11836 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of Assistant Secretary for

Housing—Federal Housing

Commissioner

24 CFR Part 890

[Docket No. R–95–1766; FR–3337–I–01]

RIN 2502–AF87

Supportive Housing for Persons With

Disabilities; Management

AGENCY: Office of Assistant Secretary for

Housing—Federal Housing

Commissioner, HUD.

ACTION: Interim rule.

SUMMARY: This interim rule establishes

the requirements related to management

and operation of the Supportive

Housing for Persons with Disabilities

Program. The purpose of the Supportive

Housing for Persons with Disabilities

Program is to enable persons with

disabilities to live with dignity and

independence within their communities

by expanding the supply of supportive

housing that is designed to

accommodate the special needs of such

persons and provides supportive

services that address the individual

health, mental health, and other needs

of such persons. Included in a

companion interim rule in today’s

Federal Register for the management

and operation of projects funded by the

Supportive Housing for the Elderly

Program are amendments which add

both Supportive Housing programs to

the list of projects covered by the pet

ownership requirements, and which

apply the wage and claim consent form

requirements to both programs.

DATES: Effective Date: April 13, 1995.

Sunset Provisions: Sections 890.600

through 890.650 shall expire and shall

not be in effect after October 2, 1996,

unless changes in this interim rule are

published as a final rule, or the

Department publishes a notice in the

Federal Register to extend the effective

date.

Comments due date: May 1, 1995.

ADDRESSES: Interested persons are

invited to submit comments regarding

this interim rule to the Rules Docket

Clerk, Office of the General Counsel,

Room 10276, Department of Housing

and Urban Development, 451 Seventh

Street SW., Washington, DC 20410–

0500. Communications should refer to

the above docket number and title. A

copy of each communication submitted

will be available for public inspection

during regular business hours

(weekdays 7:30 a.m. to 5:30 p.m.) at the

above address.

FOR FURTHER INFORMATION CONTACT:

Margaret Milner, Acting Director, Office

of Elderly and Assisted Housing,

Department of Housing and Urban

Development, 451 Seventh Street SW.,

Room 6130, Washington, DC 20410,

telephone (202) 708–4542; (TDD) (202)

708–4594. (These are not toll-free

numbers).

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

The information collection

requirements contained in this interim

rule have been approved by the Office

of Management and Budget (OMB)

under the Paperwork Reduction Act of

1980 (44 U.S.C. 3501–3520), and

assigned OMB control number 2502–

0470.

II. Justification for Interim Rulemaking

In general, the Department publishes

a rule for public comment before issuing

a rule for effect, in accordance with its

own regulations on rulemaking, 24 CFR

part 10. However, part 10 provides for

exceptions from that general rule when

the agency finds good cause to omit

advance notice and public participation.

The good cause requirement is satisfied

when prior public procedure is

‘‘impracticable, unnecessary, or contrary

to the public interest’’ (24 CFR 10.1).

The Department finds that good cause

exists to publish this interim rule for

effect without first soliciting public

comment, in that prior public procedure

is unnecessary. These management rules

vary only slightly from previous

management requirements for the

section 202/162 direct loan program for

persons with disabilities. This interim

rule furthers the legislative mandate of

section 811 of the Cranston-Gonzalez

National Affordable Housing Act, as

amended, and it involves only minor

interpretations of that statute. The

section 811 capital advance program

currently is operating under a series of

interim rules. The Department intends

to publish a final rule that will

incorporate public comments for all

aspects of the section 811 capital

advance program.

Furthermore, the Department finds

that prior public procedure would be

impracticable. The Department has

awarded capital advances since 1991,

and many of these projects are

approaching the management phase or

have become operational. Management

requirements are needed immediately to

assure transition from the development

phase to the management phase.

III. Sunset of Interim Rule

In accordance with the Department’s

policy on interim rules, the

amendments made by this interim rule

shall expire 18 months after the

effective date of this interim rule, unless

extended by notice published in the

Federal Register, or adopted by a final

rule published on or before the 18-

month anniversary date of the effective

date of this interim rule.

IV. Background

The Supportive Housing for Persons

with Disabilities Program is authorized

by section 811 of the Cranston-Gonzalez

National Affordable Housing Act (the

NAHA Act), as amended by the Housing

and Community Development Act of

1992 (1992 Act). Under the program,

which is implemented in 24 CFR part

890, assistance is provided to nonprofit

organizations to expand the supply of

supportive housing for persons with

disabilities. Such assistance is provided

as (1) capital advances and (2) project

rental assistance contracts. Capital

advances may be used to finance the

acquisition with rehabilitation,

acquisition without rehabilitation

(group homes only), construction or

rehabilitation of a structure, and

acquisition of property from the

Resolution Trust Corporation (group

homes and independent living facilities)

to be used as supportive housing for

persons with disabilities. This

assistance may also cover the cost of

real property acquisition, site

improvement, conversion, demolition,

relocation, and other expenses that the

Secretary determines are necessary to

expand the supply of supportive

housing for persons with disabilities.

