11828 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of the Secretary

24 CFR Parts 243, 760 and 889

[Docket No. R–95–1767; FR–3336–I–01]

RIN 2502–AF86

Supportive Housing for the Elderly;

Management

AGENCY: Office of the Secretary, HUD.

ACTION: Interim rule.

SUMMARY: This interim rule establishes

the requirements related to management

and operation of the Supportive

Housing for the Elderly Program. The

purpose of the Supportive Housing for

the Elderly Program is to enable elderly

persons to live with dignity and

independence by expanding the supply

of supportive housing that is designed

to accommodate the special needs of

elderly persons and provides a range of

services that are tailored to the needs of

elderly persons occupying such

housing. An interim rule similar to this

interim rule is also being published in

today’s Federal Register for the

Supportive Housing for Persons with

Disabilities Program. This interim rule

also adds both Supportive Housing

programs to the list of projects covered

by the pet ownership requirements. This

interim rule also applies the wage and

claim consent form requirements to both

programs.

DATES: Effective Date: April 3, 1995.

Sunset Provisions: Sections

243.3(c)(1), 760.3(b)(10) and (11), and

889.600 through 889.655, 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 (of the Housing Act of 1959)

direct loan program. This interim rule

furthers the legislative mandate of

section 202 of the Housing Act of 1959,

as amended, and it involves only minor

interpretations of that statute. The

section 202 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 202 capital

advance program.

The Department also 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 the

Elderly Program is authorized by section

202 of the Housing Act of 1959, as

amended by section 801 of the

Cranston-Gonzalez National Affordable

Housing Act (the NAHA Act) and the

Housing and Community Development

Act of 1992 (1992 Act). Under the

program, which is implemented in 24

CFR part 889, assistance is provided to

private nonprofit organizations and

nonprofit consumer cooperatives to

expand the supply of supportive

housing for the elderly. Such assistance

is provided as (1) capital advances and

(2) project rental assistance contracts.

Capital advances may be used to finance

the construction or rehabilitation of a

structure, or the acquisition of a

structure from the Resolution Trust

Corporation (RTC), to be used as

supportive housing for the elderly. 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 the elderly.

On June 12, 1991, the Department

published an interim rule (56 FR 27104)

implementing the amendments made by

section 801 of the NAHA to establish

the Supportive Housing for the Elderly

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 36338) to

provide the development-related

requirements (closing of capital

advances and requirements related to

project rental assistance contracts) of the

program. The program was the subject

of further amendments of the 1992 Act,

which were implemented by a third

interim rule published on May 5, 1993

(58 FR 26836). All three interim rules

are codified at 24 CFR part 889.

Selection preference rules

(§§ 889.611–889.615) for this program

were published on July 18, 1994 at 59

FR 36616. Today’s interim rule (subpart

F, part 889) 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 completed on this interim

rule, the Department will develop a

final rule based on all previous rules.
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 11829

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 889 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 the 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 families

occupying assisted units, 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 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 elderly persons; 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

Secretary is to provide to an appropriate

agency in each area (which may be the

applicable State or Area Agency on

Aging) information regarding the

availability of housing assisted under

this part. The Owner must accept

applications for admission to the project

in the form prescribed by HUD.

Applicant families applying for assisted

units 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 families. To be eligible for

admission, an applicant must be an

elderly person (as defined in § 889.105);

must meet any project occupancy

requirements approved by HUD under

§ 889.305(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 § 889.105. Under

certain circumstances, HUD may permit

the leasing of units to ineligible families

under § 889.515. If the Owner

determines that the family is eligible

and is otherwise acceptable and units

are available, the Owner will assign the

family a unit. The Owner will assign the

family a unit of the appropriate size in

accordance with HUD’s general

occupancy guidelines. If no suitable

unit is available, the Owner will place

the family on a waiting list for the

project and notify the family when a

suitable unit 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 families, 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 family 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 § 889.105, and must

determine whether the family’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.

Family Responsibilities

Families 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; and (5) use the dwelling unit

solely for residence by the family, and

as the family’s principal place of

residence. The family may not assign

the lease or transfer the unit, nor may

it occupy, or receive assistance for the

occupancy of a unit 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 family

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. 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 part 247 apply to all

decisions by an Owner to terminate the

tenancy or modify the lease of a family

residing in a unit.

