However, through a 
separate rulemaking, HUD is proposing new assessment regulations for 
Public Housing under which PHAs would be required to maintain their 
units in accordance with the same decent, safe, and sanitary standard 
proposed in part 5, subpart G of this rule.

Current Standards Applicable to Insured Multifamily Housing

    Generally, in HUD-insured multifamily housing, the mortgagors are 
subject, by contract, to maintain the mortgaged premises, 
accommodations, and the grounds appurtenant thereto, in good repair and 
condition. Additionally, HUD's standard mortgage form requires the 
mortgagor to keep the premises in good repair. Although existing FHA 
regulations and supplementary materials (such as handbooks) do not 
provide exact details on what is meant by ``good repair,'' the ``good 
repair'' standard is very similar if not identical to the ``decent, 
safe, and sanitary'' standard. For example, HUD Handbook 4350.1 REV-1, 
Multifamily Asset Management and Project Servicing, provides that in 
determining the level of management review HUD should perform on site, 
it should review the mortgagee's annual physical inspection ``to 
determine if the condition of the property is consistent with the 
provision of ``decent, safe, and sanitary housing'' (emphasis added). 
For HUD-owned projects, section 203 of the Housing and Community 
Development Amendments of 1978 (12 U.S.C. 1701-z-11) provides that HUD 
shall manage or dispose of HUD-owned projects and projects covered by a 
HUD-held mortgage in a manner that will, in the least costly fashion 
among reasonable available alternatives, address the goal of 
maintaining existing housing stock in a ``decent, safe, and sanitary 
condition,'' among other things.

Summary of Current Applicable Standards

    While Section II of the preamble does not address all the various 
HUD programs that contain housing physical condition standards and 
physical inspection requirements, the section provides examples of the 
similarities and differences in housing standards and inspection 
requirements to which certain HUD subsidized, assisted, and/or insured 
housing is currently subject under various HUD programs. These 
standards are found throughout HUD regulations, and are also 
supplemented by HUD handbooks, contracts, agreements, and other 
documents. Although several sets of housing standards apply to HUD 
housing, HUD finds it warranted, by the proper administration of its 
duties, to apply a uniform set of physical condition standards to the 
housing related to HUD's Section 8 (project-based assistance only), 
Public Housing,

[[Page 35652]]

Section 202/811 Supportive Housing, and multifamily mortgage insurance 
programs. (As described below, HUD's Section 8 Certificate and Voucher 
Programs will continue to be subject to the existing housing quality 
standards (HQS) set forth in HUD's regulations in 24 CFR part 982.) 
However, in adopting uniform physical condition standards for HUD 
housing, this proposed rule would not alter the statutory standard for 
maintaining HUD housing. Instead, this proposed rule, by using the 
statutory terminology, clearly acknowledges that the physical condition 
of the housing that is to be met is one of ``decent, safe, and 
sanitary.''

III. Proposed Uniform Physical Condition Standards

    Through this rule, HUD proposes uniform physical condition 
standards that will serve to determine whether certain HUD housing is 
decent, safe, sanitary and in good repair. HUD also proposes that these 
standards be evaluated through uniform physical inspection procedures. 
These proposed standards and inspection process are intended to achieve 
three significant objectives:
    (1) Consistency in physical condition standards for HUD housing;
    (2) Standardization of the inspection to be undertaken to determine 
compliance with the standards; and
    (3) Implementation of an electronically-based inspection system to 
evaluate, rate and rank the physical condition of HUD housing 
objectively.

HUD Programs Covered by the New Standards

    The proposed new physical condition standards will apply to housing 
assisted by HUD under the following programs (Section V of this 
preamble discusses the specific regulatory parts and sections that are 
proposed to be amended). In this rule, the various types of HUD housing 
that are proposed to be subject to the new physical condition 
standards, as set forth in paragraphs (1) through (3) below, are 
collectively referred to as ``HUD housing.''
1. Section 8 Project-Based and Other Assisted Housing
--Section 8 Project-Based Assistance, including the Section 8 New 
Construction, Substantial Rehabilitation, Loan Management Set-Aside, 
Property Disposition, Moderate Rehabilitation (including the Single 
Room Occupancy program for homeless individuals), and project-based 
Certificate programs;
--Section 202 Program of Supportive Housing for the Elderly;
--Section 811 Program of Supportive Housing for Persons with 
Disabilities; and
--Section 202 Loan Program for Projects for the Elderly and Handicapped 
(including 202/8 projects and 202/162 projects).

    While this proposed rule covers Section 8 project-based assistance, 
as described above, this proposed rule would not cover Section 8 
tenant-based assistance (i.e., housing assisted by HUD's Section 8 
Certificate and Vouchers Rental Assistance Program; see 24 CFR part 
982). The housing quality standards (HQS) were originally established 
by the Secretary for the purpose of Section 8 tenant-based housing 
assistance. Unlike Section 8 project-based assistance, HUD is 
continuously reviewing and approving new units into the Section 8 
tenant-based assistance programs, and HUD has found that HQS is 
appropriate for this purpose. As discussed earlier in this rule, HUD 
believes that all of its programs should be subject to the same uniform 
physical inspection requirements. HUD also believes that it would be 
appropriate to require the Section 8 Certificate and Voucher (tenant-
based assistance) programs to be subject to the uniform standards. 
However, HUD is not proposing at this time to apply the new uniform 
standards to such housing, but instead will consider doing so at a 
later date.
2. FHA Multifamily Housing
    The proposed standards also will apply to multifamily housing with 
mortgages insured or held by HUD, or housing that is receiving 
assistance from HUD, under the following authorities:

--Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 et 
seq.) (Rental Housing Insurance);
--Section 213 of the NHA (Cooperative Housing Insurance);
--Section 220 of the NHA (Rehabilitation and Neighborhood Conservation 
Housing Insurance);
--Section 221(d) (3) and (5) of the NHA (Housing for Moderate Income 
and Displaced Families);
--Section 221(d)(4) of the NHA (Housing for Moderate Income and 
Displaced Families);
--Section 231 of the NHA (Housing for Elderly Persons);
--Section 232 of the NHA (Mortgage Insurance for Nursing Homes, 
Intermediate Care Facilities, Board and Care Homes);
--Section 234(d) of the NHA (Rental) (Mortgage Insurance for 
Condominiums);
--Section 236 of the NHA (Rental and Cooperative Housing for Lower 
Income Families);
--Section 241 of the NHA (Supplemental Loans for Multifamily Projects); 
and
--Section 542(c) of the Housing and Community Development Act of 1992 
(12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing Program).

