96096 Federal Register / Vol. 89, No. 233 / Wednesday, December 4, 2024 / Rules and Regulations 

1Public Law 93–383, 88 Stat. 633 (1974). 

2 42 U.S.C. 1437f. 

3 40 FR 16934. 

4The terms ‘‘HFA’’ and ‘‘State Agency’’ appear in 

both part 883 and corresponding HAP Contracts. 

5 45 FR 6889 (Jan. 30, 1980). 6 42 U.S.C. 1437f. 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 883 

[Docket No. FR–6378–F–02] 

RIN 2502–AJ68 

Updated Terminology for State 

Housing Agency Housing Assistance 

Payments Contracts 

AGENCY: Office of the Assistant 

Secretary for Housing—Federal Housing 

Commissioner, Department of Housing 

and Urban Development (HUD). 

ACTION: Final rule. 

SUMMARY: This final rule revises HUD’s 

regulations for Housing Assistance 

Payments contracts that were initially 

issued and administered by a State 

Housing Finance Agency. This final rule 

clarifies the meaning of the terms ‘‘HFA 

(Housing Finance Agency)’’ and ‘‘State 

Agency (Agency)’’ when HUD either 

assumes contract administration 

responsibilities or assigns the contract 

administration responsibilities to a 

Performance-Based Contract 

Administrator. This final rule also 

clarifies how reserve accounts may be 

transferred following assumption of 

contract administration duties by a new 

party. These regulatory changes conform 

with longstanding HUD policy and 

practice. This final rule adopts HUD’s 

July 17, 2024, proposed rule without 

change. 

DATES: Effective January 3, 2025. 

FOR FURTHER INFORMATION CONTACT: 

Jennifer Larson, Director, Office of Asset 

Management and Portfolio Oversight, 

U.S. Department of Housing and Urban 

Development, 451 7th Street SW, 

Washington, DC 20410, telephone 

number 202–402–3823 (this is not a tollfree number). HUD welcomes and is 

prepared to receive calls from 

individuals who are deaf or hard of 

hearing, as well as individuals with 

speech or communication disabilities. 

To learn more about how to make an 

accessible telephone call, please visit 

https://www.fcc.gov/consumers/guides/ 

telecommunications-relay-service-trs. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Section 8 Project-Based Rental 

Assistance Program 

The Section 8 Project-Based Rental 

Assistance (Section 8 PBRA) program 

was enacted as part of the Housing and 

Community Development Act of 1974,1

which amended the United States 

Housing Act of 1937.2 Under the 

Section 8 PBRA program, either HUD or 

a public housing agency (PHA) acting 

pursuant to an annual contributions 

contract (ACC) with HUD provides 

rental assistance payments via a 

Housing Assistance Payments (HAP) 

Contract to project owners who, in turn, 

rent units covered by the HAP Contract 

to families who meet program eligibility 

rules. Either HUD or a PHA acting 

pursuant to an ACC serves as the 

contract administrator, which is 

responsible for performing multiple 

functions, from maintaining a reserve 

for replacement account and a residual 

receipts account to processing annual 

rent adjustments and periodic contract 

renewals. Pursuant to the United States 

Housing Act of 1937 and HUD 

regulations, a housing finance agency 

(HFA) meets the definition of a PHA 

and, as such, may serve as a 

Performance-Based Contract 

Administrator (PBCA). 

B. Regulatory and Operational History 

of the 24 CFR Part 883 Section 8 PBRA 

Program 

On April 15, 1975, HUD published 24 

CFR part 883, establishing policies and 

procedures under which HFAs could 

select proposals for funding under the 

Section 8 New Construction and 

Substantial Rehabilitation Programs.3

Pursuant to 24 CFR part 883, HFAs 

provided permanent financing and 

assumed the risk of default and 

foreclosure on selected project 

proposals. In selecting a project for 

permanent financing, HFAs and project 

owners could enter into HAP Contracts 

with initial mortgage terms of up to 40 

years,4 with the HFA serving as the HAP 

Contract administrator. Significantly for 

purposes of this rulemaking, in January 

of 1980, HUD issued a new regulation 

under 24 CFR part 883 that introduced 

a limit on annual distributions of project 

surplus cash for some project owners, a 

requirement for such owners to 

establish a residual receipts account, 

and a requirement to maintain a reserve 

for replacement account to address 

physical condition issues.5 As HAP 

Contract administrators, the HFAs 

controlled the residual receipts and 

reserve for replacement accounts 

required by 24 CFR part 883. 

