18174 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of the Assistant Secretary for

Public and Indian Housing

24 CFR Parts 905 and 950

[Docket No. R–95–1742; FR–3646–F–02]

RIN 2577–AB43

Indian Housing Program: Amendments

AGENCY: Office of the Assistant

Secretary for Public and Indian

Housing, HUD.

ACTION: Final rule.

SUMMARY: This final rule adds a new

part 950 to HUD’s regulations. New part

950 contains the Indian Housing

consolidated regulations that were

previously set forth in 24 CFR part 905.

In addition to moving the Indian

Housing consolidated regulations from

part 905 to part 950, the final rule

amends a number of the Indian Housing

consolidated regulations to simplify

program processes, reduce the number

of regulatory requirements, and provide

more flexibility to local tribal and

Indian housing authority officials in the

administration of the Indian Housing

program.

EFFECTIVE DATE: May 10, 1995.

FOR FURTHER INFORMATION CONTACT:

Dominic Nessi, Director, Office of

Native American Programs, Public and

Indian Housing, Room 4140,

Department of Housing and Urban

Development, 451 Seventh Street SW,

Washington, DC 20410, telephone (202)

755–0032. Hearing- or speech-impaired

persons may use the TDD number (202)

708–0850. (These are not toll-free

numbers.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

The information collection

requirements contained in this final rule

have been submitted to the Office of

Management and Budget (OMB) for

review. These information collection

requirements are not effective until such

time that OMB grants its approval. The

approval number will be published in

the Federal Register through separate

notice.

II. Background

On August 1, 1994 (59 FR 39072),

HUD published a proposed rule that

would add a new part 950 to title 24 of

the Code of Federal Regulations to

contain the Indian Housing

consolidated regulations. The proposed

rule would also make simplifying

amendments to these regulations, in

order to accomplish the primary goal of

giving Indian Housing Authorities

(IHAs) greater discretion and

responsibility in administering their

programs. The preamble to the proposed

rule described HUD’s consultation with

its six Native American Program Area

Offices, the National American Indian

Housing Council, regional IHA

associations, and other IHA

representatives. The preamble also

described HUD’s four-year trend to

provide IHAs with administrative

flexibility through regulatory revisions

(59 FR 39072).

Consistent with the principles of

Executive Order 12866, HUD has

reviewed the existing Indian Housing

regulations and the public comments

received on the proposed rule, and with

this final rule modifies the regulations

to make them more effective, consistent,

understandable, and sensible.

III. Comments on the August 1, 1994

Proposed Rule

HUD solicited public comments on

the proposed rule amending the Indian

Housing program. By the expiration of

the public comment period on

September 30, 1994, HUD had received

15 comments, all from IHAs and tribal

leaders. This final rule contains several

changes to the proposed rule in

response to these comments, as further

described in the following section,

which summarizes the comments

according to their relevant subparts and

provides HUD’s responses to those

comments.

A. Subpart A—General

1. Applicability and Scope (§ 950.101)

One commenter stated that

§ 950.101(a)(1) should expressly

acknowledge that this rule applies to

operations and funds arising from HUD

programs. The current language states

that HUD provides financial assistance

(funds) to IHAs for the development and

operation (operation) of low-income

housing projects in Indian areas. This

part is applicable to such projects

developed or operated by an IHA in an

Indian area. HUD was unclear what

additional language was requested and

believes that the current language

adequately addresses the comment.

2. Definitions (§ 950.102)

One commenter requested that the

definition of Allowable Utilities

Consumption Level (AUCL) and Heating

Degree Days (HDD) should be adjusted.

The commenter requested that Cooling

Degree Days be added, as HDD is

irrelevant to Indian country.

Section 508 of the Cranston-Gonzalez

National Affordable Housing Act (Pub.

L. 101–625, approved November 28,

1990) directed HUD to incorporate into

the Performance Funding System (PFS)

a methodology to adjust utility

consumption to account for Cooling

Degree Days that was the same as the

methodology used to account for

Heating Degree Days. The impetus for

this legislation was that IHAs in the

sunbelt that had to pay higher utility

bills for air conditioning during hot

summers wanted an adjustment in their

PFS payments to account for the

increased utility consumption. HUD

published a proposed rule, and based on

the comments received, HUD

implemented an approach to greatly

simplify the PFS by dropping all heating

and cooling degree day adjustments.

The final rule implementing this action

was published in the Federal Register

on October 13, 1994 (59 FR 51852).

Additional information on this change

can be found in the preamble of that

rule.

There were a number of comments

concerning the definitions of Adjusted

Income and Annual Income. These

suggestions included an increase in

deductions, lowering the 30 percent

rule, counting only the income from the

head of household, counting only the

income of head of household and

spouse, and using net income rather

than gross income. Also, a commenter

requested that both child care and travel

expenses be eligible deductions.

HUD appreciates the many comments

received on the definition of Adjusted

Income and Annual Income. In response

to the comment to allow both travel and

child care as deductions, section

103(a)(2) of the Housing and

Community Development Act of 1992

(Pub. L. 102–550, approved October 28,

1992) amended section 3(b)(5) of the

United States Housing Act of 1937 (42

U.S.C. 1437 et seq.) to allow for both

deductions. HUD implemented this

change by PIH Notice 93–23 dated May

19, 1993. The proposed rule included

this revision, and the same language

appears in this final rule. With regard to

the other comments on Adjusted Income

and Income, these terms are defined in

the United States Housing Act of 1937.

Section 3(b)(4) of that Act defines

‘‘income’’ as ‘‘income from all sources

of each member of the household.’’

Section 3(b)(5) contains the statutory

definition of ‘‘adjusted income.’’ The

Office of Native American Programs is

developing a legislation package for the

program, and it will carefully review all

comments as it prepares this proposal.

One commenter stated that the

definition of disposition should exclude

references to real estate, since the IHAs

do not transfer any interest in the ‘‘real
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18175

estate.’’ The commenter stated that the

most that IHAs transfer by a quit claim

deed is the remaining portion of the

leasehold interest in the underlying

land, together with the improvements.

HUD agrees with the comment as it

relates to trust and allotted land.

However, there are many cases in Indian

areas in which interest in the real estate

is transferred. Due to these situations,

HUD has not changed the definition.

One commenter requested that the

tribal government and not HUD define

low-income family based on a

determination of tribal median income

and adjustments to income due to

family size, construction costs, or other

local variations. Another commenter

stated that IHAs should be able to

establish their own income limits based

on the tribes’ economies, not on the

local communities.

The definitions of low- and very lowincome are found in the United States

Housing Act of 1937. By statute, the

definition of very low-income is tied to

‘‘50 per centum of median family

income’’ for an area, and the definition

of low-income is tied to ‘‘80 per centum

of the median family income’’ for the

area (42 U.S.C. 1427a). As required by

statute, the meaning of the term ‘‘area’’

is affected by whether the local median

family income is less than the respective

State’s nonmetropolitan median family

income. In addition, the statute provides

for adjustments to income limits for

areas with unusually high or low

incomes in relation to housing costs.

Income limits are published annually by

HUD. If an IHA or tribe feels that the

median income for its area is not

appropriate, they should contact the

local HUD Office to obtain information

on how to proceed with a request for a

change.

3. Applicability of Civil Rights

Requirements (§ 950.115).

A commenter stated that the civil

rights quotation in § 950.115(a) in the

proposed rule is misleading and the

definition should additionally explain

that these equal protection and due

process rights do not apply if they

violate customs, traditions, and

practices of the tribe. HUD agrees with

this comment and has adjusted the

definition in the final rule to include

this statement.

A commenter suggested that HUD

should strike the reference to handbooks

in § 950.115(a)(3) of the proposed rule.

This commenter also requested that the

reference to Title VI, the Fair Housing

Act, and the Americans with Disabilities

Act in § 950.115(b) of the proposed rule

be removed if they are not applicable to

IHAs established by exercise of a tribe’s

power of self-government. HUD agrees

with both of these comments. HUD has

removed the reference to handbooks and

the language regarding the

nonapplicability of those statutes in this

section.

4. Displacement, Relocation, and

Acquisition (§ 950.117)

One commenter stated that upon the

request of a resident, an IHA should be

allowed to relocate a resident

temporarily to his or her traditional

home even if it is not decent, safe, and

sanitary, and the family should be

eligible for relocation assistance. HUD

agrees with this comment and has

revised the language in § 950.117(b) for

temporary relocation.

A commenter stated that in

§ 950.117(c)(2), the word ‘‘comparable’’

should be removed since it is subject to

many interpretations, and that the IHA

should be allowed to use any available

Indian housing unit as a replacement.

The commenter also requested that HUD

add the following language: ‘‘Houses

that do not meet Section 8 fair market

rent would be allowed for comparable

housing units.’’ HUD is unable to

eliminate the term ‘‘comparable’’ in this

section of the rule. This term is defined

in the Uniform Relocation Assistance

and Real Property Acquisition Policies

Act of 1970 (URA) (42 U.S.C. 4601–

4605), as amended. The use of

‘‘comparable’’ is also required by the

Department of Transportation’s

government-wide rule implementing the

URA (49 CFR part 24). The 1987

amendments to the URA specify that the

Federal agencies covered by the URA no

longer have independent statutory

authority to promulgate their own

separate URA regulations, and in

implementing the URA they must

follow the regulations published by the

lead agency, which is the Department of

Transportation.

5. Compliance With Other Federal

Requirements (§ 950.120)

Multiple commenters suggested that

the wage rate requirements of the DavisBacon Act (§ 950.120(c)) should be

waived for Indian housing. However,

the applicability of the Davis-Bacon Act

to Indian housing is required under

Section 12 of the United States Housing

Act of 1937, as amended, and is not

subject to waiver by HUD.

6. Establishment of IHAs by Tribal

Ordinance (§ 950.126).

Several commenters agreed with

§ 950.126(b) of the proposed rule, which

allows a tribe to determine the form of

ordinance. However, one commenter

objected to leaving ordinance terms and

wording up to tribes. Another

commenter felt that HUD was leaving

the ordinance up to the tribe, and

therefore approval by the Department of

Interior (DOI) should not be necessary.

As stated previously, the intent of the

revised regulation is to provide greater

flexibility and control to IHAs and tribes

in the administration of housing

programs. This is the reason for

allowing tribes the ability to determine

the form of ordinance that is applicable

for its area. However, HUD agrees with

the comment regarding DOI approval

and has removed the language regarding

the need for such approval.

A commenter stated that § 950.126(d)

of the proposed rule should be revised

to require only those documents that

demonstrate that an authority has been

properly established. HUD agrees with

this comment and has revised this

section accordingly.

7. IHA Commissioners Who Are Tenants

or Homebuyers (§ 950.130)

One commenter stated that they

agreed that the change in the rule that

explains the role of a commissioner

when he or she faces a decision that

affects them personally is an excellent

idea. HUD appreciates the comment

regarding this section.

8. Administrative Capability (§ 950.135)

One commenter agreed that the

Administrative Capability Assessment

(ACA) should be used with other tools

to evaluate the need for technical

assistance. Two commenters stated that

there should be another appeal level,

and one commenter requested that all

appeals should go to HUD Headquarters.

One commenter stated that the reference

to HUD handbooks and other program

requirements should be deleted since

these do not constitute statutory or

regulatory authority that is binding on

the IHAs. One commenter stated that

sanctions should be clearly defined in

§ 950.135(f)(2), and limitation on

appeals should be eliminated from

§ 950.135(g)(2).

HUD agrees with the comment

suggesting the removal of the handbook

references in this section and has

revised this section in the final rule. In

response to the comments on the appeal

process, HUD finds that the current

appeal process will provide IHAs with

the ability to appeal any decision

regarding funding. All other appeals

will not affect any funding.

Furthermore, without limits to the

appeal process, HUD would not be able

to initiate corrective action when it

finds a serious deficiency.
18176 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

B. Subpart B—Procurement

1. General Comments.

Several commenters suggested minor

changes in wording throughout the

subpart to improve the readability and

clarity of the language. For the most

part, HUD agrees with these comments

and has incorporated the suggested

wording.

2. Procurement Standards (§ 950.160)

One commenter wrote that the

$25,000 limit on small purchases

created additional costs for IHAs. Since

the publication of the proposed rule on

August 1, 1994, Federal procurement

regulations have increased the small

purchase limit to $100,000. HUD has

adjusted this section accordingly.

Another commenter wrote that HUD

should allow open market purchases

from petty cash for commonly used

supplies or purchases of less than $500.

Such purchases are allowed within

existing regulations that are not changed

by this rule.

3. Methods of Procurement (§ 950.165)

One commenter suggested the

addition of language in § 950.165(c) that

specifically states that an IHA may

reject all proposals for soundly

documented reasons and has the right to

waive certain irregularities. General

procurement methods currently allow

these practices, and therefore they have

not been added to this rule.

4. Other Requirements Applicable to

Development Contracts (§ 950.170)

One commenter suggested that the

bonding alternative allowing a 25

percent letter of credit should be

deleted. HUD disagrees with this

suggestion. Each of the options for

surety other than 100 percent

performance and payment bonds are

included in the rule to enable IHAs to

assist small or disadvantaged

contractors that have the ability to

perform but do not have the resources

to pay for a performance and payment

bond. IHAs have the option but are not

obligated to use this option in their

procurement.

Another commenter suggested that

the rule should clarify that performance

and payment surety continue through a

contract’s warranty period. The term of

the surety is contained in individual

contract provisions, and therefore HUD

does not believe it should be added to

this rule.

5. Indian Preference Requirements

(§ 950.175)

HUD received a general comment that

the revised Indian preference

requirements are not simplified from the

previous rule. In these revised

regulations, HUD has tried to

accomplish two objectives. The first

objective was to make the Indian

Preference requirements less

prescriptive, enabling IHAs and their

tribes to determine the best methods for

providing Indian preference in their

programs. The second objective was to

make HUD’s Indian preference

requirements identical across its

programs to remove confusion for

participating tribes. HUD is also revising

the Indian Community Development

Block Grant and Indian HOME program

regulations to mirror the Indian Housing

regulations. HUD believes it has met

both these objectives but is receptive to

any additional suggestions that would

improve the Indian preference

requirements.

6. Insurance (§ 950.190)

One commenter suggested that this

section is unnecessarily complex and

long. The contents of this section

provide the basic requirements for

insurance coverage, however, and

therefore HUD has decided not to make

any reductions at this time.

C. Subpart C—Development

1. General Comments

Several commenters suggested minor

changes throughout the subpart to

improve the readability and clarity of

the language. For the most part, HUD

agrees with these comments and has

incorporated the suggested wording.

2. Allocation (§ 950.205)

One commenter suggested the

conversion of the allocation method

from a competitive nature to a formula

funding. This commenter wrote that this

would enable IHAs to better anticipate

funding, thereby allowing for better

long-range planning. HUD is

investigating the potential for formula

funding for development allocations;

however, a change to a formula funding

basis may require statutory authority.

3. Eligibility (§ 950.207)

In response to general comments on

clarity within the rule, HUD has added

a new section that specifies the

eligibility requirements to apply for new

Indian Housing development. Included

in this section are performance

thresholds not previously specified in

the regulation but relied upon by HUD

in determining eligibility.

4. Authority for Proceeding Without

HUD Approval (§ 950.210)

Several commenters suggested that

the rule would provide HUD great

latitude in requiring an IHA to obtain

HUD approval of processing steps. In

reviewing this section, HUD agrees that

its wording is too broad and not fully

consistent with administrative

capability remedies contained in

§ 950.135. Accordingly, HUD has

clarified this section to require HUD to

follow the provisions of § 950.135 in its

determination of performance

deficiencies and remedies. Additionally,

HUD has removed the examples of

performance deficiencies.

This final rule consolidates time

constraints on development in this

section from throughout Subpart C. In

response to several comments, the time

constraints contained in the regulation

are: (1) 24 months from program

reservation to construction start, (2) 30

months from program reservation before

HUD can recapture funds, and (3) six

years from program reservation to

closeout of development.

5. Production Methods (§ 950.215)

HUD received several comments that

questioned the clarity of the production

method descriptions. Upon review,

HUD has determined that descriptions

of production methods are more

appropriately contained in program

guides or handbooks. Accordingly, HUD

has deleted the brief descriptions of

production methods in this section.

Several comments were received

concerning the definition of an IHA

attachable asset required as security for

force account construction approval and

the need for IHAs to provide such

security. Attachable assets are those

assets that are unencumbered by

restrictions on their use and that can be

liquidated to pay for any overruns in the

development of the project. HUD has

reevaluated the risk associated with

force account construction and has

modified the surety requirements in this

final rule. The final rule (§ 950.215(b))

allows Area Offices of Native American

Programs (Area ONAPs) to approve the

force account method without requiring

the tribe or IHA to provide specific

security to cover excess costs if the IHA

agrees to construct the project in small

stages with additional HUD oversight.

6. Total Development Cost (§ 950.220)

One commenter suggested that the

$1,500 Mutual Help contribution and

development funded counseling should

be deleted from the program. However,

the $1,500 Mutual Help contribution is

required by the statute. HUD has

modified the counseling provision to

make it optional for IHAs.

One commenter suggested that the

rule should include a detailed

description of how total development
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18177

cost (TDC) standards are computed. By

statute, HUD is required to establish

TDC standards using two national cost

indices, which are multiplied by 1.6 for

elevator type structures and 1.75 for

nonelevator structures. Total

development cost standard

requirements are published periodically

in a departmental notice. HUD believes

that such a notice is the appropriate

vehicle for conveying TDC

requirements, and therefore HUD has

not adopted this suggestion.

One commenter suggested that the

rule should require all projects to be

funded at the full TDC standard. The

TDC standard establishes the maximum

allowable cost for a development and is

not intended to provide a prescribed

amount required to develop a project.

Accordingly, HUD has not adopted this

comment.

One commenter suggested that the

rule should require HUD Area ONAPs to

obtain the input of tribes in the

determination of the adequacy of TDC

areas. The TDC notice provides for IHAs

to request a HUD assessment of the

adequacy of TDC areas within their

jurisdiction. HUD believes that this

provision of the notice serves to obtain

tribal input. Therefore, HUD has not

adopted this suggestion.

HUD has significantly reduced

§ 950.220 of the proposed rule by

deleting process items that are included

in periodic TDC Notices, the discussion

of the program reservation, and HUD

cost review requirements. Additionally,

HUD has rewritten the resident training

and insurance subsections, and has

added a separate subsection that

includes the exception of donations and

off-site water and sanitation facility

infrastructure costs from the TDC

calculation. HUD has modified the 30

month for construction cost and moved

it to § 950.207.

7. Application (§ 950.225)

To provide greater clarity in section

titles, the Application section has been

divided, with items involving program

reservation and annual contributions

contract (ACC) execution moved to a

new section 950.227. HUD has deleted

from the rule process activities that are

included in the annual Notice of

Funding Availability. HUD has also

added a new paragraph (c), which

clarifies the criteria under which HUD

may approve new units for state-created

IHAs.

8. Program Reservation and ACC

Execution (§ 950.227)

HUD received several comments

supporting the elimination of the 3

percent limitation on initial planning

funds.

One commenter suggested that the

limitation on planning funds was too

vague. Upon review, HUD has

determined that since such limitations

are included in the ACC, they are

unnecessary in this rule.

To further clarify the change to a grant

program, HUD has changed the term

‘‘program reservation’’ to ‘‘development

grant approval’’ throughout the rule.

To streamline the development

process, HUD has modified subpart C to

remove the two-step process for

executing the ACC for development.

This final rule provides for execution of

the ACC (or amendment) in the full

amount of the grant upon approval of

the grant. Amendments to the ACC

would only be required if the character

of the development were changed by the

IHA.

This final rule also adds a new section

950.229 to address the process for

establishing limits on the IHA’s ability

to incur obligations under the ACC. This

section consolidates requirements for

submittal of development cost budgets

and contains the existing provision for

comprehensive housing plans.

9. Project Coordination (§ 950.230)

One commenter suggested that HUD

should participate in project planning in

order to provide technical assistance if

requested by the IHA. The current

wording does not prohibit HUD staff

from participating in planning activities

if the IHA requests, and HUD has

sufficient staff resources available to

provide such assistance. The decision to

provide voluntary technical assistance

is a joint decision of the IHA and HUD.

HUD does not find that additional

clarifying language is needed.

10. Site Selection Criteria (§ 950.235)

HUD received several comments

supporting the removal of the one acre

limitation on site size. One commenter

objected to prohibiting the cost of access

roads as a project expense. With the

exception of off-site water and sanitary

facility infrastructure that Congress

includes in Indian Housing

appropriations, infrastructure

development outside the boundaries of

the IHA site(s) are not eligible project

expenses. In the case of off-site access

roads, Congress provides funding

through the Bureau of Indian Affairs

(BIA) to construct off-site roads.

Accordingly, HUD has retained the

restrictions on off-site access roads in

this rule.

11. Types of Interest in Land (§ 950.240)

Several commenters objected to the

requirement for HUD approval of the

form of lease. Because of the period of

affordability requirements contained in

the statute and in the ACC, HUD has a

continuing interest in the availability of

dwelling units for occupancy by eligible

participants. It is in HUD’s best interest

to assure that the provisions contained

in site leases provide sufficient

protection for the government in this

area. Therefore, HUD has retained the

requirement for a HUD approved form

of lease.

Another commenter objected to

allowing leases of unrestricted fee

simple land in lieu of outright purchase.

In most instances, an IHA will prefer to

purchase fee simple land instead of

entering into a long-term lease.

However, prohibiting leasing of

unrestricted fee simple property would,

according to HUD, unduly restrict IHA

options in securing building sites.

Another commenter suggested that

HUD allow tribes to build off tribal

lands. There is no specific prohibition

against an IHA using non-tribal sites.

IHAs must operate within the

jurisdiction of the tribe, which is

generally within the tribe’s reservation

boundaries. If the IHA wishes to use

sites not within the jurisdiction of the

tribe that are subject to property taxes,

they must obtain the cooperation of the

taxing body.

12. Environment (§ 950.247)

The Multifamily Housing Property

Disposition Reform Act of 1994 (Pub. L.

103–233, approved April 11, 1994)

provided for tribes or local governments

to assume the responsibilities for

environmental assessments of public

and Indian housing sites. To implement

this requirement, HUD is revising its

environmental review regulations at 24

CFR part 58 to include the Indian

Housing program. HUD is also adding a

new section 950.247, Environment, in

this rule to provide for local completion

of the environmental assessment.

13. Site Approval (§ 950.250)

HUD has decided to remove

§ 950.250(b)(3) from the final rule. This

section had required IHA cooperation to

enable HUD to complete the

environmental assessment. Under the

final rule, the tribe or local governing

body will complete the environmental

assessment.

One commenter suggested that there

may be unnecessary duplication in the

review of sites, and that HUD and the

BIA should adopt a single

environmental assessment procedure.
18178 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

HUD and the BIA have made continuing

efforts to coordinate environmental

review procedures to minimize

duplication of efforts. With the transfer

of environmental review responsibility,

the tribe or local government will work

with the BIA in this regard.

One commenter suggested that sites

should be inspected only when the IHA

deems it appropriate. HUD finds that it

is impossible to approve a site for

inclusion in a development without first

making an on-site visit to determine the

suitability for development.

Accordingly, HUD has not adopted this

suggestion.

Another commenter suggested that

environmental reviews should be

limited to sites larger than 10 acres. The

National Environmental Policy Act of

1969 (42 U.S.C. 4332) requires an

environmental assessment for any

development action regardless of the

size of the site.

14. Design Criteria (§ 950.255)

HUD received a number of comments

objecting to requiring newly constructed

Indian housing units to comply with

specific building codes. This

requirement is not new. Due to the

investment of public funds and the

long-term association between HUD and

the IHA during the operating period,

HUD finds that it is necessary to require

minimum building standards. National

building codes, such as the Uniform

Building Code or the Uniform Plumbing

Code, provide minimum standards for

such development. HUD encourages

tribes to develop and adopt building

codes that reflect the needs of their

areas. In the absence of adopted tribal

codes, IHAs must rely on local, state, or

national codes.

HUD has added a new subsection to

specify that the IHA must perform a life

cycle cost analysis in the IHA’s

selection of utility combinations.

15. IHA Development Program

(§ 950.260)

Several commenters stated that HUD’s

suggestion in the proposed rule

(§ 950.260(a)(2)) that a development

program should be submitted within 18

months of program reservation date was

inappropriate since IHAs rely on

schedules prepared at the project

coordination meeting to reach

development program submission. HUD

agrees with these comments and has

removed the subsection containing this

suggestion.

In response to general comments for

further streamlining of the process, and

in order to recognize program evolution

to a grant basis, HUD has removed the

requirement for a development program

from the rule. In its place, HUD has

specified the documents that are

actually required prior to the IHA

proceeding with final planning, bid/

proposal solicitation, and construction

start. These documents include a

development cost budget reflecting the

anticipated cost of constructing the

project, certifications of compliance

with program requirements, and project

characteristics that were previously

gleaned from the development program

documents (§ 950.260(a) of the final

rule).

16. Construction and Inspections

(§ 950.265)

One commenter suggested replacing

the term ‘‘program requirements’’ with

‘‘all ACC, statutory, and regulatory

requirements.’’ HUD agrees and has

made the modification.

Several commenters suggested that

HUD should not monitor project

construction if it was unwilling to

perform project inspections. Congress

has charged HUD with the oversight of

appropriated funds. To properly

perform this duty, HUD must monitor

IHA compliance with all ACC, statutory,

and regulatory requirements of the

program, including the IHA’s

administration of its construction

contracts.

Several commenters suggested that

HUD should either do away with the 30

month requirement for reaching

construction start or reduce the time to

24 months. The final rule has

consolidated in § 950.210 all references

to this 30 month period. HUD has

changed the wording of the 30 month

requirement to more closely follow the

language of the statute, which limits

HUD’s ability to cancel a project before

the end of the 30 month period. HUD

has also adopted the suggestion that

construction start should occur within

24 months after the program reservation

date, and has added language that

requires HUD, subject to the availability

of resources, to provide technical

assistance to an IHA that has not

reached construction start within the 24

month time-frame.

In response to numerous suggestions

for overall streamlining of the rule, HUD

has rewritten this section to simplify the

requirements.

17. Correcting Deficiencies (§ 950.280)

HUD received a number of comments

suggesting that HUD should be required

to fund the correction of any design or

construction deficiencies. HUD does not

agree that it is obligated to fund the

correction of all design or construction

deficiencies. Under program

requirements, IHAs are required to have

in place adequate systems to assure new

developments are properly designed

and constructed. As HUD attempts to

remove its controls over IHA

decisionmaking by conveying the

authority to manage its developments, it

would be inconsistent not to convey the

responsibility to adequately manage

those developments, as well. HUD does

maintain the option of funding design or

construction deficiency corrections

when it believes it is appropriate to

provide such funding.

One commenter suggested that the

requirement for HUD approval to spend

existing funds to correct design or

construction deficiencies should be

deleted. HUD agrees that, along with the

responsibility to assure such corrections

are made, the rule should provide the

authority to spend existing funds

appropriately, including remaining

project development funds, operating

receipts, or other funds available to the

IHA. Therefore, HUD has removed the

requirement for its prior approval.

18. Fiscal Closeout (§ 950.285)

HUD has added language to this

section emphasizing the importance of

completing development grants in a

timely manner. Under the limited

oversight procedures now in effect for

Indian Housing development, it is

critical that grants be completed and the

accounts audited as soon as possible

after the date of full availability (DOFA).

19. Reformulation

HUD received several comments

suggesting that a new section be added

authorizing IHAs to reformulate project

funds at any time for any purpose

without prior HUD approval. HUD

provides funds to an IHA to develop a

specified project. Consistent with other

grant programs, if an IHA wishes to

redirect project funds, a program

modification must be proposed and

approved before such reformulation can

proceed. HUD has delegated the

authority to approve reformulations to

its Area ONAPs, which will expedite

processing of requests by IHAs.

D. Subpart D—Operation

1. Admission Policies (§ 950.301)

One commenter stated that

§ 950.301(a)(2)(iii) of the proposed rule

needs to be strengthened to read

‘‘participants or the physical, financial

or environmental aspects of the project’’

to help deal with applicants with a

history of nonpayment or unit damage.

Each IHA has the ability to develop

admission policies that address the

needs in its area. HUD’s goal is to

provide greater discretion to the IHAs
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18179

administering the housing program.

Therefore, HUD does not feel that these

additional regulatory requirements

should be added for all IHAs. However,

each IHA is encouraged to develop

admissions policies to address

individual needs, such as the ability to

deal with applicants with a history of

nonpayment or unit damage.

A commenter stated that the proposed

language ‘‘for not less than 70 percent

of the units’’ in § 950.301(a)(2)(iv) is a

marked change from the earlier draft

figure of 30 percent of the units. The

commenter stated that the 30 percent

figure seems high enough considering

that others have been on the waiting list

for years. The language in the current

Indian housing regulation states that

only 10 percent of non-Federal

preference holders are eligible for

admission in a given year. Section 501

of the National Affordable Housing Act

amended the percentage to allow for 30

percent of non-Federal preference

holders to be eligible for admission. The

language in the proposed rule stated

that the IHA shall develop tenant and

homebuyer selection criteria designed:

‘‘(iv) For not less than 70 percent of the

units made available for occupancy in a

given fiscal year, to give a preference in

the selection of participants who at the

time they are seeking housing

assistance, are involuntary displaced,

living in substandard housing, or paying

more than 50 percent of family income

for rent’’ (Federal preference).

In the final rule, HUD will handle

differently the issue of counting Federal

preferences. The final rule on

Preferences for Admission to Assisted

Housing, published in the Federal

Register on July 18, 1994 (59 FR 36616)

revised the tenant selection preference

provisions. The rule implements a

statutory change that decreases the

number of families that must be

admitted on the basis of qualifying for

a Federal selection preference, and

specifically authorizes the adoption of

local selection preferences by IHAs to be

used in admitting some applicants.

Because of several comments regarding

how to count admissions, the language

in the final rule frames the ‘‘counting’’

of admissions in terms of a limit on the

number of ‘‘local preference’’

admissions that can be made during a

one-year period. Only 30 percent of

annual admissions may be families

selected on the basis of local preference.

Under that rule, a family that qualifies

for a ‘‘Federal preference’’ is not

precluded from being admitted on the

basis of its ‘‘local preference,’’ but the

admission would be counted against the

IHA’s local preference limit, and the

selection is made without regard to that

Federal preference. A more detailed

discussion of these preferences can be

found in the preamble to that final rule.

Changing the percentage would require

Congress changing the statute.

Another commenter recommended

that the language in § 950.301(a)(2)(iv)

‘‘at the time they are seeking housing

assistance’’ be changed to ‘‘at the time

an appropriate housing unit becomes

available for their use,’’ since these two

events could occur at different times. It

would be difficult to justify attaching a

Federal preference to an applicant and

then carrying that applicant for several

months until a unit becomes available,

if the applicant had found decent, safe,

sanitary, and affordable housing in the

interim.

The reference to which this

commenter refers has been revised in

the final rule regarding Preferences for

Admission to Assisted Housing (59 FR

36616, July 18, 1994). That rule

amended § 905.301, and included a

section on verification of preference at

§ 905.304(c)(3). HUD believes that rule

addresses the commenter’s concern

regarding the timing of applicant

verification.

Another commenter stated that

admission requirements continue to get

too complex and difficult to administer.

The commenter stated that the final rule

regarding Preferences for Admission to

Assisted Housing was clear, but that

additional clarification is needed. HUD

understands the concern of this

commenter and has tried to simplify the

regulation while implementing statutory

provisions for admission.

One commenter stated that income

limits should be abolished. Another

commenter requested that HUD reduce

the definitional age for an elderly

person from 62 to 55. However, the

provisions for admission of low-income

families and the age definition for an

elderly person are statutory, and

therefore HUD cannot change them in

this rule. HUD will consider both of

these comments as HUD develops its

legislative proposal for Indian housing.

2. Initial Determination, Verification,

and Reexamination of Family Income

and Composition (§ 950.315)

One commenter stated that

recertifications should only be done

once for elderly. Another commenter

stated that recertification of participants

should be every three years. However,

the United States Housing Act of 1937

states that reviews of family income

shall be made at least annually.

Amending this provision would require

a statutory change.

3. Total Tenant Payment—Rental and

Turnkey III Programs (§ 950.325)

Many commenters objected to the 30

percent of monthly adjusted income

provision in § 950.325(a)(i) of the

proposed rule. Both tribes and IHAs

submitted resolutions objecting to this

provision. Commenters stated that this

provision causes an unreasonable

burden on tenants and does not provide

an incentive to seek gainful

employment. One commenter stated

that the rule promotes dependency on

the Federal Government for welfare

assistance and destroys the initiative for

self-sufficiency. Several commenters

objected that automatically charging 30

percent, regardless of the quality of the

unit, would have a discriminatory

effect, in that it perpetuates poverty, is

a disincentive for viable employment,

and penalizes tribal members who are

struggling to achieve economic

sufficiency.

Many commenters requested a change

in the total tenant payment from 30

percent to 20 percent. Some

commenters requested that the

percentage be lowered for the elderly

only. Another commenter requested that

a flat rent be charged or the IHA be

allowed to charge minimum rents.

Another commenter requested that no

rent be charged for welfare families.

One commenter stated that

§ 950.325(a) should be changed to read

as follows: ‘‘Total tenant payment shall

be the highest of the following, up to the

IHA’s established ceiling rent

(calculated using local income levels,

rents, and economic conditions)

rounded to the nearest dollar.’’

Many commenters recommended a

change to the current ceiling rent policy.

These commenters further stated that

IHAs should be allowed to establish

ceiling rates using local economic

conditions to provide housing for the

working poor at reasonable rates.

Another commenter requested that

ceiling rents be based on fair market

rents for the particular reservation or a

rent ceiling equal to the administrative

fee for Mutual Help housing. The

commenter stated that this would not

conflict with the United States Housing

Act of 1937, as the Mutual Help

administrative fee generally represents

the average monthly amount of debt

service and operating expenses

attributed to a dwelling unit.

HUD received many comments on the

definitions of adjusted income and

annual income. Several commenters

stated that rent should be calculated

based on net income; deductions should

be changed to be comparable to IRS

deductions because of the cost of living
18180 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

increases; medical deductions should

apply to everyone and there should be

a secondary wage earner deduction;

child support payments should be

deducted from the person paying;

elderly families should have a

deduction of $2,500; only one income

should be used when calculating rent;

more deductions should be given for

child care; deductions should be

allowed for child support; an inflation

factor should be built into the

deductions; no raises in payments if

income increases; and deductions

should be provided for investments.

HUD understands that the 30 percent

rule and the definition of annual and

adjusted income are of major concern in

the Indian housing rental program. The

United States Housing Act of 1937

establishes the amount of payment for

rental housing and defines the term

‘‘income’’ and ‘‘adjusted income.’’

Therefore, without a statutory change,

HUD cannot address any of these

requested changes. As indicated in other

parts of this preamble, HUD is

considering other regulatory changes for

the public and Indian housing

programs, and is preparing a legislative

proposal for the Indian housing

program. HUD will consider all of the

comments above as it develops the

proposal.

4. Rent and Homebuyer Payment

Collection Policy (§ 950.335)

A commenter stated that payment and

collection policies should comply with

ACC, statutory, and regulatory

requirements, and not HUD guidelines.

HUD agrees with this comment and has

revised the language in this section of

the final rule.

5. Grievance Procedures and Leases

(§ 950.340)

A commenter stated that (a)(iii) of the

proposed rule should be struck, or HUD

should at least explain that such a party

may be an official or employee of the

IHA. The reference from the commenter

was incorrect, and therefore HUD is

unable to determine the nature of the

commenter’s concerns. HUD would like

to note that the language in

§ 950.340(a)(1) is statutory.

A commenter stated that

§ 950.340(a)(3)(ii) should be changed.

The basic elements of due process

should recognize Indian Civil Rights Act

(ICRA) exceptions for tribal customs and

practices. HUD finds it unnecessary to

amend the rule to recognize exceptions

from the Indian Civil Rights Act (ICRA)

(25 U.S.C. 1301–1303), because the rule

currently states in § 950.340(a)(1) that

each IHA shall adopt grievance

procedures that are appropriate to local

circumstances and that comply with the

ICRA, if applicable.

A commenter stated that the phrase

‘‘related to the termination’’ in

§ 950.340(a) and (b) should be changed

to ‘‘used’’ in the termination or eviction.

HUD could not locate this phrase in

subsection (a). HUD is unable to change

the wording in subsection (b)(6) because

it is a statutory requirement.

One commenter stated that this

section attempts to give HUD the

authority to determine whether tribal

and state termination or eviction

procedures provide the basic elements

of due process. The commenter

continued that since HUD has no

authority over tribal sovereignty rights

to determine its own eviction and

termination procedures, this section

should be removed from the rule.

However, HUD’s ability to determine

the basic elements of due process is

statutory, and therefore this section

remains unchanged.

A commenter found a typographical

error in § 950.340(b)(6) in the proposed

rule. The provision should read

‘‘Specify that with respect to any

notice.’’ HUD has corrected the

typographical error in the final rule.

6. Fire Safety (§ 950.346)

A commenter recommended that this

section be revised to change references

to ‘‘hard-wire smoke detectors’’ to

‘‘hard-wire with battery back-up smoke

detectors,’’ and that this section should

reflect the need for fire extinguishers in

each unit. The commenter indicated

that many Mutual Help homes have

only battery operated smoke detectors,

and that many of them are inoperable.

The commenter stated that IHAs should

be allowed to receive funding to bring

such units up to code.

HUD received a second comment

regarding the benefits of a residential

range top suppression system that is

capable of detecting a cooking grease

fire originating on the range top,

extinguishing the fire, and preventing

reignition. The commenter provided

sample specifications for the product for

inclusion in the rule. The Fire

Administration Authorization Act of

1992 (the Act) (Pub. L. 102–522,

approved October 26, 1992) established

applicable Federal standards for fire

safety, and these standards are reflected

in this rule. HUD considers it

appropriate to reflect the minimum

Federal requirements mandated by the

Act and does not plan to establish more

stringent requirements in this rule. To

the extent that the State, tribal, or local

jurisdiction in which the units are

located has more stringent fire

prevention and control standards, the

more stringent State, tribal, or local

standards will govern. Further, HUD

wishes to point out that funding is

available under both the CIAP and CGP

programs for fire safety needs. Under

the competitive CIAP application

process, work items related to fire safety

are prioritized for funding along with

emergency work items.

E. Subpart E—Mutual Help

Homeownership Opportunity Program

1. Scope and Applicability (§ 950.401)

One commenter asked what

regulations exist for Mutual Help (MH)

units placed under ACC before March 9,

1976. There are no regulations for the

MH units placed under ACC prior to

March 9, 1976. The document governing

that program is the Mutual Help and

Occupancy (MHO) Agreement.

2. Special Provisions for Development

of an MH Project (§ 950.413)

One commenter stated that paragraph

(d) in this section of the proposed rule

should be revised since it allows HUD

to decide not to proceed with the

development of a MH project. The

commenter stated that this provision is

inconsistent with the goal of the rule—

HUD is giving IHAs greater

responsibility, yet it is still reserving

control and discretion as to how IHAs

carry out the housing program. In

response to this comment, HUD has

removed this entire section. The

provisions of § 950.135, Administrative

capability, will apply prior to an action

that would result in cancellation of a

development by HUD, and the IHA

would be involved and given every

opportunity to respond and appeal if

necessary.

3. Selection of MH Homebuyers

(§ 950.416)

One commenter requested that the

Federal preference mentioned in

§ 950.416(d) be removed from this

section because IHAs should select

homebuyers with the ability to meet the

obligations of the program, and Federal

preference is in conflict with the ability

to meet homebuyer obligations.

However, as the commenter recognized,

the Federal preference is a statutory

requirement that HUD is unable to

remove at this time. As mentioned

previously in this preamble, the Office

of Native American Programs is

developing a legislative proposal and

will consider this comment at that time.

One commenter requested that HUD

revise § 950.416(e) on principal

residency to emphasize that the

determination of whether the home is

necessary for the family’s livelihood or
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18181

for cultural preservation be solely that

of the IHA. In response to this comment,

HUD has changed the wording on the

principal residency as requested.

One commenter asked HUD to

streamline this section and handle many

of these requirements in a handbook or

by Board policy. HUD has reviewed this

section and streamlined where possible;

however, many of the requirements in

this section are statutorily based and

therefore HUD cannot change them.

One commenter requested the

inclusion of a discretionary preference

that the local IHA would apply to

handle unique situations in their area.

On July 18, 1994 (59 FR 36616), HUD

published a final rule in the Federal

Register on Preferences for Admission

to Assisted Housing. That rule

specifically authorizes the adoption of

local selection preferences by housing

authorities in admitting some

applicants. This rule permits IHAs to

adopt preferences that respond to local

housing needs and priorities after

conducting public hearings. See

§§ 950.301 and 950.303 of this final

rule.

4. MH Contribution (§ 950.419)

One commenter suggested that the

MH contribution requirement should be

at the option of the IHA. Another

commenter requested that land cost be

determined individually by each tribe

through an appraisal with a cap of

$2500. The requirement for a MH

contribution of at least $1500 is

statutory, and therefore HUD cannot

remove the requirement from the rule.

In response to these comments,

however, HUD has revised this section

to reflect the statutory requirement that

the MH contribution be at least $1500,

rather than a maximum of $1500, to

allow for additional MH contributions

by the homebuyer.

One commenter requested that a

subsequent homebuyer be given credit

for land donated by the tribe. HUD has

recently provided guidance to the Area

ONAPs that clarifies this section of the

rule. A subsequent homebuyer can be

given credit for a land contribution by

a tribe and not be required to provide

an additional MH contribution.

5. Inspections, Responsibility for Items

Covered by Warranty (§ 950.425)

One commenter recommended that

§§ 950.425(a) (1) and (2) be revised to

clarify that latent defects would be

covered even after the warranty period.

In response to this comment, HUD has

streamlined this section, and this issue

is now covered under the development

section (§ 950.270(a)), in which HUD

believes the language is clearer.

6. Homebuyer Payments—Post-1976

Projects (§ 950.426)

One commenter requested that the

percentage of income used for

determining homebuyer payments be

changed from 15 percent to 12 percent.

Another commenter requested that the

percentage for elderly be changed to 10

percent. Another commenter stated that

MH should have fixed payments, which

would eliminate the need for

recertification. The requirement to

charge MH participants 15 to 25 percent

of income is statutory, and HUD cannot

change it through regulation. However,

as mentioned above, HUD’s Office of

Native American Programs will consider

these comments when it develops its

legislative proposal for Native American

Programs.

7. Maintenance, Utilities, and Use of

Home (§ 950.428)

HUD received two comments

regarding § 950.428(c) on inspections.

One commenter requested that HUD

eliminate the need for inspections.

Another commenter stated that

inspections should be based on the

amount of equity in a homebuyer’s

account. In response to these comments,

HUD has changed the requirement in

the final rule for MH inspections. The

language in the final rule states that the

IHA shall conduct inspections of each

home on a schedule developed by the

IHA that ensures that the home is

maintained in a decent, safe, and

sanitary condition.

One commenter requested that the

language in § 950.428(d) of the proposed

rule be revised since the correction of

warranty items is not the same as

providing maintenance, and the two

concepts should be distinct. HUD

agrees, and in response to this comment

HUD has revised this language.

HUD received two comments on

§ 950.428(g). One commenter stated that

an IHA should be able to use Monthly

Equity Payments Account (MEPA) funds

for improvements without a waiver.

Another commenter stated that the IHA,

not HUD, should determine how MEPA

funds can be used. This rule does not

require an IHA to obtain approval or a

waiver from HUD in order to allow a

homebuyer to use MEPA funds for

betterments and additions. The IHA also

has the ability to determine whether the

homebuyer needs to replenish the

MEPA. Therefore, HUD has made no

changes.

8. Operating Subsidy (§ 950.434)

One commenter requested a change in

the operating subsidy for collection

losses so that the IHA could have funds

in advance to repair vacant units

because of the lack of reserves. While

HUD never intended to provide funds

for needed repairs to a vacant unit after

the repairs were completed, that was

often the case due to the budget process

and the need for the IHA to follow

through on all collection efforts prior to

receiving funds. HUD has modified the

language in the final rule and will

provide additional guidance on the

process to the Area ONAPs so that funds

can be provided to the IHA as soon as

possible.

Two commenters requested additional

subsidy in the MH program. One

commenter requested operating subsidy

for units converted for self-sufficiency

or anti-drug programs. Another

requested subsidy to pay for

administrative costs involved with

using the MEPA for low-income housing

purposes. However, HUD finds that the

administrative charge in the MH

program should be used to cover the

minimal costs associated with the

programs mentioned above.

One commenter requested that

operating subsidy be provided for

counseling in the rental program and

that all subsidy be provided at 100

percent. HUD provides operating

subsidy for the rental program through

the Performance Funding System, and

the IHA can budget for staff to provide

counseling in the rental program if the

budget can support this service. HUD

recognizes the difficulty that IHAs

experience when subsidy is provided at

less than 100 percent. However, the

amount of subsidy is subject to annual

congressional appropriations, and

therefore HUD is unable to guarantee

funding at 100 percent.

Several commenters requested that

HUD take into account logistical

concerns and IHA size when developing

a formula for counseling and training

funds. HUD agrees with the comments

and will take these factors into account

when developing the plan for providing

operating subsidy funding for

counseling and training. HUD will

consult IHAs prior to implementation.

9. Homebuyer Reserves and Accounts

(§ 950.437)

Several commenters stated their

support for the change to use MEPA

funds for low-income housing purposes.

HUD received several other comments

on this regulatory change. One

commenter suggested that the use of

MEPA in § 950.437(b)(2)(ii) should be

limited based on home inspections. This

commenter stated that if there are

maintenance items that need to be

addressed, the IHA should not be

allowed to use the MEPA. Another
18182 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

commenter requested that the IHA be

able to use MEPA funds for alternative

types of housing aimed at middleincome Indian families. Another

commenter requested more

independence from HUD rules in

§ 950.437(b), but this commenter

provided no additional information.

HUD also received comments requesting

clarification of the requirements for

resident notification, eligible uses, and

developing a formula for the percentage

that can be used, as well as a request to

change the definition of MEPA.

HUD appreciates the comments

received on this major regulatory

change. HUD developed this section of

the proposed rule based on public

comment during the Native American

consultation process in order to give

flexibility to IHAs that wish to use the

MEPA. IHAs will be required to obtain

approval for use of the MEPA and to

maintain a sufficient reserve of equity

for homebuyers in need of maintenance.

Hopefully, this will address the

concerns of the commenters regarding

which IHAs will be eligible to use the

MEPA for other low-income housing

purposes.

With regard to the comment on

expanding the use of the MEPA to

middle-income families, HUD has

determined that the use of MEPA funds

must be limited to low-income housing

purposes as long as the development is

under the Annual Contributions

Contract.

HUD plans to address many of the

issues such as eligible uses in ONAP

guidebooks. In streamlining the

regulation, HUD found that it was best

to handle policy questions in this way.

It is also HUD’s goal to give IHAs the

ability to make decisions on the amount

of MEPA available for use and the

amount needed for homebuyer

maintenance if they permit homebuyers

to use the reserve.

One commenter stated that IHAs

should not be required to pay interest

on MEPA accounts if the funds are

being used for other low-income

housing purposes. The commenter

requested clarification on how the IHA

would earn or pay interest to

homebuyers. The current Mutual Help

and Occupancy Agreement between the

IHA and the homebuyer states that

interest on equity accounts will be

provided annually. Due to this

provision, HUD has not changed the

regulation as requested.

One commenter requested that the

first $5,000 of MH equity be used as a

nonrefundable downpayment. HUD

believes that a requirement for a

downpayment other than the $1,500 MH

contribution would violate the intent of

the United States Housing Act of 1937.

One commenter requested that HUD

retain the Voluntary Equity Payment

Account (VEPA). However, HUD

removed the requirement for the VEPA

to streamline the MH program. IHAs

had indicated that the account was

seldom used. If an IHA wants to

continue to use a voluntary account,

they have the ability to do so. However,

without a VEPA, a homebuyer could

continue to make additional monthly

payments that would be deposited in

the Monthly Equity Payment Account

and be used to pay off a home in a

shorter period of time, similar to the

current VEPA.

10. Purchase of Home (§ 950.440).

Several commenters indicated that

they supported the change that allows

the IHA to establish the purchase price

schedule. One commenter requested

national uniformity based on

development cost. Another commenter

requested clarification on whether the

new regulations regarding purchase

price would apply to existing homes. In

response to the comments received,

HUD will implement the provisions of

§ 950.440(b) of the proposed rule, which

provides for the IHA to set the purchase

price for initial and subsequent

homebuyers, in the final rule. In

response to whether the rule is

retroactive, the IHA can implement the

changes in the final rule for current

homebuyers with their consent. The

current MHO Agreement may differ on

several topics. Since this is the contract

between the homebuyer and the IHA,

homebuyer consent would be required.

HUD received several other comments

regarding § 950.440. One commenter

requested that an IHA be allowed to

convey a unit and still perform

modernization after that unit is

conveyed, if prior to conveyance that

unit was on a comprehensive

improvement assistance program (CIAP)

or 5 year Comp Grant comprehensive

plan. Another commenter requested that

IHAs be allowed to perform only

emergency work on a paid-off unit if

there was a repayment plan for the

delinquency. Another commenter stated

that they agree with the changes, but

they are concerned about the operating

cost once the unit is paid off.

In response to these comments, HUD’s

Office of General Counsel (OGC) was

asked to review the issue once more.

OGC stated that they believe that the

statute can be read to allow

modernization work to be done on

units, title to which have been

conveyed, but which were approved for

modernization funding prior to

conveyance. However, once conveyed,

the unit is not eligible for future

assistance. The language in the

regulations at 950.440 and 950.602 will

be revised accordingly. In response to

the comment that IHAs be allowed to

perform only emergency work on a

paid-off unit if there is a repayment plan

for a delinquency, HUD believes that

modernization may be required, either

by statute or regulation, for these units,

and therefore HUD has not changed the

language in the rule. However, the IHA

does have the ability to determine its

priorities with respect to modernization

work for all units and could limit the

work to emergency items. In response to

the comment regarding operating costs,

until a unit is conveyed, the homebuyer

is responsible for monthly payments in

accordance with the Mutual Help and

Occupancy Agreement. Therefore, the

administration charge should still be

collected to cover operating costs until

the unit is conveyed.

One commenter requested that zero

interest be applied to rental, Turnkey III,

and Old Mutual Help. HUD issued

guidance in Notice PIH 91–29, dated

June 18, 1991, which provides for zero

interest in the Old Mutual Help

Program. HUD has also modified the

Turnkey III rule at § 950.525 to provide

for zero interest. It is not necessary to

change the interest in the rental

program, since all debt relating to the

rental program has been forgiven

through the loan forgiveness legislation,

and since tenants are not charged

interest with their housing payments.

One commenter requested that

§ 940.440(e)(6) be changed to allow an

IHA to use proceeds from the sale for

middle-income families. Recently,

HUD’s Office of General Counsel stated

that there are no statutory restrictions

that would prohibit the amendment of

an Administrative Use Agreement to

allow proceeds from the sale of

homeownership units to be used for

other housing purposes, including

purposes other than for lower income

housing. However, any proceeds of sale

must still be used in connection with

low- and very low-income persons.

Therefore, HUD has not changed the

language in the rule.

11. Termination of MHO Agreement

(§ 950.446)

One commenter stated that

§ 950.446(f)(3) suggests that the IHA is

the entity that evicts. This commenter

recommended that this section should

instead indicate that the IHA initiates an

eviction action. HUD agrees with this

comment and has made the change.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18183

12. Succession (§ 950.449)

One commenter stated that this is

perhaps the most important and

significant change to the Indian Housing

regulations. Another commenter

supported this change and stated it was

in agreement with the IHA. Another

commenter stated that ‘‘at the very least,

there should be a provision that

provides that the designation of a

successor by the homebuyer must be

approved by tribal government.’’

Although HUD supports tribal

involvement in the program, HUD

believes that the homebuyer should

determine the successor to their unit

whenever possible, subject to any

restrictions by the tribe on succession to

the land.

13. Conversion (§§ 950.445 and 950.458)

HUD received several comments on

the conversion process. One commenter

requested that the requirement for an

actual development cost certificate

(ADCC) be eliminated, since this is a

lengthy process and holds up

conversions. Another commenter

requested that HUD eliminate the

requirement that a conversion

application be in a form required by

HUD. Another commenter requested

that the MH contribution not be

required in a conversion and that the

lease process should not hold up a

conversion. There was a general

comment that HUD does not allow

conversion.

In response to these comments, HUD

has eliminated the need for an ADCC

prior to conversion and the requirement

that the conversion package be in a form

required by HUD. HUD has not changed

the requirement for a MH contribution,

since it is a statutory requirement for

every MH unit. However, the

contribution can be in the form of land.

HUD encourages the use of the

conversion process whenever it is

beneficial for an IHA. If an IHA is

having difficulty with the conversion

process, it should contact the Office of

Native American Programs in

Washington, D.C., at the address

specified in the ‘‘For Further

Information Contact’’ section, above.

F. Subpart F—Self-Help Development in

the Mutual Help Homeownership

Opportunity Program

HUD received no comments on this

subpart. However, HUD has made

additional revisions in the final rule to

streamline this program.

G. Subpart G—Turnkey III Program

HUD only received one comment on

the Turnkey III subpart of the rule. This

commenter requested that a zero interest

rate apply to this program, as it does

with Mutual Help Homeownership

Opportunity Program. HUD had made

this change in the proposed rule at

§ 950.525, and this change is included

in this final rule.

Due to the fact that there are currently

only 18 IHAs managing the Turnkey III

Program, and in response to general

public support for additional

streamlining of the entire regulation,

HUD has attempted to further reduce

the regulatory requirements of this

program.

H. Subpart H—Lead-Based Paint

Poisoning Prevention

With this final rule, HUD makes no

changes to the existing regulations for

lead-based paint poisoning prevention,

other than to move them from part 905

to new part 950. However, HUD is

republishing the existing regulations in

this rule in an effort to consolidate all

the Indian housing regulations.

I. Subpart I—Modernization

1. Comprehensive Improvement

Assistance Program and Comprehensive

Grant Program

HUD received many comments

regarding the changes proposed for the

Comprehensive Improvement

Assistance Program (CIAP) and

Comprehensive Grant Program (CGP).

The comments were overwhelmingly

supportive of HUD’s efforts to simplify

the programs. Many of the changes

requested on CGP were implemented in

the Public and Indian Housing

Amendments to the CGP final rule,

which was published in the Federal

Register on August 30, 1994 (59 FR

44810).

One commenter indicated that CIAP

should be an entitlement based on age

and number of units, and that the

formula must take into account small

IHAs. However, the United States

Housing Act of 1937 specifically

provides for two different

modernization programs based on

housing authority size: a formula

funded program for those with 250 or

more units, and a discretionary

application program for those with

fewer than 250 units. Therefore, HUD

could not implement this

recommendation without a legislative

amendment.

Another commenter recommended

that CIAP have a five-year plan, like

CGP. However, as stated above, funding

of a CIAP is made through a competitive

application process that does not allow

forecasting funding availability for

future years, as does the CGP. Although

HUD encourages IHAs to plan for

modernization needs, a five-year plan

would not serve the same purpose as in

the CGP.

One commenter indicated that CIAP

funds for IHAs should be a separate setaside from Public Housing. Currently,

there is only one appropriation for

Public and Indian Housing. Therefore,

implementing this recommendation

would require a legislative change.

A commenter suggested that the

process of moving CIAP/CGP funds to

resident organizations should be in

regulations. However, HUD finds that

regulating a process for transferring

funds to resident organizations would

decrease local flexibility, and therefore

HUD has not implemented this

recommendation.

2. Special requirements for Turnkey III

and Mutual Help developments

(§ 950.602)

Many commenters made

recommendations regarding this section

of Subpart I and a cross reference in the

Mutual Help Homeownership

Opportunity Program, Subpart E,

§ 950.440. Both references discuss the

use of modernization funds for paid-off

and conveyed units. In the final CGP

rule (published in the Federal Register

on August 30, 1994 (59 FR 44810)),

HUD removed the regulatory

prohibition against modernizing Mutual

Help units that are paid off but not

conveyed. The preamble to that rule

stated:

The Department believes that the only

regulatory restrictions on the modernization

of paid-off Mutual Help units should be that:

title has not been conveyed to the

homebuyer; where the homebuyer has a

delinquency at the end of the amortization

period, non-emergency modernization work

shall not be done until all delinquencies are

repaid; and, the units shall be identified in

the Comprehensive Plan (including the

Physical Needs Assessments and Five-Year

Action Plan). The prohibition against

performing modernization work on conveyed

units is based on a determination by the

Department’s Office of General Counsel that

statutory authority for the expenditure of

modernization funds is limited to existing

public housing units. Once title is conveyed

and the unit is no longer covered by the ACC,

the unit is no longer a public housing unit

and there is no legal authority for the

expenditure of modernization funds

provided under section 14 of the Act. IHAs

that wish to modernize conveyed Mutual

Help units must obtain funding from another

source; e.g., proceeds from the sale of

homeownership units or Bureau of Indian

Affairs Housing Improvement Program funds.

(59 FR 44811).

A group of IHAs consolidated their

comments and offered two alternative

recommendations for this rule’s

provisions on conveyed units at
18184 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

§§ 950.602 and 950.440. They

recommended that IHAs be allowed to

convey a unit and still perform

modernization after the unit is

conveyed, if prior to conveyance the

work was in an approved CIAP

application or CGP Five-Year Plan, and

the work is done within five years.

Alternatively, they recommended that

IHAs have the option to delay

conveyance for up to five years to

conduct modernization, but only with

the written consent of the homebuyer.

Another IHA commented that

conveyed units should be eligible for

modernization work. The IHA argued

that first priority should go to

homebuyers who have shown good faith

by paying for their homes and now have

the deeds to the homes, and not to those

who, because of a delinquent status,

have not received their conveyance

documents. The IHA recommended that

in the renovation of paid-off units, IHAs

should have the discretion to decide

which units to modernize, whether the

unit has been conveyed or not.

Two IHAs recommended that HUD

allow old Mutual Help and Turnkey III

units that have been conveyed to be

brought back into the programs for the

purpose of comprehensive

modernization. The IHAs considered

the proposed change to be unfair to

homebuyers in paid-off units that were

not included in the Comprehensive

Plans because paid-off units were

ineligible under the original regulation.

Many of those units were conveyed

before the proposed rule was published,

which provided that units that are paid

off but not conveyed are eligible for

modernization. The IHAs argued that

the conveyed units deserve the same

consideration and have the same

physical improvement needs, such as

handicapped accessibility, lead-based

paint testing, and meeting current

codes.

As discussed in the preamble

language for Subpart E, the Office of

General Counsel (OGC) has advised that

the statute can be read to allow

modernization work to be done on

units, title to which have been

conveyed, but which were approved for

modernization funding prior to

conveyance. Therefore, HUD has revised

the rule in response to the comments

submitted on this issue. Although title

can be conveyed once the unit has been

approved for modernization funding,

OGC recommends that IHAs delay

conveyance until modernization work is

completed on a Mutual Help unit.

In response to the comments

requesting that modernization be

eligible for a Mutual Help unit that has

been conveyed but not approved for

modernization funding prior to

conveyance, the prohibition is based on

the determination that statutory

authority for the expenditure of funds is

limited to existing public housing units.

Once title is conveyed and the unit is no

longer owned by an IHA and covered by

the ACC, the unit is no longer a public

housing unit, and there is no legal

authority for the expenditure of

modernization funds provided under

section 14 of the United States Housing

Act of 1937.

Two commenters recommended that

when units become paid off, the

operating costs should be charged to the

Comprehensive Grant Program. Another

commenter recommended that the rule

be revised to specify clearly that during

the period after a unit becomes paid off,

until it is modernized and title is

conveyed, the homebuyer is responsible

for the administration charge. In

response to the first two comments, the

United States Housing Act of 1937

requires that the homebuyer make

monthly payments of at least an

administration charge to cover monthly

operating expenses on the dwelling. The

second commenter was correct in the

statement that the administration charge

shall be made by a homebuyer until

conveyance. HUD has included

language to clarify this requirement in

§ 950.440 of the rule.

3. Contracting Requirements (CIAP)

(§ 950.642) and Conduct of

Modernization Activities (CGP)

(§ 950.681)

One commenter stated that in order to

assist new contractors in getting

established an IHA should be allowed to

give preference to new contractors and

pay their licensing and bonding fees. A

change to the contracting requirements

would conflict with 24 CFR part 85,

which contains the government-wide

administrative requirements for grants.

Paying licensing and bonding fees

would give an unfair advantage to new

contractors and would not provide fair

and open competition as required by

Part 85.

4. Eligible Costs (§ 950.666)

One commenter agreed with the

increase from 10 percent to 20 percent

in the cost limitation on management

improvements in § 950.666(m)(2), but

indicated that the cost limitation on

administrative costs should also be

increased from 7 percent to 10 percent.

HUD appreciates the comment in

support of the change in the cost

limitation for management

improvement. The cost limitation on

administrative costs was increased from

7 percent to 10 percent of the annual

grant in the CGP final rule published in

the Federal Register on August 30, 1994

(59 FR 44810), and effective September

29, 1994. That change is also reflected

in this rule.

One commenter stated that the

proposed rule is too restrictive with

respect to room additions needed for

handicapped accessibility. Three

commenters recommended that the rule

include additions to the living space in

a dwelling unit as an eligible work item

under CGP and CIAP. HUD

implemented this recommendation for

the CGP final rule cited above at

§ 905.666(c). That rule provides that

‘‘[a]dditional dwelling space may be

added to existing units.’’ A similar

change has been made in this CIAP final

rule at § 950.615(b).

5. Allocation of Assistance (§ 950.669)

A regional association of IHAs

commended the proposed rule for

allowing IHAs to hold public hearings

earlier in the year using the prior year’s

formula amount for planning purposes.

HUD appreciates the comment in

support of this change.

6. Comprehensive Plan (Including FiveYear Action Plan) (§ 950.672).

One commenter anticipated a problem

with unrealistically raising expectations

by consulting with the residents on all

five years of the Comprehensive Plan.

The commenter recommended limiting

resident participation to years when

funds are available. However, section 14

of the United States Housing Act of

1937 requires that residents affected by

the planned activities be given the

opportunity to review and provide their

input. This rule (§ 950.672(b)(5))

requires that at the annual Public

Hearing the IHA present ‘‘information

on the Comprehensive Plan/Annual

Submission and the status of prior

approved programs.’’

7. HUD Review and Approval of

Comprehensive Plan (Including FiveYear Action Plan) (§ 950.675).

One commenter wanted to be able to

maintain flexibility to move work items

between years of the CGP Action Plan

and have the ability to switch line items

within the original scope of work. HUD

has included the ability to undertake

any of the work identified in any of the

other four years of the latest approved

Five-Year Action Plan, current Annual

Statement, or previously approved CIAP

budgets in § 950.675(c) of the CGP final

rule cited above.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18185

J. Subpart J—Operating Subsidy

1. General Comments.

One commenter requested that the

calculation for the PFS be changed

because it is too complicated. Another

commenter stated that the PFS should

be designed specifically for IHAs. This

commenter suggested that HUD should

initiate a national study on PFS and

how to redesign it. HUD recognizes the

concerns regarding the PFS and how it

relates to the Indian Housing program.

However, any change in the PFS would

require statutory and/or regulatory

changes. At this time, HUD is studying

the entire Indian Housing program. In

this process, HUD will address any

recommendation for change in this area.

Another commenter stated that IHAs

should be provided with additional

subsidy to cover the costs of

implementing part 85. However, the

PFS is designed to cover administrative

costs of a well-managed IHA. In the

Mutual Help program, the

administration charge is used to cover

an IHA’s administrative expenses. There

are no additional congressional

appropriations to cover these costs, and

therefore HUD cannot change the rule to

accommodate this request.

2. Other Costs (§ 950.720).

A commenter stated that additional

operating subsidy should be provided

for user fees for the Mutual Help

program. Section 122(c) of the Housing

and Community Development Act of

1992 amended Section 203 of the Indian

Housing Act of 1988 (Pub. L. 100–358,

approved June 29, 1988) to provide user

fees to municipalities specifically for

each rental housing unit. The

amendment did not include Mutual

Help, and a legislative change would be

necessary to provide this funding.

3. Operating Reserves (§ 950.740)

One commenter requested that HUD

maintain the requirement for a

maximum operating reserve in the

rental program. However, HUD is

making efforts to streamline regulations

and give control of project operations to

IHAs. This includes the determination

by an IHA of the amount of reserves

needed for efficient program operation.

For that reason, HUD has eliminated the

requirement for the maximum operating

reserve in both the rental and Turnkey

III programs.

4. Operating Budget Submission and

Approval (§ 950.745)

A commenter recommended that HUD

revise the Handbook early in Fiscal Year

(FY) 1995 to implement the budget

submission change. On October 4, 1994,

HUD issued HUD Notice 94–72, which

implemented the revised procedures

regarding operating budget submission.

HUD has also modified this rule slightly

to reflect the budget submission

changes.

K. Subpart K—Energy Audits, Energy

Conservation Measures, and Utility

Allowances General Changes

1. General Comment

HUD received a comment suggesting

that this entire section should be

simplified, and it should reflect less

HUD reviews and approvals. In

response to this comment, HUD has

reviewed the section and streamlined

when possible. HUD has also removed

many of the reviews and approvals

mentioned by the commenter.

2. Energy Performance Contracts

(§ 950.825)

One commenter requested that the

word ‘‘shall’’ in the following sentence

of § 950.825(a) be removed: ‘‘Energy

performance contracting shall be

conducted using one of the following

methods of procurement * * *.’’

However, removal of the word ‘‘shall’’

would eliminate the need to conduct

energy audits. HUD finds that its

policies in this section support national

energy conservation goals, and the

elimination of the audits would not

meet HUD’s goals of reducing energy

consumption or operating costs.

L. Subpart L—Operation of Projects

After Expiration of Initial ACC Term

With this final rule, HUD makes no

changes to the existing regulations for

the operation of projects after the

expiration of the initial ACC term, other

than to move them from part 905 to new

part 950. However, HUD is republishing

the existing regulations in this rule in an

effort to consolidate all the Indian

housing regulations.

M. Subpart M—Disposition or

Demolition of Projects

HUD received no comments on this

subpart. HUD had taken steps to

streamline this subpart in the proposed

rule, and has made no additional

changes in this final rule.

N. Subpart N—Miscellaneous

Subpart N was incorporated into

subpart J (§ 950.772) of the final rule.

O. Subpart O—Resident Participation

and Opportunities General Provisions

A final rule for the Public and Indian

Housing Amendment to the Tenant

Participation and Tenant Opportunities

in Public and Indian Housing was

published in the Federal Register on

August 24, 1994 (59 FR 43622). With

today’s final rule, HUD makes no

changes to the Resident Participation

and Opportunities regulations, other

than to move them from part 905 to new

part 950. However, HUD is republishing

the existing regulations in today’s rule

in an effort to consolidate all the Indian

housing regulations.

P. Subpart P—Section 5(h)

Homeownership Program

A final rule for the Section 5(h)

Homeownership Program for Public and

Indian Housing was published in the

Federal Register on November 10, 1994

(59 FR 56354). With today’s final rule,

HUD makes no changes to the Section

5(h) Homeownership regulations for

Indian housing, other than to move

them from part 905 to new part 950.

However, HUD is republishing the

existing regulations in today’s rule in an

effort to consolidate all the Indian

housing regulations.

Q. Subpart R—Family Self-Sufficiency

HUD received no comments on this

subpart. As stated in the proposed rule,

HUD made very few changes to the

regulation implementing the FSS

program because the current regulation

reflects the statutory provisions of

section 23 of the United States Housing

Act of 1937. HUD has revised the final

rule to eliminate definitions that are

included in § 950.102.

IV. Other Matters

Finding of No Significant Impact

At the time of the development of the

proposed rule, a Finding of No

Significant Impact with respect to the

environment was made in accordance

with HUD regulations at 24 CFR part 50

that implement section 102(2)(C) of the

National Environmental Policy Act of

1969 (42 U.S.C. 4332). The Finding of

No Significant Impact remains

applicable to this final rule and is

available for public inspection and

copying during regular business hours

(7:30 a.m. to 5:00 p.m. weekdays) in the

Office of the Rules Docket Clerk, Room

10272, 451 Seventh Street, S.W.,

Washington, D.C. 20410.

Regulatory Flexibility Act

The Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.

605(b)), has reviewed this rule before

publication and by approving it certifies

that this rule does not have a significant

economic impact on a substantial

number of small entities. The rule

makes a number of amendments to the

Indian Housing Consolidated Program

regulations to simplify program
18186 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

processes, reduce the number of

regulatory requirements, and to provide

more flexibility to local tribal and

Indian housing authority officials in the

administration of the Indian Housing

program.

Executive Order 12612, Federalism

The General Counsel, as the

Designated Official under section 6(a) of

Executive Order 12612, Federalism, has

determined that the policies contained

in this rule will not have substantial

direct effects on States or their political

subdivisions, or the relationship

between the Federal Government and

the States, or on the distribution of

power and responsibilities among the

various levels of government. As a

result, the rule is not subject to review

under the order.

Executive Order 12606, the Family

The General Counsel, as the

Designated Official under Executive

Order 12606, The Family, has

determined that this rule does not have

potential for significant impact on

family formation, maintenance, and

general well-being, and thus is not

subject to review under the Order. No

significant change in existing HUD

policies or programs will result from

promulgation of this rule, as those

policies and programs relate to family

concerns.

Regulatory Agenda

This rule was listed as sequence

number 1894 in HUD’s Semiannual

Regulatory Agenda published on

November 14, 1994 (59 FR 57632,

57638) in accordance with Executive

Order 12866 and the Regulatory

Flexibility Act.

Catalog of Domestic Assistance

The Catalog of Domestic Assistance

numbers for the programs affected by

this rule are 14.146, 14.147, 14.850,

14.851, 14.852, and 15.141.

List of Subjects

24 CFR Part 905

Aged, Energy conservation, Grant

programs—housing and community

development, Grant programs—Indians,

Indians, Homeownership, Individuals

with disabilities, Lead poisoning, Loan

programs—housing and community

development, Loan programs—Indians,

Low and moderate income housing,

Public housing, Reporting and

recordkeeping requirements.

24 CFR Part 950

Aged, Grant programs—housing and

community development, Grant

programs—Indians, Disability,

Homeownership, Indians, Low and

moderate income housing, Public

housing, Reporting and recordkeeping

requirements.

Accordingly, and under the authority

of 42 U.S.C. 3535(d), title 24 of the Code

of Federal Regulations is amended as

follows:

PART 905—[REMOVED AND

RESERVED]

1. Part 905 is removed and reserved.

2. Part 950 is added to read as follows:

PART 950—INDIAN HOUSING

PROGRAMS

Subpart A—General

Sec.

950.101 Applicability and scope.

950.102 definitions.

950.110 Assistance from Indian Health

Service and Bureau of Indian Affairs.

950.115 Applicability of civil rights

requirements.

950.117 Displacement, relocation, and

acquisition.

950.120 Compliance with other Federal

requirements.

950.125 Establishment of IHAs pursuant to

State law.

950.126 Establishment of IHAs by tribal

ordinance.

950.130 IHA Commissioners who are

tenants or homebuyers.

950.135 Administrative capability.

Subpart B—Procurement

950.160 Procurement standards.

950.165 Methods of procurement.

950.170 Other requirements applicable to

development contracts.

950.172 Wage rates.

950.175 Indian preference requirements.

950.190 Insurance.

950.195 Lead-based paint liability

insurance coverage.

Subpart C—Development

950.200 Roles and responsibilities of

Federal agencies.

950.205 Allocation.

950.207 Eligibility.

950.210 Authority for proceeding without

HUD approval.

950.215 Production methods.

950.220 Total development cost.

950.225 Application.

950.227 Initial development grant approval

and ACC execution.

950.229 Expenditure of funds.

950.231 Project coordination.

950.235 Site selection criteria.

950.240 Types of interest in land.

950.245 Appraisals.

950.247 Environment.

950.250 Site approval.

950.255 Design criteria.

950.260 Construction stage development

cost budget and certifications.

950.265 Construction and inspections.

950.270 Construction completion and

settlement.

950.275 Warranty inspections and

enforcement.

950.280 Correcting deficiencies.

950.285 Fiscal closeout.

Subpart D—Operation

950.301 Admission policies.

950.303 Selection preferences.

950.304 Federal preferences: general.

950.305 Federal preferences: involuntary

displacement.

950.306 Federal preference: substandard

housing.

950.307 Federal preference: rent burden.

950.308 Exemption from eligibility

requirements for police officers and

other security personnel.

950.310 Restrictions on assistance to

noncitizens.

950.315 Initial determination, verification,

and reexamination of family income and

composition.

950.320 Determination of rents and

homebuyer payments.

950.325 Total tenant payment—Rental and

Turnkey III programs.

950.335 Rent and homebuyer payment

collection policy.

950.340 Grievance procedures and leases.

950.345 Maintenance and improvements.

950.346 Fire safety.

950.360 IHA employment practices.

Subpart E—Mutual Help Homeownership

Opportunity Program

950.401 Scope and applicability.

950.416 Selection of MH homebuyers.

950.419 MH contribution.

950.422 Commencement of occupancy.

950.425 Inspections, responsibility for

items covered by warranty.

950.426 Homebuyer payments before March

9, 1976.

