21088 Federal Register / Vol. 65, No. 76 / Wednesday, April 19, 2000 / Notices

1This adjustment was necessary to avoid double

counting units in the course of performing the

comparison since a portion of the additional

authorized units would also be included in the

number of units leased on October 1, 1997.

2 In this case, the gaining PHA’s adjusted baseline

would increase and the transferring PHA’s adjusted

baseline would decrease in an amount equal to the

number of units transferred.

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

[Doc. No. FR–4459–N–07]

Tenant-Based Section 8 Program:

Procedures for Determining Baseline

Unit Allocations, Verifying Unit

Allocations, Accessing, Using,

Restoration of and Recapture of

Program Reserves and Transfers of

Baseline Unit Allocations

AGENCY: Office of the Assistant

Secretary for Public and Indian

Housing, HUD.

ACTION: Notice.

SUMMARY: On October 21, 1999, HUD

published its final rule specifying the

method HUD will use in allocating

housing assistance available to renew

expiring contracts with public housing

agencies (PHAs) for Section 8 tenantbased housing assistance. As required

by statute, the final rule was developed

using negotiated rulemaking

procedures. This notice, which was also

developed during the negotiated

rulemaking process, provides guidance

on several topics relating to the final

rule, including the procedures for

verifying unit allocations; the accessing,

using, restoration of and recapture of

program reserves in the Annual

Contributions Contract (ACC) Reserve

Account; and the transfer of baseline

unit allocations. HUD will make the

necessary revisions to its standard ACC

to incorporate the policies and

procedures announced in this notice.

FOR FURTHER INFORMATION CONTACT:

Robert Dalzell, Office of Public and

Indian Housing, Department of Housing

and Urban Development, 451 Seventh

Street, SW, Room 4204, Washington, DC

20410; telephone (202) 708–1380. (This

is not a toll-free number.) Persons with

hearing or speech impairments may

access this number via TTY by calling

the toll-free Federal Information Relay

Service at (800) 877–8339.

SUPPLEMENTARY INFORMATION:

I. Introduction

HUD developed this Notice during the

negotiated rulemaking process that

resulted in the publication of a revised

24 CFR 982.102 on October 21, 1999 (64

FR 56882). The Notice covers five

separate topics:

• Section II (entitled ‘‘Determination of

Initial baseline (as of December 31, 1999)’’)

describes procedures for establishing the

initial baseline number of units reserved for

each PHA;

• Section III (entitled ‘‘Verifying Number

of Renewal Units’’) describes the procedures

for verifying unit allocations;

• Section IV (entitled ‘‘Annual

Contributions Contract (ACC) Reserve

Account’’) describes the procedures for

accessing reserves in the ACC Reserve

Account, the permissible uses of reserves,

and the policy for restoration of depleted

reserves;

• Section V states HUD’s policy on

recapturing program reserves in the PHA’s

ACC Reserve Account; and

• Section VI (entitled ‘‘Reduction of

Adjusted Baseline Number of Units and

Budget Authority’’) explains the procedures

to be followed to require transfers of baseline

unit allocations in the tenant-based Section

8 program.

This Notice supersedes Notices PIH

98–65 and 99–1, as well as HUD’s

February 18, 1999 Federal Register

notice (64 FR 8187). HUD will make the

necessary revisions to its standard ACC

to incorporate the policies and

procedures announced in this Notice.

The renewal funding methodology

listed in revised 24 CFR 982.102 is

designed to provide adequate funding

for the number of units reserved for

each PHA. PHAs have significant

flexibility to manage their programs

within the available funding including

the amount of program reserves

available in each PHA’s ACC Reserve

Account. HUD advises PHAs to use this

flexibility first of all to ensure that they

assist the number of families that equal

the number of units reserved for the

PHA—the baseline number of units.

Because of local conditions, it is

possible that PHAs may have some

funds remaining after assisting the

number of families that equal the PHA’s

baseline. HUD encourages PHAs in this

situation to assist additional families;

however, HUD also has to caution PHAs

to carefully assess their local conditions

(demographics of waiting list, turnover

rate, future renewal funding) prior to

issuing vouchers to families above those

equivalent to the PHA’s baseline. PHA’s

must plan ahead to avoid becoming

overextended and unable to maintain

adequate support for families in their

tenant-based program.