In the 1990s, HAP Contracts between 

HFAs and project owners began to reach 

the end of the contracted term and 

expire. Where a HAP Contract expires 

and is not renewed, families eligible for 

Section 8 PBRA are at risk of 

displacement from their housing 

because there is no longer an agreement 

in place that allows project owners to 

receive Section 8 PBRA rental assistance 

for the applicable units. To authorize 

the renewal of expiring HAP Contracts, 

including HAP Contracts issued 

pursuant to 24 CFR part 883 (Part 883 

HAP Contracts), Congress enacted the 

Multifamily Assisted Housing Reform 

and Affordability Act of 1997 

(MAHRA).6 As implemented by HUD, 

MAHRA allows the issuance of HAP 

Contracts that incorporate and renew 

nearly all provisions of an expired, 

original HAP Contract. Relevant to the 

purposes of this final rule, the 

provisions incorporated into renewed 

Part 883 HAP Contracts include 

references to the terms ‘‘HFA’’ and 

‘‘State Agency.’’ 

Beginning in May of 1999, HUD began 

using PBCAs to streamline the renewal 

and administration of expiring HAP 

Contracts, including Part 883 HAP 

Contracts, by assigning administration 

and servicing tasks to PBCAs, which 

qualify as PHAs under the United States 

Housing Act of 1937 and act in 

accordance with an ACC that sets forth 

requirements and performance-based 

incentive standards. As Part 883 HAP 

Contracts expired, HUD began 

terminating ACCs with the HFAs of the 

expiring Part 883 HAP Contracts, with 

HUD then either taking over 

administration of the Part 883 HAP 

Contracts itself or assigning 

administration of the contracts to 

PBCAs. Relevant to the purpose of this 

final rule, references to the terms 

‘‘HFA’’ and ‘‘State Agency’’ remained in 

both 24 CFR part 883 and the renewed 

Part 883 HAP Contracts that were now 

administered by either HUD or a PBCA. 

As of the second quarter of 2023, 

there were approximately 2,690 Part 883 

HAP Contracts in effect throughout the 

country. Of these contracts, the vast 

majority are now administered either by 

a PBCA or HUD, with only sixty-five 

(65) Part 883 HAP Contracts still being 

administered by an HFA. For the Part 

883 HAP Contracts that were previously 

administered by an HFA but that are 

now administered by a PBCA or HUD, 

the terms ‘‘HFA’’ and ‘‘State Agency’’ 

still appear in the Part 883 HAP 

Contracts, along with references to the 

same terms in 24 CFR part 883. The 

references to these terms in the 

contracts and part 883 create confusion 

because HUD or a PBCA now 

administers these Part 883 HAP 

Contracts rather than an HFA or State 


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Federal Register / Vol. 89, No. 233 / Wednesday, December 4, 2024 / Rules and Regulations 96097 

7 89 FR 58092. 

Agency. This confusion is especially 

problematic with regard to the 

administration of project owners’ 

restricted financial accounts (i.e., the 

residual receipts and reserve for 

replacement accounts) because of 

unclear expectations regarding which 

entity must issue approvals to withdraw 

funds. HUD issues this final rule to 

eliminate this confusion. 