950.427 Homebuyer payments for projects

under ACC on or after March 9, 1976.

950.428 Maintenance, utilities, and use of

home.

950.431 Operating reserve.

950.432 Operating budget submission and

approval.

950.434 Operating subsidy.

950.437 Homebuyer reserves and accounts.

950.440 Purchase of home.

950.443 IHA homeownership financing.

950.446 Termination of MHO Agreement.

950.449 Succession.

950.452 Miscellaneous.

950.453 Counseling of homebuyers.

950.455 Conversion of rental projects.

950.458 Conversion of Mutual Help projects

to rental program.

Subpart F—Self-Help Development in the

Mutual Help Homeownership Opportunity

Program

950.470 Purpose and applicability.

950.475 Basic requirements.

950.480 Self-Help agreement.

950.485 Application.

950.490 Development program.

950.495 Default of Self-Help agreement.

Subpart G—Turnkey III Program

950.501 Introduction.

950.503 Conversion of Turnkey III

developments.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18187

950.505 Eligibility and selection of Turnkey

III homebuyers.

950.507 Homebuyer Ownership

Opportunity Agreements (HOOA).

950.509 Responsibilities of homebuyer.

950.511 Homebuyers’ association (HBA).

950.512 Homeowners’ association (HOA).

950.513 Break-even amount and application

of monthly payments.

950.515 Monthly operating expense.

950.517 Earned Home Payments Account

(EHPA).

950.519 Nonroutine Maintenance Reserve

(NRMR).

950.521 Operating reserve.

950.523 Operating subsidy.

950.525 Purchase price and methods of

purchase.

950.529 Termination of Homebuyer

Ownership Opportunity Agreement.

Subpart H—Lead-Based Paint Poisoning

Prevention

950.551 Purpose and applicability.

950.553 Testing and abatement applicable

to development.

950.555 Testing and abatement applicable

to modernization.

950.560 Notification.

950.565 Maintenance obligation; defective

paint surfaces.

950.570 Procedures involving EBLs.

950.575 Compliance with tribal, State, and

local laws.

950.580 Monitoring and enforcement.

950.585 Insurance coverage.

Subpart I—Modernization Program General

Provisions

950.600 Purpose and applicability.

950.601 Allocation of funds under section

14.

950.602 Special requirements for Turnkey

III and Mutual Help developments.

950.603 Modernization and energy

conservation standards.

Comprehensive Improvement Assistance

Program (For IHAs That Own or Operate

Fewer than 250 Indian Housing Units)

950.609 Purpose.

950.615 Eligible costs.

950.618 Procedures for obtaining approval

of a modernization program.

950.624 Resident and homebuyer

participation.

950.635 Initiation of modernization

activities.

950.639 Fund requisitions.

950.642 Contracting requirements.

950.645 On-site inspections.

950.648 Budget revisions.

950.651 Progress reports.

950.654 HUD review of IHA performance.

950.657 Fiscal closeout.

Comprehensive Grant Program (For IHAs

That Own or Operate 250 or More Indian

Housing Units)

950.660 Purpose.

906.666 Eligible costs.

950.667 Reserve for emergencies and

disasters.

950.669 Allocation of assistance.

950.672 Comprehensive Plan (including

Five-Year Action Plan).

950.675 HUD review and approval of

Comprehensive Plan (including action

plan).

950.678 Annual Submission of activities

and expenditures.

950.681 Conduct of modernization

activities.

950.684 IHA Performance and Evaluation

Report.

950.687 HUD review of IHA performance.

Subpart J—Operating Subsidy

950.701 Purpose and applicability.

950.705 Determination of amount of

operating subsidy under PFS.

950.710 Computation of Allowable Expense

Level.

950.715 Computation of Utilities Expense

Level.

950.720 Other costs.

950.725 Projected operating income level.

950.730 Adjustments.

950.735 Transition funding for excessive

high-cost IHAs.

950.740 Operating reserves.

950.745 Operating budget submission and

approval.

950.750 Payment procedure for operating

subsidy under PFS.

950.755 Payments of operating subsidy

conditioned upon reexamination of

income of families in occupancy.

950.760 Determining actual occupancy

percentage.

950.770 Comprehensive Occupancy Plan

(COP) requirements.

950.772 Financial management systems,

monitoring and reporting.

950.774 Operating subsidy eligibility for

projects owned by IHAs in Alaska.

Subpart K—Energy Audits, Energy

Conservation Measures, and Utility

Allowances

950.801 Purpose and applicability.

Energy Audits and Energy Conservation

Measures

950.805 Requirements for energy audits.

950.810 Order of funding.

950.812 Funding.

950.815 Energy conservation equipment

and practices.

950.822 Compliance schedule.

950.825 Energy performance contracts.

Individual Metering of Utilities

950.840 Individually metered utilities.

950.842 Benefit/cost analysis.

950.844 Funding.

950.845 Order of conversion.

950.846 Actions affecting residents.

950.849 Waivers for similar projects.

950.850 Reevaluations of mastermeter

systems.

Resident Utility Allowances

950.860 Applicability.

950.865 Establishment of utility allowances

by IHAs.

950.867 Categories for establishment of

allowances.

950.869 Period for which allowances are

established.

950.870 Standards for allowances for

utilities.

950.872 Surcharges for excess consumption

of IHA-furnished utilities.

950.874 Review and revision of allowances.

950.876 Individual relief.

Subpart L—Operation of Projects After

Expiration of Initial ACC Term

950.901 Purpose and applicability.

950.903 Continuing eligibility for operating

subsidy; ACC extension.

950.905 ACC extension in absence of

current operating subsidy.

950.907 HUD approval of disposition or

demolition.

Subpart M—Disposition or Demolition of

Projects

950.921 Purpose and applicability.

950.923 General requirements for HUD

approval of disposition or demolition.

950.925 Resident organization opportunity

to purchase.

950.927 Specific criteria for HUD approval

of disposition requests.

950.928 Specific criteria for HUD approval

of demolition requests.

950.931 IHA application for HUD approval.

950.933 Use of proceeds.

950.935 Replacement housing plan.

Subpart N—[Reserved]

Subpart O—Resident Participation and

Opportunities General Provisions

950.960 Purpose.

950.961 Applicability and scope.

950.962 Definitions.

950.963 HUD’s role in activities under this

subpart.

950.964 Resident participation

requirements.

950.965 Funding resident participation.

Tenant Opportunities Program

950.966 General.

950.967 Eligible TOP activities.

950.968 Technical assistance.

950.969 Resident management

requirements.

950.970 Management specialist.

950.971 Operating subsidy, preparation of

operating budget, operating reserves, and

retention of excess revenues.

950.972 TOP Audit and administrative

requirements.

Family Investment Centers (FIC) Program

950.980 General.

950.982 Eligibility.

950.983 FIC activities.

950.984 IHA role in activities under this

part.

950.985 HUD Policy on training,

employment, contracting, and

subcontracting of Indian housing

residents.

950.986 Grant set-aside assistance.

950.987 Resident compensation.

950.988 Administrative requirements.

Subpart P—Section 5(h) Homeownership

Program

950.1001 Purpose.

950.1002 Applicability.

950.1003 General authority for sale.

950.1004 Fundamental criteria for HUD

approval.
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950.1005 Resident consultation and

involvement.

950.1006 Property that may be sold.

950.1007 Methods of sale and ownership.

950.1008 Purchaser eligibility and

selection.

950.1009 Counseling, training, and

technical assistance.

950.1010 Nonpurchasing residents.

950.1011 Nonroutine maintenance reserve.

950.1012 Purchase prices and financing.

950.1013 Protection against fraud and

abuse.

950.1014 Limitation on resale profit.

950.1015 Use of sale proceeds.

950.1016 Replacement housing.

950.1017 Records, reports, and audits.

950.1018 Submission and review of

homeownership plan.

950.1019 HUD approval and IHA-HUD

implementing agreement.

950.1020 Content of homeownership plan.

950.1021 Supporting documentation.

Subpart Q—[Reserved]

Subpart R—Family Self-Sufficiency

950.3001 Purpose, scope, and applicability.

950.3002 Program objectives.

950.3003 Definitions.

950.3004 Basic requirements of the FSS

program.

950.3011 Action Plan.

950.3012 Program Coordinating Committee

(PCC).

950.3013 FSS family selection procedures.

950.3014 On-site facilities.

950.3020 Program implementation.

950.3021 Administrative fees.

950.3022 Contract of participation.

950.3024 Total tenant payment and

increases in family income.

950.3025 FSS account.

950.3030 Reporting.

Authority: 25 U.S.C. 450e(b); 42 U.S.C.

1437aa-1437ee and 3535(d).

Subpart A—General

§ 950.101 Applicability and scope.

(a) General. (1) Under title II of the

United States Housing Act of 1937, as

added by the Indian Housing Act of

1988 (42 U.S.C. 1437aa, et seq.), the

Department of Housing and Urban

Development (HUD) provides financial

and technical assistance to Indian

Housing Authorities (IHAs), for the

development and operation of lowincome housing projects in Indian areas.

This part is applicable to such projects

developed or operated by an IHA in an

Indian area, as defined in § 950.102.

(2) If assistance under this part is not

available to a low-income family

because the family desires housing in an

area within which no IHA is authorized

to provide housing, or if for any other

reason a family desires housing

assistance other than under this part, a

family may seek housing assistance

under other HUD programs. (See 24 CFR

part 203, chapter VIII of this title, as

well as the remainder of chapter IX of

this title.)

(b) Other HUD regulations and

requirements. The provisions of this

part are a complete statement of HUD

regulations affecting the development

and operation of low-income housing by

IHAs except as supplemented by parts

in other chapters of this title that are

referenced in this part.

§ 950.102 Definitions.

Act. The United States Housing Act of

1937 (42 U.S.C. 1437–1440).

Action plan. A plan of the actions to

be funded by an IHA over a period of

five years (including an IHA’s proposed

allocation of its modernization funds to

a reserve established under

§ 950.666(a)(3)) to make the necessary

physical and management

improvements identified in the IHA’s

comprehensive plan under subpart I of

this part. The plan shall be based upon

HUD’s and the IHA’s best estimates of

the funding reasonably expected to

become available over the next five-year

period. The action plan is updated

annually to reflect a rolling five-year

base.

Adjusted income. Annual income less

the following allowances, determined in

accordance with HUD instructions:

(1) $480 for each dependent;

(2) $400 for any elderly family;

(3) For any family that is not an

elderly family but has a handicapped or

disabled member other than the head of

household or spouse, handicapped

assistance expenses in excess of three

percent of annual income, but this

allowance may not exceed the

employment income received by family

members who are 18 years of age or

older as a result of the assistance to the

handicapped or disabled person;

(4) For any elderly family—

(i) That has no handicapped

assistance expenses (as defined in

paragraph 3 of this definition), an

allowance for medical expenses (as

defined in this section) equal to the

amount by which the medical expenses

exceed three percent of annual income;

(ii) That has handicapped assistance

expenses greater than or equal to three

percent of annual income, an allowance

for handicapped assistance expenses

computed in accordance with paragraph

(3) of this definition, plus an allowance

for medical expenses that is equal to the

family’s medical expenses; and

(iii) That has handicapped assistance

expenses that are less than three percent

of annual income, an allowance for

combined handicapped assistance

expenses and medical expenses that is

equal to the amount by which the sum

of these expenses exceeds three percent

of annual income;

(5) Child care expenses, as defined in

this section; and

(6) Excessive travel expenses, not to

exceed $25 per family per week, for

employment- or education-related

travel.

Administration charge. In Mutual

Help projects, the amount budgeted perunit per-month for operating expense,

exclusive of the cost of HUD-approved

expenditures for which operating

subsidy is being provided in accordance

with § 950.434 (see § 950.427(b)).

Allowable expense level. In rental

projects, the per-unit per-month dollar

amount of expenses (excluding utilities

and expenses allowed under § 950.720)

computed in accordance with § 950.710,

which is used to compute the amount of

operating subsidy.

Allowable utilities consumption level

(AUCL). In rental projects, the amount

of utilities expected to be consumed

per-unit per-month by the IHA during

the requested budget year, which is

equal to the average amount consumed

per-unit per-month during the rolling

base period.

Annual contributions contract (ACC).

A contract under the Act between HUD

and the IHA containing the terms and

conditions under which HUD assists the

IHA in providing decent, safe, and

sanitary housing for low-income

families. The ACC shall be in a form

prescribed by HUD under which HUD

agrees to provide assistance in the

development, modernization, and/or

operation of a low-income housing

project under the Act, and the IHA

agrees to develop, modernize, and

operate the project in compliance with

all provisions of the ACC and the Act,

and all HUD regulations and

implementing requirements and

procedures.

Annual income. Annual income is the

anticipated total income from all

sources received by the family head and

spouse (even if temporarily absent) and

by each additional member of the

family, including all net income derived

from assets, for the 12-month period

following the effective date of the initial

determination or reexamination of

income, exclusive of certain types of

income as provided in paragraph (2) of

this definition.

(1) Annual income includes, but is

not limited to:

(i) The full amount, before any payroll

deductions, of wages and salaries,

overtime pay, commissions, fees, tips

and bonuses, and other compensation

for personal services;

(ii) The net income from operation of

a business or profession. Expenditures
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18189

for business expansion or amortization

of capital indebtedness shall not be used

as deductions in determining net

income. An allowance for depreciation

of assets used in a business or

profession may be deducted, based on

straight line depreciation, as provided

in Internal Revenue Service regulations.

Any withdrawal of cash or assets from

the operation of a business or profession

will be included in income, except to

the extent the withdrawal is

reimbursement of cash or assets

invested in the operation by the family;

(iii) Interest, dividends, and other net

income of any kind from real or

personal property. Expenditures for

amortization of capital indebtedness

shall not be used as deductions in

determining net income. An allowance

for depreciation is permitted only as

authorized in paragraph (1)(ii) of this

definition. Any withdrawal of cash or

assets from an investment will be

included in income, except to the extent

the withdrawal is reimbursement of

cash or assets invested by the family.

Where the family has net family assets

in excess of $5,000, annual income shall

include the greater of the actual income

derived from all net family assets or a

percentage of the value of such assets

based on the current passbook savings

rate as determined by HUD;

(iv) The full amount of periodic

payments received from social security,

annuities, insurance policies, retirement

funds, pensions, disability, or death

benefits and other similar types of

periodic receipts, including a lump-sum

payment for the delayed start of a

periodic payment (but see paragraph

(2)(xii) of this definition);

(v) Payments in lieu of earnings, such

as unemployment and disability

compensation, worker’s compensation,

and severance pay (but see paragraph

(2)(iii) of this definition);

(vi) Welfare assistance. If the welfare

assistance payment includes an amount

specifically designated for shelter and

utilities that is subject to adjustment by

the welfare assistance agency in

accordance with the actual cost of

shelter and utilities, the amount of

welfare assistance income to be

included as income shall consist of:

(A) The amount of the allowance or

grant exclusive of the amount

specifically designated for shelter or

utilities; plus

(B) The maximum amount that the

welfare assistance agency could, in fact,

allow the family for shelter and utilities.

If the family’s welfare assistance is

ratably reduced from the standard of

need by applying a percentage, the

amount calculated under paragraph

(1)(vi)(B) of this definition shall be the

amount resulting from one application

of the percentage;

(vii) Periodic and determinable

allowances, such as alimony and child

support payments, and regular

contributions or gifts received from

persons not residing in the dwelling;

and

(viii) All regular pay, special pay, and

allowances of a member of the Armed

Forces (but see paragraph (2)(vii) of this

definition).

(2) Annual income does not include

the following:

(i) Income from employment of

children (including foster children)

under the age of 18 years;

(ii) Payments received for the care of

foster children;

(iii) Lump-sum additions to family

assets, such as inheritances, insurance

payments (including payments under

health and accident insurance and

worker’s compensation), capital gains,

and settlement for personal or property

losses (but see paragraph (1)(v) of this

definition);

(iv) Amounts received by the family

that are specifically for, or in

reimbursement of, the cost of medical

expenses for any family member;

(v) Income of a live-in aide;

(vi) Amounts of educational

scholarships paid directly to the student

or to the educational institution, and

amounts paid by the Government to a

veteran, for use in meeting the costs of

tuition, fees, books, equipment,

materials, supplies, transportation, and

miscellaneous personal expenses of the

student. Any amount of such

scholarship or payment to a veteran that

is made available for subsistence is to be

included in income;

(vii) The special pay to a family

member serving in the Armed Forces

who is exposed to hostile fire;

(viii) (A) Amounts received under

training programs funded by HUD;

(B) Amounts received by a disabled

person that are disregarded for a limited

time for purposes of Supplemental

Security Income eligibility and benefits

because they are set aside for use under

a Plan for Achieving Self-Support

(PASS);

(C) Amounts received by a participant

in other publicly assisted programs that

are specifically for or in reimbursement

of out-of-pocket expenses incurred

(special equipment, clothing,

transportation, child care, etc.) and that

are made solely to allow participation in

a specific program; or

(D) A resident stipend, but only if the

resident stipend does not exceed $200

per month per officer to resident

organization officers. Stipends are

intended to cover costs related to

officers’ volunteer efforts and include

but are not limited to the following

items: child care, transportation, special

equipment, and special clothing.

(ix) Temporary, nonrecurring, or

sporadic income (including gifts);

(x) For all initial determinations and

reexaminations of income carried out on

or after April 23, 1993, reparation

payments paid by a foreign government

pursuant to claims filed under the laws

of that government by persons who were

persecuted during the Nazi era;

(xi) The earnings and benefits to any

resident resulting from the participation

in a program providing employment

training and supportive services in

accordance with the Family Support Act

of 1988, section 22 of the United States

Housing Act of 1937 (42 U.S.C. 1437 et

seq.), or any comparable Federal, State,

tribal, or local law during the exclusion

period. For purposes of paragraph (2)(xi)

of this definition, the following

definitions apply:

(A) Comparable Federal, State, tribal,

or local law means a program providing

employment training and supportive

services that—

(1) Is authorized by Federal, State,

tribal, or local law;

(2) Is funded by Federal, State, tribal,

or local government;

(3) Is operated or administered by a

public agency; and

(4) Has as its objective to assist

participants in acquiring job skills.

(B) Exclusion period means the period

during which the resident participates

in a program described in this section,

plus 18 months from the date the

resident begins the first job acquired by

the resident after completion of such

program that is not funded by public

housing assistance under the United

States Housing Act of 1937. If the

resident is terminated from employment

without good cause, the exclusion

period shall end.

(C) Earnings and Benefits means the

incremental earnings and benefits

resulting from a qualifying employment

training program or subsequent job;

(xii) Any amounts that would be

eligible for exclusion under section

1613(a)(7) of the Social Security Act

(deferred periodic payments received in

a lump sum from SSI and social

security); or

(xiii) Amounts specifically excluded

by any other Federal statute from

consideration as income for purposes of

determining eligibility or benefits under

a category of assistance programs that

includes assistance under the United

States Housing Act of 1937. A notice is

published from time to time in the

Federal Register and distributed to

IHAs identifying the benefits that
18190 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

qualify for this exclusion. Updates will

be published and distributed when

necessary.

(3) If it is not feasible to anticipate a

level of income over a 12-month period,

the income anticipated for a shorter

period may be annualized subject to a

redetermination at the end of the shorter

period.

(4) Any family receiving the

reparation payments referred to in

paragraph (2)(x) of this definition that

has been requested to repay assistance

under this part as a result of receipt of

such payments shall not be required to

make further repayments on or after

April 23, 1993.

Annual Statement. A work statement

covering the first year of the Five-Year

Action Plan and setting forth the major

work categories and costs by

development or IHA-wide for the

current Federal Fiscal Year (FFY) grant,

as well as a summary of costs by

development account and

implementation schedules for obligation

and expenditure of the funds.

Annual Submission. A collective term

for all documents that the IHA shall

submit to HUD for review and approval

before accessing the current FFY grant

funds. Such documents include the

Annual Statement, Work Statements for

years two through five of the Five-Year

Action Plan, local government

statement, IHA Board Resolution,

materials demonstrating the partnership

process, and any other documents as

prescribed by HUD.

Applicable surface. All intact and

nonintact interior and exterior painted

surfaces of a residential structure.

Area Office of Native American

Programs (ONAP). The HUD Offices in

Chicago (Eastern/Woodlands),

Oklahoma City (Southern Plains),

Denver (Northern Plains), Phoenix

(Southwest), Seattle (Northwest), and

Anchorage (Alaska), which have been

delegated authority to administer

programs under the United States

Housing Act of 1937 for the areas in

which the IHAs are located.

Base year. The IHA’s fiscal year

immediately preceding its first fiscal

year under the performance funding

system (PFS).

Base year expense level. The expense

level (excluding utilities, audits, and

certain other items) for the year,

computed as provided in § 950.710(a).

Benefit/cost analysis. For purposes of

subpart K of this part, a direct

comparison of the present worth of any

savings generated by a given system

during the expected useful life of the

system or the estimated remaining life

of the project, whichever is the shortest

number of years, to the cost of the

change.

BIA. The Bureau of Indian Affairs in

the Department of the Interior.

Checkmeter. A device for measuring

utility consumption of each individual

dwelling unit where the utility service

is supplied through a mastermeter

system. The IHA pays the utility

supplier on the basis of the mastermeter

readings and uses the checkmeters to

determine whether and to what extent

utility consumption of each dwelling

unit is in excess of the allowance for

IHA-furnished utilities, established in

accordance with subpart K of this part.

Chewable surface. All chewable

protruding painted surfaces up to five

feet from the floor or ground, that are

readily accessible to children under

seven years of age, such as protruding

corners, windowsills and frames, doors

and frames, and other protruding

woodwork.

Chief executive officer (CEO). The

CEO of a unit of general local

government means the elected official or

the legally designated official who has

the primary responsibility for the

conduct of that entity’s governmental

affairs.

Child. A member of the family, other

than the family head or a spouse, who

is under 18 years of age.

Child care expenses. Amounts

anticipated to be paid by the family for

the care of children under 13 years of

age during the period for which annual

income is computed, but only where

such care is necessary to enable a family

member to be gainfully employed or to

further his or her education only to the

extent such amounts are not

reimbursed. The amount deducted shall

reflect reasonable charges for child care,

and, in the case of child care necessary

to permit employment, the amount

deducted shall not exceed the amount of

income received from such

employment.

Citizen. A citizen or national of the

United States.

Common property. The nondwelling

structures and equipment, common

areas, community facilities, and in some

cases certain component parts of

dwelling structures, that are contained

in the development. It also may include

common property as defined in a

cooperative form of ownership, as

determined by the IHA.

Comprehensive grant number. A grant

number that is unique to each work

statement (under subpart I of this part)

covering the improvements to one or

more existing Indian housing projects.

Comprehensive Plan. A plan prepared

by an IHA, and approved by HUD,

under the Comprehensive Grant

Program setting forth all of the physical

and management improvement needs of

the IHA and its Indian housing

developments, indicating the relative

urgency of needs, and including the

IHA’s action plan, cost estimates, and

required local government and IHA

certifications. The Comprehensive Plan

may be revised, as necessary, but shall

be revised at least every sixth year. (See

subpart I of this part.)

Cooperation agreement. An agreement

between an IHA and a local governing

(taxing) body that assures exemption

from real and personal property taxes

and provides for payments in lieu of

taxes by the IHA, and that provides for

cooperation with respect to the

development and operation of lowincome housing owned by the IHA.

Current budget year. The IHA fiscal

year in which the IHA is operating.

Defective lead-based paint surface.

Paint on applicable surfaces having a

lead content of greater than or equal to

1 mg/cm2, that is cracking, scaling,

chipping, peeling, or loose.

Defective paint surface. Paint on

applicable surfaces that is cracking,

scaling, chipping, peeling, or loose.

Demolition. The razing in whole, or in

part, of one or more permanent

buildings of an Indian housing project.

Dependent. A member of the family

household (excluding foster children)

other than the family head or spouse,

who is under 18 years of age, or is a

disabled person or handicapped person,

or is a full-time student.

Deprogramming. Removal from the

IHA’s inventory under the ACC,

pursuant to the IHA’s formal request

and HUD’s approval, of a dwelling unit

no longer used for dwelling purposes or

a nondwelling structure or a unit used

for nondwelling purposes that the IHA

has determined will no longer be used

for IHA purposes.

Development. Any or all undertakings

necessary for planning, land acquisition,

demolition, construction, or equipment,

in connection with a low-income

housing project.

Development grant. The grant that

provides IHAs, in response to an

application for housing, funds to enable

the IHA to plan and construct either

rental or mutual help housing. The

development grant is for a fixed amount

of funding and ends when the housing

development is through the warranty

period (normally six years from initial

development grant approval).

Disabled person. A person who is

under a disability as defined in section

223 of the Social Security Act (42 U.S.C.

423), or who has a developmental

disability as defined in section 102(7) of

the Developmental Disabilities
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18191

Assistance and Bill of Rights Act (42

U.S.C. 6001(7)).

Displaced person. A person displaced

by governmental action, or a person

whose dwelling has been extensively

damaged or destroyed as a result of a

disaster declared or otherwise formally

recognized under Federal disaster relief

laws.

Disposition. The conveyance or other

transfer by the IHA, by sale or other

transaction, of any interest in the real

estate of an Indian housing project,

excluding transfers of property

described in § 950.921(b)(1)(i) through

(vii).

Earned home payments account

(EHPA). In the Turnkey III program

(subpart G of this part), this account is

established and maintained pursuant to

§ 950.517 by the IHA based on a portion

of the homebuyer’s required monthly

payment. The EHPA should equal the

IHA’s estimate of the monthly cost for

routine maintenance of the home.

Elderly family. A family whose head

or spouse (or sole member) is an elderly,

disabled, or handicapped person, as

defined in this section. It may include

two or more elderly, disabled, or

handicapped persons living together, or

one or more of these persons living with

one or more live-in aides, as defined in

this section.

Elderly person. A person who is at

least 62 years of age.

Elevated blood lead level or EBL.

Excessive absorption of lead, that is, a

confirmed concentration of lead in

whole blood of 25 ug/dl (micrograms of

lead per deciliter of whole blood) or

greater.

Emergency modernization (CIAP). A

type of modernization program for a

development that is limited to physical

work items of an emergency nature,

posing an immediate threat to the health

or safety of residents or related to fire

safety, which shall be corrected within

one year of CIAP funding approval.

Emergency work. Physical work items

of an emergency nature, posing an

immediate threat to the health or safety

of residents, which shall be completed

within one year of funding. Under the

Comprehensive Grant program,

management improvements are not

eligible as emergency work, and

therefore shall be covered by the

Comprehensive Plan (including the

action plan), before the IHA may carry

them out. (See subpart I of this part.)

Energy audit. A process carried out in

accordance with subpart K of this part,

that identifies and specifies the energy

and cost savings that are estimated to

result from installing or accomplishing

an energy conservation measure.

Energy conservation measures

(ECMs). Physical improvements or

modifications that, if undertaken for a

building or facility, or its equipment, are

likely to reduce the cost of energy in an

amount sufficient to recover the

installation costs in a period no longer

than the useful life of the measure. (See

subpart K of this part.)

Evidence of citizenship or eligible

immigration status. The documents

which must be submitted to evidence

citizenship or eligible immigration

status (see § 950.310(e)).

Family. Family includes but is not

limited to:

(1) An elderly family or single person

as defined in this part;

(2) The remaining member of a tenant

family; and

(3) A displaced person.

Family project. Any project assisted

under section 9 of the Act (42 U.S.C.

1437g) that is not an elderly project. For

this purpose, an elderly project is one

that was designated for occupancy by

the elderly at its inception (and has

retained that character) or, although not

so designated, for which the IHA gives

preference in tenant selection (with

HUD approval) for all units in the

project to elderly families. A building

within a mixed-use project that meets

these qualifications shall, for purposes

of this definition, be excluded from any

family project, as shall zero bedroom

units.

Federally recognized tribe. Any

Indian tribe, band, nation, or other

organized group or community,

including any Alaska Native village or

regional corporation or village as

defined in or established pursuant to the

Alaska Native Claims Settlement Act,

that is recognized as eligible for the

special programs and services provided

by the United States to Indians because

of their status as Indians.

FFY. Federal Fiscal Year (starting

with October 1, and ending with

September 30, and designated by the

calendar year in which it ends).

Force account labor. Labor directly

employed by the IHA on either a

permanent or a temporary basis.

Formula. The formula prescribed by

HUD to be used in the Performance

Funding System to estimate the cost of

operating an average unit in an IHA’s

inventory. (See subpart J of this part.)

Formula expense level. The per-unit

per-month dollar amount of expenses

(excluding utilities and audits)

computed under the formula, in

accordance with § 950.710.

Full-time student. A person who is

carrying a subject load that is

considered full-time for day students

under the standards and practices of the

educational institution attended. An

educational institution includes a

vocational school with a diploma or

certificate program, as well as an

institution offering a college degree.

Fungibility. Fungibility is a concept

that permits an IHA to substitute any

work item from the latest approved

Five-Year Action Plan to any previously

approved CIAP budget or CGP Annual

Statement and to move work items

among approved budgets without prior

HUD approval.

Handicapped assistance expenses.

Reasonable expenses that are

anticipated, during the period for which

annual income is computed, for

attendant care and auxiliary apparatus

for a handicapped or disabled family

member and that are necessary to enable

a family member (including the

handicapped or disabled member) to be

employed, provided that the expenses

are neither paid to a member of the

family nor reimbursed by an outside

source.

Hard costs. The physical

improvement costs in development

accounts 1450 through 1475 of the LowRent Housing Accounting Handbook,

7510.1, as revised, that include:

Account 1450 Site Improvements;

Account 1460 Dwelling Structures;

Account 1465.1 Dwelling Equipment—

Nonexpendable; Account 1470

Nondwelling Structures; and Account

1475 Nondwelling Equipment.

Head of household. The adult

member of the family who is the head

of the household for purposes of

determining income eligibility and rent.

High risk. See 24 CFR 85.12 and

§ 950.135.

Homebuyer. The member or members

of a low-income family who have

executed a homebuyer agreement with

the IHA and who have not yet achieved

homeownership.

Homebuyer agreement. A Mutual

Help and Occupancy Agreement or a

Turnkey III Homebuyer’s Ownership

Opportunity Agreement.

Homebuyer Association. In the

Turnkey III program this means an

incorporated organization (as defined in

§ 950.511) composed of all of the

families who are entitled to occupancy

pursuant to a Homebuyer Ownership

Opportunity Agreement or who are

homeowners.

Homeowner. A former homebuyer

who has achieved ownership of his or

her home and acquired title to the

home.

HUD. The Department of Housing and

Urban Development.

IHA homeownership financing. IHA

financing for purchase of a home by an

eligible homebuyer who gives the IHA
18192 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

a promissory note and mortgage for the

balance of the purchase price.

IHS. The Indian Health Service in the

Department of Health and Human

Services.

Indian. Any person recognized as

being an Indian or Alaska Native by an

Indian tribe, the Federal Government, or

any State.

Indian area. The area within which

an Indian Housing Authority is

authorized to provide low-income

housing.

Indian Housing Authority (IHA). An

entity that is authorized to engage in or

assist in the development or operation

of low-income housing for Indians that

is established either:

(1) By exercise of the power of selfgovernment of an Indian tribe

independent of State law; or

(2) By operation of State law

providing specifically for housing

authorities for Indians, including

regional housing authorities in the State

of Alaska.

Indian tribe. Any tribe, band, pueblo,

group, community, or nation of Indians

or Alaska Natives.

INS. The U.S. Immigration and

Naturalization Service.

Interdepartmental agreement. The

agreement among HUD, the Department

of Health and Human Services, the

Department of Interior, and other

appropriate agencies, concerning

assistance to projects developed and

operated under the Act.

Latent defect. A design or

construction deficiency that could not

reasonably have been foreseen by the

IHA or the Office of Native American

Programs.

Lead-based paint. A paint surface,

whether or not defective, identified as

having a lead content greater than or

equal to 1.0 mg/cm2, or .5 percent by

weight.

Live-in aide. A person who resides

with an elderly, disabled, or

handicapped person or persons and

who:

(1) Is determined by the IHA to be

essential to the care and well-being of

the person(s);

(2) Is not obligated for support of the

person(s); and

(3) Would not be living in the unit

except to provide necessary supportive

services. (See definition of annual

income for treatment of a live-in aide’s

income.)

Local inflation factor. The weighted

average percentage increase in local

government wages and salaries for the

area in which the IHA is located and

non-wage expenses based upon the

implicit price deflator for State and

local government purchases of goods

and services. This weighted average

percentage will be supplied by HUD.

HUD anticipates that it will update the

local inflation factor each year.

Low-income family. A family whose

annual income does not exceed 80

percent of the median income for the

area, as determined by HUD with

adjustments for smaller and larger

families. HUD may establish income

limits higher or lower than 80 percent

of the median income for an Indian area

on the basis of its finding that such

variations are necessary because of the

prevailing levels of construction costs or

unusually high or low family incomes.

Management improvement plan. A

document developed by the IHA in

accordance with § 950.135 that specifies

the actions to be taken, including

timetables, to correct deficiencies

identified as a result of a management

assessment.

Mastermeter system. A utility

distribution system in which an IHA is

supplied utility service by a utility

supplier through a meter or meters and

the IHA then distributes the utility to its

tenants.

Medical expenses. Those medical

expenses, including medical insurance

premiums, that are anticipated during

the period for which annual income is

computed, and that are not covered by

insurance.

MH Contribution. Land, labor, cash,

materials, or equipment—or a

combination of these—contributed

toward the development cost of a

project in accordance with a

homebuyer’s MHO Agreement, credit

for which is to be used toward purchase

of a home.

MH Program. The Mutual Help

Homeownership Opportunity Program.

MHO Agreement. A Mutual Help and

Occupancy Agreement between an IHA

and a homebuyer.

Mixed family. A family whose

members include those with citizenship

or eligible immigration status, and those

without citizenship or eligible

immigration status.

Modernization capability. An IHA has

modernization capability for CIAP if it

is capable of effectively carrying out the

proposed modernization improvements.

Where an IHA does not have a funded

modernization program in progress,

HUD will determine whether the IHA

has a reasonable prospect of acquiring

modernization capability through hiring

staff or contracting for assistance. (See

§ 950.135.)

Modernization funds. Funds derived

from an allocation of budget authority

for the purpose of funding physical and

management improvements.

Modernization program. An IHA’s

program for carrying out modernization,

as set forth in the approved CIAP budget

for modernization funds. (See subpart I

(CIAP) of this part.)

Modernization project. The

improvement of one or more existing

Indian housing developments under a

new number designated for that

modernization program (CIAP). For each

modernization project, HUD and the

IHA shall enter into an ACC

amendment, requiring low-income use

of the housing for not less than 20 years

from the date of the ACC amendment

(subject to sale of homeownership units

in accordance with the terms of the

ACC).

Monthly adjusted income. One

twelfth of adjusted income.

Monthly Equity Payments Account

(MEPA). A homebuyer account in the

Mutual Help Homeownership

Opportunity program credited with the

amount by which each required

monthly payment exceeds the

administration charge.

Monthly income. One twelfth of

annual income.

National. A person who owes

permanent allegiance to the United

States, for example, as a result of birth

in a United States territory or

possession.

Near elderly family. A family whose

head or spouse (or sole member) is at

least 50 years of age but below the age

of 62 years.

Net family assets. Net cash value after

deducting reasonable costs that would

be incurred in disposing of real

property, savings, stocks, bonds, and

other forms of capital investment,

excluding interests in Indian trust land

and excluding equity accounts in HUD

homeownership programs. The value of

necessary items of personal property

such as furniture and automobiles are

excluded, and, in the case of a family in

which any member is actively engaged

in a business or farming operation, the

assets that are a part of the business or

farming operation are excluded. In cases

where a trust fund, such as individual

Indian monies held by the BIA, has been

established and the trust is not

revocable by, or under the control of,

any member of the family or household,

the value of the trust fund will not be

considered an asset so long as the fund

continues to be held in trust. In

determining net family assets, IHAs

shall include the value of any business

or family assets disposed of by an

applicant or tenant for less than fair

market value (including a disposition in

trust, but not in a foreclosure or

bankruptcy sale) during the two years

preceding the date of application for the
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18193

program or reexamination, as

applicable, in excess of the

consideration received therefor. In the

case of a disposition as part of a

separation or divorce settlement, the

disposition will not be considered to be

for less than fair market value if the

applicant or tenant receives important

consideration not measurable in dollar

terms.

Noncitizen. A person who is neither

a citizen nor national of the United

States.

Nonroutine maintenance. (1) For

purposes of the Turnkey III Program

(Nonroutine Maintenance Reserve),

nonroutine maintenance refers to

infrequent and costly items of

maintenance and replacement,

including dwelling equipment such as a

range or refrigerator, or major

components such as heating or

plumbing systems or a roof. Specifically

excluded are maintenance expenses

attributable to homebuyer negligence or

to defective materials or workmanship.

(2) For purposes of the CIAP and

Comprehensive Grant Modernization

Programs under subpart I of this part

and the applicability of wage rates,

nonroutine maintenance refers to work

items that ordinarily would be

performed on a regular basis in the

course of upkeep of a property, but have

become substantial in scope because

they have been put off, and that involve

expenditures that would otherwise

materially distort the level trend of

maintenance expenses. Replacement of

equipment and materials rendered

unsatisfactory because of normal wear

and tear by items of substantially the

same kind does qualify, but

reconstruction, substantial improvement

in the quality or kind of original

equipment and materials, or remodeling

that alters the nature or type of housing

units does not qualify.

NRMR. The nonroutine maintenance

reserve account in the Turnkey III

program established and maintained in

accordance with § 950.519.

Office of Native American Programs

(ONAP). The Office of HUD that has

been delegated authority to administer

programs under this part.

Operating budget. The IHA’s

operating budget (HUD form 52564) and

all related documents, required by HUD

to be submitted pursuant to the ACC.

Operating subsidy. Annual

contributions for IHA operations made

by HUD under the authority of section

9 of the Act. (See subpart J of this part

with respect to rental projects. See also

§ 950.434 (Mutual Help Operating

Subsidy) and § 950.523 (Turnkey III

Operating Subsidy).)

Other income. Income to the IHA

other than dwelling rental income and

income from investments, except that,

for purposes of determining operating

subsidy eligibility, the following items

are excluded: Grants and gifts for

operations, other than for utility

expenses, received from Federal, State,

and local governments, individuals or

private organizations; amounts charged

to tenants for repairs for which the IHA

incurs an offsetting expense; and legal

fees in connection with eviction

proceedings, when those fees are

lawfully charged to tenants.

Other modernization (modernization

other than emergency). A type of

modernization program under the

Comprehensive Improvement

Assistance Program (CIAP) for a

development that includes one or more

physical work items, where HUD

determines that the physical

improvements are necessary and

sufficient to extend substantially the

useful life of the development, and/or

one or more management work items

(including planning costs), and/or

testing, professional risk assessments,

interim containment, and abatement of

lead-based paint.

Partnership process. A specific and

ongoing process that is designed to

ensure that residents, resident groups,

and the IHA work in a cooperative and

collaborative manner to develop,

implement and monitor the CIAP or

Comprehensive Grant Program. At a

minimum, an IHA shall ensure that the

partnership process incorporates full

resident participation in each of the

required program components.

Pay-back period. The number of years

required to accumulate net savings to

equal the cost of an energy conservation

measure.

Performance funding system (PFS).

The standards, policies, and procedures

established by HUD for determining the

amount of operating subsidy an IHA is

eligible to receive for its owned rental

projects, based on the costs of operating

a comparable well-managed project.

PILOT. Payment in lieu of taxes.

Includes all payments made by an IHA

to the local governing body (or other

taxing jurisdiction) for the provision of

certain municipal services, including

that portion of payments in lieu of taxes

that is to be applied as a reimbursement

of payments of off-site utilities. The

amount charged is determined by the

cooperation agreement, which is

generally defined as 10 percent of

shelter rent. Shelter rent is defined as

dwelling rentals less total utility

expenses.

Program reservation. A written

notification by HUD to an IHA, that is

not a legal obligation, but that expresses

HUD’s determination, subject to

fulfillment by an IHA of all legal and

administrative requirements within a

stated time, that HUD will enter into a

new or amended ACC covering the

stated number of housing units, or such

other number as is consistent with

funding reserved by HUD for the

project.

Project. Housing developed, acquired,

or assisted by an IHA under the Act, and

the improvement of this housing.

Project for elderly families. A rental

project or portion of a rental project

assisted under the United States

Housing Act of 1937 that was

designated for occupancy by the elderly

at its inception (and that has retained

that character) or, although not so

designated, for which the IHA gives

preference in tenant selection (with

HUD approval) for all units in the

project, or for a portion of the units in

the project, to elderly families.

Project units. All dwelling units of an

IHA’s projects. Projected operating

income level. The per-unit per-month

dollar amount of dwelling rental income

plus nondwelling income, computed as

provided in § 950.725.

Reasonable cost. Total unfunded hard

cost needs for a development that do not

exceed 90 percent of the computed total

development cost limit for a new

development with the same structure

type and number and size of units in the

market area.

Requested budget year. The budget

year (fiscal year) of an IHA following the

current budget year.

Resident groups. Democratically

elected resident groups such as IHAwide resident groups, area-wide

resident groups, single development

resident groups, or resident

management corporations (RMCs).

Retail service. Purchase of utility

service by IHA tenants directly from the

utility supplier.

Rolling base period. The 36-month

period that ends 12 months before the

beginning of the IHA requested budget

year, which is used to determine the

allowable utilities consumption level

used to compute the utilities expense

level.

Section 214. Section 214 of the

Housing and Community Development

Act of 1980, as amended (42 U.S.C.

1436a). Section 214 restricts HUD from

making financial assistance available for

noncitizens unless they meet one of the

categories of eligible immigration status

specified in Section 214.

Section 214 covered programs.

Programs to which the restrictions

imposed by Section 214 apply are

programs that make available financial
18194 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

assistance pursuant to the United States

Housing Act of 1937 (42 U.S.C. 1437–

1440), Section 235 or Section 236 of the

National Housing Act (12 U.S.C. 1715z

and 1715z–1) and Section 101 of the

Housing and Urban Development Act of

1965 (12 U.S.C. 1701s).

Single person. A person who lives

alone or intends to live alone, and who

does not qualify as:

(1) An elderly family;

(2) A displaced person (as defined in

this section); or

(3) The remaining member of a tenant

family.

Soft costs. The nonphysical

improvement costs, that exclude any

costs in development accounts 1450

through 1475.

State. Any of the several States of the

United States of America, the District of

Columbia, the Commonwealth of Puerto

Rico, the territories and possessions of

the United States, the Trust Territory of

the Pacific Islands, and Indian tribes.

Subsequent homebuyer. Any

homebuyer other than the homebuyer

who first occupies a home pursuant to

a Mutual Help and Occupancy (MHO)

agreement.

Substantial rehabilitation. A

modernization program for a project that

provides for all physical and

management improvements needed to

meet the modernization and energy

conservation standards and to ensure

long-term physical and social viability.

Successor homebuyer. A person

eligible to become a homebuyer who has

been designated by a current homebuyer

to succeed to an interest under a

homeownership agreement in the event

of the current homebuyer’s death or

mental incapacity.

Surcharge. The amount charged by

the IHA to a tenant, in addition to the

Tenant Rent, for consumption of

utilities in excess of the allowance for

IHA-furnished utilities or for estimated

consumption attributable to tenantowned major appliances or to optional

functions of IHA-furnished equipment.

Surcharges calculated pursuant to

subpart K of this part, based on

estimated consumption where

checkmeters have not been installed, are

referred to as ‘‘scheduled surcharges.’’

Tenant-purchased utilities. Utilities

purchased by the tenant directly from a

utility supplier.

Tenant rent. The amount payable

monthly by the family as rent to the

IHA. Where all utilities (except

telephone) and other essential housing

services are supplied by the IHA, tenant

rent equals total tenant payment. Where

some or all utilities (except telephone)

and other essential housing services are

not supplied by the IHA and the cost

thereof is not included in the amount

paid as rent, tenant rent equals total

tenant payment less the utility

allowance.

Total development cost. The sum of

all HUD-approved costs for a project

including all undertakings necessary for

administration, planning, site

acquisition, demolition, construction or

equipment and financing (including the

payment of carrying charges), and for

otherwise carrying out the development

of the project. The maximum total

development cost excludes off-site

water and sewer facilities development

costs; costs normally paid for by other

entities, but included in the

development cost budget for the project

for contracting or accounting

convenience; and any donations

received from public or private sources.

Total tenant payment. The monthly

amount calculated under subpart D of

this part. Total tenant payment does not

include any surcharge for excess utility

consumption or other miscellaneous

charges (see subpart K of this part).

Unit approved for deprogramming. (1)

A dwelling unit for which HUD has

approved the IHA’s formal request to

remove the dwelling unit from the IHA’s

inventory and the Annual Contributions

Contract but for which removal, i.e.

deprogramming, has not yet been

completed; or

(2) A nondwelling structure or a

dwelling unit used for nondwelling

purposes that the IHA has determined

will no longer be used for IHA purposes

and that HUD has approved for removal

from the IHA’s inventory and Annual

Contributions Contract.

Unit months available. Project units

multiplied by the number of months the

project units are expected to be

available for occupancy during a given

IHA fiscal year. Except as provided in

the following sentence, for purposes of

this part, a unit is considered available

for occupancy from the date on which

the end of the initial operating period

for the project is established until the

time it is approved by HUD for

deprogramming and is vacated or

approved for nondwelling use. On or

after July 1, 1991, a unit is not

considered available for occupancy in

any IHA Requested Budget Year if the

unit is located in a vacant building in

a project that HUD has determined is

nonviable.

Utilities. For purposes of determining

utility allowances, utilities include

electricity, gas, heating fuel, water,

sewerage service, septic tank pumping/

maintenance, sewer system hookup

charges (after development), and trash

and garbage collection. Telephone

service is not included as a utility. For

purposes of IHA accounting, PFS and

non-PFS, trash and garbage collection

and maintenance and repair of any

systems are considered maintenance

expenses and not utility expenses.

Utilities expense level. The per-unit

per-month dollar amount of utilities

expense used in calculation of operating

subsidy, as provided in § 950.715.

Utility allowance. An allowance for

IHA-furnished utilities represents the

maximum consumption units (e.g.,

kilowatt hours of electricity), that may

be used by a dwelling unit without a

surcharge against the tenant for excess

consumption. An allowance for tenantpurchased utilities is a fixed dollar

amount that is deducted from the total

tenant payment otherwise chargeable to

a tenant who has retail service, whether

the charges are more or less than the

amounts of the allowance. (See

§§ 950.865 and 950.870.)

Utility reimbursement. The amount, if

any, by which the utility allowance for

tenant-purchased utilities for the unit, if

applicable, exceeds the family’s total

tenant payment.

Very low-income family. A lowincome family whose annual income

does not exceed 50 percent of the

median income for the area, as

determined by HUD, with adjustments

for smaller and larger families. HUD

may establish income limits higher or

lower than 50 percent of the median

income for an Indian area on the basis

of its finding that such variations are

necessary because of unusually high or

low family incomes.

Welfare assistance. Welfare or other

payments to families or individuals,

based on need, that are made under

programs funded, separately or jointly,

by Federal, State, or local governments.

Work item. Any separately

identifiable unit of work constituting a

part of a modernization program.

Work Statements. Work Statements

cover the second through fifth years of

the Five-Year Action Plan and set forth

the major work categories and costs, by

development or IHA-wide, that the IHA

intends to undertake in each year of

years two through five. In preparing

these Work Statements, the IHA shall

assume that the current FFY formula

amount will be available in each year of

years two through five.

§ 950.110 Assistance from Indian Health

Service and Bureau of Indian Affairs.

Because HUD assistance under this

part is not limited to IHAs of Federally

recognized tribes, provisions in this part

relating to assistance from BIA or IHS,

or to required approvals, actions, or

determinations by these agencies in

connection with such assistance, are
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18195

applicable only to projects undertaken

by IHAs of Federally recognized tribes

or by regional housing authorities

created by Alaska state law. These

projects shall be developed promptly

and operated in accordance with the

provisions of this part and the

Interdepartmental Agreement.

§ 950.115 Applicability of civil rights

requirements.

(a) Indian Civil Rights Act. (1) The

Indian Civil Rights Act (ICRA) (title II of

the Civil Rights Act of 1968, 25 U.S.C.

1301–1303) provides, among other

things, that no Indian tribe in exercising

powers of self-government shall deny to

any person within its jurisdiction the

equal protection of its laws or deprive

any person of liberty or property

without due process of law. The ICRA

also states these equal protection and

due process rights do not apply if they

violate customs, traditions, and

practices of the tribe. The ICRA applies

to any tribe, band, or other group of

Indians subject to the jurisdiction of the

United States in the exercise of

recognized powers of self-government.

The ICRA is applicable in all cases in

which an IHA has been established by

exercise of tribal powers of selfgovernment.

(2) For IHAs established pursuant to

State law, HUD will determine the

applicability of the ICRA on a case-bycase basis. Factors considered may

include the existence of recognized

powers of self-government; the scope

and jurisdiction of such powers; and the

applicability of such powers to the area

of operation of a particular IHA.

Generally, determinations by HUD of

the existence of recognized powers of

self-government and the jurisdiction of

such powers will be made in

consultation with the Department of

Interior-Bureau of Indian Affairs, and

may be based on applicable legislation,

treaties, and judicial decisions. The area

of operation of an IHA may be

determined by the jurisdiction of the

governing body creating the IHA, any

limitations within the enabling

legislation, and judicial decisions.

(3) Projects of IHAs subject to the

ICRA shall be developed and operated

in compliance with its provisions and

all HUD regulations thereunder.

(b) Applicability of Title VI, the Fair

Housing Act; and Title II of the

Americans with Disabilities Act. Title VI

of the Civil Rights Act of 1964 (42

U.S.C. 2000d), which prohibits

discrimination on the basis of race,

color, or national origin in federally

assisted programs; the Fair Housing Act

(42 U.S.C. 3601–3619), which prohibits

discrimination based on race, color,

religion, sex, or national origin in the

sale or rental of housing; and Title II of

the Americans with Disabilities Act (42

U.S.C. 12131) apply to those IHAs

created by State law for which HUD has

determined that the ICRA is

inapplicable. Actions taken by an IHA

to implement the statutory admission

restriction in favor of Indian families in

the MH program, as set forth in

§ 950.416, shall not be considered a

violation of any provision of either Title

VI, the Fair Housing Act, or Title II of

the Americans with Disabilities Act.

(c) Indian Housing Act of 1988—

Mutual Help program admissions. For

provisions generally limiting admission

to the Mutual Help Homeownership

Opportunity program to Indians and

requiring findings of need for admission

of non-Indians, see § 950.416.

(d) Disability. (1) Under section 504 of

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

794), as amended, HUD is required to

assure that no otherwise-qualified

disabled person is excluded from

participation, denied benefits, or

discriminated against under any

program or activity receiving Federal

financial assistance, solely by reason of

his or her disability. IHAs shall comply

with implementing instructions in 24

CFR part 8.

(2) The IHA shall comply with the

Architectural Barriers Act of 1968 (42

U.S.C. 4151–4157), and HUD

implementing regulations (24 CFR part

40).

(e) Minority Business Enterprise

Development and Women’s Business

Enterprise Policy. Executive Orders

12432 (3 CFR, 1983 Comp., p. 198) and

12138 (3 CFR, 1979 Comp., p. 39),

respectively, apply to Indian Housing

Authorities.

§ 950.117 Displacement, relocation, and

acquisition.

(a) Minimizing displacement.

Consistent with the other goals and

objectives of this part, IHAs shall assure

that they have taken all reasonable steps

to minimize the displacement of

persons (families, individuals,

businesses, nonprofit organizations, and

farms) as a result of a project assisted

under this part.

(b) Temporary relocation. Residents

who will not be required to move

permanently, but who must relocate

temporarily (e.g., to permit

rehabilitation), shall be provided:

(1) Reimbursement for all reasonable

out-of-pocket expenses incurred in

connection with the temporary

relocation, including the cost of moving

to and from the temporary housing and

any increase in monthly rent/utility

costs.

(2) Appropriate advisory services,

including reasonable advance written

notice of:

(i) The date and approximate duration

of the temporary relocation;

(ii) The location of the housing, which

may include a traditional home, to be

made available for the temporary

period;

(iii) The terms and conditions under

which the resident may lease and

occupy a suitable, decent, safe, and

sanitary dwelling in the development

following its completion; and

(iv) The provisions of paragraph (b)(1)

of this section.

(c) Relocation assistance for displaced

persons. (1) A displaced person (defined

in paragraph (g) of this section) shall be

provided relocation assistance at the

levels described in, and in accordance

with the requirements of, the Uniform

Relocation Assistance and Real Property

Acquisition Policies Act of 1970, as

amended (URA) (42 U.S.C. 4601–4655)

and implementing regulations at 49 CFR

part 24.

(2) A comparable Indian housing unit,

project-based Section 8 housing, or a

privately-owned dwelling made

affordable by a Section 8 Rental

Certificate or Rental Voucher, may

qualify as a comparable replacement

dwelling for a person displaced from an

Indian housing unit.

(d) Real property acquisition

requirements. The acquisition of real

property for a development is subject to

the URA and the requirements

described in 49 CFR part 24, subpart B,

whether the acquiring entity is

organized under State law or tribal law.

(e) Appeals. A person who disagrees

with the IHA’s determination

concerning whether the person qualifies

as a displaced person, or the amount of

relocation assistance for which the

person is eligible, may file a written

appeal of that determination with the

IHA. A lower-income person who is

dissatisfied with the IHA’s

determination on his or her appeal may

submit a written request for review of

that determination to the HUD Area

ONAP.

(f) Responsibility of IHA. (1) The IHA

shall certify (i.e., provide assurance of

compliance, as required by 49 CFR part

24) that it will comply with the URA,

the regulations at 49 CFR part 24, and

the requirements of this section, and

shall ensure such compliance

notwithstanding any third party’s

contractual obligation to the IHA to

comply with the requirements in 49

CFR part 24.

(2) The cost of required relocation

assistance is an eligible project cost in

the same manner and to the same extent
18196 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

as other project costs. However, such

assistance also may be paid from funds

available from other sources.

(3) The IHA shall maintain records in

sufficient detail to demonstrate

compliance with the requirements of

this section.

(g) Definition of displaced person. (1)

For purposes of this section, the term

‘‘displaced person’’ means a person

(family, individual, business, nonprofit

organization, or farm) that moves from

real property, or moves personal

property from real property,

permanently, as a direct result of

acquisition, rehabilitation, demolition,

or conversion of a unit to

homeownership (Mutual Help

Homeownership Opportunity (MH)

Program) for a project assisted under

this part or as a direct result of

disposition in accordance with subpart

M of this part. This includes any

permanent, involuntary move for an

assisted project including any

permanent move from the development

that is made:

(i) After notice to the person by the

IHA or property owner to move

permanently from the property, if the

move occurs on or after:

(A) For the comprehensive

improvement assistance program (CIAP)

and the comprehensive grant program

(CGP) under subpart I of this part, 45

calendar days from before:

(1) The IHA issues the invitation for

bids for the project, or

(2) The start of force account work,

whichever is applicable; or

(B) For the disposition or demolition

of Indian housing under subpart M of

this part, the date of HUD approval of

the IHA’s proposal; or

(C) For other projects subject to this

section, the date HUD approves the site

for the project; or, if HUD site approval

is not required, the date the IHA

approves the site for the project;

(ii) Before the date described in

paragraph (g)(1)(i) of this section, if the

IHA or HUD determines that the

displacement resulted directly from

acquisition, rehabilitation, demolition,

or conversion for the assisted project; or

(iii) By a resident of a dwelling unit,

if any one of the following three

situations occurs:

(A) The resident moves after the

initiation of negotiations (as defined in

paragraph (h) of this section) and the

move occurs before the resident is

provided written notice offering him or

her the opportunity to lease and occupy

a suitable, decent, safe, and sanitary

dwelling in the same development,

under reasonable terms and conditions,

upon its completion. Such reasonable

terms and conditions include a monthly

rent and estimated average monthly

utility costs that do not exceed the

amount determined in accordance with

§ 950.325; or

(B) The resident is required to relocate

temporarily, does not return to the

development, and either:

(1) The resident is not offered

payment for all reasonable out-of-pocket

expenses incurred in connection with

the temporary relocation; or

(2) Other conditions of the temporary

relocation are not reasonable; or

(C) The resident is required to move

to another dwelling unit in the same

development but is not offered

reimbursement for all reasonable out-ofpocket expenses incurred in connection

with the move, or other conditions of

the move are not reasonable.

(2) Notwithstanding the provisions of

paragraph (g)(1) of this section, a person

does not qualify as a displaced person

(and is not eligible for relocation

assistance under the URA or this

section), if:

(i) The person has been evicted for

serious or repeated violation of the

terms and conditions of the lease or

occupancy agreement, violation of

applicable Federal, State, tribal, or local

law, or other good cause, and HUD

determines that the eviction was not

undertaken for the purpose of evading

the obligation to provide relocation

assistance;

(ii) The person moved into the

property after the date described in

paragraph (g)(1)(i) of this section and,

before commencing occupancy, was

provided written notice of the project,

its possible impact on the person (e.g.,

the person may be displaced,

temporarily relocated, or suffer a rent

increase) and the fact that he or she will

not qualify as a displaced person (or for

assistance under this section) as a result

of the project:

(iii) The person is ineligible under 49

CFR 24.2(g)(2); or

(iv) HUD determines that the person

was not displaced as a direct result of

acquisition, rehabilitation, demolition,

or conversion for the project.

(3) The IHA may, at any time, ask

HUD to determine whether a

displacement is or would be covered by

this section.

(h) Definition of initiation of

negotiations. For purposes of

determining the formula for computing

the replacement housing assistance to

be provided to a resident, the term

‘‘initiation of negotiations’’ means the

following action:

(1) For the comprehensive

improvement assistance program (CIAP)

or comprehensive grant program (CGP)

under subpart I of this part, 45 calendar

days before:

(i) The IHA’s issuance of the

invitation for bids for the project; or

(ii) The start of force account work,

whichever is applicable;

(2) For an IHA purchase through an

arm’s-length transaction as described in

49 CFR 24.101(a)(1), the seller’s

acceptance of the IHA’s written offer to

purchase the property;

(3) For an IHA purchase that does not

qualify as an arm’s-length transaction,

the delivery of the initial written

purchase offer from the IHA to the

Owner of the property. However, if the

IHA issues a notice of intent to acquire

the property, and a person moves after

that notice, but before the initial written

purchase offer, the initiation of

negotiations is the actual move of the

person from the property;

(4) For disposition or demolition of

Indian housing under subpart M of this

part, HUD approval of the IHA’s

proposal; or

(5) For other programs under this part

950, the notice to the occupant that he

or she shall move permanently, or, if

there is no notice, the person’s actual

move from the property.

§ 950.120 Compliance with other Federal

requirements.

(a) Environmental clearance. Before

obligating or expending funds for any

physical improvements under a

development or modernization project,

the IHA will comply with the

requirements of 24 CFR part 58.

(b) Flood insurance protection. HUD

will not approve financial assistance for

acquisition, construction,

reconstruction, repair, or improvement

of a building located in an area that has

been identified by the Federal

Emergency Management Agency

(FEMA) as having special flood hazards,

unless the following conditions are met:

(1) Flood insurance on the building is

obtained in compliance with section

102(a) of the Flood Disaster Protection

Act of 1973 (42 U.S.C. 4012a(a)); and

(2) The community in which the area

is situated is participating in the

National Flood Insurance Program in

accord with section 202(a) of the Flood

Disaster Protection Act of 1973 (42

U.S.C. 4106(a)), or less than a year has

passed since FEMA notification

regarding such flood hazards. For this

purpose, the ‘‘community’’ is the

jurisdiction, such as an Indian tribe or

authorized tribal organization, an

Alaska native village, or authorized

native organization, or a municipality or

county, that has authority to adopt and

enforce flood plain management

regulations for the area.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18197

(c) Wage rates for laborers and

mechanics. (1) With respect to

construction work on a project,

including a modernization project

(except for nonroutine maintenance

work, as described in paragraph (2) of

the definition of ‘‘nonroutine

maintenance’’ in § 950.102), the IHA

and its contractors shall pay not less

than the wages prevailing in the

locality, as predetermined by the

Secretary of Labor pursuant to the

Davis-Bacon Act (40 U.S.C. 276a

through 276a-5), to all laborers and

mechanics who are employed by an IHA

or its contractors for work or contracts

over $2,000.

(2) With respect to all maintenance

work on a project, including nonroutine

maintenance work (as described in

paragraph (2) of the definition of

‘‘nonroutine maintenance’’ in § 950.102)

on a modernization project, the IHA and

its contractors shall pay not less than

the wages prevailing in the locality, as

determined or adopted (after a

determination under State, tribal, or

local law) by HUD pursuant to section

12 of the United States Housing Act of

1937 (42 U.S.C. 1437j), to all laborers

and mechanics who are employed by an

IHA or its contractors.

(3) Prevailing wage rates determined

under State or tribal law are

inapplicable under the circumstances

set out in § 950.172(b).

(d) Professional and technical wage

rates. All architects, technical engineers,

draftsmen, and technicians employed in

the development of a project shall be

paid not less than the wages prevailing

in the locality, as determined or adopted

(after a determination under applicable

State, tribal, or local law) by HUD.

(e) Access to records: audits. (1) HUD

and the Comptroller General of the

United States shall have access to all

books, documents, papers, and other

records that are pertinent to the

activities carried out under this part, in

order to make audit examinations,

excerpts, and transcripts, in accordance

with 24 CFR 85.42.

(2) IHAs that receive financial

assistance under this part shall comply

with the audit requirements of 24 CFR

part 44. If an IHA has failed to submit

an acceptable audit on a timely basis in

accordance with that part, HUD may

arrange for, and pay the costs of, the

audit. In such circumstances, HUD may

withhold, from assistance otherwise

payable to the IHA under this part,

amounts sufficient to pay for the

reasonable costs of conducting an

acceptable audit, including, when

appropriate, the reasonable costs of

accounting services necessary to place

the IHA’s books and records into

auditable condition. The costs to place

the IHA’s books and records into

auditable condition do not generate

additional subsidy eligibility under this

part.

(f) Uniform administrative

requirements. The Uniform

Administrative Requirements for Grants

and Cooperative Agreements to States,

Local, and Federally Recognized Indian

Tribal Governments, as set forth in 24

CFR part 85, are applicable to grants

under this part, except as specified in

this part. However, the provisions of 24

CFR 85.36 have been incorporated in

the procurement regulations (subpart B

of this part).

(g) Lead-based paint poisoning

prevention. See 24 CFR part 35 and

subpart H of this part.

(h) Coastal barriers. In accordance

with the Coastal Barriers Resources Act

(16 U.S.C. 3501), no financial assistance

under this part may be made available

within the Coastal Barrier Resources

System.

(i) Economic opportunities for lowand very low-income persons. IHAs

shall comply with section 3 of the

Housing and Urban Development Act of

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

regulations in 24 CFR part 135, as

provided in part 135, to the maximum

extent consistent with, but not in

derogation of, compliance with section

7(b) of the Indian Self-Determination

and Education Assistance Act (25 U.S.C.

450e(b)). See also 24 CFR 950.170(c).

§ 950.125 Establishment of IHAs pursuant

to State law.

An IHA may be established pursuant

to a State law that provides for the

establishment of IHAs with all

necessary legal powers to carry out lowincome housing projects for Indians.

§ 950.126 Establishment of IHAs by tribal

ordinance.

(a) Legal capacity of tribe to establish

IHA. Where an Indian tribe has

governmental police power to promote

the general welfare, including the power

to create a housing authority, an IHA

may be established by tribal ordinance

enacted by the governing body of the

tribe.

(b) Form of ordinance. The form of

tribal ordinance shall be determined by

the tribe and reviewed by the ONAP

Administrator. The IHA shall also

demonstrate that it has the legal

authority to develop, own, and operate

a public housing project under the Act.

Unless an IHA is created as part of the

tribal government, ordinances shall

include language that allows the IHA to

sue and be sued in its corporate name.

A sample format will be provided by

HUD.

(c) Approval or review of ordinance.

HUD shall not enter into an undertaking

for assistance to an IHA formed by tribal

ordinance unless such ordinance has

been submitted to HUD.

(d) Submission to HUD of documents

establishing IHA. (1) The tribal

ordinance shall be submitted to HUD

prior to receiving financial assistance.

(2) An IHA must certify that it has

enacted the ordinance pursuant to any

constitutional law or practice and has

the local cooperation required by law.

§ 950.130 IHA Commissioners who are

tenants or homebuyers.

(a) Tenant or homebuyer

commissioners. No person shall be

barred from serving on an IHA’s Board

of Commissioners because he or she is

a tenant or homebuyer in a housing

project of the IHA. A Commissioner

who is a tenant or homebuyer shall be

entitled to participate fully in all

meetings concerning matters that affect

all of the tenants or homebuyers, even

though such matters affect him or her as

well. However, no such Commissioner

shall be entitled or permitted to

participate in or be present at any

meeting (except in his or her capacity as

a tenant or homebuyer), or be counted

or treated as a member of the Board,

concerning any matter involving his or

her individual rights, obligations, or

status as a tenant or homebuyer.

(b) Commissioner as IHA employee. A

member of the IHA’s Board of

Commissioners shall not be eligible for

employment by the IHA, except under

extremely unusual circumstances in

which it is documented that no one

except the commissioner is qualified for

the position and where the HUD Area

ONAP approves in advance of the

hiring.

§ 950.135 Administrative capability.

(a) HUD determination. At least

annually, HUD shall carry out such

reviews of the performance of each IHA,

including remote reviews, on-site

limited and full reviews, audits,

surveys, and a formal annual review or

risk analysis assessment, as may be

necessary or appropriate to make the

determinations required by this section,

taking into consideration all available

evidence. HUD will evaluate an IHA’s

compliance in the areas of development,

modernization, and operations,

including such functions as

administration, financial management,

occupancy, and maintenance.

(b) Obligation to maintain. (1) An IHA

shall maintain administrative capability

at all times throughout the term of the
18198 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

ACC. In order to be considered

administratively capable, an IHA shall

administer the Indian housing program

in accordance with applicable statutory

requirements, HUD regulations, and

contracts with no serious deficiencies. If

any of the following conditions exist, it

shall be considered a serious deficiency:

(i) The IHA is not financially stable,

based on the most recent annual audit,

technical assistance visit, or other

reliable information;

(ii) An audit, conducted in

accordance with 24 CFR part 44 and

§ 950.120, or HUD reviews (including

monitoring findings) reveal deficiencies

that HUD reasonably believes require

corrective action and/or that corrective

actions are not taken in accordance with

established timeframes;

(iii) The IHA has management

systems that do not meet the standards

as set forth in 24 CFR part 85, and the

lack of such systems may result in

mismanagement or misuse of Federal

funds;

(iv) The IHA has not conformed to the

terms and conditions of previous

awards, including for new construction,

the Comprehensive Improvement

Assistance Program, the Comprehensive

Grant Program, or the use of Operating

Subsidies;

(v) The IHA lacks properly trained

and competent personnel at key

management positions of the IHA; or

(vi) The IHA is in violation of the

terms of applicable statutes, regulations,

or Annual Contributions Contracts.

(2) If an IHA has serious deficiencies,

HUD shall take any or all of the

following actions:

(i) Issue a notice of deficiency;

(ii) Issue a corrective action order; or

(iii) Classify the IHA as ‘‘high risk’’

(see 24 CFR part 85).

(c) Notice of deficiency. Based on

HUD reviews of IHA performance and

findings of any of the deficiencies in

paragraph (b)(1) of this section, HUD

may issue to the IHA a notice of

deficiency, stating the specific program

requirements that the IHA has violated

and requesting the IHA to take

appropriate action. The notification

shall be in writing and contain the

following:

(1) The deficiencies, i.e., the IHA

actions and the statutory or regulatory

or other requirements that have been

violated;

(2) Recommended actions that may be

taken by the IHA and a timeframe for

completion;

(3) The documentation necessary for

evidence that all actions have been

completed.

(d) Corrective action order. (1) Based

on HUD reviews of IHA performance

and findings of any of the deficiencies

described in paragraph (b)(1) of this

section, HUD may issue to the IHA a

corrective action order. An order may be

issued, whether or not a notice of

deficiency previously has been issued

with regard to the specific deficiency on

which the corrective action order is

based. HUD may order corrective action

at any time by notifying the IHA of the

specific program requirements that the

IHA has violated, and by specifying the

corrective actions that shall be taken.

HUD shall design corrective action to

prevent a continuation of the deficiency,

mitigate any adverse effects of the

deficiency to the extent possible, and

prevent a recurrence of the same or

similar deficiencies.

(2) Before ordering corrective action,

HUD will notify the IHA and give it an

opportunity to consult with HUD

regarding the proposed action unless

HUD notifies the IHA that special

circumstances exist that warrant giving

immediate effect to the announced HUD

action.

(3) Any corrective action ordered by

HUD shall become a condition of the

ACC grant agreement.

(4) The order shall be in writing and

shall contain the following:

(i) The deficiencies, i.e., the IHA

actions and the statutory or regulatory

or other requirements that have been

violated;

(ii) The corrective action(s) that shall

be taken by the IHA and the time

allowed for completing the corrective

action(s);

(iii) The method of requesting

reconsideration of the HUD action and

the documentation necessary to

evidence that all corrective actions have

been completed.

(e) Management improvement plan

(MIP). (1) When an IHA receives a

corrective action order, it shall respond

to the determination, in writing. This

response shall include a management

improvement plan to correct existing

deficiencies. The plan shall describe in

detail the method to be used and the

time schedule to be maintained, shall be

approved by the IHA Board of

Commissioners, and is subject to HUD

approval.

(2) After receiving the response from

the IHA, HUD may direct the IHA to

take one or more of the following

actions:

(i) Submit additional information:

(A) Concerning the IHA’s

administrative, planning, budgeting,

accounting, management, and

evaluation functions, to determine the

cause for the IHA having deficiencies, as

described in paragraph (b)(1) of this

section;

(B) Explaining any steps the IHA is

taking to correct the deficiencies;

(C) Documenting that IHA activities

were not inconsistent with the IHA’s

annual statement or other applicable

statutes, regulations, or program

requirements;

(ii) Submit schedules for completing

the work identified in the MIP;

(iii) Submit additional material in

support of one or more of the

statements, resolutions, and

certifications submitted as part of the

IHA’s MIP;

(iv) Not incur financial obligations, or

to suspend payments for one or more

activities;

(v) Reimburse, from non-HUD

sources, one or more program accounts

for any amounts improperly expended;

or

(vi) Take such other corrective actions

as HUD determines appropriate to

correct the IHA deficiencies.

(3) HUD shall determine whether the

IHA has satisfied, or has made

reasonable progress towards satisfying,

the management improvement plan.

(4) If the IHA does not satisfy the

terms of the plan or does not act in good

faith to meet the timeframes included in

its MIP, HUD may impose additional

restrictions. In addition, existing

projects may be terminated, or other

action may be instituted, as appropriate.

(f) High risk determination. An IHA

may be classified as ‘‘high risk’’ and

determined ineligible for certain types

of future funding related to the

classification of risk, or may be

determined eligible for future funding

but subject to special conditions or

restrictions corresponding to the high

risk classification. A corrective action

order listing the specific violation shall

accompany the high risk designation.

(1) If an IHA is determined to be high

risk, the conditions that form the basis

for that determination shall be

sufficiently serious to warrant a

determination to exclude the IHA from

future funding of a particular type. The

determination of high risk shall state the

cause for that finding.

(2) An IHA may continue to be

eligible for funding despite a finding

that it is high risk—subject to special

conditions and/or restrictions

corresponding to the deficiencies

found—if it has submitted a

management improvement plan that

was approved by HUD, and it has

exhibited substantial compliance with

the plan or a good faith effort to comply

with the plan. If HUD determines that

it is necessary to impose special

conditions or restrictions, it will notify

the IHA in writing of the applicable

conditions or restrictions. One or more
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18199

of the following special conditions or

restrictions may be imposed:

(i) Submission to HUD of additional

documentation;

(ii) Submission to HUD of additional

or more detailed financial reports;

(iii) Additional project monitoring

from the HUD Area ONAP;

(iv) Additional requirements for

technical assistance, from HUD or

another entity approved by HUD;

(v) Establishing additional approvals

by HUD;

(vi) Withholding some or all of the

IHA’s grant;

(vii) Declaring a breach of the ACC

grant amendment with respect to some

or all of the IHA’s functions; or

(viii) Any other sanction authorized

by law or regulation.

(g) Appeals. (1) An IHA may appeal

a corrective action order or a

determination of high risk status to the

local HUD Administrator, Office of

Native American Programs (ONAP). All

appeals shall be made in writing within

30 calendar days of notice to the IHA of

the HUD action and shall state clearly

any justification or evidence that the

action is unwarranted or too severe. If

an appeal is filed concerning one or

more action(s), the action(s) shall not

take effect until HUD makes a final

determination on the appeal or notifies

the IHA that special circumstances exist

that warrant giving immediate effect to

the announced HUD action. The HUD

Administrator shall respond to the

appeal within 30 days of receipt of the

appeal.

(2) An IHA may appeal a decision of

the Administrator to the ONAP,

Headquarters, only if the case involves

actions related to a determination of

ineligibility of funding for the upcoming

funding cycle. An appeal of the

Administrator’s decision shall be made

to ONAP, Headquarters in writing,

stating the justification or evidence, and

shall be received within 21 days of the

date of the Administrator’s decision.