On June 12, 1991, the Department

published an interim rule (56 FR 27070)

implementing section 811 of the NAHA

to establish the Supportive Housing for

Persons with Disabilities Program. That

interim rule, which enabled the program

to be funded for FY–1991, described

application procedures and program

requirements, selection of applications

and duration of fund reservation

requirements. A second interim rule

was published on August 12, 1992 (57

FR 36330) to provide the developmentrelated requirements (closing of capital

advances and requirements related to

project rental assistance contracts) of the

program. The program was the subject

of further amendments by the 1992 Act,

which were implemented by a third

interim rule published on May 5, 1993

(58 FR 26816). All three interim rules

are codified at 24 CFR part 890.

Today’s interim rule (subpart F, part

890) completes the establishment of the

program by providing the requirements

for management and operation of

projects funded under the program.

After the period of public comment is
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 11837

completed on this interim rule, the

Department will develop a final rule

based on all previous rules.

V. Summary of Interim Rule

(Subpart F)

Subpart F provides the

responsibilities of the Owner,

requirements of the replacement

reserve, selection and admission

requirements for tenants, obligations of

tenants, provisions regarding

overcrowded and underoccupied units,

lease requirements, and requirements

regarding termination of tenancy,

modifications of leases, security

deposits and vacancy payments.

The subpart F requirements are

similar to existing requirements for the

Section 202 Projects for Nonelderly

Handicapped Families and Individuals

receiving assistance under section

202(h) of the Housing Act of 1959. See

24 CFR 885.940–885.985.

Owner Responsibilities

The responsibilities of an Owner

under part 890 include marketing,

management and maintenance,

contracting for services, submission of

financial and operating statements,

project fund accounting and reporting.

Marketing must be conducted in

accordance with a HUD-approved

affirmative fair housing marketing plan

and all Federal, State or local fair

housing and equal opportunity

requirements. The Owner is responsible

for all management functions. These

functions include selection and

admission of tenants, required

reexaminations of incomes for

households occupying assisted units or

residential spaces, collection of tenant

payments, termination of tenancy and

eviction, and all repair and maintenance

functions (including ordinary and

extraordinary maintenance and

replacement of capital items). All

functions must be performed in

compliance with equal opportunity

requirements. The section 811 Owner

must also establish and maintain a

replacement reserve to aid in funding

extraordinary maintenance, and repair

and replacement of capital items.

The Owner is required to adopt

written tenant selection procedures

which ensure nondiscrimination in the

selection of tenants and that are (1)

consistent with the purpose of

improving housing opportunities for

very low-income persons with

disabilities; and (2) reasonably related to

program eligibility and an applicant’s

ability to perform the obligations of the

lease. The Owner must comply with all

nondiscrimination authorities. The

Owner must accept applications for

admission to the project in the form

prescribed by HUD. Applicant

households applying for assisted units

(or residential spaces in a group home)

must complete a certification of

eligibility as part of the application for

admission.

The Owner is also responsible for

determining whether applicants are

eligible for admission and for the

selection of households. To be eligible

for admission, an applicant must be a

disabled person (as defined in

§ 890.105); must meet any project

occupancy requirements approved by

HUD under § 890.305(a)(1); must meet

the disclosure and verification

requirements for Social Security

Numbers, as provided by 24 CFR part

750; must sign and submit consent

forms for the obtaining of wage and

claim information from State Wage

Information Collection Agencies, as

provided by 24 CFR part 760; and must

be a very low-income family, as defined

by § 890.105. Owners shall make

selections in a nondiscriminatory

manner without regard to

considerations such as race, religion,

color, sex, national origin, familial

status, or disability. However, an Owner

may, with the approval of the Secretary,

limit occupancy within housing

developed under this part to persons

with disabilities who have similar

disabilities and require a similar set of

supportive services in a supportive

housing environment. Under certain

circumstances, HUD may permit the

leasing of units to ineligible families

under § 890.515. If the Owner

determines that the household is

eligible and is otherwise acceptable and

units (or residential spaces in a group

home) are available, the Owner will

assign the household a unit or

residential space in a group home. If the

household will occupy an assisted unit,

the Owner will assign the household a

unit of the appropriate size in

accordance with HUD’s general

occupancy guidelines. If no suitable

unit (or residential space in a group

home) is available, the Owner will place

the household on a waiting list for the

project and notify the household when

a suitable unit or residential space may

become available. If the waiting list is so

long that the applicant would not be

likely to be admitted for the next 12

months, the Owner may advise the

applicant that no additional

applications for admission are being

considered for that reason.

If the Owner determines that an

applicant is ineligible for admission or

the Owner is not selecting the applicant

for other reasons, the Owner will

promptly notify the applicant in writing

of the determination, the reasons for the

determination, and that the applicant

has a right to request a meeting to

review the rejection, in accordance with

HUD requirements.

Records on applicants and approved

eligible households, which provide

racial, ethnic, gender and place of

previous residency data required by

HUD, must be retained for three years.