II. Determination of Initial Baseline (As

of December 31, 1999)

In order to calculate the allocation of

renewal funding in the tenant based

Section 8 program, HUD uses a renewal

units number as a factor in its

calculation (renewal units equal the

number of units for which funding is

reserved on HUD books for a PHA’s

program). HUD has established an

initial baseline number of units reserved

for each PHA as of December 31, 1999,

to be used in calculating the renewal

units number for calendar year 2000 and

subsequent years (see 24 CFR

§ 982.102(d)(1)(ii)). HUD used the

following process to determine the

December 31, 1999 initial baseline:

Step 1: HUD determined the number

of families assisted as of October 1,

1997. For purposes of calculating the

initial baseline, HUD determined the

number of assisted units under lease on

October 1, 1997. The number of assisted

units under lease was specified in the

supporting documentation submitted by

PHAs with the Voucher for Payment of

Annual Contributions and Operating

Statement (Form HUD–52681).

Step 2: HUD determined the adjusted

reserved number of units as of October

1, 1997. HUD determined the number of

reserved units as of October 1, 1997.

HUD then added the number of

authorized units reserved after October

1, 1997 as a result of HUD’s review,

conducted in Federal Fiscal Year 1998,

of leasing in excess of the number of

units reserved, in accordance with PIH

Notice 98–22 and letters sent to each

affected PHA.1 The result of the

addition is the adjusted reserved

number of units.

Step 3: HUD compared the number of

adjusted reserved units and the number

of leased units as of October 1, 1997. In

performing this step of the calculation,

HUD compared the number of adjusted

reserved units (from Step 2) and the

number of leased units as of October 1,

1997 (from Step 1) and used the higher

of the two as the basis of further

calculation in step 4. The comparison

was done separately for the certificate

and the voucher programs.

Step 4: HUD added any additional

units reserved for the PHA from October

1, 1997 to December 31, 1999 to the

result of Step 3. HUD included all

additional units reserved for the PHA

from October 1, 1997 until December 31,

1999. Adjustments included

incremental funding as well as

conversion funding awarded to provide

continued assistance to assisted families

pursuant to the conversion of project

based assistance to tenant based

assistance. HUD also included

adjustments for assistance transferred

from one housing agency to another.2

Step 5: Finally, HUD added the

calculated number of units from Step 4

in the certificate program to the

calculated number of units from Step 4

in the voucher program to establish the

Federal Register / Vol. 65, No. 76 / Wednesday, April 19, 2000 / Notices 21089

3The FMC will attempt to complete its reviews

within 60 days.

initial baseline (as of December 31,

1999) for each PHA.

For example, on October 1, 1997, the

‘‘Main Street’’ Housing Authority was

listed as having 100 reserved voucher

units in HUD’s records and

subsequently reported that it was

leasing 110 units in its voucher program

at that time. HUD determined in 1998

that 5 units (vouchers) should be added

to the Main Street Housing Authority as

additional authorized units. In

performing the first three steps of the

calculation, HUD would have done the

following: Step 1—determined that the

housing authority was leasing 110 units

as of October 1, 1997; Step 2—added the

5 additional authorized units to the 100

reserved units to calculate a total of 105

adjusted reserved voucher units; and

Step 3—compared the 105 adjusted

reserved units in the Main Street

Housing Authority’s voucher program to

the 110 units reported as actually

leased. Because the 110 units reported

as leased exceeded the 105 adjusted

reserved units in the housing authority’s

voucher program, HUD would have

used 110 units as the result of step 3 of

the calculation for the housing

authority’s voucher program. Or

alternatively, the housing authority

might have reported that it was leasing

100 voucher units on October 1, 1997 in

Step 1 in which case HUD would have

compared the 100 units with the 105

adjusted reserved units in its voucher

program and would have used 105 units

as the result of Step 3 of the calculation.