    The proposed standards would not apply to housing insured under 
HUD's single family mortgage insurance programs. Section 5.701(b)(1) of 
this proposed rule lists those sections of the National Housing Act 
that specifically give the Secretary authority to insure mortgages. 
Sections of the NHA that give the Secretary authority to insure 
mortgages ``pursuant to'' another section of the NHA are not listed in 
the coverage of Sec. 5.701 of this proposed rule, because HUD 
ultimately has insured the mortgages under one of the listed statutory 
sections.
3. Public Housing
--Housing receiving assistance under sections 5, 9 or 14 of the U.S. 
Housing Act of 1937.

    Through a separate rulemaking, HUD is proposing new assessment 
regulations for Public Housing under which PHAs would be required to 
maintain their units in accordance with the same decent, safe, and 
sanitary standard proposed in part 5, subpart G of this rule. Under the 
HUD 2020 Management Reform Plan, published in the Federal Register on 
August 12, 1997 (62 FR 43204), HUD is seeking new tools to strengthen 
its abilities to ensure the soundness and physical condition of Public 
Housing. Consistent with HUD's responsibilities under the new Real 
Estate Assessment Center, HUD intends to conduct independent 
inspections of a statistically valid number of Public Housing units for 
each PHA, in order to confirm compliance with the new uniform physical 
condition standards.
    Although HUD encourages PHAs to use its inspection software during 
the course of their own annual inspections in order to promote 
uniformity in inspections, HUD is not proposing at this time to require 
PHAs to use HUD's inspection software for two reasons. First, PHAs may 
have existing software for operations (e.g., work order systems) that 
may be incompatible with the HUD software. It would be unreasonable and 
uneconomical to require PHAs to change their existing systems. Second, 
PHAs may, as a part of their operating procedures, combine other 
inspections (e.g., housekeeping, preventative

[[Page 35653]]

maintenance) with their annual unit inspections. HUD believes that its 
role, consistent with section 2 of the U.S. Housing Act of 1937 (42 
U.S.C. 1437), is to prescribe broad standards, giving PHAs maximum 
latitude as to how best to meet those standards consistent with 
existing statutes, regulations, and their own operating procedures and 
practices. HUD has no objection, however, if the PHA determines that 
use of the HUD software for its own purposes is in its best interests.

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

    The uniform standards in this proposed rule would set parameters 
under which the HUD housing must be maintained and will be evaluated. 
These standards are designed to analyze, score, and rank the overall 
and general physical condition of a project. This evaluation would not 
focus on a single element, but would take into consideration 
significant observable deficiencies and score compliance taken as a 
whole. A single critical element with a major defect (for example, an 
inoperable heating system), however, could have a significant impact on 
a project's overall evaluation. The proposed standards emphasize health 
and safety considerations as essential to housing that is decent, safe, 
sanitary and in good repair.
    The physical condition standards are intentionally broad and are 
defined with terms such as in ``proper operating condition,'' 
``adequately functional,'' and ``free of health and safety hazards.'' 
Given the differences in construction and design of HUD housing, and 
the different types of electrical and utility systems that an inspector 
will encounter, the rule cannot define or describe proper operating 
condition for every type of system. For example, an inspection of 
whether an electrical heating system is operating properly might be 
different from an inspection of whether an oil-based heating system is 
operating properly. This would not mean, however, that these two 
systems should be subject to a different physical condition standard. 
The standard--proper operating condition--is the same for both types of 
systems and is the same for all heating systems.
    The uniform physical condition standards in this proposed rule do 
not include design or configuration requirements for housing (e.g., 
these standards do not require that every unit have a kitchen). The 
regulations for the individual housing programs will continue to 
contain any such design or configuration requirements. The uniform 
physical condition standards in this proposed rule are structured so 
that regardless of the configuration of a particular project or unit 
(for example, a shared kitchen versus private kitchens), the project or 
unit would be inspected under the uniform standards. Similarly, the 
proposed standards do not address occupancy requirements of a dwelling 
unit, that is, the number of residents per unit. The proposed standards 
are solely concerned with the physical condition of the housing and the 
operational state of its various elements, to the extent relevant.
    The proposed new standards address six major areas of the HUD 
housing:
    (1) Site;
    (2) Building exterior;
    (3) Building systems;
    (4) Dwelling units;
    (5) Common areas; and
    (6) Health and safety.
    Under this proposed rule, the major areas of the HUD housing and 
their related elements are to be maintained in a manner that is decent, 
safe, sanitary and in good repair. Intrinsic to all these areas are 
health and safety considerations. However, there are other broad health 
and safety concerns that HUD will evaluate at any time they are 
observed. Since HUD places such a high priority on health and safety 
concerns, this proposed rule identifies them separately.
    1. Site. The site components, such as fencing and retaining walls, 
grounds, lighting, mailboxes/project signs, parking lots/driveways, 
play areas and equipment, refuse disposal, roads, storm drainage and 
walkways must be free of health and safety hazards and be in good 
repair. The site must not be subject to material adverse conditions, 
such as abandoned vehicles, dangerous walks or steps, poor drainage, 
septic tank back-ups, sewer hazards, excess accumulations of trash, 
vermin or rodent infestation or fire hazards.
    2. Building Exterior. Each building on the site must be 
structurally sound, secure, habitable, and in good repair. Each 
building's doors, fire escapes, foundations, lighting, roofs, walls, 
and windows, where applicable, must be free of health and safety 
hazards, operable, and in good repair.
    3. Building Systems. Each building's domestic water, electrical 
system, elevators, emergency power, fire protection, HVAC, and sanitary 
system must be free of health and safety hazards, functionally 
adequate, operable, and in good repair.
    4. Dwelling Units. Each dwelling unit within a building must be 
structurally sound, habitable, and in good repair. All areas and 
aspects of the dwelling unit must be free of health and safety hazards. 
The unit's bathroom, call-for-aid, ceiling, doors, electrical systems, 
floors, hot water heater, HVAC, kitchen, lighting, outlets/switches, 
patio/porch/balcony, smoke detectors, stairs, walls, and windows (where 
applicable) must be free of health and safety hazards, functionally 
adequate, operable, and in good repair. Where applicable, the dwelling 
unit must have hot and cold running water, including an adequate source 
of potable water (note for example that single room occupancy units may 
not contain water facilities). If the dwelling unit includes its own 
sanitary facility, it must be in proper operating condition, usable in 
privacy, and adequate for personal hygiene and the disposal of human 
waste. The dwelling unit must include at least one battery-operated or 
hard-wired smoke detector, in proper working condition, on each level 
of the unit. Properties that are subject to the specific requirements 
of the Fire Administration Authorization Act must also comply with 
those requirements.
    5. Common Areas. The common areas must be structurally sound, 
secure, and functionally adequate for the purposes intended. The 
basement/garage/carport, restrooms, closets, utility, mechanical, 
community rooms, day care, halls/corridors, stairs, kitchens, laundry 
rooms, office, porch, patio, balcony, and trash collection areas, if 
applicable, must be free of health and safety hazards, operable, and in 
good repair. All common area ceilings, doors, floors, HVAC, lighting, 
outlets/switches, smoke detectors, stairs, walls, and windows, to the 
extent applicable, must be free of health and safety hazards, operable, 
and in good repair. These standards for common areas would apply, to a 
varying extent, to all HUD housing, but will be particularly relevant 
to congregate housing, independent group homes/residences, and single 
room occupancy units, in which the individual dwelling units (sleeping 
areas) do not contain kitchen and/or bathroom facilities.
    6. Health and Safety Considerations. All areas and components of 
the housing must be free of health and safety hazards. As discussed in 
the preceding section, the five other major inspectable areas contain 
health and safety considerations that will be evaluated in the 
applicable areas. In addition, there are broad health and safety 
concerns by which HUD will evaluate the housing. These areas include, 
but are not limited to, air quality, electrical hazards, elevators, 
emergency/fire exits, flammable materials, garbage and debris, handrail 
hazards, infestation, and lead-based