Decisions reviewed by Headquarters

will be evaluated based on the facts as

presented to the Administrator and on

any aggravating or extenuating

circumstances.

(3) The IHA’s Board of Commissioners

shall notify the tribal government of

HUD’s final determination to withhold

or suspend funds or declare a breach of

the ACC grant agreement, as well as the

basis for, and consequences resulting

from, such a determination.

Subpart B—Procurement

§ 950.160 Procurement standards.

(a) HUD standards. (1) Applicability.

This subpart sets forth Federal

requirements to be followed by IHAs in

the procurement of services, supplies,

and goods.

(2) Contracting authorization. An IHA

may execute contracts without HUD

approval for the procurement of work,

materials, equipment, and/or

professional services, in accordance

with paragraph (a)(3)(ii) of this section.

Before the execution of contracts, the

IHA Board of Commissioners will

ensure that procedures are in place to

ensure all ACC, statutory, and

regulatory requirements are satisfied

before the execution of contracts. The

IHA Board of Commissioners will

periodically review compliance with

these procedures.

(3) Limitations. (i) An IHA shall not

award a contract until the prospective

contractor has demonstrated, to the

satisfaction of the IHA, the technical,

administrative, and financial capability

to perform contract work of the size and

type involved and within the time

provided under the contract. The IHA

shall not award a contract to a person

or firm on the List of Parties Excluded

from Federal Procurement and

Nonprocurement Programs, which is

compiled, maintained, and distributed

by the General Services Administration

(GSA), or to a person or firm that is

subject to a limited denial of

participation issued by the HUD Office

of Native American Programs. (See 24

CFR part 24.)

(ii) The IHA may execute or approve

any agreement or contract for personnel,

management, legal, or other services

with any person or firm without the

prior written approval of HUD, except

under the following circumstances:

(A) When the term of the agreement

or contract (including renewal) is in

excess of two years; or

(B) When the amount of the

agreement or contract is in excess of the

amount included for such purpose in

the HUD-approved development cost

budget, Comprehensive Grant program

budget, or operating budget, or an

amount specified from time to time by

HUD, as the case may be; or

(C) When the agreement or contract is

for legal or other services in connection

with litigation; or

(D) For contracts in excess of

$100,000 in the aggregate when the IHA

proposes to award a contract based

upon a single bid or proposal received

except when the procurement meets the

requirements of 24 CFR 950.165(d).

(4) Records. An IHA shall maintain

records sufficient to detail the

significant history of a procurement.

The IHA shall maintain evidence in its

files:

(i) That the solicitation and award

procedures were conducted in

compliance with State, tribal, or local

laws and Federal requirements,

including requirements for Indian

preference and wage rates;

(ii) That the award does not exceed

the approved budget amount and is not

being made on the basis of a single bid

or proposal; and

(iii) That the IHA reviewed the

contractor’s qualifications, checked to

ensure that the contractor is not listed

on the GSA List of Parties Excluded

from Federal Procurement and

Nonprocurement Programs, and

determined that the contractor has the

capacity to successfully complete the

work or services under the terms and

conditions of the contract. This

determination shall consider the

contractor’s record of past performance,

integrity, compliance with public

policy, and financial and technical

resources.

(5) Contract administration. An IHA

is responsible, in accordance with good

administrative practice and sound

business judgment, for the settlement of

all contractual and administrative issues

arising out of procurement.

(6) Competition. All procurement

transactions must be conducted in a

manner providing full and open

competition.

(7) Contract cost and price. An IHA

must perform a cost or price analysis in

connection with every procurement

action, including contract

modifications.

(b) IHA standards. (1) IHA

procedures. Each IHA shall adopt,

promulgate, and comply with rules or

regulations for the procurement and

administration of supplies, materials,

services, and equipment in connection

with the development and operation of

projects. Upon adoption or

modification, the IHA will promptly

furnish a copy of these rules or

regulations to HUD. These rules or

regulations shall contain provisions on

at least the following subjects:

(i) Procedures to ensure that all

procurement transactions are conducted

in a full and open competitive manner,

consistent with the standards of 24 CFR

85.36;

(ii) Identification (by position title) of

IHA officials authorized to enter into

and approve contracts on a

noncompetitive basis as authorized by

24 CFR 85.36(d)(4);

(iii) Procedures for inventory control;

(iv) Procedures for storage and

protection of goods and supplies;

(v) Procedures for issuance of, or

other disposition of, supplies and

equipment;
18200 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(vi) Procedures for implementing

Indian preference requirements;

(vii) Procedures for handling

complaints and protests regarding

procurement;

(viii) Standards of conduct governing

IHA directors, board members, officers,

and employees; and

(ix) Conflict of interest provisions

governing directors, officers, employees,

contractors/developers, and others

doing business with the IHA.

(2) Contract administration system.

An IHA shall maintain a contract

administration system that ensures that

contractors perform in accordance with

the terms, conditions, and specifications

of their contracts and purchase orders.

(c) Government-wide contract

requirements. A HUD regulation found

at 24 CFR part 85 embodies governmentwide administrative requirements for

grants to State, local, and federally

recognized Indian tribal governments

(including grants received by IHAs). The

contract provisions listed in 24 CFR

85.36(i) of that regulation are to be

included in any IHA contracts.

§ 950.165 Methods of procurement.

(a) Small purchase procedures. Small

purchase procedures are those relatively

simple and informal procurement

methods for securing services, supplies,

or other property that do not cost more

than $100,000 in the aggregate. If small

purchase procurements are used, price

or rate quotations will be obtained from

an adequate number of qualified

sources.

(b) Procurement by sealed bids

(Invitations for Bid (IFB)). Bids are

publicly solicited and a firm fixed price

contract (lump sum or unit price) is

awarded to the responsible bidder

whose bid, conforming with all the

material terms and conditions of the

invitation for bids, is the lowest in

price. The sealed bid method is the

preferred method for procuring

construction, if the conditions in

§ 950.165(b)(1) apply.

(1) In order for sealed bidding to be

feasible, the following conditions

should be present:

(i) A complete, adequate, and realistic

specification or purchase description is

available;

(ii) Two or more responsible bidders

are willing and able to compete

effectively for the business; and

(iii) The procurement lends itself to a

firm fixed price contract and the

selection of the successful bidder can be

made principally on the basis of price.

(2) If sealed bids are used, the

following requirements apply:

(i) The invitation for bids will be

publicly advertised and bids shall be

solicited from an adequate number of

known suppliers, providing them

sufficient time prior to the date set for

opening the bids;

(ii) The invitation for bids, which will

include any specifications and pertinent

attachments, shall define the items or

services in order for the bidder to

properly respond;

(iii) All bids will be publicly opened

at the time and place prescribed in the

invitation for bids;

(iv) A firm fixed price contract award

will be made in writing to the lowest

responsive and responsible bidder; and

(v) Any or all bids may be rejected if

there is a sound documented reason.

(c) Procurement by competitive

proposals (Request for Proposals (RFP)).

The technique of competitive proposals

is normally conducted with more than

one source submitting an offer, and

either a fixed price or cost

reimbursement type contract is

awarded. It is generally used when

conditions are not appropriate for the

use of sealed bids. If this method is

used, the following requirements apply:

(1) Requests for proposals will be

publicized and identify all evaluation

factors and their relative importance.

Any response to publicized requests for

proposals shall be honored to the

maximum extent practical;

(2) Proposals will be solicited from an

adequate number of qualified sources;

(3) IHAs will have a method for

conducting technical evaluations of the

proposals received and for selecting

awardees;

(4) Awards will be made to the

responsible firm whose proposal is most

advantageous to the program, with price

and other factors considered; and

(5) IHAs may use competitive

proposal procedures for qualificationsbased procurement of architectural/

engineering (A/E) professional services

whereby competitors’ qualifications are

evaluated and the most qualified

competitor is selected, subject to

negotiation of fair and reasonable

compensation. The method, when price

is not used as a selection factor, can

only be used in procurement of A/E

professional services. It cannot be used

to purchase other types of services

though A/E firms, even though they are

a potential source to perform the

proposed effort.

(d) Procurement by noncompetitive

proposals is procurement through

solicitation of a proposal from only one

source, or where after solicitation of a

number of sources, competition is

determined inadequate.

(1) Procurement by noncompetitive

proposals may be used only when the

award of a contract is infeasible under

small purchase procedures, sealed bids,

or competitive proposals, and one of the

following circumstances applies:

(i) The item is available only from a

single source;

(ii) The public exigency or emergency

for the requirement will not permit a

delay resulting from competitive

solicitation;

(iii) HUD authorizes noncompetitive

proposals; or

(iv) After solicitation of a number of

sources, competition is determined

inadequate.

(2) Cost analysis, i.e., verifying the

proposed cost data, the projections of

the data, and the evaluation of the

specific elements of costs and profit, is

required.

§ 950.170 Other requirements applicable to

development contracts.

(a) Bonding requirements. For

construction contracts for more than

$100,000, each contractor shall be

required to provide bid guarantees and

adequate assurance of performance and

payment acceptable to HUD in

accordance with 24 CFR 85.36(h). In the

case of a Mutual Help project, the term

‘‘total contract price’’ as used with

respect to each of the above assurance

methods includes the value of all

Mutual Help contributions for work,

materials, or equipment to be provided

to the contractor for use in performing

the contract work. The following

methods may be used to provide

performance and payment assurance:

(1) Performance and payment bonds

for 100 percent of the total contract

price;

(2) Deposit with the IHA of a cash

escrow of not less than 20 percent of the

total contract price, subject to reduction

during the warranty period,

commensurate with potential risk;

(3) Letter of credit for 25 percent of

the total contract price, unconditionally

payable upon demand of the IHA,

subject to reduction during the warranty

period commensurate with potential

risk;

(4) Letter of credit for 10 percent of

the total contract price unconditionally

payable upon demand of the IHA

subject to reduction during the warranty

period commensurate with potential

risk, and compliance with the

procedures for monitoring of

disbursements by the contractor.

(b) Executive Order 11246 (equal

employment opportunity). Contracts for

construction work in connection with

Projects under this part are subject to

Executive Order 11246 (3 CFR, 1964–65

Comp., p. 339), as amended by

Executive Order 11375 (3 CFR, 1966–70

Comp., p. 684), and to applicable
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18201

implementing regulations (24 CFR part

130; 41 CFR chapter 60), rules, and

orders of HUD and the Office of Federal

Contract Compliance Programs of the

Department of Labor (DOL). Executive

Order 11246 prohibits discrimination

and requires affirmative action to ensure

that employees or applicants for

employment are treated without regard

to their race, color, religion, sex, or

national origin. Compliance with E.O.

11246, and related regulations, Orders,

and requirements shall be to the

maximum extent consistent with, but

not in derogation of, compliance with

section 7(b) of the Indian SelfDetermination and Education

Assistance Act.

(c) Local area residents. In accordance

with section 3 of the Housing and Urban

Development Act of 1968 (12 U.S.C.

1701u) and the implementing

regulations in 24 CFR part 135, IHAs

and their contractors and subcontractors

shall make best efforts, consistent with

existing Federal, State, and local laws

and regulations (including section 7(b)

of the Indian Self-Determination and

Education Assistance Act) to give lowand very low-income persons the

training and employment opportunities

generated by section 3 covered

assistance (as this term is defined in 24

CFR 135.3(1)) and to give section 3

business concerns the contracting

opportunities generated by section 3

covered assistance.

§ 950.172 Wage rates.

(a) Determination of prevailing wage

rates. For the applicable method of

determination of the prevailing wage

rates to be paid laborers and mechanics,

see § 950.120(c).

(b) Preemption of prevailing wage

rates. (1) A prevailing wage rate

determined under State or tribal law

shall be inapplicable to a contract or

IHA-performed work item for the

development, maintenance, or

modernization of a project whenever:

(i) The contract or the work item is

otherwise subject to State or tribal law

requiring the payment of wage rates

determined by a State, local, or tribal

government or agency to be prevailing

and is for a project assisted with funds

for low-income housing under the Act;

and

(ii) The wage rate (the basic hourly

rate and any fringe benefits) determined

under State or tribal law to be prevailing

with respect to an employee in any

trade or position employed in the

development, maintenance, or

modernization of a project exceeds

whichever of the following Federal

wage rates is applicable:

(A) The wage rate determined by the

Secretary of Labor pursuant to the

Davis-Bacon Act (40 U.S.C. 276a, et

seq.) to be prevailing in the locality with

respect to such trade;

(B) An applicable apprentice wage

rate based thereon specified in an

apprenticeship program registered with

the Department of Labor or a DOLrecognized State Apprenticeship

Agency;

(C) An applicable trainee wage rate

based thereon specified in a DOLcertified trainee program; or

(D) The wage rate determined by the

Secretary of HUD to be prevailing in the

locality with respect to such trade or

position.

(2) For the purpose of ascertaining

whether a wage rate determined under

State or tribal law for a trade or position

exceeds the Federal wage rate:

(i) When a rate determined by the

Secretary of Labor or an apprentice or

trainee wage rate based thereon is

applicable, the total wage rate

determined under State or tribal law,

including fringe benefits (if any) and

basic hourly rate, shall be compared to

the total wage rate determined by the

Secretary of Labor or apprentice or

trainee wage rate; and

(ii) When a rate determined by the

Secretary of HUD is applicable, any

fringe benefits determined under State

or tribal law shall be excluded from the

comparison with the rate determined by

the Secretary of HUD.

(3) Whenever paragraph (b)(1)(i) of

this section is applicable:

(i) Any solicitation issued by the IHA

and any contract executed by the IHA

for development, maintenance, or

modernization of the project shall

include a statement as prescribed in this

paragraph, and failure to include this

statement may constitute grounds for

requiring re-solicitation. The statement

that any prevailing wage rate (including

basic hourly rate and any fringe

benefits) determined under State or

tribal law to be prevailing with respect

to an employee in any trade or position

employed under the contract is

inapplicable to the contract and shall

not be enforced against the contractor or

any subcontractor with respect to

employees engaged under the contract

must be included whenever either of the

following occurs:

(A) Such non-Federal prevailing wage

rate exceeds:

(1) The applicable wage rate

determined by the Secretary of Labor

pursuant to the Davis-Bacon Act (40

U.S.C. 276a, et seq.) to be prevailing in

the locality with respect to such trade;

(2) An applicable apprentice wage

rate based thereon specified in an

apprenticeship program registered with

the Department of Labor or a DOLrecognized State Apprenticeship

Agency; or

(3) An applicable trainee wage rate

based thereon specified in a DOLcertified trainee program; or

(B) Such non-Federal prevailing wage

rate, exclusive of any fringe benefits,

exceeds the applicable wage rate

determined by the Secretary of HUD to

be prevailing in the locality with respect

to such trade or position.

(ii) The IHA itself shall not be

required to pay the basic hourly rate or

any fringe benefits comprising a

prevailing wage rate determined under

State or tribal law and described in

paragraph (b)(2) of this section to any of

its own employees who may be engaged

in the development, maintenance, or

modernization of the project; and

(iii) Neither the basic hourly rate nor

any fringe benefits comprising a

prevailing wage rate determined under

State or tribal law and described in

paragraph (b)(2) of this section shall be

enforced against the IHA or any of its

contractors or subcontractors with

respect to employees engaged in the

contract or IHA-performed work item

for development, maintenance, or

modernization of the project.

(4) Nothing in paragraph (b) of this

section shall affect the applicability of

any wage rate established in a collective

bargaining agreement with an IHA or its

contractors or subcontractors when such

wage rate equals or exceeds the

applicable Federal wage rate referred to

in paragraph (b)(1)(ii) of this section,

nor does paragraph (b) of this section

impose a ceiling on wage rates an IHA

or its contractors or subcontractors may

choose to pay independent of State law.

(5) The provisions of paragraph (b) of

this section shall apply to work

performed under any prime contract

entered into as a result of a solicitation

of bids or proposals issued on or after

October 6, 1988 and to any work

performed by employees of an IHA on

or after October 6, 1988.

§ 950.175 Indian preference requirements.

(a) Applicability. HUD has determined

that grants under this part are subject to

section 7(b) of the Indian SelfDetermination and Education

Assistance Act (25 U.S.C. 450e(b)),

which requires that, to the greatest

extent feasible:

(1) Preference and opportunities for

training and employment shall be given

to Indians; and

(2) Preference in the award of

contracts and subcontracts shall be

given to Indian organizations and

Indian-owned economic enterprises.
18202 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(b) Definitions. Indian organizations

and Indian-owned economic enterprises

include either of the following:

(1) Any economic enterprise as

defined in section 3(e) of the Indian

Financing Act of 1974 (25 U.S.C. 1452);

that is, ‘‘any Indian-owned (as defined

by the Secretary of Interior) commercial,

industrial, or business activity

established or organized for the purpose

of profit provided that such Indian

ownership and control shall constitute

not less than 51 percent of the

enterprise’’; and

(2) Any Tribal organization as defined

in section 4(c) of the Indian SelfDetermination and Education

Assistance Act (25 U.S.C. 450(b)(8));

that is, ‘‘the recognized governing body

of any Indian Tribe; any legally

established organization of Indians

which is controlled, sanctioned or

chartered by such governing body or

which is democratically elected by the

adult members of the Indian community

to be served by such organizations and

which includes the maximum

participation of Indians in all phases of

its activities.’’

(c) Preference in employment and

training. To the greatest extent feasible,

IHAs and their contractors and

subcontractors shall give preference and

opportunities for training and

employment in connection with the

administration of grants awarded under

this part and in the award of contracts

funded under this part to Indians and

Alaskan natives. The Indian SelfDetermination Act defines ‘‘Indians’’ to

mean persons who are members of an

Indian tribe, and defines ‘‘Indian tribe’’

to mean any Indian tribe, band, nation,

or other organized group or community,

including any Alaska Native village or

regional or village corporation as

defined in or established pursuant to the

Alaska Native Claims Settlement Act,

which is recognized as eligible for the

special programs and services provided

by the United States to Indians because

of their status as Indians.

(d) Preference in contracting. To the

greatest extent feasible, IHAs shall give

preference in the award of contracts

funded under this part to Indian

organizations and Indian-owned

economic enterprises.

(1) Each IHA shall:

(i) Advertise for bids or proposals

limited to qualified Indian organizations

and Indian-owned enterprises; or

(ii) Use a two-stage preference

procedure, as follows:

(A) Stage 1. Invite or otherwise solicit

Indian-owned economic enterprises to

submit a statement of intent to respond

to a bid announcement limited to Indian

organizations and Indian-owned

enterprises;

(B) Stage 2. If responses to the

solicitation of intent to bid under Stage

1, above, are received from more than

one Indian organization or Indianowned enterprise that is found to be

qualified, advertise for bids or proposals

limited to Indian organizations and

Indian-owned economic enterprises

(otherwise, bids may be solicited on an

open, competitive basis); or

(iii) Develop and incorporate into

their procurement policy, subject to

HUD Area ONAP one-time approval, the

IHA’s method of providing preference.

In no instance shall HUD approve a

method that provides preference based

upon affiliation or membership in a

particular tribe or group of tribes.

(2) If the IHA-selected method of

providing preference under paragraph

(d)(1) of this section results in fewer

than two responsible qualified Indian

organizations or Indian-owned

enterprises submitting a statement of

intent, a bid, or a proposal to perform

the contract at a reasonable cost, then

the IHA shall:

(i) Re-compete the contract, using any

of the methods described in paragraph

(d)(1) of this section; or

(ii) Re-compete the contract without

limiting the advertisement for bids or

proposals to Indian organizations and

Indian-owned economic enterprises; or

(iii) If only one bid or proposal is

received, request Area ONAP review

and approval of the proposed contract

and related procurement documents, in

accordance with 24 CFR 85.36, in order

to award the contract to the single bid

or proposal.

(3) Procurements that are within the

dollar limitations established for small

purchases under 24 CFR 85.36(d)(1)

need not follow the formal requirements

for public announcement and

advertising for bids or proposals as

provided in paragraph (d)(1) of this

section. However, an IHA small

purchase procurement shall, to the

greatest extent feasible, provide Indian

preference in the award of contracts.

(4) All preferences shall be publicly

announced in the solicitation and the

contract documents.

(5) An IHA, at its discretion, may

require information of prospective

contractors seeking to qualify as Indian

organizations or Indian-owned

economic enterprises. IHAs may require

prospective contractors to submit

information prior to submitting a bid or

proposal, or at the time of submission.

Information requested by the IHA may

include but is not limited to the

following:

(i) Evidence showing fully the extent

of Indian ownership, control, and

interest;

(ii) Evidence of structure,

management, and financing affecting the

Indian character of the enterprise,

including major subcontracts and

purchase agreements; materials or

equipment supply arrangements; and

management salary or profit-sharing

arrangements; and evidence showing

the effect of these on the extent of

Indian ownership and interest; and

(iii) Evidence sufficient to

demonstrate to the satisfaction of the

IHA that the prospective contractor has

the technical, administrative, and

financial capability to perform contract

work of the size and type involved.

(6) The IHA shall incorporate the

following clause (referred to as the

Section 7(b) clause) in each contract

awarded in connection with a project

funded under this part:

(i) The work to be performed under

this contract is on a project subject to

Section 7(b) of the Indian SelfDetermination and Education

Assistance Act (25 U.S.C. 450e(b))

(Indian Act). Section 7(b) requires that

to the greatest extent feasible:

(A) Preferences and opportunities for

training and employment shall be given

to Indians; and

(B) Preferences in the award of

contracts and subcontracts shall be

given to Indian organizations and

Indian-owned economic enterprises.

(ii) The parties to this contract shall

comply with the provisions of section

7(b) of the Indian Act.

(iii) In connection with this contract,

the contractor shall, to the greatest

extent feasible, give preference in the

award of any subcontracts to Indian

organizations and Indian-owned

economic enterprises, and preferences

and opportunities for training and

employment to Indians and Alaskan

natives.

(iv) The contractor shall include this

Section 7(b) clause in every subcontract

in connection with the project, and

shall, at the direction of the IHA, take

appropriate action pursuant to the

subcontract upon a finding by the IHA

or HUD that the subcontractor has

violated the Section 7(b) clause of the

Indian Act.

(e) Additional Indian preference

requirements. An IHA may, subject to

applicable State, local, or tribal law,

provide for additional Indian preference

requirements as conditions for the

award of, or in the terms of, any contract

in connection with a project funded

under this part. The additional Indian

preference requirements shall be

consistent with the objectives of the
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18203

Section 7(b) clause of the Indian Act

and shall not result in a significantly

higher cost or greater risk of

nonperformance or longer period of

performance. The additional Indian

preference requirements permitted by

this part do not include the imposition

of geographic preferences or restrictions

to the procurement process.

(f) Complaint procedures. The

following complaint procedures are

applicable to complaints arising out of

any of the methods of providing for

Indian preference contained in this

subpart, including alternate methods

enacted and approved in the manner

described in this subpart B.

(1) Each complaint shall be in writing,

signed, and filed with the IHA.

(2) A complaint must be filed with the

IHA no later than 20 calendar days from

the date of the action (or omission) upon

which the complaint is based.

(3) Upon receipt of a complaint, the

IHA shall promptly stamp the date and

time of receipt upon the complaint, and

immediately acknowledge its receipt.

(4) Within 20 calendar days of receipt

of a complaint, the IHA shall either

meet, or communicate by mail or

telephone, with the complaining party

in an effort to resolve the matter. The

IHA shall make a determination on a

complaint and notify the complainant,

in writing, within 30 calendar days of

submittal of the complaint to the IHA.

The decision of the IHA shall constitute

final administrative action on the

complaint.

§ 950.190 Insurance.

(a) Purpose. This section implements

policies concerning insurance coverage

required under the Annual

Contributions Contract (ACC) or Mutual

Help Annual Contributions Contract

(MHACC) between HUD and an IHA.

These contracts require (in section 305

of the ACC and Article IX of the

MHACC) that IHAs maintain specified

insurance coverage for property and

casualty losses that would jeopardize

the financial stability of the IHAs. The

insurance coverage is required to be

obtained under procedures that provide

for open and competitive bidding. The

HUD Appropriations Act for Fiscal Year

1992 (Pub.L. 102–368) provided that an

IHA could purchase insurance coverage

without regard to competitive selection

procedures when it purchases it from a

nonprofit insurance entity owned and

controlled by IHAs approved by HUD in

accordance with standards established

by regulation. This section specifies the

standards.

(b) Method of selection of insurance

coverage. While 24 CFR part 85 requires

that grantees solicit full and open

competition for their procurements, the

HUD Appropriations Act for Fiscal Year

1992 (Pub.L. 102–368) provides an

exception to this requirement. IHAs are

authorized to obtain any line of

insurance from a nonprofit insurance

entity that is owned and controlled by

IHAs and approved by HUD in

accordance with this section, without

regard to competitive selection

procedures. Procurement of insurance

from other entities is subject to

competitive selection procedures.

(c) Approval of a nonprofit insurance

entity. Under the following conditions,

HUD will approve a nonprofit selffunded insurance entity created by IHAs

that limits participation to IHAs (and to

nonprofit entities associated with IHAs

that engage in activities or perform

functions only for housing authorities or

housing authority residents):

(1) An insurance company (including

a risk retention group);

(i) The insurance company maintains

a current license or is authorized to do

business in the State or tribal area by the

State Insurance Commissioner or Indian

tribal governing body and has submitted

documentation of this authority to HUD;

and

(ii) The insurance company has not

been suspended from providing

insurance coverage in the State or tribal

area or been suspended or debarred

from doing business with the Federal

Government. The insurance company is

obligated to send to HUD a copy of any

action taken by the authorizing official

to withdraw the license or

authorization;

(2) An entity not organized as an

insurance company.

(i) The entity has competent

underwriting staff (hired directly or

engaged by contract with a third party),

as evidenced by professionals with an

average of at least five years of

experience in large risk (exceeding

$100,000 in annual premiums)

commercial underwriting or at least five

years of experience in the underwriting

of risks for public entity risk pools. This

standard may be satisfied by submission

of evidence of competent underwriting

staff, including copies of resumes of

underwriting staff for the entity;

(ii) The entity has efficient and

qualified management (hired directly or

engaged by contract with a third party),

as evidenced by the report submitted to

HUD in accordance with paragraph

(d)(3) of this section and by having at

least one senior staff person who has a

minimum of five years of experience:

(A) At the management level of Vice

President of a property/casualty

insurance entity;

(B) As a senior branch manager of a

branch office with annual property/

casualty premiums exceeding $5

million; or

(C) As a senior manager of a public

entity risk pool. Documentation for this

standard must include copies of

resumes of key management personnel

responsible for oversight and for the

day-to-day operation of the entity;

(iii) The entity maintains internal

controls and cost containment

measures, as evidenced by an annual

budget;

(iv) The entity maintains sound

investments consistent with:

(A) The State insurance

commissioner’s requirements for

licensed insurance companies, or other

State statutory requirements controlling

investments of public entities in the

State in which the entity is organized,

investing only in assets that qualify as

‘‘admitted assets’’; or

(B) Any applicable provisions of

Indian tribal law concerning

investments, in the case of an IHA that

is not subject to such State law;

(v) The entity maintains adequate

surplus and reserves for undischarged

liabilities of all types, as evidenced by

a current audited financial statement

and an actuarial review conducted in

accordance with paragraph (d) of this

section; and

(vi) Upon application for initial

approval, the entity has proper

organizational documentation, as

evidenced by copies of the articles of

incorporation, by-laws, business plans,

copies of contracts with third party

administrators, and an opinion from

legal counsel that establishment of the

entity conforms with all legal

requirements under Federal, State, or

tribal law. Any material changes made

to these documents after initial approval

must be submitted for review and

approval before becoming effective.

(d) Professional evaluations of

performance. Audits and actuarial

reviews are required to be prepared and

submitted annually to the HUD Office of

Public and Indian Housing, for review

and appropriate action, by nonprofit

insurance entities that are not insurance

companies approved under paragraph

(c)(1) of this section. Selection of

entities to perform such reviews shall

comply with the competitive

requirements of 24 CFR 85.36. In

addition, an evaluation of other

management factors is required to be

performed by an insurance professional

every three years. For fiscal years

ending on or after December 31, 1993,

the initial audit, actuarial review, and

insurance management review required

for a nonprofit insurance entity must be
18204 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

submitted to HUD within 90 days after

the end of the entity’s fiscal year.

(1) The annual financial statement

prepared in accordance with generally

accepted accounting principles

(including any supplementary data

required by GASB 10) is to be audited

by an independent auditor (see 24 CFR

part 44), in accordance with generally

accepted auditing standards. The

independent auditor shall express an

opinion on whether the entity’s

financial statement is presented fairly in

accordance with generally accepted

accounting principles. A copy of this

audit must be submitted to HUD.

(2) The actuarial review must be done

consistent with requirements

established by the National Association

of Insurance Commissioners and must

be conducted by an independent

property/casualty actuary who is an

Associate or Fellow of a recognized

professional actuarial organization, such

as the Casualty Actuary Society. The

report issued, a copy of which must be

submitted to HUD, must include an

opinion on any over or under reserving

and the adequacy of the reserves

maintained for the open claims and for

incurred but unreported claims.

(3) A review must be conducted, a

copy of which must be submitted to

HUD, by an independent insurance

consulting firm that has at least one

person on staff who has received the

professional designation of chartered

property/casualty underwriter (CPCU),

associate in risk management (ARM), or

associate in claims (AIC), of the

following:

(i) Efficiency of any Third Party

Administrator;

(ii) Timeliness of the claim payments

and reserving practices; and

(iii) The adequacy of reinsurance

coverage.

(e) Revocation of approval of a

nonprofit insurance entity. HUD may

revoke its approval of a nonprofit

insurance entity under this section

when it no longer meets the

requirements of this section. The

nonprofit insurance entity will be

notified in writing of the proposed

revocation of its approval, and the

manner and time in which to request a

hearing to challenge the determination.

The procedure to be followed is

specified in 24 CFR part 26.

§ 950.195 Lead-based paint liability

insurance coverage.

(a) General. The purpose of this

section is to specify what HUD deems

reasonable insurance coverage with

respect to the hazards associated with

testing for and abatement of lead-based

paint that the IHA undertakes, in

accordance with the IHA’s ACC or

MHACC with HUD. The insurance

coverage does not relieve the IHA of its

responsibility for assuring that leadbased paint testing and abatement

activities are conducted in a responsible

manner.

(b) Insurance coverage requirements.

When the IHA undertakes lead-based

paint testing and abatement, it must

assure that it has reasonable insurance

coverage for itself for potential personal

injury liability associated with those

activities. If the work is being done by

IHA employees, the IHA must obtain a

liability insurance policy directly to

protect the IHA. If the work is being

done by a contractor, the IHA may

obtain, from the insurer of the

contractor performing this type of work

in accordance with a contract, a

certificate of insurance providing

evidence of such insurance and naming

the IHA as an additional insured; or it

may obtain such insurance directly.

Insurance must remain in effect during

the entire period of testing and

abatement and must comply with the

following requirements:

(1) Named insured. If purchased by

the IHA, the policy shall name the IHA

as insured. If purchased by an

independent contractor, the policy shall

name the contractor as insured and the

IHA as an additional insured, in

connection with performing work under

the IHA’s lead-based paint testing and

abatement contract. If the IHA has

executed a contract with a Resident

Management Corporation (RMC) to

manage a building/project on behalf of

the IHA, the RMC shall also be an

additional insured under the policy in

connection with the lead-based paint

testing and abatement contract. (The

duties of the RMC are similar to those

of a real estate management firm.)

(2) Coverage limits. The minimum

limit of liability shall be $500,000 per

occurrence written, with a combined

single limit for bodily injury and

property damage.

(3) Deductible. A deductible, if any,

may not exceed $5,000 per occurrence.

(4) Supplementary payments.

Payments for such supplementary costs

as the costs of defending against a claim

must be in addition to, and not as a

reduction of, the limit of liability.

However, it will be permissible for the

policy to have a limit on the amount

payable for defense costs. If a limit is

applicable, it must not be less than

$250,000 per claim prior to such costs

being deducted from the limit of

liability.

(5) Occurrence form policy. The form

used must be an ‘‘occurrence’’ form, or

a ‘‘claims made’’ form that contains an

extended reporting period of at least five

years. (Under an occurrence form,

coverage applies to any loss if the policy

was in effect when the loss occurred,

regardless of when the claim is made.)

(6) Aggregate limit. If the policy

contains an aggregate limit, the

minimum acceptable limit is

$1,000,000.

(7) Cancellation. In the event of

cancellation, at least 30 days’ advance

notice is to be given to the insured and

any additional insured.

(c) Exception to requirements.

Insurance already purchased by the IHA

or contractor and in force on the date

this rule is effective, which provides

coverage for the hazards involved in the

testing for and abatement of lead-based

paint, shall be considered as meeting

the requirements of this rule until the

expiration of the policy. This rule is not

applicable to architects, engineers, or

consultants who do not physically

perform lead-based paint testing and

abatement work.

(d) Insurance for the existence

hazard. An IHA may also purchase

special liability insurance against the

existence hazard of lead-based paint,

although it is not a required coverage.

An IHA may purchase this coverage if,

in the opinion of the IHA, the policy

meets the IHA’s requirements, the

premium is reasonable, and the policy

is obtained in accordance with

applicable procurement standards of

this subpart B. If this coverage is

purchased, the premium must be paid

from funds available under the

Performance Funding System or from

reserves.

Subpart C—Development

§ 950.200 Roles and responsibilities of

Federal agencies.

HUD, IHS, BIA, and other appropriate

agencies shall coordinate their functions

in accordance with the

Interdepartmental Agreement. HUD

shall take the lead role in the

coordination of the construction of

Indian housing under this part.

§ 950.205 Allocation.

HUD will allocate funds to Area

ONAPs using a systematic process that

considers the relative need for housing

in each HUD area or other geographic

area, based on the most recent and

reliable data available. (See 24 CFR part

791, subpart D.)

§ 950.207 Eligibility.

(a) Basic criteria. An IHA is eligible to

submit an application for new housing

development and to be considered for

funding if it meets the following criteria:
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18205

(1) Has been established in

accordance with the provisions of

§ 950.125 or § 950.126; and

(2) Has not been determined to be

administratively incapable, in

accordance with § 950.135; and

(3) Meets all the performance

thresholds contained in paragraph (b) of

this section.

(b) Performance thresholds. An IHA

shall be in compliance with the

following requirements for all projects

in development or operation to be

considered for additional new housing

development funding. The ONAP

Administrator may waive performance

thresholds for good cause.

(1) Environmental Review

requirements of § 950.247;

(2) Fiscal closeout requirements of

§ 950.285;

(3) Final site approval and site control

requirements of § 950.250(c);

(4) Firm commitments from utility

suppliers in accordance with

§ 950.235(c) prior to the execution of a

construction contract, contract of sale,

or start of construction; and

(5) Pre-construction certification

requirements of § 950.260.

§ 950.210 Authority for proceeding without

HUD approval.

(a) IHA authority to proceed. An IHA

shall proceed with development

functions without obtaining HUD

approval except as otherwise specified

in this part. An IHA shall accomplish

necessary planning and administration

activities to assure the timely

completion of the development grant

(generally six years from the initial

development grant approval to

development grant closeout).

(b) Rescinding authorization. At any

time during the development process,

HUD may make a determination, subject

to the procedures specified under

§ 950.135, that an IHA shall obtain HUD

approval of additional processing steps.

If such a determination is made, HUD

shall explain in writing the reasons for

the determination and specify any

processing steps that are subject to

additional technical assistance and prior

approval by HUD.

(c) Time constraints. The IHA shall

commence project planning so that

construction begins within 24 months of

the initial development grant approval

date. HUD shall not recapture funds

reserved for the project during the 30-

month period following the initial

development grant approval. Excluded

from the computation of the 30-month

period shall be any delay caused by the

failure of HUD to process such project

within a reasonable period of time, any

environmental review requirement

(other than the failure to initiate the

environmental review process by the

responsible entity), any legal action

affecting the project, or any other factor

beyond the control of the IHA. If an IHA

fails to reach construction start for a

project within 24 months of the date of

initial development grant approval,

HUD shall analyze the circumstances

that have resulted in the failure to reach

construction start and, subject to the

availability of resources, shall provide

assistance to the IHA to enable

construction start within 30 months

after the date of initial development

grant approval.

§ 950.215 Production methods.

(a) Choice and approval of production

method. The IHA may utilize any

production method or combination of

production methods as long as the

production method(s) is not in conflict

with the procurement requirements of

24 CFR 85.36 and subpart B of this part.

The IHA shall advise HUD on its

application of its choice of production

methods. Prior HUD approval is

required if the method selected is Force

Account or if the IHA proposes to

utilize a noncompetitive procurement

method. If HUD disapproves the IHA’s

preferred development method, it shall

provide a justification to the IHA.

Production methods utilized in the

Indian Housing program are

Conventional, Turnkey, Modified

Turnkey, Self-Help, Acquisition, and

Force Account.

(b) Special requirements for approval

of Force Account method. The Force

Account method may be used only if

approved by the Area ONAP. The IHA

shall demonstrate that it has the

technical and administrative

capabilities to complete the project

within the projected time and budget.

The Area ONAP shall require that a

tribe or IHA agree in writing:

(1) To cover any costs in excess of

those included in the HUD-approved

development cost budget;

(2) Demonstrate that it has the

financial resources to meet the excess

costs up to a specified amount; and

(3) Provide some form of security

acceptable to HUD to cover excess costs.

For this purpose, an IHA may use

attachable assets including funds

maintained in its reserve for

replacements received from the sale of

Mutual Help units. The Area ONAP may

approve the Force Account method

without requiring the IHA or tribe to

provide security to cover excess costs if

the IHA agrees to develop the project in

small stages with additional HUD

monitoring and oversight. Under such

approval, the IHA continues to be

obligated to cover costs in excess of

those included in the HUD-approved

development cost budget.

§ 950.220 Total development cost.

(a) Total development cost standard.

Total development cost (TDC)

standards, which establish the

maximum allowable cost for developing

Indian housing projects, are determined

as a per unit cost for various unit sizes,

structure types, and geographic areas,

and are published annually by HUD.

(b) Resident training and insurance.

The total development cost of a project

may include costs associated with a

HUD-approved tenant or homebuyer

counseling program (in accordance with

the provisions of § 950.453) and the

insurance premiums for the first three

years of project operation with no

obligation for reimbursement from

operating receipts. The anticipated cost

of such insurance premiums may be

charged to the development and placed

in escrow by the IHA to enable closeout

of the development grant.

(c) Costs excluded from TDC. The

TDC standard for a project includes all

costs associated with the project except

for off-site water and sanitation facilities

infrastructure and donations received

from any public or private source. Costs

for off-site water and sanitation facilities

infrastructure and any donations

received shall be included in the project

development cost budget but will be

excluded from the calculation of the

project TDC limit.

§ 950.225 Application.

(a) Submission to HUD. (1) An eligible

IHA may submit an application for a

project after HUD issues a notice of

funding availability (NOFA).

(2) The application shall be on the

form prescribed by HUD and shall be

accompanied by all the legal and

administrative attachments required by

the form.

(3) State-created IHAs for nonFederally recognized tribes shall certify

that sites selected shall be within the

IHA’s area of operation. For purposes of

this section ‘‘area of operation’’ is

defined as a land area with defined

geographical boundaries, which has a

significant concentration of Indian

families who are:

(i) Not served by a PHA or triballycreated IHA; and

(ii) Have a bona fide historic presence

or connection with the land, as

recognized by the Federal Government

or a State.

(b) Rating process. (1) Applications

shall be rated and points shall be

awarded for at least the following

categories:
18206 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(i) Relative unmet need for housing;

(ii) Relative IHA occupancy rate

compared to the occupancy rates of

other eligible IHAs submitting

applications;

(iii) Length of time since the last

development grant approval date for

each IHA compared to other eligible

IHAs submitting applications;

(iv) Current IHA development

pipeline activity; and

(v) Other factors identified in a

NOFA.

(2) After the completion of the rating

process, all applications shall be

combined into one list to produce an

ordered ranking to be used in

determining applications to be funded.

§ 950.227 Initial development grant

approval and ACC execution.

(a) Grant approval. (1) For those

applications selected for funding, the

Area ONAP shall issue a development

grant approval that shall specify

housing type, household type,

development method, the amount of

funds reserved, the minimum and

maximum number of total units, and the

number of units of each bedroom size to

be developed. The total project

development cost is limited to the funds

designated in the development grant

approval plus any donations to the

project.

(2) As long as the total project

development cost limit and the funds

reserved in the development grant

approval are not exceeded, the IHA may

change any of the elements specified in

the development grant approval it

determines necessary to complete the

project. If an IHA decides to change any

of the elements specified in the

development grant approval, it shall

submit to HUD a request to amend the

development grant approval, including

documentation supporting the request.

HUD shall either approve the request or

notify the IHA of the reason the request

is not approved. Amendment funds may

not be used to increase the project size.

(b) Execution of ACC. (1) Upon

issuance of the development grant

approval by HUD, the IHA and HUD

may execute an ACC to cover the

eligible costs of the project with respect

to the number of units covered by the

development grant approval.

(2) The ACC must be amended, if

required, upon completion of project

planning to correctly identify the

number of units in the development,

program type, and production method.

§ 950.229 Expenditure of funds.

(a) Development Cost Budgets. The

IHA shall submit for HUD review and

acceptance a development cost budget

showing anticipated expenditures and

any needed supporting documentation

before funds can be obligated or

expended.

(1) The IHA may submit a

development cost budget for planning

for an amount that the IHA

demonstrates is required for the

planning of the project. A development

cost budget for planning may include

costs for comprehensive planning. (See

paragraph (c) of this section.)

(2) The IHA shall submit a

construction stage development cost

budget, in accordance with the

procedures specified under § 950.260.

(b) Limitations. (1) An IHA shall not

incur any development cost in excess of

the amount identified on the ACC for

that project.

(2) Obligation or expenditure of

development funds is limited to the

amounts reviewed and accepted by

HUD in the latest development cost

budget.

(3) Use of development funds of

projects under ACC to cover costs for

another project is strictly prohibited

except as provided for under paragraph

(c) of this section.

(c) Comprehensive housing plan. At

the request of an IHA, HUD may

approve up to one percent of the

development grant to establish and/or

update a master housing plan for the

IHA’s area of operation. The plan shall

contain such elements as proposed

housing sites, existing and proposed offsite roads, and existing and proposed

water and sewer facilities. In addition,

the plan shall address geographical and

topographical features, as well as socioeconomic and cultural factors, such as

employment opportunities, schools, and

services, that have an impact on the

placement of residential housing. The

plan shall be approved by resolution of

the tribal council. The one-percent cost

for the comprehensive housing plan

may be charged to the development and

placed in an escrow or revolving fund

account by the IHA to enable closeout

of the development program and/or

pooling of planning resources.

§ 950.231 Project coordination.

(a) Project coordination meeting.

Upon notification of a development

grant approval, the IHA shall schedule

a project coordination meeting to plan

and schedule the steps needed to

develop the project. The IHA shall

invite to the project coordination

meeting the project designer (if known)

and any tribal, State, or Federal officials

who will participate in the development

of the project. At the project

coordination meeting, the IHA shall

establish a schedule of planning

activities with target dates for

completion of key activities, including

the submission to HUD of a construction

stage development cost budget and

other requirements contained in

§ 950.260. The schedule, and any

amendments thereto, shall be provided

to meeting participants and to HUD to

be used in planning and monitoring

activities.

(b) Citizen participation. The IHA

shall hold at least one public meeting at

which comments are solicited on the

proposed sites and project design from

potential occupants, as well as from

other interested parties. The meeting

may be held in conjunction with a

regularly scheduled board meeting or

may be held separately. In either case,

adequate notice shall be provided to the

public to enable full participation. The

IHA shall give maximum consideration

to all public comments in the design of

the project. Failure to hold a public

meeting or failure to consider public

comments in the design of the project

shall be grounds for HUD to rescind

authorization, in accordance with the

procedures specified in § 950.210(b).

§ 950.235 Site selection criteria.

(a) Relation to tribal, local, and

regional plans. Selected sites shall

comply with all applicable tribal, local,

and/or regional plans.

(b) Access roads. Access roads up to

the boundaries of multi-unit sites shall

be provided by the BIA, the tribe, or

other appropriate agency and shall not

be an eligible cost of the project. Access

roads up to the boundaries of individual

homesites in a scattered site project

shall be provided by the homebuyer, the

tribe, or other appropriate agency and

shall not be an eligible cost of the

project. Access roads shall be

maintained by a responsible local entity

to provide safe and suitable vehicular

access. No site shall be approved unless

such access roads exist, or a written

assurance has been obtained from the

responsible entity that roads shall be

constructed before commencement of

project construction.

(c) Utilities. Before final site approval,

the IHA shall obtain firm commitments

from utility suppliers that all utility

services necessary for the operation of

the project are available or will be

available at the time of project

occupancy.

(d) Physical characteristics of site.

The physical characteristics of a site

shall facilitate overall economy in site

preparation, construction, and

management. Only reasonable costs for

surveys, planning, test borings, and test

wells shall be included in the

development cost of the project.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18207

(e) Size of sites. An individual

homesite, whether a scattered site or

included in a multi-unit site, shall not

exceed the size determined by the IHA

or by tribal or local policy to be

necessary for the use and occupancy of

the dwelling unit.

(f) Access to sites. For a Mutual Help

unit, each homesite shall be legally and

practicably available for use by another

homebuyer. If a site is part of other land

owned by the prospective homebuyer,

the lease or other conveyance to the IHA

shall include the legal right of access to

the site by any substitute homebuyer.

§ 950.240 Types of interest in land.

(a) Trust or restricted land. Sites on

tribally or individually owned trust or

restricted land (as defined in 25 CFR

151.2) shall be leased to the IHA for a

term of not less than 50 years (25 years,

automatically renewable for an

additional term of 25 years) on a HUDapproved form of lease, which shall

provide that the lease cannot be

terminated before its expiration without

the consent of the IHA, and while the

site remains under the ACC, by HUD.

(b) Unrestricted land. Sites on

unrestricted land shall be either

conveyed to the IHA in fee or leased to

the IHA on a HUD-approved form of

lease for a term of not less than 50 years.

(c) Tax exempt status.

Notwithstanding the type of interest in

land, all project property shall be

exempt from local or State imposed real

or personal property tax in accordance

with section 6(d) of the U.S. Housing

Act of 1937 (42 U.S.C. 1437d(d)).

§ 950.245 Appraisals.

(a) When the cost of a site is to be

charged to the IHA’s development cost

and the cost of the site exceeds $1,500

per dwelling unit, an appraisal shall be

made in accordance with the

requirements of the Uniform Relocation

Assistance and Real Property

Acquisition Policies Act of 1970, as

amended (42 U.S.C. 4601–4655).

Government-wide implementing

regulations are at 49 CFR part 24. The

cost of donated land may be assumed to

be $1,500 per unit and no appraisal is

required. An appraisal of donated land

shall be performed only if the IHA

determines that the value to be

attributed to the site exceeds $1,500.

(b) When the interest to be appraised

is a leasehold interest in tribally or

individually owned trust or restricted

land and comparable leasehold

transactions are not available, the

appraiser shall estimate the value of the

land as if alienable in fee, based on a

comparison of the land being valued

with sales of fee interests in comparable

land in the same or competing market

areas.

§ 950.247 Environment.

In order to assure that the policies of

the National Environmental Policy Act

of 1969 and other provisions of Federal

law that further the purposes of that act

are most effectively implemented in

connection with the expenditure of

Indian housing funds, the IHA shall

comply with the Environmental Review

Procedures specified under 24 CFR part

58. Upon completion of the

environmental review, the IHA shall

submit a certification and request for

release of funds for particular projects in

accordance with 24 CFR part 58. Costs

associated with completing the

environmental review are eligible

project expenses.

§ 950.250 Site approval.

(a) IHA certification. Included in the

IHA’s certifications pursuant to

§ 950.260 shall be a certification to HUD

that all conditions that would prevent

the site from being included in the

project have been satisfactorily

addressed, and that there are no legal or

physical reasons that would interfere

with the occupancy and use of the site

during the term of the ACC. Such

certification shall be conditioned only

upon final acquisition or execution of a

lease on the property.

(b) Tentative site approval. (1) When

a site is proposed for use, the IHA shall

inspect the property to ascertain its

suitability for development. When

appropriate, the IHA shall request an

inspection of any proposed site by

utility suppliers, the BIA, the IHS, and

a representative of the local governing

body and shall include each agency’s

comments in a list of potential site

approval concerns. Tentative approval

of the site by the IHA occurs when the

IHA determines that:

(i) A site can be economically

included in the project;

(ii) A site does not contain any legal

or physical conditions that cannot be

adequately addressed that would

exclude it from consideration for

acquisition; and

(iii) The environmental review of the

site has been completed (see § 950.247)

and a finding of no significant impact

issued.

(2) Tentative site approval shall not be

determined until the requirements for

compliance with local governmental

approval have been met. (See 24 CFR

part 791.)

(c) Final site approval. (1) Final site

approval occurs when all of the

conditions stated in the tentative

approval have been appropriately

addressed and, with respect to trust

land or restricted land over which the

BIA has authority, the BIA has given

either unconditional concurrence for

final site approval or concurrence

conditioned only on subsequent

execution of site leases or right-of-way

easements. If the BIA has given final site

approval conditioned on subsequent

execution of site leases of right-of-way

easements, the IHA shall obtain from

the BIA written assurance that a valid

lease or easement, executed by all the

necessary parties, can be obtained

within a reasonable time and before

start of construction.

(2) Final site approval on all sites for

the project shall occur:

(i) Before any commitment is made to

acquire or lease any site; and

(ii) Before construction is started,

except for a project developed under the

acquisition method for restricted land

sites, in accordance with paragraph

(c)(3) of this section. In addition, leases

and necessary rights-of-way shall be

obtained before solicitation of

construction bids or before construction

may begin on any units.

(3) With respect to trust or restricted

land sites, construction may start before

final site approval of all sites only when

the following conditions have been met:

(i) All sites for the project have

tentative site approval;

(ii) At least 50 percent of the sites

have final site approval;

(iii) HUD is satisfied that the balance

of the sites will meet the requirements

for final site approval no later than one

year from execution of the construction

contract; and

(iv) The construction contract

provides that if all sites, finally

approved and with executed leases,

have not been delivered by the IHA to

the contractor/developer within one

year from execution of the construction

contract (or HUD-approved extension),

the construction contract shall be

reduced by the amount attributable to

the units to be developed on the

undelivered sites.

§ 950.255 Design criteria.

(a) Building standards. (1) The IHA

shall use tribal or, if appropriate, local

government building codes that meet or

exceed standards of national building

codes. In the absence of tribal or local

government adopted building codes that

meet the requirements of this section,

the IHA Board of Commissioners shall

specify, by Resolution, the building

codes to be followed in the development

of its housing.

(2) Codes used shall provide sufficient

flexibility to permit the use of different

designs and materials; shall include
18208 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

standards for reasonable site designs;

shall give proper consideration to the

needs of physically handicapped

persons for ready access to, and use of,

housing assisted under this part (see 24

CFR part 8); and shall be sufficient to

produce a decent, safe, and sanitary

home.

(3) Modifications to model national

building codes are authorized if a tribe

or, in the absence of tribally adopted

codes, an IHA determines to make

special provisions in its codes for

traditional and culturally oriented

design features.

(b) Fuel and energy consumption. (1)

Newly constructed housing shall meet

or exceed the requirements of the latest

Model Energy Code published by the

Council of American Building Officials.

In selecting from among design options

for heating, cooking, and electrical

systems, maximum attention shall be

given to cost, adequacy, maintenance of

the system, and the long-term reliability

of fuel supplies. Where fuel is not

locally available at low cost, alternate

systems such as wind, solar, or coal may

be used and included in the project cost.

(2) Life-cycle cost-effective energy

performance standards established by

HUD to reduce the operating costs of

Indian housing developments over the

estimated life of the buildings shall

apply to all new Indian housing

developments under this part.

(c) Moderate housing design. The IHA

shall select a moderate design standard

taking into consideration anticipated

long-term operating costs.

(d) Water provisions for Alaska.

Alaska Native housing assisted under

this part shall be designed and

constructed to include water storage

tanks when the housing is not served by

or scheduled to be served by piped

utilities. These tanks shall be no less

than 100 gallons in capacity and

constructed to be accessed from outside

the house.

(e) Design approval. The IHA shall

obtain the approval of project designs by

all local or tribal regulatory agencies, by

the BIA for on-site streets, and the IHS,

where appropriate, for community water

and/or sewer facilities. The IHA shall

assure the design meets applicable

building codes, that the project can be

constructed within the amount of funds

reserved for the development, and that

the project is financially feasible

including ongoing maintenance cost

considerations.

§ 950.260 Construction stage development

cost budget and certifications.

(a) IHA submission. Upon completion

of project planning, an IHA shall submit

to HUD a construction stage

development cost budget, certifications

attesting to the completion of all

preconstruction requirements, and

project characteristics information.

Submission of this information shall be

in accordance with the schedule

established at the project coordination

meeting. The IHA’s timely submission

of the information specified in this

paragraph, in the form prescribed by

HUD, shall be a factor in HUD’s

evaluation of an IHA’s administrative

capability in accordance with § 950.135.

The information and documentation

submitted by the IHA shall demonstrate

the financial feasibility of the project,

the legal sufficiency to proceed with

construction, and compliance with all

ACC, statutory, and regulatory

requirements.

(b) HUD actions. HUD shall review

the IHA submittals and shall determine

whether they meet the requirements

specified in paragraph (a) of this

section. If the submittals meet the

requirements of this section, HUD will

notify the IHA. If the submission does

not meet the requirements of this

section, HUD shall notify the IHA of the

reasons and allow the IHA to amend

and resubmit the documents.

§ 950.265 Construction and inspections.

(a) Construction start. Following HUD

review and acceptance of the IHA

submittals, the IHA shall commence

final preconstruction activities and

begin construction of the development.

(b) Notification. Upon award of

construction contract, execution of a

contract of sale, or construction start,

the IHA shall notify all participating

agencies. The notification to HUD shall

include a revised development cost

budget, if appropriate, and a statement

that the IHA has met all ACC, statutory,

and regulatory requirements for the

applicable development method. Upon

request, the IHA shall submit to HUD

copies of the construction plans and

specifications, the construction contract

or contract of sale, detailed plans for

Force Account construction

management, the notice to proceed, or

other applicable contracting documents.

(c) Inspections and Monitoring. (1)

Whatever the development method

used, the IHA shall be responsible for

obtaining inspections throughout the

construction period including the

frequency of inspections and the

procedures to be used to assure

completion of quality housing in

accordance with the contract

documents. Inspections shall be

performed by an architect, engineer, or

other qualified person selected by the

IHA.

(2) The IHA shall coordinate

inspections with tribal or local

regulatory agencies and, where

applicable, the BIA and/or IHS, to

assure that all governing codes and

other requirements are met.

(3) HUD representatives or agents may

visit construction sites to evaluate the

IHA’s contract administration. These

visits are not inspections of the quality

of construction and shall not be

construed by the IHA as construction

inspections.

§ 950.270 Construction completion and

settlement.

(a) Final inspection. The IHA shall

assure that all work is satisfactorily

completed, in accordance with the

terms of the construction contract, prior

to scheduling a final inspection. The

final inspection shall be made jointly by

the IHA and the contractor. Where

appropriate, the IHA shall notify tribal

or local regulatory agencies, the BIA, the

IHS, and HUD before this inspection to

provide them with the opportunity to

participate in the final inspection of all

or part of the work. In a MH project,

homebuyers shall also be invited to

participate in the inspection of their

homes, but acceptance shall be by the

IHA. Maximum consideration shall be

given to all homebuyer concerns.

(b) Contract settlement. (1) If the final

inspection discloses no deficiencies

other than punch list items or seasonal

completion items, the IHA shall, as soon

as practical, develop an interim

Certificate of Completion to enable

partial settlement of the contract. The

interim Certificate shall detail the items

remaining and set forth a schedule for

their completion, and shall allow the

IHA to accept the units (or stage) for

occupancy. Upon completion of the

interim Certificate and receipt of the

contractor’s Certificate and Release, the

IHA shall release the monies due the

contractor/developer less withholdings

in accordance with the construction

contract.

(2) The contractor/developer shall

complete the punch list items in

accordance with the time schedule

contained in the interim Certificate. The

IHA may pay the contractor/developer

for items that are completed to the

satisfaction of the IHA. If the IHA is

satisfied that the applicable

requirements of the construction

contract and the interim Certificate have

been met, the IHA shall prepare a final

Certificate of Completion and release

the amounts withheld to the contractor/

developer.

(c) Notification to HUD. (1) Upon

acceptance of the project or any part

thereof, the IHA shall notify HUD of
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18209

such action. When all units within a

project are accepted, the IHA shall

provide a notification to HUD of the

date the project was fully available for

occupancy by residents.

(2) The IHA shall notify HUD when

all units in the project are occupied.

§ 950.275 Warranty inspections and

enforcement.

(a) The construction contract shall

specify the warranty periods applicable

to items completed as part of the

contract. It shall also provide for

assignment to the IHA of manufacturers’

and suppliers’ warranties covering

equipment or supplies.

(b) The IHA shall conduct an

inspection of each dwelling unit at least

once not later than six months after the

start of the contractor’s warranty period.

A separate or final warranty inspection

shall be made in time to exercise the

IHA’s rights before expiration of the

contractor’s warranties. Each inspection

shall cover all items under warranty at

the time of the inspection, including

items covered by manufacturers’ and

suppliers’ warranties. At each

inspection, the IHA shall obtain a

signed statement from the occupants as

to any deficiencies in the structure,

equipment, grounds, etc., so that it may

enforce any rights under applicable

warranties.

§ 950.280 Correcting deficiencies.

(a) Responsibility. The IHA shall

pursue correction of any deficiencies

against the responsible party (e.g.,

architect, contractor/developer or MH

homebuyer) as soon as possible after

discovering the deficiencies. Where the

costs of correcting deficiencies cannot

be recovered from the responsible party

and/or the deficiency requires

immediate correction to protect life or

safety or to avoid further damage to the

project unit(s), the IHA may apply to

HUD for amendment of the

development budget to provide the

funds required. The IHA may also use

operating receipts to cover such costs.

The IHA shall be responsible for

correction of any deficiencies that could

have been detected and/or corrected

during the warranty period if the IHA

had inspected at the appropriate time or

had pursued correction of deficiencies

against the responsible parties.

(b) Amendments. (1) HUD may, but is

not obligated to, provide additional

funding to the IHA to correct

deficiencies. The ACC may be amended

to provide amounts needed to correct

deficiencies (and any resulting damage)

in design, construction, and equipment

only where there is substantial evidence

that it is not possible to obtain timely

correction or payment by the

responsible parties, including the source

of the performance bond.

(2) In the case of a MH home, the

additional cost for correcting

deficiencies in design, construction, or

equipment (and any damage resulting

therefrom) shall not result in an increase

in the homebuyer’s purchase price. If a

homebuyer is not in compliance with

the MHO Agreement, the IHA shall

reach agreement with the homebuyer to

correct the noncompliance before

approving or beginning the corrective

work.

§ 950.285 Fiscal closeout.

The IHA shall submit to HUD a

certificate of actual development cost

within 24 months of the date of full

availability (see § 950.270(c)(1)), or such

later date as may be approved by HUD,

in a form prescribed by HUD. Audit

verification of the actual development

costs shall be submitted to HUD within

36 months of the date of full

availability. The audit shall follow the

requirements of 24 CFR part 44 (Single

Audit Act of 1984). If the audit of the

actual development costs indicates that

excess funds have been advanced to the

IHA, the IHA shall dispose of the excess

as HUD directs. If the audited

development cost certificate discloses

unauthorized expenditures, the IHA

shall take such corrective actions as

HUD directs. If the IHA fails to submit

a certificate of actual development cost

or audit within the prescribed times, the

Area ONAP may make a determination

that all development activities have

been completed as of a specified date,

and inform the IHA that such action has

been taken and that no additional costs

may be incurred for the development.

The Area ONAP shall then proceed with

the fiscal close-out of the development.

Subpart D—Operation

§ 950.301 Admission policies.

(a) Admission policies. (1) The IHA

shall establish and adopt written

policies for admission of participants.

The policies shall cover all programs

operated by the housing authority and,

as applicable, will address the programs

individually to meet their specific

requirements (i.e., Rental, MH, or

Turnkey III). A copy of the policies shall

be posted prominently in the IHA’s

office for examination by prospective

participants. (See § 950.416 with respect

to Mutual Help admission policies.)

(2) These policies shall be designed:

(i) To attain, to the maximum extent

feasible, residency that includes

families with a broad range of incomes

and that avoids concentrations of the

most economically deprived families

with serious social problems;

(ii) To preclude admission of

applicants whose habits and practices

reasonably may be expected to have a

detrimental effect on the residents or the

project environment;

(iii) To give a preference in selection

of tenants and homebuyers to applicants

who qualify for a Federal preference,

ranking preference, or local preference,

in accordance with §§ 950.303 through

950.307; and

(iv) To establish objective and

reasonable policies for selection by the

IHA among otherwise eligible

applicants.

(3) The IHA admission policies shall

include the following:

(i) Requirements for applications and

waiting lists;

(ii) Description of the policies for

selection of applicants from the waiting

list that includes the following:

(A) How the Federal preferences

(described in § 950.303) will be used;

(B) How any ranking preferences

(described in § 950.303) will be used;

(C) How any local preferences

(described in § 950.303) will be used;

and

(D) How any residency preference

will be used;

(iii) Policies for verification and

documentation of information relevant

to acceptance or rejection of an

applicant;

(iv) Policies for resident transfer

between units, projects, and programs.

For example, an IHA could adopt a

criterion for voluntary transfer that the

resident had met all obligations under

the current program, including payment

of charges to the IHA and completion of

maintenance requirements;

(v) Policies for compliance with 24

CFR part 750, which requires applicants

and participants to disclose and verify

social security numbers at the time

eligibility is determined and at later

income reexaminations; and

(vi) Policies for compliance with 24

CFR part 760, which requires applicants

and participants to sign and submit

consent forms for the obtaining of wage

and claims information from State wage

and information collections agencies.

(4) These selection policies shall:

(i) Be duly adopted; and

(ii) Be publicized by posting copies

thereof in each office where

applications are received and by

furnishing copies to applicants or

residents upon request, free or at their

expense, at the discretion of the IHA.

(5) Such policies shall be submitted to

the HUD Area ONAP upon request from

that office.

(6) ‘‘Residency preference’’ means a

preference for admission of families
18210 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

living in the jurisdiction of the IHA.

Residency provisions are subject to the

following:

(i) Residency requirements are not

permitted;

(ii) A residency preference may not be

based on how long the applicant has

resided in the jurisdiction; and

(iii) Applicants who are working or who

have been notified that they are hired to work

in the jurisdiction shall be treated as

residents of the jurisdiction.

(b) Income limits. (1) A family shall be

a low-income family, as defined in

§ 950.102, to be eligible for admission.

(With respect to eligibility for the

Mutual Help program, see special

provisions of § 950.416.)

(2) In extremely unusual

circumstances, the IHA may request that

HUD increase or decrease income limits

for low-income families or for very lowincome families in the Indian area

because of unusually high or low family

incomes. Such a request can be granted

only by joint approval of HUD’s

Assistant Secretary for Housing and

Assistant Secretary for Public and

Indian Housing, after consultation with

the Secretary of Agriculture (if the

income limits are being established for

a ‘‘rural area’’ as defined in section 520

of the Housing Act of 1949 (42 U.S.C.

1490)).

(c) Standards for IHA tenant/

homebuyer selection criteria. (1) The

criteria to be established and

information to be considered shall be

reasonably related to individual

attributes and behavior of an applicant,

and shall not be related to those that

may be imputed to a particular group or

category of persons of which an

applicant may be a member. The IHA’s

tenant/homebuyer selection criteria

shall be in accordance with HUD

guidelines and submitted to the HUD

Area ONAP. (With respect to the Mutual

Help program, see special provisions of

§ 950.416.)

(2) In the event of any unfavorable

information regarding an applicant, the

IHA shall take into consideration the

time, nature, and extent of the past

occurrence and reasonable probability

of future favorable performance.

(d) Admission of single persons—

priority to elderly and displaced

persons. An IHA shall extend preference

to elderly families (including disabled

persons and handicapped persons),

displaced families, and displaced

persons over single persons.

(e) Selection preference with respect

to projects for elderly families. (1) In

determining priority for admission to

projects for elderly families, an IHA

shall give a preference to elderly

families. When selecting applicants for

admission from among elderly families,

an IHA shall follow its policies and

procedures for applying the Federal

preferences, ranking preferences, and

local preferences in accordance with

§§ 950.303 through 950.307.

(2) An IHA may give a preference to

near elderly families in determining

priority for admission to projects for

elderly families when the IHA

determines that there are not enough

eligible elderly families to fill all the

units that are currently vacant or

expected to become vacant in the next

12 months. In no event may an IHA

admit a near elderly family if there are

eligible elderly families on the IHA’s

waiting list that would be willing to

accept an offer for a suitable vacant unit

in that project.

(3) Before electing the discretionary

preference in paragraph (e)(2) of this

section, an IHA shall conduct outreach

to attract eligible elderly families,

including, where appropriate, elderly

families residing in projects not

designated as being for elderly families.

(4) If an IHA elects the discretionary

preference in paragraph (e)(2) of this

section, the IHA shall follow its policies

and procedures for applying the Federal

preferences, ranking preferences, and

local preferences in accordance with

§§ 950.303 through 950.307 when

selecting applicants for admission from

among near elderly families. Near

elderly families that do not qualify for

a Federal preference and that are given

preference for admission under this

section over other nonelderly families

that qualify for such a Federal

preference are not subject to the 30

percent limitation on local preference

admissions. If a near elderly applicant is

a single person, the near elderly single

person may be given a preference for

admission over other single persons to

projects for the elderly.

(f) Verification of information and

notification to applicants.

(1) Verification. Adequate procedures

shall be developed to obtain and verify

information with respect to each

applicant. Information relative to the

acceptance or rejection of an applicant

shall be documented and placed in the

applicant’s file.

(2) Notification to applicants. (i) If an

IHA determines that an applicant is

ineligible for admission to a project, the

IHA shall promptly notify the applicant

of the basis for such determination and

shall provide the applicant, upon

request and within a reasonable time

after the determination is made, with an

opportunity for an informal hearing on

such determination; and

(ii) When a determination has been

made that an applicant is eligible and

satisfies all requirements for admission

including the tenant selection criteria,

the applicant shall be notified of the

approximate date of occupancy insofar

as that date can be reasonably

determined.

§ 950.303 Selection preferences.

(a) Types of preference. There are

three types of admission preferences.

(1) ‘‘Federal preferences’’ are

preferences that are prescribed by

Federal law and required to be used in

the selection process. See § 950.304(a).

(2) ‘‘Ranking preferences’’ are

preferences that may be established by

the IHA to use in selecting among

applicants that qualify for Federal

preferences. See § 950.304(b).

(3) ‘‘Local preferences’’ are

preferences that may be established by

the IHA for use in selecting among

applicants without regard to their

Federal preference status.

(b) Use of preference in selection

process. (1) Factors other than

preference. (i) Characteristics of the

unit. The IHA may match other

characteristics of the applicant family

with the type of unit available, e.g.,

number of bedrooms. In selection of a

family for a unit that has special

accessibility features, the IHA shall give

preference to families that include

persons with disabilities who can

benefit from those features of the unit

(see 24 CFR 8.27). Also, in selection of

a family for a unit in a project for

elderly families, the owner will give

preference to elderly families and

disabled families.

(ii) Singles preference. See § 950.102.

(2) Local preference admissions. (i) If

the IHA wants to use preferences to

select among applicants without regard

to their Federal preference status, it may

adopt a preference system for this

purpose. These local preferences may

only be adopted after the IHA has

conducted a public hearing to establish

preferences that respond to local

housing needs and priorities. The IHA

may only use local preferences in

selection for admission if the IHA has

conducted the required public hearing.

(ii) ‘‘Local preference limit’’ means 30

percent of total annual admissions to

the program. In any year, the number of

families given preference in admission

pursuant to a local preference over

families with a Federal preference may

not exceed the local preference limit.

(3) Prohibition of preference if

applicant was evicted for drug-related

criminal activity. The IHA may not give

a preference to an applicant (Federal

preference, local preference, or ranking

preference) if any member of the family

is a person who was evicted during the
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18211

past three years because of drug-related

criminal activity from housing assisted

under a 1937 Housing Act program.

However, the IHA may give an

admission preference in any of the

following cases:

(i) If the IHA determines that the

evicted person has successfully

completed a rehabilitation program

approved by the IHA;

(ii) If the IHA determines that the

evicted person clearly did not

participate in or know about the drugrelated criminal activity; or

(iii) If the IHA determines that the

evicted person no longer participates in

any drug-related criminal activity.

(c) Informing applicants about

admission preferences. (1) The IHA

shall inform all applicants about

available preferences and shall give

applicants an opportunity to show that

they qualify for available preferences

(Federal preference, ranking preference,

or local preference).

(2) If the IHA determines that the

notification to all applicants on a

waiting list required by paragraph (d)(1)

of this section is impracticable because

of the length of the list, the IHA may

provide this notification to fewer than

all applicants on the list at any given

time. However, the IHA shall have

notified a sufficient number of

applicants at any given time that, on the

basis of the IHA’s determination of the

number of applicants on the waiting list

who already claim a Federal preference

and the anticipated number of project

admissions:

(i) There is an adequate pool of

applicants who are likely to qualify for

a Federal preference; and

(ii) It is unlikely that, on the basis of

the IHA’s framework for applying the

preferences and the Federal preferences

claimed by those already on the waiting

list, any applicant who has not been so

notified would receive assistance before

those who have received notification.

(d) Nondiscrimination. (1) Any

selection preference used by an IHA

shall be established and administered in

a manner that is consistent with HUD’s

affirmative fair housing objectives.

(2) The Indian Civil Rights Act may

apply to operations of the IHA.

(3) In addition, the following

nondiscrimination requirements may

apply:

(i) Title VI of the Civil Rights Act of

1964 (42 U.S.C. 2000d) and the

implementing regulations at 24 CFR part

1;

(ii) The Fair Housing Act (42 U.S.C.

3601–19) and the implementing

regulations at 24 CFR parts 100, 108,

109, and 110;

(iii) Executive Order 11063 on Equal

Opportunity in Housing and the

implementing regulations at 24 CFR part

107;

(iv) Section 504 of the Rehabilitation

Act of 1973 (29 U.S.C. 794) and the

implementing regulations at 24 CFR part

8;

(v) The Age Discrimination Act of

1975 (42 U.S.C. 6101–07) and the

implementing regulations at 24 CFR part

146; and

(vi) The Americans with Disabilities

Act (42 U.S.C. 12101–12213) to the

extent applicable.

(e) Notice and opportunity for a

meeting if preference is denied. (1) If the

IHA determines that an applicant does

not qualify for a Federal preference,

ranking preference, or local preference

claimed by the applicant, the IHA shall

promptly give the applicant written

notice of the determination. The notice

shall contain a brief statement of the

reasons for the determination, and state

that the applicant has the right to meet

with a representative of the IHA to

review the determination. The meeting

may be conducted by any person or

persons designated by the IHA, who

may be an officer or employee of the

IHA, including the person who made or

reviewed the determination or a

subordinate employee.

(2) The applicant may exercise other

rights if the applicant believes that the

applicant has been discriminated

against in violation of requirements

stated in paragraph (d) of this section.

§ 950.304 Federal preferences: general.

(a) Definition. A Federal preference is

a preference under Federal law for

selection of families that are:

(1) Involuntarily displaced;

(2) Living in substandard housing

(including families that are homeless or

living in a shelter for the homeless); or

(3) Paying more than 50 percent of

family income for rent.

(b) Ranking preferences: selection

among Federal preference holders. The

IHA’s admission policy may provide for

the use of a ranking preference for

selecting among applicants who qualify

for a Federal preference.

(1) The IHA could give preference to

working families. (If an IHA adopts such

a preference, an applicant household

shall be given the benefit of the

preference if the head and spouse, or

sole member is age 62 or older or is

receiving social security disability,

supplemental security income disability

benefits, or any other payments based

on an individual’s inability to work.) An

IHA also could give preference to

graduates of, as well as active

participants in, educational and training

programs that are designed to prepare

individuals for the job market. An IHA

also could use its local preferences for

the Section 8 Certificate and Voucher

programs to rank Federal preference

holders.

(2) The IHA may limit the number of

applicants who may qualify for any

ranking preference.

(3) The system may give different

weight to the Federal preferences,

through such means as:

(i) Aggregating the Federal

preferences (e.g., provide that two

Federal preferences outweigh one);

(ii) Giving greater weight to holders of

a particular Federal preference (e.g.,

provide that an applicant living in

substandard housing has greater need

for housing than—and, therefore, would

be considered for assistance before—an

applicant paying more than 50 percent

of family income for rent); or

(iii) Giving greater weight to a Federal

preference holder who fits a particular

category of a single Federal preference

(e.g., provide that those living in

housing that is dilapidated or has been

declared unfit for habitation by an

agency or unit of government have a

greater need for housing than those

whose housing is substandard only

because it does not have a usable

bathtub or shower inside the unit for the

exclusive use of the family).

(c) Qualifying for a Federal

preference. (1) Basis of Federal

preference. The IHA shall use the

following definitions of the Federal

preferences (as elaborated upon in

§§ 950.305, 950.306, and 950.307)

unless it has received HUD approval of

alternative definitions.