Security Deposit

At the time of the initial execution of

the lease, the Owner will require each

family occupying a unit to pay a
11830 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

security deposit in an amount equal to

one month’s total tenant payment or

$50, whichever is greater. The family 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 also submit an

analysis of any utility allowances

applicable. 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 families 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 certain conditions

for receipt of these project rental

assistance payments are fulfilled. For

each unit 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 for the first 60 days of

vacancy, if the Owner: (1) Conducted

marketing in accordance with

§ 889.600(a) and otherwise complied

with § 889.600; (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

family vacates a unit, the Owner is

entitled to vacancy payments in the

amount of 50 percent of the approved

per unit 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

§ 889.600(a)(2) and (3) and

§ 889.650(b)(2) and (3); and (4) for any

vacancy resulting from the Owner’s

eviction of an eligible family, certifies

that it has complied with § 889.635. If

the Owner collects payments for

vacancies from other sources (tenant

payments, security deposits, payments

under § 889.640(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 889.

VI. Amendments to 24 CFR Parts 243

and 760

This interim rule also amends 24 CFR

part 243 by including the Supportive

Housing for the Elderly and Supportive

Housing for Persons with Disabilities

projects in the list of projects covered by

the pet ownership requirements. The

interim rule also amends part 760 and

applies the wage and claim consent

form requirements to the Supportive

Housing for the Elderly and Supportive

Housing for Persons with Disabilities

Programs.

VII. 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 and nonprofit consumer

cooperatives to expand the supply of

supportive housing for the elderly.

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.

Executive Order 12612, Federalism

The General Counsel, as the

Designated Official under section 6(a) of

Executive Order No. 12611—

Federalism, has determined that the

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 number 1807 in the

Department’s Semiannual Agenda of

Regulations published on November 14,

1994 (59 FR 57632, 57657) under

Executive Order 12866 and the

Regulatory Flexibility Act.

Catalog of Federal Domestic Assistance

The program number is 14.157,

Housing for the Elderly or Handicapped.

List of Subjects

24 CFR Part 243

Aged, Grant programs—housing and

community development, Individuals

with disabilities, Loans programs—

housing and community development,

Low and moderate income housing,

Mortgage insurance, Pets, Reporting and

recordkeeping requirements.

24 CFR Part 760

Grant programs—housing and

community development, Income

verification procedures, Indians,

Intergovernmental relations, Loan

programs—housing and community

development, Penalties, Public housing,

Rent subsidies, Reporting and

recordkeeping requirements, Wages.

24 CFR Part 889

Aged, Capital advance programs,

Grant programs—housing and

communtiy development, Loan

programs—housing and community

development, Low and moderate

income housing, Rent subsidies,

Reporting and recordkeeping

requirements.

Accordingly, for the reasons stated in

the preamble, title 24 of the Code of

Federal Regulations is amended to read

as follows:

PART 243—PET OWNERSHIP IN

HOUSING FOR THE ELDERLY OR

HANDICAPPED

1. The authority citation for part 243

continues to read as follows:

Authority: 12 U.S.C. 1701r–1; 42 U.S.C.

3535(d).
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 11831

2. In § 243.3, paragraph (c)

introductory text and paragraph (c)(1)

are revised to read as follows:

§ 243.3 Definitions.

* * * * *

(c) Project for the elderly or persons

with disabilities means a specific rental

or cooperative multifamily property

that, unless currently owned by HUD, is

subject to a first mortgage, and:

(1) That is assisted under section 202

of the Housing Act of 1959, and as

amended (Housing for the Elderly or

Disabled or Supportive Housing for the

Elderly) or is assisted under section 811

of the National Affordable Housing Act

(Supportive Housing for Persons with

Disabilities);

* * * * *

3. Section 243.4 is revised to read as

follows:

§ 243.4 Effective date.

This part shall be effective on March

2, 1987. However, project owners shall

have until May 1, 1987 to implement

the provisions of this part. Section

243.3(c)(1) 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.

PART 760—PROCEDURES FOR

OBTAINING WAGE AND CLAIM

INFORMATION ABOUT APPLICANTS

AND PARTICIPANTS IN HUD’S

SECTION 8 AND PUBLIC HOUSING

PROGRAMS FROM STATE WAGE

INFORMATION COLLECTION

AGENCIES (SWICAs)

4. The authority citation for part 760

is revised to read as follows:

Authority: 12 U.S.C. 1701q; 42 U.S.C.

1437a, 1437d, 1437ee, 1437f, 3535(d), and

3544.