[[Page 35654]]

paint. For example, the buildings must have fire exits that are not 
blocked and are accessible to all residents, and have hand rails that 
are undamaged and have no other observable deficiencies. The housing 
must have no evidence of infestation by rats, mice, or other vermin, or 
of garbage and debris. The housing must have no evidence of electrical 
hazards, natural hazards, or fire hazards. The dwelling units and 
common areas must have proper ventilation and be free of mold, odor, or 
other observable deficiencies. The housing must comply with all 
requirements related to the evaluation and reduction of lead-based 
paint hazards and have available proper certifications of such.
    With regard to the evaluation and reduction of lead-based paint 
hazards, HUD is developing consolidated final regulations to implement 
sections 1012 and 1013 of the Residential Lead-Based Paint Hazard 
Reduction Act of 1992, which is Title X of the Housing and Community 
Development Act of 1992 (42 U.S.C 4851 et seq.). These final 
regulations will be based upon a proposed rule published on June 7, 
1996 (61 FR 29170), and will be codified in 24 CFR part 35.
    No Preemption of State and Local Building and Maintenance Codes. 
The new uniform physical condition standards in this rule would not 
supersede or preempt State and local building and maintenance codes 
with which HUD housing must comply. HUD housing must continue to adhere 
to these codes.

IV. Proposed Uniform Physical Inspection Requirements

Frequency of Inspection

    To make a determination of whether the owner is providing HUD 
housing that is decent, safe, sanitary and in good repair, this rule 
proposes to continue the practice currently found in HUD programs of 
requiring a physical inspection of each HUD housing structure (except 
that Public Housing shall be inspected as described below). This 
proposed rule would require such inspections annually, unless HUD 
provides notice to the contrary. HUD housing is currently subject to an 
annual inspection requirement; therefore, an annual inspection would 
impose no new requirement.

The New Inspection Protocol

    Along with the uniform physical condition standards proposed in 
this rule, HUD intends to implement a new computer-driven physical 
inspection protocol. The inspection would not have to be performed by 
an engineer or architect, but may be performed by a person who is 
generally familiar with real estate of the type to be inspected. Any 
eligible individual who is trained and certified under HUD auspices to 
use the new HUD computer program may conduct the inspection. The 
inspector will complete the inspection using a hand-held computer that 
uses the HUD software. The new HUD computer program would guide the 
inspector through the inspection, prompting the necessary observations 
to be made regarding the condition of the property. The computer 
program is based on substantially objective observations, which will 
tend to eliminate the uncertainty of subjective interpretation of the 
physical condition standards. The results of the inspection will be 
electronically transferred to HUD and will be processed and scored by 
electronic means and recorded in a Central Integrated Data Repository.

Determining Whether HUD Housing Meets the New Physical Condition 
Standards

    The determination of whether the HUD housing meets the standard of 
decent, safe, sanitary and in good repair would be based on a review of 
observable deficiencies of the health and safety conditions, the site, 
the building, the dwelling units, and the common areas of such housing. 
The computer program will generate a score for these major areas and 
their respective elements. The scores will allow HUD to rank the 
housing according to physical condition as determined by the computer-
based inspection.
    Inherent in such a scoring system is the weighting of factors that 
make up the physical condition standards. For instance, health and 
safety hazards are of utmost importance to HUD; therefore, these 
factors, as well as other key components of the building (i.e., roof, 
walls, heating) might be more heavily weighted in the scoring. Other 
factors that are less crucial to health and safety, although still 
related to housing that is decent, safe, sanitary and in good repair, 
might receive a lower weight. For example, a faulty roof would 
generally be weighed more heavily than a faulty sidewalk, because it 
could generally have a greater impact on the residents' health and 
safety. The evaluation system will create a composite score for HUD 
housing by calculating the component scores on a weighted average 
basis.

V. Regulatory Amendments

New Subpart for Physical Condition Standards and Inspection 
Requirements

    This rule proposes to create a new subpart G in 24 CFR part 5. The 
regulations in part 5 represent HUD's general program requirements, as 
well as requirements that cut across one or more HUD programs. This new 
subpart G would consist of three sections. Section 5.701 would provide 
the lists of the types of HUD housing to which the uniform physical 
condition standards and inspection requirements would apply. This 
section also would describe the unique applicability of the proposed 
requirements to the Public Housing program, as described above.
    Section 5.703 would contain the physical condition standards for 
HUD housing that is decent, safe, sanitary and in good repair. These 
are the standards to which HUD housing must be maintained. Section 
5.705 would simply provide that any entity responsible for conducting a 
physical inspection of HUD housing must inspect such housing annually 
(unless HUD provides notice to the contrary), in accordance with HUD-
prescribed physical inspection procedures. This rule would not affect 
the existing requirements under each covered HUD program regarding 
which entity is responsible for conducting the physical inspection. HUD 
intends to provide more details with respect to the implementation of 
its physical inspection system through notices and other guidance 
materials.