HUD would have performed a similar

analysis of the housing authority’s

certificate program. For example for

Step 1—the housing authority reported

a lease rate of 175 in its certificate

program as of October 1, 1997. For Step

2—HUD’s records listed the Main Street

Housing Authority as having 200

reserved certificate units as of October

1, 1997. HUD would have compared the

two and determined that 200 certificate

units was the result of the calculation of

Step 3.

To continue the example for Step 4,

in Fiscal Year 1998 HUD reserved

funding for 10 voucher units for the

Main Street Housing Authority under

the Family Unification Program. In

Fiscal Year 1999 the authority had 10

voucher units added to its inventory as

a result of the conversion of a property

from project based to tenant based

assistance. All 20 of these additional

units added subsequent to 1997 would

have been added to the number of units

calculated in Step 3 to calculate the

number of units for the housing

authority’s voucher program, 130. No

units were added to the housing

authority’s certificate program after

October 1, 1997. HUD’s unit number for

the certificate program would therefore

remain 200 units.

To complete the example for Step 5,

HUD would have added the number of

vouchers, 130 to the number of

certificates, 200 to establish a December

31, 1999 initial baseline of 330 total

units.

III. Verifying Number of Renewal Units

A. Section 8 Finance Division Exhibit

HUD uses the number of renewal

units to calculate the amount of renewal

funding. HUD has determined the

December 31, 1999 initial baseline

number of units to be used for each

PHA’s renewal calculation for calendar

year 2000.The initial baseline is a

primary component of the renewal units

factor.

In March of 2000 the Section 8

Finance Division in the Headquarters

Office of PIH has mailed to each PHA

a letter with an exhibit that lists the

number of units in the PHA’s initial

baseline (as of December 31, 1999). An

example of this exhibit is attached as

Appendix A to this Notice. The Section

8 Finance Division will simultaneously

send a copy of the exhibits to the

Section 8 Financial Management Center

(FMC).

The exhibit will separately list:

1. All of the unit counts assigned to

each active increment in HUDCAPS for

the PHA as of December 31, 1999;

2. The number of leased units as of

October 1, 1997;

3. The number of reserved units as of

October 1, 1997;

4. Any additional authorized units

reserved as a result of HUD’s review of

leasing in excess of contract levels

conducted in Federal Fiscal Year 1998

and 1999 in accordance with letters sent

to each affected PHA;

5. Any units reserved for the PHA

between October 1, 1997 and December

31, 1999;

6. The total number of units

scheduled to expire after December 31,

2000;

7. The total number of units

determined to make up the Renewal

Units for the purposes of calculating the

allocation of renewal funding for

calendar year 2000.

B. PHA Error Notifications

PHAs will have 90 days from the date

of the letter to review HUD’s listing of

the numbers of units and to notify HUD

of any errors:

1. The PHA’s notification must at a

minimum specify the increment(s) in

error, state that the PHA believes that

HUD has made an error in determining

the number of units, indicate the correct

number of units, include documentary

evidence demonstrating that the unit

count is in error and provide a narrative

explanation of how the documentation

shows that HUD’s baseline unit exhibit

is in error.

2. The notification must be received

by the FMC no later than 90 days from

date of the letter at the following

address: ATTN: Baseline Unit Review,

Denise Rock, 2345 Grand Blvd., Suite

1150, Kansas City, MO 64108–2603;

3. If the FMC does not receive a

notification of errors within the

prescribed time frame, HUD will

consider the renewal units number and

the other listed unit numbers

established and will not consider later

requests for adjustments to the unit

count based on error except in

extraordinary circumstances.