The Owner must reexamine the income

and composition of the household at

least every 12 months. Upon verification

of the information, the Owner must

make appropriate adjustments in the

total tenant payment in accordance with

part 813, as modified by § 890.105, and

must determine whether the

household’s unit size is still

appropriate. The Owner must adjust

tenant payment and the project rental

assistance payment and must carry out

any unit transfer in accordance with

HUD standards.

Household Responsibilities

Households under the program are

required to do the following: (1) Pay

amounts due under the lease directly to

the Owner; (2) supply such certification,

release, information, or documentation

as the Owner or HUD determines

necessary, including information and

documentation relating to the disclosure

and verification of Social Security

Numbers, as provided by 24 CFR part

750, and the signing and submission of

consent forms for the obtaining of wage

and claim information from State Wage

Information Collection Agencies, as

provided by 24 CFR part 760; (3) allow

the Owner to inspect the dwelling unit

or residential space at reasonable times

and after reasonable notice; (4) notify

the Owner before vacating the dwelling

unit or residential space; and (5) use the

dwelling unit or residential space solely

for residence by the household, and as

the household’s principal place of

residence. The household may not

assign the lease or transfer the unit or

residential space, nor may it occupy, or

receive assistance for the occupancy of

a unit or residential space governed

under this part while occupying, or

receiving assistance for occupancy of,

another unit assisted under any Federal

housing assistance program, including

any section 8 program.

Lease

The term of the lease may not be less

than one year. Unless the lease has been

terminated by appropriate action, upon

expiration of the lease term, the

household and Owner may execute a

new lease for a term not less than one

year, or may take no action. If no action

is taken, the lease will automatically be
11838 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

renewed for successive terms of one

month. The Owner shall use the lease

form prescribed by HUD. The Owner

may not use any of the prohibited

provisions specified by HUD. In

addition to required provisions of the

lease form, the Owner may include a

provision in the lease permitting the

Owner to enter the leased premises, at

any time, without advance notice where

there is reasonable cause to believe that

an emergency exists or that health or

safety of a family member is

endangered. The provisions of 24 CFR

part 247 apply to all decisions by an

Owner to terminate the tenancy or

modify the lease of a household residing

in a unit (or residential space in a group

home).

Security Deposit

At the time of the initial execution of

the lease, the Owner will require each

household occupying an assisted unit

(or residential space in a group home)

to pay a security deposit in an amount

equal to one month’s tenant payment or

$50, whichever is greater. The

household is expected to pay the

security deposit from its own resources

and other available public or private

resources. The Owner may collect the

security deposit on an installment basis.

The Owner must place the security

deposits in a segregated interest-bearing

account.

Utility Allowances

The Owner must submit an analysis

of any utility allowances applicable in

an independent living complex. Such

data as changes in utility rates and other

facts affecting utility consumption

should be provided as part of this

analysis to permit appropriate

adjustments in the utility allowances for

assisted units. In addition, if utility rate

changes would result in a cumulative

increase of 10 percent or more in the

most recently approved utility

allowances, the Owner must advise

HUD and request approval of new

utility allowances. Whenever a utility

allowance for an assisted unit is

adjusted, the Owner will promptly

notify affected households and make a

corresponding adjustment of the tenant

payment and the amount of the project

rental assistance payment.

Vacancy Payments

Vacancy payments under the Project

Rental Assistance Contract (PRAC) will

not be made unless the conditions for

receipt of these project rental assistance

payments are fulfilled. For each unit (or

residential space in a group home) that

is not leased as of the effective date of

the PRAC, the Owner is entitled to

vacancy payments in the amount of 50

percent of the per unit operating cost (or

pro rata share of the group home

operating cost) for the first 60 days of

vacancy, if the Owner: (1) Conducted

marketing in accordance with

§ 890.600(a) and otherwise complied

with § 890.600; (2) has taken and

continues to take all feasible actions to

fill the vacancy; and (3) has not rejected

any eligible applicant except for good

cause acceptable to HUD. If an eligible

household vacates an assisted unit (or

residential space in a group home) the

Owner is entitled to vacancy payments

in the amount of 50 percent of the

approved per unit operating cost (or pro

rata share of the group home operating

cost) for the first 60 days of vacancy if

the Owner: (1) Certifies that it did not

cause the vacancy by violating the lease,

the PRAC, or any applicable law; (2)

notified HUD of the vacancy or

prospective vacancy and the reasons for

the vacancy upon learning of the

vacancy or prospective vacancy; (3) has

fulfilled and continues to fulfill the

requirements specified in § 890.600(a)

(2) and (3) and § 890.645(b) (2) and (3);

and (4) for any vacancy resulting from

the Owner’s eviction of an eligible

household, certifies that it has complied

with § 890.630. If the Owner collects

payments for vacancies from other

sources (tenant payment, security

deposits, payments under § 890.635(c),

or governmental payments under other

programs), the Owner shall not be

entitled to collect vacancy payments to

the extent these collections from other

sources plus the vacancy payment

exceed the approved per unit operating

cost.

HUD Reviews

HUD shall conduct periodic on-site

management reviews of the Owner’s

compliance with the requirements of

part 890.