Conforming Amendments in Program Regulations

    In accordance with the proposed physical condition standards and 
inspection requirements, this rule also proposes to make several 
conforming amendments to HUD's program regulations.
    1. 24 CFR part 207; Multifamily Housing Mortgage Insurance. This 
rule proposes to add a new Sec. 207.260, which will provide that for 
FHA-insured multifamily properties, the mortgagor must maintain the 
insured project in accordance with the physical condition standards in 
the new subpart G of part 5. This section would also require the 
mortgagee to inspect the project in accordance with the requirements in 
subpart G of part 5. As described above, the requirements for the 
mortgagor to maintain the property in a condition that is decent, safe, 
sanitary and in good repair (and for the mortgagee to inspect the 
property) are not new. This rule provides a clear set of physical 
condition standards and inspection requirements to help ensure that 
these

[[Page 35655]]

properties are maintained in accordance with such obligations.
    2. 24 CFR part 266; Housing Finance Agency (HFA) Risk-Sharing. This 
rule proposes to add a new Sec. 266.507 to provide that the mortgagor 
must maintain the project in accordance with the new physical condition 
standards in subpart G of part 5. This new section would apply the new 
standards to all projects insured previously or in the future. This 
rule also proposes to remove Sec. 266.505(b)(6) regarding the 
maintenance requirements of the Regulatory Agreement between the HFA 
and the mortgagor, since the maintenance requirements would be in the 
new Sec. 266.507. This rule would also amend Sec. 266.510(a) to require 
HFAs to perform their inspections in accordance with the inspection 
requirements in subpart G of part 5.
    3. 24 CFR part 880; Section 8 New Construction. This rule proposes 
to amend Sec. 880.201 to revise the definition of the term ``Decent, 
safe, and sanitary.'' This rule would provide that decent, safe, and 
sanitary housing is housing that meets the requirements of subpart G of 
part 5. This rule also proposes to remove paragraph (a) of Sec. 880.207 
regarding HUD's minimum property standards, since compliance with the 
new subpart G of part 5 would replace the continuing requirement to 
comply with these standards.
    4. 24 CFR part 881; Section 8 Substantial Rehabilitation. This rule 
proposes to amend Sec. 881.201 to revise the definition of the term 
``Decent, safe, and sanitary.'' This rule would provide that decent, 
safe, and sanitary housing is housing that meets the requirements of 
subpart G of part 5. This rule also proposes to remove paragraph (a) of 
Sec. 881.207 regarding HUD's minimum design standards, since compliance 
with the new subpart G of part 5 would replace the continuing 
requirement to comply with these standards.
    5. 24 CFR part 882; Section 8 (Project-Based) Moderate 
Rehabilitation (including the Single Room Occupancy program for 
homeless individuals). HUD recently amended its regulations in part 882 
to remove the regulatory provisions on certificates. These provisions 
are now in part 982. (Please see the Section 8 Certificate and Voucher 
Programs Conforming Rule, published in the Federal Register on April 
30, 1998, 63 FR 23826.) The only regulatory provisions remaining in 
part 882 are for two Section 8 project-based programs--Moderate 
Rehabilitation and Single Room Occupancy for homeless individuals.
    This rule proposes to amend part 882 further to recognize the new 
uniform physical condition standards. This rule would amend 
Sec. 882.102 to revise the definition of the term ``Decent, safe, and 
sanitary.'' This rule would provide that decent, safe, and sanitary 
housing is housing that meets the requirements of subpart G of part 5. 
This rule would also remove the definition of ``Housing Quality 
Standards'' from Sec. 882.102, since those standards would be replaced 
by the new uniform physical condition standards in this proposed rule.
    This rule would then amend Sec. 882.404 by replacing the Housing 
Quality Standards with references to the new physical condition 
standards in subpart G of part 5. This rule would retain, however, the 
lead-based paint requirements that are otherwise embedded in the 
Housing Quality Standards. This rule would not affect the applicability 
of HUD's lead-based paint requirements (although please see the 
reference above to the separate regulations that are under development 
for lead-based paint). Similarly, this rule would also amend 
Sec. 882.803(b) for the SRO program by replacing references to the 
Housing Quality Standards with references to Sec. 882.404.
    6. 24 CFR part 883; Section 8 State Housing Agencies. This rule 
proposes to amend Sec. 883.302 to add a definition of the term 
``Decent, safe, and sanitary.'' This rule would provide that decent, 
safe, and sanitary housing is housing that meets the requirements of 
subpart G of part 5. This rule also proposes to remove the definition 
of ``MPS (Minimum Property Standards)'' in Sec. 883.302, and paragraphs 
(a)(1) and (b)(1) of Sec. 883.310 regarding HUD's minimum property and 
design standards, since compliance with the new subpart G of part 5 
would replace the continuing requirement to comply with these 
standards.
    7. 24 CFR part 884; Section 8 New Construction Set-Aside for Rural 
Rental Housing. This rule proposes to amend Sec. 884.102 to revise the 
definition of the term ``Decent, safe, and sanitary.'' This rule would 
provide that decent, safe, and sanitary housing is housing that meets 
the requirements of subpart G of part 5. This rule also proposes to 
remove the definition of ``Minimum property standards'' in 
Sec. 884.102, and paragraph (b)(1) of Sec. 884.110 regarding HUD's 
minimum property standards, since compliance with the new subpart G of 
part 5 would replace the continuing requirement to comply with those 
standards.
    8. 24 CFR part 886; Section 8 Special Allocations (Loan Management 
Set-Aside (LMSA) and Property Disposition (PD)). This rule proposes to 
amend Secs. 886.102 (LMSA) and 886.302 (PD) to revise the definition of 
the term ``Decent, safe, and sanitary.'' This rule would provide that 
decent, safe, and sanitary housing is housing that meets the 
requirements of subpart G of part 5. This rule also would amend 
Secs. 886.113 (LMSA) and 886.307 (PD) by replacing the Housing Quality 
Standards with references to the new physical condition standards in 
subpart G of part 5. This rule would retain, however, the specific 
occupancy requirements (i.e., the number of tenants per dwelling unit); 
such requirements are not addressed by the new uniform physical 
condition standards. This rule also would retain the lead-based paint 
requirements that are otherwise embedded in the Housing Quality 
Standards. This rule would not affect the applicability of HUD's lead-
based paint requirements (although please see the reference above to 
the separate regulations that are under development for lead-based 
paint).
    9. 24 CFR part 891; Supportive Housing for the Elderly and Persons 
with Disabilities. This rule would add a new Sec. 891.180 to provide 
that housing assisted under these supportive housing programs must be 
maintained and inspected in accordance with the proposed physical 
condition standards and inspection requirements in subpart G of part 5.
    10. 24 CFR part 965; PHA-Owned or Leased Projects--General 
Provisions. This rule proposes to add a new subpart F (consisting of 
Sec. 965.601) to part 965. Section 965.601 would require that housing 
that is owned or leased by a PHA must be maintained in accordance with 
the new uniform physical condition standards. Section 965.601 would 
also provide that for each PHA, HUD intends to perform independent 
inspections to confirm that Public Housing is being maintained in 
accordance with the new uniform physical condition standards using the 
proposed new inspection system, based upon a statistically valid sample 
of Public Housing units for each PHA.
    11. 24 CFR part 983; Section 8 Project-Based Certificate Program. 
This rule proposes to amend Sec. 983.5 by replacing the Housing Quality 
Standards with references to the new physical condition standards in 
subpart G of part 5. This rule would retain, however, the specific 
occupancy requirements, since these requirements are not addressed by 
the new uniform physical condition standards. This rule also would 
retain the lead-based paint requirements that are otherwise embedded in 
the Housing Quality Standards. This rule would not affect the 
applicability of HUD's lead-based paint requirements (although please 
see the reference above to the