C. FMC Review of Error Notifications

The FMC will review any error

notifications submitted by PHAs within

a reasonable time period in light of the

number of error notifications received 3

(while the error notification is under

review, HUD will not change the

allocation of renewal funding to

compensate for the asserted error):

1. If the FMC determines that an error

has occurred, it will make an

adjustment to the PHA’s renewal unit

count; however, in making its

determination, the FMC will review and

revise any element in calculation of the

initial baseline and the number of

renewal units.

a. If HUD determines there is

sufficient funding available, HUD will

make appropriate adjustments to the

applicable PHA’s renewal unit count for

the calendar year in which it makes the

determination, otherwise the adjustment

will be applied to the following

calendar year (it will not be retroactive).

b. The FMC will send the PHA a

revised unit exhibit with a description

of when and how the adjustment to

compensate for the error will be made

(with a copy to the Section 8 Finance

Division in PIH Headquarters).

2. If the FMC determines that there is

no error, it will send a letter to the

notifying PHA indicating that it does

not believe that there is an error with an

explanation of its reasoning.

3. If a PHA disagrees with the FMC’s

determination (either concluding that

there is no error or disagreeing with the

number of units in error), it can ask for

the Assistant Secretary of Public and

Indian Housing to reconsider the

21090 Federal Register / Vol. 65, No. 76 / Wednesday, April 19, 2000 / Notices

determination of the FMC in accordance

with the following procedure:

a. Its request for reconsideration must

be sent to the FMC and received no later

than 30 days after the date of the FMC’s

reply to the PHA’s notification.

b. The request for reconsideration

must clearly state the nature of the

disagreement and the reason that the

determination of the FMC is incorrect.

c. The FMC will forward the request

to the Section 8 Finance Division in PIH

Headquarters.

d. The Assistant Secretary shall have

the same ability to respond to the PHA’s

error notification that the FMC has in

III.C.1 and III.C.2 above.

e. The Assistant Secretary for Public

and Indian Housing will reply to the

request for reconsideration within a

reasonable time period (generally within

30 days).

i. If the Assistant Secretary agrees

with all or part of the PHA’s request for

reconsideration, the Assistant Secretary

will issue an appropriate directive to the

FMC and will also provide a written

response to the applicable PHA.

ii. If the Assistant Secretary disagrees

with the PHA’s request for

reconsideration, the Assistant Secretary

will provide the PHA with a written

response explaining why the PHA’s

request will not be further considered.

iii. The decision of the Assistant

Secretary shall be final.

IV. Annual Contributions Contract

(ACC) Reserve Account

A. General

HUD continues to maintain local

program reserves (ACC reserve

accounts) for each PHA’s program in the

amount determined by HUD in

accordance with the PHA’s

Consolidated Annual Contributions

Contract. In accordance with the Quality

Housing and Work Responsibility Act of

1998 (Pub.L. 105–276, 112 Stat. 2461,

approved October 21, 1998) (the Public

Housing Reform Act), HUD revised its

methodology for allocating funding for

the renewal of expiring contracts in the

tenant-based Section 8 program. HUD

anticipates that some PHAs may not

receive adequate budget authority to

support the adjusted baseline number of

units under the revised allocation

system. Some PHAs may experience

increases in the cost per unit of tenantbased assistance that exceed the per unit

costs predicted by the revised renewal

allocation methodology and would

therefore not have sufficient funds to

support the adjusted baseline. In order

to provide reasonable assurance that

there will be adequate funding to

support families assisted in the tenantbased Section 8 program, HUD believes

that PHAs should have access to an

Annual Contributions Contract (ACC)

Reserve Account. The approved reserve

level is 1/6th of the current year

projected expenditures from the PHA’s

approved budget for a given year.

There are separate ACC Reserve

Accounts for both the certificate and

voucher programs. The amounts in each

program reserve (certificate or voucher)

are fungible and can be budgeted and

requisitioned, as needed, from the ACC

Reserve Account for either program.

Amounts accumulated by a PHA in the

ACC Reserve Account above the

approved reserve level are considered

excess reserves.

B. Procedures for Accessing ACC

Reserve Account

A PHA will be permitted to access up

to 50% of its approved reserve level

under the circumstances noted below if

the PHA is not designated as troubled

under the Section 8 Management

Assessment Program (SEMAP) and is

not in breach of its ACC. To access

balances in the ACC Reserve Account,

the PHA must submit a budget or budget

revision to the FMC.