HUD Issuances

The Department intends to amend the

Handbook 4350.3, Occupancy

Requirements of Subsidized Multifamily

Housing Programs, with these new part

890 requirements.

VI. Other Matters

Environmental Impact

A Finding of No Significant Impact

with respect to the environment has

been made in accordance with HUD

regulations at 24 CFR part 50

implementing section 102(2)(C) of the

National Environmental Policy Act of

1969, 42 U.S.C. 4332. The Finding of No

Significant Impact is available for public

inspection and copying between 7:30

a.m. and 5:30 p.m. weekdays at the

Office of the Rules Docket Clerk, 451

Seventh Street, SW., Room 10276,

Washington, DC 20410–0500.

Regulatory Flexibility Act

Under 5 U.S.C. 605(b), (the Regulatory

Flexibility Act), the undersigned hereby

certifies that this interim rule does not

have a significant economic impact on

a substantial number of small entities.

The interim rule would provide capital

advances to private nonprofit

organizations to expand the supply of

supportive housing for persons with

disabilities. Although small entities will

participate in the program, the interim

rule would not have a significant impact

on them.

Executive Order 12606, the Family

The General Counsel, as the

Designated Official for Executive order

12606, the Family, has determined that

the provisions of this interim rule will

not have a significant impact on family

formation, maintenance or well being.

No significant change in existing HUD

policies or programs will result from

promulgation of this interim rule, as

those policies and programs relate to

family concerns.

Executive Order 12612, Federalism

The General Counsel, as the

Designated Official under section 6(a) of

Executive Order No. 12611—

Federalism, has determined that this

interim rule does not involve the

preemption of State law by Federal

statute or regulation and does not have

federalism impacts.

Regulatory Agenda

This interim rule was listed as

sequence 1809 in the Department’s

Semiannual Agenda of Regulations

published on November 14, 1994 (59 FR

57632, 57658) under Executive Order

12866 and the Regulatory Flexibility

Act.

Catalog of Federal Domestic Assistance

The program number is 14.181,

Supportive Housing for Persons with

Disabilities.

List of Subjects in 24 CFR Part 890

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, Reporting and recordkeeping

requirements.

Accordingly, for the reasons stated in

the preamble, part 890 of title 24 of the
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 11839

Code of Federal Regulations is amended

as follows:

PART 890—SUPPORTIVE HOUSING

FOR PERSONS WITH DISABILITIES

1. The authority citation for part 890

continues to read as follows:

Authority: 42 U.S.C. 3535(d) and 8013.

2. Section 890.100 is amended by

adding paragraph (d) to read as follows:

§ 890.100 Purpose and policy.

* * * * *

(d) Effective date of regulation.

Sections 890.600 through 890.650 shall

expire and shall not be in effect after

October 2, 1996, unless changes in this

interim rule are published as a final

rule, or the Department publishes a

notice in the Federal Register to extend

the effective date.

3. Part 890 is amended by adding

subpart F to read as follows:

Subpart F—Project Management

Sec.

890.600 Responsibilities of Owner.

890.605 Replacement reserve.

890.610 Selection and admission of tenants.

890.615 Obligations of the household.

890.620 Overcrowded and underoccupied

units.

890.625 Lease requirements.

890.630 Termination of tenancy and

modification of lease.

890.635 Security deposits.

890.640 Adjustment of utility allowances.

890.645 Conditions for receipt of vacancy

payments for assisted units.

890.650 HUD review.

Subpart F—Project Management

§ 890.600 Responsibilities of Owner.

(a) Marketing. (1) The Owner must

commence and continue diligent

marketing activities not later than 90

days before the anticipated date of

availability for occupancy of the group

home or the anticipated date of

availability of the first unit in an

independent living complex. Market

activities shall include the provision of

notices of the availability of housing

under the program to operators of

temporary housing for the homeless in

the same housing market.

(2) Marketing must be done in

accordance with a HUD-approved

affirmative fair housing marketing plan

and all Federal, State or local fair

housing and equal opportunity

requirements. The purpose of the plan

and requirements is to achieve a

condition in which eligible households

of similar income levels in the same

housing market area have a like range of

housing choices available to them

regardless of discriminatory

considerations such as their race, color,

creed, religion, familial status,

disability, sex or national origin.

(3) At the time of PRAC execution, the

Owner must submit to HUD a list of

leased and unleased assisted units (or in

the case of a group home, leased and

unleased residential spaces) with a

justification for the unleased units or

residential spaces, in order to qualify for

vacancy payments for the unleased

units or residential spaces.

(b) Management and maintenance.

The Owner is responsible for all

management functions. These functions

include selection and admission of

tenants, required reexaminations of

incomes for households occupying

assisted units or residential spaces,

collection of tenant payments,

termination of tenancy and eviction,

and all repair and maintenance

functions (including ordinary and

extraordinary maintenance and

replacement of capital items). All

functions must be performed in

compliance with equal opportunity

requirements.