[[Page 35656]]

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

VI. Justification for 30-Day Comment Period

    In general, it is HUD's policy that notices of proposed rulemaking 
are to afford the public not less than 60 days for submission of 
comments, in accordance with its regulations on rulemaking in 24 CFR 
part 10. However, HUD has determined that there is good cause to reduce 
the public comment period for this proposed rule to 30 days. As 
discussed in more detail earlier in this preamble, the announcement, 
through this rule, of HUD's proposal to establish a uniform set of 
physical condition standards and to establish a uniform inspection 
protocol has been developed with the participation of HUD's program 
participants, industry leaders, and experts in the real estate 
inspection industries. As also discussed in the preamble, in adopting 
uniform physical condition standards for HUD housing, this proposed 
rule would not alter the statutory standard for the maintenance of HUD 
housing, nor the existing requirement to conduct property inspection. 
HUD anticipates that making these standards uniform and consistent will 
ease the administrative burden for participants in the covered HUD 
programs, and therefore there is a benefit to making this standard 
effective at the earliest date possible. Given these reasons, HUD has 
determined that the 30-day comment period for this proposed rule should 
provide sufficient notice and opportunity for interested entities to 
comment. In order to provide the fullest and most expedient access to 
the provisions of this proposed rule, HUD will make it available on the 
HUD Home Page on the World Wide Web at http://www.hud.gov, on the date 
of publication in the Federal Register. HUD will also directly notify 
entities that have expressed a significant interest to HUD by sending 
such entities a copy of this proposed rule.

VII. Findings and Certifications

Executive Order 12866

    The Office of Management and Budget (OMB) reviewed this proposed 
rule under Executive Order 12866, Regulatory Planning and Review, 
issued by the President on September 30, 1993. OMB determined that this 
proposed rule is a ``significant regulatory action,'' as defined in 
section 3(f) of the Order (although not economically significant, as 
provided in section 3(f)(1) of the Order). Any changes made in this 
proposed rule subsequent to its submission to OMB are identified in the 
docket file, which is available for public inspection between 7:30 a.m. 
and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Office 
of General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC.

Environmental Impact

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

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this proposed rule before publication and 
by approving it certifies that this proposed rule is not anticipated to 
have a significant economic impact on a substantial number of small 
entities. All HUD housing is currently subject to physical condition 
standards and a physical inspection requirement. As discussed in the 
preamble to this proposed rule, there are statutory directives to 
maintain HUD housing in a condition that is decent, safe, and sanitary. 
Accordingly, this proposed rule does not alter that requirement, nor 
does the proposed rule shift responsibility with respect to who 
conducts the physical inspection of the property. The entities and 
individuals currently responsible for the inspection of HUD subsidized 
properties would remain responsible. The proposed rule, however, 
provides for uniform physical inspection standards for the majority of 
HUD programs. These standards would not be significantly different from 
those standards to which HUD housing is currently subject. The existing 
applicable standards are similar but there are some variations from HUD 
program to program. HUD anticipates that making these standards uniform 
and consistent for the HUD programs covered by this rule will ease the 
administrative burden for participants in the covered HUD programs, 
including and particularly small entities. As with the implementation 
of any new or modified program requirement, HUD intends to provide 
guidance to the covered entities, particularly small entities, to 
assist them in understanding the changes being made.
    Notwithstanding HUD's determination that this proposed rule would 
not have a significant economic impact on small entities, HUD 
specifically invites comments regarding alternatives to this proposed 
rule that would meet HUD's objectives as described in this preamble.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this proposed rule would not have substantial direct 
effects on States or their political subdivisions, on the relationship 
between the Federal Government and the States, or on the distribution 
of power and responsibilities among the various levels of government. 
This proposed rule would provide a uniform set of physical condition 
standards and physical inspection requirements for HUD housing, which 
would make HUD's requirements clearer and more objective. As a result, 
the proposed rule is not subject to review under the Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for Federal 
agencies to assess the effects of their regulatory actions on State, 
local, and tribal governments, and the private sector. This proposed 
rule would not impose any Federal mandates on any State, local, or 
tribal governments, or on the private sector, within the meaning of the 
UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the programs 
that would be affected by this proposed rule are:

14.126--Mortgage Insurance--Cooperative Projects (Section 213)
14.129--Mortgage Insurance--Nursing Homes, Intermediate Care 
Facilities, Board and Care Homes and Assisted Living Facilities 
(Section 232)
14.134--Mortgage Insurance--Rental Housing (Section 207)
14.135--Mortgage Insurance--Rental and Cooperative Housing for Moderate 
Income Families and Elderly, Market Rate Interest (Sections 221(d) (3) 
and (4))
14.138--Mortgage Insurance--Rental Housing for Elderly (Section 231)
14.139--Mortgage Insurance--Rental Housing in Urban Areas (Section 220 
Multifamily)

[[Page 35657]]

14.157--Supportive Housing for the Elderly (Section 202)
14.181--Supportive Housing for Persons with Disabilities (Section 811)
14.188--Housing Finance Agency (HFA) Risk Sharing Pilot Program 
(Section 542(c))
14.856--Lower Income Housing Assistance Program--Section 8 Moderate 
Rehabilitation

List of Subjects

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Drug abuse, 
Drug traffic control, Grant programs--housing and community 
development, Grant programs--Indians, Individuals with disabilities, 
Loan programs--housing and community development, Low- and moderate-
income housing, Mortgage insurance, Pets, Public housing, Rent 
subsidies, Reporting and recordkeeping requirements.