(i) Displacement. An applicant

qualifies for Federal preference if:

(A) The applicant has been

involuntarily displaced and is not living

in standard, permanent replacement

housing (as defined in § 950.305(a)(2)),

or

(B) The applicant will be

involuntarily displaced within no more

than six months from the date of

preference status certification by the

family or verification by the IHA.

(ii) Substandard housing. An

applicant qualifies for a Federal

preference if the applicant is living in

substandard housing. An applicant that

is homeless or living in a shelter for the

homeless is considered as living in

substandard housing.

(iii) Rent burden. An applicant

qualifies for a Federal preference if the

applicant is paying more than 50

percent of family income for rent.

(2) Certification of preference. An

applicant may claim qualification for a

Federal preference by certifying to the
18212 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

IHA that the family qualifies for Federal

preference. The IHA shall accept this

certification, unless the IHA verifies that

the applicant is not qualified for Federal

preference.

(3) Verification of preference. (i)

Before admitting an applicant on the

basis of a Federal preference, the IHA

shall require the applicant to provide

information needed by the IHA to verify

that the applicant qualifies for a Federal

preference due to the applicant’s current

status. The applicant’s current status

shall be determined without regard to

whether there has been a change in the

applicant’s qualification for a Federal

preference between the time of

application and selection for admission,

including a change from one Federal

preference category to another.

(ii) Once the IHA has verified an

applicant’s qualification for a Federal

preference, the IHA need not require the

applicant to provide information needed

by the IHA to verify such qualification

again unless:

(A) The IHA determines reverification

is desirable because a long time has

passed since verification; or

(B) The IHA has reasonable grounds

to believe that the applicant no longer

qualifies for a Federal preference.

(4) Effect of current residence in

assisted housing. No applicant is to be

denied a Federal preference for which

the family otherwise qualifies on the

basis that the applicant already resides

in assisted housing; for example, the

actual condition of the housing unit

shall be considered, or the possibility of

involuntary displacement resulting from

domestic violence shall be evaluated.

§ 950.305 Federal preference: involuntary

displacement.

(a) How applicant qualifies for

displacement preference. (1) An

applicant qualifies for a Federal

preference on the basis of involuntary

displacement if either of the following

apply:

(i) The applicant has been

involuntarily displaced and is not living

in standard, permanent replacement

housing; or

(ii) The applicant will be

involuntarily displaced within no more

than six months from the date of

preference status certification by the

family or verification by the IHA.

(2) (i) ‘‘Standard, permanent

replacement housing’’ is housing:

(A) That is decent, safe, and sanitary;

(B) That is adequate for the family

size; and

(C) That the family is occupying

pursuant to a lease or occupancy

agreement.

(ii) ‘‘Standard, permanent

replacement housing’’ does not include:

(A) Transient facilities, such as

motels, hotels, or temporary shelters for

victims of domestic violence or

homeless families; or

(B) In the case of domestic violence,

the housing unit in which the applicant

and the applicant’s spouse or other

member of the household who engages

in such violence live.

(b) Meaning of involuntary

displacement. An applicant is or will be

involuntarily displaced if the applicant

has vacated or will have to vacate the

unit where the applicant lives because

of one or more of the following:

(1) Displacement by disaster. An

applicant’s unit is uninhabitable

because of a disaster, such as a fire or

flood.

(2) Displacement by government

action. Activity carried on by an agency

of the United States or by any State or

local governmental body or agency in

connection with code enforcement or a

public improvement or development

program.

(3) Displacement by action of housing

owner. (i) Action by a housing owner

forces the applicant to vacate its unit.

(ii) An applicant does not qualify as

involuntarily displaced because action

by a housing owner forces the applicant

to vacate its unit unless:

(A) The applicant cannot control or

prevent the owner’s action;

(B) The owner action occurs although

the applicant met all previously

imposed conditions of occupancy; and

(C) The action taken by the owner is

other than a rent increase.

(iii) To qualify as involuntarily

displaced because action by a housing

owner forces the applicant to vacate its

unit, reasons for an applicant’s having

to vacate a housing unit include, but are

not limited to, conversion of an

applicant’s housing unit to nonrental or

nonresidential use; closing of an

applicant’s housing unit for

rehabilitation or for any other reason;

notice to an applicant that the applicant

shall vacate a unit because the owner

wants the unit for the owner’s personal

or family use or occupancy; sale of a

housing unit in which an applicant

resides under an agreement that the unit

shall be vacant when possession is

transferred; or any other legally

authorized act that results or will result

in the withdrawal by the owner of the

unit or structure from the rental market.

(iv) Such reasons do not include the

vacating of a unit by a tenant as a result

of actions taken by the owner because

the tenant refuses:

(A) To comply with HUD program

policies and procedures for the

occupancy of underoccupied or

overcrowded units; or

(B) To accept a transfer to another

housing unit in accordance with a court

decree or in accordance with policies

and procedures under a HUD-approved

desegregation plan.

(4) Displacement by domestic

violence. (i) An applicant is

involuntarily displaced if:

(A) The applicant has vacated a

housing unit because of domestic

violence; or

(B) The applicant lives in a housing

unit with a person who engages in

domestic violence.

(ii) ‘‘Domestic violence’’ means actual

or threatened physical violence directed

against one or more members of the

applicant family by a spouse or other

member of the applicant’s household.

(iii) To qualify as involuntarily

displaced because of domestic violence:

(A) The IHA shall determine that the

domestic violence occurred recently or

is of a continuing nature; and

(B) The applicant shall certify that the

person who engaged in such violence

will not reside with the applicant family

unless the IHA has given advance

written approval. If the family is

admitted, the IHA may deny or

terminate assistance to the family for

breach of this certification.

(5) Displacement to avoid reprisals. (i)

An applicant family is involuntarily

displaced if:

(A) Family members provided

information on criminal activities to a

law enforcement agency; and

(B) Based on a threat assessment, a

law enforcement agency recommends

rehousing the family to avoid or

minimize a risk of violence against

family members as a reprisal for

providing such information.

(ii) The IHA may establish

appropriate safeguards to conceal the

identity of families requiring protection

against such reprisals.

(6) Displacement by hate crimes. (i)

An applicant is involuntarily displaced

if:

(A) One or more members of the

applicant’s family have been the victim

of one or more hate crimes; and

(B) The applicant has vacated a

housing unit because of such crime, or

the fear associated with such crime has

destroyed the applicant’s peaceful

enjoyment of the unit.

(ii) ‘‘Hate crime’’ means actual or

threatened physical violence or

intimidation that is directed against a

person or his or her property and that

is based on the person’s race, color,

religion, sex, national origin, handicap,

or familial status.

(iii) The IHA shall determine that the

hate crime involved occurred recently

or is of a continuing nature.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18213

(7) Displacement by inaccessibility of

unit. An applicant is involuntarily

displaced if:

(i) A member of the family has a

mobility or other impairment that makes

the person unable to use critical

elements of the unit; and

(ii) The owner is not legally obligated

to make the changes to the unit that

would make critical elements accessible

to the disabled person as a reasonable

accommodation.

(8) Displacement because of HUD

disposition of multifamily project.

Involuntary displacement includes

displacement because of disposition of

a multifamily rental housing project by

HUD under section 203 of the Housing

and Community Development

Amendments of 1978.

§ 950.306 Federal preference: substandard

housing.

(a) When unit is substandard. A unit

is substandard if it:

(1) Is dilapidated;

(2) Does not have operable indoor

plumbing;

(3) Does not have a usable flush toilet

inside the unit for the exclusive use of

a family;

(4) Does not have a usable bathtub or

shower inside the unit for the exclusive

use of a family;

(5) Does not have electricity, or has

inadequate or unsafe electrical service;

(6) Does not have a safe or adequate

source of heat;

(7) Should, but does not, have a

kitchen; or

(8) Has been declared unfit for

habitation by an agency or unit of

government.

(b) Other definitions. (1) Dilapidated

unit. A housing unit is dilapidated if:

(i) The unit does not provide safe and

adequate shelter, and in its present

condition endangers the health, safety,

or well-being of a family; or

(ii) The unit has one or more critical

defects, or a combination of

intermediate defects in sufficient

number or extent to require

considerable repair or rebuilding. The

defects may involve original

construction, or they may result from

continued neglect, lack of repair, or

serious damage to the structure.

(2) Homeless family. (i) An applicant

that is a ‘‘homeless family’’ is

considered to be living in substandard

housing.

(ii) A ‘‘homeless family’’ includes any

person or family that:

(A) Lacks a fixed, regular, and

adequate nighttime residence; and also

(B) Has a primary nighttime residence

that is:

(1) A supervised publicly or privately

operated shelter designed to provide

temporary living accommodations

(including welfare hotels, congregate

shelters, and transitional housing);

(2) An institution that provides a

temporary residence for individuals

intended to be institutionalized; or

(3) A public or private place not

designed for, or ordinarily used as, a

regular sleeping accommodation for

human beings.

(iii) A ‘‘homeless family’’ does not

include any person imprisoned or

otherwise detained pursuant to an Act

of Congress or a State or tribal law.

(3) Status of SRO housing. In

determining whether an individual

living in single room occupancy (SRO)

housing qualifies for Federal preference,

SRO housing is not considered

substandard solely because it does not

contain sanitary or food preparation

facilities.

§ 950.307 Federal preference: rent burden.

(a) ‘‘Rent burden preference’’ means

the Federal preference for admission of

applicants that are required to pay more

than 50 percent of family income for

rent.

(b) For purposes of determining

whether an applicant qualifies for the

rent burden preference:

(1) ‘‘Family income’’ means Monthly

Income, as defined in § 950.102.

(2) ‘‘Rent’’ means:

(i) The actual monthly amount due

under a lease or occupancy agreement

between a family and the family’s

current landlord; and

(ii) For utilities purchased directly by

tenants from utility providers:

(A) The utility allowance for familypurchased utilities and services that is

used in the IHA’s programs; or

(B) If the family chooses, the average

monthly payments that the family

actually made for these utilities and

services for the most recent 12-month

period or, if information is not

obtainable for the entire period, for an

appropriate recent period.

(3) Amounts paid to or on behalf of

a family under any energy assistance

program shall be subtracted from the

otherwise applicable rental amount, to

the extent that they are not included in

the family’s income.

(c) An applicant does not qualify for

a rent burden preference if either of the

following is applicable:

(1) The applicant has been required to

pay more than 50 percent of income for

rent for less than 90 days.

(2) The applicant is paying more than

50 percent of family income to rent a

unit because the applicant’s housing

assistance for occupancy of the unit

under any of the following programs has

been terminated due to the applicant’s

refusal to comply with applicable

program policies and procedures on the

occupancy of underoccupied and

overcrowded units:

(i) The Section 8 programs or public

and Indian housing programs under the

United States Housing Act of 1937;

(ii) The rent supplement program

under section 101 of the Housing and

Urban Development Act of 1965; or

(iii) Rental assistance payments under

section 236(f)(2) of the National Housing

Act.

§ 950.308 Exemption from eligibility

requirements for police officers and other

security personnel.

(a) Purpose and scope. The purpose of

this section is to permit the admission

to Indian housing of police officers and

other security personnel who are not

otherwise eligible for such housing

under any other admission requirements

or procedures, under a plan submitted

by an Indian housing authority (IHA)

and approved by the Department, and to

set forth standards and criteria for the

approval of such plans. The

Department’s objective in granting the

exemption allowed by this section is to

permit long-term residence in Indian

housing developments by police officers

and security personnel, whose visible

presence is expected to serve as a

deterrent to criminal activity in and

around Indian housing.

(b) Definitions. For the purposes of

this section:

Department means the U.S.

Department of Housing and Urban

Development (HUD). For purposes of

plan submission and approval,

Department refers to the local HUD

Office of Native American Programs.

Eligible Families means families that

are eligible for residence in Indian

housing assisted under the United

States Housing Act of 1937.

Officer means a professional police

officer or other professional security

provider. Police officers and other

security personnel are considered

professional if they are employed full

time, i.e., not less than 35 hours per

week, by a governmental unit or a

private employer and compensated

expressly for providing police or

security services. As used in this

section, ‘‘Officer’’ may refer to the

Officer as so defined or to the Officer

and his or her family taken together,

depending on the context.

Plan means the written plan

submitted by an IHA to the Department,

under which, if approved, the

Department will exempt Officers from

the normal eligibility requirements for

residence in Indian housing

developments and allow Officers who
18214 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

are otherwise not eligible to reside in

Indian housing units. An IHA may have

only one plan in effect at any one time,

which will govern exemptions under

this section for all housing

developments managed by that IHA.

(c) Exemption from eligibility

requirements; plan submission; plan

approval or disapproval.

(1) Conditions for exemption. The

Department may exempt Officers from

the eligibility requirements for

admission to Indian housing, provided

that:

(i) The Officers would not be eligible,

under any other admission requirements

or procedures, for admission to the

Indian housing development without

such an exemption; and

(ii) The exemption is given under a

properly submitted plan that satisfies

the standards and criteria set forth in

§ 950.308(d), and accordingly has been

approved by the Department.

(2) Plan submission. A plan is

properly submitted when it is received

by the local HUD Office of Native

American Programs with jurisdiction

over the IHA.

(3) Notification of plan approval or

disapproval. The Department will notify

an IHA of the approval or disapproval

of its plan within thirty days of its

submission. Plan approval by the

Department constitutes granting of the

exemption for the purposes of this

section.

(d) Plan standards and criteria. (1)

Minimum requirements. To be

approved, a plan shall satisfy the

following requirements:

(i) The plan shall identify the total

number of units under management by

the IHA; the specific housing

developments, and the number of units

they contain, where the IHA intends to

place Officers; and the particular units

(stating number of bedrooms) within

each development that would be

allocated to Officers. For each unit

identified, the plan shall state the

amount of rent that the Officer will pay

and facts and circumstances (such as the

rent that would ordinarily be charged

for the unit, the IHA’s annual

maintenance cost for the unit, the

degree of difficulty in attracting Officers

to reside in the unit, the extent of the

crime problem in the development, and

the anticipated benefits of the Officer’s

presence) that demonstrate the

reasonableness of that amount, as

required under § 950.308(e)(i).

(ii) The plan shall identify specifically

the benefits to the community and to the

IHA that will result from the presence

of Officers in each affected

development.

(iii) The plan shall describe the

existing physical and social conditions

in and around each affected

development, providing specific

evidence of criminal activity (such as

frequency of telephone calls to local

police, number of arrests and types of

offenses involved, and data on drug

abuse in the community) in order to

permit the Department to make an

informed assessment of the level of need

for increased security.

(iv) The plan shall afford the

Department a reasonable basis, which

necessarily includes the certifications

required under § 950.308(d)(2), for

determining that the use by Officers of

the identified dwelling units will:

(A) Increase security for other Indian

housing residents;

(B) Result in a limited loss of income

to the IHA; and

(C) Not result in a significant

reduction of units available for

residence by Eligible Families.

(2) Certifications by IHA. Only upon

making the determination described in

§ 950.308(d)(1)(iv) will the Department

approve a plan. Further, the Department

will not make this determination unless

the plan contains a written statement,

signed by an authorized officer or other

agent of the IHA, certifying that:

(i) The dwelling units proposed to be

allocated to Officers are situated so as to

place the Officers in close physical

proximity to other residents;

(ii) No resident families will have to

be transferred to other dwelling units in

order to make available the units

proposed to be allocated to Officers;

(iii) The dwelling units proposed to

be allocated to Officers will be rented

under a lease that contains the terms

described in § 950.308(e); and

(iv) The number of dwelling units

proposed to be allocated to Officers

under the plan does not exceed the

limits set forth in § 950.308(d)(3), or, in

the alternative, any units so allocated in

excess of the applicable maximum

number are vacant units for which there

are no Eligible Families. This

certification on the part of the IHA

satisfies the requirements of

§§ 950.308(d)(1)(iv)(B) and (C).

(3) Unit allocation table. For purposes

of the certification required by

§ 950.308(d)(2), the following table sets

forth the maximum number of units to

be allocated to Officers as a function of

the total number of units under

management by the IHA:

UNIT ALLOCATION TABLE

Total units under management Units to be

allocated

500–999 ...................................... 5

UNIT ALLOCATION TABLE—Continued

Total units under management Units to be

allocated

1000–4999 .................................. 10

5000–9999 .................................. 15

10,000 + ..................................... 20

The maximum number of units to be

allocated by IHAs with less than 500

units under management will be

determined by the Office of Native

American Programs on a case by case

basis.

(Approved by the Office of Management and

Budget under OMB control number 2577–

0185.)

(e) Special rent requirements and

other terms and conditions. The IHA

shall lease units to Officers under a

lease agreement, which shall be

submitted as a part of the plan,

containing terms that provide as

follows:

(1) Reasonable rent. The lease shall

provide for a reasonable rent, which

may be a flat amount not related to the

Officer’s income. The IHA should

attempt to establish a rent that will

provide an incentive to Officers to

reside in the units but that is also

consistent with the limited loss of

income requirement of

§ 950.308(d)(1)(iv)(B). As required in

§ 950.308(d)(1)(i), the plan shall state

facts and circumstances (such as the

rent that would ordinarily be charged

for the unit, the IHA’s annual

maintenance cost for the unit, the

degree of difficulty in attracting Officers

to reside in the unit, the extent of the

crime problem in the development, and

the anticipated benefits of the Officer’s

presence) that demonstrate the

reasonableness of the rent amount.

(2) Responsibility for damage and

overall condition. The Officer shall be

responsible for physical damage to the

interior of the leased unit, hallway, and

entrance, if any, and exterior area

bordering the unit. The lease also shall

require the Officer to maintain the

overall condition of the leased unit,

including control of litter in the area of

the development immediately around

the unit.

(3) Responsibility for normal facility

management. The lease shall impose on

the IHA responsibility for routine

facility management relating to the

leased unit, including ongoing

maintenance and repair of equipment,

trash collection, and similar areas of

responsibility.

(4) Continued employment. The lease

shall provide that the Officer’s right of

occupancy is dependent on the

continuation of employment as an
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18215

Officer. The lease also shall provide that

the Officer will move out of the leased

unit within a reasonably prompt time, to

be established by the lease, after

termination of employment as an

Officer.

(5) Prohibition on subletting. The

lease shall prohibit the Officer from

subletting the unit, and provide that the

unit shall be the Officer’s primary

residence.

(f) Applicability of the annual

contributions contract; effect on the

performance funding system. (1) Annual

contributions contract. Except to the

extent that an exemption from eligibility

requirements is provided under

§ 950.308(c), Indian housing units

occupied by Officers in accordance with

a plan submitted and approved under

this section will be subject to the terms

and conditions of the annual

contributions contract (ACC) between

the IHA and HUD. This section does not

override any of the terms and conditions

of the ACC except insofar as they are

inconsistent with the provisions of this

section.

(2) Performance Funding System. For

purposes of the operating subsidy under

the Performance Funding System (PFS)

described in subpart J of this part,

dwelling units allocated to Officers in

accordance with this section are

excluded from the total unit months

available, as defined in § 950.102. Also

for purposes of the operating subsidy

under the PFS, the full amount of any

rent paid by Officers in accordance with

this section is included in other income,

as defined in § 950.102. IHAs may

receive operating subsidy for one unit

per housing development to promote

economic self-sufficiency services or

anti-drug programs, including housing

police officers and security personnel.

An IHA may request consideration of

such units in its calculation of operating

subsidy eligibility through the

appropriate local HUD Office of Native

American Programs.

§ 950.310 Restrictions on assistance to

noncitizens.

(a) Requirements concerning

documents. For any notice or document

(decision, declaration, consent form,

etc.) that this section requires an IHA to

provide to an individual, or requires

that the IHA obtain the signature of the

individual, the IHA, where feasible,

must arrange for the notice or document

to be provided to the individual in a

language that is understood by the

individual if the individual is not

proficient in English. (See 24 CFR 8.6 of

HUD’s regulations for requirements

concerning communications with

persons with disabilities.)

(b) Restrictions on assistance.

Assistance provided under a Section

214 covered program is restricted to:

(1) Citizens; or

(2) Noncitizens who have eligible

immigration status in one of the

following categories:

(i) A noncitizen lawfully admitted for

permanent residence, as defined by

section 101(a)(20) of the Immigration

and Nationality Act (INA), as an

immigrant, as defined by section

101(a)(15) of the INA (8 U.S.C.

1101(a)(20) and 1101(a)(15),

respectively) [immigrants]. (This

category includes a noncitizen admitted

under section 210 or 210A of the INA

(8 U.S.C. 1160 or 1161), [special

agricultural worker], who has been

granted lawful temporary resident

status);

(ii) A noncitizen who entered the

United States before January 1, 1972, or

such later date as enacted by law, and

has continuously maintained residence

in the United States since then, and who

is not ineligible for citizenship, but who

is deemed to be lawfully admitted for

permanent residence as a result of an

exercise of discretion by the Attorney

General under section 249 of the INA (8

U.S.C. 1259);

(iii) A noncitizen who is lawfully

present in the United States pursuant to

an admission under section 207 of the

INA (8 U.S.C. 1157) [refugee status];

pursuant to the granting of asylum

(which has not been terminated) under

section 208 of the INA (8 U.S.C. 1158)

[asylum status]; or as a result of being

granted conditional entry under section

203(a)(7) of the INA (8 U.S.C. 1153(a)(7))

before April 1, 1980, because of

persecution or fear of persecution on

account of race, religion, or political

opinion or because of being uprooted by

catastrophic national calamity;

(iv) A noncitizen who is lawfully

present in the United States as a result

of an exercise of discretion by the

Attorney General for emergent reasons

or reasons deemed strictly in the public

interest under section 212(d)(5) of the

INA (8 U.S.C. 1182(d)(5)) [parole status];

(v) A noncitizen who is lawfully

present in the United States as a result

of the Attorney General’s withholding

deportation under section 243(h) of the

INA (8 U.S.C. 1253(h)) [threat to life or

freedom]; or

(vi) A noncitizen lawfully admitted

for temporary or permanent residence

under section 245A of the INA (8 U.S.C.

1255a) [amnesty granted under INA

245A].

(c) Family eligibility for assistance. (1)

A family shall not be eligible for

assistance unless every member of the

family residing in the unit is determined

to have eligible status, as described in

paragraph (b) of this section;

(2) Despite the ineligibility of one or

more family members, a mixed family

may be eligible for one of the three types

of assistance provided in paragraph (r)

of this section. A family without any

eligible members and receiving

assistance on June 19, 1995 may be

eligible for temporary deferral of

termination of assistance as provided in

paragraph (r) of this section.

(d) Exemption of certain homebuyers

from restrictions of this section. A

homebuyer who executed a

Homeownership Opportunity

Agreement under the Turnkey III

program or who executed a Mutual Help

and Occupancy Agreement under the

Mutual Help Homeownership program

before June 19, 1995 is not subject to

this citizenship or eligible immigration

status requirement for continued

participation in the program.

(e) Submission of evidence of

citizenship or eligible immigration

status.

(1) General. Eligibility for assistance

or continued assistance under a Section

214 covered program is contingent upon

a family’s submission to the IHA of the

documents described in paragraph (e)(2)

of this section for each family member.

If one or more family members do not

have citizenship or eligible immigration

status, the members may exercise the

election not to contend to have eligible

immigration status as provided in

paragraph (f) of this section, and the

provisions of paragraph (r) of this

section shall apply.

(2) Evidence of citizenship or eligible

immigration status. Each family,

regardless of age, must submit the

following evidence to the IHA:

(i) For citizens, the evidence consists

of a signed declaration of U.S.

citizenship;

(ii) For noncitizens who are 62 years

of age or older or who will be 62 years

of age or older and receiving assistance

under a Section 214 covered program on

June 19, 1995, the evidence consists of:

(A) A signed declaration of eligible

immigration status; and

(B) Proof of age document.

(iii) For all other noncitizens, the

evidence consists of:

(A) A signed declaration of eligible

immigration status;

(B) The INS documents listed in

paragraph (k)(2) of this section; and

(C) A signed verification consent

form.

(3) Declaration. For each family

member who contends that he or she is

a U.S. citizen or a noncitizen with

eligible immigration status, the family

must submit to the IHA a written
18216 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

declaration, signed under penalty of

perjury, by which the family member

declares whether he or she is a U.S.

citizen or a noncitizen with eligible

immigration status.

(i) For each adult, the declaration

must be signed by the adult.

(ii) For each child, the declaration

must be signed by an adult residing in

the assisted dwelling unit who is

responsible for the child.

(4) Verification consent form. (i) Who

signs. Each noncitizen who declares

eligible immigration status, must sign a

verification consent form as follows:

(A) For each adult, the form must be

signed by the adult;

(B) For each child, the form must be

signed by an adult member of the family

residing in the assisted dwelling unit

who is responsible for the child.

(ii) Notice of release of evidence by

IHA. The verification consent form shall

provide that evidence of eligible

immigration status may be released by

the IHA, without responsibility for the

further use or transmission of the

evidence by the entity receiving it, to:

(A) HUD as required by HUD; and

(B) The INS for purposes of

verification of the immigration status of

the individual.

(iii) Notice of release of evidence by

HUD. The verification consent form also

shall notify the individual of the

possible release of evidence of eligible

immigration status by HUD. Evidence of

eligible immigration status shall only be

released to the INS for purposes of

establishing eligibility for financial

assistance and not for any other

purpose. HUD is not responsible for the

further use or transmission of the

evidence or other information by the

INS.

(f) Individuals who do not contend to

have eligible immigration status. If one

or more members of a family elect not

to contend that they have eligible

immigration status and the other

members of the family establish their

citizenship or eligible immigration

status, the family may be considered for

assistance under paragraphs (r) or (s) of

this section despite the fact that no

declaration or documentation of eligible

status is submitted by one or more

members of the family. The family,

however, must identify to the IHA, the

family member (or members) who will

elect not to contend that he or she has

eligible immigration status.

(g) Notification of requirements of

Section 214. (1) When notice is to be

issued. Notification of the requirement

to submit evidence of citizenship or

eligible immigration status, as required

by this section, or to elect not to

contend that one has eligible

immigration status as provided by

paragraph (f) of this section, shall be

given by the IHA as follows:

(i) Applicant’s notice. The notification

described in paragraph (g)(1) of this

section shall be given to each applicant

at the time of application for financial

assistance. Families whose applications

are pending on June 19, 1995 shall be

notified of the requirements to submit

evidence of eligible status as soon as

possible after June 19, 1995.

(ii) Notice to families already

receiving assistance. For a family in

occupancy on June 19, 1995, the

notification described in paragraph

(g)(1) of this section shall be given to

each at the time of, and together with,

the IHA’s notice of the first regular

reexamination after that date, but not

later than one year following June 19,

1995.

(2) Form and content of notice. The

notice shall:

(i) State that financial assistance is

contingent upon the submission and

verification, as appropriate, of the

evidence of citizenship or eligible

immigration status, as required by this

section;

(ii) Describe the type of evidence that

must be submitted and state the time

period in which that evidence must be

submitted (see paragraph (h) of this

section concerning when evidence must

be submitted); and

(iii) State that assistance will be

prorated, denied or terminated, as

appropriate, upon a final determination

of ineligibility after all appeals have

been exhausted (see paragraph (n) of

this section concerning INS appeal, and

paragraph (o) of this section concerning

IHA informal hearing process) or, if

appeals are not pursued, at a time to be

specified in accordance with HUD

requirements. Families already

receiving assistance also shall be

informed of how to obtain assistance

under the preservation of families

provisions of paragraph (r) of this

section.

(h) When evidence of eligible status is

required to be submitted. The IHA shall

require evidence of eligible status to be

submitted at the times specified in

paragraph (h) of this section subject to

any extension granted in accordance

with paragraph (i) of this section.

(1) Applicants. For applicants, the

IHA must ensure that evidence of

eligible status is submitted not later

than the date the IHA anticipates or has

knowledge that verification of other

aspects of eligibility for assistance will

occur (see paragraph (l) of this section).

(2) Families already receiving

assistance. For a family already

receiving the benefit of assistance in a

covered program on June 19, 1995, the

required evidence shall be submitted at

the first regular reexamination after June

19, 1995, in accordance with program

requirements.

(3) New occupants of assisted units.

For any new family members, the

required evidence shall be submitted at

the first interim or regular

reexamination following the person’s

occupancy.

(4) Changing participation in a HUD

program. Whenever a family applies for

admission to a Section 214 covered

program, evidence of eligible status is

required to be submitted in accordance

with the requirements of this part unless

the family already has submitted the

evidence to the IHA for a covered

program.

(5) One-time evidence requirement for

continuous occupancy. For each family

member, the family is required to

submit evidence of eligible status only

one time during continuously assisted

occupancy under any covered program.

(i) Extensions of time to submit

evidence of eligible status. (1) When

extension must be granted. The IHA

shall extend the time, provided in

paragraph (h) of this section, to submit

evidence of eligible immigration status

if the family member:

(i) Submits the declaration required

under paragraph (e)(3) of this section

certifying that any person for whom

required evidence has not been

submitted is a noncitizen with eligible

immigration status; and

(ii) Certifies that the evidence needed

to support a claim of eligible

immigration status is temporarily

unavailable, additional time is needed

to obtain and submit the evidence, and

prompt and diligent efforts will be

undertaken to obtain the evidence.

(2) Prohibition on indefinite extension

period. Any extension of time, if

granted, shall be for a specific period of

time. The additional time provided

should be sufficient to allow the family

the time to obtain the evidence needed.

The IHA’s determination of the length of

the extension needed, shall be based on

the circumstances of the individual

case.

(3) Grant or denial of extension to be

in writing. The IHA’s decision to grant

or deny an extension as provided in

paragraph (i)(1) of this section shall be

issued to the family by written notice.

If the extension is granted, the notice

shall specify the extension period

granted. If the extension is denied, the

notice shall explain the reasons for

denial of the extension.

(j) Failure to submit evidence or

establish eligible immigration status. If

the family fails to submit required
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18217

evidence of eligible immigration status

within the time period specified in the

notice, or any extension granted in

accordance with paragraph (i) of this

section, or if the evidence is timely

submitted but fails to establish eligible

immigration status, the IHA shall

proceed to deny, prorate or terminate

assistance, or provide continued

assistance or temporary deferral of

termination of assistance, as

appropriate, in accordance, respectively

with the provisions of paragraph (m) of

this section or paragraph (r) of this

section.

(k) Documents of eligible immigration

status. (1) General. An IHA shall request

and review original documents of

eligible immigration status. The IHA

shall retain photocopies of the

documents for its own records and

return the original documents to the

family.

(2) Acceptable evidence of eligible

immigration status. The original of one

of the following documents is

acceptable evidence of eligible

immigration status, subject to

verification in accordance with

paragraph (l) of this section:

(i) Form I–551, Alien Registration

Receipt Card (for permanent resident

aliens);

(ii) Form I–94, Arrival-Departure

Record, with one of the following

annotations:

(A) ‘‘Admitted as Refugee Pursuant to

Section 207’’;

(B) ‘‘Section 208’’ or ‘‘Asylum’’;

(C) ‘‘Section 243(h)’’ or ‘‘Deportation

stayed by Attorney General’’;

(D) ‘‘Paroled Pursuant to Sec.

212(d)(5) of the INA’’;

(iii) If Form I–94, Arrival-Departure

Record, is not annotated, then

accompanied by one of the following

documents:

(A) A final court decision granting

asylum (but only if no appeal is taken);

(B) A letter from an INS asylum

officer granting asylum (if application is

filed on or after October 1, 1990) or from

an INS district director granting asylum

(if application filed before October 1,

1990);

(C) A court decision granting

withholding or deportation; or

(D) A letter from an INS asylum

officer granting withholding of

deportation (if application filed on or

after October 1, 1990).

(iv) Form I–688, Temporary Resident

Card, which must be annotated ‘‘Section

245A’’ or ‘‘Section 210’’;

(v) Form I–688B, Employment

Authorization Card, which must be

annotated ‘‘Provision of Law

274a.12(11)’’ or ‘‘Provision of Law

274a.12’’;

(vi) A receipt issued by the INS

indicating that an application for

issuance of a replacement document in

one of the above-listed categories has

been made and the applicant’s

entitlement to the document has been

verified; or

(vii) If other documents are

determined by the INS to constitute

acceptable evidence of eligible

immigration status, they will be

announced by notice published in the

Federal Register.

(l) Verification of eligible immigration

status. (1) When verification is to occur.

Verification of eligible immigration

status shall be conducted by the IHA

simultaneously with verification of

other aspects of eligibility for assistance

under a Section 214 covered program.

(See paragraph (h) of this section.) The

IHA shall verify eligible immigration

status in accordance with the INS

procedures described in this section.

(2) Primary verification. (i) Automated

verification system. Primary verification

of the immigration status of the person

is conducted by the IHA through the

INS automated system (INS Systematic

for Alien Verification for Entitlements

(SAVE)). The INS SAVE system

provides access to names, file numbers

and admission numbers of noncitizens.

(ii) Failure of primary verification to

confirm eligible immigration status. If

the INS SAVE system does not verify

eligible immigration status, secondary

verification must be performed.

(3) Secondary verification. (i) Manual

search of INS records. Secondary

verification is a manual search by the

INS of its records to determine an

individual’s immigration status. The

IHA must request secondary

verification, within 10 days of receiving

the results of the primary verification, if

the primary verification system does not

confirm eligible immigration status, or if

the primary verification system verifies

immigration status that is ineligible for

assistance under a covered Section 214

covered program.

(ii) Secondary verification initiated by

IHA. Secondary verification is initiated

by the IHA forwarding photocopies of

the original INS documents listed in

paragraph (k)(2) of this section (front

and back), attached to the INS document

verification request form G–845S

(Document Verification Request), or

such other form specified by the INS, to

a designated INS office for review.

(Form G–845S is available from the

local INS Office.)

(iii) Failure of secondary verification

to confirm eligible immigration status. If

the secondary verification does not

confirm eligible immigration status, the

IHA shall issue to the family the notice

described in paragraph (m)(4) of this

section, which includes notification of

appeal to the INS of the INS finding on

immigration status (see paragraph

(m)(4)(iv) of this section).

(4) Exemption from liability for INS

verification. The IHA shall not be liable

for any action, delay, or failure of the

INS in conducting the automated or

manual verification.

(m) Delay, denial, or termination of

assistance. (1) Restrictions on delay,

denial, or termination of assistance.

Assistance to an applicant shall not be

delayed or denied, and assistance to a

tenant shall not be delayed, denied, or

terminated, on the basis of ineligible

immigration status of a family member

if:

(i) The primary and secondary

verification of any immigration

documents that were timely submitted

has not been completed;

(ii) The family member for whom

required evidence has not been

submitted has moved from the tenant’s

dwelling unit;

(iii) The family member who is

determined not to be in an eligible

immigration status following INS

verification has moved from the tenant’s

dwelling unit;

(iv) The INS appeals process under

paragraph (n) of this section has not

been concluded;

(v) For a tenant, the IHA hearing

process under paragraph (o) of this

section has not been concluded;

(vi) Assistance is prorated in

accordance with paragraph (s) of this

section;

(vii) Assistance for a mixed family is

continued in accordance with paragraph

(r) of this section; or

(viii) Deferral of termination of

assistance is granted in accordance with

paragraph (r) of this section.

(2) When delay of assistance to

applicant is permissible. Assistance to

an applicant may be delayed after the

conclusion of the INS appeal process,

but not denied until the conclusion of

the IHA informal hearing process, if an

informal hearing is requested by the

family.

(3) Events causing denial or

termination of assistance. Assistance to

an applicant shall be denied, and a

tenant’s assistance shall be terminated,

in accordance with the procedures of

this section, upon the occurrence of any

of the following events:

(i) Evidence of citizenship (i.e., the

declaration) and eligible immigration

status is not submitted by the date

specified in paragraph (h) of this

section, or by the expiration of any

extension granted in accordance with

paragraph (i) of this section; or
18218 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(ii) The evidence of citizenship and

eligible immigration status is timely

submitted, but INS primary and second

verification does not verify eligible

immigration status of a family member;

and

(A) The family does not pursue INS

appeal (as provided in paragraph (n) of

this section) or IHA informal hearing

rights (as provided in paragraph (o) of

this section); or

(B) INS appeal and informal hearing

rights are pursued, but the final appeal

or hearing decisions are decided against

the family member.

(4) Notice of denial or termination of

assistance. The notice of denial or

termination of assistance shall advise

the family:

(i) That financial assistance will be

denied or terminated, and provide a

brief explanation of the reasons for the

proposed denial or termination of

assistance;

(ii) That the family may be eligible for

proration of assistance as provided in

paragraph (s) of this section;

(iii) In the case of a tenant, the criteria

and procedures for obtaining relief

under the preservation of families

provisions in paragraph (r) of this

section;

(iv) That the family has a right to

request an appeal to the INS of the

results of the secondary verification of

immigration status, and to submit

additional documentation or a written

explanation in support of the appeal, in

accordance with the procedures of

paragraph (n) this section;

(v) That the family has a right to

request an informal hearing with the

IHA either upon completion of the INS

appeal or in lieu of the INS appeal, as

provided in paragraph (n) of this

section;

(vi) For applicants, the notice shall

advise that assistance may not be

delayed until the conclusion of the INS

appeal process, but assistance may be

delayed during the pendency of the IHA

informal hearing process.

(n) Appeal to the INS. (1) Submission

of request for appeal. Upon receipt of

notification by the IHA that INS

secondary verification failed to confirm

eligible immigration status, the IHA

shall notify the family of the results of

the INS verification, and the family

shall have 30 days from the date of the

IHA’s notification, to request an appeal

of the INS results. The request for

appeal shall be made by the family

communicating that request in writing

directly to the INS. The family must

provide the IHA with a copy of the

written request for appeal and proof of

mailing. For good cause shown, the IHA

shall grant the family an extension of

time within which to request an appeal.

(2) Documentation to be submitted as

part of appeal to INS. The family shall

forward to the designated INS office any

additional documentation or written

explanation in support of the appeal.

This material must include a copy of the

INS document verification request form

G–845S (used to process the secondary

verification request) or such other form

specified by the INS, and a cover letter

indicating that the family is requesting

an appeal of the INS immigration status

verification results. (Form G–845S is

available from the local INS Office.)

(3) Decision by INS. (i) When decision

will be issued. The INS will issue to the

family, with a copy to the IHA, a

decision within 30 days of its receipt of

documentation concerning the family’s

appeal of the verification of immigration

status. If, for any reason, the INS is

unable to issue a decision within the 30

day time period, the INS will inform the

family and the IHA of the reasons for

the delay.

(ii) Notification of INS decision and of

informal hearing procedures. When the

IHA receives a copy of the INS decision,

the IHA shall notify the family of its

right to request an informal hearing on

the IHA’s ineligibility determination in

accordance with the procedures of

paragraph (o) of this section.

(4) No delay, denial or termination of

assistance until completion of INS

appeal process; direct appeal to INS.

Pending the completion of the INS

appeal under this section, assistance

may not be delayed, denied or

terminated on the basis of immigration

status.

(o) Informal hearing. (1) When request

for hearing is to be made. After

notification of the INS decision, or in

lieu of request of appeal to the INS, the

family may request that the IHA provide

a hearing. This request must be made

either within 14 days of the date the

IHA mails or delivers the notice under

paragraph (m)(4) of this section, or

within 14 days of the mailing of the INS

appeal decision issued in accordance

with paragraph (n)(4) of this section

(established by the date of postmark).

(2) Extension of time to request

hearing. The IHA shall extend the

period of time for requesting a hearing

(for a specified period) upon good cause

shown.

(3) Informal hearing procedures. (i)

For tenants, the procedures for the

hearing before the IHA are set forth in

§ 950.340.

(ii) For applicants, the procedures for

the informal hearing before the IHA are

as follows:

(A) Hearing before an impartial

individual. The applicant shall be

provided a hearing before any person(s)

designated by the IHA (including an

officer or employee of the IHA), other

than a person who made or approved

the decision under review, and other

than a person who is a subordinate of

the person who made or approved the

decision;

(B) Examination of evidence. The

applicant shall be provided the

opportunity to examine and copy, at the

applicant’s expense and at a reasonable

time in advance of the hearing, any

documents in the possession of the IHA

pertaining to the applicant’s eligibility

status, or in the possession of the INS

(as permitted by INS requirements),

including any records and regulations

that may be relevant to the hearing;

(C) Presentation of evidence and

arguments in support of eligible status.

The applicant shall be provided the

opportunity to present evidence and

arguments in support of eligible status.

Evidence may be considered without

regard to admissibility under the rules

of evidence applicable to judicial

proceedings;

(D) Controverting evidence of the

project owner. The applicant shall be

provided the opportunity to controvert

evidence relied upon by the IHA and to

confront and cross-examine all

witnesses on whose testimony or

information the IHA relies;

(E) Representation. The applicant

shall be entitled to be represented by an

attorney, or other designee, at the

applicant’s expense, and to have such

person make statements on the

applicant’s behalf;

(F) Interpretive services. The

applicant shall be entitled to arrange for

an interpreter to attend the hearing, at

the expense of the applicant or the IHA,

as may be agreed upon by both parties;

(G) Hearing to be recorded. The

applicant shall be entitled to have the

hearing recorded by audiotape (a

transcript of the hearing may, but is not

required to, be provided by the IHA);

and

(H) Hearing decision. The IHA shall

provide the applicant with a written

final decision, based solely on the facts

presented at the hearing within 14 days

of the date of the informal hearing. The

decision shall state basis for the

decision.

(p) Judicial relief. A decision against

a family member under the INS appeal

process or the IHA informal hearing

process does not preclude the family

from exercising the right, that may

otherwise be available, to seek redress

directly through judicial procedures.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18219

(q) Retention of documents. The IHA

shall retain for a minimum of 5 years

the following documents that may have

been submitted to the IHA by the family

or provided to the IHA as part of the INS

appeal or the IHA informal hearing

process:

(1) The application for financial

assistance;

(2) The form completed by the family

for income re-examination;

(3) Photocopies of any original

documents (front and back), including

original INS documents;

(4) The signed verification consent

form;

(5) The INS verification results;

(6) The request for an INS appeal;

(7) The final INS determination;

(8) The request for an IHA informal

hearing; and

(9) The final hearing decision.

(r) Preservation of mixed families and

other families. (1) Assistance available

for mixed families. (i) Assistance

available for tenant mixed families. For

a mixed family assisted under a Section

214 covered program on June 19, 1995,

and following the appeals and informal

hearing procedures provided in

paragraphs (n) and (o) of this section if

utilized by the family, one of the

following three types of assistance may

be available to the family:

(A) Continued assistance (see

paragraph (r)(2) of this section);

(B) Temporary deferral of termination

of assistance (see paragraph (r)(3) of this

section); or

(C) Prorated assistance (see paragraph

(s) of this section; a mixed family must

be provided prorated assistance if the

family so requests).

(ii) Assistance available for applicant

mixed families. Prorated assistance is

also available for mixed families

applying for assistance, as provided in

paragraph (s) of this section.

(iii) Assistance available to other

families in occupancy. For families

receiving assistance under a Section 214

covered program on the June 19, 1995

and who have no members with eligible

immigration status, the IHA may grant

the family temporary deferral of

termination of assistance.

(2) Continued assistance. A mixed

family may receive continued housing

assistance if all of the following

conditions are met:

(i) The family was receiving

assistance under a Section 214 covered

program on June 19, 1995;

(ii) The family’s head of household or

spouse has eligible immigration status

as described in paragraph (b)(2) of this

section; and

(iii) The family does not include any

person (who does not have eligible

immigration status) other than the head

of household, any spouse of the head of

household, any parents of the head of

household, any parents of the spouse, or

any children of the head of household

or spouse.

(3) Temporary deferral of termination

of assistance. (i) Eligibility for this type

of assistance. If a mixed family qualifies

for prorated assistance (and does not

qualify for continued assistance), but

decides not to accept prorated

assistance, or if a family has no

members with eligible immigration

status, the family may be eligible for

temporary deferral of termination of

assistance if necessary to permit the

family additional time for the orderly

transition of those family members with

ineligible status, and any other family

members involved, to other affordable

housing. Other affordable housing is

used in the context of transition of an

ineligible family from a rent level that

reflects HUD assistance to a rent level

that is unassisted; the term refers to

housing that is not substandard, that is

of appropriate size for the family and

that can be rented for an amount not

exceeding the amount that the family

pays for rent, including utilities, plus 25

percent.

(ii) Time limit on deferral period. If

temporary deferral of termination of

assistance is granted, the deferral period

shall be for an initial period not to

exceed six months. The initial period

may be renewed for additional periods

of six months, but the aggregate deferral

period shall not exceed a period of three

years.

(iii) Notification requirements for

beginning of each deferral period. At the

beginning of each deferral period, the

IHA must inform the family of its

ineligibility for financial assistance and

offer the family information concerning,

and referrals to assist in finding, other

affordable housing.

(iv) Determination of availability of

affordable housing at end of each

deferral period. Before the end of each

deferral period, the IHA must:

(A) Make a determination of the

availability of affordable housing of

appropriate size based on evidence of

conditions which when taken together

will demonstrate an inadequate supply

of affordable housing for the area in

which the project is located, the

consolidated plan (if applicable, as

described in 24 CFR part 91), the IHA’s

own knowledge of the availability of

affordable housing, and on evidence of

the tenant family’s efforts to locate such

housing; and

(B) Notify the tenant family in

writing, at least 60 days in advance of

the expiration of the deferral period,

that termination will be deferred again

(provided that the granting of another

deferral will not result in aggregate

deferral periods that exceed three years),

and a determination was made that

other affordable housing is not

available; or

(C) Notify the tenant family in

writing, at least 60 days in advance of

the expiration of the deferral period,

that termination of financial assistance

will not be deferred because either

granting another deferral will result in

aggregate deferral periods that exceed

three years, or a determination has been

made that other affordable housing is

available.

(v) Option to select proration of

assistance at end of deferral period. A

family who is eligible for, and receives

temporary deferral of termination of

assistance, may request, and the IHA

shall provide, proration of assistance at

the end of the deferral period if the

family has made a good faith effort

during the deferral period to locate

other affordable housing.

(vi) Notification of decision on family

preservation assistance. An IHA shall

notify the family of its decision

concerning the family’s qualification for

assistance under this section. If the

family is ineligible for assistance under

this section, the notification shall state

the reasons, which must be based on

relevant factors. For tenant families, the

notice also shall inform the tenant

family of any appeal rights.

(s) Proration of assistance. (1)

Applicability. This section applies to a

mixed family other than a family

receiving continued assistance under

paragraph (r)(2) of this section, or other

than a family who is eligible for and

requests temporary deferral of

termination of assistance under

paragraph (r)(3) of this section. The IHA

must provide an eligible mixed family

prorated assistance if the family request

prorated assistance.

(2) Method of prorating assistance.

The IHA shall prorate the family’s

assistance by:

(i) Step 1. Determining total tenant

payment in accordance with § 950.325

(annual income includes income of all

family members, including any family

member who has not established

eligible immigration status).

(ii) Step 2. Subtracting the total tenant

payment from a HUD-supplied ‘‘Indian

housing maximum rent’’ applicable to

the unit or the housing authority.

(‘‘Indian housing maximum rent’’ shall

be determined by HUD using the 95th

percentile rent for the housing

authority.) The result is the maximum

subsidy for which the family could
18220 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

qualify if all members were eligible

(‘‘family maximum subsidy’’).

(iii) Step 3. Dividing the family

maximum subsidy by the number of

persons in the family (all persons) to

determine the maximum subsidy per

each family member who has

citizenship or eligible immigration

status (‘‘eligible family member’’). The

subsidy per eligible family member is

the ‘‘member maximum subsidy’’.

(iv) Step 4. Multiplying the member

maximum subsidy by the number of

family members who have citizenship

or eligible immigration status (‘‘eligible

family members’’).

(v) Step 5. The product of steps 1

through 4, as set forth in paragraph

(s)(2) of this section is the amount of

subsidy for which the family is eligible

(‘‘eligible subsidy’’). The family’s rent is

the ‘‘public housing maximum rent’’

minus the amount of the eligible

subsidy.

(t) Prohibition of assistance to

noncitizen students. (1) General. The

provisions of this section permitting

continued assistance, prorated

assistance or temporary deferral of

termination of assistance for certain

families, do not apply to any person

who is determined to be a noncitizen

student, as defined in paragraph (t)(2) of

this section, or the family of the

noncitizen student, as described in

paragraph (t)(3) of this section.

(2) Noncitizen student. For purposes

of this part, a noncitizen student is

defined as a noncitizen who:

(i) Has a residence in a foreign

country that the person has no intention

of abandoning;

(ii) Is a bona fide student qualified to

pursue a full course of study; and

(iii) Is admitted to the United States

temporarily and solely for purposes of

pursuing such a course of study at an

established institution of learning or

other recognized place of study in the

United States, particularly designated

by such person and approved by the

Attorney General after consultation with

the Department of Education of the

United States, which institution or place

of study shall have agreed to report to

the Attorney General the termination of

attendance of each nonimmigrant

student (and if any such institution of

learning or place of study fails to make

such reports promptly the approval

shall be withdrawn).

(3) Family of noncitizen student. The

prohibition on providing assistance to a

noncitizen student as described in

paragraph (t)(1) of this section also

extends to the noncitizen spouse of the

noncitizen student and minor children

of any noncitizen student if the spouse

or children are accompanying the

student or following to join such

student. The prohibition on providing

assistance to a noncitizen student does

not extend to the citizen spouse of the

noncitizen student and the children of

the citizen spouse and noncitizen

student.

(u) Protection from liability for IHAs,

State, Tribal, and local government

agencies and officials. (1) Protection

from liability for IHAs. HUD will not

take any compliance, disallowance,

penalty, or other regulatory action

against an IHA with respect to any error

in its determination of eligibility for

assistance based on citizenship or

immigration status:

(i) If the IHA established eligibility

based upon verification of eligible

immigration status through the

verification system described in

paragraph (l) of this section;

(ii) Because the IHA was required to

provide an opportunity for the applicant

or family to submit evidence in

accordance with paragraphs (h) and (i)

of this section;

(iii) Because the IHA was required to

wait for completion of INS verification

of immigration status in accordance

with paragraph (l) of this section;

(iv) Because the IHA was required to

wait for completion of the INS appeal

process provided in accordance with

paragraph (n) of this section; or

(v) Because the IHA was required to

provide an informal hearing in

accordance with paragraph (o) of this

section.

(2) Protection from liability for State,

Tribal and local government agencies

and officials. State, Tribal, and local

government agencies and officials shall

not be liable for the design or

implementation of the verification

system described in paragraph (l) of this

section and the IHA informal hearing

provided under paragraph (o) of this

section, so long as the implementation

by the State, Tribal, or local government

agency or official is in accordance with

prescribed HUD rules and requirements.

§ 950.315 Initial determination, verification,

and reexamination of family income and

composition.

(a) Income, family composition, and

eligibility. The IHA is responsible for

determination of annual income and

adjusted income, for determination of

eligibility for admission and total tenant

payment or homebuyer required

monthly payment; and for

reexamination of family income and

composition at least annually for all

tenants and homebuyers. The ‘‘effective

date’’ of an examination or

reexamination refers to:

(1) In the case of an examination for

admission, the effective date of initial

occupancy; and

(2) In the case of a reexamination of

an existing tenant or homebuyer, the

effective date of any change in tenant

payment or required monthly payment

resulting from the reexamination.

(3) If there is no change, the effective

date is the date a change would have

taken place if the reexamination had

resulted in a change in payment.

(b) Verification. As a condition of

admission to, or continued occupancy

of, any assisted unit, the IHA shall

require the family head and other such

family members as it designates to

execute a HUD-approved release and

consent form (including any release and

consent as required under 24 CFR part

760) authorizing any depository or

private source of income, or any

Federal, State, or local agency, to

furnish or release to the IHA and to

HUD such information as the IHA or

HUD determines to be necessary. The

IHA also shall require the family to

submit directly the documentation

determined to be necessary, including

any information required under 24 CFR

part 750. Information or documentation

shall be determined to be necessary if it

is required for purposes of determining

or auditing a family’s eligibility to

receive housing assistance; for

determining the family’s adjusted

income, tenant rent, or required

monthly payment; for verifying related

information; or for monitoring

compliance with equal opportunity

requirements. The use or disclosure of

information obtained from a family or

from another source pursuant to this

release and consent shall be limited to

purposes directly connected with

administration of this part or an

application for assistance.

(c) Rent and homebuyer payment

adjustments. After consultation with the

family and upon verification of the

information, the IHA shall make

appropriate adjustments in the rent or

homebuyer payment amount. The

tenant or homebuyer shall comply with

the IHA’s policy regarding required

interim reporting of changes in the

family’s income.

(d) Implementation of verification of

citizenship or eligible immigration

status. The IHA shall follow the

procedures required by § 950.310 for

determining citizenship or eligible

immigration status before initial

occupancy, and, for tenants admitted

before June 19, 1995, at the first

reexamination of family income and

composition after that date. Thereafter,

at the annual reexaminations of family

income and composition, the IHA shall
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follow the requirements of § 950.310

concerning verification of the

immigration status of any new family

member. The family shall comply with

the IHA’s policy regarding required

interim reporting of changes in the

family’s income and composition. If the

IHA is informed of a change in the

family income or other circumstances

between regularly scheduled

reexaminations, the IHA, upon

consultation with the family and

verification of the information, shall

promptly make any adjustments

appropriate in the rent or Homebuyer

payment amount or take appropriate

action concerning the addition of a

family member who is a noncitizen with

ineligible immigration status.

(e) See 24 CFR part 908 for

requirements for transmission of data to

HUD.

§ 950.320 Determination of rents and

homebuyer payments.

(a) Rental and Turnkey III projects.

The amount of rent required of a tenant

in a rental project or the Turnkey III

homebuyer payment amount for a

homebuyer in a Turnkey III project for

Turnkey III contracts executed after

August 1, 1982, shall be equal to the

total tenant payment as determined in

accordance with § 950.325. For Turnkey

III contracts executed on or before

August 1, 1982, the Turnkey III

homebuyer payment is determined in

accordance with the contract. If the

utility allowance exceeds the rent or

required monthly payment, the IHA will

pay the utility reimbursement as

provided in § 950.325(b). In the case of

a Turnkey III homebuyer, payment of a

utility reimbursement may affect the

IHA’s evaluation of the Turnkey III

homebuyer’s homeownership potential.

(See § 950.529 regarding loss of

homeownership potential and § 950.523

regarding funds to cover such

reimbursements.)

(b) MH projects. The amount of the

required monthly payment for a

homebuyer in an MH project is

determined in accordance with subpart

E of this part.

§ 950.325 Total tenant payment—Rental

and Turnkey III programs.

(a) Total tenant payment. Total tenant

payment shall be the highest of the

following, rounded to the nearest dollar:

(1) 30 percent of monthly adjusted

income;

(2) 10 percent of monthly income; or

(3) If the family receives welfare

assistance from a public agency and a

part of such payments, adjusted in

accordance with the family’s actual

housing costs, is specifically designated

by such agency to meet the family’s

housing costs, the monthly portion of

such payments that is so designated. If

the family’s welfare assistance is ratably

reduced from the standard of need by

applying a percentage, the amount

calculated under paragraph (a)(3) of this

section shall be the amount resulting

from one application of the percentage.

(b) Utility reimbursement. If the utility

allowance exceeds the total tenant

payment, the difference (the utility

reimbursement) shall be due to the

family. If the utility company consents,

an IHA may, at its discretion, pay the

utility reimbursement directly to the

utility company.

§ 950.335 Rent and homebuyer payment

collection policy.

Each IHA shall establish and adopt,

and use its best efforts to obtain

compliance with, written policies

sufficient to assure the prompt payment

and collection of rent and homebuyer

payments. A copy of the written policies

shall be posted prominently in the IHA

office and shall be provided upon

request. Such policies shall be in

accordance with the ACC and HUD

statutory and regulatory requirements.

§ 950.340 Grievance procedures and

leases.

(a) Grievance procedures. (1) General.

Each IHA shall adopt grievance

procedures that are appropriate to local

circumstances. These procedures shall

comply with the Indian Civil Rights Act,

if applicable, and section 6(k) of the Act,

as applicable, and shall assure that

tenants and homebuyers will:

(i) Be advised of the specific grounds

of any proposed adverse action by the

IHA;

(ii) Have an opportunity for a hearing

before an impartial party upon timely

request;

(iii) Have a reasonable opportunity to

examine any documents, records, or

regulations related to the proposed

action before the hearing (or trial in

court);

(iv) Be entitled to be represented by

another person of their choice at any

hearing;

(v) Be entitled to ask questions of

witnesses and have others make

statements on their behalf; and

(vi) Be entitled to receive a written

decision by the IHA on the proposed

action.

(2) Expedited grievance procedure.

An IHA may establish an expedited

grievance procedure for any grievance

concerning a termination of tenancy or

eviction that involves:

(i) Any criminal activity that threatens

the health, safety, or right to peaceful

enjoyment of the Indian housing

development by other residents or

employees of the IHA; or

(ii) Any drug-related criminal activity

on or near the premises.

(3) Exclusion of certain grievances. (i)

General. An IHA may pursue

termination of tenancy or eviction

without offering a grievance procedure

if the termination or eviction is based on

one of the grounds stated in paragraph

(a)(2) of this section, so long as

applicable tribal or State law requires

that, before eviction, a tenant (including

a homebuyer under a homeownership

agreement) be given a hearing in court,

and HUD has determined that the tribal

or State procedures provide the basic

elements of due process.

(ii) Basic elements of due process. The

elements of due process against which

the jurisdiction’s procedures are

measured by HUD are the following:

(A) Adequate notice to the tenant of

the grounds for terminating the tenancy

and for eviction;

(B) Right of the tenant to be

represented by counsel;

(C) Opportunity for the tenant to

refute the evidence presented by the

IHA, including the right to confront and

cross-examine witnesses and to present

any affirmative legal or equitable

defense that the tenant might have; and

(D) A decision on the merits.

(4) Notice to post office of certain

evictions. When an IHA evicts an

individual or family from a dwelling

unit for engaging in criminal activity,

including drug-related criminal activity,

the IHA shall notify the local post office

serving that dwelling unit that the

evicted individual or family is no longer

residing in the dwelling unit (so that the

post office will terminate delivery of

mail for such persons at the unit, and

that such persons will not return to the

unit to pick up mail).

(5) Notice of procedures. A copy of

the grievance procedures shall be posted

prominently in the IHA office, and shall

be provided to any tenant, homebuyer,

or applicant upon request.

(b) Leases. Each IHA shall use leases

that:

(1) Do not contain unreasonable terms

and conditions;

(2) Obligate the IHA to maintain the

project in a decent, safe, and sanitary

condition;

(3) Require the IHA to give adequate

written notice of termination of the

lease that shall not be less than—

(i) A reasonable time, but not to

exceed 30 days, when the health or

safety of other tenants or IHA employees

is threatened;

(ii) Fourteen days in the case of

nonpayment of rent; and
18222 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(iii) Thirty days in any other case;

(4) Require that the IHA may not

terminate the tenancy except for serious

or repeated violation of the terms or

conditions of the lease or for other good

cause;

(5) Provide that any criminal activity

that threatens the health, safety, or right

to peaceful enjoyment of the premises

by other tenants, or any drug-related

criminal activity on or near the

premises, engaged in by an Indian

housing tenant, any member of the

tenant’s household, or any guest or

other person under the tenant’s control,

shall be cause for termination of

tenancy. For purposes of this section,

the term ‘‘drug-related criminal

activity’’ means the illegal manufacture,

sale, distribution, use, or possession

with intent to manufacture, sell,

distribute, or use, of a controlled

substance (as defined in section 102 of

the Controlled Substances Act (21

U.S.C. 802)); and

(6) Specify that with respect to any

notice of termination of tenancy or

eviction, notwithstanding any

applicable tribal or State law, an Indian

housing tenant shall be informed of the

opportunity, before any hearing or trial,

to examine any relevant documents,

records, or regulations directly related

to the termination or eviction.

§ 950.345 Maintenance and improvements.

(a) General. Each IHA shall adopt

written policies to assure full

performance of the respective

maintenance responsibilities of the IHA

and tenants. A copy of such policies

shall be posted prominently in the IHA

office, and shall be provided to an

applicant or tenant upon entry into the

program and upon request.

(b) Provisions for rental projects. For

rental projects, the maintenance policies

shall contain provisions on at least the

following subjects:

(i) The responsibilities of tenants for

normal care and maintenance of their

dwelling units, and of the common

property, if any;

(ii) Procedures for handling

maintenance service requests from

tenants;

(iii) Procedures for IHA inspections of

dwelling units and common property;

(iv) Special arrangements, if any, for

obtaining maintenance services from

outside workers or contractors; and

(v) Procedures for charging tenants for

damages for which they are responsible.

§ 950.346 Fire safety.

(a) Applicability. This section applies

to all IHA-owned or leased housing,

including Mutual Help and Turnkey III.

(b) Smoke detectors. (1) After October

30, 1992, each unit shall be equipped

with at least one battery-operated or

hard-wired smoke detector, or such

greater number as may be required by

applicable State, local, or tribal codes,

in working condition, on each level of

the unit. In units occupied by hearingimpaired residents, smoke detectors

shall be hard-wired.

(2) After October 30, 1992, the public

areas of all housing covered by this

section shall be equipped with a

sufficient number, but not less than one

for each area, of battery-operated or

hard-wired smoke detectors to serve as

adequate warning of fire. Public areas

include, but are not limited to, laundry

rooms, community rooms, day care

centers, hallways, stairwells, and other

common areas.

(3) The smoke detector for each

individual unit shall be located, to the

extent practicable, in a hallway adjacent

to the bedroom or bedrooms. In units

occupied by hearing-impaired residents,

hard-wired smoke detectors shall be

connected to an alarm system designed

for hearing-impaired persons and

installed in the bedroom or bedrooms

occupied by the hearing-impaired

residents. Individual units that are

jointly occupied by both hearing and

hearing-impaired residents shall be

equipped with both audible and visual

types of alarm devices.

(4) If needed, battery-operated smoke

detectors, except in units occupied by

hearing-impaired residents, may be

installed as a temporary measure where

no detectors are present in a unit.

Temporary battery-operated smoke

detectors shall be replaced with hardwired electric smoke detectors in the

normal course of an IHA’s planned

CIAP or CGP program to meet the HUD

Modernization Standards of applicable

State, local, or tribal codes, whichever

standard is stricter. Smoke detectors for

units occupied by hearing-impaired

residents shall be installed in

accordance with the acceptability

criteria in paragraph (b)(3) of this

section.

(5) IHAs shall use operating funds to

provide battery-operated smoke

detectors in units that do not have any

smoke detectors in place. If operating

funds or reserves are insufficient to

accomplish this, IHAs may apply for

emergency CIAP funding. IHAs may

apply for CIAP or CGP funds to replace

battery-operated smoke detectors with

hard-wired smoke detectors in the

normal course of a planned

modernization program.

§ 950.360 IHA employment practices.

(a) Indian preference. Each IHA shall

adopt written policies with respect to

the IHA’s own employment practices,

which shall be in compliance with its

obligations under section 7(b) of the

Indian Self-Determination and

Education Assistance Act (25 U.S.C.

450e(b)), and E.O. 11246 (3 CFR, 1964–

65 comp., p. 339), as amended by E.O.

11375 (3 CFR, 1966–70 comp., p. 684),

as applicable. A copy of these policies

shall be posted in the IHA office. (Title

VII of the Civil Rights Act of 1964 (42

U.S.C. 2000e), as amended, which

prohibits discrimination in employment

by making it unlawful for employers to

engage in certain discriminatory

practices, excludes Indian tribes from

the nondiscrimination requirements of

Title VII. See also § 950.175(c).)

(b) Wage rates. See § 950.120 (c) and

(d) with respect to the wage rates

applicable to IHA employees.

Subpart E—Mutual Help

Homeownership Opportunity Program

§ 950.401 Scope and applicability.

(a) Scope. This subpart sets forth the

requirements for the Mutual Help (MH)

Homeownership Opportunity Program.

For any matter not covered in this

subpart, see other subparts contained in

this part. Projects developed under the

Self-Help development method shall

comply with the requirements of

subparts E and F of this part.

(b) Applicability. The provisions of

this subpart are applicable to all MH

projects placed under ACC on or after

March 9, 1976, and to projects

converted in accordance with

§§ 950.455 or 950.503.

§ 950.416 Selection of MH homebuyers.

(a) Admission policies. (1) Lowincome families. An IHA’s written

admission policies for the MH program,

adopted in accordance with § 950.301,

shall limit admission to low-income

families.

(i) An IHA may provide for admission

of applicants whose family income

exceeds the levels established for lowincome families if the IHA demonstrates

to HUD’s satisfaction that there is a need

to house such families that cannot

reasonably be met except under this

program.

(ii) The number of dwelling units in

any project assisted under the MH

program that may be occupied by or

reserved for families whose incomes

exceed the levels established for lowincome families (i.e., applicants

admitted under paragraph (a)(1)(i) of

this section) may not exceed whichever

of the following is higher:

(A) Ten percent of the dwelling units

in the project; or

(B) Five dwelling units.

(2) An IHA may establish criteria in

its Admissions and Occupancy Policy
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18223

for admission of a non-Indian applicant

in circumstances where the IHA

determines the presence of the family is

essential to the well-being of Indian

families and the need for housing for the

family cannot reasonably be met except

under this program.

(3) Different standards for MH

program. The IHA’s admission policies

for MH projects should be different from

those for its rental or Turnkey III

projects. The policies for the MH

program should provide standards for

determining a homebuyer’s:

(i) Ability to provide maintenance for

the unit;

(ii) Potential for maintaining at least

the current income level;

(iii) Successor to a unit at the time of

an ‘‘event ‘‘ (‘‘event’’ should also be

defined by the IHA in its policy; see

§ 950.449(a)); and

(iv) Initial purchase price and the

purchase price for a subsequent

homebuyer.

(b) Ability to meet homebuyer

obligations. A family shall not be

selected for MH housing unless, in

addition to meeting the income limits

and other requirements for admission

(see § 950.301), the family is able and

willing to meet all obligations of an

Mutual Help and Occupancy (MHO)

Agreement, including the obligations to

perform or provide the required

maintenance, to provide the required

MH Contribution, and to pay for utilities

and the administration charge.

(c) MH waiting list. (1) Families who

wish to be considered for MH housing

shall apply specifically for such

housing. A family on any other IHA

waiting list, or a tenant in a rental

project of the IHA, shall also submit an

application in order to be considered for

an MH project; and

(2) The IHA shall maintain a waiting

list, separate from any other IHA

waiting list, of families that have

applied for MH housing and meet the

admission requirements. The IHA shall

maintain an MH waiting list in

accordance with requirements

prescribed by HUD and shall make

selections in the order in which they

appear on the list.

(d) Making the selections. Within 30

days after HUD approval of the

application for a project, the IHA shall

proceed with preliminary selection of as

many homebuyers as there are homes in

the project. Preliminary selection of

homebuyers shall be made from the MH

waiting list in accordance with the date

of application; qualification for a

Federal preferences, ranking

preferences, and local preferences, in

accordance with §§ 950.303 through

950.307; other pertinent factors under

the IHA’s admissions policies

established in accordance with

§ 950.301; and 24 CFR part 750. Final

selection of a homebuyer will be made

only after the site for that homebuyer

has received final site approval, and the

form of MH contribution has been

determined.

(e) Principal residence. A condition

for selection as a homebuyer is that the

family agrees to use the home as their

principal residence during the term of

the MHO Agreement. Ownership or use

of an additional residence that is decent,

safe, and sanitary at the time of

occupancy or acquisition during

occupancy would disqualify a family

from the MH program. However, there

are two situations that do not violate the

principal residence requirement. First,

ownership or use of a secondary home

that is necessary for the family’s

livelihood or for cultural preservation,

as solely determined by the IHA and

described in the IHA’s admission and

occupancy policy, is acceptable.

Second, a family’s temporary absence

from its MH home, and related

subleasing of it, is acceptable if it is

done for reasons and time periods

prescribed in the IHA’s admission and

occupancy policy.

(f) Notification of applicants. The IHA

shall give families prompt written

notice of selection for a MH home.

§ 950.419 MH contribution.

(a) Amount and form of contribution.

As a condition of occupancy, the MH

homebuyer will be required to provide

an MH contribution. Contributions other

than labor may be made by an Indian

tribe on behalf of a family.

(1) The value of the contribution shall

not be less than $1500.

(2) The MH contribution may consist

of land, labor, cash, materials,

equipment, or any combination thereof.

Land contributed to satisfy this

requirement shall be owned in fee

simple by the homebuyer or shall be

assigned or allotted to the homebuyer

for his or her use before application for

an MH unit. Contributions of land

donated by another person on behalf of

the homebuyer will satisfy the

requirement for an MH contribution. A

homebuyer may provide cash to satisfy

the MH contribution requirement where

the cash is used for the purchase of

land, labor, materials, or equipment for

the homebuyer’s home.

(3) The amount of credit for an MH

contribution in the case of land, labor,

materials, or equipment shall be based

upon the market value at the time of the

contribution. In the case of labor,

materials, or equipment, market value

shall be determined by the contractor

and the IHA. In the case of land, market

value shall be determined by the IHA.

(See § 950.245). The use of labor,

materials, or equipment as MH

contributions shall be reflected by a

reduction in the Total Contract Price

stated in the Construction Contract.

(b) Execution of Agreements. For

projects other than Self-Help

development projects, MHO Agreements

should be signed for all units before

execution of the construction contract

for the project. Land leases for trust land

shall be signed and approved by BIA

before construction start.

(c) Total contribution to be furnished

before occupancy. The homebuyer

cannot occupy the unit until the entire

MH contribution is provided to the IHA.

If the homebuyer is unable or unwilling

to provide the MH contribution before

occupancy of the project, the MHO

Agreement for the homebuyer shall be

terminated and the IHA shall select a

substitute homebuyer from its waiting

list.

(d) MH contribution in event of

substitution of homebuyer. If an MHO

Agreement is terminated and a

substitute homebuyer is selected, the

amount of MH contribution to be

provided by the substitute homebuyer

shall be in accordance with paragraph

(a) of this section. The substitute

homebuyer may not occupy the unit

until the complete MH contribution has

been made.

(e) Disposition of contribution. If an

MHO Agreement is terminated by the

IHA or the homebuyer before the date of

occupancy, the homebuyer may receive

reimbursement of the value of the MH

contribution made plus other amounts

contributed by the homebuyer, in

accordance with § 950.446.

§ 950.422 Commencement of occupancy.

(a) Notice. (1) Upon acceptance of the

home by the IHA from the contractor,

the IHA shall determine whether the

homebuyer has met all requirements for

occupancy, including satisfaction in full

of the MH contribution, and fulfillment

of mandatory homebuyer counseling

requirements. (See § 950.453.) The IHA

shall notify the homebuyer in writing

that the home is available for occupancy

as of a date specified in the notice.

(2) If the IHA determines that the

homebuyer has not met any of the other

conditions for occupancy by the date of

occupancy, the IHA shall send the

homebuyer a notice in writing. This

notice shall specify the date by which

all requirements shall be satisfied and

shall advise the homebuyer that the

MHO Agreement will be terminated and

a substitute homebuyer selected for the
18224 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

unit if the requirements are not

satisfied.

(b) Credits to MH accounts and

reserves. Promptly after the date of

occupancy, the IHA shall credit the

amount of the MH contribution to the

homebuyer’s accounts and reserves in

accordance with § 950.437 and shall

give the homebuyer a statement of the

amounts so credited.

§ 950.425 Inspections, responsibility for

items covered by warranty.

(a) Inspection before move-in and

identification of warranties. (1) To

establish a record of the condition of the

home on the date of occupancy, the IHA

shall include the homebuyer in all

inspection activities (See § 950.270).

(2) Within 30 days of commencement

of occupancy of each home, the IHA

shall furnish the homebuyer with a list

of applicable contractors’,

manufacturers’, and suppliers’

warranties, indicating the items covered

and the periods of the warranties, and

stating the homebuyer’s responsibility

for notifying the IHA of any deficiencies

that would be covered under the

warranties.

(b) Inspections during contractors’

warranty periods, responsibility for

items covered by contractors’,

manufacturers’, or suppliers’

warranties. It is the responsibility of the

homebuyer during the period of the

applicable warranties, to promptly

inform the IHA in writing of any

deficiencies arising during the warranty

period (including manufacturers’ and

suppliers’ warranties) so that the IHA

may enforce any rights under the

applicable warranties. If a homebuyer

fails to furnish such a written report in

time, and the IHA is subsequently

unable to obtain redress under the

warranty, correction of the deficiency

shall be the responsibility of the

homebuyer.

(c) Inspection upon termination of

Agreement. If the MHO Agreement is

terminated for any reason after

commencement of occupancy, the IHA

shall inspect the home after notifying

the homebuyer of the time for

inspection and shall give the homebuyer

a written statement of the cost of any

maintenance work required to put the

home in satisfactory condition for the

next occupant (see § 950.446).

(d) Homebuyer permission for

inspections; participation in

inspections. The homebuyer shall

permit the IHA to inspect the home at

reasonable hours and intervals during

the period of the MHO Agreement in

accordance with rules established by the

IHA. The homebuyer shall be notified of

the opportunity to participate in the

inspection made in accordance with this

section.

§ 950.426 Homebuyer payments before

March 9, 1976.

The amount of the required monthly

payment for a homebuyer in an MH

project placed under ACC before March

9, 1976 is determined in accordance

with the MHO Agreement and

provisions of §§ 950.315 and 950.102

concerning income. Utility

reimbursements are not applicable to

the Mutual Help program.