(c) Contracting for services. (1) With

HUD approval, the Owner may contract

with a private or public entity for

performance of the services or duties

required in paragraphs (a) and (b) of this

section. However, such an arrangement

does not relieve the Owner of

responsibility for these services and

duties. All such contracts are subject to

the restrictions governing prohibited

contractual relationship described in

§ 890.105 (definition of Owner) (These

prohibitions do not extend to

management contracts entered into by

the Owner with the Sponsor or its nonprofit affiliate).

(2) Consistent with the objectives of

Executive Orders 11625, 12432 and

12138, the Owner will promote

awareness and participation of minority

and women’s business enterprises in

contracting and procurement activities.

(d) Submission of financial and

operating statements. The Owner must

submit to HUD:

(1) Within 60 days after the end of

each fiscal year of project operations,

financial statements for the project

audited by an independent public

accountant and in the form required by

HUD; and

(2) Other statements regarding project

operation, financial conditions and

occupancy as HUD may require to

administer the PRAC and to monitor

project operations.

(e) Use of project funds. The Owner

shall maintain a separate interest

bearing project fund account in a

depository or depositories which are

members of the Federal Deposit

Insurance Corporation or National

Credit Union Share Insurance Fund and

shall deposit all tenant payments,

charges, income and revenues arising

from project operation or ownership to

this account. All project funds are to be

deposited in Federally insured

accounts. All balances shall be fully

insured at all times, to the maximum

extent possible. Project funds must be

used for the operation of the project

(including required insurance coverage),

and to make required deposits to the

replacement reserve under § 890.605, in

accordance with HUD-approved budget.

Any remaining project funds in the

project funds account (including earned

interest) following the expiration of the

fiscal year shall be deposited in a

Federally-insured residual receipts

account within 60 days following the

end of the fiscal year. Withdrawals from

this account may be made only for

project purposes and with the approval

of HUD. If there are funds remaining in

the residual receipts account when the

mortgage is satisfied, such funds shall

be returned to HUD.

(f) Reports. The Owner shall submit

such reports as HUD may prescribe to

demonstrate compliance with

applicable civil rights and equal

opportunity requirements. See

§ 890.610(a). (Approved by the Office of

Management and Budget under control

number 2502–0470).

§ 890.605 Replacement reserve.

(a) Establishment of reserve. The

Owner shall establish and maintain a

replacement reserve to aid in funding

extraordinary maintenance and repair

and replacement of capital items.

(b) Deposits to reserve. The Owner

shall make monthly deposits to the

replacement reserve in an amount

determined by HUD.

(c) Level of reserve. The reserve must

be built up to and maintained at a level

determined by HUD to be sufficient to

meet projected requirements. Should

the reserve reach that level, the amount

of the deposit to the reserve may be

reduced with the approval of HUD.

(d) Administration of reserve.

Replacement reserve funds must be

deposited with HUD or in a Federallyinsured depository in an interestbearing account(s) whose balances(s) are

fully insured at all times. All earnings

including interest on the reserve must

be added to the reserve. Funds may be

drawn from the reserve and used only

in accordance with HUD guidelines and

with the approval of, or as directed by,

HUD.
11840 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

§ 890.610 Selection and admission of

tenants.

(a) Written tenant selection

procedures. The Owner shall adopt

written tenant selection procedures

which ensure nondiscrimination in the

selection of tenants and that are

consistent with the purpose of

improving housing opportunities for

very low-income persons with

disabilities; and reasonably related to

program eligibility and an applicant’s

ability to perform the obligations of the

lease. The Owner must comply with the

following nondiscrimination

authorities: section 504 of the

Rehabilitation Act of 1973 (29 U.S.C.

794) and the implementing regulations

at 24 CFR part 8; the Fair Housing Act

(42 U.S.C. 3600–3619) and the

implementing regulations at 24 CFR

parts 100, 108, 109, and 110; Title VI of

the Civil Rights Act of 1964 (42 U.S.C.

2000d) and the implementing

regulations at 24 CFR part 1; section 3

of the Housing and Urban Development

Act of 1968 (12 U.S.C. 1701u) and the

implementing regulations at 24 CFR part

135; the Age Discrimination Act of 1975

(42 U.S.C. 6101–6107) and the

implementing regulations at 24 CFR part

146; Executive Order 11246 (as

amended), 3 CFR, 1964–1965 COMP., p.

339, and the implementing regulations

at 41 CFR Chapter 60; the regulations

implementing Executive Order 11063

(Equal Opportunity in Housing), 3 CFR,

1959–1963 COMP., p. 652, at 24 CFR

part 107; the Americans with

Disabilities Act (42 U.S.C. 12101 et seq.)

to the extent applicable; and other

applicable Federal, State and local laws

prohibiting discrimination and

promoting equal opportunity. While

local residency requirements are

prohibited, local residency preferences

may be applied in selecting tenants only

to the extent that they are not

inconsistent with affirmative fair

housing marketing objectives and the

Owner’s HUD-approved affirmative fair

housing marketing plan. Preferences

may not be based on the length of time

the applicant has resided in the

jurisdiction. With respect to any

residency preference, persons expected

to reside in the community as a result

of current or planned employment will

be treated as residents. Owners shall

promptly notify in writing any rejected

applicant of the grounds for any

rejection. Additionally, owners shall

maintain a written, chronological

waiting list showing the name, race,

gender and ethnicity and date of each

person applying for the program.