C. Residual Receipts and Reserve for 

Replacement Project Accounts 

Both the residual receipts account and 

the reserve for replacement account are 

project accounts. The project owner 

must make deposits to the residual 

receipts account and the reserve for 

replacement accounts, consistent with 

HUD requirements, and must receive 

prior approval before withdrawing 

funds from either account. When a HAP 

Contract associated with the project is 

administered by an HFA, the project 

owner requests fund withdrawal 

approval from the HFA. Once an ACC 

between the HFA and HUD expires, 

HUD must review such fund withdrawal 

requests; therefore, the HFA must 

release the funds in the accounts upon 

the request of the project owner. The 

project owner, in turn, must ensure that 

the residual receipts and reserve for 

replacement accounts funds are placed 

in accounts that meet HUD 

requirements, after which time any fund 

withdrawals will be made only with 

HUD approval. 

II. The Proposed Rule 

On July 17, 2024, HUD published for 

public comment a proposed rule 

entitled ‘‘Updated Terminology for State 

Housing Agency Housing Assistance 

Payments Contracts.’’ 7 The proposed 

rule proposed to amend the definitions 

of two terms defined in 24 CFR 883.302: 

‘‘HFA (Housing Finance Agency)’’ and 

‘‘State Agency (Agency).’’ In the 

proposed rule, HUD proposed that the 

definitions found in 24 CFR 883.302 for 

these terms continue to apply while an 

ACC between HUD and an HFA is in 

effect. When an ACC between HUD and 

the HFA expires and is not renewed, 

HUD proposed that the definitions of 

the terms ‘‘HFA (Housing Finance 

Agency)’’ and ‘‘State Agency (Agency)’’ 

then be defined the same as ‘‘Contract 

Administrator’’ is defined at 24 CFR 

880.201. In addition to the proposed 

definition changes to 24 CFR 883.302, 

HUD also proposed to make a 

conforming change to 24 CFR 883.701. 

In the proposed rule, HUD also 

proposed to amend 24 CFR 883.306 and 

add a new § 883.702 to make clear that 

project owners are required to request 

the withdrawal of funds from residual 

receipts and reserve for replacement 

accounts administered by HFAs when 

the ACC between HUD and the HFA is 

terminated or expires. 

III. This Final Rule 

HUD is publishing this final rule 

without change from the proposed rule. 

HUD received a single public comment 

in response to the proposed rule that 

noted that the commenter has had no 

problem with PHFA. HUD appreciates 

the comment. As noted, HUD is revising 

the referenced terminology for clarity 

and accuracy. 

HUD believes that the revision in 24 

CFR 883.302 to the definitions of ‘‘HFA 

(Housing Finance Agency)’’ and ‘‘State 

Agency (Agency)’’ is necessary to 

eliminate the confusion that results 

when a renewed Part 883 HAP Contract 

is administered by HUD or a PBCA, 

rather than the former HFA. In addition, 

the conforming change to 24 CFR 

883.701 makes clear that, for the 

purposes of 24 CFR part 883, subpart G, 

all references to ‘‘contract 

administrator’’ in 24 CFR part 880, 

subpart F, shall be construed to refer to 

‘‘Agency’’ only while the ACC between 

the State Agency and HUD is in effect. 

The changes to 24 CFR 883.306 and the 

addition of a new § 883.702 are 

necessary to clarify that project owners 

are required to request the withdrawal 

of funds from residual receipts and 

reserve for replacement accounts 

administered by HFAs when the ACC 

between HUD and the HFA is 

terminated or expires. 

V. Findings and Certifications 

Regulatory Review—Executive Orders 

12866, 13563, and 14094 

Pursuant to Executive Order 12866 

(Regulatory Planning and Review), a 

determination must be made whether a 

regulatory action is significant and, 

therefore, subject to review by the Office 

of Management and Budget (OMB) in 

accordance with the requirements of the 

order. Executive Order 13563 

(Improving Regulations and Regulatory 

Review) emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. The order also 

directs Executive agencies to analyze 

regulations that are ‘‘outmoded, 

ineffective, insufficient, or excessively 

burdensome, and to modify, streamline, 

expand, or repeal them in accordance 

with what has been learned.’’ Executive 

Order 13563 further directs that, where 

relevant, feasible, and consistent with 

regulatory objectives, and to the extent 

permitted by law, agencies are to 

identify and consider regulatory 

approaches that reduce burdens and 

maintain flexibility and freedom of 

choice for the public. Executive Order 

14094 (Modernizing Regulatory Review) 

amends section 3(f) of Executive Order 

12866, among other things. 