§ 950.427 Homebuyer payments for

projects under ACC on or after March 9,

1976.

(a) Establishment of payment. (1)

Each homebuyer shall be required to

make a monthly payment (required

monthly payment) as determined by the

IHA. The minimum required monthly

payment shall equal the administration

charge.

(2) Subject to the requirement for

payment of at least the administration

charge, each homebuyer shall pay an

amount of required monthly payment

computed by:

(i) Multiplying adjusted income

(determined in accordance with

§ 950.102) by a specified percentage.

The specific percentage shall be no less

than 15 percent and no more than 30

percent, as determined by the IHA; and

(ii) Subtracting from that amount the

utility allowance determined for the

unit.

(3) The IHA shall provide that the

required monthly payment may not be

more than a maximum amount. The

maximum shall not be less than the sum

of:

(i) The administration charge; and

(ii) The monthly debt service amount

shown on the homebuyer’s purchase

price schedule.

(4) If the required monthly payment

exceeds the administration charge, the

amount of the excess shall be credited

to the homebuyer’s monthly equity

payments account (see § 950.437(b)).

(b) Administration charge. The

administration charge may be based on

differences in expenses attributable to

different sizes or types of units.

(c) Adjustments in the amount of the

required monthly payment. (1) After the

initial determination of a homebuyer’s

required monthly payment, the IHA

shall increase or decrease the amount of

such payment in accordance with HUD

regulations to reflect changes in

adjusted income (pursuant to a

reexamination by the IHA in accordance

with § 950.315), adjustments in the

administration charge, or in any of the

other factors affecting computation of

the homebuyer’s required monthly

payment.

(2) In order to accommodate wide

fluctuations in required monthly

payments due to seasonal conditions, an

IHA may agree with the homebuyer for

payments to be made in accordance

with a seasonally adjusted schedule that

assures full payment of the required

amount for each year.

(d) Homebuyer payment collection

policy. Each IHA shall establish and

adopt written policies to obtain prompt

payment and collection of required

homebuyer payments. A copy of the

policies shall be posted prominently in

the IHA office, and shall be provided to

a homebuyer upon request.

§ 950.428 Maintenance, utilities, and use of

home.

(a) General. Each IHA shall establish

and adopt written policies to assure full

performance of the respective

maintenance responsibilities of the IHA

and homebuyers. A copy of such written

policies shall be posted prominently in

the IHA office, and shall be provided to

an applicant or homebuyer upon entry

into the program and upon request.

(b) Provisions for MH projects. The

written maintenance policies shall

contain provisions on at least the

following subjects:

(1) The responsibilities of homebuyers

for maintenance and care of their

dwelling units and common property;

(2) Procedures for providing advice

and technical assistance to homebuyers

to enable them to meet their

maintenance responsibilities;

(3) Procedures for IHA inspections of

homes and common property;

(4) Procedures for IHA performance of

homebuyer maintenance responsibilities

(if homebuyers fail to satisfy such

responsibilities), including procedures

for charging the homebuyer’s proper

account for the cost thereof;

(5) Special arrangements, if any, for

obtaining maintenance services from

outside workers or contractors; and

(6) Procedures for charging

homebuyers for damage for which they

are responsible.

(c) IHA responsibility in MH projects.

The IHA shall enforce the provisions of

a MHO Agreement for homebuyer

maintenance of the home. Failure of a

homebuyer to meet the obligations for

maintenance shall not relieve the IHA of

responsibility in this respect. The IHA

shall conduct a complete interior and

exterior examination of each home on a

schedule developed by the IHA that

ensures that the home is maintained in

decent, safe, and sanitary condition and

shall furnish a copy of the inspection

report to the homebuyer. The IHA shall
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18225

take appropriate action, as needed, to

remedy conditions shown by the

inspection, including steps to assure

performance of the homebuyer’s

obligations under the homebuyer’s

Agreement.

(d) Homebuyer responsibility in MH

program. (1) The homebuyer shall be

responsible for routine and nonroutine

maintenance of the home, including all

repairs and replacements (including

those resulting from damage from any

cause). The IHA shall not be obligated

to pay for or provide any maintenance

of the home, except as determined

necessary in paragraph (d)(2) of this

section.

(2) Homebuyer’s failure to perform

maintenance. (i) Failure of the

homebuyer to perform maintenance

obligations constitutes a breach of the

MHO Agreement and grounds for its

termination.

(ii) If the IHA determines that the

condition of the property creates a

hazard to the life, health, or safety of the

occupants, or if there is a risk of damage

to the property if the condition is not

corrected, the corrective work shall be

done promptly by the IHA with such

use of the homebuyer’s accounts as the

IHA may determine to be necessary, or

by the homebuyer with a charge of the

cost to the homebuyer’s accounts in

accordance with § 950.437.

(iii) Any maintenance work

performed by the IHA shall be

accounted for through a work order

stating the nature of and charge for the

work. The IHA shall give the homebuyer

copies of all work orders for the home.

(e) Homebuyer’s responsibility for

utilities. The homebuyer is responsible

for the cost of furnishing utilities. The

IHA shall have no obligation for the

utilities. If the IHA determines that the

homebuyer is unable to pay for the

utilities for the home the IHA may pay

for the utilities on behalf of the

homebuyer and charge the homebuyer’s

accounts for the costs. When the

homebuyer’s accounts have been

exhausted, the IHA shall pursue

termination of the homebuyer

Agreement and may offer the

homebuyer a transfer into the rental

program if a unit is available.

(f) Obligations with respect to home

and other persons and property. (1) The

homebuyer shall agree to abide by all

provisions of the MHO Agreement

concerning homebuyer responsibilities,

occupancy, and use of the home.

(2) The homebuyer may request IHA

permission to operate a small business

in the unit. An IHA may determine

when permission will be given.

(g) Structural changes. (1) A

homebuyer shall not make any

structural changes in or additions to the

home unless the IHA has determined

that such changes are acceptable.

(2) If the homebuyer is in compliance

with the terms of the MHO Agreement,

the IHA may agree to allow the

homebuyer to use the funds in the

MEPA for betterments and additions to

the MH home. The IHA shall determine

whether the homebuyer will be required

to replenish the MEPA or if the funds

are to be loaned to the homebuyer at an

interest rate determined by the IHA. The

homebuyer cannot use MEPA funds for

luxury items, as determined by the IHA.

§ 950.431 Operating reserve.

The IHA shall maintain an operating

reserve in an amount sufficient for

working capital purposes, estimated

future nonroutine maintenance

requirements for IHA-owned

administrative facilities and common

property, payment of advance premiums

for insurance, unanticipated project

requirements, and other eligible uses as

determined by the IHA. The amount of

a contribution to this reserve shall be

determined by the IHA and included in

the administration charge. The amount

of this contribution shall be increased or

decreased annually to reflect the needs

of the IHA for working capital and for

reserves for anticipated future

expenditures, and it shall be included in

the operating budget.

§ 950.432 Operating budget submission

and approval.

(a) Required documentation. (1) An

IHA shall prepare an operating budget

each fiscal year in a manner prescribed

by HUD. The board of commissioners

shall review and approve the budget by

resolution. Each fiscal year, the IHA

shall submit to the Area ONAP the

approved board resolution and any

necessary supporting documentation for

operating subsidy as prescribed by

HUD.

(2) The Area ONAP may direct an IHA

to submit a complete operating budget

if the IHA has been issued a corrective

action order with respect to financial

management. If such action is necessary,

the Area ONAP will notify the IHA prior

to the beginning of the fiscal year.

(b) HUD operating budget review. (1)

A detailed review will be performed on

IHA operating budgets that are subject

to HUD review and approval. If the HUD

Area ONAP finds that an operating

budget is incomplete, includes illegal or

ineligible expenditures, mathematical

errors, errors in the application of

accounting procedures, or is otherwise

unacceptable, the HUD Area ONAP may

at any time require the submission by

the IHA of further information regarding

an operating budget or operating budget

revision.

(2) When the IHA no longer is

operating in a manner that threatens the

future serviceability, efficiency,

economy, or stability of the housing,

HUD will notify the IHA that it no

longer is required to submit an

operating budget to HUD for review and

approval.

§ 950.434 Operating subsidy.

(a) Scope. This section authorizes the

use of operating subsidy for Mutual

Help projects and establishes eligible

costs.

(b) Eligible costs. Operating subsidy

may be paid to cover proposed

expenditures approved by the Area

ONAP for the following purposes:

(1) The reasonable cost of an annual

independent audit;

(2) Administration charges for vacant

units when the IHA submits evidence to

the Area ONAP’s satisfaction that it is

making every reasonable effort to fill the

vacancies;

(3) Collection losses due to payment

delinquencies on the part of homebuyer

families whose MHO Agreements have

been terminated and who have vacated

the home, and the cost of any

maintenance (including repairs and

replacements) necessary to put the

vacant home in a suitable condition for

a subsequent homebuyer family.

Operating subsidy may be made

available for these purposes only after

the IHA has previously used all

available homebuyer credits;

(4) An amount for the cost of a HUDapproved counseling program;

(5) An amount for training and related

travel of IHA staff and Commissioners;

(6) The costs of a HUD-approved

professional management contract; and

(7) Operating costs resulting from

other unusual circumstances justifying

payment of operating subsidy, if

approved by HUD.

(8) Subject to appropriations, and in

accordance with the provisions of

subpart O of this part and procedures

determined by HUD, each IHA with a

duly elected resident organization (RO)

shall receive $25 per unit per year for

resident participation activities. Of this

amount, $15 per unit per year shall fund

resident participation activities of the

RO. Ten dollars per unit per year shall

fund IHA costs incurred in carrying out

resident participation activities.

(c) Ineligible costs. No operating

subsidy shall be paid for utilities,

maintenance, or other items for which

the homebuyer is responsible except, as

necessary, to put a vacant home in

condition for a subsequent family as
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provided in paragraph (b)(2) of this

section.

§ 950.437 Homebuyer reserves and

accounts.

(a) Refundable and nonrefundable

MH reserves. The IHA shall establish

separate refundable and nonrefundable

reserves for each homebuyer effective

on the date of occupancy.

(1) The refundable MH reserve

represents a homebuyer’s interest in

funds that may be used to purchase the

home at the option of the homebuyer.

The IHA shall credit this account with

the amount of the homebuyer’s cash MH

contribution or the value of the labor,

materials, or equipment MH

contribution.

(2) The nonrefundable MH reserve

also represents a homebuyer’s interest

in funds that may be used to purchase

the home at the option of the

homebuyer. The IHA shall credit this

account with the amount of the

homebuyer’s share of any credits for

land contributed to the project and the

homebuyer’s share of any credit for nonland contributions by a terminated

homebuyer.

(b) Equity accounts. (1) Monthly

equity payments account (MEPA). The

IHA shall maintain a separate MEPA for

each homebuyer. The IHA shall credit

this account with the amount by which

each required monthly payment exceeds

the administration charge. Should the

homebuyer fail to pay the required

monthly payment, the IHA may elect to

reduce the MEPA by the amount owed

each month towards the administration

charge, until the MEPA has been fully

expended. The MEPA balance shall be

comprised of an amount backed by cash

actually received in order for any such

reduction to be made.

(2) Investment of equity funds. (i)

Funds held by the IHA in the equity

accounts of all the homebuyers in the

project shall be invested in HUDapproved investments. Income earned

on the investments of such funds shall

periodically, but at least annually, be

prorated and credited to each

homebuyer’s equity account in

proportion to the amount in each such

account on the date of proration. If HUD

determines that accounts are not

properly managed it may ultimately

remove responsibility of the IHA for

managing such accounts to a HUDapproved escrow agent.

(ii) Notwithstanding other provisions

of this subpart and subject to Area

ONAP approval, an IHA may use a

portion of the homebuyer’s equity

account for low-income housing

purposes provided that a reserve of

homebuyer’s MEPA is maintained. The

reserve shall be at a percentage

established by the IHA and approved by

the Area ONAP. (Interest shall continue

to be credited to the homebuyer’s

account based on the MEPA balance and

the rate of interest that would have been

earned if the funds were invested.)

(c) Charges for maintenance. (1) If the

IHA has maintenance work done, the

cost thereof shall be charged to the

homebuyer’s MEPA.

(d) Use of reserves and accounts;

nonassignability. The homebuyer shall

have no right to receive or use the funds

in any reserve or account except as

provided in the MHO Agreement, and

the homebuyer shall not, without

approval of the IHA and HUD, assign,

mortgage, or pledge any rights in the

MHO Agreement or to any reserve or

account.

§ 950.440 Purchase of home.

(a) General. The IHA provides the

family an opportunity to purchase the

dwelling under the MHO Agreement (a

lease with an option to purchase), under

which the purchase price is amortized

over the period of occupancy, in

accordance with a purchase price

schedule. If a homebuyer wants to

acquire ownership in a shorter period

than that shown on the purchase price

schedule, the homebuyer may exercise

his or her option to purchase the home

on or after the date of occupancy, but

only if the homebuyer has met all

obligations under the MHO Agreement.

The homebuyer may obtain financing,

from the IHA or an outside source, at

any time to cover the remaining

purchase price.

(b) Purchase price and purchase price

schedule. (1) Initial purchase price. The

initial purchase price of a home for a

homebuyer shall be determined by the

IHA.

(2) Purchase price schedule. Promptly

after execution of the construction

contract, the IHA shall furnish to the

homebuyer a statement of the initial

purchase price of the home, and a

purchase price schedule that will apply,

based on amortizing the balance

(purchase price less the MH

contribution) over a period, not less

than 15 years or more than 25 as

determined by the IHA, at an interest

rate determined by the IHA. The IHA

may choose to forego charging interest

and calculate the payment with an

interest rate of zero.

(c) Purchase price schedule for

subsequent homebuyer. (1) Initial

purchase price. When a subsequent

homebuyer executes the MHO

Agreement, the purchase price for the

subsequent homebuyer shall be

determined by the IHA.

(2) Purchase price schedule. Each

subsequent homebuyer shall be

provided with a purchase price

schedule, showing the monthly

declining purchase price over a period,

not less than 15 years or more than 25

years as determined by the IHA, at an

interest rate determined by the IHA.

(d) [Reserved].

(e) Conveyance of home. (1) Purchase

procedure. In accordance with the MHO

Agreement, the IHA shall convey title to

the homebuyer when the balance of the

purchase price can be covered from the

amount in the equity account. The

homebuyer may supplement the amount

in the equity account with reserves or

any other funds of the homebuyer.

Notwithstanding the requirement for

prompt conveyance, an IHA may delay

conveyance long enough for

modernization of a paid-off unit in

accordance with its Comprehensive

Plan or CIAP application. Until title is

conveyed, the homebuyer is responsible

to make monthly payments to cover the

monthly operating expenses for the unit.

(2) Amounts to be paid. The purchase

price shall be the amount shown on the

purchase price schedule for the month

in which the settlement date falls.

(3) Settlement costs. Settlement costs

shall be paid by the homebuyer, who

may use equity accounts or reserves

available for the purchase in accordance

with paragraph (e)(4) of this section.

(4) Disposition of homebuyer accounts

and reserves. When the homebuyer

purchases the home, the net credit

balances in the homebuyer’s equity

account (as described in § 950.437),

supplemented by the nonrefundable MH

reserve and then the refundable MH

reserve, shall be applied in the

following order:

(i) For the initial payment for fire and

extended coverage insurance on the

home after conveyance, if the IHA

finances purchase of the home in

accordance with § 950.443;

(ii) For settlement costs, if the

homebuyer so directs;

(iii) For the purchase price; and

(iv) The balance, if any, for refund to

the homebuyer.

(5) Settlement. A home shall not be

conveyed until the homebuyer has met

all the obligations under the MHO

Agreement, except as provided in

§ 950.440(e)(8). The settlement date

shall be mutually agreed upon by the

parties. On the settlement date, the

homebuyer shall receive the documents

necessary to convey to the homebuyer

the IHA’s right, title, and interest in the

home, subject to any applicable

restrictions or covenants as expressed in

such documents. The required

documents shall be approved by the
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attorneys representing the IHA, and by

the homebuyer or the homebuyer’s

attorney.

(6) IHA investment and use of

purchase price payments. After

conveyance, all homebuyer funds held

or received by the IHA from the sale of

a unit in a project financed with grants

shall be held separate from other project

funds, and shall be used for purposes

related to low-income housing use.

Homebuyer funds held or received by

the IHA from the sale to a homebuyer

of a unit in a project financed by loans

are subject to loan forgiveness.

(7) Removal of home from MH

program. When a home has been

conveyed to the homebuyer, whether or

not with IHA financing, the unit is

removed from the IHA’s MH project

under its ACC with HUD.

(8) Homebuyers with delinquencies.

(i) If a homebuyer has a delinquency at

the end of the amortization period, the

unit is no longer available for assistance

from HUD.

(ii) Notwithstanding the above

requirements, an IHA may complete

emergency work and modernization

work required by statute or regulation

on a unit that is paid off but not

conveyed, during the term of the

repayment schedule.

(iii) Upon repayment of the total

delinquency, the IHA may, in

accordance with § 950.602(b)(2),

complete nonemergency modernization

work on a unit prior to conveyance.

§ 950.443 IHA homeownership financing.

The IHA may offer a form of

homeownership financing, similar to a

purchase money mortgage. The IHA

shall set standards for determining

eligibility and developing promissory

notes, mortgages, and other financial

instruments necessary to carry out the

transaction.

§ 950.446 Termination of MHO Agreement.

(a) Termination upon breach. (1) In

the event the homebuyer fails to comply

with any of the obligations under the

MHO Agreement, the IHA may

terminate the MHO Agreement by

written notice to the homebuyer,

enforced by eviction procedures

applicable to landlord-tenant

relationships.

(2) Misrepresentation or withholding

of information when applying for

admission or in connection with any

subsequent reexamination of income

and family composition constitutes a

breach of the homebuyer’s obligations

under the MHO Agreement.

‘‘Termination,’’ as used in the MHO

Agreement, does not include acquisition

of ownership by the homebuyer.

(b) Notice of termination of MHO

Agreement by the IHA, right of

homebuyer to respond. Termination of

the MHO Agreement by the IHA for any

reason shall be by written notice of

termination. Such notice shall be in

compliance with the terms of the MHO

Agreement and, in all cases, shall afford

a fair and reasonable opportunity to

have the homebuyer’s response heard

and considered by the IHA. Such

procedures shall comply with the

Indian Civil Rights Act, if applicable,

and shall incorporate all the steps and

provisions needed to comply with State,

local, or tribal law, with the least

possible delay. (See § 950.340.)

(c) Termination of MHO Agreement by

homebuyer. The homebuyer may

terminate the MHO Agreement by giving

the IHA written notice in accordance

with the Agreement. If the homebuyer

vacates the home without notice to the

IHA, the homebuyer shall remain

subject to the obligations of the MHO

Agreement, including the obligation to

make monthly payments, until the IHA

terminates the MHO Agreement in

writing. Notice of the termination shall

be communicated by the IHA to the

homebuyer to the extent feasible and the

termination shall be effective on the

date stated in the notice.

(d) Disposition of funds upon

termination of the MHO Agreement. If

the MHO Agreement is terminated, the

balances in the homebuyer accounts and

reserves shall be disposed of as follows:

(1) The MEPA shall be charged with:

(i) Any maintenance and replacement

cost incurred by the IHA to prepare the

home for the next occupant;

(ii) Any amounts the homebuyer owes

the IHA, including required monthly

payments;

(iii) The required monthly payment

for the period the home is vacant, not

to exceed 60 days from the date of

receipt of the notice of termination, or

if the homebuyer vacates the home

without notice to the IHA, for the period

ending with the effective date of

termination by the IHA; and

(iv) The cost of securing a vacant unit,

the cost of notification and associated

termination tasks, and the cost of

storage and/or disposition of personal

property.

(2) If, after making the charges in

accordance with paragraph (d)(1) of this

section, there is a debit balance in the

MEPA, the IHA shall charge that debit

balance first to the refundable MH

reserve, and second to the

nonrefundable MH reserve, to the extent

of the credit balances in these reserves

and account. If the debit balance in the

MEPA exceeds the sum of the credit

balances in these reserves and account,

the homebuyer shall be required to pay

to the IHA the amount of the excess.

(3) If, after making the charges in

accordance with paragraph (d)(1) of this

section, there is a credit balance in the

MEPA, this amount shall be refunded.

(4) Any credit balance remaining in

the refundable MH reserve after making

the charges described in paragraph

(d)(2) of this section shall be refunded

to the homebuyer.

(5) Any credit balance remaining in

the nonrefundable MH reserve after

making the charges described in

paragraph (d)(2) of this section shall be

retained by the IHA for use by the

subsequent homebuyer.

(e) Settlement upon termination; time

for settlement. Settlement with the

homebuyer following a termination

shall be made as promptly as possible

after all charges provided in paragraph

(d) of this section have been determined

and the IHA has given the homebuyer

a statement of such charges. The

homebuyer may obtain settlement

before determination of the actual cost

of any maintenance required to put the

home in satisfactory condition for the

next occupant, if the homebuyer is

willing to accept the IHA’s estimate of

the amount of such cost. In such cases,

the amounts to be charged for

maintenance shall be based on the IHA’s

estimate of the cost thereof.

(f) Responsibility of IHA to terminate.

(1) The IHA is responsible for taking

appropriate action with respect to any

noncompliance with the MHO

Agreement by the homebuyer. In cases

of noncompliance that are not corrected

as provided further in this paragraph (f),

it is the responsibility of the IHA to

terminate the MHO Agreement in

accordance with the provisions of this

section and to institute eviction

proceedings against the occupant.

(2) As promptly as possible after a

noncompliance comes to the attention

of the IHA, the IHA shall discuss the

matter with the homebuyer and give the

homebuyer an opportunity to identify

any extenuating circumstances or

complaints that may exist. A plan of

action shall be agreed upon that will

specify how the homebuyer will come

into compliance, as well as any actions

by the IHA that may be appropriate.

This plan shall be in writing and signed

by both parties.

(3) Compliance with the plan shall be

checked by the IHA not later than 30

days from the date thereof. In the event

of refusal by the homebuyer to agree to

such a plan or failure by the homebuyer

to comply with the plan, the IHA shall

issue a notice of termination of the

MHO Agreement and institute eviction

procedures against the homebuyer in
18228 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

accordance with the provisions of this

section on the basis of the

noncompliance with the MHO

Agreement.

(4) A record of meetings with the

homebuyer, written plans of action

agreed upon, and all other related steps

taken in accordance with paragraph (f)

of this section shall be maintained by

the IHA for inspection by HUD.

(g) Subsequent use of unit. After

termination of a homebuyer’s interest in

the unit, it remains as part of the MH

project under the ACC. The IHA shall

follow its policies for selection of a

subsequent homebuyer for the unit

under the MH program. (See

§ 950.449(g) for use of unit if no

qualified subsequent homebuyer is

available.)

§ 950.449 Succession.

(a) Definition of ‘‘event.’’ ‘‘Event’’

means the death, mental incapacity, or

other conditions as determined by the

IHA, of all of the persons who have

executed the MHO Agreement as

homebuyers.

(b) Designation of successor by

homebuyer. A homebuyer may

designate a successor who, at the time

of the event, would assume the status of

homebuyer, provided that at the time of

the event, the successor meets the

conditions established by the IHA.

(c) Succession by persons designated

by homebuyer. Upon occurrence of an

event, the person designated as the

successor shall succeed to the former

homebuyer’s rights and responsibilities

under the MHO Agreement if the

designated successor meets the criteria

established by the IHA.

(d) Designation of successor by IHA.

If at the time of the event there is no

successor designated by the homebuyer,

the IHA may designate another family

member, in accordance with its

occupancy policy.

(e) Occupancy by appointed guardian.

If at the time of the event there is no

qualified successor designated by the

homebuyer or by the IHA, and a minor

child or children of the homebuyer are

living in the home, the IHA may, in

order to protect their continued

occupancy and opportunity for

acquiring ownership of the home,

approve as occupant of the home an

appropriate adult who has been

appointed legal guardian of the children

with a duty to perform the obligations

of the MHO Agreement in their interest

and behalf.

(f) Succession and occupancy on trust

land. In the case of a home on trust

land, a person who is prohibited by law

from succeeding to the IHA’s interest on

such land may, nevertheless, continue

in occupancy with all the rights,

obligations, and benefits of the MHO

Agreement, modified to conform to

restrictions on succession to the land.

(g) Termination in absence of

qualified successor. If there is no

qualified successor in accordance with

the IHA’s approved Admissions and

Occupancy policy, the IHA shall

terminate the MHO Agreement and

select a subsequent homebuyer from the

top of the waiting list to occupy the unit

under a new MHO Agreement. If a new

homebuyer is unavailable or if the home

cannot continue to be used for lowincome housing in accordance with the

Mutual Help program, the IHA may

submit an application to HUD to convert

the unit to the rental program in

accordance with § 950.458 or to approve

a disposition of the home, in accordance

with subpart M of this part.

§ 950.452 Miscellaneous.

(a) Annual statement to homebuyer.

The IHA shall provide an annual

statement to the homebuyer that sets

forth the credits and debits to the

homebuyer’s equity accounts and

reserves during the year and the balance

in each account at the end of each IHA

fiscal year. The statement shall also set

forth the remaining balance of the

purchase price.

(b) Insurance before transfer of

ownership, repair, or rebuilding. (1)

Insurance. The IHA shall carry all

insurance prescribed by HUD, including

fire and extended coverage insurance

upon the home.

(2) Repair or rebuilding. In the event

the home is damaged or destroyed by

fire or other casualty, the IHA shall

consult with the homebuyers as to

whether the home shall be repaired or

rebuilt. The IHA shall use the insurance

proceeds to have the home repaired or

rebuilt unless there is good reason for

not doing so. In the event the IHA

determines that the home should not be

repaired or rebuilt and the homebuyer

disagrees, the matter shall be submitted

to the Area ONAP for final

determination. If the final determination

is that the home should not be repaired

or rebuilt, the IHA shall terminate the

MHO Agreement, and the homebuyer’s

obligation to make required monthly

payments shall be deemed to have

terminated as of the date of the damage

or destruction.

(3) Suspension of payments. In the

event of termination of a MHO

Agreement because of damage or

destruction of the home, or if the home

must be vacated during the repair

period, the IHA will use its best efforts

to assist in relocating the homebuyer. If

the home must be vacated during the

repair period, required monthly

payments shall be suspended during the

vacancy period.

(c) Notices. Any notices by the IHA to

the homebuyer required under the MHO

Agreement or by law shall be delivered

in writing to the homebuyer personally

or to any adult member of the

homebuyer’s family residing in the

home, or shall be sent by certified mail,

return receipt requested, properly

addressed, postage prepaid. Notice to

the IHA shall be in writing and either

delivered to an IHA employee at the

office of the IHA, or sent to the IHA by

certified mail, return receipt requested,

properly addressed, postage prepaid.

§ 950.453 Counseling of homebuyers.

(a) General. (1) The IHA shall provide

counseling to homebuyers in

accordance with this section. The

purpose of the counseling program shall

be to develop:

(i) A full understanding by

homebuyers of their responsibilities as

participants in the MH Project;

(ii) Ability on their part to carry out

these responsibilities; and

(iii) A cooperative relationship with

the other homebuyers.

(2) All homebuyers shall be required

to participate in and cooperate fully

with all official preoccupancy and

postoccupancy counseling activities.

Failure without good cause to

participate in the program shall

constitute a breach of the MHO

Agreement.

(b) The IHA shall submit to the HUD

Area ONAP a copy of its counseling

program with its request for funding for

approval.

(c) Progress reports. An IHA shall

submit an annual progress report to the

Area ONAP within 45 days of the end

of its fiscal year or such later date as

may be approved by the Area ONAP.

§ 950.455 Conversion of rental projects.

(a) Applicability. Notwithstanding

other provisions of this part, an IHA

may apply to the HUD Area ONAP for

approval to convert any or all of the

units in an existing rental project to the

MH program.

(b) Minimum requirements. (1) In

order to be eligible for conversion, the

units shall have individually metered

utilities and be in decent, safe, and

sanitary condition. If the units are not

decent, safe, and sanitary, the IHA shall

submit a plan to correct unit

deficiencies.

(2) Tenants or other applicants to be

homebuyers of the proposed conversion

units shall qualify for the program

under § 950.416(b). The entire MH

contribution required of the homebuyer
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shall be made before the rental unit

occupied by a tenant can be converted

to the MH program.

(3) In the case of conversion of

apartments or row houses to

condominium or cooperative

ownership, all units in a structure shall

be converted, with all occupants at the

time of the application qualified, in

accordance with paragraph (b)(2) of this

section. Any occupants who do not

qualify or desire to convert shall be

satisfactorily relocated and replaced

with qualified occupants before

application for conversion of the

structure.

(c) Application process. The IHA shall

submit a request for conversion to the

HUD Area ONAP. The HUD Area ONAP

shall review the application for legal

sufficiency; tribal acceptance;

demonstration of family interest;

evidence that units are habitable, safe,

and sanitary; family qualifications as

discussed in paragraph (b)(2) of this

section; and financial feasibility. If the

IHA does not propose to convert all

units in a project, the IHA’s ability to

operate the remaining rental units shall

not be adversely affected.

§ 950.458 Conversion of Mutual Help

projects to rental program.

(a) Applicability. Notwithstanding

other provisions of this part, an IHA

may apply to the HUD Area ONAP for

approval to convert any or all Mutual

Help project units to the rental program,

whenever a homebuyer or homebuyers

have lost the potential for ownership

due to the inability to meet the cost of

their homebuyer responsibilities.

(b) Minimum requirements. (1) The

remaining balances in any reserve

accounts shall be accounted for

individually for each unit converted in

a manner prescribed by HUD.

(2) The balance remaining in the

MEPA, if any, is applied first to

outstanding tenant accounts receivable,

then to repair of homebuyer

maintenance items, and finally returned

to the homebuyer.

(c) Application process. The IHA shall

submit a request for conversion to the

HUD Area ONAP. The HUD Area ONAP

shall review the application for legal

sufficiency, tribal acceptance,

demonstration of family interest, and

financial feasibility. If the IHA does not

propose to convert all units in a project,

the IHA’s ability to operate the

remaining units shall not be adversely

affected.

Subpart F—Self-Help Development in

the Mutual Help Homeownership

Opportunity Program

§ 950.470 Purpose and applicability.

(a) Purpose. The purpose of the SelfHelp (SH) program is to provide an

alternate method of developing units

that will be less costly than other

methods of development, will engender

community pride and cooperation, and

will provide training in construction

skills that will have lasting value to

participants. If an IHA is interested in

pursuing SH development, it organizes

a small group of families (six to ten) to

build a substantial portion of the homes

for all the families in the group, with

technical assistance, supervision, and

materials provided by the IHA,

augmented by skilled labor obtained

under contract. The participants are

families who qualify for participation in

the Mutual Help Homeownership

Opportunity (MH) program, who have

the ability to furnish their share of the

required labor and who agree to

participate in the cooperative effort to

build homes for all members of the

group.

(b) Applicability. Any IHA eligible for

development funds may submit an

application for a SH MH project.

§ 950.475 Basic requirements.

(a) Contracts. A SH MH project also

involves three basic contracts in a form

approved by HUD: an ACC for a MH

project executed by HUD and the IHA

after approval of the SH project

application and after HUD approval of

the development program, an SH

agreement executed by the participating

families and the IHA before

construction begins, and a Mutual Help

and Occupancy Agreement executed by

the participating families and the IHA

after construction completion.

(b) Family participation. Each family

shall show the desire to work with other

families in building their own homes

and shall have the time to contribute the

labor necessary to perform a substantial

number of the tasks required in the

construction of the homes. Each family

shall sign an SH agreement with the

IHA.

(c) IHA capacity. The IHA shall have

the capacity to provide for the financial,

legal, administrative, and technical

responsibilities of the program. The IHA

is required to provide assurance that the

project will be completed, in the form

of a letter of credit or its equivalent in

an amount equal to 10 percent of the

estimated Total Development Cost

Standard.

(d) Funding. The funding for technical

training and supervision of participating

families will be provided through

development funds, and the cost will be

included in the Total Development Cost

(TDC) of the project. The cost of

construction supervision and technical

assistance shall generally be no more

than 15 percent, but may not exceed 20

percent of the TDC of these SH homes.

(e) Applicability of Indian preference.

In the selection of contractors to

perform construction supervision,

skilled labor, or other work under this

program, the provisions concerning

preference for Indians (§ 950.175) apply.

In the selection of participating families,

the provisions of § 950.416 apply.

(f) Building code. The building code

used by the IHA in accordance with

§ 950.255 will apply to the homes

constructed under this program.

§ 950.480 Self-Help agreement.

(a) Timing. The obligations under the

Self-Help agreement, executed by the

IHA and the families in a group selected

by the IHA to participate in a Self-Help

program, will be contingent upon HUD’s

approval of the development program.

Each family will be obligated to be

available to commence work at a time

that fits the IHA’s schedule for

completion of prior tasks by skilled

labor, but generally within 120 days of

HUD’s approval of the IHA’s SH project

development program, and to complete

the work within a period not to exceed

two years.

(b) Pre-construction period. The SH

agreement will provide that, before

construction begins, the participating

families will be required to organize

themselves, with the assistance of the

IHA, and to participate in construction

skills training.

(c) Labor contribution. (1) The SH

agreement will specify the construction

tasks to be performed by the

participating families as their labor

contribution, and the construction tasks

to be performed under contract by

skilled laborers. The number of tasks to

be performed by the participating

families shall constitute the vast

majority of the tasks.

(2) The labor performed is not subject

to the labor standards specified in

section 12 of the United States Housing

Act of 1937 (42 U.S.C. 1437j).

(3) The SH agreement will specify the

circumstances under which it may be

terminated.

(d) Insurance requirements. The SH

agreement will provide that the families

waive any liability claim against the

IHA for any injury that might occur

during the development of the project.

(e) Standard provisions. The SH

agreement will include provisions
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prohibiting kickbacks and conflicts of

interest.

(f) Completion. The SH agreement

will provide that upon successful

completion of the family’s obligations

under it, the family and the IHA will

execute a Mutual Help and Occupancy

Agreement.

§ 950.485 Application.

(a) General. The application for a SH

development method of Mutual Help

project shall comply with the general

requirements of § 950.225.

(b) Need for Self-Help housing.

Evidence of the need for SH housing

shall be submitted, including the

following:

(1) The names, addresses, and number

of persons in the household, and annual

incomes of the families selected to

participate;

(2) The SH agreement;

(3) Certification by the IHA that the

participating families are believed to

have the time and ability to fulfill their

obligations under the SH agreement;

and

(4) Such information as the incomes

and sizes of other interested families

who appear to be eligible.

(c) Ability of IHA to administer SH

housing. The IHA shall demonstrate its

ability to administer the program by

identifying the staff members who will

supervise construction and provide

technical assistance, and describing

their experience. If the IHA plans to

contract with an outside entity to

perform these functions, it shall follow

the requirements concerning Indian

preference. Regardless of the identity of

the firm selected to perform this

function, the IHA should identify the

firm and briefly describe its experience.

The IHA also shall demonstrate its

capacity to administer the program, in

accordance with § 950.475.

§ 950.490 Development program.

(a) In addition to complying with the

requirements of § 950.260, the IHA’s

development program for a SH project

submitted to HUD shall include the

following:

(1) IHA coordination plan. The plan

for organizing and implementing the

development, including elements

comparable to those covered in the

standard Mutual Help construction

contract, and the method of

coordinating work of participating

families and skilled contractors.

(2) Difference in cost. A description of

how the development cost differs from

the cost for a project constructed under

a construction contract. This difference

should reflect the labor contribution,

after considering the construction

supervision cost.

(3) Special provisions for acquisition

with rehabilitation projects. A

description of the repair or

rehabilitation work needed on each

home to be acquired. The work needed

on all the homes should be reasonably

comparable in the amount of labor

exchange that is required. The estimated

number of hours of labor and a

description of the work to be done shall

be provided.

(4) Certification of participation.

Certification by the IHA that the

participating families have signed the

SH agreement and remain able to fulfill

their obligations under the SH

agreement.

(5) Changes since application stage.

Statement of any changes in the data

submitted in the application.

(b) HUD will review the development

program submitted by an IHA for a SH

project with particular attention to the

elements listed in paragraph (a) of this

section.

§ 950.495 Default of Self-Help agreement.

(a) If the IHA determines that a

participating family is failing to provide

its labor contribution, as required in

accordance with its SH agreement, it

shall counsel the family about its

obligations and encourage fulfillment of

its responsibilities. If the failure of the

family is jeopardizing the progress of

the project, the IHA shall declare the

family in default and terminate its

participation in the project. Upon

termination of the participation of one

family, the IHA shall move

expeditiously to select an alternate

family to take over the responsibilities

of the terminated family. If another

qualified family cannot be found to

assume the responsibilities of the

terminated family, the unit may be

converted to some other development

method (e.g., force account,

conventional bid, etc.) under the MH

program.

(b) If the IHA determines that an

entire group is unable to continue its

work to completion of construction, the

IHA shall first counsel the group about

its obligations and encourage fulfillment

of its responsibilities. If counseling is

unsuccessful in bringing about

satisfactory progress toward completion,

the IHA shall declare the families in

default and convert the project to a

regular MH project. The IHA’s plan for

completing the project shall be

submitted to HUD for review and

counsel prior to terminating the SelfHelp project. Availability of additional

HUD funding for this purpose is not

assured.

Subpart G—Turnkey III Program

§ 950.501 Introduction.

(a) Purpose. This subpart sets forth

the requirements of the Turnkey III

Homeownership Opportunities

Program, which is administered by HUD

as part of the Indian Housing Program

under the United States Housing Act of

1937. This part covers the management,

operation, conversion, and sale of

existing Turnkey III homes that remain

in Indian housing authority (IHA)

ownership.

(b) Program framework. (1) All

Turnkey III projects shall be operated in

accordance with an executed Annual

Contributions Contract (ACC), which

includes the ‘‘Special Provisions for

Turnkey III Homeownership

Opportunity Project’’ and Homebuyer

Ownership Opportunity Agreements

(Homebuyer Agreement) between the

IHA and the Homebuyer.

(2) A Turnkey III development may

only include units that are to be

operated for the purpose of providing

homeownership opportunities for

eligible low-income families pursuant to

this part and the special Turnkey III

provisions of the ACC, including units

occupied temporarily by former

homebuyers who, as a result of losing

homeownership potential, have been

transferred to rental status in place,

pending the availability of a suitable

rental unit. When a homebuyer is

converted to rental status while

remaining in the same unit, pending

availability of a satisfactory rental unit

or approval of a request to convert the

unit in accordance with § 950.503, the

unit remains under the Turnkey III

project.

(3) An IHA may establish any

policies, procedures, and requirements

that are not contrary to the ACC, this

part, other applicable Federal, State, and

local statutes and regulations, and the

rights of homebuyers under existing

homebuyer agreements.

(c) Program overview. The Turnkey III

Program provides homeownership

opportunities for eligible low-income

families. The program uses a leasepurchase arrangement, whereby the

homebuyer family initially takes

occupancy of a rental basis, under a

homebuyer agreement which constitutes

a lease with an option to purchase. The

purchase price is set at the time of

initial occupancy. During the period of

rental tenancy, the homebuyer makes

monthly rental payments based on a

percentage of family income and is

responsible for routine maintenance. A

portion of the homebuyer monthly

payment is used to establish an Earned

Home Payments Account (EHPA) and a
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Nonroutine Maintenance Reserve

(NRMR). To the extent that these funds

are not used by the IHA to perform

maintenance relating to the home, the

funds will be available to apply to the

purchase price at the time the

homebuyer is in a position to exercise

the option to purchase. At closing, the

homebuyer pays the IHA the balance of

the purchase price due (or may be

permitted by the IHA to finance all or

a portion of that amount through a

purchase money mortgage) and the IHA

deeds the home to the homebuyer.

(d) Contracts, agreements, other

documents. All contracts, agreements,

and other documents referred to in this

subpart shall be in a form approved by

HUD, and changes shall be made with

the approval of the Area ONAP.

§ 950.503 Conversion of Turnkey III

developments.

(a) Applicability. Notwithstanding

other provisions of this part, an IHA

may apply to the Area ONAP for

approval to convert any or all of the

units in an existing Turnkey III

development to the rental or MH

program.

(b) Minimum requirements. (1) In

order to be eligible for conversion, the

units shall have individually metered

utilities and be in decent, safe, and

sanitary condition. If the units are not

decent, safe, and sanitary, the IHA shall

submit a plan to correct unit

deficiencies.

(2) For conversion to MH, applicants

shall qualify for the program under

§ 950.416(b). The entire MH

contribution required of the homebuyer

shall be made before the Turnkey III

unit occupied by a tenant can be

converted to the MH program. In

determining the purchase price and

term, the homebuyer may receive credit

for the period of time they have been

residing in a Turnkey III

homeownership unit.

(c) Application process. The IHA shall

submit a request for conversion to the

HUD Area ONAP. The HUD Area ONAP

shall review the application for legal

sufficiency, tribal acceptance,

demonstration of family interest, and

financial feasibility. If the IHA does not

propose to convert all units in a

development, the IHA’s ability to

operate the remaining Turnkey III units

shall not be adversely affected.

§ 950.505 Eligibility and selection of

Turnkey III homebuyers.

(a) Applications. Families who wish

to be considered for Turnkey III shall

apply specifically for that program, and

a separate list of eligible applicants for

Turnkey III shall be maintained.

Applications shall be dated as received.

The submission of an application for

Turnkey III by a family that is also an

applicant for conventional rental

housing or that is an occupant of such

housing shall in no way affect its status

with regard to such rental housing. A

family shall not lose its place on the

waiting list until it is selected for

Turnkey III and shall not receive any

different treatment or consideration

with respect to other rental housing

programs due to having applied for

Turnkey III. In order to be considered

for selection, a family shall be

determined to meet at least all of the

following standards of potential for

homeownership:

(1) Sufficient income to cover the

EHPA, NRMR, and the estimated cost of

utilities with its required monthly

payment (see § 950.315); and

(2) Ability to meet all obligations

under the Homebuyer Agreement.

(b) Selection and notification of

homebuyers. Homebuyers shall be

selected from those families determined

to have potential for homeownership.

Such selection shall be made in

sequence from the waiting list.

§ 950.507 Homebuyer Ownership

Opportunity Agreements (HOOA).

(a) General. The HOOA shall be

executed between the IHA and the

homebuyer as a condition for occupancy

of a Turnkey III unit.

(b) Pre-Existing Agreements. (1)

Turnkey III Projects in operation on the

effective date of this subpart shall be

governed by this subpart, except to the

extent that the terms of any pre-existing

Homebuyer Agreements shall govern the

relationship of an IHA and occupant

until the termination or cancellation of

such agreement(s). If the agreement

establishes a maximum or a minimum

monthly payment, the terms of the

agreement shall govern. However, in no

event will the monthly payment charged

exceed the Total Tenant Payment

determined in accordance with subpart

D of this part.

(2) Pre-existing Homebuyer

Agreements that determined the

required monthly payment in

accordance with a ‘‘Schedule’’

developed by the IHA and approved by

HUD should continue to determine the

monthly payment in accordance with

the schedule. This schedule is

determined as follows:

(i) The operating budget for the

project is based on estimated expenses

for a given period of time. The amount

needed to operate a particular project is

called the break-even amount (see

§ 950.513(a)). This is comprised of the

Operating Expenses, the total amount

needed for EHPA, and the total amount

needed for NRMR.

(ii) The aggregate of all homebuyers’

incomes is determined. (If no definition

of income is stated in the homebuyer’s

contract, the definition in subpart A of

this part is used.)

(iii) The percentage of aggregated

income needed to cover 110 percent of

the break-even amount is determined.

This percentage is the one that appears

in the schedule.

§ 950.509 Responsibilities of homebuyer.

(a) Repair, maintenance, and use of

home. The homebuyer shall be

responsible for the routine maintenance

of the home to the satisfaction of the

homebuyers’ association (HBA) and the

IHA.

(b) Repair of damage. In addition to

the obligation for routine maintenance,

the homebuyer shall be responsible for

repair of any damage caused by the

homebuyer, other occupants, or visitors.

(c) Care of home. A homebuyer shall

keep the home in a sanitary condition;

cooperate with the IHA and the HBA in

keeping and maintaining the common

areas and property, including fixtures

and equipment, in good condition and

appearance; and follow all rules of the

IHA and the HBA concerning the use

and care of the dwellings and the

common areas and property.

(d) Inspections. A homebuyer shall

agree to permit officials, employees, or

agents of the IHA and the HBA to

inspect the home at reasonable hours

and intervals in accordance with rules

established by the IHA and the HBA.

(e) Use of home. (1) A homebuyer

shall not:

(i) Sublet the home without the prior

written approval of the IHA;

(ii) Use or occupy the home for any

unlawful purpose; or

(iii) Provide accommodations (unless

approved by the HBA and the IHA) to

boarders or lodgers.

(2) The homebuyer shall agree to use

the home primarily as a place to live for

the family (as identified in the initial

application or by subsequent

amendment with the approval of the

IHA).

(f) Obligations with respect to other

persons and property. Neither the

homebuyer nor any other member of the

family shall interfere with the rights of

other occupants of the development,

damage the common property or the

property of others, or create physical

hazards.

(g) Structural changes. A homebuyer

shall not make any structural changes in

or additions to the home unless the IHA

has determined that such change would

not:
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(1) Impair the value of the unit, the

surrounding units, or the development

as a whole; or

(2) Affect the use of the home for

residential purposes;

(h) Statements of condition and

repair. When each homebuyer moves in,

the IHA shall inspect the home and

shall give the homebuyer a written

statement, to be signed by the IHA and

the homebuyer, of the condition of the

home and the equipment in it. Should

the homebuyer vacate the home, the

IHA shall inspect it and give the

homebuyer a written statement of the

repairs and other work, if any, required

to put the home in good condition for

the next occupant. The homebuyer or

the homebuyer’s representative and a

representative of the HBA may join in

any inspections by the IHA.

(i) Maintenance of common property.

The homebuyer may participate in

nonroutine maintenance of the home

and in maintenance of common

property.

(j) Assignment and survivorship. Until

such time as the homebuyer obtains title

to the home, the following conditions

apply:

(1) A homebuyer shall not assign any

right or interest in the home or any

interest under the Homebuyer

Ownership Opportunity Agreement

without the prior written approval of

the IHA;

(2) In the event of death, mental

incapacity, or other condition as

determined by the IHA, the person

designated as the successor in the

Homebuyer Ownership Opportunity

Agreement shall succeed to the rights

and responsibilities under the

agreement if that person meets the

conditions established by the IHA. Such

person shall be designated by the

homebuyer. If there is no such

designation, or the designee does not

meet the standards of potential for

homeownership, the IHA may consider

as the homebuyer any family member

who meets the standards of potential for

homeownership;

(3) If there is no qualified successor in

accordance with paragraph (j)(2) of this

section, and no minor child of the

homebuyer’s family is in occupancy, the

IHA shall terminate the agreement and

select another family. Where a minor

child or children of the homebuyer’s

family is in occupancy, and an

appropriate adult(s) who has been

appointed legal guardian of the children

is able and willing to perform the

obligations of the Homebuyer

Ownership Opportunity Agreement in

their interest and on their behalf, then

in order to protect continued occupancy

and opportunity for acquisition of

ownership of the home, the IHA may

approve the guardian(s) as occupants of

the unit with a duty to fulfill the

homebuyer obligations under the

agreement.

§ 950.511 Homebuyers’ association (HBA).

(a) General. (1) The homebuyers’

association (HBA) is an incorporated

organization composed of all

homebuyers and homeowners. Each

Turnkey III development shall have an

HBA, unless the homes are on scattered

sites (noncontiguous lots throughout a

multi-block area with no common

property), or the number of homes in

the development may be too few to

support an HBA. For such cases, a

modified form of homebuyers

association or a less formal organization

may be desirable. This decision shall be

made jointly by the IHA and the

homebuyers.

(2) The functions of the HBA shall be

set forth in its articles of incorporation

and by-laws. The IHA shall assist the

HBA in its organization and operation to

the extent possible.

(b) Funding. The IHA may provide

noncash contributions to the HBA, such

as office space, as well as cash

contributions, which shall be provided

for in the annual operating budgets of

the IHA. The cash contributions shall be

in an amount provided for in the IHA

budget and shall be subject to any HUD

restrictions on funding.

§ 950.512 Homeowner’s association

(HOA).

A ‘‘homeowners’ association’’ means

an association comprised of

homeowners, to which the IHA conveys

ownership of common property, and

which thereafter has responsibilities

with respect to the common property.

Only residents who have acquired title

to their homes are members of the HOA.

§ 950.513 Break-even amount and

application of monthly payments.

(a) Definition. The term ‘‘break-even

amount’’ as used herein means the

minimum average monthly amount

required to provide funds for the

amounts budgeted for operating

expenses, the EHPA, and the NRMR. A

separate break-even amount is

established for each size and type of

dwelling unit, as well as for the project

as a whole. The break-even amount for

EHPA and NRMR will vary by size and

type of dwelling unit. Similar variations

may occur for operating expenses. The

break-even amount does not include the

monthly allowance for utilities that the

homebuyer pays directly.

(b) Application of monthly payments.

The IHA shall apply the homebuyer’s

monthly payment as follows:

(1) To the credit of the homebuyer’s

EHPA;

(2) To the credit of the homebuyer’s

NRMR; and

(3) For payment of monthly operating

expense, including contributions to the

operating reserve.

(c) Excess over break-even. When the

homebuyer’s required monthly payment

exceeds the applicable break-even

amount, the excess shall constitute

additional project income and shall be

deposited and used in the same manner

as other project income.

(d) Deficit in monthly payment. When

the homebuyer’s required monthly

payment is less than the applicable

break-even amount, the deficit shall be

applied as a reduction of that portion of

the monthly payment designated for

operating expense (i.e., as a reduction of

project income). In all cases, the

homebuyer payment shall be sufficient

to cover the EHPA and the NRMR,

which shall be credited with the amount

included in the break-even amount for

these accounts.

§ 950.515 Monthly operating expense.

(a) Definition and categories of

monthly operating expense. The term

‘‘monthly operating expense’’ means the

monthly amount needed for the

following purposes:

(1) Administration. Administrative

salaries, travel, legal expenses, office

supplies, etc.;

(2) Homebuyer services. IHA expenses

in the achievement of social goals,

including costs such as salaries,

publications, payments to the HBA to

assist its operation, contracts, and other

costs;

(3) Utilities. Those utilities (such as

water), if any, to be furnished by the

IHA as part of operating expense;

(4) Routine maintenance of common

property. For community building,

grounds, and other common areas, if

any. The amount required for routine

maintenance of common property

depends upon the type of common

property included in the development

and the extent of the IHA’s

responsibility for maintenance;

(5) Protective services. The cost of

supplemental protective services paid

by the IHA for the protection of persons

and property;

(6) General expense. Premiums for

fire and other insurance, payments in

lieu of taxes to the local taxing body,

collection losses, payroll taxes, etc.;

(7) Nonroutine maintenance of

common property (contribution to

operating reserve). Extraordinary

maintenance of equipment applicable to

the community building and grounds,
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18233

and unanticipated items for

nondwelling structures.

(b) Monthly operating expense rate.

(1) The monthly operating expense rate

to be included in the break-even amount

for each fiscal year shall be established

on the basis of the IHA’s operating

budget for that fiscal year. The operating

budget may be revised during the course

of the fiscal year in accordance with

HUD regulations, contracts, and

handbooks.

(2) If it is subsequently determined

that the actual operating expense for a

fiscal year was more or less than the

amount provided by the monthly

operating expense established for that

fiscal year, the rate of monthly operating

expenses to be established for the next

fiscal year may be adjusted to account

for the differences.

(c) Posting of monthly operating

expense statement. A statement

showing the budgeted monthly amount

allocated in the current operating

expense category shall be provided to

the HBA, and copies shall be provided

to homebuyers upon request.

§ 950.517 Earned Home Payments

Account (EHPA).

(a) Credits to the account. The IHA

shall establish and maintain a separate

EHPA for each homebuyer. Since the

homebuyer is responsible for

maintaining the home, a portion of the

required monthly payment equal to the

IHA’s estimate of the monthly cost for

such routine maintenance, taking into

consideration the relative type and size

of the homeowner’s home, shall be set

aside in the EHPA. In addition, this

account shall be credited with:

(1) Any voluntary payments made

pursuant to paragraph (f) of this section;

and

(2) Any amount earned through the

performance of maintenance as

provided in paragraph (c) of this

section.

(b) Charges to the account. (1) If for

any reason the homebuyer is unable or

fails to perform any item of required

maintenance, the IHA shall arrange to

have the work done in accordance with

the procedures established by the IHA

and the HBA, and the cost thereof shall

be charged to the homebuyer’s EHPA.

Inspections of the home shall be made

jointly by the IHA and HBA.

(2) To the extent NRMR expense is

attributable to the negligence of the

homebuyer as determined by the HBA

and approved by the IHA (see

§ 950.519), the cost thereof shall be

charged to the EHPA.

(c) Additional equity through

maintenance of common property.

Homebuyers may earn addition EHPA

credits by providing in whole or in part

any of the maintenance necessary to the

common property of the development.

When such maintenance is to be

provided by the homebuyer, this may be

done and credit earned therefore only

pursuant to a prior written agreement

between the homebuyer and the IHA (or

the homeowners’ association,

depending on who has responsibility for

maintenance of the property involved),

covering the nature and scope of the

work and the amount of credit the

homebuyer is to receive. In such cases,

the agreed amount shall be charged to

the appropriate maintenance account

and credited to the homebuyer’s EHPA

upon completion of the work.

(d) Investment of excess. (1) When the

aggregate amount of all EHPA balances

exceeds the estimated reserve

requirements for 90 days, the IHA shall

notify the HBA and shall invest the

excess in Federally insured savings

accounts, Federally insured credit

unions, and/or securities approved by

HUD, and in accordance with any

recommendations made by the HBA. If

the HBA wishes to participate in the

investment program, it should submit

periodically to the IHA a list of HUDapproved securities, bonds, or

obligations that the association

recommends for investment by the IHA

of the funds in the EHPAs. Interest

earned on the investment of such funds

shall be prorated and credited to each

homebuyer’s EHPA in proportion to the

amount in each such reserve account.

(2)(i) Periodically, but not less often

than annually, the IHA shall prepare a

statement showing:

(A) The aggregate amount of all EHPA

balances,

(B) The aggregate amount of

investments (savings accounts and/or

securities) held for the account of all the

homebuyers’ EHPAs, and

(C) The aggregate uninvested balance

of all the homebuyers’ EHPAs.

(ii) This statement shall be made

available to any authorized

representative of the HBA.

(e) Voluntary payments. To enable the

homebuyer to acquire title to the home

within a shorter period, the homebuyer

may make payments over and above the

required monthly payments. Such

voluntary payments shall be credited to

the homebuyer’s EHPA.

(f) Delinquent monthly payments.

Under exceptional circumstances as

determined by the HBA and the IHA, a

homebuyer’s EHPA may be used to pay

the delinquent required monthly

payments, provided the amount used for

this purpose does not seriously deplete

the account and provided that the

homebuyer agrees to cooperate in such

counseling as may be made available by

the IHA or the HBA.

(g) Annual statement to homebuyer.

The IHA shall provide an annual

statement to each homebuyer specifying

the amounts in the EHPA and the

NRMR. Any maintenance or repair done

on the dwelling by the IHA that is

chargeable to the EHPA or to the NRMR

shall be accounted for through a work

order, a copy of which shall be sent to

the homebuyer.

(h) Withdrawal and assignment. The

homebuyer shall have no right to assign,

withdraw, or in any way dispose of the

funds in its EHPA except as provided in

this section or in § 950.525.

(i) Application of EHPA upon

vacating of dwelling. (1) In the event a

homebuyer agreement is terminated the

IHA shall charge against the

homebuyer’s EHPA the amounts

required to pay:

(i) The amount due the IHA,

including the monthly payments the

homebuyer is obligated to pay up to the

date the homebuyer vacates;

(ii) The monthly payment for the

period the home is vacant, not to exceed

60 days from the date of notice of

intention to vacate, or if the homebuyer

fails to give notice of intention to vacate,

60 days from the date the home is put

in good condition for the next occupant;

and

(iii) The cost of any routine

maintenance, and of any nonroutine

maintenance attributable to the

negligence of the homebuyer, required

to put the home in good condition for

the next occupant.

(2) If the EHPA balance is not

sufficient to cover all of these charges,

the IHA shall require the homebuyer to

pay the additional amount due. If the

amount in the account exceeds these

charges, the excess shall be paid to the

homebuyer.

(3) Settlement with the homebuyer

shall be made promptly after the actual

cost of repairs to the dwelling has been

determined, provided that the IHA shall

make every effort to make such

settlement within 30 days from the date

the homebuyer vacates.

§ 950.519 Nonroutine Maintenance

Reserve (NRMR).

(a) Purpose of reserve. The IHA shall

establish and maintain a separate NRMR

for each home, using a portion of the

homebuyer’s monthly payment. The

purpose of the NRMR is to provide

funds for the nonroutine maintenance of

the home, which consists of the

infrequent and costly items of

maintenance and replacement shown on

the Nonroutine Maintenance Schedule
18234 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

for the home. The NRMR shall not be

used for nonroutine maintenance of

common property, or for nonroutine

maintenance relating to the home to the

extent such maintenance is attributable

to the homebuyer’s negligence or to

defective materials or workmanship.

(b) Amount of reserve. The amount of

the monthly payments to be set aside for

NRMR shall be determined by the IHA,

on the basis of the Nonroutine

Maintenance Schedule showing the

amount likely to be needed for

nonroutine maintenance of the home

during the term of the Homebuyer

Ownership Opportunity Agreement,

taking into consideration the type of

construction and dwelling equipment.

The IHA shall prepare this schedule and

reexamine it annually.

(c) Charges to NRMR. (1) The IHA

shall provide the nonroutine

maintenance necessary for the home,

and the cost thereof shall be funded as

provided in paragraph (c)(2) of this

section. Such maintenance may be

provided by the homebuyer but only

pursuant to a prior written agreement

with the IHA covering the nature and

scope of the work and the amount of

credit the homebuyer is to receive. The

amount of any credit shall, upon

completion of the work, be credited to

the homebuyer’s EHPA and charged as

provided in paragraph (c)(2) of this

section.

(2) The cost of nonroutine

maintenance shall be charged to the

NRMR for the home except that:

(i) To the extent such maintenance is

attributable to the fault or negligence of

the homebuyer, the cost shall be

charged to the homebuyer’s EHPA after

consultation with the HBA if the

homebuyer disagrees; and

(ii) To the extent such maintenance is

attributable to defective materials or

workmanship not covered by the

warranty, or even though covered by the

warranty if not paid for thereunder

through no fault or negligence of the

homebuyer, the cost shall be charged to

the appropriate operating expense

account of the Project.

(3) In the event the amount charged

against the NRMR exceeds the balance

therein, the difference (deficit) shall be

made up from continuing monthly

credits to the NRMR based upon the

homebuyer’s monthly payments. If there

is still a deficit when the homebuyer

acquires title, the homebuyer shall pay

such deficit at settlement (see paragraph

(d)(2) of this section).

(d) Transfer of NRMR. (1) In the event

the homebuyer agreement is terminated,

the homebuyer shall not receive any

balance or be required to pay any deficit

in the NRMR. When a subsequent

homebuyer moves in, a credit balance in

the NRMR shall continue to be

applicable to the home in the same

amount as if the preceding homebuyer

had continued in occupancy.

(2) In the event the homebuyer

purchases the home, and there remains

a balance in the NRMR, the IHA shall

pay such balance to the homeowner at

settlement. In the event the homebuyer

purchases and there is a deficit in the

NRMR, the homebuyer shall pay such

deficit to the IHA at settlement.

(e) Investment of excess. (1) When the

aggregate amount of the NRMR balances

for all the homes exceeds the estimated

reserve requirements for 90 days, the

IHA shall invest the excess in Federally

insured savings accounts, Federally

insured credit unions, and/or securities

approved by HUD. Income earned on

the investment of such funds shall be

prorated and credited to each

homebuyer’s NRMR in proportion to the

amount in each reserve account.

(2) (i) Periodically, but not less often

than annually, the IHA shall prepare a

statement showing:

(A) The aggregate amount of all

NRMR balances,

(B) The aggregate amount of

investments (savings accounts and/or

securities) held for the account of the

NRMRs, and

(C) The aggregate uninvested balance

of the NRMRs.

(ii) The IHA shall make a copy of this

statement available to any authorized

representative of the HBA.

§ 950.521 Operating reserve.

(a) Purpose of the reserve. To the

extent that total operating receipts

(including subsidies for operations)

exceed total operating expenditures of

the project, the IHA shall establish an

operating reserve in connection with its

annual operating budgets for the project.

The purpose of this reserve is to provide

funds for:

(1) The infrequent but costly items of

nonroutine maintenance and

replacements of common property,

taking into consideration the types of

items that constitute common property,

such as nondwelling structures and

equipment, and in certain cases,

common elements of dwelling

structures;

(2) Nonroutine maintenance for the

homes to the extent such maintenance

is attributable to defective materials or

workmanship not covered by warranty;

(3) Working capital, including funds

to cover a deficit in a homebuyer’s

NRMR until such deficit is offset by

future monthly payments by the

homeowner or a settlement in the event

the homebuyer should purchase;

(4) A deficit in the operation of the

project for a fiscal year, including any

deficit resulting from monthly payments

totaling less than the break-even amount

for the project;

(5) Nonroutine maintenance of

vacated homes with insufficient NRMR

balances to put them in suitable

condition for reoccupancy by

subsequent homeowners; and

(6) The cost of utilities on a temporary

basis for an individual unit by way of

a utility reimbursement when a

homebuyer has insufficient tenant

income to cover even the utilities.

(b) Nonroutine maintenance of

common property (contribution to

operating reserve. The amount under

this heading to be included in operating

expense (and in the break-even amount)

established for the fiscal year shall be

determined by the IHA, on the basis of

estimates of the monthly amount

needed to accumulate an adequate

reserve for the items described in

paragraph (a)(1) of this section. This

contribution to the operating reserve

shall be made only during the period

the IHA is responsible for the

maintenance of any common property;

during such period, the amount shall be

determined on the basis of the

requirements of all common property in

the development.

(c) Transfer to homeowners’

association. Where a Turnkey III

development includes common

property, the IHA shall be responsible

for and shall retain custody of the

operating reserve until the homeowners

acquire voting control of the

homeowners’ association. When the

homeowners acquire voting control, the

homeowners’ association shall then

assume full responsibility for

management and maintenance of

common property under a plan, agreed

upon by the IHA and the homeowners

association, and the IHA shall transfer

to the homeowners’ association a

portion of the operating reserve then

held by the IHA. This provision shall

not apply when there is no common

property or when there is no duly

organized and functioning homeowners

association.

(d) Disposition of reserve. Following

the end of the fiscal year in which the

last home has been conveyed by the

IHA, the balance of the operating

reserve held by the IHA shall be

retained by the IHA in a replacement

reserve if an ACC amendment has been

executed implementing loan

forgiveness, provided that the aggregate

amount of payments by the IHA under

this paragraph (d) shall not exceed the

aggregate amount of annual
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18235

contributions paid by HUD with respect

to the development.

§ 950.523 Operating subsidy.

HUD may pay operating subsidy,

subject to the availability of funds for

this purpose and at HUD’s sole

discretion, to cover an operating deficit

in an operating budget. However,

operating subsidy or project funds may

not be used to establish or maintain the

homebuyer reserve accounts.

§ 950.525 Purchase price and methods of

purchase.

(a) Purchase price. The purchase price

for the initial and subsequent

homebuyer shall be determined by the

IHA.

(b) Purchase price schedule. On the

date when the homebuyer agreement is

signed, the IHA shall provide the

homebuyer with a Purchase Price

Schedule, showing the monthly

declining purchase price over the term

of the HOOA agreement (a period not

less than 15 years or more than 25 as

determined by the IHA, at an interest

rate determined by the IHA). The IHA

may choose to forego charging interest

and calculate the payment with an

interest rate of zero.

(c) Methods of purchase. (1) The

homebuyer may achieve ownership

when the amount in the EHPA, plus

such portion of the NRMR as the

homebuyer wishes to use for the

purchase, is equal to the unamortized

balance purchase price as shown at that

time on the homebuyer’s purchase price

schedule plus all incidental costs (the

costs incidental to acquiring ownership,

including but not limited to the costs for

a credit report, field survey, title

examination, title insurance,

inspections, the fees for attorneys other

than the IHA’s attorney, mortgage

application, closing and recording, and

the transfer taxes and loan discount

payment, if any). If for any reason title

to the home is not conveyed to the

homebuyer during the month in which

the combined total in the EHPA and

designated portion of the NRMR equals

the purchase price, the balance of the

purchase price shall be fixed as the

amount specified for that month, and

the homebuyer shall be refunded:

(i) The net additions, if any, credited

to the EHPA after that month; and

(ii) Such part of the monthly

payments made by the homebuyer after

the balance of the purchase price has

been fixed that exceeds the break-even

amount attributable to the unit.

(2) Where the sum of the unamortized

balance of the purchase price and

incidental costs is greater than the

amounts in the homebuyer’s EHPA and

NRMR, the homebuyer may achieve

ownership by obtaining financing for or

otherwise paying the excess amount.

The unamortized balance of the

purchase price shall be the amount

shown on the homebuyer’s purchase

price schedule for the month in which

the settlement date for the purchase

occurred.

(3) Period required to achieve

ownership. The maximum period for

achieving ownership shall be 30 years,

but depending upon increases in the

homebuyer’s income and the amount of

credit the homebuyer can accumulate in

the EHPA and NRMR, the period may be

shortened accordingly.

(4) Residual receipts. After payment

in full of the IHA’s debt, if there are any

subsequent homebuyers who have not

acquired ownership of their homes, the

IHA shall retain all residual receipts

from the operation of the development

in a replacement reserve.

(5) IHA financing. The IHA may, at its

discretion, provide financing for

purchases by homebuyers, or assist with

financing, by such methods and on such

terms and conditions as may agreeable

to the IHA and the homebuyer

(6) Transfer of title to homebuyer.

When the homebuyer is to obtain

ownership, the parties shall mutually

agree upon a closing date. On the

closing date, the homebuyer shall pay

the required amount of money to the

IHA and receive a deed for the home.

§ 950.529 Termination of Homebuyer

Ownership Opportunity Agreement.

(a) Termination by IHA. (1) In the

event the homebuyer should breach the

Homebuyer Ownership Opportunity

Agreement by failure to make the

required monthly payment, by

misrepresentation or withholding

information in applying for admission

or in connection with any subsequent

reexamination of income and family

composition, by failure to comply with

any of the other homebuyer obligations

under the agreement, by loss of

homeownership potential (beyond a

temporary, unforeseen change in

circumstances), an income that requires

outright purchase, the IHA may

terminate the agreement 30 days after

giving the homebuyer notice of its

intention to do so in accordance with

paragraph (a)(2) of this section.

(2) Notice of termination by the IHA

shall be in writing. Such notice shall

state:

(i) The reason for termination;

(ii) That the homebuyer may respond

to the IHA, in writing or in person,

within a specified reasonable period of

time regarding the reason for

termination;

(iii) That in such response the

homebuyer may be represented by the

HBA;

(iv) That the IHA will consult the

HBA concerning this termination;

(v) That unless the IHA rescinds or

modifies the notices, the termination

shall be effective at the end of the 30-

day notice period; and

(vi) That, in the case of termination as

a result of loss of homeownership

potential when the homebuyer is

otherwise in compliance with the

agreement, the family will be offered a

transfer to a rental unit (whether or not

in concert with a conversion of that unit

to the rental program). If a rental unit of

appropriate size is available, the family

will be notified of a transfer to that unit.

If no other unit is then available and the

homebuyer’s current unit is not to be

converted to rental, the family will be

notified that it may remain in place

until an appropriate rental unit becomes

available (in which case the unit

remains under the Turnkey III project).

Otherwise, the notice shall state that the

transfer shall occur as soon as a suitable

rental unit is available for occupancy,

but no earlier than 30 days from the date

of the notice. The notice shall also state

that if the homebuyer should refuse to

move under such circumstances, the

family may be required to vacate the

homebuyer unit, without further notice.

(b) Termination by the homebuyer.

The homebuyer may terminate the

Homebuyer Ownership Opportunity

Agreement by giving the IHA 30 days

notice in writing of the intention to

terminate and vacate the home. In the

event that the homebuyer vacates the

home without notice to the IHA, the

agreement shall be terminated

automatically, and the IHA may dispose

of, in any manner deemed suitable by it,

any items of personal property left by

the homebuyer in the home.

(c) Transfer to the rental program. In

the event of termination of the

Homebuyer Ownership Opportunity

Agreement by the IHA or by the

homebuyer with adequate notice, the

homebuyer may be transferred to a

suitable unit in the rental program, in

accordance with § 950.503 or terminated

from occupancy. If the homebuyer is

transferred to the rental program, the

amount in the homeowner’s EHPA shall

be paid in accordance with § 950.517(i).

Subpart H—Lead-Based Paint

Poisoning Prevention

§ 950.551 Purpose and applicability.

The purpose of this subpart is to

implement the provisions of the LeadBased Paint Poisoning Prevention Act,

42 U.S.C. 4821–4846, by establishing
18236 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

procedures to eliminate as far as

practicable the immediate hazards from

the presence of paint which may

contain lead in IHA-owned housing

assisted under the United States

Housing Act of 1937. This subpart

applies to IHA-owned low-income

housing projects, including Turnkey III,

Mutual Help, and conveyed Lanham Act

and Public Works Administration

projects, and to section 23 Leased

Housing Bond-Financed projects. This

subpart does not apply to projects under

the section 23 Leased Housing NonBond-Financed Program, the section

10(c) Leased Housing Program, or the

section 23 and section 8 Housing

Assistance Payments programs. This

subpart is promulgated in accordance

with the authorization granted in 24

CFR 35.24(b)(4) and supersedes, with

respect to all housing to which it

applies, the requirements prescribed by

subpart C of 24 CFR part 35.

§ 950.553 Testing and abatement

applicable to development.

(a) Pre-acquisition testing. With

respect to development, all existing

properties constructed before 1978 (or

substantially rehabilitated before 1978)

and proposed to be acquired for family

projects (whether or not they will need

rehabilitation) shall be tested for leadbased paint on applicable surfaces (as

defined in subpart A of this part).

(b) Pre-occupancy abatement. If units

containing lead-based paint are

acquired, compliance with parts 35 and

this subpart is required, and abatement

shall be completed before occupancy.

(c) Compliance with guidelines. It is

strongly encouraged, but not required,

that all such properties be tested in

accordance with the Lead-Based Paint

Interim Guidelines for Hazard

Identification and Abatement in Public

and Indian Housing (hereafter LeadBased Paint Interim Guidelines), which

were published at 55 FR 14555 and 55

FR 39874 (1990), as periodically

amended or updated, and other future

official departmental issuances related

to lead-based paint, before any

irrevocable commitment is made to

acquire the property. Properties that

have already been tested in accordance

with the Lead-Based Paint Poisoning

Prevention Act as amended by the

Housing and Community Development

Act of 1987 need not be tested again. If

lead-based paint is found in a property

to be acquired, the cost of testing and

abatement shall be considered when

making the cost comparison to justify

new construction, as well as when

meeting maximum total development

cost limitations.

§ 950.555 Testing and abatement

applicable to modernization.

(a) Applicability of requirements—(1)

General. With respect to modernization,

the IHA shall comply with the LeadBased Paint Poisoning Prevention Act

(42 U.S.C. 4821–4846) and HUD

implementing regulations (24 CFR part

35 and this subpart H). The five-year

funding request plan for CIAP (as

described in § 950.610) shall be

amended to include the schedule for

lead-based paint testing and abatement.

Random testing shall be completed by

December 6, 1994 (42 U.S.C.

4822(d)(2)(B)). Testing and abatement

shall be completed with respect to all

family projects constructed or

substantially rehabilitated before 1978

approved for (or applications for)

comprehensive and homeownership

modernization; other pre-1978 family

projects not undergoing comprehensive

and homeownership modernization;

and special purpose modernization.

Any previous testing or abatement work

that was done in accordance with

HUD’s implementing regulations,

effective June 6, 1988, or the Lead-Based

Paint Poisoning Prevention Act as

amended by the Housing and

Community Development Act of 1987

shall not be redone to comply with the

requirements of this section.

(2) Special Purpose. The requirements

for lead-based paint testing and

abatement apply to the following three

categories of special purpose

modernization: vacant unit reduction;

accessibility for handicapped (for any

dwelling in such housing in which any

child who is less than 7 years of age

resides or is expected to reside); and

cost effective energy efficiency

measures. In the case of funding for

accessibility for the handicapped and

cost-effective energy efficiency

measures, LBP testing and abatement

shall be performed only when the

rehabilitation involves removal of walls,

doors, and windows. The HUD Area

ONAP may determine on a case-by-case

basis whether lead-based paint testing

and abatement should be allowed for an

IHA requesting special purpose

modernization for physical

improvements to replace or repair major

equipment systems or structural

elements (such as, the exterior of

buildings). With regard to lead-based

paint testing for special purpose

modernization, if the project has already

been randomly sampled before May 15,

1991, using the criteria found in the

June 6, 1988 regulations (see paragraph

(a)(1) of this section) or after May 15,

1991, using the criteria outlined in

paragraph (b) of this section. If leadbased paint is found as a result of

previous random testing or current

testing, it must be abated.