5. In § 760.3, paragraph (b) is

amended by redesignating paragraphs

(b)(10) through (b)(13) as paragraphs

(b)(12) through (b)(15), and by adding

new paragraphs (b)(10) and (b)(11), to

read as follows:

§ 760.3 Applicability.

* * * * *

(b) * * *

(10) Part 889, Supportive Housing for

the Elderly.

(11) Part 890, Supportive Housing for

Persons with Disabilities.

* * * * *

6. Section 760.40 is amended by

adding paragraph (c) to read as follows:

§ 760.40 Effective date of rule.

* * * * *

(c) Expiration date. Sections

760.3(b)(10) and (11) 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.

PART 889—SUPPORTIVE HOUSING

FOR THE ELDERLY

7. The authority citation for part 889

continues to read as follows:

Authority: 12 U.S.C. 1701q, 42 U.S.C.

3535(d).

8. Section 889.100 is amended by

adding paragraph (d) to read as follows:

§ 889.100 Purpose and policy.

* * * * *

(d) Expiration date. Sections 889.600

through 889.655 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.

9. Subpart F is amended by adding

§§ 889.600, 889.605, 889.610, 889.620,

889.625, 889.630, 889.635, 889.640,

889.645, and 889.650, to read as follows:

Subpart F—Project Management

Sec.

889.600 Responsibilities of owner.

889.605 Replacement reserve.

889.610 Selection and admission of tenants.

889.611 Selection preferences.

* * * * *

889.620 Obligations of the family.

889.625 Overcrowded and underoccupied

units.

889.630 Lease requirements.

889.635 Termination of tenancy and

modification of lease.

889.640 Security deposits.

889.645 Adjustment of utility allowances.

889.650 Conditions for receipt of vacancy

payments for assisted units.

889.655 HUD review.

Subpart F—Project Management

§ 889.600 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 of the first unit. 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 the 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 families of

similar income levels in the same

housing market 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, with

a justification for the unleased units, in

order to qualify for vacancy payments

for the unleased units.

(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 families occupying assisted

units, 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

§ 889.105 (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-owned 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.
11832 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

(e) Use of project funds. The Owner

shall maintain a separate 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 Federallyinsured 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 § 889.605, 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 Federallyinsured 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

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

Management and Budget under control

number 2502–0470).

§ 889.605 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 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.

§ 889.610 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 elderly persons; 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

Part 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, ethnicity and date of each

person applying for the program.

(b) Information on availability of

assisted housing. The Secretary shall

provide to an appropriate agency in

each area (which may be the applicable

State or Area Agency on Aging)

information regarding the availability of

housing assisted under this part.

(c) Application for admission. The

Owner must accept applications for

admission to the project in the form

prescribed by HUD and is obligated to

confirm all information provided by the

applicant families on the application.

Applicant families must be requested to

complete a release of information

consent for verification of information.

Applicant families applying for assisted

units must complete a certification of

eligibility as part of the application for

admission. Applicant families 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

family must complete and sign the

application for admission. On request,

the Owner must furnish copies of all

applications for admission to HUD.

(d) Determination of eligibility and

selection of tenants. The Owner is

responsible for determining whether

applicants are eligible for admission and

for the selection of families. To be

eligible for admission, an applicant

must be an elderly person (as defined in

§ 889.105); 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 § 889.105. Under certain

circumstances, HUD may permit the

leasing of units to ineligible families

under § 889.515.

(e) Unit assignment. If the Owner

determines that the family is eligible

and is otherwise acceptable and units

are available, the Owner will assign the

family a unit. The Owner will assign the

family a unit of the appropriate size in

accordance with HUD’s general

occupancy guidelines. If no suitable

unit is available, the Owner will place

the family on a waiting list for the

project and notify the family when a

suitable unit 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
Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations 11833

additional applications for admission

are being considered for that reason.

(f) 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.

(g) Records. Records on applicants

and approved eligible families, which

provide racial, ethnic, gender and place

of previous residency data required by

HUD, must be retained for three years.

See § 889.610(a).

(h) Reexamination of family income

and composition. (1) Regular

reexaminations. The Owner must

reexamine the income and composition

of the family 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 § 889.105, and must

determine whether the family’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 (h)(1) of

this section, the Owner must require the

family 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.