This final rule clarifies that HUD or a 

PBCA may assume the HAP Contract 

administrator responsibilities when the 

ACC between HUD and an HFA expires. 

This final rule also clarifies how 

residual receipts and reserve for 

replacement accounts may be 

transferred following assumption of 

contract administration duties by a new 

party. These regulatory changes conform 

with longstanding HUD policy and 

practice. This rulemaking was 

determined to not be a ‘‘significant 

regulatory action’’ as defined in section 

3(f) of Executive Order 12866, as 

amended by Executive Order 14094, and 

is not an economically significant 

regulatory action and therefore was not 

subject to OMB review. 

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 on 

the private sector. This final rule does 

not impose any Federal mandates on 

any State, local, or Tribal government, 

or on the private sector, within the 

meaning of the UMRA. 

Environmental Impact 

A Finding of No Significant Impact 

(FONSI) with respect to the 

environment has been made in 

accordance with HUD regulations at 24 

CFR part 50, which implement section 

102(2)(C) of the National Environmental 

Policy Act of 1969 (42 U.S.C. 

4332(2)(C)). The FONSI is available 

through the Federal eRulemaking Portal 

at http://www.regulations.gov. The 

FONSI is also available for public 

inspection during regular business 

hours in the Regulations Division, 

Office of General Counsel, Department 

of Housing and Urban Development, 

451 7th Street SW, Room 10276, 

Washington, DC 20410–0500. Due to 

security measures at the HUD 

Headquarters building, you must 

schedule an appointment in advance to 

review the FONSI by calling the 

Regulations Division at 202–708–3055 

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

welcomes and is prepared to receive 

calls from individuals who are deaf or 

hard of hearing, as well as individuals 

with speech or communication 


ddrumheller on DSK120RN23PROD with RULES1
96098 Federal Register / Vol. 89, No. 233 / Wednesday, December 4, 2024 / Rules and Regulations 

disabilities. To learn more about how to 

make an accessible telephone call, 

please visit https://www.fcc.gov/ 

consumers/guides/telecommunicationsrelay-service-trs. 

Regulatory Flexibility Act 

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. As discussed 

above, the changes in this final rule are 

limited to clarifying that HUD or a 

PBCA may assume the HAP Contract 

administrator responsibilities when the 

ACC between HUD or an HFA expires. 

The rulemaking also clarifies how 

residual receipts and reserve for 

replacement accounts may be 

transferred following assumption of 

contract administration duties by a new 

party. These regulatory changes conform 

with longstanding HUD policy and 

practice. Accordingly, the undersigned 

certifies that this final rule will not have 

a significant economic impact on a 

substantial number of small entities. 

Executive Order 13132, Federalism 

Executive Order 13132 (Federalism) 

prohibits an agency from publishing any 

rule that has federalism implications if 

the rule either: (1) imposes substantial 

direct compliance costs on State and 

local governments and is not required 

by statute, or (2) the rule preempts State 

law, unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive order. This 

final 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. 

List of Subjects in 24 CFR Part 883 

Accounting, Administrative practice 

and procedure, Government contracts, 

Grant programs-housing and community 

development, Low and moderate 

income housing, Public assistance 

programs, Public housing, Rent 

subsidies, Reporting and recordkeeping 

requirements, State and local 

governments. 

For the reasons stated in the 

preamble, HUD amends 24 CFR part 883 

as follows: 

PART 883—SECTION 8 HOUSING 

ASSISTANCE PAYMENTS 

PROGRAM—STATE HOUSING 

AGENCIES 

■ 1. The authority citation for part 883 

continues to read as follows: 

Authority: 42 U.S.C. 1437a, 1437c, 1437f, 

3535(d), and 13611–13619. 