(b) Which standards apply—(1)

Comprehensive, special purpose, and

homeownership modernization in

progress. With respect to family projects

approved for comprehensive, special

purpose, and homeownership

modernization (assisted under section

14 of the Act) that may contain leadbased paint for which funds were

reserved by HUD by May 15, 1991, the

following standards apply:

(i) IHAs that awarded any

construction contract (including

architectural and engineering (A&E)

contracts) before April 1, 1990, are

subject to the provisions regarding

random testing and abatement in effect

at the time of award.

(ii) IHAs that advertise for bid or

award a construction contract

(including A&E contracts) or plan to

start force account work on or after

April 1, 1990, excluding those contracts

solely for emergency work items, shall

not execute these contracts until

random testing as described in this

section has taken place and any

necessary abatement as described in this

section is included in the modernization

budget.

(2) Applications for comprehensive,

special purpose, and homeownership

modernization projects. With respect to

applications for family projects for

comprehensive, special purpose, and

homeownership modernization (assisted

under section 14 of the Act) that may

contain lead-based paint, no

construction contracts awarded on or

after April 1, 1990 (including A&E

contracts and force account work),

excluding those contracts solely for

emergency work items, shall be

executed until random testing as

described in this section has taken place

and any necessary abatement as

described in this section is included in

the modernization budget.

(3) Lead-based paint modernization;

other family projects not undergoing

comprehensive, special purpose, or

homeownership modernization. Any

pre-1978 family project (assisted under

section 14 of the Act) not undergoing

comprehensive, special purpose, or

homeownership modernization (as

covered in paragraphs (b)(1) and (2) of

this section) including a pre-1978 family

project that previously has been

modernized with comprehensive,

special purpose, or homeownership

modernization grants under previous

regulations shall be randomly tested as

described in this section, and abated as

described in this section if lead-based

paint is found, unless testing and

abatement was previously done in
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18237

accordance with paragraph (a) of this

section.

(c) Testing—(1) Random testing.

Random testing as described in this

paragraph (c)(1) is an eligible cost under

lead-based paint modernization and is a

planning cost as described in

§ 950.605(d). Interior common areas to

be sampled include IHA-owned or

operated child care facilities.

(i) Initial random test. IHAs shall use

random testing on family projects

(including homeownership units)

constructed or substantially

rehabilitated before 1978. It is strongly

recommended, but not required, that

IHAs use the random testing

methodology set forth in the lead-based

paint interim guidelines, as periodically

amended or upgraded, and other future

outstanding departmental issuances in

effect at the time of testing. Random

testing shall be scheduled or prioritized

by age of the family projects and

whether the family projects are known

to have lead-based paint or the presence

of previous elevated blood levels (EBLs).

(ii) Followup. If evidence of leadbased paint is found in units that were

in the random sample, the IHA is

required to:

(A) Test the corresponding surfaces

where lead-based paint was found in

other units of the universe being tested;

or

(B) Abate all like surfaces in that

universe without further testing.

(2) Universal testing. For scattered site

family projects involving single-unit

structures that are not contiguous or

were built and/or rehabilitated at

different times, the IHA shall cause each

unit to be tested for lead-based paint.

(d) Abatement. Abatement shall be

performed in accordance with

§ 950.570. Abatement within a

comprehensive and homeownership

modernization project should be

prioritized in relation to the immediacy

of the hazards to children under seven

years of age.

(Information collection requirements

contained in this section were approved by

the Office of Management and Budget under

control number 2577–0090).

§ 950.560 Notification.

(a) General LBP Hazard Notification

for all Residents. Tenants in IHA-owned

low-income public housing projects

constructed before 1978 shall be

notified:

(1) That the property was constructed

before 1978;

(2) That the property may contain

lead-based paint;

(3) Of the hazards of lead-based paint;

(4) Of the symptoms and treatment of

lead-based paint poisoning;

(5) Of the precautions to be taken to

avoid lead-based paint poisoning

(including maintenance and removal

techniques for eliminating such

hazards); and

(6) Of the advisability and availability

of blood lead level screening for

children under seven years of age.

Tenants shall be advised to notify the

IHA if a child is identified as having an

elevated lead blood level (EBL)

condition.

(b) Lead-Based Paint Hazard

Notification for Applicants and

prospective purchasers. A notice of the

dangers of lead-based paint poisoning

and a notice of the advisability and

availability of blood lead level screening

for children under seven years of age

shall be provided to every applicant

family at the time of application. The

applicant family shall be advised, if

screening is utilized and an EBL

condition identified, to notify the IHA.

(c) Notification of Positive Lead-Based

Paint Test Results. In the event that an

IHA-owned project constructed or

substantially rehabilitated before 1978 is

tested and the test results using an x-ray

fluorescence analyzer (XRF) are

identified as having a lead content

greater than or equal to 1.0 mg/cm2, or

is tested by laboratory chemical analysis

(atomic absorption spectroscopy (AAS))

and found to contain .5% lead by

weight or more, the IHA shall provide

written notification of such result to the

current residents, applicants,

prospective purchasers, and

homebuyers of such units in a timely

manner. The IHA shall retain written

records of the notification.

§ 950.565 Maintenance obligation;

defective paint surfaces.

In family projects constructed or

substantially rehabilitated before 1978,

the IHA shall visually inspect units for

defective paint surfaces as part of

routine periodic unit inspections. If

defective paint surfaces are found,

covering or removal of the defective

paint spots as described in § 35.24(b)(2)

shall be required. Treatment shall be

completed within a reasonable period of

time.

§ 950.570 Procedures involving EBLs.

(a) Procedures where a current

resident child has an EBL. When a child

residing in an IHA-owned low-income

housing project has been identified as

having an EBL, the IHA shall:

(1) Test all surfaces in the unit and

applicable surfaces of any IHA-owned

and operated child care facility if used

by the EBL child for lead-based paint

and abate the surfaces found to contain

lead-based paint. Testing of exteriors

and interior common areas (including

non-dwelling IHA facilities that are

commonly used by the EBL child under

seven years of age) will be done as

considered necessary and appropriate

by the IHA and HUD; or

(2) Transfer the family with an EBL

child to a post-1978 or to a previously

tested unit that was found to be free of

lead-based paint hazards or in which

such hazards have been abated as

described in this section.

(b) Procedures where a non-resident

child using an IHA-owned or operated

child care facility has an EBL. When a

non-resident child using an IHA-owned

or operated child care facility has been

identified as having an EBL, the IHA

shall test all applicable surfaces of the

IHA-owned or operated child care

facility and abate the surfaces found to

contain lead-based paint.

(c) Testing. Testing shall be

completed within five days after

notification to the IHA of the

identification of the EBL child. A

qualified inspector or laboratory shall

certify in writing the precise results of

the inspection. Testing services

available from State, local, or tribal

health or housing agencies or an

organization recognized by HUD shall

be utilized to the extent available. If the

results equal or exceed a level of 1 mg/

cm2 or .5% by weight, the results shall

be provided to the tenant or the family

of the EBL child using the IHA-owned

or operated child care facility. Testing

will be considered an eligible

modernization cost under subpart I of

this part only upon IHA certification

that testing services are otherwise

unavailable.

(d) Hazard abatement requirements—

(1) Abatement actions. Hazard

abatement actions shall be carried out in

accordance with the following

requirements and order of priority:

(i) Unit housing a child with an EBL.

Any surface in the unit found to contain

lead-based paint shall be treated. Where

full treatment of a unit housing an EBL

child cannot be completed within five

days after positive testing, emergency

intervention actions (including

removing defective lead-based paint and

scrubbing surfaces after such removal

with strong detergents) shall be taken

within such time. Full treatment of a

unit housing an EBL child shall be

completed within 14 days after positive

testing, unless funding sources are not

immediately available. In such event,

the IHA may use its operating reserves

and, when necessary, may request

reimbursement from the current fiscal

year CIAP funds, or request the

reprogramming of previously approved

CIAP funds.
18238 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(ii) IHA-owned or operated child care

facility used by a child with an EBL.

Any applicable surface found to contain

lead-based paint shall be treated.

(iii) Interior common areas (including

nondwelling IHA facilities that are

commonly used by EBL children under

seven years of age) and exterior surfaces

of projects in which children with EBLs

reside. Abatement shall be provided to

all surfaces containing lead-based paint.

(2) Abatement methods. IHAs shall

select a safe and cost effective treatment

for surfaces found to contain lead-based

paint, including clean-up procedures,

and are strongly encouraged, but not

required, to follow those methods

specified in the Lead-Based Paint

Interim Guidelines, and other future

official departmental issuances relating

to lead-based paint abatement in effect

at the time the surfaces are to be abated.

Certain prohibited abatement methods

are set forth in § 35.24(b)(2)(ii) of this

title. Final inspection and certification

after treatment shall be made by a

qualified inspector, industrial hygienist,

or local health official based on

clearance levels specified in HUD

departmental issuances and guidelines.

(3) Tenant protection. The IHA shall

take appropriate action to protect

tenants including children with EBLs,

other children, and pregnant women,

from hazards associated with abatement

procedures, and is strongly encouraged,

but not required, to take actions more

fully outlined in the Lead-Based Paint

Interim Guidelines and other future

official departmental issuances related

to tenant protection in effect at the time

the abatement procedure is undertaken.

Tenant relocation may be accomplished

with CIAP assistance.

(4) Disposal of lead-based paint

debris. The IHA shall dispose of leadbased paint debris in accordance with

applicable local, State, or Federal

requirements. Additional information

covering disposal practices is contained

in the Lead-Based Paint Interim

Guidelines and other future official

departmental issuances relating to leadbased paint. In any event, the

Environmental Protection Agency (EPA)

has primary responsibility for waste

disposal regulations and procedures.

(see, e.g., 40 CFR parts 260 through

271.)

(e) Records. The IHA shall maintain

records on which units, common areas,

exteriors, and IHA child care facilities

have been tested, results of the testing,

and the condition of painted surfaces by

location in or on the unit, interior

common area, exterior surface, or IHA

child care facility. The IHA shall report

information regarding such testing, in

accordance with such requirements as

shall be prescribed by HUD. The IHA

shall also maintain records of abatement

provided under this subpart, and shall

report information regarding such

abatement, and its compliance with the

requirements of 24 CFR part 35 and

§ 950.555, in accordance with such

requirements as shall be prescribed by

HUD. If records establish that a unit, an

IHA child care facility, an exterior or

interior common area was tested or

treated in accordance with the standards

prescribed in this subpart, that unit,

child care facility, exterior or interior

common area is not required to be retested or re-treated.

(Information collection requirements

contained in paragraph (e) were approved by

the Office of Management and Budget under

control number 2577–0090)

§ 950.575 Compliance with tribal, State

and local laws.

(a) IHA responsibilities. Nothing in

this subpart is intended to relieve an

IHA of any responsibility for

compliance with tribal, State, or local

laws, ordinances, codes, or regulations

governing lead-based paint testing or

hazard abatement. The IHA shall

maintain records evidencing

compliance with applicable tribal, State,

or local requirements, and shall report

information concerning such

compliance, in accordance with such

requirements as shall be prescribed by

HUD.

(b) HUD responsibility. If HUD

determines that a tribal, State, or local

law, ordinance, code, or regulation

provides for lead-based paint testing or

hazard abatement in a manner that

provides a comparable level of

protection from the hazards of leadbased paint poisoning to that provided

by the requirements of this subpart and

that adherence to the requirements of

this subpart would be duplicative or

otherwise cause inefficiencies, HUD

may modify or waive the requirements

of this subpart in such a manner as may

be appropriate to promote efficiency

while ensuring such comparable level or

protection.

(Information collection requirements

contained in this section were approved by

the Office of Management and Budget under

OMB Control Number 2577–0090).

§ 950.580 Monitoring and enforcement.

IHA compliance with the

requirements of this subpart H will be

included in the scope of HUD

monitoring of IHA operations.

Noncompliance with any requirement of

this subpart may subject an IHA to

sanctions provided under the Annual

Contributions Contract or to

enforcement by other means authorized

by law.

§ 950.585 Insurance coverage.

For the requirements concerning an

IHA’s obligation to obtain reasonable

insurance coverage with respect to the

hazards associated with testing for and

abatement of lead-based paint, see

§ 950.195.

Subpart I—Modernization Program

General Provisions

§ 950.600 Purpose and applicability.

(a) Purpose. The purpose of this

section is to set forth the policies and

procedures for the Modernization

program, authorizing HUD to provide

financial assistance to Indian Housing

Authorities (IHAs) to:

(1) Improve the physical condition

and upgrade the management and

operation of existing Indian housing

developments;

(2) Assure that such developments

continue to be available to serve lowincome families;

(3) Assess the risks of lead-based

paint poisoning through the use of

professional risk assessments that

include dust and soil sampling and

laboratory analysis in all developments

constructed before 1980 that are, or will

be occupied by families; and

(4) Take effective interim measures to

reduce and contain the risks of leadbased paint poisoning recommended in

such professional risk assessments.

(b) Applicability. (1) The sections

under the undesignated heading

‘‘General Provisions’’ applies to all

modernization under this subpart. The

sections under the undesignated

heading ‘‘Comprehensive Improvement

Assistance Program’’ (CIAP) set forth the

requirements and procedures for the

CIAP for IHAs that own or operate fewer

than 250 Indian housing units. An IHA

that qualifies for participation in the

Comprehensive Grant Program (CGP) is

not eligible to participate in the CIAP.

The sections under the undesignated

heading ‘‘Comprehensive Grant program

(CGP)’’ set forth the requirements and

procedures for the CGP for IHAs that

own or operate 250 or more Indian

housing units. For purposes of the 250

or more unit threshold for participation

in the CGP, and for the formula

allocation under § 950.601, an existing

rental, Mutual Help, or section 23 bondfinanced unit under the ACC shall count

as one unit; and a unit under the

Turnkey III program shall count as onefourth of a unit. An IHA that has already

qualified to participate in the CGP

because it owns or operates 250 or more

units may elect to continue to
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18239

participate in the CGP so long as it owns

or operates at least 200 units.

(2) This subpart applies to IHA-owned

low-income Indian housing

developments (including developments

managed by a Resident Management

Corporation pursuant to a contract with

the IHA), and to Section 23 Leased

Housing Bond-Financed developments,

for which IHAs request assistance under

the CIAP or CGP. This subpart also

applies to the implementation of

modernization programs which were

approved before FFY 1992. Rental

developments that are planned for

conversion to homeownership under

sections 5(h), 21, or 301 of the Act, but

that have not yet been sold by an IHA,

continue to qualify for assistance under

this part. This subpart does not apply to

developments under the Section 23

Leased Housing Non-Bond Financed

program, the Section 10(c) Leased

program, or the Section 23 or Section 8

Housing Assistance Payments programs.

(c) Transition. Any amount that HUD

has obligated to an IHA under CIAP

shall be used for the purposes for which

the funding was provided, or for

purposes consistent with an approved

action plan submitted by the IHA under

the CGP, as the IHA determines to be

appropriate.

(d) Other. See subpart A of this part

for applicable requirements, other than

the Act, that apply to modernization

under this subpart I.

§ 950.601 Allocation of funds under

section 14.

(a) General. This section describes the

process for allocating modernization

funds to the aggregate of IHAs and PHAs

participating in the CIAP (i.e., agencies

that own or operate fewer than 250

units), and to individual IHAs and

PHAs participating in the CGP (i.e.,

agencies that own or operate 250 or

more units). The program requirements

governing PHA participation in the

CIAP and CGP are contained in 24 CFR

part 968.

(b) Set-aside for emergencies and

disasters. For each FFY, HUD shall

reserve from amounts approved in the

appropriation act for grants under this

part and part 968 of this title, $75

million (which shall include unused

reserve amounts carried over from

previous FFYs), which shall be made

available to IHAs and PHAs for

modernization needs resulting from

natural and other disasters, and from

emergencies. HUD shall replenish this

reserve at the beginning of each FFY so

that it always begins with a $75 million

balance. Any unused funds from

previous years will remain in the

reserve until allocated. The

requirements governing the reserve for

disasters and emergencies and the

procedures by which an IHA may

request such funds are set forth in

§ 950.667.

(c) Set-aside for credits for mod

troubled PHAs under 24 CFR part 968,

subpart C. (1) General. After deducting

amounts for the reserve for natural and

other disasters and for emergencies

under paragraph (b) of this section, HUD

shall set aside no more than five percent

of the remaining amount for the purpose

of providing credits to PHAs under 24

CFR part 968, subpart C that were

formerly designated as mod troubled

agencies under the Public Housing

Management Assessment Program

(PHMAP) at 24 CFR part 901. The

purpose of this set-aside is to

compensate such PHAs for amounts

previously withheld by HUD because of

their prior designation as a mod

troubled agency.

(2) Nonapplicability to IHAs. Since

the PHMAP performance indicators

under 24 CFR part 901 do not apply to

IHAs, these agencies cannot be deemed

mod troubled for purposes of the CGP.

Hence, IHAs are not subject to any

reduction in funding under section

14(k)(5)(a) of the Act, nor do they

participate in the set-aside of credits

established under paragraph (c)(1) of

this section.

(d) Formula allocation based on

relative needs. After determining the

amounts to be reserved under

paragraphs (b) and (c) of this section,

HUD shall allocate the amount

remaining pursuant to the formula set

forth in paragraphs (e) and (f) of this

section, which are designed to measure

the relative backlog and accrual needs of

IHAs and PHAs.

(e) Allocation for backlog needs. HUD

shall allocate half of the formula amount

under paragraph (d) of this section

based on the relative backlog needs of

IHAs and PHAs, as follows:

(1) Determination of backlog need. (i)

Statistically reliable data. Where HUD

determines that the data concerning the

categories of backlog need identified

under paragraph (e)(4) of this section are

statistically reliable for individual IHAs

and PHAs with 250 or more units, or the

aggregate of IHAs and PHAs with fewer

than 250 units not participating in the

formula funding portion of the

modernization program, it will base its

allocation on direct estimates of the

statutory categories of backlog need,

based on the most recently available,

statistically reliable data.

(ii) Statistically reliable data are

unavailable. Where HUD determines

that statistically reliable data concerning

the categories of backlog need identified

under paragraph (e)(4) of this section are

not available for individual IHAs and

PHAs with 250 or more units, it will

base its allocation of funds under this

section on estimates of the categories of

backlog need using:

(A) The most recently available data

on the categories of backlog need under

paragraph (e)(4) of this section;

(B) Objectively measurable data

concerning the following IHA or PHA,

community, and development

characteristics:

(1) The average number of bedrooms

in the units in a development (Weighted

at 2858.7);

(2) The proportion of units in a

development available for occupancy by

very large families (Weighted at 7295.7);

(3) The extent to which units for

families are in high-rise elevator

developments (Weighted at 5555.8);

(4) The age of the developments, as

determined by the DOFA date (date of

full availability). In the case of acquired

developments, HUD will use the DOFA

date unless the IHA provides HUD with

the actual date of construction, in which

case HUD will use the age of the

development (or for scattered sites, the

average age of all the buildings), subject

to a 50 year cap. (Weighted at 206.5);

(5) In the case of a large agency, the

number of units with 2 or more

bedrooms (Weighted at .433);

(6) The cost of rehabilitating property

in the area (Weighted at 27544.3);

(7) For family developments, the

extent of population decline in the unit

of general local government determined

on the basis of the 1970 and 1980

censuses (Weighted at 759.5); and

(C) An equation constant of 1412.9.

(2) Calibration of backlog need for

developments constructed prior to 1985.

The estimated backlog need, as

determined under either paragraphs

(e)(1)(i) or (e)(1)(ii) of this section, shall

be adjusted upward for developments

constructed prior to 1985 by a constant

ratio of 1.5 to more accurately reflect the

costs of modernizing the categories of

backlog need under paragraph (e)(4) of

this section, for the Indian housing

stock as of 1991.

(3) Deduction for prior modernization.

HUD shall deduct from the estimated

backlog need, as determined under

either paragraphs (e)(1)(i) or (e)(1)(ii) of

this section, amounts previously

provided to an IHA or PHA for

modernization, using one of the

following methods:

(i) Standard deduction for prior CIAP

and MROP. HUD shall deduct 60

percent of the CIAP funds made

available on an IHA-wide or PHA-wide

basis from FFY 1984 to 1991, and 40

percent of the funds made available on
18240 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

a development-specific basis for the

Major Reconstruction of Obsolete

Projects (MROP) (not to exceed the

estimated formula need for the

development), subject to a maximum 50

percent deduction of an IHA’s or PHA’s

total need for backlog funding;

(ii) Newly constructed units. Units

with a DOFA date of October 1, 1991 or

thereafter will be considered to have a

zero backlog; or

(iii) Acquired developments.

Developments acquired by an IHA with

major rehabilitation, with a DOFA date

of October 1, 1991 or thereafter, will be

considered to have a zero backlog.

(4) Categories of backlog need. The

most recently available data to be used

under either paragraphs (e)(1)(i) or

(e)(1)(ii) of this section shall pertain to

the following categories of backlog need:

(i) Backlog of needed repairs and

replacements of existing physical

systems in Indian housing

developments;

(ii) Items that shall be added to

developments to meet HUD’s

modernization standards under

§ 950.603, and State, local and tribal

codes; and

(iii) Items that are necessary or highly

desirable for the long-term viability of a

development, in accordance with HUD’s

modernization standards.

(f) Allocation for accrual needs. HUD

shall allocate the other half remaining

under the formula allocation under

paragraph (d) of this section based upon

the relative accrual needs of IHAs and

PHAs, determined as follows:

(1) Statistically reliable data. If HUD

determines that statistically reliable data

are available concerning the categories

of need identified under paragraph (f)(3)

of this section for individual IHAs and

PHAs with 250 or more units and for the

aggregate of IHAs and PHAs with fewer

than 250 units, it shall base its

allocation of assistance under this

section on the needs that are estimated

to have accrued since the date of the last

objective measurement of backlog needs

under paragraph (e)(1)(i) of this section;

or

(2) Statistically reliable data are

unavailable. If HUD determines that

statistically reliable data concerning the

categories of need identified under

paragraph (f)(3) of this section are not

available for individual IHAs and PHAs

with 250 or more units, it shall base its

allocation of assistance under this

section on estimates of accrued need

using:

(i) The most recently available data on

the categories of backlog need under

paragraph (f)(3) of this section;

(ii) Objectively measurable data

concerning the following IHA or PHA,

community, and development

characteristics:

(A) The average number of bedrooms

in the units in a development (Weighted

at 100.1);

(B) The proportion of units in a

development available for occupancy by

very large families (Weighted at 356.7);

(C) The age of the developments

(Weighted at 10.4);

(D) The extent to which the buildings

in developments of an agency average

fewer than 5 units (Weighted at 87.1.);

(E) The cost of rehabilitating property

in the area (Weighted at 679.1);

(F) The total number of units of each

IHA or PHA that owns or operates 250

or more units (Weighted at .0144); and

(iii) An equation constant of 602.1.

(3) Categories of need. The data to be

provided under either paragraph (f)(1)

or (f)(2) of this section shall pertain to

the following categories of need:

(i) Backlog of needed repairs and

replacements of existing physical

systems in Indian housing

developments; and

(ii) Items that shall be added to

developments to meet HUD’s

modernization standards under

§ 950.603, and State, local, and tribal

codes.

(g) Allocation for CIAP. The formula

amount determined under paragraphs

(e) and (f) of this section for IHAs and

PHAs with fewer than 250 units shall be

allocated to IHAs in accordance with

the requirements under the

undesignated heading of this subpart

‘‘Comprehensive Improvement

Assistance Program’’ (CIAP) and to

PHAs in accordance with the

requirements of 24 CFR part 968,

subpart B.

(h) Allocation for CGP. The formula

amount determined under paragraphs

(e) and (f) of this section for IHAs with

250 or more units shall be allocated in

accordance with the requirements under

the undesignated heading of this

subpart ‘‘Comprehensive Grant

Program,’’ and for PHAs in accordance

with the requirements of 24 CFR part

968, subpart C. An IHA that is eligible

to receive a grant under the CGP may

appeal the amount of its formula

allocation under this section in

accordance with the requirements set

forth in § 950.669(b). An IHA that is

eligible to receive modernization funds

under the CGP because it owns or

operates 250 or more units, is

disqualified from receiving assistance

under the CIAP under this part.

(i) Use of formula allocation. Any

amounts allocated to an IHA under

paragraphs (e) and (f) of this section

may be used for any eligible activity

under this subpart, notwithstanding that

the allocation amount is determined by

allocating half based on the relative

backlog needs and half based on the

relative accrual needs of IHAs and

PHAs.

(j) Calculation of number of units. For

purposes of determining under this

section the number of units owned or

operated by an IHA or PHA, and the

relative modernization needs of IHAs

and PHAs, HUD shall count as one unit

each existing rental, Mutual Help, and

section 23 Bond-Financed unit under

the ACC, except that it shall count as

one-fourth of a unit each existing unit

under the Turnkey III program. New

development units that are added to an

IHA’s or PHA’s inventory will be added

to the overall unit count so long as they

are under ACC amendment and have

reached DOFA by the first day in the

FFY in which the formula is being run.

Any increase in units (reaching DOFA

and under ACC amendment) as of the

beginning of the FFY shall result in an

adjustment upwards in the number of

units under the formula. New units

reaching DOFA after this date will be

counted for formula purposes as of the

following FFY.

(k) Demolition, disposition, and

conversion of units. (1) General. Where

an existing unit under an ACC is

demolished, disposed of, or converted

into a larger or smaller unit, HUD shall

not adjust the amount the IHA or PHA

receives under the formula, unless more

than one percent of the units are

affected on a cumulative basis. Where

more than one percent of the existing

units are demolished, disposed of, or

converted, HUD shall reduce the

formula amount for the IHA or PHA

over a 3-year period to reflect removal

of the units from the ACC.

(2) Determination of one percent cap.

In determining whether more than one

percent of the units are affected on a

cumulative basis, HUD will compare the

units eligible for funding in the initial

year under formula funding with the

number of units eligible for funding for

the current year under formula funding,

and shall base its calculations on the

following:

(i) Increases in the number of units

resulting from the conversion of existing

units will be added to the overall unit

count so long as they are under ACC

amendment by the first day in the FFY

in which the formula is being run;

(ii) Units that are lost as a result of

demolition, disposition, or conversion

shall not be offset against units

subsequently added to an IHA’s or

PHA’s inventory;

(iii) For purposes of calculating the

number of converted units, HUD shall

regard the converted size of the unit as
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18241

the appropriate unit count (e.g., a unit

that originally was counted as one unit

under paragraph (j) of this section, but

which later was converted into two

units, shall be counted as two units

under the ACC).

(3) Phased-in reduction of units. (i)

Reduction less than one percent. If HUD

determines that the reduction in units

under paragraph (k)(2) of this section is

less than one percent, the IHA or PHA

will be funded as though no change had

occurred.

(ii) Reduction greater than one

percent. If HUD determines that the

reduction in units under paragraph

(k)(2) of this section is greater than one

percent, the number of units on which

formula funding is based will be the

number of units reported as eligible for

funding for the current program, plus

two-thirds of the difference between the

initial year and the current year in the

first year, plus one-third of the

difference in the second year, and at the

level of the current year in the third

year.

(iii) Exception. A unit that is

conveyed under the Mutual Help or

Turnkey III programs will result in an

automatic (rather than a phased-in)

reduction in the unit count. Paid-off

Mutual Help or Turnkey III units

continue to be counted until they are

conveyed.

(4) Subsequent reductions in unit

count. (i) Once an IHA’s or PHA’s unit

count has been fully reduced under

paragraph (k)(3)(ii) of this section to

reflect the new number of units under

the ACC, this new number of units will

serve as the base for purposes of

calculating whether there has been a

one percent reduction in units on a

cumulative basis.

(ii) A reduction in formula funding,

based upon additional reductions to the

number of an IHA’s or PHA’s units, will

also be phased in over a 3-year period,

as described in paragraph (k)(2) of this

section.

§ 950.602 Special requirements for

Turnkey III and Mutual Help developments.

(a) Modernization costs.

Modernization work on a Mutual Help

or Turnkey III unit shall not increase the

purchase price or amortization period of

the home.

(b) Eligibility of paid-off and conveyed

units for assistance. (1) Paid-off units. A

Mutual Help or Turnkey III unit, which

is paid off but has not been conveyed at

the time work is included for it in the

CIAP application or CGP Annual

Statement, is eligible for any physical

improvements provided under § 950.615

or § 950.666. However, in accordance

with the provisions of § 950.440(e)(8),

an IHA may perform nonemergency

work on a paid-off Mutual Help unit

only after all delinquencies are repaid.

(2) Conveyed units. Where

modernization work has been approved

prior to conveyance, the IHA may

complete the work even if title to the

unit is subsequently conveyed before

the work is completed. However, once

conveyed, the unit is not eligible for

additional or future assistance. An IHA

shall not use funds provided under this

subpart for the purpose of modernizing

units if the modernization work was not

approved before conveyance of title.

(c) Other. The homebuyer family shall

be in compliance with its financial

obligations under its homebuyer

agreement in order to be eligible for

nonemergency physical improvements,

with the exception of work necessary to

meet statutory and regulatory

requirements, (e.g., accessibility for

disabled persons, lead-based paint

testing, interim containment,

professional risk assessment, and

abatement) and the correction of

development deficiencies.

Notwithstanding the above requirement,

an IHA may, with prior HUD approval,

complete nonemergency physical

improvements on any homeownership

unit if the IHA demonstrates that, due

to economies of scale or geographic

constraints, substantial cost savings may

be realized by completing all necessary

work in a development at one time.

§ 950.603 Modernization and energy

conservation standards.

(a) All improvements funded under

this subpart, which may include

alterations, betterments, additions,

replacements, or nonroutine

maintenance, shall meet the HUD

modernization standards, described in

paragraph (b) of this section; comply

with lead-based paint testing and

abatement requirements in subpart H of

this part; and provide decent, safe, and

sanitary living conditions in IHA-owned

and IHA-operated housing. All

improvements funded under this part

shall meet the HUD energy conservation

standards for cost-effective energy

conservation measures in such

developments, described in paragraphs

(c) and (d) of this section.

(b) The modernization standards are

comprised of both mandatory and

development-specific standards. The

mandatory standards are intended to

provide decent, safe, and sanitary living

conditions in Indian housing, including

corrections of violations of basic health

and safety codes, and to address all

deficiencies, including those related to

deferred maintenance. The

development-specific standards permit

an IHA to undertake improvements that

are necessary or highly desirable for the

long-term physical and social viability

of a development, which includes site

and building security. The

modernization standards are contained

in HUD Handbook 7485.2, as revised,

Public and Indian Housing

Modernization Standards, and in other

documents cited in the Handbook.

(c) The energy conservation standards

are standards for the installation of costeffective energy conserving

improvements, including solar energy

systems. The energy conservation

standards provide for the conducting or

updating of energy audits, including

cost-benefit analyses of energy saving

opportunities, in order to determine

which measures will be cost effective in

conserving energy. The energy

conservation standards are contained in

the HUD Workbook, Energy

conservation for Housing, and in other

documents cited in the Workbook.

(d) Life-cycle cost-effective energy

performance standards established by

HUD to reduce the operating costs of

Indian housing developments over the

estimated life of the buildings shall

apply to developments modernized

under this subpart. These standards are

contained in HUD Handbook 7418.1, as

revised, Life-Cycle Cost Analysis for

Utility Combinations.

Comprehensive Improvement

Assistance Program (For IHAs that

Own or Operate Fewer than 250 Indian

Housing Units)

§ 950.609 Purpose.

The purpose of these sections under

the undesignated heading

‘‘Comprehensive Improvement

Assistance Program’’ (CIAP) is to set

forth the policies and procedures for the

CIAP under which IHAs that own or

operate fewer than 250 units of Indian

housing may receive financial assistance

for the modernization of Indian housing

developments, including Emergency

and Other Modernization. Funding for

this program is provided under section

5(c) of the Act (42 U.S.C. 1437c(c)),

pursuant to section 14(k) of the Act (42

U.S.C. 1437l(k)) (see § 950.601 for the

formula allocation process for the

aggregate of CIAP agencies under this

subpart I).

§ 950.615 Eligible costs.

(a) Demonstration of viability. Except

in the case of emergency work, an IHA

shall only expend funds on a

development for which the IHA has

determined, and HUD agrees, that the

completion of the improvements and

replacements will reasonably ensure the

long-term physical and social viability
18242 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

of the development at a reasonable cost,

as defined in § 950.102.

(b) Physical improvement costs for

rental and Mutual Help developments.

Eligible costs include alterations,

betterments, nondwelling additions,

replacements, and nonroutine

maintenance that are necessary to meet

the modernization and energy

conservation standards prescribed in

§ 950.603. The modernization standards

include mandatory and development

specific work. The mandatory standards

may be exceeded only when the IHA

and HUD determine that it is necessary

or highly desirable for the long-term

physical and social viability of the

individual development. If demolition

or disposition is proposed, the IHA shall

comply with subpart M of this part.

Additional dwelling space may be

added to existing units.

(c) Turnkey III developments. (1)

General. Eligible physical improvement

costs for existing Turnkey III

developments are limited to work items

under Emergency Modernization or

Other Modernization that are not the

responsibility of the homebuyer

families, and that are related to health

and safety, correction of development

deficiencies, physical accessibility,

energy audits and cost-effective energy

conservation measures, or lead-based

paint testing, interim containment,

professional risk assessment, and

abatement. In addition, eligible costs

include management improvements

under the modernization type of Other

Modernization.

(2) Ineligible costs. Nonroutine

maintenance or replacements, dwelling

additions, and items that are the

responsibility of the homebuyer families

are ineligible costs.

(3) Exception for vacant or nonhomebuyer-occupied Turnkey III units.

(i) Notwithstanding the requirements of

paragraph (c)(1) of this section, an IHA

may carry out Other Modernization in a

Turnkey III development, whenever a

Turnkey III unit becomes vacant or is

occupied by a nonhomebuyer family.

An IHA that intends to use funds under

this paragraph shall identify in its CIAP

application the estimated number of

units proposed for Other Modernization

and subsequent sale. In addition, an

IHA shall certify that the IHA has

homebuyers who are both eligible for

homeownership, in accordance with the

requirements of this part, and who have

demonstrated their intent to be placed

into each of the Turnkey III units

proposed for Other Modernization.

(ii) Before an IHA may be approved

for Other Modernization of a unit under

this paragraph, it shall first deplete any

Earned Home Payments Account

(EHPA), or Non-Routine Maintenance

Reserve (NRMR) pertaining to the unit,

and request the maximum operating

subsidy. Any increase in the value of a

unit caused by its Other Modernization

under this paragraph shall be reflected

solely by its subsequent appraised

value, and not by an automatic increase

in its purchase price.

(d) Demolition and conversion costs.

Eligible costs include:

(1) Demolition of dwelling units or

nondwelling facilities, for which HUD

has approved the demolition under

subpart M of this part, and related costs,

such as clearing and grading the site

after demolition and subsequent site

improvement to benefit the remaining

portion of the existing development;

and

(2) Conversion of existing dwelling

units to different bedroom sizes or to

nondwelling use.

(e) Management improvement costs.

(1) General. Management improvements

that are development-specific or IHAwide in nature are eligible costs if

needed to upgrade the operation of the

IHA’s developments, sustain physical

improvements at those developments, or

correct management deficiencies.

Management improvements and

planning costs may be funded as a

single modernization project.

(2) Ineligible costs. An IHA’s ongoing

operating expenses, including direct

provision of social services through

either contract or force account labor,

are ineligible management improvement

costs. In addition, if an approved

modernization program includes

management improvements that involve

ongoing costs, HUD is not obligated to

provide continued funding or additional

operating subsidy after the end of the

implementation period of the

management improvements. An IHA is

responsible for finding other funding

sources, reducing its ongoing

management costs, or terminating the

management activities.

(3) Eligible costs. Eligible costs

include:

(i) General management costs.

Eligible general management costs

include, but are not limited to:

management, financial, and accounting

control systems of the IHA, rent

collection, and maintenance.

(ii) Economic development costs.

Economic development activities, such

as job training and resident

employment, for the purpose of carrying

out activities related to the eligible

management and physical

improvements are eligible costs, as

approved by HUD. HUD encourages

IHAs, to the greatest extent feasible, to

hire residents as trainees, apprentices,

or employees to carry out the

modernization program under this

subpart I.

(iii) Resident management costs.

Technical assistance to a resident

council or resident management

corporation (RMC), as defined in

subpart O of this part, in order to

determine the feasibility of the resident

management entity or assist in its

formation is an eligible cost.

(iv) Resident homeownership costs.

The study of the feasibility of converting

rental to homeownership units, as well

as the preparation of an application for

conversion to homeownership, is an

eligible cost.

(f) Drug elimination costs. Drug

elimination activities involving

management or physical improvements

are eligible costs, as specified by HUD.

(g) Administrative costs.

Administrative costs necessary for the

planning (planning costs can be funded

as a single modernization project),

design, implementation, and monitoring

of the physical and management

improvements are eligible costs, and

include the following:

(1) The salaries of nontechnical and

technical IHA personnel assigned fulltime or part-time to modernization are

eligible costs only if the scope and

volume of the work are beyond that

which could reasonably be expected to

be accomplished by such personnel in

the performance of their

nonmodernization duties. An IHA shall

properly apportion to the appropriate

program budget any direct charges for

the salaries of assigned full- or part-time

staff (e.g., to the CIAP or operating

budget);

(2) IHA contributions to employee

benefit plans on behalf of nontechnical

and technical IHA personnel are eligible

costs in direct proportion to the amount

of salary charged to the CIAP; and

(3) Other administrative costs, such as

telephone and facsimile, as specified by

HUD.

(h) Architectural/engineering and

consultant fees. Fees for planning,

preparation of needs assessments, and

other required documents, detailed

design work, assistance in the

preparation of construction and bid

documents, lead-based paint

professional risk assessments and

testing are eligible costs.

(i) Relocation and moving costs.

Relocation and other relocation

assistance for permanent and temporary

relocation are eligible costs, when this

assistance is required by § 950.117.

(j) Cost limitations. (1) Management

improvements. Management

improvement costs shall not exceed 10
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18243

percent of the CIAP funds available to

an Area ONAP in a particular FFY.

(2) Planning costs. Planning costs are

costs incurred before HUD approval of

the CIAP application and that are

related to developing the CIAP

application or carrying out eligible

modernization planning, such as

detailed design work, preparation of

solicitations, and lead-based paint

professional risk assessment and testing.

Planning costs may be funded as a

single modernization project. If an IHA

incurs planning costs without prior

HUD approval, an IHA does so with the

full understanding that the costs may

not be reimbursed upon approval of the

CIAP application. Planning costs shall

not exceed five percent of the CIAP

funds available to an Area ONAP in a

particular FFY.

(3) Program benefit. If the physical or

management improvement will benefit

programs other than Indian Housing,

such as Section 8, local renewal, eligible

costs are limited to the amount directly

attributable to the Indian Housing

Program.

(k) Ineligible costs. An IHA shall not

make luxury improvements, or carry out

any other ineligible activities, as

specified by HUD.

§ 950.618 Procedures for obtaining

approval of a modernization program.

(a) HUD notification. After

modernization funds for a particular

FFY become available, HUD shall

publish in the Federal Register a notice

of funding availability (NOFA) and the

time frame for submission of

applications.

(b) IHA consultation with local

officials and residents/homebuyers. An

IHA shall develop the application in

consultation with local officials,

residents, and homebuyers, as set forth

in § 950.624.

(c) IHA application. An IHA shall

submit to HUD an application, in a form

prescribed by HUD, which shall

include:

(1) A general description of IHA

development(s) (including the current

physical condition, for each

development for which the IHA is

requesting funds, or for all the IHA’s

developments) and physical and

management improvement needs (to

meet the Secretary’s standards in

§ 950.603), general description of major

work categories (e.g., kitchens,

bathrooms) required to correct

identified deficiencies and estimated

costs, including a statement concerning

consultation with local officials and

residents and viability of the

development(s). The application will

also identify a cost estimate for the

equipment systems or structural

elements that would normally be

replaced over the remaining period of

the annual contributions contract or

during the 30-year period beginning on

the date of submission of the

application.

(2) For management improvements,

the application shall identify the

management improvement need,

including a general description of the

work required for correction and an

estimated cost. Management areas for

which needs should be identified

include, but are not limited to, the

following:

(i) The management, financial, and

accounting control systems of the IHA;

(ii) The adequacy and qualifications

of personnel employed by such IHA (in

the management and operation of such

developments) for each category of

employment; and

(iii) The adequacy and efficacy of

resident programs and services in such

developments, the security of each such

development and its residents, policies

and procedures of the IHA for the

selection and eviction of residents in

such developments, and other policies

and procedures of such IHA relating to

such developments, as specified by the

Secretary; and

(3) Any other documents, as may be

required by HUD.

(d) Completeness review. To be

eligible for selection, an application

shall be received by the Area ONAP

within the time period specified in the

NOFA and shall be complete. In order

to determine whether an application is

complete, responsive to the NOFA, and

acceptable for technical processing, the

Area ONAP shall perform an initial

completeness review upon receipt of the

application. To make the above

determination, the Area ONAP shall use

the following criteria:

(1) The application was received by

HUD at the appropriate address by the

date and time specified in the NOFA

and was complete and responsive

(excluding exhibits that are

certifications); or

(2) If an application is determined to

be incomplete or to have missing

certifications, the IHA shall be advised

in writing of any deficiencies or any

inconsistencies. The missing

information is to be submitted within a

specified period of time from the date of

HUD’s written notification. This is not

additional time to substantially revise

the application. Deficiencies that may

be corrected at this time are those such

as inadvertently omitted documents,

clarifications of previously submitted

material, and other changes that are not

of such a nature as to improve the

competitive position of the application.

The IHA shall acceptably correct

deficiencies (including furnishing

missing certifications) within the time

specified in the NOFA.

(e) Eligibility review. (1) Eligibility for

processing. To be eligible for processing,

based on the general description of its

developments’ condition and general

statement of physical and management

improvement needs, and the Area

ONAP’s knowledge of the

development’s conditions, the work

items, particularly emergency work

items, shall appear to be eligible and

needed.

(2) Eligibility review on reduced

scope. When the following conditions

exist, the IHA will be reviewed on a

reduced scope:

(i) Where the IHA owes funds to HUD

as a result of excess development,

modernization, or operating funds

previously provided, and the IHA has

not repaid the funds or has not entered

into a repayment agreement, or is not

meeting its obligations under a

repayment agreement, the IHA is

eligible for processing for Emergency

Modernization only.

(ii) Where the IHA has not complied

with Fair Housing and Equal

Opportunity (FHEO) requirements as set

forth in § 950.115, as evidenced by an

action, finding, or determination as

described in paragraphs (e)(2)(ii)(A)

through (E) of this section, unless the

IHA is implementing a voluntary

compliance agreement or settlement

agreement designed to correct the

area(s) of noncompliance, the IHA is

eligible for processing only for

Emergency Modernization or for work

needed to remedy civil rights

deficiencies.

(A) A pending proceeding against the

IHA based upon a charge of

discrimination issued under the Fair

Housing Act. A charge of discrimination

is a charge under section 810(g)(2) of the

Fair Housing Act (42 U.S.C. 3610(g)(2)),

issued by HUD’s General Counsel or

legally authorized designee;

(B) A pending civil rights suit against

the IHA, referred by HUD’s General

Counsel and instituted by the

Department of Justice;

(C) Outstanding HUD findings of IHA

noncompliance with civil rights statutes

and executive orders under § 950.115, or

implementing regulations, as a result of

formal administrative proceedings,

unless the IHA is implementing a HUDapproved resident selection and

assignment plan or compliance

agreement designed to correct the

area(s) of noncompliance;

(D) A deferral of the processing of

applications from the IHA imposed by
18244 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

HUD under title VI of the Civil Rights

Act of 1964 (42 U.S.C. 2000d) and

§ 950.115, the Attorney General’s

Guidelines (28 CFR 50.3) and HUD’s

title VI regulations (24 CFR 1.8) and

procedures (HUD Handbook 8040.1), or

under section 504 of the Rehabilitation

Act of 1973 (29 U.S.C. 794) and HUD’s

implementing regulations (24 CFR 8.57);

or

(E) An adjudication of a violation

under any of the authorities under

§ 950.115 in a civil action filed against

the IHA by a private individual, unless

the IHA is implementing a HUDapproved resident selection and

assignment plan or compliance

agreement designed to correct the

area(s) of noncompliance.

(3) FHEO Division review. The

processing office shall request the

appropriate FHEO Division of the

Regional Office to identify any IHAs

with equal opportunity-related

problems. After consulting with

Regional FHEO, as appropriate, and

reviewing its own files, the FHEO

Division shall identify each IHA by the

following categories and provide any

other relevant information within the

requested time frame:

(i) There are no known equal

opportunity-related problems;

(ii) There are known equal

opportunity-related problems, as

identified; or

(iii) There are circumstances as set

forth in paragraph (e)(2) of this section.

(f) Technical processing. When an

application is determined to be

complete and responsive to the NOFA

and eligible for processing, technical

processing, consisting of the following,

shall be accomplished:

(1) The Area ONAP shall categorize

the eligible IHAs and their

developments into two processing

groups: Group 1 for Emergency

Modernization, and Group 2 for Other

Modernization. IHA developments may

be included in both groups, and the

same development may be in each

group. The IHA only needs to submit

one application that includes needs that

the Area ONAP will process under

Group 1 or Group 2. However, the IHA

can submit Emergency Modernization

applications whenever needed. Group 2

developments are subject to the longterm viability and reasonable cost

analysis. Preference will be given to

IHAs that request assistance for

developments having conditions that

threaten the health or safety of the

residents or having a significant number

of vacant, substandard units; and that

have demonstrated a capability of

carrying out the activities proposed.

Within Group 2, the Secretary may give

priority to compliance with statutory,

regulatory, and court-ordered deadlines.

(2) The Area ONAP will evaluate the

Group 2 IHAs and developments to

determine eligibility and acceptability

based on the technical review factors in

paragraph (g) of this section. Based on

these factors, the Area ONAP shall

determine the applications that, in its

judgment, are approvable. Selections

then shall be made in accordance with

paragraph (h) of this section.

(g) Technical review factors. The

technical review factors for assistance

include:

(1) Extent and urgency of need,

including need to comply with

statutory, regulatory, or court-ordered

deadlines;

(2) Extent of vacancies;

(3) IHA’s modernization capability;

(4) IHA’s management capability;

(5) Degree of resident involvement in

IHA operations;

(6) Degree of IHA activity in resident

initiatives, including resident

management, economic development,

and drug elimination efforts;

(7) Degree of resident employment;

(8) Local government support for

proposed modernization; and

(9) Such additional factors as the

Secretary determines necessary and

appropriate.

(h) Rating and ranking. The Area

ONAP shall rate and rank each

application in Group 2 on the basis of

its assessment of the application using

the technical review factors set forth in

paragraph (g) of this section and in the

NOFA. The Area ONAP shall identify

for joint review selection the highest

IHA ranking applications in Group 2 in

descending order and other Group 2

IHAs with lower ranking applications

but with high priority needs, which

most reasonably approximate the

amount of modernization which can be

funded. High priority needs are

nonemergency needs, but related to:

health or safety; vacant, substandard

units; structural or system integrity; or

compliance with statutory, regulatory,

or court-ordered deadlines. All Group 1

applications would be automatically

selected for joint review.

(i) Joint review. HUD shall notify each

IHA whose application has been

selected for further processing as to

whether the joint review will be

conducted on-site or off-site (e.g., by

telephone or in-office meeting). The

purpose of the joint review is to discuss

the proposed modernization program, as

set forth in the application, and

determine the size of the grant, if any,

to be awarded. If the IHA has not

included all its developments in the

CIAP application, HUD may not, as a

result of joint review, consider funding

any nonemergency work at excluded

developments or subsequently approve

use of leftover funds at excluded

developments. An IHA shall prepare for

the joint review by preparing a draft

CIAP budget, and reviewing the other

items to be covered during the joint

review, as prescribed by HUD. If

conducted on-site, the joint review may

include an inspection of the proposed

physical work. IHAs not selected for

joint review will be advised in writing

of the reasons for nonselection.

(j) HUD awards. Upon completion of

the joint review, HUD shall adjust the

amounts to be awarded, as necessary,

based on information obtained at Joint

Review, including the information

received as a result of the FHEO review

and completion of the environmental

review, and announce the IHAs selected

for CIAP grants (subject to their

submission of an approvable CIAP

budget and any other required

documents). HUD would request the

funded IHA to submit a CIAP budget,

including an implementation schedule,

a resolution by the IHA Board of

Commissioners (approving the CIAP

budget and containing certifications

required by HUD), and any other

necessary documents.

(k) ACC amendment. After HUD

approval of the CIAP budget, HUD and

the IHA shall enter into an ACC

amendment in order for the IHA to

requisition modernization funds. The

ACC amendment shall require lowincome use of the housing for not less

than 20 years from the date of the ACC

amendment (subject to sale of

homeownership units in accordance

with the terms of the ACC). HUD has the

authority to condition an ACC

amendment (e.g., to require an IHA to

hire a modernization coordinator or

contract administrator to a administer

its modernization program).

(l) Declaration of trust. An IHA shall

execute and file for record a Declaration

of Trust as provided under the ACC to

protect the rights and interests of HUD

throughout the 20-year period during

which the IHA is obligated to operate its

developments in accordance with the

ACC, the Act, and HUD regulations and

requirements. A Declaration of Trust is

not required for Mutual Help units.

§ 950.624 Resident and homebuyer

participation.

(a) Resident participation. For a rental

development only, the IHA shall

establish a Partnership Process, as

defined in § 950.102, to develop,

implement, and monitor the CIAP.

Before submission of the application, an

IHA shall consult with the residents, the
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18245

resident organization, or the RMC (see

subpart O of this part) of the

development being proposed for

modernization regarding its intent to

submit an application for CIAP funds.

An IHA shall give residents a reasonable

opportunity to present their views on

the proposed modernization program

and alternatives to it, and give full and

serious consideration to resident

recommendations. An IHA shall

respond in writing to the residents, the

resident organization, or the RMC,

indicating its acceptance or rejection of

resident recommendations, consistent

with HUD requirements and the IHA’s

own determination of efficiency,

economy, and need. After HUD

approval of the modernization program,

an IHA shall inform the residents, the

resident organization, or the RMC of the

approved work items and its progress

during implementation. If HUD does not

approve the modernization program, an

IHA shall so inform the residents, the

resident organization, or the RMC.

(b) Homebuyer participation: Turnkey

III and Mutual Help. For a

homeownership development only,

before submission of the application, an

IHA shall consult with the homebuyer

families of the development proposed

for modernization regarding its intent to

submit an application for CIAP funds.

An IHA shall give the homebuyer

families a reasonable opportunity to

present their views on the proposed

modernization program and alternatives

to it, and give full and serious

consideration to their recommendations.

An IHA shall respond in writing to the

homebuyer families, indicating its

acceptance or rejection of their

recommendations, consistent with HUD

requirements and the IHA’s own

determination of efficiency, economy,

and need. After HUD approval of the

modernization program, an IHA shall

inform the homebuyer families of the

approved work items and its progress

during implementation. If HUD does not

approve the modernization program, an

IHA shall so inform the homebuyer

families.

§ 950.635 Initiation of modernization

activities.

After HUD has approved the

modernization program and entered into

an ACC amendment with the IHA, an

IHA shall undertake the modernization

activities and expenditures set forth in

its approved CIAP budget in a timely,

efficient, and economical manner,

subject to the following requirement. An

IHA shall ensure that there is no

duplication between the activities

carried out with CIAP funds and the

activities carried out with other funds.

§ 950.639 Fund requisitions.

An IHA shall requisition

modernization funds against the

approved CIAP budget in accordance

with procedures prescribed by HUD.

§ 950.642 Contracting requirements.

An IHA shall comply with the

prevailing wage rate requirements in

§§ 950.120 and 950.172, as well as the

Indian Preference requirements in

§ 950.175. In addition, an IHA shall

comply with State, tribal, and local laws

and Federal requirements, as set forth in

24 CFR part 85, except as follows:

(a) Architect/engineer and other

professional services contracts.

Notwithstanding 24 CFR 85.36(g), an

IHA shall comply with HUD

requirements to either:

(1) If the proposed contract amount

exceeds the HUD-established threshold,

submit the contract for prior HUD

approval before execution or issuance;

or

(2) If the proposed contract amount

does not exceed the HUD-established

threshold, certify that the scope of work

is consistent with any agreements

reached with HUD, and that the amount

is appropriate and does not exceed the

HUD-approved CIAP budget amount.

(b) Assurance of completion. For each

construction contract over $25,000, the

contractor shall furnish a performance

and payment bond for 100 percent of

the contract price or, notwithstanding

24 CFR 85.36(h), a 20 percent cash

escrow, or a 25 percent letter of credit

or, as may be required by law, separate

performance and payment bonds, each

for 50 percent or more of the contract

price.

(c) Construction solicitations.

Notwithstanding 24 CFR 85.36(g), an

IHA shall comply with HUD

requirements to either:

(1) If the estimated contract amount

exceeds the HUD-established threshold,

submit a complete construction

solicitation for prior HUD approval

before issuance; or

(2) If the estimated contract amount

does not exceed the HUD-established

threshold, certify receipt of the required

architect’s/engineer’s certification that

the construction documents accurately

reflect HUD-approved work and meet

the modernization and energy

conservation standards and that the

construction solicitation is complete

and includes all mandatory items.

(d) Contract awards. An IHA shall

obtain HUD approval of the proposed

award of a contract if the award exceeds

the HUD-approved CIAP budget amount

or if the procurement meets the criteria

set forth in 24 CFR 85.36(g)(2)(i) through

(iv). In all other instances, an IHA shall

make the award without HUD approval

after the IHA has certified that:

(1) The solicitation and award

procedures were conducted in

compliance with State, tribal, and local

laws and Federal requirements;

(2) The award does not exceed the

approved CIAP budget amount and does

not meet the criteria in 24 CFR

85.36(g)(2) (i) through (iv) for prior HUD

approval; and

(3) The contractor is not on the Lists

of Parties Excluded from the Federal

Procurement or Nonprocurement

Programs.

(e) Contract modifications.

Notwithstanding 24 CFR 85.36(g),

except in an emergency endangering life

or property, an IHA shall comply with

HUD requirements to either:

(1) If the proposed contract

modification exceeds the HUDestablished threshold, submit the

proposed modification for prior HUD

approval before issuance; or

(2) If the proposed contract

modification does not exceed the HUDestablished threshold, certify that the

proposed modification is within the

scope of the contract and that any

additional costs are within the latest

HUD-approved CIAP budget or

otherwise approved by HUD.

(f) Construction requirements. An IHA

may be required to submit to HUD

periodic progress reports and

construction completion documents for

prior HUD approval above a HUDspecified amount.

(g) Previous participation. An IHA

shall ensure that the contractor is not on

the GSA List of Parties Excluded from

Federal Procurement and

Nonprocurement Programs.

§ 950.645 On-site inspections.

It is the responsibility of the IHA, not

HUD, to provide, by contract or

otherwise, adequate and competent

supervisory and inspection personnel

during modernization, whether work is

performed by contract or force account

labor, and with or without the services

of an architect/engineer, to assure work

quality and progress.

§ 950.648 Budget revisions.

An IHA shall not incur any

modernization cost in excess of the total

HUD-approved CIAP budget. An IHA

shall submit a budget revision, in a form

prescribed by HUD, if the IHA plans

(within the total approved CIAP budget)

to incur modernization costs in excess

of the approved CIAP budget amount for

any development. An IHA also shall

comply with HUD requirements to

either:

(a) Submit the proposed CIAP budget

revision for prior HUD approval if the
18246 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

IHA plans to delete or substantially

revise approved work items, add new

work items, or incur modernization

costs in excess of the HUD-established

threshold; or

(b) Certify that the revisions are

necessary to carry out the approved

work and do not result in the approved

CIAP budget amount for any

development being exceeded.

§ 950.651 Progress reports.

For each six-month period, beginning

October 1, until completion of the

modernization program or expenditure

of all funds, an IHA shall submit a

report, in a form prescribed by HUD, to

the HUD Area ONAP. Where HUD

determines that an IHA is having

implementation problems, HUD may

require more frequent reporting. The

report shall include:

(a) Modernization fund obligations

and expenditures and progress against

the approved implementation

schedule(s); and

(b) Management improvement

progress, as applicable.

§ 950.654 HUD review of IHA performance.

HUD shall periodically review IHA

performance in carrying out its

approved modernization program to

determine compliance with HUD

requirements, the quality of an IHA’s

inspections as evidenced by the quality

of work, and the timeliness of the work.

Where deficiencies are noted, an IHA

shall take corrective action, as directed

by HUD.

§ 950.657 Fiscal closeout.

Upon completion or termination of a

modernization program, the IHA shall

submit the actual modernization cost

certificate, in a form prescribed by HUD,

to HUD for review, audit verification,

and approval. An IHA shall

immediately remit any excess funds

provided by HUD. The audit shall

follow the guidelines prescribed in 24

CFR part 44, Non-Federal Government

Audit Requirements. If the audited

modernization cost certificate indicates

that there are still excess funds, an IHA

shall immediately remit the excess

funds as directed by HUD. If the audited

modernization cost certificate discloses

unauthorized or ineligible expenditures,

an IHA shall take such corrective

actions as HUD may direct.

Comprehensive Grant Program (For

IHAs That Own or Operate 250 or More

Indian Housing Units)

§ 950.660 Purpose.

(a) The purpose of the Comprehensive

Grant Program (CGP) under this subpart

I is:

(1) To provide modernization

assistance to IHAs that own or operate

a total of 250 or more units of Indian

Housing on a reliable and more

predictable basis; to enable them to

operate, upgrade, modernize, and

rehabilitate Indian housing

developments; to ensure their continued

availability for low-income families as

decent, safe, and sanitary housing;

(2) To provide considerable discretion

to IHAs to decide the specific

improvements, the manner of their

execution, and the timing of the

expenditure of funds;

(3) To simplify significantly the

program of Federal assistance for capital

improvements in Indian housing

developments;

(4) To provide increased

opportunities and incentives for more

efficient management of Indian housing

developments; and

(5) To give IHAs greater control in

planning and expending funds for

modernization, rehabilitation,

maintenance, and improvement of

Indian housing developments to benefit

low-income families.

(b) The purpose of the sections under

the undesignated heading

‘‘Comprehensive Grant Program’’ (CGP)

is to set forth the policies and

procedures for the CGP under which

IHAs that own and operate a total of 250

or more units of Indian housing receive

financial assistance on a formula grant

basis in accordance with § 950.601(e)

and (f) for the modernization of Indian

housing developments.

§ 950.666 Eligible costs.

(a) General. An IHA may use financial

assistance received under the CGP for

the following eligible costs:

(1) Undertaking activities described in

its approved Five-Year Plan under

§ 950.672(d)(5);

(2) Carrying out emergency work,

whether or not the need is indicated in

the IHA’s approved Comprehensive

Plan (including Five-Year Action Plan)

or Annual Submission;

(3) Funding a replacement reserve to

carry out eligible activities in future

years, subject to the restrictions set forth

in paragraph (f) of this section;

(4) Preparing the Comprehensive Plan

and Action Plan under § 950.672,

including reasonable costs necessary to

assist residents to participate in a

meaningful way in the planning,

implementation, and monitoring

process; and

(5) Carrying out an audit, in

accordance with 24 CFR part 44 and

§ 950.120.

(b) Demonstration of viability. Except

in the case of emergency work, an IHA

shall only expend funds on a

development for which the IHA has

demonstrated that completion of the

improvements and replacements

identified in the Comprehensive Plan

will reasonably ensure the long-term

physical and social viability of the

development at a reasonable cost or for

essential nonroutine maintenance

needed to keep the property habitable

until residents are relocated.

(c) Physical improvement costs.

Eligible costs include alterations,

betterments, additions, replacements,

and nonroutine maintenance that are

necessary to meet the modernization

and energy conservation standards

prescribed in § 950.603. These

mandatory standards may be exceeded

only when the IHA determines that it is

necessary or highly desirable for the

long-term physical and social viability

of the individual development. If

demolition or disposition is proposed,

the IHA shall comply with subpart M of

this part. Additional dwelling space

may be added to existing units.

(d) Costs for Turnkey III

developments. (1) General. Eligible

physical improvement costs for existing

Turnkey III developments are limited to

work items that are not the

responsibility of the homebuyer families

and that are related to health and safety,

correction of development deficiencies,

physical accessibility, energy audits and

cost-effective energy conservation

measures, and lead-based paint testing

and abatement. In addition,

management improvements are eligible

modernization costs for existing

Turnkey III developments.

(2) Ineligible costs. Nonroutine

maintenance or replacements, additions,

and items that are the responsibility of

the homebuyer families are ineligible

costs.

(3) Exception for vacant or nonhomebuyer-occupied Turnkey III units.

(i) Notwithstanding the requirements of

paragraph (d)(1) of this section, an IHA

may substantially rehabilitate a Turnkey

III unit whenever the unit becomes

vacant or is occupied by a nonhomebuyer family. An IHA that intends

to use funds under this paragraph shall

identify in its needs assessment the

estimated number of units that the IHA

is proposing for substantial

rehabilitation and subsequent sale. In

addition, an IHA shall demonstrate in

its needs assessment that the IHA has

homebuyers who are both eligible for

homeownership, in accordance with the

requirements of 24 CFR part 950,

Subpart G, and who have demonstrated

their intent to be placed into each of the

Turnkey III units proposed to be

substantially rehabilitated;
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18247

(ii) Before an IHA may be approved

for the substantial rehabilitation of a

unit under this paragraph, it shall first

deplete any Earned Home Payments

Account (EHPA) or Non-Routine

Maintenance Reserve (NRMR)

pertaining to the unit, and request the

maximum amount of operating subsidy.

Any increase in the value caused by its

substantial rehabilitation under this

paragraph shall be reflected solely by its

subsequent appraised value, and not by

an automatic increase in its selling

price.

(e) Demolition and conversion costs.

Eligible costs include:

(1) Demolition of dwelling units or

nondwelling facilities approved by HUD

under subpart M of this part, and related

costs, such as clearing and grading the

site after demolition and subsequent site

improvement to benefit the remaining

portion of the existing development;

and

(2) Conversion of existing dwelling

units to different bedroom sizes.

(f) Replacement reserve costs. (1)

Funding a replacement reserve to carry

out eligible activities in future years is

an eligible cost, subject to the following

restrictions:

(i) Annual CGP funds are not needed

for existing needs, as identified by the

IHA in its needs assessments;

(ii) A physical improvement requires

more funds than the IHA would receive

under its annual formula allocation; or

(iii) A management improvement

requires more funds than the IHA may

use under its 20 percent limit for

management improvements (except as

provided in paragraph (m)(1) of this

section), and the IHA needs to save a

portion of its annual grant in order to

combine it with a portion of subsequent

year(s) grants, to fund the work item;

(2) The IHA shall invest replacement

reserve funds so as to generate a return

equal to or greater than the average 91-

day Treasury bill rate;

(3) Interest earned on funds in the

replacement reserve will not be added

to the IHA’s income in the

determination of an IHA’s operating

subsidy eligibility, but shall be used for

eligible modernization costs;

(4) To the extent that its annual

formula allocation and any unobligated

balances of modernization funds are not

adequate to meet emergency needs, an

IHA shall first use its replacement

reserve, if funded, to meet emergency

needs, before requesting funds from the

$75 million reserve. An IHA is not

required to use its replacement reserve

for natural and other disasters.

(g) Management improvement costs.

Management improvements that are

needed to upgrade the operation of the

IHA’s developments, sustain physical

improvements at those developments, or

correct management deficiencies

identified by the IHA in its

Comprehensive Plan are eligible costs.

An IHA’s ongoing operating expenses,

including direct provision of social

services through either contract or force

account labor, are ineligible

management improvement costs.

(1) Economic development activities

costs. Economic development activities

such as job training, resident

employment, and resident businesses,

for the purpose of carrying out activities

related to the eligible management and

physical improvements are eligible

costs, as approved by HUD. HUD

encourages IHAs, to the greatest extent

feasible, to hire residents as trainees or

employees to carry out the

modernization program under this

subpart, and to contract with residentowned businesses for modernization

work.

(2) Resident management costs.

Technical assistance to a resident

organization or resident management

corporation (RMC), as defined in

§ 950.962, in order to determine the

feasibility of the resident management

entity or assist in its formation is an

eligible cost.

(3) Resident homeownership costs.

The study of the feasibility of converting

rental to homeownership units, as well

as the preparation of an application for

conversion to homeownership, is an

eligible cost.

(h) Drug elimination costs. Drug

elimination activities involving

management or physical improvements

are eligible costs, as specified by HUD.

(i) Administrative costs.

Administrative costs necessary for the

planning, design, implementation, and

monitoring of the physical and

management improvements are eligible

costs and include the following:

(1) The salaries of nontechnical and

technical IHA personnel assigned fulltime or part-time to modernization are

eligible costs only if the scope and

volume of the work are beyond that

which could be reasonably expected to

be accomplished by such personnel in

the performance of their

nonmodernization duties. The IHA shall

properly apportion to the appropriate

program budget any direct charges for

the salaries of assigned full- or part-time

staff (e.g., to the CIAP, CGP, or operating

budgets);

(2) IHA contributions to employee

benefit plans on behalf of nontechnical

and technical IHA personnel are eligible

costs in direct proportion to the amount

of salary charged to the CGP; and

(3) Other administrative costs, such as

telephone and facsimile, as specified by

HUD.

(j) Audit costs.

(k) Architectural/engineering and

consultant fees. Fees for planning,

preparation of needs assessments and

required documents, detailed design

work, preparation of construction and

bid documents, lead-based paint testing,

etc., are eligible costs.

(l) Relocation costs. Relocation costs

as a direct result of rehabilitation,

demolition, or acquisition for a CGPfunded activity are eligible costs, as

required by § 950.117.

(m) Cost limitation. (1)

Notwithstanding the full fungibility of

work items in § 950.675(c), an IHA shall

not use more than a total of 20 percent

of its annual grant for management

improvement costs in account 1408,

unless specifically approved by HUD.

(2) Notwithstanding the full

fungibility of work items in § 950.675(c),

an IHA shall not use more than a total

of 10 percent of its annual grant on

administrative costs in account 1410,

excluding any costs related to leadbased paint or asbestos testing (whether

conducted by force account employees

or by a contractor), in-house

architectural/engineering (A/E) work, or

other special administrative costs

required by State, tribal, or local law,

unless specifically approved by HUD;

(3) When the physical or management

improvement will benefit programs

other than Indian Housing, such as

Section 8, local renewal, etc., eligible

costs are limited to the amount directly

attributable to the Indian Housing

Program.

(n) Ineligible costs. An IHA (or an

RMC acting on behalf of an IHA) shall

not make luxury improvements, or carry

out any other ineligible activities, as

specified by HUD.

§ 950.667 Reserve for emergencies and

disasters.

(a) Emergencies. (1) Eligibility for

assistance. An IHA (including an IHA

that is determined to be high risk under

§ 950.135) may obtain funds at any time,

for any eligible emergency work item as

defined in § 950.102 (for IHAs

participating in CGP) or for any eligible

emergency work item (described as

emergency modernization in § 950.102)

(for IHAs participating in CIAP), from

the reserve established under

§ 950.601(b). However, emergency

reserve funds may not be provided to an

IHA participating in CGP that has the

necessary funds available from any

other source, including its annual

formula allocation under § 950.601(e)

and (f), other unobligated modernization
18248 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

funds, and its replacement reserves

under § 950.666. An IHA is not required

to have an approved Comprehensive

Plan under § 950.672 before it can

request emergency assistance from this

reserve. Emergency reserve funds may

not be provided to an IHA participating

in CIAP unless it does not have the

necessary funds available from any

other source, including unobligated

CIAP, and no CIAP modernization

funding is available from HUD for the

remainder of the fiscal year.

(2) Procedure. To obtain emergency

funds, an IHA shall submit a request, in

a form to be prescribed by HUD, that

demonstrates that without the requested

funds from the set-aside under this

section, the IHA does not have adequate

funds available to correct the conditions

that present an immediate threat to the

health or safety of the residents. HUD

will immediately process a request for

such assistance, and if it determines that

the IHA’s request meets the

requirements of paragraph (a)(1) of this

section, it shall approve the request,

subject to the availability of funds in the

reserve.

(3) Repayment. A CGP IHA that

receives assistance for its emergency

needs from the reserve under

§ 950.601(b) shall repay such assistance

from its future allocations of assistance,

as available. For IHAs participating in

the CGP, HUD shall deduct up to 50

percent of an IHA’s succeeding year’s

formula allocation under § 950.601(e)

and (f) to repay emergency funds

previously provided by HUD to the IHA.

The remaining balance, if any, shall be

deducted from an IHA’s succeeding

years’ formula allocations.

(b) Natural and other disasters. (1)

Eligibility for assistance. An IHA

(including an IHA that has been

determined by HUD not to be

administratively capable under

§ 950.135) may request assistance at any

time from the reserve under § 950.601(b)

for the purpose of permitting the IHA to

respond to a natural or other disaster.

To qualify for assistance, the disaster

shall pertain to an extraordinary event

affecting only one or a few IHAs, such

as an earthquake or hurricane. Any

disaster declared by the President (or

that HUD determines would qualify for

a Presidential declaration if it were on

a larger scale) qualifies for assistance

under this paragraph. An IHA may

receive funds from the reserve

regardless of the availability of other

modernization funds or reserves, but

only to the extent its needs are in excess

of its insurance coverage. An IHA is not

required to have an approved

Comprehensive Plan under § 950.672

before it can request assistance from the

reserve under § 950.601(b).

(2) Procedure. To obtain funding for

natural or other disasters under

§ 950.601(b), an IHA shall submit a

request, in a form prescribed by HUD,

that demonstrates that it meets the

requirements of paragraph (b)(1) of this

section. HUD will immediately process

a request for such assistance, and if it

determines that the request meets the

requirements under paragraph (b)(1) of

this section, it will approve the request,

subject to the availability of funds in the

reserve.

(3) Repayment. Funds provided to an

IHA under paragraph (b)(1) of this

section for natural and other disasters

shall be in the form of a grant, and are

not required to be repaid.

§ 950.669 Allocation of assistance.

(a) Submission of formula

characteristics report. In its first year of

participation in the CGP, each IHA shall

verify and provide data to HUD, in a

form and at a time to be prescribed by

HUD, concerning IHA and development

characteristics, so that HUD can develop

the IHA’s annual funding allocation

under the CGP in accordance with

§ 950.601(e) and (f). If an IHA fails to

submit to HUD the formula

characteristics report by the prescribed

deadline, HUD will use the data that it

has available concerning IHA and

development characteristics for

purposes of calculating the IHA’s

formula share. After its first year of

participation in the CGP, an IHA is

required to respond to data transmitted

by HUD if there have been changes to

its inventory from that previously

reported, or when requested by HUD.

On an annual basis, HUD will transmit

to the IHA the formula characteristics

report that reflects the data that will be

used to determine the IHA’s formula

share. The IHA will have 30 days to

review and advise HUD of errors in this

HUD report. Necessary adjustments will

be made to the IHA’s data before the

formula is run for the current FFY. On

an annual basis, HUD will transmit to

the IHA the formula characteristics

report that reflects the data that will be

used to determine the IHA’s formula

share. The IHA will have at least 30

calendar days to review and advise HUD

of errors in this HUD report. Necessary

adjustments will be made to the IHA’s

data before the formula is run for the

current FFY.

(b) HUD notification of formula

amount; appeal rights. (1) Formula

amounts notification. After HUD

determines an IHA’s formula allocation

under § 950.601(e) and (f) based upon

the IHA, development, and community

characteristics, it shall notify the IHA of

its formula amount and provide

instructions on the Annual Submission

in accordance with §§ 950.672(a) and

950.678;

(2) Appeal based upon unique

circumstances. An IHA may appeal in

writing HUD’s determination of its

formula amount within 60 calendar

days of the date of HUD’s determination

on the basis of ‘‘unique circumstances.’’

The IHA shall indicate what is unique,

specify the manner in which it is

different from all other IHAs

participating in the CGP, and provide

any necessary supporting

documentation. HUD shall render a

written decision on an IHA’s appeal

under this paragraph within 60 calendar

days of the date of its receipt of the

IHA’s request for an appeal. HUD shall

publish in the Federal Register a

description of the facts supporting any

successful appeals based upon ‘‘unique

circumstances.’’ Any adjustments

resulting from successful appeals in a

particular FFY under this paragraph

shall be made from the subsequent

years’ allocation of funds under this

part;

(3) Appeal based upon error. An IHA

may appeal in writing HUD’s

determination of its formula amount

within 60 calendar days of the date of

HUD’s determination on the basis of an

error. The IHA may appeal on the basis

of error the correctness of data in the

formula characteristics report. The IHA

shall describe the nature of the error and

provide any necessary supporting

documentation. HUD shall respond to

the IHA’s request within 60 calendar

days of the date of its receipt of the

IHA’s request for an appeal. Any

adjustment resulting from successful

appeals in a particular FFY under this

paragraph shall be made from

subsequent years’ allocation of funds

under this part;

(c) IHAs determined to be high risk. If

an IHA is determined to have serious

deficiencies in accordance with

§ 950.135, or if the IHA fails to meet, or

to make reasonable progress toward

meeting, the goals previously

established in its management

improvement plan under § 950.135,

HUD may designate the IHA as high

risk. If HUD designates the IHA as high

risk with respect to modernization, HUD

may withhold some or all of the IHA’s

annual grant; HUD may declare a breach

of the grant agreement with respect to

all or some of the IHA’s functions, so

that the IHA or a particular function of

the IHA may be administered by another

entity; or HUD may take other sanctions

authorized by law or regulation.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18249

(d) Obligation of formula funding. All

formula funding should be obligated

within two years of approval. However,

due to the size of the grant, complexity

of the work, and other factors, the IHA

may propose, and HUD may approve, a

longer time period.