(2) Interim reexaminations. The

family 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 family’s income or other

circumstances between regularly

scheduled reexaminations, the Owner

must consult with the family 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 family 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

family’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 family shall

remain eligible for project rental

assistance payment until the total tenant

payment equals or exceeds the gross

rent. The termination of subsidy

eligibility will not affect the family’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 family meets the income

eligibility requirements of part 813 of

this chapter (as modified in § 889.105)

and project rental assistance is available

for the unit under the terms of the

PRAC. The family will not be required

to establish its eligibility for admission

to the project under the remaining

requirements of paragraph (d) of this

section.

(ii) A family’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).

* * * * *

§ 889.620 Obligations of the family.

(a) Requirements. The family 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; and

(5) Use the dwelling unit solely for

residence by the family and as the

family’s principal place of residence.

(b) Prohibitions. The family shall not:

(1) Assign the lease or transfer the

unit; or

(2) Occupy, or receive assistance for

the occupancy of, a unit 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.

(Approved by the Office of Management and

Budget under control number 2502–0470)

§ 889.625 Overcrowded and

underoccupied units.

If the Owner determines that because

of change in family size, a unit is

smaller than appropriate for the eligible

family to which it is leased, or that the

unit is larger than appropriate, project

rental assistance payment with respect

to the unit will not be reduced or

terminated until the eligible family has

been relocated to an appropriate

alternate unit. If possible, the Owner

will, as promptly as possible, offer the

family an appropriate alternate unit.

The Owner may receive vacancy

payments for the vacated unit if the

Owner complies with the requirements

of § 889.650.

§ 889.630 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 family 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 family. All

leases may contain a provision that

permits the family 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.
11834 Federal Register / Vol. 60, No. 41 / Thursday, March 2, 1995 / Rules and Regulations

§ 889.635 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 family residing in a unit.

§ 889.640 Security deposits.

(a) Collection of security deposit. At

the time of the initial execution of the

lease, the Owner will require each

family occupying a unit to pay a

security deposit in an amount equal to

one month’s total tenant payment or

$50, whichever is greater. The family 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 families 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) Family notification requirement. In

order to be considered for the refund of

the security deposit, a family 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 paragraph (b)(3)

of this section, may use the family’s

security deposit balance as

reimbursement for any unpaid family

contribution or other amount which the

family owes under the lease. Within 30

days (or shorter time if required by State

or local law) after receiving notification

under paragraph (b)(2) of this section

the Owner must:

(i) Refund to a family which does not

owe any amount under the lease the full

amount of the family’s security deposit

balance;

(ii) Provide to a family owing amounts

under the lease a list itemizing each

amount, along with a statement of the

family’s rights under State and local

law. If the amount which the Owner

claims is owed by the family is less than

the amount of the family’s security

deposit balance, the Owner must refund

the excess balance to the family. If the

Owner fails to provide the list, the

family will be entitled to the refund of

the full amount of the family’s security

deposit balance.

(4) Disagreements. If a disagreement

arises concerning reimbursement of the

security deposit, the family 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 family from

exercising its rights under State or local

law.

(5) Decedent’s interest in security

deposit. Upon the death of a member of

a family, 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 family’s security

deposit balance is insufficient to

reimburse the Owner for any amount

which the family owes under the lease

for a unit and the Owner has provided

the family 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 family’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

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

§ 889.650.

§ 889.645 Adjustment of utility allowances.

The Owner must submit an analysis

of any utility allowances applicable.

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 families and make a

corresponding adjustment of the tenant

payment and the amount of the project

rental assistance payment.

(Approved by the Office of Management and

Budget under control number 2502–0470)

§ 889.650 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 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

for the first 60 days of vacancy, if the

Owner:

(1) Conducted marketing in

accordance with § 889.600(a) and

otherwise complied with § 889.600;

(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 family vacates a unit, the Owner

is entitled to vacancy payments in the

amount of 50 percent of the approved

per unit 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

§ 889.600(a)(2) and (3) and

§ 889.650(b)(2) and (3); and

(4) For any vacancy resulting from the

Owner’s eviction of an eligible family,

certifies that it has complied with

§ 889.635.

(d) Prohibition of double

compensation for vacancies. If the

Owner collects payments for vacancies

from other sources (tenant payments,

security deposits, payments under

§ 889.640(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.

§ 889.655 HUD review.

HUD shall conduct periodic on-site

management inspections and reviews of

the Owner’s compliance with the

requirements of this part.

Henry G. Cisneros,

Secretary.

[FR Doc. 95–4890 Filed 3–1–95; 8:45 am]

BILLING CODE 4210–32–P