24 CFR Part 207

    Manufactured homes, Mortgage insurance, Reporting and recordkeeping 
requirements, Solar energy.

24 CFR Part 266

    Aged, Fair housing, Intergovernmental relations, Mortgage 
insurance, Low and moderate income housing, Reporting and recordkeeping 
requirements.

24 CFR Part 880

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

24 CFR Part 881

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

24 CFR Part 882

    Grant programs--housing and community development, Homeless, Lead 
poisoning, Manufactured homes, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 883

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

24 CFR Part 884

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

24 CFR Part 886

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

24 CFR Part 891

    Aged, Capital advance programs, Civil rights, Grant programs--
housing and community development, Individuals with disabilities, Loan 
programs--housing and community development, Low-and moderate-income 
housing, Mental health programs, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 965

    Energy conservation, Government procurement, Grant programs--
housing and community development, Lead poisoning, Loan programs--
housing and community development, Public housing, Reporting and 
recordkeeping requirements, Utilities.

24 CFR Part 983

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.
    Accordingly, for the reasons stated in the preamble, title 24 of 
the CFR is proposed to be amended as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

    1. The authority citation for 24 CFR part 5 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d), unless otherwise noted.

    2. A new subpart G is added to part 5 to read as follows:

Subpart G--Physical Condition Standards and Inspection Requirements

Sec.
5.701  Applicability.
5.703  Physical condition standards for HUD housing that is decent, 
safe, sanitary and in good repair (DSS/GR).
5.705  Uniform physical inspection requirements.

Subpart G--Physical Condition Standards and Inspection Requirements


Sec. 5.701  Applicability.

    (a) This subpart applies to housing assisted by HUD under the 
following programs:
    (1) All Section 8 project-based assistance. ``Project-based 
assistance'' means Section 8 assistance that is attached to the 
structure (see Sec. 982.1(b)(1) regarding the distinction between 
``project-based'' and ``tenant-based'' assistance);
    (2) Section 202 Program of Supportive Housing for the Elderly;
    (3) Section 811 Program of Supportive Housing for Persons with 
Disabilities;
    (4) Section 202 loan program for projects for the elderly and 
handicapped (including 202/8 projects and 202/162 projects).
    (b) This subpart also applies to housing with mortgages insured or 
held by HUD, or housing that is receiving assistance from HUD, under 
the following authorities:
    (1) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 
et seq.) (Rental Housing Insurance);
    (2) Section 213 of the NHA (Cooperative Housing Insurance);
    (3) Section 220 of the NHA (Rehabilitation and Neighborhood 
Conservation Housing Insurance);
    (4) Section 221(d)(3) and (5) of the NHA (Housing for Moderate 
Income and Displaced Families);
    (5) Section 221(d)(4) of the NHA (Housing for Moderate Income and 
Displaced Families);
    (6) Section 231 of the NHA (Housing for Elderly Persons);
    (7) Section 232 of the NHA (Mortgage Insurance for Nursing Homes, 
Intermediate Care Facilities, Board and Care Homes);
    (8) Section 234(d) of the NHA (Rental) (Mortgage Insurance for 
Condominiums);
    (9) Section 236 of the NHA (Rental and Cooperative Housing for 
Lower Income Families);
    (10) Section 241 of the NHA (Supplemental Loans for Multifamily 
Projects); and
    (11) Section 542(c) of the Housing and Community Development Act of 
1992 (12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing 
Program).
    (c) This subpart also applies to Public Housing (housing receiving 
assistance under sections 5, 9, or 14 of the U.S. Housing Act of 1937).
    (d) For purposes of this subpart, the term ``HUD housing'' means 
the types of housing listed in paragraphs (a), (b), and (c) of this 
section.


Sec. 5.703  Physical condition standards for HUD housing that is 
decent, safe, sanitary and in good repair (DSS/GR).

    HUD housing must be decent, safe, sanitary and in good repair. 
Owners of housing described in Sec. 5.701(a), mortgagors of housing 
described in Sec. 5.701(b), and PHAs and other entities approved by HUD 
owning housing described in Sec. 5.701(c) must maintain such housing in 
a manner that meets the physical condition standards set forth in this 
section in order to be considered decent, safe, sanitary and in good 
repair.

[[Page 35658]]