(b) Application for admission. The

Owner must accept applications for

admission to the project in the form

prescribed by HUD. Applicant

households applying for assisted units

(or residential spaces in a group home)

must complete a certification of

eligibility as part of the application for

admission. Applicant households must

meet the disclosure and verification

requirements for Social Security

Numbers, as provided by 24 CFR part

750. Applicant families must sign and

submit consent forms for the obtaining

of wage and claim information from

State Wage Information Collection

Agencies, as provided by 24 CFR part

760. Both the Owner and the applicant

household must complete and sign the

application for admission. On request,

the Owner must furnish copies of all

applications for admission to HUD.

(c) Determination of eligibility and

selection of tenants. The Owner is

responsible for determining whether

applicants are eligible for admission and

for the selection of households. To be

eligible for admission, an applicant

must be a disabled person (as defined in

§ 890.105); must meet any project

occupancy requirements approved by

HUD under §§ 890.265(c)(14) and

890.305(a)(1); must meet the disclosure

and verification requirements for Social

Security Numbers, as provided by 24

CFR part 750; must sign and submit

consent forms for the obtaining of wage

and claim information from State Wage

Information Collection Agencies, as

provided by 24 CFR part 760; and must

be a very low-income family, as defined

by § 890.105. An Owner, may with the

approval of the Secretary, limit

occupancy within housing developed

under this part to persons with

disabilities who have similar disabilities

and require a similar set of supportive

services in a supportive housing

environment. Owners shall make

selections in a nondiscriminatory

manner without regard to

considerations such as race, religion,

color, sex, national origin, familial

status, or disability. However, an Owner

may, with the approval of the Secretary,

limit occupancy within housing

developed under this part to persons

with disabilities who have similar

disabilities and require a similar set of

supportive services in a supportive

housing environment. Under certain

circumstances, HUD may permit the

leasing of units to ineligible families

under § 890.515.

(d) Unit assignment. If the Owner

determines that the household is

eligible and is otherwise acceptable and

units (or residential spaces in a group

home) are available, the Owner will

assign the household a unit or

residential space in a group home. If the

household will occupy an assisted unit,

the Owner will assign the household a

unit of the appropriate size in

accordance with HUD’s general

occupancy guidelines. If no suitable

unit (or residential space in a group

home) is available, the Owner will place

the household on a waiting list for the

project and notify the household when

a suitable unit or residential space may

become available. If the waiting list is so

long that the applicant would not be

likely to be admitted for the next 12

months, the Owner may advise the

applicant that no additional

applications for admission are being

considered for that reason.

(e) Ineligibility determination. If the

Owner determines that an applicant is

ineligible for admission or the Owner is

not selecting the applicant for other

reasons, the Owner will promptly notify

the applicant in writing of the

determination, the reasons for the

determination, and the applicant’s right

to request a meeting to review the

rejection, in accordance with HUD

requirements. The review, if requested,

may not be conducted by a member of

the Owner’s staff who made the initial

decision to reject the applicant. The

applicant may also exercise other rights

(e.g., rights granted under Federal, State

or local civil rights laws) if the applicant

believes he or she is being discriminated

against on a prohibited basis.

(f) Records. Records on applicants and

approved eligible households, which

provide racial, ethnic, gender and place

of previous residency data required by

HUD, must be retained for three years.

See § 890.610(a).

(g) Reexamination of household

family income and composition.—(1)

Regular reexaminations. The Owner

must reexamine the income and

composition of the household at least

every 12 months. Upon verification of

the information, the Owner must make

appropriate adjustments in the total

tenant payment in accordance with part

813 of this chapter, as modified by

§ 890.105, and must determine whether

the household’s unit size is still

appropriate. The Owner must adjust

tenant payment and the project rental

assistance payment, and must carry out

any unit transfer in accordance with

HUD standards. At the time of

reexamination under paragraph (g)(1) of

this section, the Owner must require the

household to meet the disclosure and

verification requirements for Social

Security Numbers, as provided by 24

CFR part 750. For requirements

regarding the signing and submitting of

consent forms by families for obtaining

of wage and claim information from

State Wage Information Collection

Agencies, see 24 CFR part 760.
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 11841

(2) Interim reexaminations. The

household must comply with the

provisions in its lease regarding interim

reporting of changes in income. If the

Owner receives information concerning

a change in the household’s income or

other circumstances between regularly

scheduled reexaminations, the Owner

must consult with the household and

make any adjustments determined to be

appropriate. See 24 CFR 750.10(d)(2)(i)

for the requirements for the disclosure

and verification of Social Security

Number at interim reexaminations

involving new household members. For

requirements regarding the signing and

submitting of consent forms by families

for the obtaining of wage and claim

information from State Wage

Information Collection Agencies, see 24

CFR part 760. Any change in the

household’s income or other

circumstances that result in an

adjustment in the total tenant payment,

tenant payment, and project rental

assistance payment must be verified.