In order for a non-troubled PHA that

has not breached its ACC to access ACC

Reserve Account balances in excess of

50% of the approved reserve level, it

must submit the following to the FMC:

1. A budget or budget revision.

2. A narrative justification that clearly

outlines the circumstances that cause

the PHA to need to access reserves in

the ACC Reserve Account.

3. A plan that describes:

a. The appropriate steps that it is

taking to ensure that it will not exceed

its budget authority, including balances

in the ACC Reserve Account, in the

current fiscal year;

b. How it will reduce (and ultimately

eliminate) its reliance on reserve

funding over the subsequent 2 years;

and

c. In instances in which the PHA is

obligated to restore reserves, its plan for

restoring reserves.

PHAs designated as troubled under

SEMAP may access reserves only after

the FMC has approved the request. The

FMC shall inform the applicable

Troubled Agency Recovery Center

(TARC) in the event a troubled PHA

requests access to its reserves and shall

also inform the TARC of the proposed

decision on the request. A troubled PHA

may be required by the FMC and/or the

TARC to provide documentation and/or

justification to substantiate its request to

access reserve funds.

C. Permissible Uses of ACC Reserves

1. Supporting the Reserved Number of

Units. A PHA must compare the budget

authority assigned to the PHA by HUD

pursuant to the allocation of renewal

funding with the actual per unit costs

the PHA is incurring. If at any time the

PHA determines that the overall cost of

maintaining assistance for the number

of families assisted under the PHA’s

program (but not exceeding the number

of units reserved to the PHA) has

increased to a level that will not be

supported within the budget authority

that HUD has assigned to the PHA, the

PHA may request authorization to use a

portion of its ACC Reserve Account. In

this instance HUD will restore depleted

reserves in accordance with Section

IV.D. below subject to the availability of

funds.

2. Supporting Units Above the

Reserved Number of Units. a. A PHA

may issue as many vouchers as can be

prudently supported within the PHA’s

allocated annual budget authority even

if the number of vouchers exceeds the

number of units reserved for the PHA.

PHAs that exercise this flexibility are

engaging in ‘‘maximized leasing.’’

‘‘Maximum leased units’’ means the

number of leased units in excess of the

number reserved. It is important for

PHAs that take advantage of maximized

leasing to examine the long term impact

of maximized leasing to ensure that it

does not jeopardize adequate support

for the reserved number of units in

subsequent years.

The units supported above the PHA’s

reserved number of units (maximized

leased units) will not be supported by

HUD’s calculation of the allocation of

renewal funding. The PHA may not

receive sufficient budget authority in

subsequent years to be able to maintain

maximized leased units exceeding the

number of units reserved. The PHA may

use the ACC Reserve Account to

maintain assistance for maximized

leased units on a temporary basis while

the PHA takes steps to reduce the size

of its program through attrition back to

its reserved number of units or the

number of units that can be supported

by its allocated budget authority on a

long term basis. The PHA may not use

the ACC Reserve Account to support

units beyond the number of units

supported by annual budget authority

(apart from the ACC Reserve Account)

for more than a year except under

exceptional circumstances. A PHA that

uses the ACC Reserve Account in this

situation must restore the amount of

reserves depleted to support maximized

leased units by using less than its full

Federal Register / Vol. 65, No. 76 / Wednesday, April 19, 2000 / Notices 21091

4 In this instance, the PHA cannot simply return

to 100% leasing of its reserved number of units

before it can start issuing new vouchers because if

it does it will again become overextended. It must

drop at least one unit below the reserved number

of units to be in a position to issue new vouchers.

annual budget authority in subsequent

years.

b. A PHA that is close to leasing all

of the units that can be supported

within annual budget authority may

issue more vouchers than the PHA can

actually support with annual budget

authority (without using its ACC

Reserve Account) on the assumption

that not all issued units will ultimately

be used. PHAs that are close to leasing

a number of units that fully utilizes

their available annual budget authority

can be expected to occasionally exceed

their annual budget authority based on

more families than predicted leasing

units; in such instances the PHA is

permitted to support units not

supported by annual budget authority

through use of the ACC Reserve

Account. PHAs are to manage their

lease-up and turnover rates to attempt to

achieve full utilization of their annual

budget authority without relying on the

ACC Reserve Account. PHAs that use

the ACC Reserve Account in this

situation must restore the amount of

ACC Reserve Account funds used to

temporarily support lease-up that

exceeds annual budget authority by

using less than their full annual budget

authority in subsequent years.