§ 950.672 Comprehensive Plan (including

Five-Year Action Plan).

(a) Submission. As soon as possible

after modernization funds first become

available for allocation under this

subpart, HUD shall notify IHAs in

writing of their formula amount. For

planning purposes, IHAs may use the

amount they received under CGP in the

prior year in developing their

Comprehensive Plan, or they may wait

for the annual HUD notification of

formula amount under § 950.669(b)(1).

(b)(1) Resident participation. An IHA

is required to develop, implement,

monitor, and annually amend portions

of its Comprehensive Plan in

consultation with residents of the

developments covered by the

Comprehensive Plan, and with

democratically elected resident groups.

In addition, the IHA shall also consult

with resident management corporations

(RMCs) to the extent that an RMC

manages a development covered by the

Comprehensive Plan. The IHA, in

partnership with the residents, shall

develop and implement a process for

resident participation that ensures that

residents are involved in a meaningful

way in all phases of the CGP. Such

involvement shall include

implementing the Partnership Process

as a critical element of the CGP.

(2) Establishment of Partnership

Process. The IHA, in partnership with

the residents of the developments

covered by the plan, and with

democratically elected resident groups,

shall establish a Partnership Process to

develop and implement the goals,

needs, strategies, and priorities

identified in the Comprehensive Plan.

After residents have organized to

participate in the CGP, they may decide

to establish a volunteer advisory group

of experts in various professions to

assist them in the CGP Partnership

Process. The Partnership Process shall

be designed to achieve the following:

(i) To assure that residents are fully

briefed and involved in developing the

content of, and monitoring the

implementation of, the Comprehensive

Plan including, but not limited to, the

physical and management needs

assessments, viability analysis, FiveYear Action Plan, and Annual

Statement. If necessary, the IHA shall

develop and implement capacity

building strategies to ensure meaningful

resident participation in CGP. Such

technical assistance efforts for residents

are eligible management improvement

costs under CGP;

(ii) To enable residents to participate,

on an IHA-wide or area-wide basis, in

ongoing discussions of the

Comprehensive Plan and strategies for

its implementation, and in all meetings

necessary to ensure meaningful

participation.

(3) Public notice. Within a reasonable

amount of time before the advance

meeting for residents and duly elected

resident organizations under paragraph

(b)(4) of this section, and the public

hearing under paragraph (b)(5) of this

section, the IHA shall provide public

notice of the advance meeting and the

public hearing in a manner determined

by the IHA and which ensures notice to

all duly elected resident organizations;

(4) Advance meeting for residents and

duly elected resident organizations. The

IHA shall hold, within a reasonable

amount of time before the public

hearing under paragraph (b)(5) of this

section, a meeting for residents and duly

elected resident organizations at which

the IHA shall explain the components of

the Comprehensive Plan. The meeting

shall be open to all residents and duly

elected resident organizations;

(5) Public Hearing. The IHA shall

hold at least one public hearing, and

any appropriate number of additional

hearings, to present information on the

Comprehensive Plan/Annual

Submission and the status of prior

approved programs. The public hearing

shall provide ample opportunity for

residents, duly elected resident

organizations, local government

officials, and other interested parties to

express their priorities and concerns.

The IHA shall give full consideration to

the comments and concerns of

residents, local government officials,

and other interested parties.

(c) Local government participation.

An IHA shall consult with appropriate

local government officials with respect

to the development of the

Comprehensive Plan. In the case of an

IHA with developments in multiple

jurisdictions, the IHA may meet this

requirement by consulting with an

advisory group representative of all the

jurisdictions. At a minimum, such

consultation shall include providing

such officials with:

(1) Advance written notice of the

public hearing required under

paragraph (b)(5) of this section;

(2) A copy of the summary of total

preliminary estimated costs to address

physical needs by each development

and management/operations needs IHAwide, a specific description of the IHA’s

process for maximizing the level of

participation by residents, a summary of

the general issues raised on the plan by

residents and others during the public

comment process, and the IHA’s

response to the general issues. IHA

records, such as minutes of planning

meetings or resident surveys, shall be

maintained in the IHA’s files and made

available to residents, resident

organizations, and other interested

parties upon request.

(d) Contents of Comprehensive Plan.

The Comprehensive Plan shall identify

all of the physical and management

improvements needed for an IHA and

all of its developments, and that

represent needs eligible for funding

under § 950.666. The plan shall also

include preliminary estimates of the

total cost of these improvements. The

plan shall set forth general strategies for

addressing the identified needs, and

highlight any special strategies, such as

major redesign or partial demolition of

a development, that are necessary to

ensure the long-term physical and social

viability of the development. Each

Comprehensive Plan shall contain the

following elements:

(1) Summaries. An IHA shall include

as part of its Comprehensive Plan the

following summaries:

(i) A summary of total preliminary

estimated costs to address physical

needs by each development and

management needs IHA-wide; and

(ii) A specific description of the IHA’s

process for maximizing the level of

participation by residents during the

development, implementation, and

monitoring of the Comprehensive Plan,

a summary of the general issues raised

on the plan by residents and others

during the public comment process, and

the IHA’s response to the general issue.

IHA records, such as minutes of

planning meetings or resident surveys,

shall be maintained in the IHA’s files

and made available to residents, duly

elected resident organizations, and other

interested parties, upon request.

(2) Physical needs assessment. (i)

Requirements. The physical needs

assessment identifies all of the work

that an IHA would need to undertake to

bring each of its developments up to the

modernization and energy conservation

standards, as required by section

14(e)(1)(A)(ii) of the Act, to comply with

lead-based paint testing and abatement

requirements under § 950.120(g), and to

comply with other program

requirements under § 950.120. The

physical needs assessment is completed

without regard to the availability of

funds, and shall include the following

information with respect to each of an

IHA’s developments:
18250 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(A) A brief summary of the physical

improvements necessary to bring each

development to a level at least equal to

the modernization standards contained

in HUD Handbook 7485.2 (Public and

Indian Housing Modernization

Standards), and to the energy

conservation and life-cycle costeffective performance standards, as

required in § 950.603, to comply with

the Lead-Based Testing and Abatement

requirements under § 950.120(g). The

IHA should also indicate the relative

urgency of need. If the IHA has no

physical improvement needs at a

particular development at the time it

completes its Comprehensive Plan, it

shall so indicate. Similarly, if the IHA

intends to demolish, partially demolish,

convert, or dispose of a development (or

units within a development), it shall so

indicate in the summary of physical

improvements;

(B) The replacement needs of

equipment systems and structural

elements that will be required to be met

(assuming routine and timely

maintenance is performed) during the

period covered by the action plan;

(C) A preliminary estimate of the cost

to complete the physical work;

(D) The projected FFY in which the

IHA anticipates that the development

will meet the modernization and energy

conservation standards;

(E) In addition, the IHA shall provide

with respect to vacant or nonhomebuyer-occupied Turnkey III units,

the estimated number of units that the

IHA is proposing for substantial

rehabilitation and subsequent sale, in

accordance with § 950.666(d)(3).

(ii) Sources of data. The IHA shall

identify in its needs assessment the

sources from which it derived data to

develop the physical needs assessment

under this paragraph (d)(3), and shall

retain such source documents in its

files.

(3) Management needs assessment. (i)

Requirements. The plan shall include a

comprehensive assessment of the

improvements needed to upgrade the

management and operation of the IHA

and of each viable development, so that

decent, safe, and sanitary living

conditions will be provided. The

management needs assessment shall

include the following, with the relative

urgency of need indicated:

(A) An identification of the most

current needs related to the following

areas (to the extent that any of these

needs is addressed in a HUD-approved

management improvement plan, the

IHA may simply include a crossreference to these documents):

(1) The management, financial, and

accounting control systems of the IHA;

(2) The adequacy and qualifications of

personnel employed by the IHA in the

management and operation of its

developments, for each significant

category of employment;

(3) The adequacy and efficacy of:

(i) Resident programs and services;

(ii) Resident and development

security;

(iii) Resident selection and eviction;

(iv) Occupancy;

(v) Maintenance;

(vi) Resident management and

resident capacity building programs;

(vii) Resident opportunities for

employment and business development

and other self-sufficiency opportunities

for residents; and

(viii) Homeownership opportunities

for residents.

(B) Any additional deficiencies

identified through audits and HUD

monitoring reviews that are not

addressed under paragraph (d)(3)(i)(A)

of this section. To the extent that any of

these is addressed in a HUD-approved

management improvement plan, the

IHA may include a cross-reference to

these documents;

(C) Any other management and

operations needs that the IHA wants to

address at the IHA-wide or development

level;

(D) An IHA-wide preliminary cost

estimate for addressing all the needs

identified in the management needs

assessment, without regard to the

availability of funds; and

(E) The projected FFY in which the

IHA anticipates that all identified

management deficiencies will be

corrected.

(ii) Sources of data. The IHA shall

identify in its needs assessment the

sources from which it derived data to

develop the management needs

assessment under this paragraph, and

shall retain such source documents in

its files.

(4) Demonstration of long-term

physical and social viability. (i) General.

The plan shall include, on a

development-by-development basis, an

analysis of whether completion of the

improvements and replacements

identified under paragraphs (d)(2) and

(d)(3) of this section will reasonably

ensure the long-term physical and social

viability, including achieving structural/

system soundness and full occupancy of

the development at a reasonable cost.

For cost reasonableness, the IHA may

choose to use the 90 percent of Total

Development Cost (TDC) approach (the

preliminary estimate of hard costs for

work proposed at the development is 90

percent or less of TDC) or a cost

reasonableness approach related to the

cost of individual work items as

indicated by National cost indices,

adjusted by local conditions and the

IHA’s own recent procurement

experience. The IHA shall keep

documentation in its files to support its

reasonable cost determinations of each

major work item (e.g., kitchen cabinets,

exterior doors). HUD will review cost

reasonableness as part of its review of

the Annual Submission and the

Performance and Evaluation Report. As

necessary, HUD will review the IHA’s

documentation in support of its cost

reasonableness;

(ii) Determination of non-viability.

When an IHA’s analysis of a

development, under paragraph (d) of

this section, establishes that completion

of the identified improvements and

replacements will not result in the longterm physical and social viability of the

development at a reasonable cost, the

IHA shall not expend CGP funds for the

development, except for emergencies

and essential nonroutine maintenance

necessary to maintain habitability until

residents can be relocated. The IHA

shall specify in its Comprehensive Plan

the actions it proposes to take with

respect to the nonviable development

(e.g., demolition or disposition under 24

CFR part 950, subpart M).

(5) Five-Year Action Plan. (i) General.

The Comprehensive Plan shall include

a rolling Five-Year Action Plan to carry

out the improvements and replacements

(or a portion thereof) identified under

paragraphs (d)(2) and (d)(3) of this

section. In developing its Five-Year

Action Plan, the IHA shall assume that

the current year funding or formula

amount will be available for each year

of its Five-Year Action Plan, whichever

the IHA is using for planning purposes,

plus the IHA’s estimate of the funds that

will be available from other sources,

such as State, local, and tribal

governments. All activities specified in

an IHA’s Five-Year Action Plan are

contingent upon the availability of

funds.

(ii) Requirements. Under the action

plan, an IHA shall indicate how it

intends to use the funds available to it

under the CGP to address the

deficiencies, or a portion of the

deficiencies, identified under its

physical and management needs

assessments, as follows:

(A) Physical condition. With respect

to the physical condition of an IHA’s

developments, an IHA shall indicate in

its action plan how it intends to

address, over a five-year period, the

deficiencies (or a portion of the

deficiencies) identified in its physical

needs assessment so as to bring each of

its developments up to a level at least

equal to the modernization and energy
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18251

conservation standards. This would

include specifying the work to be

undertaken by the IHA in major work

categories (e.g., kitchens, electrical

systems, etc.); establishing priorities

among the major work categories by

development and year based upon the

relative urgency of need; and estimating

the cost of each of the identified major

work categories. In addition, an IHA

shall estimate the FFY in which it

anticipates that the development will

meet the modernization and energy

conservation standards. In developing

its action plan, an IHA shall give

priority to the following:

(1) Activities required to correct

emergency conditions;

(2) Activities required to meet

statutory (or other legally mandated)

requirements;

(3) Activities required to meet the

needs identified in the Section 504

needs assessment within the regulatory

timeframes; and

(4) Activities required to complete

lead-based paint testing and abatement

requirements.

(B) Management and operations. An

IHA shall address in its action plan the

management and operations

deficiencies (or a portion of the

deficiencies) identified in its

management needs assessment, as

follows:

(1) With respect to the management

and operations needs of the IHA, the

IHA shall identify how it intends to

address with CGP funds, if necessary,

the deficiencies (or a portion thereof)

identified in its management needs

assessment, including work identified

through audits, HUD monitoring

reviews, and self-assessments (this

would include establishing priorities

based upon the relative urgency of

need);

(2) A preliminary IHA-wide cost

estimate, by major work category.

(iii) Procedure for maintaining current

Five-Year Action Plan. The IHA shall

maintain a current Five-Year Action

Plan by annually amending its FiveYear Action Plan, in conjunction with

the Annual Submission;

(6) Local government statement. The

Comprehensive Plan shall include a

statement signed by the chief executive

officer of the appropriate governing

body (or in the case of an IHA with

developments in multiple jurisdictions,

from the CEO of each such jurisdiction),

certifying as to the following:

(i) The IHA developed the

Comprehensive Plan/Five-Year Action

Plan or amendments thereto in

consultation with officials of the

appropriate governing body and with

development residents covered by the

Comprehensive Plan/Five-Year Action

Plan, in accordance with the

requirements of § 950.672(b) and (c);

(ii) The Comprehensive Plan/FiveYear Action Plan or amendments

thereto are consistent with the

appropriate governing body’s

assessment of its low-income housing

needs and that the appropriate

governing body will cooperate in

providing resident programs and

services; and

(iii) The IHA’s proposed drug

elimination activities are coordinated

with, and supportive of, local drug

elimination strategies and neighborhood

improvement programs, if applicable.

(7) IHA resolution. The plan shall

include a resolution adopted by the IHA

Board of Commissioners, and signed by

the Board Chairman of the IHA,

approving the Comprehensive Plan or

any amendments thereto and certifying

that:

(i) The IHA will comply with all

policies, procedures, and requirements

prescribed by HUD for modernization,

including implementation of the

modernization in a timely, efficient, and

economical manner;

(ii) IHA has established controls to

assure that any activity funded by the

CGP is not also funded by any other

HUD program, thereby preventing

duplicate funding of any activity;

(iii) The IHA will not provide to any

development more assistance under the

CGP than is necessary to provide

affordable housing, after taking into

account other government assistance

provided;

(iv) The proposed physical work will

meet the modernization and energy

conservation standards under § 950.603;

(v) The proposed activities in the

Five-Year Action Plan/Annual

Statement are consistent with the

proposed or approved Comprehensive

Plan of the IHA;

(vi) The IHA will comply with

applicable civil rights requirements

under § 950.115, and, when applicable,

will carry out the Comprehensive Plan

in conformity with title VI of the Civil

Rights Act of 1964 (42 U.S.C. 2000d),

the Fair Housing Act (42 U.S.C. 3601–

3619), and section 504 of the

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

794);

(vii) The IHA will, to the greatest

extent feasible, give preference to the

award of modernization contracts to

Indian organizations and Indian-owned

economic enterprises under § 950.175;

(viii) The IHA has provided to HUD

any documentation that HUD has

requested to carry out its review under

the National Environmental Policy Act

(NEPA) and other related authorities in

accordance with 24 CFR 950.120(a) and

(b), and will not obligate, in any

manner, the expenditure of CGP funds,

or otherwise undertake the activities

identified in its Comprehensive Plan/

Annual Statement, until the IHA

receives written notification from HUD

indicating that HUD has complied with

its responsibilities under NEPA and

other related authorities;

(ix) The IHA will comply with the

wage rate requirements under

§ 950.120(c) and (d);

(x) The IHA will comply with the

relocation assistance and real property

acquisition requirements under

§ 950.117;

(xi) The IHA will comply with the

requirements for physical accessibility

under § 950.115(d);

(xii) The IHA will comply with the

requirements for access to records and

audits under § 950.120(e);

(xiii) The IHA will comply with the

uniform administrative requirements

under § 950.120(f);

(xiv) The IHA will comply with leadbased paint testing and abatement

requirements under § 950.120(g);

(xv) The IHA has complied with the

requirements governing tribal

government and resident participation

in accordance with §§ 950.672(b),

950.678(d), and 950.684, and has given

full consideration to the priorities and

concerns of tribal government and

residents, including comments that

were ultimately not adopted, in

preparing the Comprehensive Plan/FiveYear Action Plan and any amendments

thereto;

(xvi) The IHA will comply with the

special requirements of § 950.666(d)

with respect to a homeownership

development; and

(xvii) The IHA will comply with

section 3 of the Housing and Urban

Development Act of 1968, as amended,

and make best efforts, consistent with

existing Federal, State, and local laws

and regulations, to give low- and very

low-income persons, training and

employment opportunities generated by

CGP assistance, and to make best efforts,

consistent with existing Federal, State,

and local laws and regulations, to award

contracts for work to be performed in

connection with CGP assistance to

business concerns that provide

economic opportunities for low- and

very low-income persons.

(e) Amendments to the

Comprehensive Plan. (1) Extension of

time for performance. An IHA shall

have the right to amend its

Comprehensive Plan (including the

action plan) to extend the time for

performance whenever HUD has not

provided the amount of assistance set
18252 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

forth in the Comprehensive Plan or has

not provided the assistance in a timely

manner.

(2) Amendments to needs

assessments. The IHA shall amend its

plan by revising its needs assessments

whenever it proposes to carry out

activities in its Five-Year Action Plan or

Annual Statement that are not reflected

in its current needs assessments (except

in the case of emergencies). The IHA

may propose an amendment to its needs

assessments, in connection with the

submission of its Annual Submission

(see § 950.678(b)), or at any other time.

These amendments shall be reviewed by

HUD in accordance with § 950.675;

(3) Six-year revision of

Comprehensive Plan. Every sixth year

following the initial year of

participation, the IHA shall submit to

HUD, with its Annual Submission, a

complete update of its Comprehensive

Plan. An IHA may elect to revise some

or all parts of the Comprehensive Plan

more frequently.

(4) Annual revision of Five-Year

Action Plan. Annually, the IHA shall

submit to HUD, with its Annual

Submission, an update of its Five-Year

Action Plan, eliminating the previous

year and adding an additional year. The

IHA shall identify changes in work

categories (other than those included in

the new fifth year) from the previous

year Five-Year Action Plan when

making this Annual Submission.

(5) Required submissions. Any

amendments to the Comprehensive Plan

under this section shall be submitted

with the IHA resolution under

§ 950.672(d)(7).

(f) Prerequisite for receiving

assistance. (1) Prohibition of assistance.

No financial assistance, except for

emergency work to be funded under

§§ 950.601(b) and 950.666(a)(2), and for

modernization needs resulting from

disasters under § 950.601(b), may be

made available under this subpart

unless HUD has approved a

Comprehensive Plan submitted by the

IHA that meets the requirements of

§ 950.672. An IHA that has failed to

obtain approval of its Comprehensive

Plan by the end of the FFY shall have

its formula allocation for that year (less

any formula amounts provided to the

IHA for emergencies) added to the

subsequent year’s appropriation of

funds for grants under this part. HUD

shall allocate such funds to IHAs and

PHAs participating in the CGP in

accordance with the formula under

§ 950.601(e) and (f) in the subsequent

FFY. An IHA that elects in any FFY not

to participate in the CGP under this

subpart may participate in the CGP in

subsequent FFYs.

(2) Requests for emergency assistance.

An IHA may receive funds from its

formula allocation to address emergency

modernization needs if HUD has not

approved an IHA’s Comprehensive Plan.

To request such assistance, an IHA shall

submit to HUD a request for funds in

such form as HUD may prescribe,

including any documentation necessary

to support its claim that an emergency

exists. HUD shall review the request and

supporting documentation to determine

if it meets the definition of ‘‘emergency

work,’’ as set forth in § 950.102.

§ 950.675 HUD review and approval of

Comprehensive Plan (including action

plan).

(a) Submission of Comprehensive

Plan. (1) Upon receipt of a

Comprehensive Plan from an IHA, HUD

shall determine whether:

(i) The plan contains each of the

required components specified at

§ 950.672(d); and

(ii) If applicable, the IHA has

submitted any additional information or

assurances required as a result of HUD

monitoring, findings of inadequate IHA

performance, audit findings, or civil

rights compliance findings.

(2) Acceptance for review. If the IHA

has submitted a Comprehensive Plan

(including the action plan) that meets

the criteria specified in paragraph (a)(1)

of this section, HUD shall accept the

Comprehensive Plan for review, within

14 calendar days of its receipt in the

Area ONAP. The IHA shall be notified

in writing that the plan has been

accepted by HUD, and that the 75-day

review period is proceeding.

(3) Time period for review. A

Comprehensive Plan that is accepted by

HUD for review shall be considered to

be approved unless HUD notifies the

IHA in writing, postmarked within 75

calendar days of the date of HUD’s

receipt of the Comprehensive Plan for

review, that HUD has disapproved the

plan. HUD shall not disapprove a

Comprehensive Plan on the basis that it

cannot complete its review within the

75-day deadline.

(4) Rejection of Comprehensive Plan.

If an IHA has submitted a

Comprehensive Plan (including the

action plan) that does not meet the

requirements of paragraph (a)(1) of this

section, HUD shall notify the IHA

within 14 calendar days of its receipt

that HUD has rejected the plan for

review. In such case, HUD shall indicate

the reasons for rejection, the

modifications required to qualify the

Comprehensive Plan for HUD review,

and the deadline date for receipt of any

modifications.

(b) HUD approval of Comprehensive

Plan (including action plan). (1) A

Comprehensive Plan (including the

action plan) that is accepted by HUD for

review in accordance with paragraph (a)

of this section shall be considered to be

approved, unless HUD notifies the IHA

in writing, postmarked within 75 days

of the date of HUD’s receipt of the

Comprehensive Plan for review, that

HUD has disapproved the plan,

indicating the reasons for disapproval,

and the modifications required to make

the Comprehensive Plan approvable.

The IHA shall re-submit the

Comprehensive Plan to HUD, in

accordance with the deadline

established by HUD, which may allow

up to 75 calendar days before the end

of the FFY for HUD review. If the

revised plan is disapproved by HUD

following its resubmission, or the IHA

fails to resubmit the plan by the

deadline established by HUD, any funds

that would have been allocated to the

IHA shall be added to the subsequent

year’s appropriation of funds for grants

under this subpart. HUD shall allocate

such funds to IHAs and PHAs

participating in the CGP in accordance

with the formula under 24 CFR 950.601

and 968.103. HUD shall not disapprove

a Comprehensive Plan on the basis that

HUD cannot complete its review under

this section within the 75-day deadline.

(2) HUD shall approve the

Comprehensive Plan except where it

makes a determination in accordance

with one or more of the following:

(i) The Comprehensive Plan is

incomplete in significant matters. HUD

determines that the IHA has failed to

include all required information or

documentation in its Comprehensive

Plan, e.g, the physical needs assessment

does not provide all of the information

required by HUD concerning all of its

developments; or the IHA has supplied

incomplete data on the current

condition and other characteristics of its

developments;

(ii) Identified needs are plainly

inconsistent with facts and data. On the

basis of available significant facts and

data pertaining to the physical and

operational condition of the IHA’s

developments or the management and

operations of the IHA, HUD determines

that the IHA’s identification of

modernization needs (see

§ 950.672(d)(2) and (3)) is plainly

inconsistent with such facts and data.

HUD will take into account facts and

data such as those derived from recent

HUD monitoring, audits, and resident

comments and will disapprove a

Comprehensive Plan based on such

findings as:
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18253

(A) Identified physical improvements

and replacement are inadequate. The

completion of the identified physical

improvements and replacements will

not bring all of an IHA’s developments

to a level at least equal to the

modernization and energy conservation

and life-cycle cost-effective standards in

§ 950.603 (except that a development

shall meet the energy conservation

standards under § 950.603 only when

they are applicable to the work being

performed);

(B) Identified management

improvements are inadequate. The

identified management and operations

improvement needs do not address all

of an IHA’s areas of deficiency, or the

completion of those improvements

would not result in each area of

deficiency under an IHA’s management

improvement plan under § 950.135

being brought up to an acceptable level

of performance; and

(C) Proposed physical and

management improvements fail to

address identified needs. The proposed

physical and management

improvements in the action plan are not

related to the identified needs in the

needs assessments portion of the

Comprehensive Plan, e.g., a heating

plant renovation is in the action plan,

but it was not included in the needs

assessment for that development.

(iii) Action plan is plainly

inappropriate to meeting identified

needs. On the basis of the

Comprehensive Plan, HUD determines

that the action plan (see § 950.672(d)(5))

is plainly inappropriate to meet the

needs identified in the Comprehensive

Plan, e.g., the proposed work item will

not correct the need identified in the

needs assessment. HUD will take into

account the availability of funds. In

addition, HUD will take into account

whether the action plan fails to address

work items that are needed to correct

known emergency conditions or that are

otherwise needed to meet statutory or

other legally mandated requirements, as

identified by the IHA in its

Comprehensive Plan.

(iv) Inadequate demonstration of longterm viability at reasonable cost. HUD

determines that the IHA has failed to

demonstrate that completion of

improvements and replacements

identified in the Comprehensive Plan,

as required by § 950.672(d)(2) and (3),

will reasonably ensure long-term

viability of one or more Indian housing

developments to which they relate at a

reasonable cost, as required by

§ 950.672(d)(4).

(v) Contradiction of local government

statement or IHA resolution. HUD has

evidence that tends to challenge, in a

substantial manner, the appropriate

governing body’s statement or IHA

resolution contained in the

Comprehensive Plan, as required in

§ 950.672(d)(6) and (7). Such evidence

may include, but is not necessarily

limited to:

(A) Evidence that the IHA failed to

implement the Partnership Process and

to meet the requirements for resident

participation, as set forth in

§ 950.672(b). In such cases, HUD shall

review the IHA’s resident participation

process and any supporting

documentation to determine whether

the standards for participation under

§ 950.672(b) were met;

(B) With respect to an IHA established

under State law and determined to be

subject to the requirements of title VI of

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

2000d) and the Fair Housing Act (42

U.S.C. 3601–3619), HUD shall also

consider as such evidence the following:

(1) A pending proceeding against the

IHA based upon a charge of

discrimination pursuant to the Fair

Housing Act. (For purposes of this

provision, ‘‘a charge of discrimination’’

means a charge, pursuant to section

810(g)(2) of the Fair Housing Act (42

U.S.C. 3610(g)(2)), issued by the HUD

General Counsel, or his or her legally

authorized designee.);

(2) A pending civil rights suit against

the IHA instituted by the Department of

Justice;

(3) Outstanding HUD findings, under

§ 950.120, of IHA noncompliance with

civil rights statutes and executive orders

or implementing regulations, as a result

of formal administrative proceedings,

unless the IHA is implementing a HUDapproved resident selection and

assignment plan or compliance

agreement designed to correct the

area(s) of noncompliance;

(4) A deferral of the processing of

applications from the IHA imposed by

HUD under title VI of the Civil Rights

Act of 1964 (42 U.S.C. 2000d), the

Attorney General’s Guidelines (28 CFR

50.3), and HUD’s title VI regulations (24

CFR 1.8) and procedures (HUD

Handbook 8040.1), or under section 504

of the Rehabilitation Act of 1973 (29

U.S.C. 794) and HUD’s section 504

regulations (24 CFR 8.57); or

(5) An adjudication of a violation

under any of the authorities under

§ 950.120(a) in a civil action filed

against the IHA by a private individual,

unless the IHA is implementing a HUDapproved resident selection and

assignment plan or compliance

agreement designed to correct the

area(s) of noncompliance.

(c) Effect of HUD approval of

Comprehensive Plan. After HUD

approves the Comprehensive Plan

(including the Five-Year Action Plan),

or any amendments to the plan, it shall

be binding upon HUD and the IHA,

until such time as the IHA submits, and

HUD approves, an amendment to its

plan. The IHA is expected to undertake

the work set forth in the Annual

Statement. However, the IHA may

undertake any of the work identified in

any of the other four years of the latest

approved Five-Year Action Plan, current

approved Annual Statement or

previously approved CIAP budgets,

without further HUD approval. Actual

uses of the funds are to be reflected in

the IHA Annual Performance and

Evaluation Report for each grant. See

§ 950.684. HUD encourages the IHA to

inform the residents of significant

changes (such as changes in scope of

work or whenever it moves work items

within the approved Five-Year Action

Plan). The IHA shall retain

documentation of that information in its

files. If HUD determines as a result of an

audit or monitoring findings that an IHA

has provided false or substantially

inaccurate data in its Comprehensive

Plan/Annual Submission or has

circumvented the intent of the program,

HUD may condition the receipt of

assistance, in accordance with

§ 950.687. Moreover, in accordance with

18 U.S.C. 1001, any individual or entity

who knowingly and willingly makes or

uses a document or writing containing

any false, fictitious, or fraudulent

statement or entry, in any matter within

the jurisdiction of any department or

agency of the United States, shall be

fined not more than $10,000 or

imprisoned for not more than five years,

or both.

§ 950.678 Annual Submission of activities

and expenditures.

(a) General. The Annual Submission

is a collective term for all documents

that the IHA shall submit to HUD for

review and approval before accessing

the current FFY grant funds. Such

documents include the Annual

Statement, Work Statements for years

two through five of the Five-Year Action

Plan, local government statement, IHA

Board Resolution, materials

demonstrating the partnership process,

and any other documents as prescribed

by HUD. For planning purposes, an IHA

may use either the amount of funding

received in the current year or the actual

formula amount provided in HUD’s

notification under § 950.669(b)(1) in

developing the Five-Year Action Plan

for presentation at the resident meetings

and public hearing. Work Statements

cover the second through the fifth years

of the Five-Year Action Plan and set
18254 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

forth the major work categories and

costs, by development or IHA-wide, that

the IHA intends to undertake in each

year of years two through five. In

preparing these Work Statements, the

IHA shall assume that the current FFY

formula amount will be available in

each year of years two through five. The

Work Statements for all five years will

be at the same level of detail so that the

IHA may interchange work items as

discussed in § 950.672(d)(5)(i). An IHA

may budget up to 8 percent of its annual

grant in a contingency account for cost

overruns.

(b) Submission. After receiving HUD

notification of the formula amount

estimating how much funding will be

available from other sources, such as

State and tribal governments, and

determining its activities and costs

based on the current FFY formula

amount, the IHA shall submit its

Annual Submission.

(c) Acceptance for review. (1) Upon

receipt of an Annual Submission from

an IHA, HUD shall determine whether:

(i) The Annual Submission contains

each of the required components; and

(ii) The IHA has submitted any

additional information or assurances

required as a result of HUD monitoring,

findings of inadequate IHA

performance, audit findings, and civil

rights compliance findings.

(2) If the IHA has submitted a

complete Annual Submission and all

required information and assurances,

HUD will accept the submission for

review, as of the date of receipt. If the

IHA has not submitted all required

material, HUD will promptly notify the

IHA that it has disapproved the

submission, indicating the reasons for

disapproval, the modifications required

to qualify the Annual Submission for

HUD review, and the date by which

such modifications shall be received by

HUD.

(d) Resident and local government

participation. An IHA is required to

develop its Annual Submission,

including any proposed amendments to

its Comprehensive Plan as provided in

§ 950.672(e), in consultation with

officials of the appropriate governing

body (or in the case of an IHA with

developments in multiple jurisdictions,

in consultation with the CEO of each

such jurisdiction or with an advisory

group representative of all jurisdictions)

and with residents and duly elected

resident organizations of the

developments covered by the

Comprehensive Plan, as follows:

(1) Public notice. Within a reasonable

amount of time before the advance

meeting for residents under paragraph

(d)(2) of this section, and the public

hearing under paragraph (d)(3) of this

section, the IHA shall annually provide

public notice of the advance meeting

and the public hearing in a manner

determined by the IHA and that ensures

notice to all duly elected resident

organizations;

(2) Advance meeting with residents.

The IHA shall at least annually hold a

meeting open to all residents and duly

elected resident organizations. The

advance meeting shall be held within a

reasonable amount of time before the

public hearing under paragraph (d)(3) of

this section. The IHA will provide

residents with information concerning

the contents of the IHA’s Five-Year

Action Plan (and any proposed

amendments to the IHA’s

Comprehensive Plan to be submitted

with the Annual Submission) so that

residents can comment adequately at

the public hearing on the contents of the

Five-Year Action Plan and any proposed

amendments to the Comprehensive

Plan.

(3) Public hearing. The IHA shall

annually hold at least one public

hearing, and any appropriate number of

additional hearings, to present

information on the Annual Submission

and the status of prior approved

programs. The public hearing shall

provide ample opportunity for residents

of the developments covered by the

Comprehensive Plan, officials of the

appropriate governing body, and other

interested parties, to express their

priorities and concerns. The IHA shall

give full consideration to the comments

and concerns of residents, local

government officials, and other

interested parties in developing its FiveYear Action Plan, or any amendments to

its Comprehensive Plan.

(4) Expedited scheduling. IHAs are

encouraged to hold the meeting with

residents and duly elected resident

organizations under paragraph (d)(2) of

this section, and the public hearing

under paragraph (d)(3) of this section,

between July 1 (i.e., after the end of the

program year—June 30) and September

30, using the formula amount for the

current FFY. If an IHA elects to use such

expedited scheduling, it shall explain at

the meeting with residents and duly

elected resident organizations and at the

public hearing that the current FFY

amount is not the actual grant amount

for the subsequent year, but is rather the

amount used for planning purposes. It

shall also explain that the Five-Year

Action Plan will be adjusted when HUD

provides notification of the actual

formula amount, and explain which

major work categories at which

developments may be added or deleted

to adjust for the actual formula amount

and that any added work categories/

developments will come from the

Comprehensive Plan.

(e) Contents of Annual Submission.

The Annual Statement for each year

shall include, for each development or

on an IHA-wide basis for management

improvements or certain physical

improvements for which work is to be

funded out of that year’s grant:

(1) A list of development accounts

with an identification of major work

categories;

(2) The cost for each major work

category, as well as a summary of cost

by development account;

(3) The IHA-wide or developmentspecific management improvements to

be undertaken during the year;

(4) For each development and for any

management improvements not covered

by a HUD-approved management

improvement plan, a schedule for the

use of current year funds, including

target dates for the obligation and

expenditure of the funds. In general,

HUD expects that an IHA will obligate

its current year’s allocation of CGP

funds (except for its funded replacement

reserves) within two years, and expend

such funds within three years, of the

date of HUD approval, unless longer

time-frames are approved by HUD due

to the size of the grant, the complexity

of the work, and other factors;

(5) A summary description of the

actions to be taken with non-CGP funds

to meet physical and management

improvement needs that have been

identified by the IHA in its needs

assessments;

(6) Documentation supporting the

IHA’s actions in carrying out its

responsibilities under the National

Environmental Policy Act and other

related authorities in accordance with

§ 950.120(a) and (b);

(7) Other information, as specified by

HUD and approved by OMB under the

Paperwork Reduction Act; and

(8) An IHA resolution approving the

Annual Submission or any amendments

thereto, as set forth in § 950.672(d)(7).

(f) Additional submissions with

Annual Submission. An IHA shall

submit with the Annual Submission any

amendments to the Comprehensive

Plan, as set forth in § 950.672(e), and

such additional information as may be

prescribed by HUD. HUD shall review

any proposed amendments to the

Comprehensive Plan in accordance with

review standards under § 950.675(b).

(g) HUD review and approval of

Annual Submission. (1) General. An

Annual Submission accepted in

accordance with paragraph (a) of this

section shall be considered to be

approved, unless HUD notifies the IHA
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18255

in writing, postmarked within 75

calendar days of the date that HUD

receives the Annual Submission for

review under paragraph (c) of this

section, that HUD has disapproved the

Annual Submission, indicating the

reasons for disapproval, the

modifications required to make the

Annual Submission approvable, and the

date by which such modifications shall

be received by HUD. HUD may request

additional information (e.g., for

eligibility determinations) to facilitate

review and approval of the Annual

Submission during the 75-day review

period. HUD shall not disapprove an

Annual Submission on the basis that

HUD cannot complete its review under

this section within the 75-day deadline;

(2) Bases for disapproval for Annual

Submission. HUD shall approve the

Annual Submission, except when:

(i) Plainly inconsistent with

Comprehensive Plan. HUD determines

that the activities and expenditures

proposed in the Annual Submission are

plainly inconsistent with the IHA’s

approved Comprehensive Plan;

(ii) Contradiction of IHA resolution.

HUD has evidence that tends to

challenge, in a substantial manner, the

certifications contained in the board

resolution, as required by

§ 950.672(d)(7).

(h) Amendments to Annual

Statement. The IHA shall advise HUD of

all changes to the IHA’s approved

Annual Statement in its Performance

and Evaluation Report submitted under

§ 950.684. The IHA shall submit to HUD

for prior approval any additional work

categories (except for emergency work)

that are not within the IHA’s approved

Five-Year Action Plan.

(i) Failure to obligate formula funding

and extension of time for performance.

(1) Failure to obligate formula funds. If

the IHA fails to obligate formula funds

within the approved or extended time

period, the IHA may be subject to an

alternative management strategy, which

may involve third-party oversight or

administration of the modernization

function. HUD would only require such

action after a corrective action order had

been issued under § 950.687 and the

IHA failed to comply with the order.

HUD could then require an alternative

management strategy in a corrective

action order. An IHA may appeal in

writing the corrective action order

requiring an alternative management

strategy within 30 calendar days of that

order. HUD Headquarters shall render a

written decision on an IHA’s appeal

within 30 calendar days of the date of

its receipt of the IHA’s appeal.

(2) Extension of time for performance.

An IHA may extend the target dates for

fund obligation and expenditure in the

approved Annual Statement whenever

any delay outside the IHA’s control

occurs, as specified by HUD, and the

extension is made in a timely manner.

Such revision is subject to HUD review

under § 950.687(a)(2) as to the IHA’s

continuing capacity. HUD shall not

review as to an IHA’s continuing

capacity any revisions to an IHA’s

Comprehensive Plan and related

statements when the basis for the

revision is that HUD has not provided

the amount of assistance set forth in the

Annual Submission, or has not provided

such assistance in a timely manner.

(j) ACC Amendment. After HUD

approval of each year’s Annual

Submission, HUD and the IHA shall

enter into an ACC amendment to obtain

modernization funds. The ACC

amendment shall require low-income

use of housing for not less than 20 years

from the date of the ACC amendment

(subject to sale of homeownership units

in accordance with the terms of the

ACC).

(k) Declaration of Trust. As HUD may

require, the IHA shall execute and file

for record a Declaration of Trust as

provided under the ACC to protect the

rights and interests of HUD throughout

the 20-year period during which the

IHA is obligated to operate its

developments in accordance with the

ACC, the Act, and HUD regulations and

requirements. A Declaration of Trust is

not required for Mutual Help units.

§ 950.681 Conduct of modernization

activities.

(a) Initiation of activities. After HUD

has approved a Five-Year Action Plan

and entered into an ACC amendment

with the IHA, the IHA shall undertake

in a timely, efficient, and economical

manner the modernization activities and

expenditures set forth in its approved

Annual Statement or substitute work

categories from within the approved

Five-Year Action Plan, subject to the

following requirements:

(1) The IHA may undertake the

activities using force account or contract

labor, including contracting with an

RMC. If the entirety of modernization

activity (including the planning and

architectural design of the

rehabilitation) is administered by an

RMC, the IHA shall not retain for any

administrative or other reason, any

portion of the CGP funds provided,

unless the IHA and the RMC provide

otherwise by contract; and

(2) All activities shall be monitored by

resident groups within the framework

and intent of the Partnership Process.

(b) Fund requisitions. To request

modernization funds against the

approved Annual Statement for year

one, the IHA shall comply with

requirements prescribed by HUD.

(c) Contracting requirements. The IHA

shall comply with the wage rate

requirements in § 950.120. In addition,

the IHA shall comply with the

requirements set forth in subpart B of

this part, except as follows:

(1) Assurance of completion. For each

construction or equipment contract over

$25,000, the contractors shall furnish a

performance and payment bond for 100

percent of the contract price, or,

notwithstanding 24 CFR 85.36(h) and

§ 950.170, a 20 percent cash escrow, or

a 25 percent letter of credit, or, as may

be required by law, separate

performance and payments bonds, each

for 50 percent or more of the contract

price.

(2) Previous participation. An IHA

shall ensure that the contractor is not on

the GSA List of Parties Excluded from

Federal Procurement and

Nonprocurement Programs.

(d) Assurance of nonduplication. The

IHA shall ensure that there is no

duplication between the activities

carried out pursuant to the CGP, and

activities carried out with other funds.

(e) Fiscal closeout of a comprehensive

grant. Upon expenditure by an IHA of

all funds, or termination by HUD of the

activities funded by each annual grant,

the IHA shall submit the actual

modernization cost certificate, in a form

prescribed by HUD, to HUD for review,

audit verification, and approval. The

audit shall follow the guidelines

prescribed by 24 CFR part 44, NonFederal Government Audit

Requirements. If the audited

modernization cost certificate discloses

unauthorized expenditures, the IHA

shall take such corrective actions as

HUD may direct.

§ 950.684 IHA Performance and Evaluation

Report.

(a) Submission. For any FFY in which

an IHA has received assistance under

this subpart, the IHA shall submit a

Performance and Evaluation Report, in

a form and at a time to be prescribed by

HUD, describing its use of assistance in

accordance with the approved Annual

Statement. The IHA shall make

reasonable efforts to notify residents and

officials of the appropriate governing

body of the availability of the draft

report, make copies available to

residents in the development office, and

provide residents with at least 30

calendar days in which to comment on

the report.

(b) Content. The report shall include

the following:
18256 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(1) An explanation of how the IHA

has used other funds, such as

Community Development Block Grant

program assistance, State or tribal

assistance, and private funding, for the

needs identified in the IHA’s

Comprehensive Plan and for the

purposes of this subpart I;

(2) An explanation of how the IHA

has used the CGP funds to address the

needs identified in its Comprehensive

Plan and to carry out the activities

identified in its approved Five-Year

Action Plan, and shall specifically

address:

(i) Any funds used for emergency

needs not set forth in its Five-Year

Action Plan; and

(ii) Any changes to the Annual

Statement under § 950.678(h);

(3) The results of the IHA’s process for

consulting with residents on the

implementation of the plan;

(4) The current status of the IHA’s

obligations and expenditures, specifying

how the IHA is performing with respect

to its implementation schedules, and an

explanation of any necessary revision to

the planned target dates;

(5) A summary of resident, tribal, or

local government comments received on

the report; and

(6) A resolution by the IHA Board of

Commissioners approving the

Performance and Evaluation Report and

containing a certification that the IHA

has made reasonable efforts to notify

residents in the development(s) and

local government officials of the

opportunity to review the draft report

and to comment on it before its

submission to HUD, and that copies of

the report were provided to residents in

the development office and to local

government officials, or furnished upon

their request.

§ 950.687 HUD review of IHA performance.

(a) HUD determination. At least

annually, HUD shall carry out such

reviews of the performance of each IHA

as may be necessary or appropriate to

make the determinations required by

this paragraph, taking into consideration

all available evidence.

(1) Conformity with Comprehensive

Plan. HUD will determine whether the

IHA has carried out its activities under

this subpart in a timely manner and in

accordance with its Comprehensive

Plan.

(i) In making this determination, HUD

will review the IHA’s performance to

determine whether the modernization

activities undertaken during the period

under review conform substantially to

the activities specified in the approved

Five-Year Action Plan. HUD will also

review an IHA’s progress against the

implementation schedules for purposes

of determining whether the IHA has

carried out its modernization activities

in a timely manner;

(ii) HUD will review an IHA’s

performance to determine whether the

activities carried out comply with the

requirements of the Act, including the

requirement that the work carried out

meets the modernization and energy

conservation standards in § 950.603,

this part, and other applicable laws and

regulations.

(2) Continuing capacity. HUD will

determine whether the IHA has a

continuing capacity to carry out its

Comprehensive Plan in a timely

manner. After the first full operational

year of CGP, CIAP experience will not

be taken into consideration except when

the IHA has not yet had comparable

experience under the CGP.

(i) The primary factors to be

considered in arriving at a

determination that a recipient has a

continuing capacity are those described

in paragraphs (a)(1) and (a)(3) of this

section as they relate to carrying out the

Comprehensive Plan. HUD generally

will consider an IHA to have a

continuing capacity if it determines that

the IHA has:

(A) Carried out its activities under the

CGP program, as well as the CIAP, in a

timely manner, taking into account the

level of funding available and whether

the IHA obligates its modernization

funds within two years from the

execution of the ACC amendment and

expends such modernization funds

within three years of ACC amendment

execution, or such longer period as

approved by HUD or as extended by the

IHA for reasons outside of its control;

(B) Adequately inspected the funded

modernization to assure that the

physical work is being carried out in

accordance with the plans and

specifications and the modernization

and energy conservation standards (or

in the case of an IHA’s performance

under CIAP, whether the IHA has

carried out the physical work in

accordance with the HUD-approved

budget and in conformance with the

modernization and energy conservation

standards) and that any HUD

monitoring findings relating to the

quality of the physical work have been,

or are being, resolved);

(C) Established and maintained

internal controls for its modernization

program in accordance with HUD

requirements for financial management

and accounting, as determined by the

fiscal audit;

(D) Administered its modernization

contracts in accordance with a HUDapproved procurement policy, which

meets the requirements of 24 CFR

85.36(a) and § 950.160;

(E) Carried out its activities in

accordance with its Comprehensive

Plan and HUD requirements; and

(F) Has satisfied, or made reasonable

progress toward satisfying, the

performance standards prescribed in

paragraph (a)(3) of this section as they

relate to activities under the CGP

program;

(ii) HUD will give particular attention

to IHA efforts to accelerate the progress

of the program and to prevent the

recurrence of past deficiencies or

noncompliance with applicable laws

and regulations.

(3) Reasonable progress. HUD shall

determine whether the IHA has

satisfied, or has made reasonable

progress towards satisfying, the

following performance standards:

(i) With respect to the physical

condition of each development, whether

the work items being carried out by the

IHA are in conformity with the

modernization and energy conservation

standards in § 950.603, and whether the

IHA has brought, or is making

reasonable progress toward bringing, all

of its developments to these standards,

in accordance with its physical needs

assessment; and

(ii) With respect to the management

condition of the IHA, whether the IHA

has achieved, or is making reasonable

progress in implementing, the work

items (specified in its Annual Statement

and Five-Year Action Plan) that are

designed to address deficiencies

identified in its management needs

assessment or through audits or HUD

reviews; and

(iii) In determining whether the IHA

has made reasonable progress, HUD will

take into account the level of funding

available and whether the IHA obligates

its modernization funds within two

years from the execution of the ACC

amendment and expends such

modernization funds within three years

of ACC amendment execution, or such

longer period if approved by HUD or

extended by the IHA for reasons outside

of its control in an implementation

schedule. The IHA shall demonstrate to

HUD’s satisfaction that any lack of

timeliness (beyond the time periods

specified in this paragraph or date

specified in a HUD-approved

implementation schedule) has resulted

from factors beyond the IHA’s control.

If the IHA fails to obligate formula funds

within the approved or extended time

period, the IHA may be subject to an

alternative management strategy which

may involve third-party oversight or

administration of the modernization

function. HUD would only require such
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18257

action after a corrective action order had

been issued under this section and the

IHA failed to comply with the order.

HUD could then require an alternative

management strategy in a correction

action order. An IHA may appeal in

writing the corrective action order

requiring an alternative management

strategy within 30 calendar days of that

order. HUD Headquarters shall render a

written decision on an IHA’s appeal

within 30 calendar days of the date of

its receipt of the IHA’s appeal.

(b) Notice of deficiency. Based on

HUD reviews of IHA performance and

findings of any of the deficiencies in

paragraph (d) of this section, HUD may

issue to the IHA a notice of deficiency

stating the specific program

requirements that the IHA has violated

and requesting the IHA to take any of

the actions in paragraph (e) of this

section.

(c) Corrective action order. (1) Based

on HUD reviews of IHA performance

and findings of any of the deficiencies

in paragraph (d) of this section, HUD

may issue to the IHA a corrective action

order, whether or not a notice of

deficiency has previously been issued in

regard to the specific deficiency on

which the corrective action order is

based. HUD may order corrective action

at any time by notifying the IHA of the

specific program requirements that the

IHA has violated, and specifying that

any of the corrective actions listed in

paragraph (e) of this section shall be

taken. HUD shall design corrective

action to prevent a continuation of the

deficiency, mitigate any adverse effects

of the deficiency to the extent possible,

or prevent a recurrence of the same or

similar deficiencies.

(2) Before ordering corrective action,

HUD will notify the IHA and give it an

opportunity to consult with HUD

regarding the proposed action.

(3) Any corrective action ordered by

HUD shall become a condition of the

grant agreement.

(4) If HUD orders corrective action by

an IHA in accordance with this section,

the IHA’s Board of Commissioners shall

notify affected residents of HUD’s

determination, the bases for the

determination, the conditioning

requirements imposed under this

paragraph (c), and the consequences to

the IHA if it fails to comply with HUD’s

requirements.

(d) Basis for corrective action. HUD

may order an IHA to take corrective

action only if HUD determines:

(1) The IHA has not submitted a

performance and evaluation report, in

accordance with § 950.684;

(2) The IHA has not carried out its

activities under the CGP program in a

timely manner and in accordance with

its Comprehensive Plan or HUD

requirements, as described in paragraph

(a)(1) of this section;

(3) The IHA does not have a

continuing capacity to carry out its

Comprehensive Plan in a timely manner

or in accordance with its

Comprehensive Plan or HUD

requirements, as described in paragraph

(a)(2) of this section;

(4) The IHA has not satisfied, or has

not made reasonable progress towards

satisfying, the performance standards

specified in paragraph (a)(3) of this

section;

(5) An audit conducted in accordance

with 24 CFR part 44 and § 950.120, or

pursuant to other HUD reviews

(including monitoring findings) reveals

deficiencies that HUD reasonably

believes require corrective action;

(6) The IHA has failed to repay HUD

for amounts awarded under the CGP

program that were improperly

expended; or

(7) The IHA has been determined to

be high risk, in accordance with

§ 950.135.

(e) Types of corrective action. HUD

may direct an IHA to take one or more

of the following corrective actions:

(1) Submit additional information:

(i) Concerning the IHA’s

administrative, planning, budgeting,

accounting, management, and

evaluation functions, to determine the

cause for an IHA not meeting the

standards in paragraphs (a)(1), (2), or (3)

of this section;

(ii) Explaining any steps the IHA is

taking to correct the deficiencies;

(iii) Documenting that IHA activities

were not inconsistent with the IHA’s

annual statement or other applicable

laws, regulations, or program

requirements; and

(iv) Demonstrating that the IHA has a

continuing capacity to carry out the

Comprehensive Plan in a timely

manner;

(2) Submit detailed schedules for

completing the work identified in its

Annual Statements and report

periodically on its progress on meeting

the schedules;

(3) Notwithstanding 24 CFR 85.36(g),

submit to HUD the following documents

for prior approval, which may include,

but are not limited to:

(i) Proposed agreement with the

architect/engineer (prior to execution);

(ii) Complete construction and bid

documents (prior to soliciting bids);

(iii) Proposed award of contracts,

including construction and equipment

contracts and management contracts; or

(iv) Proposed contract modifications

prior to issuance, including

modifications to construction and

equipment contracts, and management

contracts.

(4) Submit additional material in

support of one or more of the

statements, resolutions, and

certifications submitted as part of the

IHA’s Comprehensive Plan, Five-Year

Action Plan, or Performance and

Evaluation Report;

(5) Submit additional material in

support of one or more of the

statements, resolutions, and

certifications submitted as part of the

IHA’s Comprehensive Plan, Five-Year

Action Plan, or Performance and

Evaluation Report;

(6) Reimburse, from non-HUD

sources, one or more program accounts

for any amounts improperly expended;

(7) Take such other corrective actions

HUD determines appropriate to correct

IHA deficiencies;

(8) Submit to an alternative

management strategy which may

involve third-party oversight or

administration of the modernization

function (see § 950.669(d)); and

(9) Take such other corrective actions

HUD determines appropriate to correct

IHA deficiencies.

(f) Failure to take corrective action. In

cases in which HUD has ordered

corrective action and the IHA has failed

to take the required actions within a

reasonable time, as specified by HUD,

HUD may take one or more of the

following steps:

(1) Withhold some or all of the IHA’s

grant;

(2) Declare a breach of the ACC grant

amendment with respect to some or all

of the IHA’s functions; or

(3) Any other sanction authorized by

law or regulation.

(g) Reallocation of funds that have

been withheld. If HUD has withheld for

a prescribed period of time some or all

of an IHA’s annual grant, HUD may

reallocate such amounts to other IHAs/

PHAs under the CGP program, subject to

approval in appropriations acts. The

reallocation shall be made to IHAs that

HUD has determined to be

administratively capable under

§ 950.135, and to PHAs under the CGP

program that are not designated as

either troubled or mod troubled under

the PHMAP at 24 CFR part 901, based

upon the relative needs of these IHAs

and PHAs, as determined under the

formula at § 950.601.

(h) Right to appeal. Before

withholding some or all of the IHA’s

annual grant, declaring a breach of the

ACC grant amendment, or reallocating

funds that have been withheld, HUD

will notify the IHA and give it an

opportunity, within a prescribed period
18258 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

of time, to present to ONAP

Headquarters, in writing, any arguments

or additional facts and data concerning

the proposed action.

(i) Notification of residents. The IHA’s

Board of Commissioners shall notify

affected residents of HUD’s final

determination to withhold funds,

declare a breach of the ACC grant

amendment, or reallocate funds, as well

as the basis for, and the consequences

resulting from, such a determination.

(j) Recapture. In addition, HUD may

recapture for good cause any grant

amounts previously provided to an IHA,

based upon a determination that the

IHA has failed to comply with the

requirements of the CGP program.

Before recapturing any grant amounts,

HUD will notify the IHA and give it an

opportunity to appeal in accordance

with § 950.687(h). Any reallocation of

recaptured amounts will be in

accordance with § 950.687(g). The IHA’s

board of Commissioners shall notify

affected residents of HUD’s final

determination to recapture any funds.

Subpart J—Operating Subsidy

§ 950.701 Purpose and applicability.

(a) Implementation of section 9(a).

(1) The purpose of this subpart is to

establish standards and policies for the

distribution of operating subsidy in

accordance with section 9(a) of the

United States Housing Act of 1937 (42

U.S.C. 1437g(a)). Section 9(a) authorizes

the Secretary of Housing and Urban

Development (HUD) to make annual

contributions for the operation of IHAowned rental housing (operating

subsidy).

(2) This subpart establishes standards

for the cost of providing comparable

services as determined in accordance

with a formula representing the

operations of a prototype well-managed

project, taking into account the

character and location of the project and

the characteristics of the families

served. These standards, policies, and

procedures are called the Performance

Funding System (PFS), as described in

this subpart J. The provisions of PFS are

intended to recognize and give an

incentive for efficient and economical

management and to avoid the

expenditure of federal funds to

compensate for excessive costs

attributable to poor or inefficient

management. PFS is intended to provide

the incentive and financial discipline

for excessively high-cost IHAs to

improve their management efficiency.

(b) Applicability. This subpart is

applicable to all IHA-owned rental units

under Annual Contributions Contracts.

This subpart J is not applicable to the

Section 23 Leased Housing Program, the

Section 23 Housing Assistance

Payments Program, the Section 8

Housing Assistance Payments Program,

the Mutual-Help Program, or the

Turnkey III Homeownership

Opportunity Program. Provisions

regarding an operating subsidy for the

homeownership programs are found in

the applicable subpart of this rule

(subpart E of this part for Mutual Help,

and subpart G of this part for Turnkey

III).

§ 950.705 Determination of amount of

operating subsidy under PFS.

The amount of operating subsidy for

which each IHA is eligible shall be

determined as follows: The projected

operating income level is subtracted

from the total expense level (Allowable

Expense Level plus Utilities Expense

Level). These amounts are per-unit permonth dollar amounts, and shall be

multiplied by the Unit Months

Available. Transition funding, if

applicable, and other costs as specified

in paragraphs (b) through (e) of

§ 950.720 are then added to this total in

order to determine the total amount of

operating subsidy for the requested

budget year, exclusive of consideration

of the cost of an independent audit. As

an independent operating subsidy

eligibility factor, an IHA may receive

operating subsidy in an amount,

approved by HUD, equal to the actual or

estimated cost of the independent audit

to be prorated to operations of the IHAowned rental housing (under

§ 950.720(a)). (See § 950.730 regarding

adjustments.)

§ 950.710 Computation of Allowable

Expense Level.

The IHA shall compute its Allowable

Expense Level (AEL) using forms

prescribed by HUD, as follows:

(a) Computation of Base Year Expense

Level. The Base Year Expense Level

includes payments in lieu of taxes

(PILOT) required by a Cooperation

Agreement, even if PILOT is not

included in the approved operating

budget for the base year because of a

waiver of the requirements by the local

taxing jurisdiction(s). The Base Year

Expense Level includes all other

operating expenditures as reflected in

the IHA’s operating budget for the base

year approved by HUD except the

following:

(1) Utilities expense;

(2) Cost of an independent audit;

(3) Adjustments applicable to budget

years before the base year;

(4) Expenditures supported by

supplemental subsidy payments

applicable to budget years before the

base year;

(5) All other expenditures that are not

normal fiscal year expenditures as to

amount or as to the purpose for which

expended; and

(6) Expenditures that were funded

from a nonrecurring source of income.

(b) Adjustment. In compliance with

the six exclusions set forth in paragraph

(a) of this section, the IHA shall adjust

the AEL by excluding any of these items

from the Base Year Expense Level, if

this has not already been accomplished.

If such adjustment is made in the

second or some later fiscal year of the

PFS, the AEL shall be adjusted in the

year in which the adjustment is made,

but the adjustment shall not be applied

retroactively. If the IHA does not make

these adjustments, the HUD Area ONAP

shall compute the adjustments.

(c) Computation of ‘‘Formula Expense

Level.’’ The IHA shall compute its

Formula Expense Level (FEL) in

accordance with a HUD-prescribed

formula that estimates the cost of

operating an average unit in a particular

IHA’s inventory. The formula takes into

account such data as the number of two

or more bedroom units, ratio of two or

more bedroom units in high-rise family

projects, ratio of units with three or

more bedrooms, local government wage

rates, and number of pre-1940 rental

units occupied by poor households. It

uses weights and a local inflation factor

assigned each year to derive a Formula

Expense Level for the current year and

the requested budget year. The weights

of the formula and the formula are

subject to updating by HUD.

(d) Computation of Allowable

Expense Level. The IHA shall compute

its Allowable Expense Level as follows:

(1) Allowable Expense Level for first

budget year under PFS if Base Year

Expense Level does not exceed the top

of the range. The top of the range is

defined as: FEL plus $10.31 for fiscal

years starting before April 1, 1992, and

FEL multiplied by 1.15 for fiscal years

starting on or after April 1, 1992. Every

IHA whose Base Year Expense Level is

less than the top limit of the range shall

compute its AEL for the first budget year

under PFS by adding the following to its

Base Year Expense Level (before

adjustment under § 950.730);

(i) Any increase approved by HUD in

accordance with § 950.730(a);

(ii) The increase (decrease) between

the Formula Expense Level for the base

year and the Formula Expense Level for

the first budget year under PFS; and

(iii) The sum of the Base Year

Expense Level and any amounts

described in paragraphs (d)(1)(i) and (ii)
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18259

of this section multiplied by the local

inflation factor.

(2) Allowable Expense Level for first

budget year under PFS if Base Year

Expense Level exceeds the top of the

range. The top of the range is defined

as: FEL plus $10.31 for fiscal years

starting before April 1, 1992, and FEL

multiplied by 1.15 for fiscal years

starting on or after April 1, 1992. Every

IHA whose Base Year Expense Level

exceeds the top of the range shall

compute its AEL for the first budget year

under PFS by adding the following to

the top of the range (not to its Base Year

Expense Level, as in paragraph (d)(1) of

this section):

(i) The increase (decrease) between

the Formula Expense Level for the base

year and the Formula Expense Level or

the first budget year under PFS;

(ii) The sum of the figure equal to the

top of the range and the increase

(decrease) described in paragraph

(d)(2)(i) of this section, multiplied by

the local inflation factor. (If the Base

Year Expense Level is above the

allowable expense level, computed as

provided in paragraph (d) of this

section, the IHA may be eligible for

transition funding under § 950.735.)

(3) Allowable Expense Level for first

budget year under PFS for a new project.

A new project of a new IHA or a new

project of an existing IHA that the IHA

decides to place under a separate ACC,

which did not have a sufficient number

of units available for occupancy in the

base year to have a level of operations

representative of a full fiscal year of

operation is considered to be a ‘‘new

project.’’ The AEL for the first budget

year under PFS for a ‘‘new project’’ will

be based on the AEL for a comparable

project, as determined by the HUD Area

ONAP. The IHA may suggest a project

or projects it believes to be comparable.

(4) Allowable Expense Level for

budget years after the first budget year

under PFS that begins on or after April

1, 1986 and before April 1, 1992. For

each budget year after the first budget

year under PFS that begin on or after

April 1, 1986 and before April 1, 1992,

the AEL shall be computed as follows:

(i) The Allowable Expense Level shall

be increased by any increase to the AEL

approved by HUD under § 950.720(c);

(ii) The AEL for the current budget

year also shall be increased (or

decreased) by either:

(A) If the IHA has not experienced a

change in the number of its units in

excess of 5 percent or 1,000 units,

whichever is less, since the last

adjustment to the AEL based on

paragraph (d)(4)(ii)(B) of this section,

the AEL shall be increased by one-half

of one percent (.5 percent); or

(B) If the IHA has experienced a

change in the number of units in excess

of 5 percent or 1,000 units, whichever

is less, since the last adjustment to the

AEL based on this paragraph (d)(4)(ii)(B)

of this section, it shall use the increase

(decrease) between the Formula

Expense Level for the current budget

year and the Formula Expense Level for

the requested budget year. The IHA

characteristics that shall be used to

compute the Formula Expense Level for

the current budget year shall be the

same as those that were used for the

requested budget year when the last

adjustment to the AEL was made based

on this paragraph (d)(4)(ii)(B) of this

section, except that the number of

interim years in which the .5 percent

adjustment was made under paragraph

(d)(4)(ii)(A) of this section shall be

added to the average age that was used

for the last adjustment; and

(iii) The amount computed in

accordance with paragraphs (d)(4)(i) and

(ii) of this section shall be multiplied by

the local inflation factor.

Example:

FY 1987. Assume that: (1) The IHA has

experienced no change in the number of its

units;

(2) The AEL for the IHA’s FY 1986 is

$64.00; and

(3) The applicable local inflation factor is

6 percent (expressed as 1.06). The AEL for FY

1987 is $68.18, computed as follows:

1. Allowable Expense Level for FY

1986 .............................................. $64.00

2. Delta: Increase (or Decrease) in

Formula Expense Level ($64.00 ×

.5 percent) ..................................... .32

3. Sum (line 1 plus line 2) ................ 64.32

4. Local Inflation Factor .................... 1.06

5. Allowable Expense Level for FY

1987 (line 3 multiplied by line 4) ... 68.18

FY 1988. Assume that the IHA has

deprogrammed (e.g., demolished or sold) a

project that represents seven percent of its

units, and that the last time an adjustment to

the AEL was made based on paragraph

(d)(4)(ii)(B) of this section was in its FY 1985,

at which time the IHA had the following

characteristics for its requested budget year:

average age of 10 years, average project

height of 5 stories, and average unit size of

4 bedrooms. The Formula Expense Level for

the current budget year is calculated using 12

years (10 years plus two years in which the

standard .5 percent adjustment was used), 5

stories, and 4 bedrooms.

Also assume that Formula Expense Level

calculated based on these characteristics is

$70.00 and that the IHA average

characteristics for the requested budget year

are now an average age of 8 years, average

project height of 4 stories and average unit

size of 2 bedrooms, resulting in a Formula

Expense Level for the requested budget year

of $68.00. The Formula Expense Level for the

requested budget year, therefore, decreases

by $2.00. Assuming that the local inflation

factor is 4.5 percent (expressed as 1.045), the

AEL for FY 1988 is $69.16, computed as

follows:

1. Allowable Expense Level for FY

1987 .............................................. $68.18

2. Delta (or Decrease) in Formula

Expense Level ............................... (2.00)

3. Sum (line 1 plus line 2) ................ 66.18

4. Local Inflation Factor .................... 1.045

It should be noted that the Delta in line 2

of the example reflects the application of the

formula weights, constant, and local inflation

factor for the requested budget year applied

first to the IHA characteristics for the current

budget year and then to the IHA

characteristics for the requested budget year,

to determine the respective Formula Expense

Levels. The local inflation factor shown on

line 4 of the example is the same one used

in determining the Formula Expense Levels.

(5) Allowable Expense Level for

budget years after the first budget year

under PFS that begins on or after April

1, 1992. For each budget year after the

first budget year under PFS that begins

on or after April 1, 1992, the AEL shall

be computed as follows:

(i) The Allowable Expense Level shall

be increased by any increase to the AEL

approved by HUD under § 950.720(c);

(ii) The AEL for the Current Budget

Year also shall be adjusted as follows:

(A) Increased by one-half of one

percent (.5 percent); and

(B) If the IHA has experienced a

change in the number of units in excess

of 5 percent or 1,000 units, whichever

is less, since the last adjustment to the

AEL based on this paragraph (d)(5)(ii)(B)

of this section, it shall use the increase

(decrease) between the Formula

Expense Level for the Current Budget

Year and the Formula Expense Level for

the Requested Budget Year. The IHA’s

characteristics that shall be used to

compute the Formula Expense Level for

the Current Budget Year shall be the

same as those that applied to the

Requested Budget Year when the last

adjustment to the AEL was made based

on this paragraph (d)(5)(ii)(B) of this

section, except that the number of

interim years in which the .5 percent

adjustment was made under paragraph

(d)(5)(ii)(A) of this section shall be

added to the average age that was used

for the last adjustment.

(iii) The amount computed in

accordance with paragraphs (d)(5)(i) and

(ii) of this section shall be multiplied by

the Local Inflation Factor.
18260 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(6) Adjustment of Allowable Expense

Level for budget years after the first

budget year under PFS. HUD may adjust

the AEL of budget years after the first

year under PFS under the provisions of

§§ 950.710(b) or 950.720(c).

§ 950.715 Computation of Utilities Expense

Level.

(a) General. In recognition of the rapid

rises that occur in utilities costs, the

wide diversity among IHAs as to types

of utilities services used, the manner in

which utilities payments are allocated

between IHAs and tenants, and the fact

that utilities rates charged by suppliers

are beyond the control of the IHA, the

PFS treats utilities expenses separately

from other IHA expenses. Utilities

expenses are, therefore, excluded from

the IHA’s Allowable Expense Level, and

the PFS provides for computation of the

amount of operating subsidy for utilities

costs based upon a calculated utilities

expense of each IHA. Accordingly, the

IHA’s Utilities Expense Level for the

requested budget year shall be

computed by multiplying the Allowable

Utilities Consumption Level (AUCL)

per-unit per-month for each utility,

determined as provided in paragraph (c)

of this section, by the projected utility

rate determined as provided in

paragraph (b) of this section.

(b) Utilities rates. (1) The currently

applicable rates, with consideration of

adjustments and pass-throughs, in effect

at the time the operating budget is

submitted to HUD will be used as the

utilities rates for the requested budget

year, except that when the appropriate

utility commission has, before the date

of submission of the operating budget to

HUD, approved and published rate

changes to be applicable during the

requested budget year, the future

approved rates may be used as the

utilities rates for the entire requested

budget year.

(2) If an IHA takes action, such as a

well-head purchase of natural gas, or

administrative appeals or legal action

beyond normal public participation in

rate-making proceedings to reduce the

rate it pays for utilities (including water,

fuel oil, electricity, and gas), then the

IHA will be permitted to retain one-half

of the cost savings during the first 12

months attributable to its actions. Upon

determination that the action was costeffective in the first year, the IHA may

be permitted to retain one-half the

annual cost savings for an additional

period not to exceed six years, if the

actions continue to be cost-effective. See

also paragraph (f) of this section and

§ 950.730(c).

(c) Computation of ‘‘Allowable

Utilities Consumption Level.’’ The

Allowable Utilities Consumption Level

(AUCL) used to compute the Utilities

Expense Level of an IHA for the

requested budget year generally will be

based upon the availability of

consumption data. For project utilities

for which consumption data are

available for the entire rolling base

period, the computation will be in

accordance with paragraph (c)(1) of this

section. If data are not available for the

entire period, the computation will be

in accordance with paragraph (c)(2) of

this section, unless the project is a new

project, in which case the computation

will be in accordance with paragraph

(c)(3) of this section. For a project for

which the IHA has taken special energy

conservation measures that qualify for

special treatment in accordance with

paragraph (f)(1) of this section, the

computation of the AUCL may be made

in accordance with paragraph (c)(4) of

this section. The AUCL for all of an

IHA’s projects is the sum of the amounts

determined using all of the paragraphs

in this paragraph (c), as appropriate.

(1) Rolling Base Period System. For

project utilities with consumption data

for the entire rolling base period, the

AUCL is the average amount consumed

per unit per month during the rolling

base period, adjusted in accordance

with paragraph (d) of this section. The

IHA shall determine the average amount

of each of the utilities consumed during

the rolling base period (i.e., the 36-

month period ending 12 months prior to

the first day of the requested budget

year).

(i) IHA fiscal years affected. The

rolling base period shall be used to

compute the AUCL submitted with the

operating budgets. (ii) An example of a

rolling base is as follows:

IHA fiscal year (affected fiscal year)Rolling base period

Beginning Ending Begins Ends

1–1–92 ... 12–31–92

(1st

year).

1–1–88 12–31–90

1–1–93 ... 12–31–93

(2nd

year).

1–1–89 12–31–91

(2) Alternative method if data is not

available for the entire rolling base

period:

(i) If the IHA has not maintained or

cannot recapture consumption data

regarding a particular utility from its

records for the whole rolling base period

mentioned in paragraph (c)(1) of this

section, it shall submit consumption

data for that utility for the last 24

months of its rolling base period to the

HUD Area ONAP for approval. If this is

not possible, it shall submit

consumption data for the last 12 months

of its rolling base period. The IHA also

shall submit a written explanation of the

reasons that data for the whole rolling

base period is unavailable.

(ii) In those cases when an IHA has

not maintained or cannot recapture

consumption data for a utility for the

entire rolling base period, comparable

consumption for the greatest of either

36, 24, or 12 months, as needed, shall

be used for the utility for which the data

is lacking. The comparable consumption

shall be estimated based upon the

consumption experienced during the

rolling base period of comparable

project(s) with comparable utility

delivery systems and occupancy. The

use of actual and comparable

consumption by each IHA, other than

those IHAs defined as new projects in

paragraph (c)(3) of this section, will be

determined by the availability of

complete data for the entire 36-month

rolling base period. Appropriate utility

consumption records, satisfactory to

HUD, shall be developed and

maintained by all IHAs so that a 36-

month rolling average utility

consumption per unit per month under

paragraph (c)(1) of this section can be

determined.

(iii) If an IHA cannot develop the

consumption data for the rolling base

period or for 12 or 24 months of the

rolling base period, either from its own

project(s) data, or by using comparable

consumption data the actual per-unit

per-month utility expenses stated in

paragraph (d) of this section shall be

used as the Utilities Expense Level.

(3) Computation of Allowable Utilities

Consumption Levels for New Projects. (i)

A new project, for the purpose of

establishing the rolling base period and

the Utilities Expense Level, is defined as

either:

(A) A project that had not been in

operation during at least 12 months of

the rolling base period, or a project that

enters management after the rolling base

period and before the end of the

requested budget year; or

(B) A project that during or after the

rolling base period, has experienced

conversion from one energy source to

another, interruptible service,

deprogrammed units, a switch from

tenant-purchased to IHA-supplied

utilities, or a switch from IHA-supplied

to tenant-purchased utilities.

(ii) The actual consumption for new

projects shall be determined so as not to

distort the rolling base period in

accordance with a method prescribed by

HUD.

(4) Freezing the Allowable Utilities

Consumption Level (AUCL). (i)
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18261

Notwithstanding the provisions of

paragraphs (c)(1) and (c)(2) of this

section, if an IHA undertakes energy

conservation measures that are

approved by HUD under paragraph (f) of

this section, the AUCL for the project

and the utilities involved may be frozen

during the contract period. Before the

AUCL is frozen, it shall be adjusted to

reflect any energy savings resulting from

the use of any HUD funding. The AUCL

is then frozen at the level calculated for

the year during which the conservation

measures initially will be implemented,

as determined in accordance with

paragraph (g) of this section.