(3) Continuation of project rental

assistance payment. (i) A household

shall remain eligible for project rental

assistance payment until the total tenant

payment equals or exceeds the gross

rent (or a pro rata share of the gross rent

in a group home). The termination of

subsidy eligibility will not affect the

household’s other rights under its lease.

Project rental assistance payment may

be resumed if, as a result of changes in

income, rent or other relevant

circumstances during the term of the

PRAC, the household meets the income

eligibility requirements of 24 CFR part

813 (as modified in § 890.105) and

project rental assistance is available for

the unit or residential space under the

terms of the PRAC. The household will

not be required to establish its eligibility

for admission to the project under the

remaining requirements of paragraph (c)

of this section.

(ii) A household’s eligibility for

project rental assistance payment may

be terminated in accordance with HUD

requirements for such reasons as failure

to submit requested verification

information, including information

related to disclosure and verification of

Social Security Numbers, as provided

by 24 CFR part 750 or failure to sign and

submit consent forms for the obtaining

of wage and claim information from

State Wage Information Collection

Agencies (as provided by 24 CFR part

760).

§ 890.615 Obligations of the household.

(a) Requirements. The household

shall:

(1) Pay amounts due under the lease

directly to the Owner;

(2) Supply such certification, release

of information, consent, completed

forms or documentation as the Owner or

HUD determines necessary, including

information and documentation relating

to the disclosure and verification of

Social Security Numbers, as provided

by 24 CFR part 750, and the signing and

submission of consent forms for the

obtaining of wage and claim information

from State Wage Information Collection

Agencies, as provided by 24 CFR part

760;

(3) Allow the Owner to inspect the

dwelling unit or residential space at

reasonable times and after reasonable

notice;

(4) Notify the Owner before vacating

the dwelling unit or residential space;

and

(5) Use the dwelling unit or

residential space solely for residence by

the household and as the household’s

principal place of residence.

(b) Prohibitions. The household shall

not:

(1) Assign the lease or transfer the

unit or residential space; or

(2) Occupy, or receive assistance for

the occupancy of, a unit or residential

space governed under this part while

occupying, or receiving assistance for

occupancy of, another unit assisted

under any Federal housing assistance

program, including any section 8

program.

§ 890.620 Overcrowded and

underoccupied units.

If the Owner determines that because

of change in household size, an assisted

unit is smaller than appropriate for the

eligible household to which it is leased,

or that the assisted unit is larger than

appropriate, project rental assistance

payment with respect to the unit will

not be reduced or terminated until the

eligible household has been relocated to

an appropriate alternate unit. If

possible, the Owner will, as promptly as

possible, offer the household an

appropriate alternate unit. The Owner

may receive vacancy payments for the

vacated unit if the Owner complies with

the requirements of § 890.645.

§ 890.625 Lease requirements.

(a) Term of lease. The term of the

lease may not be less than one year.

Unless the lease has been terminated by

appropriate action, upon expiration of

the lease term, the household and

Owner may execute a new lease for a

term not less than one year or may take

no action. If no action is taken, the lease

will automatically be renewed for

successive terms of one month.

(b) Termination by the household. All

leases may contain a provision that

permits the household to terminate the

lease upon 30 days advance notice. A

lease for a term that exceeds one year

must contain such provision.

(c) Form. The Owner shall use the

lease form prescribed by HUD. In

addition to required provisions of the

lease form, the Owner may include a

provision in the lease permitting the

Owner to enter the leased premises, at

any time, without advance notice where

there is reasonable cause to believe that

an emergency exists or that health or

safety of a family member is

endangered.

§ 890.630 Termination of tenancy and

modification of lease.

The provisions of part 247 of this title

apply to all decisions by an Owner to

terminate the tenancy or modify the

lease of a household residing in a unit

(or residential space in a group home).

§ 890.635 Security deposits.

(a) Collection of security deposit. At

the time of the initial execution of the

lease, the Owner will require each

household occupying an assisted unit

(or residential space in a group home)

to pay a security deposit in an amount

equal to one month’s tenant payment or

$50, whichever is greater. The

household is expected to pay the

security deposit from its own resources

and other available public or private

resources. The Owner may collect the

security deposit on an installment basis.

(b) Security deposit provisions

applicable to units.—(1) Administration

of security deposit. The Owner must

place the security deposits in a

segregated interest-bearing account. The

amount of the segregated, interestbearing account maintained by the

Owner must at all times equal the total

amount collected from the households

then in occupancy plus any accrued

interest and less allowable

administrative cost adjustments. The

Owner must comply with any

applicable State and local laws

concerning interest payments on

security deposits.

(2) Household notification

requirement. In order to be considered

for the refund of the security deposit, a

household must provide the Owner

with a forwarding address or arrange to

pick up the refund.