c. A PHA that has had to use the ACC

Reserve Account to support units

beyond its reserved number of units

must not admit families on its waiting

list until the number of families in its

program is reduced below the reserved

number of units through attrition 4 or it

is able to support families from the

waiting list within its annual budget

authority apart without using funds in

the ACC Reserve Account.

D. Restoration of Depleted Reserves.

Subject to the availability of

appropriated funds, HUD will restore

ACC Reserve Account amounts to the

1⁄6th level in accordance with the

following:

1. HUD will determine the amount by

which the ACC Reserve Account is

depleted below the approved reserve

level based on the ACC Reserve Account

level recorded in HUDCAPS from the

most recent year end statement

approved and processed by the FMC

compared to the approved budget for

the current year at the time that the

Department calculates the amounts to be

restored.

2. HUD will determine if a PHA has

leased more than its reserved number of

units based on its most recent HUD

approved Year End Statement; if the

PHA has leased more than its reserved

number of units, HUD will not restore

any depleted ACC Reserve Account for

such an agency during the PHA’s

current fiscal year. However, HUD may

grant an exception to this policy on a

case by case basis where a PHA has

substantially depleted the ACC Reserve

Account and HUD has determined that

the PHA is not providing long term

support for units not supported by

annual budget authority.

3. HUD shall determine the schedule

for restoration of depleted ACC Reserves

in instances where a PHA has not leased

more than its reserved number of units

or HUD has determined that the housing

agency is not providing long term

support for units not supported by

annual budget authority apart from the

funds in the ACC Reserve Account.

V. Excess ACC Reserve Amounts

At its discretion, HUD may recapture

ACC Reserve Account amounts in

excess of the approved reserve level.

VI. Reduction of Adjusted Baseline

Number of Units and Budget Authority

A. Beginning with PHA Fiscal Years

December 31, 1999 and thereafter, HUD

will assess the leasing rate and use of

budget authority of each PHA on an

annual basis when HUD processes the

PHA’s year end statement

(Approximately six months after the end

of the PHA’s fiscal year) to determine if

HUD will transfer some or all of the

PHA’s unexpended annual budget

authority to another PHA.

B. In performing the assessment, HUD

will exclude units (and their associated

budget authority) awarded to the PHA

for: litigation purposes; on schedule

replacement/relocation purposes; as

well as budget authority for a funding

increment whose effective date is less

than 8 months prior to the end of the

PHA’s fiscal year in which such funds

are reallocated.

For example for calendar year 2000

the Main Street Housing Authority has

an adjusted baseline of 130 units. In

1999, HUD awarded 10 units to the PHA

to provide for relocation of 10 families

living in 10 units of public housing

approved for demolition. The

demolition is not scheduled to take

place until the end of calendar year

2000 and the 10 units are being held by

the PHA until they are needed to

support the demolition. For the

purposes of assessing the PHA’s leaseup rate, HUD would exclude the 10

units and only perform the assessment

on the 120 units remaining. It would

take the 10 units and multiply them by

the adjusted per unit cost for the

housing authority ($4,800) and subtract

the result from the housing authority’s

overall budget authority ($48,000) in

performing the assessment below.

C. If the assessment reveals that the

PHA’s lease rate is less than 90% of the

reserved number of units (‘‘90% unit

threshold’’) and the PHA has expended

less than 90% of its annual budget

authority (90% annual budget authority

threshold’’), HUD will issue a warning

to the PHA, the applicable PHA

governing board and the chief executive

officer of the unit of local or state

government. The warning will state that

if the PHA fails to increase its lease rate

to 95% of the number of reserved units

by the time that it submits its 2nd

budget after the warning (approximately

16 months after the warning), then it’s

unexpended baseline authority would

be subject to reallocation by HUD to

another PHA.