■ 2. In § 883.302, redesignate the 

definition of ‘‘HFA (Housing Finance 

Agency)’’ in alphabetical order and 

revise it, and revise the definition of 

‘‘State Agency (Agency)’’. 

The revisions read as follows: 

§ 883.302 Definitions. 

* * * * * 

HFA (Housing Finance Agency). 

While the Annual Contributions 

Contract between the State Agency and 

HUD is in effect, ‘‘Housing Finance 

Agency’’ and ‘‘HFA’’ means a State 

Agency that provided permanent 

financing for newly constructed or 

substantially rehabilitated housing 

processed under this part and financed 

without Federal mortgage insurance or a 

Federal guarantee except coinsurance 

under section 244 of the National 

Housing Act. When the Annual 

Contributions Contract between the 

State Agency and HUD is no longer in 

effect, ‘‘Housing Finance Agency’’ and 

‘‘HFA,’’ as used in this part and in the 

Housing Assistance Payments Contract, 

means ‘‘Contract Administrator,’’ as 

defined in 24 CFR 880.201. 

* * * * * 

State Agency (Agency). While the 

Annual Contributions Contract between 

the State Agency and HUD is in effect, 

‘‘State Agency’’ and ‘‘Agency’’ means an 

agency that has been notified by HUD 

that it is authorized to apply for a setaside and/or to use the Fast Track 

Procedures of this part. When the 

Annual Contributions Contract between 

the State Agency and HUD is no longer 

in effect, ‘‘State Agency’’ and ‘‘Agency,’’ 

as used in this part and in the Housing 

Assistance Payments Contract, mean 

‘‘Contract Administrator,’’ as defined in 

24 CFR 880.201. 

* * * * * 

■ 3. In § 883.306, add a sentence to the 

end of paragraph (e) to read as follows: 

§ 883.306 Limitation on distributions. 

* * * * * 

(e) * * * Upon termination of the 

Annual Contributions Contract between 

HUD and the HFA, the Owner must 

request withdrawal of any funds that 

were placed in such an account at the 

direction of the HFA and immediately 

deposit such funds into an interestbearing residual receipts account that 

complies with the requirements of 24 

CFR 880.601(e)(2)(i). 

* * * * * 

§ 883.701 [Amended] 

■ 4. In § 883.701, add the words ‘‘while 

the Annual Contributions Contract 

between the State Agency and HUD is 

in effect’’ to the end of the second 

sentence following ‘‘Agency’’. 

■ 5. Add § 883.702 to read as follows: 

§ 883.702 Replacement reserve. 

For projects that are required to 

maintain a replacement reserve account 

to fund capital repairs and building 

system replacements, while the Annual 

Contributions Contract (ACC) between 

the State Agency and HUD is in effect, 

funds in that replacement reserve 

account may be drawn and used only in 

accordance with State Agency 

guidelines and with the approval of, or 

as directed by, the State Agency. Upon 

termination of the ACC, the Owner must 

request withdrawal of any funds in the 

replacement reserve account and 

immediately deposit such funds into an 

interest-bearing replacement reserve 

account that complies with the 

requirements of 24 CFR 

880.602(a)(1)(iv). 

Julia R. Gordon, 

Assistant Secretary for Housing—Federal 

Housing Commissioner. 

[FR Doc. 2024–28297 Filed 12–3–24; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. USCG–2024–0962] 

Special Local Regulations; Marine 

Events Within the Captain of the Port 

Charleston Zone 

AGENCY: Coast Guard, DHS. 

ACTION: Notification of enforcement of 

regulation. 

SUMMARY: The Coast Guard will enforce 

the special local regulation to provide 

for the safety and security of certain 

navigable waterways of Charleston 

Harbor during the Charleston Parade of 

Boats. Our regulation for marine events 

within the Captain of the Port 

Charleston identifies the regulated area 

for this event in Charleston Harbor, SC. 

During the enforcement periods, no 

person or vessel may enter, transit 

through, anchor in, or remain within the 

designated area unless authorized by the 


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