These standards address the major areas of the HUD housing: the site; 
the building exterior; the building systems; the dwelling units; the 
common areas; and health and safety considerations.
    (a) Site. The site components, such as fencing and retaining walls, 
grounds, lighting, mailboxes/project signs, parking lots/driveways, 
play areas and equipment, refuse disposal, roads, storm drainage and 
walkways must be free of health and safety hazards and be in good 
repair. The site must not be subject to material adverse conditions, 
such as abandoned vehicles, dangerous walks or steps, poor drainage, 
septic tank back-ups, sewer hazards, excess accumulations of trash, 
vermin or rodent infestation or fire hazards.
    (b) Building exterior. Each building on the site must be 
structurally sound, secure, habitable, and in good repair. Each 
building's doors, fire escapes, foundations, lighting, roofs, walls, 
and windows, where applicable, must be free of health and safety 
hazards, operable, and in good repair.
    (c) Building systems. Each building's domestic water, electrical 
system, elevators, emergency power, fire protection, HVAC, and sanitary 
system must be free of health and safety hazards, functionally 
adequate, operable, and in good repair.
    (d) Dwelling units. (1) Each dwelling unit within a building must 
be structurally sound, habitable, and in good repair. All areas and 
aspects of the dwelling unit (for example, the unit's bathroom, call-
for-aid, ceiling, doors, electrical systems, floors, hot water heater, 
HVAC (where individual units are provided), kitchen, lighting, outlets/
switches, patio/porch/balcony, smoke detectors, stairs, walls, and 
windows) must be free of health and safety hazards, functionally 
adequate, operable, and in good repair.
    (2) Where applicable, the dwelling unit must have hot and cold 
running water, including an adequate source of potable water (note for 
example that single room occupancy units may not contain water 
facilities).
    (3) If the dwelling unit includes its own sanitary facility, it 
must be in proper operating condition, usable in privacy, and adequate 
for personal hygiene and the disposal of human waste.
    (4) The dwelling unit must include at least one battery-operated or 
hard-wired smoke detector, in proper working condition, on each level 
of the unit.
    (e) Common areas. The common areas must be structurally sound, 
secure, and functionally adequate for the purposes intended. The 
basement/garage/carport, restrooms, closets, utility, mechanical, 
community rooms, day care, halls/corridors, stairs, kitchens, laundry 
rooms, office, porch, patio, balcony, and trash collection areas, if 
applicable, must be free of health and safety hazards, operable, and in 
good repair. All common area ceilings, doors, floors, HVAC, lighting, 
outlets/switches, smoke detectors, stairs, walls, and windows, to the 
extent applicable, must be free of health and safety hazards, operable, 
and in good repair. These standards for common areas would apply, to a 
varying extent, to all HUD housing, but will be particularly relevant 
to congregate housing, independent group homes/residences, and single 
room occupancy units, in which the individual dwelling units (sleeping 
areas) do not contain kitchen and/or bathroom facilities.
    (f) Health and safety concerns. All areas and components of the 
housing must be free of health and safety hazards. These areas include, 
but are not limited to, air quality, electrical hazards, elevators, 
emergency/fire exits, flammable materials, garbage and debris, handrail 
hazards, infestation, and lead-based paint. For example, the buildings 
must have fire exits that are not blocked and are accessible to all 
residents, and have hand rails that are undamaged and have no other 
observable deficiencies. The housing must have no evidence of 
infestation by rats, mice, or other vermin, or of garbage and debris. 
The housing must have no evidence of electrical hazards, natural 
hazards, or fire hazards. The dwelling units and common areas must have 
proper ventilation and be free of mold, odor, or other observable 
deficiencies. The housing must comply with all requirements related to 
the evaluation and reduction of lead-based paint hazards and have 
available proper certifications of such (see 24 CFR part 35).
    (g) Compliance with State and local codes. The physical condition 
standards in this section do not supersede or preempt State and local 
codes building and maintenance with which HUD housing must comply. HUD 
housing must continue to adhere to these codes.


Sec. 5.705  Uniform physical inspection requirements.

    Any entity responsible for conducting a physical inspection of HUD 
housing, to determine compliance with this subpart, must inspect such 
HUD housing annually (unless otherwise specifically notified by HUD), 
in accordance with HUD-prescribed physical inspection procedures. For 
Public Housing, PHAs have the option to inspect Public Housing units 
using the procedures prescribed in accordance with this section.

PART 207--MULTIFAMILY HOUSING MORTGAGE INSURANCE

    3. The authority citation for 24 CFR part 207 continues to read as 
follows:

    Authority: 12 U.S.C. 1701z-11(e), 1713, and 1715b; 42 U.S.C. 
3535(d).

    4. A new Sec. 207.260 is added, immediately after Sec. 207.259a, to 
read as follows:


Sec. 207.260  Maintenance and inspection of property.

    As long as the mortgage is insured or held by the Commissioner, the 
mortgagor must maintain the insured project in accordance with the 
physical condition requirements in 24 CFR part 5, subpart G; and the 
mortgagee must inspect the project in accordance with the physical 
inspection requirements in 24 CFR part 5, subpart G.

PART 266--HOUSING FINANCE AGENCY RISK-SHARING PROGRAM FOR INSURED 
AFFORDABLE MULTIFAMILY PROJECT LOANS

    5. The authority citation for 24 CFR part 266 continues to read as 
follows:

    Authority: 12 U.S.C. 1707; 42 U.S.C. 3535(d).


Sec. 266.505  [Amended]

    6. Section 266.505 is amended by removing and reserving paragraph 
(b)(6).
    7. A new Sec. 266.507 is added, to read as follows:


Sec. 266.507  Maintenance requirements.

    The mortgagor must maintain the project in accordance with the 
physical condition standards in 24 CFR part 5, subpart G.
    8. In Sec. 266.510, paragraph (a) is revised to read as follows:


Sec. 266.510  HFA responsibilities.

    (a) Inspections. The HFA must perform inspections in accordance 
with the physical inspection procedures in 24 CFR part 5, subpart G.
* * * * *

PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW 
CONSTRUCTION

    9. The authority citation for 24 CFR part 880 continues to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 
13611-13619.

    10. Section 880.201 is amended by revising the definition of 
``Decent, safe and sanitary'', to read as follows:

[[Page 35659]]

Sec. 880.201  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary 
if it meets the physical condition requirements in 24 CFR part 5, 
subpart G.
* * * * *


Sec. 880.207  [Amended]

    11. Section 880.207 is amended by removing and reserving paragraph 
(a).

PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR 
SUBSTANTIAL REHABILITATION

    12. The authority citation for 24 CFR part 881 continues to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 
13611-13619.

    13. Section 881.201 is amended by revising the definition of 
``Decent, safe and sanitary'', to read as follows:


Sec. 881.201  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary 
if it meets the physical condition requirements in 24 CFR part 5, 
subpart G.
* * * * *


Sec. 881.207  [Amended]

    14. Section 881.207 is amended by removing and reserving paragraph 
(a).

PART 882--SECTION 8 MODERATE REHABILITATION PROGRAMS

    15. The authority citation for 24 CFR part 882 continues to read as 
follows:

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

    16. Section 882.102 is amended in paragraph (b) by revising the 
definition of ``Decent, safe, and sanitary''; and by removing the 
definition of ``Housing quality standards (HQS)''; to read as follows:


Sec. 882.102  Definitions.

* * * * *
    (b) * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary 
if it meets the physical condition standards in 24 CFR part 5, subpart 
G.
* * * * *
    17. Section 882.404 is amended by revising the heading; by revising 
paragraph (a); by removing and reserving paragraph (b); by revising 
paragraph (c); and by removing paragraph (d); to read as follows:


Sec. 882.404  Physical condition standards; physical inspection 
requirements.