For example, the Main Street Housing

Authority has a fiscal year that ends on

December 31, 1999. At the time that it

submits its year end statement (around

February of 2000), it reports that the

number of units months leased for its

1999 fiscal year was 1020 (the

equivalent of 85 units out of the

possible 130) and that it expended

$408,000 out of a total annual budget

authority of $611,000. When HUD

performs its assessment in conjunction

with approving the year end statement

(around June of 2000), it will perform

the following steps:

1. HUD will subtract the 10 relocation

units from 130 adjusted baseline

number of units.

2. For the remaining 120 units

available for lease-up, HUD will

compare the possible units months

leased (120 × 12 or 1,440) with the

number of actual units months leased

(1020) to derive the lease-up percentage

(71%).

3. Since the lease-up percentage falls

below the 90% threshold, HUD will

determine the percentage use of annual

budget authority as follows:

a. HUD will first subtract the annual

budget authority for the 10 excluded

relocation units ($48,000) from the total

annual budget authority for the PHA

($611,000) to determine the available

annual budget authority

($611,000¥$48,000=$563,000).

b. HUD will then divide the amount

expended ($408,000) by the amount of

the available budget authority

($563,000) to determine the percentage

of budget authority utilization

($408,000/$563,000=72%).

In this instance the assessment would

indicate that the housing authority

should be issued a warning based on the

21092 Federal Register / Vol. 65, No. 76 / Wednesday, April 19, 2000 / Notices

fact that its lease up rate is 71% and its

budget authority utilization rate is

72%—both below the 90% thresholds.

D. When the PHA submits its second

budget after receipt of the warning, the

PHA will provide a status report on its

lease-up rate to the FMC. If the PHA has

failed to achieve a lease up rate of 95%

of its total number of reserved number

of units minus any special category

units (e.g., units reserved for relocation

purposes or due to litigation), the FMC

will reduce both the PHA’s annual

budget authority and its adjusted

baseline number of units.

1. In this instance, the FMC will

require that budget authority not

required to support currently assisted

families through the end of contract

increment(s) terms(s) will be deleted

from the PHA’s budget so as to bring its

budget authority utilization rate to 95%.

Budgetary authority amounts deleted

from the PHA’s budget will be made

available for reallocation.

2. HUD will calculate the number of

units the deleted budget authority under

section D.1. above would have

supported based on the PHA’s adjusted

per unit cost.

3. HUD will delete the number of

units calculated under section D.2. for

the purpose of calculating future

renewal funding for the PHA.

For example, the Main Street Housing

Authority will process its first budget

about 4 months after having received

the warning in October of 2000. At the

time that it processes its second budget

after the warning in October of 2001, it

would provide a report on its status in

terms of its lease-up rate. At that time,

it reports that its lease up rate has

improved from the equivalent of 85

units to 105 units. The lease-up

percentage would have increased from

71% to 88%. It would also report that

its budget authority utilization rate

increased from 72% to 85% (from

$408,000 to $478,550). In this instance

HUD would calculate the amount of

budget authority that would bring the

PHA to 95% utilization of its budget

authority ($478,550/.95=$503,157).

HUD would then delete the remaining

budget authority ($563,000

¥$503,157=$59,842) from the PHA’s

annual budget authority. HUD would

also calculate the number of units that

the subtracted budget authority

represents ($59,842 divided by $4,800

per unit cost = 12 units) and subtract

those units from the PHA’s adjusted

baseline for the purpose of calculating

future renewals.

E. Each year HUD will issue a PIH

Notice (and subsequent Federal

Register) notice outlining the criteria for

determining the PHAs to be recipients

of reallocated budget authority. The

notice will outline the process for

implementing the transfer as well as the

number of units and the priority for

reallocating budget authority.

Dated: April 12, 2000.

Harold Lucas,

Assistant Secretary for Public and Indian

Housing.

[FR Doc. 00–9733 Filed 4–18–00; 8:45 am]

BILLING CODE 4210–33–P