(3) Use of security deposit. The

Owner, subject to State and local law

and the requirements of paragraphs

(b)(1) and (b)(3) of this section, may use

the household’s security deposit balance

as reimbursement for any unpaid

amounts which the household owes

under the lease. Within 30 days (or

shorter time if required by State or local
11842 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

law) after receiving notification under

paragraph (b)(2) of this section the

Owner must:

(i) Refund to a household which does

not owe any amount under the lease the

full amount of the household’s security

deposit balance;

(ii) Provide to a household owing

amounts under the lease a list itemizing

each amount, along with a statement of

the household’s rights under State and

local law. If the amount which the

Owner claims is owed by the household

is less than the amount of the

household’s security deposit balance,

the Owner must refund the excess

balance to the household. If the Owner

fails to provide the list, the household

will be entitled to the refund of the full

amount of the household’s security

deposit balance.

(4) Disagreements. If a disagreement

arises concerning reimbursement of the

security deposit, the household will

have the right to present objections to

the Owner in an informal meeting. The

Owner must keep a record of any

disagreements and meetings in a tenant

file for inspection by HUD. The

procedures of paragraph (b)(4) of this

section do not preclude the household

from exercising its rights under State or

local law.

(5) Decedent’s interest in security

deposit. Upon the death of a member of

a household, the decedent’s interest, if

any, in the security deposit will be

governed by State or local law.

(c) Reimbursement by HUD for

assisted units. If the household’s

security deposit balance is insufficient

to reimburse the Owner for any amount

which the household owes under the

lease for an assisted unit or residential

space and the Owner has provided the

household with the list required by

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

Owner may claim reimbursement from

HUD for an amount not to exceed the

lesser of:

(1) The amount owed the Owner, or

(2) One month’s per unit operating

cost, minus the amount of the

household’s security deposit balance.

Any reimbursement under this section

will be applied first toward any unpaid

tenant payment due under the lease. No

reimbursement may be claimed for any

unpaid tenant payment for the period

after termination of the tenancy. The

Owner may be eligible for vacancy

payments following a vacancy in

accordance with the requirements of

§ 890.645.

(Approved by the Office of Management and

Budget under control number 2502–0470.)

§ 890.640 Adjustment of utility allowances.

The Owner must submit an analysis

of any utility allowances applicable in

an independent living complex. Such

data as changes in utility rates and other

facts affecting utility consumption

should be provided as part of this

analysis to permit appropriate

adjustments in the utility allowances for

assisted units. In addition, when utility

rate changes would result in a

cumulative increase of 10 percent or

more in the most recently approved

utility allowances, the Owner must

advise HUD and request approval of

new utility allowances. Whenever a

utility allowance for an assisted unit is

adjusted, the Owner will promptly

notify affected households and make a

corresponding adjustment of the tenant

payment and the amount of the project

rental assistance payment.

§ 890.645 Conditions for receipt of

vacancy payments for assisted units.

(a) General. Vacancy payments under

the PRAC will not be made unless the

conditions for receipt of these project

rental assistance payments set forth in

this section are fulfilled.

(b) Vacancies during rent-up. For each

unit (or residential space in a group

home) that is not leased as of the

effective date of the PRAC, the Owner

is entitled to vacancy payments in the

amount of 50 percent of the per unit

operating cost (or pro rata share of the

group home operating cost) for the first

60 days of vacancy, if the Owner:

(1) Conducted marketing in

accordance with § 890.600(a) and

otherwise complied with § 890.600;

(2) Has taken and continues to take all

feasible actions to fill the vacancy; and

(3) Has not rejected any eligible

applicant except for good cause

acceptable to HUD.

(c) Vacancies after rent-up. If an

eligible household vacates an assisted

unit (or residential space in a group

home) the Owner is entitled to vacancy

payments in the amount of 50 percent

of the approved per unit operating cost

(or pro rata share of the group home

operating cost) for the first 60 days of

vacancy if the Owner:

(1) Certifies that it did not cause the

vacancy by violating the lease, the

PRAC, or any applicable law;

(2) Notified HUD of the vacancy or

prospective vacancy and the reasons for

the vacancy upon learning of the

vacancy or prospective vacancy;

(3) Has fulfilled and continues to

fulfill the requirements specified in

§ 890.600(a) (2) and (3) and § 890.645(b)

(2) and (3); and

(4) For any vacancy resulting from the

Owner’s eviction of an eligible

household, certifies that it has complied

with § 890.630.

(d) Prohibition of double

compensation for vacancies. If the

Owner collects payments for vacancies

from other sources (tenant payment,

security deposits, payments under

§ 890.635(c), or governmental payments

under other programs), the Owner shall

not be entitled to collect vacancy

payments to the extent these collections

from other sources plus the vacancy

payment exceed the approved per unit

operating cost.

§ 890.650 HUD review.

HUD shall conduct periodic on-site

management reviews of the Owner’s

compliance with the requirements of

this part.

Dated: December 27, 1994.

Jeanne K. Engel,

General Deputy Assistant Secretary for

Housing—Federal Housing Commissioner.

[FR Doc. 95–4889 Filed 3–1–95; 8:45 am]

BILLING CODE 4210–27–P