    (a) Compliance with physical condition standards. Housing in this 
program must be maintained and inspected in accordance with the 
requirements in 24 CFR part 5, subpart G.
* * * * *
    (c) Compliance with lead-based paint requirements. Housing used in 
the Section 8 moderate rehabilitation program must comply with the 
lead-based paint requirements in 24 CFR 982.401(j). For purposes of the 
SRO program, however, see Sec. 882.803(b).
    18. Section 882.803 is amended by revising paragraph (b), to read 
as follows:


Sec. 882.803  Project eligibility and other requirements.

* * * * *
    (b) Physical condition standards. Section 882.404 applies to this 
program, except that the lead-based paint requirements in 24 CFR 
982.401(j) do not apply to this program, since these SRO units will not 
house children.
* * * * *

PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE 
HOUSING AGENCIES

    19. The authority citation for 24 CFR part 883 continues to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

    20. Section 883.302 is amended by adding a definition of ``Decent, 
safe, and sanitary'', in alphabetical order; and by removing the 
definition of ``MPS (Minimum Property Standards''; to read as follows:


Sec. 883.302  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary 
if it meets the physical condition requirements in 24 CFR part 5, 
subpart G.
* * * * *


Sec. 883.310  [Amended]

    21. Section 883.310 is amended by removing and reserving paragraphs 
(a)(1) and (b)(1).

PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW 
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING 
PROJECTS

    22. The authority citation for 24 CFR part 884 continues to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

    23. Section 884.102 is amended by revising the definition of 
``Decent, safe, and sanitary''; and by removing the definition of 
``Minimum property standards''; to read as follows:


Sec. 884.102  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary 
if it meets the physical condition requirements in 24 CFR part 5, 
subpart G.
* * * * *


Sec. 884.110  [Amended]

    24. Section 884.110 is amended in paragraph (b) by removing ``(1) 
Minimum Property Standards,'' and the designations ``(2)'', ``(3)'', 
``(4)'', and ``(5)''.

PART 886--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--SPECIAL 
ALLOCATIONS

    25. The authority citation for 24 CFR part 886 continues to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.
    26. Section 886.102 is amended by revising the definition of 
``Decent, Safe and Sanitary'', to read as follows:


Sec. 886.102  Definitions.

* * * * *
    Decent, Safe, and Sanitary. Housing is decent, safe, and sanitary 
if it meets the physical condition requirements in 24 CFR part 5, 
subpart G.
* * * * *
    27. Section 886.113 is amended by revising the heading; by removing 
the introductory text; by revising paragraphs (a) and (b); by removing 
and reserving paragraphs (c) through (h); and by removing paragraphs 
(j) through (n); to read as follows:


Sec. 886.113  Physical condition standards; physical inspection 
requirements.

    (a) General. Housing used in this program must be maintained and 
inspected in accordance with the requirements in 24 CFR part 5, subpart 
G.
    (b) Space and security. In addition to the standards in 24 CFR part 
5, subpart G, the dwelling unit must have a living room, a kitchen 
area, and a bathroom. The dwelling unit must have at least one bedroom 
or living/sleeping room for each two persons.
* * * * *
    28. Section 886.302 is amended by revising the definition of 
``Decent, safe, and sanitary'', to read as follows:


Sec. 886.302  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary 
if it meets the

[[Page 35660]]

physical condition requirements in 24 CFR part 5, subpart G.
* * * * *
    29. Section 886.307 is amended by revising the heading; by removing 
the introductory text; by revising paragraphs (a) and (b); by removing 
and reserving paragraphs (c) through (h); and by removing paragraphs 
(j) through (p); to read as follows:


Sec. 886.307  Physical condition standards; physical inspection 
requirements.

    (a) General. Housing assisted under this part must be maintained 
and inspected in accordance with the requirements in 24 CFR part 5, 
subpart G.
    (b) Space and security. In addition to the standards in 24 CFR part 
5, subpart G, the dwelling unit must have a living room, a kitchen 
area, and a bathroom. The dwelling unit must have at least one bedroom 
or living/sleeping room for each two persons.
* * * * *

PART 891--SUPPORTIVE HOUSING FOR THE ELDERLY AND PERSONS WITH 
DISABILITIES

    30. The authority citation for 24 CFR part 891 continues to read as 
follows:

    Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437f, 3535(d) and 8013.

    31. In subpart A of part 891, a new Sec. 891.180 is added, to read 
as follows:


Sec. 891.180  Physical condition standards; physical inspection 
requirements.

    Housing assisted under this part must be maintained and inspected 
in accordance with the requirements in 24 CFR part 5, subpart G.

PART 965--PHA-OWNED OR LEASED PROJECTS--GENERAL PROVISIONS

    32. The authority citation for 24 CFR part 965 continues to read as 
follows:

    Authority: 2 U.S.C. 1437, 1437a, 1437d, 1437g, and 3535(d). 
Subpart H is also issued under 42 U.S.C. 4821-4846.

    33. In part 965, a new subpart F, consisting of Sec. 965.601, is 
added, to read as follows:

Subpart F--Physical Condition Standards and Physical Inspection 
Requirements


Sec. 965.601  Physical condition standards; physical inspection 
requirements.

    Housing owned or leased by a PHA, and public housing owned by 
another entity approved by HUD, must be maintained in accordance with 
the physical condition standards in 24 CFR part 5, subpart G. For each 
PHA, HUD will perform an independent physical inspection of a 
statistically valid sample of such housing based upon the physical 
condition standards in 24 CFR part 5, subpart G.

PART 983--SECTION 8 PROJECT-BASED CERTIFICATE PROGRAM

    34. The authority citation for 24 CFR part 983 continues to read as 
follows:

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

    35. Section 983.5 is revised to read as follows:


Sec. 983.5  Physical condition standards; physical inspection 
requirements.

    (a) General. Housing used in this program must be maintained and 
inspected in accordance with the requirements in 24 CFR part 5, subpart 
G.
    (b) Space and security. In addition to the standards in 24 CFR part 
5, subpart G, the dwelling unit must have a living room, a kitchen 
area, and a bathroom. The dwelling unit must have at least one bedroom 
or living/sleeping room for each two persons.
    (c) Lead-based paint. 24 CFR 982.401(j) applies to assistance under 
this part.

    Dated: June 5, 1998.
Andrew Cuomo,
Secretary.
[FR Doc. 98-17271 Filed 6-29-98; 8:45 am]
BILLING CODE 4210-32-P