(ii) If the AUCL is frozen during the

contract period, the annual three-year

rolling base procedures for computing

the AUCL shall be reactivated after the

IHA satisfies the conditions of the

contract. The three years of

consumption data to be used in

calculating the AUCL after the end of

the contract period will be as follows:

(A) First year: The energy

consumption during the year before the

year in which the contract ended and

the energy consumption for each of the

two years before installation of the

energy conservation improvements;

(B) Second year: The energy

consumption during the year the

contract ended, energy consumption

during the year before the contract

ended, and energy consumption during

the year before installation of the energy

conservation improvements;

(C) Third year: The energy

consumption during the year after the

contract ended, energy consumption

during the year the contract ended, and

energy consumption during the year

before the contract ended.

(d) Utilities Expense Level when

consumption data for the full rolling

base period is unavailable. If an IHA

does not obtain the consumption data

for the entire rolling base period, or for

12 or 24 months of the rolling base

period, either for its own project(s) or by

using comparable consumption data as

required in paragraph (c)(2) of this

section, it shall request HUD Area

ONAP approval to use actual per-unit

per-month utility expenses. These

expenses shall exclude utilities labor

and other utilities expenses. The actual

per-unit per-month utility expenses

shall be taken from the year-end

statement of operating receipts and

expenditures Form HUD–52599 (Office

of Management and Budget approval

number 2577–0067), prepared for the

IHA fiscal year that ended 12 months

before the beginning of the IHA

requested budget year (e.g., for an IHA

fiscal year beginning January 1, 1983,

the IHA would use data from the fiscal

year ended December 31, 1981).

Subsequent adjustments will not be

approved for a budget year for which

the utility expense level is established

based upon actual per-unit per-month

utility expenses.

(e) Adjustments. IHAs shall request

adjustments of utilities expense levels

in accordance with § 950.730(c), which

requires an adjustment based upon a

comparison of actual experience and

estimates of consumption and of utility

rates.

(f) Incentives for energy conservation

improvements. If an IHA undertakes

energy conservation measures

(including measures to save water, fuel

oil, electricity , and gas) that are

financed by an entity other than the

Secretary, such as physical

improvements financed by a loan from

a utility or governmental entity,

management of costs under a

performance contract, or a shared

savings agreement with a private energy

service company, the IHA may qualify

for one of two possible incentives under

this part. For an IHA to qualify for these

incentives, it shall obtain HUD

approval. Approval will be based upon

a determination that payments under

the contract can be funded from the

reasonably anticipated energy cost

savings, and the contract period does

not exceed 12 years.

(1) If the contract allows the IHA’s

payments to be dependent on the cost

savings it realizes, the IHA shall use at

least 50 percent of the cost savings to

pay the contractor. With this type of

contract, the IHA may take advantage of

a frozen AUCL under paragraph (c)(4) of

this section, and it may use the full

amount of the cost savings, as described

in § 950.730(c)(2)(ii).

(2) If the contract does not allow the

IHA’s payments to be dependent on the

cost savings it realizes, then the AUCL

will continue to be calculated in

accordance with paragraphs (c)(1)

through (c)(3) of this section, as

appropriate; the IHA will be able to

retain part of the cost savings, in

accordance with § 950.730(c)(2)(i); and

the IHA will qualify for additional

operating subsidy eligibility (above the

amount based on the allowable expense

level) to cover the cost of amortizing the

improvement loan during the term of

the contract, in accordance with

§ 950.730(f).

§ 950.720 Other costs.

(a) Costs of independent audits. (1)

Eligibility to receive operating subsidy

for independent audits is considered

separately from the PFS. However, the

IHA shall not request, nor will HUD

approve, an operating subsidy for the

cost of an independent audit if the audit

has been funded by subsidy in a prior

year. The IHA’s estimate of cost of the

independent audit is subject to

adjustment by HUD. If the IHA requires

assistance in determining the amount of

cost to be estimated, it should contact

the HUD Area ONAP.

(2) An IHA that is required by the

Single Audit Act (31 U.S.C. 7501–7507)

(see 24 CFR part 44) to conduct a regular

independent audit may receive

operating subsidy to cover the cost of

the audit. The amount shall be prorated

between the IHA’s development cost

budget and one or all of its operating

budgets, as appropriate. The estimated

cost of an independent audit, applicable

to the operations of IHA-owned rental

housing, is not included in the

Allowable Expense Level, but it is

allowed in full in computing the

amount of operating subsidy under

§ 950.705.

(3) An IHA that is exempt from the

audit requirements of the Single Audit

Act (31 U.S.C. 7501–7507) (see 24 CFR

part 44) may receive operating subsidy

to offset the cost of an independent

audit chargeable to operations (after the

end of the initial operating period) if the

IHA chooses to have an audit.

(b) Costs attributable to units

approved for deprogramming and

vacant. (1) Units approved for

deprogramming are those for which the

IHA’s formal request has been approved

by HUD but for which deprogramming

has not been completed. Costs for these

units may be eligible for inclusion, but

shall be limited to the minimum

services and protection necessary to

protect and preserve the units until the

units are deprogrammed. Costs

attributable to units temporarily

unavailable for occupancy because they

are utilized for IHA-related activities are

not eligible for inclusion. In

determining the PFS operating subsidy,

these units shall not be included in the

calculation of unit months available.

Units approved for deprogramming

shall be listed by the IHA and

supporting documentation regarding

direct costs attributable to such units

shall be included as part of the

operating budget in which the IHA

requests operating subsidy for these

units. If the IHA requires assistance in

this matter, it should contact the HUD

Area ONAP.

(2) Units approved for nondwelling

use to promote economic selfsufficiency services and anti-drug

activities are eligible for operating

subsidy under the conditions provided

in this paragraph (b)(2), and the costs

attributable to them are to be included

in the operating budget. If a unit
18262 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

satisfies the conditions stated in

paragraphs (b)(2) (i) through (v) of this

section, it will be eligible for subsidy at

the rate of the AEL for the number of

months the unit is devoted to such use.

Approval will be given for a period of

no more than three years. Renewal of

the approval to allow payments after

that period may be made only if the IHA

can demonstrate that no other sources

for paying the nonutility operating costs

of the unit are available:

(i) The unit shall be used for either

economic self-sufficiency activities

directly related to maximizing the

number of employed residents or for

anti-drug programs directly related to

ridding the development of illegal drugs

and drug-related crime. The activities

shall be directed toward and for the

benefit of residents of the development.

(ii) The IHA shall demonstrate that

space for the service or program is not

available elsewhere in the locality and

that the space used is safe and suitable

for its intended use or that resources are

committed to make the space safe and

suitable.

(iii) The IHA shall demonstrate

satisfactorily that other funding is not

available to pay for the nonutility

operating costs. All rental income

generated as a result of the activity shall

be reported as income in the operating

subsidy calculation.

(iv) Operating subsidy may be

approved for only one site (involving

one or more contiguous units) per

Indian housing development for

economic self-sufficiency services or

anti-drug programs, and the number of

units involved should be the minimum

necessary to support the service or

program. Operating subsidy for any

additional sites per development can

only be approved by HUD Headquarters.

(v) The IHA shall submit a

certification with its Performance

Funding System calculation that the

units are being used for the purpose for

which they were approved and that any

rental income generated as a result of

the activity is reported as income in the

operating subsidy calculation. The IHA

shall maintain specific documentation

of the units covered. Such

documentation should include a listing

of the units and project/management

control numbers.

(c) Costs attributable to changes in

Federal law or regulation. In the event

that HUD determines that enactment of

a Federal law or revision in HUD or

other Federal regulations have caused or

will cause a significant increase in

expenditures of a continuing nature

above the Allowable Expense Level and

Utilities Expense Level, and upon a

determination that sufficient other

funds are not available to cover the

required expenditures, HUD may in

HUD’s sole discretion decide to

prescribe a procedure under which the

IHA may apply for or may receive an

increase in operating subsidy.

(d) Costs beyond the control of the

IHA. Costs attributable to unique

circumstances that are beyond the

control of the IHA and were not

reflected in the IHA’s Base Year

Expense Level may be considered for

supplemental operating subsidy

funding. When costs were reflected in

the IHA’s Base Year Expense Level, but

the rate of increase for such costs is

greater than the prescribed PFS inflation

rate(s), then the increase in excess of

that provided by the inflation rate may

be considered for supplemental

operating subsidy funding. The IHA

shall submit to the HUD Area ONAP

complete documentation relating to

those cost items that it claims to be

beyond its control. Such documentation

shall not be submitted as part of the

requested operating budget, but shall be

submitted separately as an addendum to

the budget. The IHA also shall show

that these additional costs cannot be

funded from its own resources. In the

event that excess funds are available

after making all payments approvable

under §§ 950.705 and 950.720 of this

chapter, HUD may, in HUD’s sole

discretion, solicit, evaluate, and approve

or disapprove, in full or in part, these

requests for additional operating

subsidy for costs beyond the control of

the IHA.

(e) Costs resulting from combination

of two or more units. When an IHA

redesigns or rehabilitates a project and

combines two or more units into one

larger unit, and the combination of units

results in a unit that houses at least the

same number of people as were

previously served, the AEL for the

requested year shall be multiplied by

the number of unit months not included

in the requested year’s unit months

available as a result of these

combinations that have occurred since

the Base Year. The number of people

served in a unit will be based on the

formula [(2 × No. of bedrooms) minus

1], which yields the average number of

people that would be served. An

efficiency unit will be counted as a one

bedroom unit for purposes of this

calculation.

(f) User fee. Additional operating

subsidy will be provided to IHAs for

payment of an annual User Fee separate

from the PFS. An IHA operating a rental

program shall pay an annual User Fee

to municipalities, which may include

tribal, city, county governments or other

political subdivisions that provide any

roads, water supply, sewage facilities,

electrical systems, or fuel distribution

systems. The annual User Fee will be

paid in an amount equal to 10 percent

of the applicable shelter rent, minus the

utility allowance; or $150, whichever is

greater, for each rental housing unit

covered by this section.

(g) Funding for resident organization

expenses. In accordance with the

provisions of 24 CFR Part 950, subpart

O, and procedures determined by HUD,

each IHA with a duly elected resident

organization shall include in the

operating subsidy eligibility calculation

$25 per unit per year (subject to

appropriations) for each unit

represented by a duly-elected resident

organization in support of the duly

elected resident organization’s

activities.

§ 950.725 Projected operating income

level.

(a) Policy. PFS determines the amount

of operating subsidy for a particular IHA

based in part upon a projection of the

actual dwelling rental income and other

income for the particular IHA. The

projection of dwelling rental income is

obtained by computing the average

monthly dwelling rental charge per unit

for the IHA, and projecting this amount

for the requested budget year by

applying an upward trend factor

(subject to updating) of three percent,

and multiplying this amount by the

projected occupancy percentage for the

requested budget year. Nondwelling

income is projected by the IHA subject

to adjustment by HUD. There are special

provisions for projection of dwelling

rental income for new projects.

(b) Computation of projected average

monthly dwelling rental income. The

projected average monthly dwelling

rental income per unit for the IHA is

computed as follows:

(1) Average monthly dwelling rental

charge per unit. The dollar amount of

the average monthly dwelling rental

charge per unit shall be computed on

the basis of the total dwelling rental

charges (total of the adjusted rent roll

amounts) for all project units, as shown

on the rent roll control and analysis of

dwelling rent charges, which the IHA is

required to maintain, for the first day of

the month that is six months before the

first day of the requested budget year,

except that if a change in the total of the

rent rolls has occurred in a subsequent

month that is before the beginning of the

requested budget year and before the

submission of the requested budget year

operating budget, the IHA shall use the

latest changed rent roll for the purpose

of the computation. This aggregate

dollar amount shall be divided by the
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18263

number of occupied dwelling units as of

the same date.

(2) Three percent increase. The

average monthly dwelling rental charge

per unit, computed under paragraph

(b)(1) of this section, is increased by

three percent to obtain the projected

average monthly dwelling rental charge

per unit of the IHA for the requested

budget year.

(3) Projected occupancy percentage.

The IHA shall determine its projected

percentage of occupancy for all project

units (projected occupancy percentage)

as follows:

(i) High occupancy IHAs. If the IHA’s

actual occupancy percentage (see

§ 950.760) is equal to or greater than 97

percent, the IHA’s projected occupancy

percentage is 97 percent.

(ii) High occupancy IHAs exclusive of

scheduled modernization. If the IHA’s

actual occupancy percentage (see

§ 950.760) is less than 97 percent solely

because of vacant, on-schedule

modernization units described in

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

IHA’s projected occupancy percentage is

its actual occupancy percentage. An

IHA may also use its actual occupancy

percentage as its projected occupancy

percentage if the IHA has five or fewer

vacant units other than vacant, onschedule modernization units described

in paragraph (b)(3)(v) of this section.

(iii) Low occupancy IHAs with an

approved Comprehensive Occupancy

Plan (COP). If the IHA has an actual

occupancy percentage (see § 950.760)

less than 97 percent and more than five

vacant units, not solely because of

vacant, on-schedule modernization

units described in paragraph (b)(3)(v) of

this section, and if the IHA has a HUDapproved COP, the IHA’s projected

occupancy percentage is determined

under § 950.770(g).

(iv) Low Occupancy IHAs without an

approved COP. (A) The IHA shall use 97

percent as its projected occupancy

percentage, if the IHA:

(1) Has an actual occupancy

percentage (see § 950.760) less than 97

percent and has more than five vacant

units, not solely because of vacant, onschedule modernization units described

in paragraph (b)(3)(v) of this section;

and the IHA:

(2)(i) Has completed the term of its

approved COP but has not achieved a 97

percent actual occupancy percentage or

has not had five or fewer vacant units

other than vacant, on-schedule

modernization units described in

paragraph (b)(3)(v) of this section; or

(ii) Is authorized to submit a COP but

elects not to submit one; or

(iii) Submits a COP that is

disapproved by HUD.

(B) Notwithstanding the requirement

in paragraph (b)(3)(iv)(A) of this section

that 97 percent be the projected

occupancy percentage, a low occupancy

IHA that satisfies all the conditions

described in paragraph (b)(3)(iv)(A)(2)(i)

of this section, may adjust the 97

percent projected occupancy percentage

to discount units that are vacant for

reasons beyond its control, as provided

in § 950.770(h).

(v) Vacant, on-schedule

modernization units. Vacant, onschedule modernization units are vacant

units in an otherwise occupiable project

that has received funding for

modernization through the

Comprehensive Improvement

Assistance Program (subpart I of this

part) or other sources; and for which:

(A) It is expected that the vacant units

will be occupied on completion of

modernization work;

(B) The IHA has a schedule for

carrying out the modernization that is

acceptable to HUD; and

(C) The modernization work is on

schedule.

(4) Projected average monthly

dwelling rental income. The projected

occupancy percentage under paragraph

(b)(3) of this section shall be multiplied

by the projected average monthly

dwelling rental charge under paragraph

(b)(2) of this section to obtain the

projected monthly dwelling rental

income per unit.

(c) Projected average monthly

dwelling rental charge per unit for new

projects. The projected average monthly

dwelling rental charge for new projects

that were not available for occupancy

during the budget year before the

requested budget year and that will

reach the end of the initial operating

period (EIOP) within the first nine

months of the requested budget year,

shall be calculated as follows:

(1) If the IHA has another project or

projects under management that are

comparable in terms of elderly and

nonelderly tenant composition, the IHA

shall use the projected average monthly

dwelling rental charge for such project

or projects.

(2) If the IHA has no other projects

that are comparable in terms of elderly

and nonelderly tenant composition, the

HUD Area ONAP will provide the

projected average monthly dwelling

rental charge for such project or

projects, based on comparable projects

located in the area.

(d) Estimate of additional dwelling

rental income. After implementation of

the provisions of any legislation enacted

or any HUD administrative action taken

after the effective date of these

regulations, which affects rent paid by

tenants of projects, each IHA shall

submit a revision of its annual operating

budget showing an estimate of any

change in rental income that it

anticipates as the result of the

implementation of said provisions. HUD

shall have complete discretion to adjust

the projected average monthly dwelling

rental charge per unit to reflect the

IHA’s estimate of change, or in the

absence of this submission, to reflect

HUD’s estimate of such change. HUD

also shall have complete discretion to

reduce or increase the operating subsidy

approved for the IHA current fiscal year

in an amount equivalent to the change

in the rental income.

(e) IHA’s estimate of income other

than dwelling rental income. (1)

Investment income. IHAs with an

estimated average cash balance of less

than $20,000, excluding investment

income earned from a funded

replacement reserve under § 950.666(f),

shall make a reasonable estimate of

investment income for the Requested

Budget Year. IHAs with an estimated

average cash balance of $20,000 or

more, excluding investment income

earned from a funded replacement

reserve under § 950.666(f), shall

estimate interest on general fund

investments based on the estimated

average yield for 91-day Treasury bills

for the IHA’s Requested Budget Year

(yield information will be provided by

HUD). The determination of average

cash balance will allow a deduction of

$10,000, plus $10 per unit for each unit

over 1,000, subject to a total maximum

deduction of $250,000. In all cases, the

estimated investment income amount

shall be subject to HUD approval. (See

§ 950.730(b)).

(2) Other income. All IHAs shall

estimate other income based on past

experience and a reasonable projection

for the requested budget year, which

estimate shall be subject to HUD

approval.

(3) Total. The estimated total amount

of income from investments and other

income, as approved, shall be divided

by the number of unit months available

to obtain a per-unit per-month amount.

Such amount shall be added to the

projected average dwelling rental

income per unit to obtain the projected

operating income level. This amount

shall not be subject to the provisions

regarding program income in 24 CFR

85.25.

(f) Required adjustments to estimates.

The IHA shall submit year-end

adjustments of projected operating

income levels in accordance with

§ 950.730(b), which covers investment

income.
18264 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

§ 950.730 Adjustments.

Adjustment information submitted to

HUD under this section shall be

accompanied by an original or revised

operating budget.

(a) Adjustment of Base Year Expense

Level. (1) Eligibility. An IHA with

projects that have been in management

for at least one full fiscal year, for which

operating subsidy is being requested

under the formula for the first time,

may, during its first budget year under

PFS, request HUD to increase its Base

Year Expense Level. Included in this

category are existing IHAs requesting

subsidy for a project or projects in

operation at least one full fiscal year

under separate ACC for which operating

subsidy has never been paid, except for

IPA audit costs. This request may be

granted by HUD, in its discretion, only

when the IHA establishes to HUD’s

satisfaction that the Base Year Expense

Level computed under § 950.710(a) will

result in operating subsidy at a level

insufficient to support a reasonable

level of essential services. The approved

increase cannot exceed the per-unit permonth amount by which the top of the

range exceeds the Base Year Expense

Level or $10.31.

(2) Procedure. An IHA that is eligible

for an adjustment under paragraph (a)(1)

of this section may only make a request

for such adjustment once for projects

under a particular ACC, at the time it

submits the operating budget for the

first budget year under PFS. Such

request shall be submitted to the HUD

Area ONAP, which will review, modify

as necessary, and approve or disapprove

the request. A request under this

paragraph shall include a calculation of

the amount per-unit per-month of

requested increase in the Base Year

Expense Level, and shall show the

requested increase as a percentage of the

Base Year Expense Level.

(b) Adjustments to estimated

investment income. An IHA that has an

estimated average cash balance of at

least $20,000 shall submit a year-end

adjustment to the estimated amount of

investment income that was used to

determine subsidy eligibility at the

beginning of the IHA’s fiscal year. The

amount of the adjustment will be the

difference between the estimate and a

target investment income amount based

on the actual average yield on 91-day

Treasury bills for the IHA’s fiscal year

being adjusted and the actual average

cash balance available for investment

during the IHA’s fiscal year, computed

in accordance with HUD requirements.

HUD will provide the IHA with the

actual average yield on 91-day Treasury

bills for the IHA’s fiscal year. Failure of

an IHA to submit the required

adjustment of investment income by the

date due may, in the discretion of HUD,

result in the withholding of approval of

future obligation of operating subsidies

until the adjustment is received.

(c) Adjustments to Utilities Expense

Level. An IHA receiving operating

subsidy under § 950.705, excluding

those IHAs that receive operating

subsidy solely for IPA audit

(§ 950.720(a)), shall submit a year-end

adjustment regarding the Utility

Expense Level approved for operating

subsidy eligibility purposes. This

adjustment, which will compare the

actual utility expense and consumption

for the IHA fiscal year to the estimates

used for subsidy eligibility purposes,

shall be submitted on forms prescribed

by HUD. This request shall be submitted

to the HUD Area ONAP by a deadline

established by HUD, which will be

during the IHA fiscal year following the

IHA fiscal year for which an operating

subsidy was received by the IHA,

exclusive of a subsidy solely for IPA

audit costs. Failure to submit the

required adjustment of the Utilities

Expense Level by the due date may, in

the discretion of HUD, result in the

withholding of approval of future

obligation of operating subsidies until it

is received. Adjustments under this

subsection normally will be made in the

IHA fiscal year following the year for

which the adjustment is applicable,

except as provided in paragraph (c)(5) of

this section or unless a repayment plan

is necessary as noted in paragraph (d) of

this section.

(1) Rates. (i) A decrease in the utilities

expense level because of decreased

utility rates—to the extent funded by

operating subsidy—will be deducted by

HUD from future operating subsidy

payments. However, when the rate

reduction covering utilities, such as

water, fuel oil, electricity, and gas, is

directly attributable to action by the

IHA, such as well-head purchase of

natural gas, or administrative appeals or

legal action beyond normal public

participation in ratemaking proceedings,

then the IHA will be permitted to retain

one-half of the cost savings attributable

to its actions for the first year, and upon

determination that the action was costeffective in the first year, for up to an

additional six years, as long as the

actions continue to be cost-effective,

and the other one-half of the cost

savings will be deducted from operating

subsidy otherwise payable.

(ii) An increase in the utilities

expense level because of increased

utility rates—to the extent funded by

operating subsidy—will be fully funded

by increased operating subsidy, subject

to availability of funds.

(2) Consumption. (i) Generally, 50

percent of any decrease in the Utilities

Expense Level attributable to decreased

consumption after adjustment for any

utility rate change, will be retained by

the IHA; 50 percent will be offset by

HUD against subsequent payment of

operating subsidy.

(ii) However, in the case of an IHA

whose energy conservation measures

have been approved by HUD as

satisfying the requirements of

§ 950.715(f)(1), the IHA may retain 100

percent of the savings from decreased

consumption after payment of the

amount due the contractor until the

term of the financing agreement is

completed. The decreased consumption

is to be determined by adjusting for any

utility rate changes. The savings

realized shall be applied in the

following order:

(A) Retention of up to 50 percent of

the total savings from decreased

consumption to cover training of IHA

employees, counseling of tenants, IHA

management of the cost reduction

program, and any other eligible costs;

and

(B) Prepayment of the amount due the

contractor under the contract.

(iii) Fifty percent of the increase in

the Utilities Expense Level attributable

to increased consumption will be

funded by increased operating subsidy

payments, subject to the availability of

funds.

(3) Emergency adjustments. In

emergency cases, when an IHA

establishes to HUD’s satisfaction that a

severe financial crisis would result from

a utility rate increase, the IHA may

submit to HUD an adjustment covering

only the rate increase at any time during

the IHA’s Current Budget Year. Unlike

the adjustments mentioned in

paragraphs (c)(1) and (c)(2) of this

section, the IHA shall submit this

adjustment to the HUD Area ONAP by

revision of the original submission of

the estimated Utility Expense Level for

the fiscal year to be adjusted.

(4) Documentation. The IHA shall

retain supporting documentation

substantiating the requested

adjustments pending HUD audit.

(d) Requests for adjustments to

projected average monthly dwelling

rental income. The IHA may make

requests for adjustments to projected

average monthly dwelling rental income

as follows:

(1) Criteria for granting request. An

IHA may request an adjustment to

projected average monthly dwelling

rental income under PFS if the IHA can

establish to HUD’s satisfaction that the

projected amount computed under

§ 950.725 was not attained because of
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18265

circumstances beyond the control of the

IHA, such as a substantial increase in

general unemployment in the locality,

or because of a revision of the IHA’s rent

schedule that has been approved by

HUD. The IHA shall also demonstrate to

HUD’s satisfaction that it has

established and is effectively

implementing tenant selection criteria

in compliance with HUD requirements.

HUD shall have complete discretion to

approve completely, approve in part, or

deny any requested adjustments to

projected average monthly dwelling

rental income.

(2) Procedure. The IHA shall submit

a request for an adjustment under this

subsection to the HUD Area ONAP by

a deadline established by HUD, which

will be within twelve months following

the IHA’s fiscal year being adjusted. In

emergency cases, however, when an

IHA establishes to HUD’s satisfaction

that decreased rental income would

result in a severe financial crisis, the

IHA may submit a request for

adjustments to HUD at an earlier time.

(e) Energy conservation financing. If

HUD has approved an energy

conservation contract under

§ 950.715(f)(2), then the IHA is eligible

for additional operating subsidy each

year of the contract to amortize the cost

of the energy conservation measures

under the contract, subject to a

maximum annual limit equal to the cost

savings for that year (and a maximum

contract period of 12 years).

(1) Each year, the energy cost savings

would be determined as follows:

(i) The consumption level that would

have been expected if the energy

conservation measure had not been

undertaken would be adjusted for the

Heating Degree Days experience for the

year, and for any change in utility rate.

(ii) The actual cost of energy (of the

type affected by the energy conservation

measure) after implementation of the

energy conservation measure would be

subtracted from the expected energy

cost, to produce the energy cost savings

for the year. (See also paragraph

(c)(2)(ii) of this section for retention of

consumption savings.)

(2) If the cost savings for any year

during the contract period is less than

the amount of operating subsidy to be

made available under this paragraph (e)

to pay for the energy conservation

measure in that year, the deficiency will

be offset against the IHA’s operating

subsidy eligibility for the IHA’s next

fiscal year.

(3) If energy cost savings are less than

the amount necessary to meet

amortization payments specified in a

contract, the contract term may be

extended (up to the 12-year limit) if

HUD determines that the shortfall is the

result of changed circumstances rather

than a miscalculation or

misrepresentation of projected energy

savings by the contractor or IHA. The

contract term may only be extended to

accommodate payment to the contractor

and associated direct costs.

(f) Formal review process (1992). (1)

Eligibility for consideration. Any IHA

with an established Allowable Expense

Level may request to use a revised

Allowable Expense Level for its

requested budget year that starts on or

after April 1, 1992 (and ends during

calendar year 1993).

(2) Eligibility for adjustment. (i) If an

IHA’s AEL for the budget year that ends

during calendar year 1992 is either less

than 85 percent of the Formula Expense

Level or more than 115 percent of the

Formula Expense Level, as calculated

using the revised formula and the

characteristics for the IHA and its

community, then the IHA’s AEL for the

budget year that ends during calendar

year 1993 is subject to adjustment at the

IHA’s request. The revised formula

expense level for the fiscal year ending

during calendar year 1992 is the IHA’s

value of the following formula, after

updating by the local inflation factors

from FY 1989 to the requested budget

year.

(ii) The revised formula is the sum of

the following six numbers:

(A) The number of pre-1940 rental

units occupied by poor households in

1980 as a percentage of the 1980

population of the community multiplied

by a weight of 7.954. This Census-based

statistic applies to the county of the

IHA, except that, if the IHA has 80

percent or more of its units in an

incorporated city of more than 10,000

persons, it uses city-specific data.

County data will exclude data for any

incorporated cities of more than 10,000

persons within its boundaries.

(B) The Local Government Wage Rate

multiplied by a weight of 116.496. The

wage rate used is a figure determined by

the Bureau of Labor Statistics. It is a

county-based statistic, calibrated to a

unit-weighted IHA standard of 1.0. For

multi-county IHAs, the local

government wage is unit-weighted. For

this formula, the local government wage

index for a specific county cannot be

less than 85 percent or more than 115

percent of the average local government

wage for counties of comparable

population and metro/non-metro status,

on a state-by-state basis. In addition, for

counties of more than 150,000

population in 1980, the local

government wage cannot be less than 85

percent or more than 115 percent of the

wage index of private employment

determined by the Bureau of Labor

Statistics and the rehabilitation cost

index of labor and materials determined

by the R.S. Means Company.

(C) The lesser of the current number

of the IHA’s two or more bedroom units

available for occupancy, or 15,000 units,

multiplied by a weight of .002896.

(D) The current ratio of the number of

the IHA’s two or more bedroom units

available for occupancy in high-rise

family projects to the number of all the

IHA’s units available for occupancy

multiplied by a weight of 37.294. For

this indicator, a high-rise family project

is defined as averaging 1.5 or more

bedrooms per unit available for

occupancy, averaging 35 or more units

available for occupancy per building,

and containing at least one building

with units available for occupancy that

is five or more stories high.

(E) The current ratio of the number of

the IHA’s three or more bedroom units

available for occupancy to the number

of all the IHA’s units available for

occupancy multiplied by a weight of

22.303.

(F) An equation calibration constant

of –.2344.

(3) Procedure. If an IHA wants to

request a revision to its AEL, it should

determine whether its AEL for the fiscal

year ending in calendar year 1992 (for

purposes of this section, the ‘‘unrevised

AEL’’) is either less than 85 percent of

the Formula Expense Level or more than

115 percent of the Formula Expense

Level. Then, in lieu of using the

unrevised AEL as the basis for

developing the IHA’s AEL and operating

budget for the fiscal year ending in

calendar year 1993, the IHA will use 85

percent of the FEL (if this is higher than

the unrevised AEL) or 115 percent of the

FEL (if this is lower than the unrevised

AEL). If an IHA has submitted its

original operating budget before the

publication of a change to the PFS

handbook containing forms and

instructions necessary to

implementation of this regulatory

change, the IHA shall submit a revision

to its operating budget with calculations

based on the new AEL. If an IHA

requests such revision of its AEL in

connection with submission of an

operating budget and its current AEL is

within 85 to 115 percent of the FEL,

HUD will not adjust the AEL. If an IHA

requests revision and its AEL is not

within 85 to 115 percent of the FEL,

HUD will increase it to 85 percent or

decrease it to 115 percent. The revised

Allowable Expense Levels approved by

HUD will be put into effect for the IHA’s

budget year that begins on or after April

1, 1992 (and thus ends in calendar year

1993).
18266 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(g) Additional HUD-initiated

adjustments. Notwithstanding any other

provisions of this subpart, HUD may at

any time make an upward or downward

adjustment in the amount of the IHA’s

operating subsidy as result of data

subsequently available to HUD that

alters projections upon which the

approved operating subsidy was based.

Normally adjustments shall be made in

total in the IHA fiscal year in which the

needed adjustment is determined;

however, if a downward adjustment

would cause a severe financial hardship

on the IHA, the HUD Area ONAP may

establish a recovery schedule that

represents the minimum number of

years needed for repayment.

§ 950.735 Transition funding for excessive

high-cost IHAs.

If an IHA’s Base Year Expense Level

exceeds its Allowable Expense Level,

computed as provided in § 950.710, for

any budget year under PFS, the IHA

may be eligible for transition funding.

Transition funding shall be an amount

not to exceed the difference between the

Base Year Expense Level and the

Allowable Expense Level for the

requested budget year, multiplied by the

number of units months available. HUD

shall have the right to discontinue

payment of all or part of the transition

funding in the event HUD at any time

determines that the IHA has not

achieved a satisfactory level of

management efficiency, or is not making

efforts satisfactory to HUD to improve

its management performance.

§ 950.740 Operating reserves.

The IHA shall maintain an operating

reserve in an amount sufficient for

working capital purposes, estimated

future nonroutine maintenance

requirements for IHA-owned

administrative facilities, common

property and dwelling units, payment of

advanced insurance premiums,

unanticipated project requirements, and

other eligible uses as determined by the

IHA.

§ 950.745 Operating budget submission

and approval.

(a) Required documentation. (1) An

IHA shall prepare an operating budget

each fiscal year in a manner prescribed

by HUD. The board of commissioners

shall review and approve the budget by

resolution. Each fiscal year, the IHA

shall submit to the Area ONAP the

approved board resolution and the

necessary HUD-required PFS

calculation forms.

(2) The Area ONAP may direct an IHA

to submit a complete operating budget

if the IHA has been issued a corrective

action order with respect to financial

management. If such action is necessary,

the Area ONAP will notify the IHA prior

to the beginning of the fiscal year.

(b) HUD operating budget review. (1)

The HUD Area ONAP will perform a

detailed review on IHA operating

budgets that are subject to HUD review

and approval. If the HUD Area ONAP

finds that an operating budget is

incomplete, includes illegal or ineligible

expenditures, mathematical errors,

errors in the application of accounting

procedures, or is otherwise

unacceptable, the HUD Area ONAP may

at any time require the submission by

the IHA of further information regarding

an operating budget or operating budget

revision.

(2) When the IHA no longer is

operating in a manner that threatens the

future serviceability, efficiency,

economy, or stability of the housing,

HUD will notify the IHA that it no

longer is required to submit an

operating budget to HUD for review and

approval.

§ 950.750 Payment procedure for

operating subsidy under PFS.

(a) General. Subject to the availability

of funds, payments of operating subsidy

under PFS shall be made generally by

electronic funds transfers, based on a

schedule submitted by the IHA and

approved by HUD, reflecting the IHA’s

projected cash needs. The schedule may

provide for several payments per month.

If an IHA has an unanticipated,

immediate need for disbursement of

approved operating subsidy, it may

make an informal request to HUD to

revise the approved schedule. (Requests

by telephone are acceptable.)

(b) Payments procedure. In the event

that the amount of operating subsidy

has not been determined by HUD as of

the beginning of an IHA’s budget year

under these PFS regulations in this

subpart, annual, monthly, or quarterly

payments of operating subsidy shall be

made, as provided in paragraph (a) of

this section, based upon the amount of

the IHA’s operating subsidy for the

previous budget year or such other

amount as HUD may determine to be

appropriate.

(c) Availability of funds. In the event

that insufficient funds are available to

make payments approvable under PFS

for operating subsidy payable by HUD,

HUD shall have complete discretion to

revise, on a pro rata basis or other basis

established by HUD, the amounts of

operating subsidy to be paid to IHAs.

§ 950.755 Payments of operating subsidy

conditioned upon reexamination of income

of families in occupancy.

(a) Policy. The income and

composition of each family shall be

reexamined at least annually (see

§ 950.315). IHAs shall be in compliance

with this reexamination requirement to

be eligible to receive full operating

subsidy payments.

(b) IHAs in compliance with

requirements. Each submission of the

original operating budget for a fiscal

year shall be accompanied by a

certification by the IHA that it is in

compliance with the annual income

reexamination requirements and that

rents have been or will be adjusted in

accordance with subpart D of this part.

(c) IHAs not in compliance with

requirements. Any IHA not in

compliance with the annual income

reexamination requirement at the time

of operating budget submission shall

furnish to the HUD Area ONAP a copy

of the procedure it is using to attain

compliance and a statement of the

number of families that have undergone

reexamination during the twelve

months preceding the date of the

operating budget submission, or the

revision thereof. If, on the basis of such

submission, or any other information,

the Area ONAP Director determines that

the IHA is not substantially in

compliance with the annual income

reexamination requirement, HUD shall

withhold payments to which the IHA

might otherwise be entitled under this

part, equal to his or her estimate of the

loss of rental income to the IHA

resulting from its failure to comply with

those requirements.

§ 950.760 Determining actual occupancy

percentage.

(a) For each requested budget year

beginning on or after July 1, 1986, the

IHA shall determine the percentage of

occupancy for all project units included

in the unit months available (actual

occupancy percentage), at its option,

either:

(1) For the last day of the month that

ends six months before the beginning of

the requested budget year; or

(2) Based on the average occupancy

during the month ending six months

before the beginning of the requested

budget year.

(b) If the IHA elects to use an average,

it shall maintain a record of its

computation of its actual occupancy

percentage. The actual occupancy

percentage shall be adjusted to reflect

expected changes in occupancy because

of modernization, new development,

demolition, or disposition in order to

reflect the expected average occupancy
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18267

rate throughout the year. If, after that

date, there are changes, up or down, in

occupancy because of modernization,

new development, demolition, or

disposition not reflected in the

adjustment, the IHA shall submit a

budget revision to reflect the actual

change in occupancy due to these

actions.

§ 950.770 Comprehensive Occupancy Plan

(COP) requirements.

(a) IHAs that may submit a

Comprehensive Occupancy Plan (COP).

An IHA may prepare and submit a COP

to HUD in accordance with the

provisions of this section:

(1) For its first requested budget year

beginning on or after July 1, 1986, if the

IHA has an actual occupancy percentage

(§ 950.760) less than 97 percent, and has

more than five vacant units, not solely

because of vacant, on-schedule

modernization units (as defined in

§ 950.725(b)(3)(v)); or

(2) For a requested budget year

beginning on or after July 1, 1987, if:

(i) The IHA projects an actual

occupancy percentage (§ 950.760) for

the requested budget year of less than 97

percent and has more than five vacant

units, other than vacant, on-schedule

modernization units;

(ii) The IHA is not currently a low

occupancy IHA, that is, the IHA had an

actual occupancy percentage

determined under § 950.760 for the

current requested budget year that

equalled or exceeded 97 percent or had

five or fewer vacant units other than

vacant, on-schedule modernization

units; and

(iii) The IHA is not currently under a

COP.

(b) Comprehensive Occupancy Plan

content. A COP shall provide a general

IHA-wide strategy for returning to

occupancy or deprogramming all vacant

units and a specific strategy for

returning to occupancy or

deprogramming units for each project

that has an occupancy percentage of less

than 97 percent.

(1) The general IHA-wide strategy for

returning to occupancy or

deprogramming all vacant units shall

specify management actions the IHA is

taking or intends to take to eliminate

vacancies, such as revised occupancy

policies, actions to reduce time to return

vacated units to occupancy, and

identification of the need to use the

exception for nonelderly tenants in

elderly projects, and shall include a

schedule for completing these actions.

(2) The project-specific strategy shall:

(i) Identify each project that has a

percentage of occupancy less than 97

percent.

(ii) State the project-specific actions

the IHA is taking or intends to take to

eliminate vacancies, such as:

(A) Modernization;

(B) Demolition;

(C) Disposition;

(D) Change in occupancy policy; or

(E) Physical or management

improvements; and

(iii) For each project identified,

include a schedule for completing these

actions and returning the units to

occupancy.

(3) The COP shall also include yearly

IHA-wide occupancy goals and yearly

occupancy goals for each project with

an occupancy rate below 97 percent

stated for each year until there is a

projected IHA-wide occupancy rate of at

least 97 percent or an estimate that the

IHA will have five or fewer vacant units,

excluding units that are vacant, onschedule modernization units. These

goals should reflect the average

occupancy percentage for each year. The

yearly occupancy goals (both IHA-wide

and project specific) for the first year of

a COP that is submitted with an IHA’s

budget for its first requested budget year

beginning on or after July 1, 1986, shall

take into account actions taken by the

IHA from August 2, 1985, to reduce

vacancies.

(c) Time for submitting a

Comprehensive Occupancy Plan. An

IHA that submits a COP to HUD for

approval in accordance with paragraph

(a) of this section shall submit the COP

with its budget.

(d) Maximum term of a

Comprehensive Occupancy Plan. (1)

Except as provided in paragraph (d)(2)

of this section, a COP:

(i) Submitted for an IHA’s first

requested budget year beginning on or

after July 1, 1986, shall be for a period

approved by HUD as reasonable, which

shall not exceed five years; or

(ii) Submitted for a requested budget

year beginning on or after July 1, 1987,

shall be for a period of one or two years,

as approved by HUD.

(2) A COP that exceeds the maximum

period provided in paragraphs (d)(1)(i)

or (ii) of this section may be approved

only if the Assistant Secretary for Public

and Indian Housing has given written

authorization for such longer period

before the approval of the COP.

(e) Local governing body review. The

IHA shall have the COP reviewed by the

local governing body for comment and

shall submit any comments from the

local governing body to HUD with the

COP.

(f) HUD review of Comprehensive

Occupancy Plan. If HUD fails to

approve, disapprove, or otherwise

substantively comment on a COP within

45 days of receipt of the plan, the IHAwide yearly occupancy goal for the first

year of the COP shall be considered

approved for the purpose of determining

the IHA’s projected occupancy

percentage under paragraph (g) of this

section.

(g) Projected Occupancy Percentage

(Comprehensive Occupancy Plan). An

IHA that has a HUD-approved COP shall

use as its projected occupancy

percentage for computing its projected

operating income level under § 950.725

the greater of its actual occupancy

percentage, as determined under

§ 950.760, or its approved, yearly IHAwide occupancy goal, adjusted as

necessary to discount units that are

vacant for reasons beyond the IHA’s

control, as provided in paragraph (h) of

this section.

(h) Units vacant for reasons beyond

an IHA’s control. A vacant unit is

considered vacant for reasons beyond an

IHA’s control only if the unit is located

in a project that meets one of the

following conditions:

(1) The IHA has applied for

modernization, HUD cannot fund the

project because of lack of sufficient

funding, and it is expected that the units

will be occupied when the units are

modernized.

(2) The vacant units are vacant, onschedule modernization units.

(3) The units are vacant because of

natural disasters, or as a result of courtordered, or HUD-approved, constraints

relating to title VI of the Civil Rights Act

of 1964 (42 U.S.C. 2000d).

§ 950.772 Financial management systems,

monitoring, and reporting.

The financial management systems,

monitoring, and reporting on program

performance and financial reporting

will be in compliance with the

requirements of 24 CFR 85.20, 85.40,

and 85.41, except to the extent that HUD

requirements provide for additional

specialized procedures necessary to

permit the Secretary to make the

determinations regarding the payment

of operating subsidy specified in section

9(a)(1) of the United States Housing Act

of 1937 (42 U.S.C 1437g(a)(1)).

§ 950.774 Operating subsidy eligibility for

projects owned by IHAs in Alaska.

The provisions of this subpart are

applicable to the development,

modernization, and operation of the

rental housing owned by the IHAs in the

State of Alaska, excluding the formula

calculation for the PFS.
18268 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

Subpart K—Energy Audits, Energy

Conservation Measures and Utility

Allowances

§ 950.801 Purpose and applicability.

(a) Purpose. The purpose of this

subpart K is to implement HUD policies

in support of national energy

conservation goals by reducing energy

consumption through requiring that

IHAs conduct energy audits and

undertake certain cost-effective energy

conservation measures. This subpart K

also provides for the establishment of

utility allowances for residents based on

reasonable consumption of utilities by

an energy-conscious household.

(b) Applicability. The provisions of

this subpart K apply to all IHAs with

IHA-owned housing, including Mutual

Help and Turnkey III.

Energy Audits and Energy Conservation

Measures

§ 950.805 Requirements for energy audits.

All IHAs shall complete an energy

audit for each IHA-owned project under

management. Standards for energy

audits shall be equivalent to State or

tribal standards for energy audits.

Energy audits shall analyze all of the

energy conservation measures, and the

payback period for these measures, that

are pertinent to the type of buildings

and equipment operated by the IHA.

§ 950.810 Order of funding.

Within the funds available to an IHA,

energy conservation measures should be

accomplished with the shortest payback periods funded first. However,

HUD Area ONAPs should permit IHAs

to make adjustments to this funding

order because of insufficient funds to

accomplish high-cost energy

conservation measures (ECM), or a

situation in which an ECM with a longer

pay-back period can be more efficiently

installed in conjunction with other

planned modernization. Area ONAPs

may not authorize installation of

individual utility meters that measure

the energy or fuel used for space heating

in dwelling units that need substantial

weatherization, when installation of

meters would result in economic

hardship for residents. In these cases,

the ECMs related to weatherization shall

be accomplished before the installation

of individual utility meters.

§ 950.812 Funding.

(a) The cost of accomplishing costeffective energy conservation measures,

including the cost of performing energy

audits, shall be funded from operating

funds of the IHA to the extent feasible.

When sufficient operating funds are not

available for this purpose, such costs are

eligible for inclusion in a modernization

program, for funding from any available

development funds in the case of

projects still in development, or for

other available funds that HUD may

designate to be used for energy

conservation.

(b) If an IHA finances energy

conservation measures from sources

other than modernization or operating

reserves, such as on the basis of a

promise to repay, HUD may agree to

provide adjustments in its calculation of

the IHA’s operating subsidy eligibility

under the PFS for the project and utility

involved if the financing arrangement is

cost-beneficial to HUD. (See

§ 950.730(e)).

§ 950.815 Energy conservation equipment

and practices.

In purchasing original or, when

needed, replacement equipment, IHAs

shall acquire only equipment that meets

or exceeds the minimum efficiency

requirements established by the U.S.

Department of Energy. In the operation

of their facilities, IHAs shall follow

operating practices directed to

maximum energy conservation.

§ 950.822 Compliance schedule.

All energy conservation measures

determined by energy audits to be cost

effective shall be accomplished as funds

are available.

§ 950.825 Energy performance contracts.

Method of procurement. Energy

performance contracting shall be

conducted using one of the following

methods of procurement:

(a) Competitive proposals (see

§ 950.165(c)). In identifying the

evaluation factors and their relative

importance, as required by

§ 950.165(c)(1), the solicitation shall

state that technical factors are

significantly more important than price

(of the energy audit); or

(b) If the services are available only

from a single source, noncompetitive

proposals (see § 950.165(d)).

Individual Metering of Utilities

§ 950.840 Individually metered utilities.

(a) All utility service shall be

individually metered to residents, either

through provision of retail service to the

residents by the utility supplier or

through the use of checkmeters, unless:

(1) Individual metering is impractical,

such as in the case of a central heating

system in an apartment building;

(2) Change from a mastermetering

system to individual meters would not

be financially justified based upon a

benefit/cost analysis; or

(3) Checkmetering is not permissible

under State or local law, or under the

policies of the particular utility supplier

or public service commission.

(b) If checkmetering is not

permissible, retail service shall be

considered. Where checkmetering is

permissible, the type of individual

metering offering the most savings to the

IHA shall be selected.

§ 950.842 Benefit/cost analysis.

(a) A benefit/cost analysis shall be

made to determine whether a change

from a mastermetering system to

individual meters will be cost effective,

except as otherwise provided in

§ 950.846.

(b) Proposed installation of

checkmeters shall be justified on the

basis that the cost of debt service

(interest and amortization) of the

estimated installation costs plus the

operating costs of the checkmeters will

be more than offset by reduction in

future utilities expenditures to the IHA

under the mastermeter system.

(c) Proposed conversion to retail

service shall be justified on the basis of

net savings to the IHA. This

determination involves making a

comparison between the reduction in

utility expense obtained through

eliminating the expense to the IHA for

IHA-supplied utilities and the resultant

allowance for resident-supplied

utilities, based on the cost of utility

service to the residents after conversion.

§ 950.844 Funding.

The cost to change mastermeter

systems to individual metering of

resident consumption, including the

costs of benefit/cost analysis and

complete installation of checkmeters,

shall be funded from operating funds of

the IHA to the extent feasible. When

sufficient operating funds are not

available for this purpose, such costs are

eligible for inclusion in a modernization

project or for funding from any available

development funds.

§ 950.845 Order of conversion.

Conversions to individually metered

utility service shall be accomplished in

the following order when an IHA has

projects of two or more of the

designated categories, unless otherwise

approved by the HUD Area ONAP:

(a) In projects for which retail service

is provided by the utility supplier and

the IHA is paying all the individual

utility bills, no benefit/cost analysis is

necessary, and residents shall be billed

directly after the IHA adopts revised

payment schedules providing

appropriate allowances for residentsupplied utilities.

(b) In projects for which checkmeters

have been installed but are not being
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18269

utilized as the basis for determining

utility charges to the residents, no

benefit/cost analysis is necessary. The

checkmeters shall be used as the basis

for utility charges and residents shall be

surcharged for excess utility use.

(c) Projects for which meter loops

have been installed for utilization of

checkmeters shall be analyzed both for

the installation of checkmeters and for

conversion to retail service.

(d) Low- or medium-rise family units

with a mastermeter system should be

analyzed for both checkmetering and

conversion to retail service, because of

their large potential for energy savings.

(e) Low- or medium-rise housing for

elderly should next be analyzed for both

checkmetering and conversion to retail

service, since the potential for energy

saving is less than for family units.

(f) Electric service under mastermeters

for high-rise buildings, including

projects for the elderly, should be

analyzed for both use of retail service

and of checkmeters.

§ 950.846 Actions affecting residents.

(a) Before making any conversion to

retail service, the IHA shall adopt

revised payment schedules, providing

appropriate allowances for the residentsupplied utilities resulting from the

conversion.

(b) Before implementing any

modifications to utility services

arrangements with the residents or

charges with respect thereto, the

requisite changes shall be made in

resident dwelling leases in accordance

with subpart D of this part.

(c) To the extent practicable, IHAs

should work closely with resident

organizations in making plans for

conversion of utility service to

individual metering, explaining the

national policy objectives of energy

conservation, the changes in charges

and rent structure that will result, and

the goals of achieving an equitable

structure that will be advantageous to

residents who conserve energy.

(d) A transition period of at least six

months shall be provided in the case of

initiation of checkmeters, during which

residents will be advised of the charges

but during which no surcharge will be

made based on the readings. This trial

period will afford residents ample

notice of the effects the checkmetering

system will have on their individual

utility charges and also afford a test

period for the adequacy of the utility

allowances established.

(e) During and after the transition

period, IHAs shall advise and assist

residents with high utility consumption

on methods for reducing their usage.

This advice and assistance may include

counseling, installation of new energy

conserving equipment or appliances,

and corrective maintenance.

§ 950.849 Waivers for similar projects.

IHAs with more than one project of

similar design and utilities service may

prepare a benefit/cost analysis for a

representative project. A finding that a

change in metering is not cost effective

for the representative project is

sufficient reason for the HUD Area

ONAP to waive the requirements of this

subpart for benefit/cost analysis on the

remaining similar projects.

§ 950.850 Reevaluations of mastermeter

systems.

Because of changes in the cost of

utility services and the periodic changes

in utility regulations, IHAs with

mastermeter systems are required to

reevaluate mastermeter systems without

checkmeters by making benefit/cost

analyses at least every 36 months. HUD

Area ONAPs may grant waivers of this

requirement upon making a finding as

provided in § 950.849.

Resident Utility Allowances

§ 950.860 Applicability.

(a) Sections 950.860 through 950.876

apply to all Indian housing dwelling

units, including those operated under

the Mutual Help Homeownership

Opportunity Program.

(b) In rental units for which utilities

are furnished by the IHA but there are

no checkmeters to measure the actual

utilities consumption of the individual

units, residents shall be subject to

charges for consumption of residentowned major appliances, or for optional

functions of IHA-furnished equipment,

in accordance with § 950.865(e), but no

utility allowance will be established.

§ 950.865 Establishment of utility

allowances by IHAs.

(a) IHAs shall establish allowances for

IHA-furnished utilities for all

checkmetered utilities and allowances

for resident-purchased utilities for all

utilities purchased directly by residents

from the utilities suppliers.

(b) The IHA shall maintain a record

that documents the basis on which

allowances and scheduled surcharges,

and revisions thereof, are established

and revised. Such record shall be

available for inspection by residents.

(c) The IHA shall give notice to all

residents of proposed allowances,

scheduled surcharges, and revisions

thereof. Such notice shall be given, in

the manner provided in the lease or

homebuyer agreement, not less than 60

days before the proposed effective date

of the allowances or scheduled

surcharges or revisions; shall describe

with reasonable particularity the basis

for determination of the allowances,

scheduled surcharges, or revisions,

including a statement of the specific

items of equipment and function whose

utility consumption requirements were

included in determining the amounts of

the allowances or scheduled surcharges;

shall notify residents of the place where

the IHA’s record maintained in

accordance with paragraph (b) of this

section is available for inspection; and

shall provide all residents an

opportunity to submit written

comments during a period expiring not

less than 30 days before the proposed

effective date of the allowances or

scheduled surcharges or revisions. Such

written comments shall be retained by

the IHA and shall be available for

inspection by residents.

(d) Schedules of allowances and

scheduled surcharges shall not be

subject to approval by HUD before

becoming effective, but will be reviewed

in the course of audits or reviews of IHA

operations.

(e) The IHA’s determinations of

allowances, scheduled surcharges, and

revisions thereof shall be final and valid

unless found to be arbitrary, capricious,

an abuse of discretion, or otherwise not

in accordance with the law.

§ 950.867 Categories for establishment of

allowances.

Separate allowances shall be

established for each utility and for each

category of dwelling units determined

by the IHA to be reasonably comparable

as to factors affecting utility usage. The

IHA will establish allowances for

different size units, in terms of numbers

of bedrooms. Other categories may be

established at the discretion of the IHA.

§ 950.869 Period for which allowances are

established.

(a) IHA-furnished utilities.

Allowances will normally be

established on a quarterly basis;

however, residents may be surcharged

on a monthly basis. The allowances

established may provide for seasonal

variations.

(b) Resident-purchased utilities.

Monthly allowances shall be established

at a uniform monthly amount based on

an average monthly utility requirement

for a year; however, if the utility

supplier does not offer residents a

uniform payment plan, the allowances

established may provide for seasonal

variations.

§ 950.870 Standards for allowances for

utilities.

(a) The objective of an IHA in

designing methods of establishing
18270 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

utility allowances for each dwelling unit

category and unit size shall be to

approximate a reasonable consumption

of utilities by an energy-conservative

household of modest circumstances

consistent with the requirements of a

safe, sanitary, and healthful living

environment.

(b) Allowances for both IHAfurnished and resident-purchased

utilities shall be designed to include

such reasonable consumption for major

equipment or for utility functions

furnished by the IHA for all residents

(e.g., heating furnace, hot water heater),

for essential equipment whether or not

furnished by the IHA (e.g., range and

refrigerator), and for minor items of

equipment (such as toasters and radios)

furnished by residents.

(c) The complexity and elaborateness

of the methods chosen by the IHA, in its

discretion, to achieve the foregoing

objective will depend upon the data

available to the IHA and the extent of

the administrative resources reasonably

available to the IHA to be devoted to the

collection of such data, the formulation

of methods of calculation, and actual

calculation and monitoring of the

allowances.

(d) In establishing allowances, the

IHA shall take into account relevant

factors affecting consumption

requirements, including:

(1) The equipment and functions

intended to be covered by the allowance

for which the utility will be used. For

instance, natural gas may be used for

cooking, heating domestic water, or

space heating, or any combination of the

three.

(2) The climatic location of the

housing projects.

(3) The size of the dwelling units and

the number of occupants per dwelling

unit.

(4) Type of construction and design of

the housing project.

(5) The energy efficiency of IHAsupplied appliances and equipment.

(6) The utility consumption

requirements of appliances and

equipment whose reasonable

consumption is intended to be covered

by the total resident payment.

(7) The physical condition, including

insulation and weatherization, of the

housing project.

(8) Temperature levels intended to be

maintained in the unit during the day

and at night, and in cold and warm

weather.

(9) Temperature of domestic hot

water.

§ 950.872 Surcharges for excess

consumption of IHA-furnished utilities.

(a) For dwelling units subject to

allowances for IHA-furnished utilities

where checkmeters have been installed,

the IHA shall establish surcharges for

utility consumption in excess of the

allowances. Surcharges may be

computed on a straight per unit of

purchase basis (e.g., cents per kilowatt

hour of electricity) or for stated blocks

of excess consumption, and shall be

based on the IHA’s average utility rate.

The basis for calculating such

surcharges shall be described in the

IHA’s schedule of allowances. Changes

in the dollar amounts of surcharges

based directly on changes in the IHA’s

average utility rate shall not be subject

to the advance notice requirements of

this section.

(b) For dwelling units served by IHAfurnished utilities where checkmeters

have not been installed, the IHA shall

establish schedules of surcharges

indicating additional dollar amounts

residents will be required to pay by

reason of estimated utility consumption

attributable to resident-owned major

appliances or to optional functions of

IHA-furnished equipment. Such

surcharge schedules shall state the

resident-owned equipment (or functions

of IHA-furnished equipment) for which

surcharges shall be made and the

amounts of such charges, which shall be

based on the cost to the IHA of the

utility consumption estimated to be

attributable to reasonable usage of such

equipment.

§ 950.874 Review and revision of

allowances.

(a) Annual review. The IHA shall

review at least annually the basis on

which utility allowances have been

established and, if reasonably required

in order to continue adherence to the

standards stated in § 950.870, shall

establish revised allowances. The

review shall include all changes in

circumstances (including completion of

modernization and/or other energy

conservation measures implemented by

the IHA) indicating probability of a

significant change in reasonable

consumption requirements and changes

in utility rates.

(b) Revision as a result of rate

changes. The IHA may revise its

allowances for resident-purchased

utilities between annual reviews if there

is a rate change (including fuel

adjustments) and shall be required to do

so if such change, by itself or together

with prior rate changes not adjusted for,

results in a change of 10 percent or more

from the rates on which such

allowances were based. Adjustments to

resident payments as a result of such

changes shall be retroactive to the first

day of the month following the month

in which the last rate change taken into

account in such revision became

effective.

§ 950.876 Individual relief.

Requests for relief from surcharges for

excess consumption of IHA-purchased

utilities, or from payment of utility

supplier billings in excess of the

allowances for resident-purchased

utilities, may be granted by the IHA on

reasonable grounds, such as special

needs of elderly, il,l or handicapped

residents, or special factors affecting

utility usage not within the control of

the resident, as the IHA shall deem

appropriate. The IHA’s criteria for

granting such relief, and procedures for

requesting such relief, shall be adopted

at the time the IHA adopts the methods

and procedures for determining utility

allowances. Notice of the availability of

such procedures (including

identification of the IHA representative

with whom initial contact may be made

by residents), and the IHA’s criteria for

granting such relief, shall be included in

each notice to residents given in

accordance with § 950.865(c) and in the

information given to new residents

upon admission.

Subpart L—Operation of Projects After

Expiration of Initial ACC Term

§ 950.901 Purpose and applicability.

(a) Purpose. This subpart L specifies

methods for extending the effective

period of provisions of the ACC relating

to project operation beyond the original

ACC term. Such an extension provides

a contractual basis for continued

eligibility for operating subsidy.

(b) Applicability. This subpart L

applies to any Indian housing project

which is owned by an IHA and is

subject to an ACC under section 5 of the

United States Housing Act of 1937,

including rental, Turnkey III, or Mutual

Help housing. However, it does not

apply to the Section 8 and Section 23

Housing Assistance Payments Programs

and the Section 10(c) and Section 23

Leased Housing Programs.

§ 950.903 Continuing eligibility for

operating subsidy; ACC extension.

(a) Operating subsidy. After the initial

term of the ACC, HUD will pay

operating subsidy with respect to a

project only in accordance with an ACC

amendment providing for extension of

the term of the ACC provisions related

to project operation for at least ten years

after the last payment of HUD

assistance. The ACC amendment shall

be in the form prescribed by HUD, and

shall specify the particular provisions of

the ACC that relate to continued project

operation and, therefore, remain in

effect for the extended ACC term. These
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18271

provisions shall include a requirement

that the IHA execute and file, for public

record, an appropriate document

evidencing the IHA’s covenant not to

convey, encumber or make any other

disposition of the project without HUD

approval for a period of ten years after

the receipt of the last payment of HUD

assistance.

(b) Consolidated ACC. Where a single

ACC covers more than one project

(consolidated ACC), each annual

operating subsidy payable under that

ACC is a lump-sum amount which is

not divided into discrete amounts for

the individual projects subject to the

consolidated ACC (see subpart J of this

part). Accordingly, if an IHA, before

submitting a request for operating

subsidy, determines that any project(s)

under the consolidated ACC will not

require operating subsidy and should

not be subject to the provisions of

paragraph (a) of this section, the IHA

shall accompany its request with a

resolution adopted by the Board of

Commissioners certifying that no

operating subsidy shall be used with

respect to such project(s) thereafter and

that all financial records and accounts

shall be kept separately for such

project(s). In such cases, the removal of

the project(s) from the request for

operating subsidy shall be reflected by

the inclusion of that number of unit

months available for the project(s) when

making the calculations, under subpart

J of this part, for determination of total

amount of operating subsidy payable

under the consolidated ACC. In any

event no operating subsidy payable

under a consolidated ACC or otherwise

shall be used to pay, directly or

indirectly, any costs attributable to a

project that is ineligible or otherwise

excluded from operating subsidy under

paragraph (a) of this section. Even if no

operating subsidy is received with

respect to a project, the IHA remains

obligated to maintain and operate the

project in accordance with the

provisions of the ACC related to project

operation so long as those ACC

provisions remain in effect.

§ 950.905 ACC extension in absence of

current operating subsidy.

Where no operating subsidy is being

paid under an ACC, the IHA shall, at

least one year before the anticipated

ACC expiration date for the project,

notify the Area ONAP as to whether or

not the IHA desires to maintain a basis

for receiving operating subsidy with

respect to the project after the

anticipated ACC expiration date. This

notification shall be submitted to the

appropriate Area ONAP in the form of

a resolution by the IHA’s Board of

Commissioners. If the IHA does not

desire to maintain a basis for operating

subsidy payments with respect to the

project after the anticipated ACC

expiration date, the resolution shall

certify that no operating subsidy shall

be utilized with respect to the project

after the effective date of this rule and

that all financial records and accounts

for such a project shall be kept

separately. If the IHA does desire to

maintain a basis for such operating

subsidy payments, the resolution shall

include the IHA’s request for extension

of the term of the ACC provisions

related to project operation, for a period

of not less than one nor more than 10

years. Upon the Area ONAP’s receipt of

the request, HUD and the IHA shall

enter into an ACC amendment effecting

the extension for the period requested

by the IHA, unless HUD finds that

continued operation of the project

cannot be justified under the standards

set forth in subpart M of this part.

§ 950.907 HUD approval of disposition or

demolition.

During the post-assistance service

period of continued operation as lowincome housing, HUD may authorize an

IHA to dispose of or demolish housing

units at any time, in accordance with

subpart M of this part.

Subpart M—Disposition or Demolition

of Projects

§ 950.921 Purpose and applicability.

(a) Purpose. This subpart M sets forth

requirements for HUD approval of an

IHA’s application to dispose of or

demolish (in whole or in part) IHAowned projects assisted under the Act.

The rules and procedures contained in

24 CFR part 85 are inapplicable.

(b) Applicability. (1) Type of projects.

This subpart M applies to any Indian

housing project that is owned by an IHA

and is subject to an ACC under section

5 of the United States Housing Act of

1937 (42 U.S.C. 1437c), including rental,

Turnkey III, or Mutual Help housing.

This subpart M does not apply to:

(i) IHA-owned Section 8 housing or

housing leased under section 10(c) or

section 23 of the Act (42 U.S.C. 1437h(c)

or 1437u);

(ii) Demolition or disposition before

the end of the initial operating period

(EIOP), as determined under the ACC, of

property acquired incident to the

development of an Indian housing

project (however, this exception does

not apply to units occupied or available

for occupancy by Indian housing

tenants before EIOP);

(iii) Conveyance of Indian housing for

the purpose of providing

homeownership opportunities for lowincome families under section 21 of the

Act, the Turnkey III or Mutual Help

Homeownership Opportunity programs,

or any other homeownership programs

established under sections 5(h) and

6(c)(4)(D) of the Act (42 U.S.C. 1437c(h),

1437d(c)(4)(3)) or titles II and III of the

Act (42 U.S.C. 1437aa, 1437aaa).

(iv) Leasing of dwelling or

nondwelling space incident to the

normal operation of the project for

Indian housing purposes, as permitted

by the ACC;

(v) Easements, rights-of-way, and

transfers of utility systems incident to

the normal operation of the project for

Indian housing purposes, as permitted

by the ACC;

(vi) Reconfiguration of the interior

space of buildings (e.g., moving or

removing interior walls to change the

design, sizes, or number of units)

without demolition; and

(vii) A whole or partial taking by a

public or quasi-public entity through

the exercise of its power of eminent

domain.

(2) [Reserved].

(c) Type of actions. Any action by an

IHA to dispose of or demolish an Indian

housing project or a portion of an Indian

housing project is subject to the

requirements of this subpart M. Until

such time as HUD approval may be

obtained, the IHA may not take any

action to dispose of or demolish an

Indian housing project or portion of an

Indian housing project, and the IHA

shall continue to meet its ACC

obligations to maintain and operate the

property as housing for low-income

families. This does not mean that HUD

approval under this subpart M is

required for planning activities,

analysis, or consultations, such as

project viability studies, comprehensive

modernization planning, or

comprehensive occupancy planning.

§ 950.923 General requirements for HUD

approval of disposition or demolition.

(a) For purposes of this subpart M, the

term ‘‘tenant’’ will also include

‘‘homebuyer’’ when the development

involved is a homeownership project;

and the term ‘‘unit of general

government’’ will include the tribal

government, when applicable.

(b) HUD will not approve an

application for disposition or

demolition unless:

(1) The application has been

developed in consultation with tenants

of the project involved, any tenant

organizations for the project, and any

IHA-wide tenant organizations that will

be affected by the disposition or

demolition;
18272 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(2) The IHA has complied with the

requirement to offer the project or

portion of the project proposed for

demolition or disposition to the resident

organizations as required under

§ 950.925;

(3) The application contains a

certification by the chief executive

officer, or designee, that the unit of

general government will comply with

displacement, relocation, and real

property acquisition policies described

in § 950.117;

(4) Demolition or disposition

(including any related replacement

housing plan) will meet the

requirements of the National

Environmental Policy Act of 1969 (42

U.S.C. 4321), the National Historic

Preservation Act of 1966 (16 U.S.C.

469), and related laws, as stated in

HUD’s regulations at 24 CFR part 50.

When the site of the replacement

housing is unknown at the time of

submission of the application for

demolition or disposition, the

application shall contain a certification

that the applicant agrees to assist HUD

to comply with 24 CFR part 50, and that

the applicant shall:

(i) Supply HUD with all available,

relevant information necessary for HUD

to perform for each property any

environmental review required by 24

CFR part 50;

(ii) Carry out mitigating measures

required by HUD or select alternate

eligible property; and

(iii) Not acquire, rehabilitate, convert,

lease, repair, or construct property, or

commit HUD funds or other funds to

such program activities with respect to

any eligible property, until HUD

approval is received.

(5) The IHA has developed a

replacement housing plan, in

accordance with § 950.935, and has

obtained a commitment for the funds

necessary to carry out the plan over the

approved schedule of the plan. To the

extent such funding is not provided

from other sources (e.g., State, tribal, or

local programs or proceeds of

disposition), HUD approval of the

application for demolition or

disposition is conditioned on HUD’s

agreement to commit the necessary

funds (subject to availability of future

appropriations).

§ 950.925 Resident organization

opportunity to purchase.

(a) Applicability. (1) This section

applies to applications for demolition or

disposition of a development which

involve dwelling units, nondwelling

spaces (e.g., administration and

community buildings, maintenance

facilities), and excess land.

(2) The requirements of this section

do not apply to the following cases

which it has been determined do not

present appropriate opportunities for

resident purchase:

(i) The IHA has determined that the

property proposed for demolition is an

imminent threat to the health and safety

of residents;

(ii) The tribal or local government has

condemned the property proposed for

demolition;

(iii) A tribal or local government

agency has determined and notified the

IHA that units shall be demolished to

allow access to fire and emergency

equipment;

(iv) The IHA has determined that the

demolition of selected portions of the

development in order to reduce density

is essential to ensure the long-term

viability of the development or the IHA

(but in no case should this be used

cumulatively to avoid Section 412

requirements); or

(v) A public body has requested to

acquire vacant land that is less than two

acres in order to build or expand its

services (e.g., a tribal or local

government wishes to use the land to

build or establish a police substation).

(3) In the situations listed in

paragraph (a)(2) of this section, the IHA

may proceed to submit its request to

demolish or dispose of the property, or

the portion of the property, to HUD, in

accordance with section 18 of the

United States Housing Act of 1937 (42

U.S.C. 1437p) and this subpart without

affording an opportunity for purchase

by a resident organization. However,

resident consultation would be required

in accordance with § 950.923(b)(1). The

IHA shall submit written

documentation, on official stationery,

with date and signatures to justify

paragraphs (a)(2)(i) through (v) of this

section. Examples of such

documentation include:

(i) A certification from a tribal or local

agency, such as the fire or health

department, that a condition exists in

the development that is an imminent

threat to residents; or

(ii) A copy of the condemnation order

from the local health department. If,

however, at some future date, the IHA

proposes to sell the remaining property

described in paragraphs (a)(2)(i) through

(iii) of this section, the IHA will be

required to comply with this section.

(b) Opportunity for residents to

organize. Where the affected

development does not have an existing

resident organization, resident

management corporation or resident

cooperative at the time of the IHA

proposal to demolish or dispose of the

development or a portion of the

development, the IHA shall make a

reasonable effort to inform residents of

the development of the opportunity to

organize and purchase the property

proposed for demolition or disposition.

Examples of ‘‘reasonable effort’’ at a

minimum include at least one of the

following activities: convening a

meeting, sending letters to all residents,

publishing an announcement in the

resident newsletter, where available, or

hiring a consultant to provide technical

assistance to the residents. HUD will not

approve any application that cannot

demonstrate that the IHA has allowed at

least 45 days for the residents of the

affected development to organize a

resident organization. The IHA should

initiate its efforts to inform the residents

of their right to organize as an integral

part of the resident consultation

requirement under § 950.923(b)(1).

(c) Established organizations. Where

there are duly formed resident

management corporations, resident

organizations or resident cooperatives at

the affected development, the IHA

should follow the procedures beginning

in paragraph (d) of this section. Where

the affected development is fully or

partially occupied, the residents shall be

given the opportunity to form under the

procedures in paragraph (b) of this

section.

(d) Offer of sale to resident

organizations. (1) The IHA shall make

the formal offer for sale which shall

include the information listed in this

section. All contacted organizations

shall have 30 days to express an interest

in the offer. The IHA shall offer to sell

the property proposed for demolition or

disposition to the resident management

corporation, the resident organization or

resident cooperative of the affected

development under at least as favorable

terms and conditions as the IHA would

offer it for sale to another purchaser.

The offer shall include:

(i) An identification of the

development, or portion of the

development, in the proposed

demolition or disposition, including the

development number and location, the

number of units and bedroom

configuration, the amount of space and

use for non-dwelling space, the current

physical condition (e.g., fire damaged,

friable asbestos, lead based paint test

results), and occupancy status (e.g.,

percent occupancy);

(ii) In the case of disposition, a copy

of the appraisal of the property and any

terms of sale;

(iii) An IHA disclosure and

description of plans proposed for reuse

of land, if any, after the proposed

demolition or disposition;
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18273

(iv) An identification of available

resources (including its own and HUD’s)

to provide technical assistance to the

resident management corporation,

resident organization or resident

cooperative of the affected development

to enable the organization to better

understand its opportunity to purchase

the development, the development’s

value and potential use;

(v) Any and all terms of sale that the

IHA requires for the Section 18 action;

[If the resident management

corporation, resident organization or

resident cooperative of the affected

development submits a proposal that is

other than the terms of sale (e.g.,

purchase at less than fair market value

with demonstrated commensurate

public benefit or for the purposes of

homeownership), the IHA may consider

accepting the offer.]

(vi) A date by which the resident

management corporation, resident

organization or resident cooperative of

the affected development shall respond

to the IHA’s offer to sell the property

proposed for demolition or disposition,

which shall be no less than 30 days

from the date of the official offering of

the IHA which will be made sometime

after the meeting. The response from the

resident management corporation,

resident organization or resident

cooperative of the affected development

shall be in the form of a letter

expressing its interest in accepting the

IHA’s written offer.

(vii) A statement that the resident

management corporation, resident

organization and resident cooperative of

the affected development will be given

up to 60 days to develop and submit a

proposal to the IHA to purchase the

property and to obtain a firm financial

commitment. It shall explain that the

IHA shall approve the proposal from the

resident management corporation,

resident organization or resident

cooperative of the affected development,

if it meets the terms of sale. However,

the statement shall indicate that the IHA

can consider accepting an offer from the

resident management corporation,

resident organization or resident

cooperative of the affected development

that is other than the terms of sale; e.g.,

purchase at less than fair market value

with demonstrated commensurate

public benefit or for the purposes of

homeownership. The statement shall

explain that if the IHA receives more

than one proposal from a resident

management corporation, resident

organization or resident cooperative at

the affected development, the IHA shall

select the proposal that meets the terms

of sale. In the event that two proposals

from the affected development meet the

terms of sale, the IHA shall choose the

best proposal.

(2) After the 30 day time frame for the

resident management corporation,

resident organization or resident

cooperative of the affected development

to respond to the notification letter has

expired, the IHA is to prepare letters to

those organizations that responded

affirmatively inviting them to submit a

formal proposal to purchase the

property. The organization has up to 60

days from the date of its affirmative

response to prepare and submit a

proposal to the IHA that provides all the

information requested in paragraph

(d)(1) of this section and meets the

terms of sale.

(e) IHA review of proposals. The IHA

has up to 60 days from the date of

receipt of the proposals to review them

and determine whether they meet the

terms of sale set forth in its offer. If the

resident management corporation,

resident organization or resident

cooperative of the affected development

submits a proposal that is other than the

terms of sale (e.g., purchase at less than

the fair market value with demonstrated

commensurate public benefit or for the

purposes of homeownership), the IHA

may consider accepting the offer. If the

terms of sale are met, within 14 days of

the IHA’s final decision, the IHA shall

notify the resident management

corporation, resident organization or

resident cooperative of the affected

development of that fact and that the

proposal has been accepted or rejected.

(f) Appeals. The resident management

corporation, resident organization or

resident cooperative of the affected

development has the right to appeal the

IHA’s decision to the HUD Area ONAP.

A written appeal shall be made within

30 days of the decision by the IHA. The

appeal should include copies of the

proposal and any related

correspondence. The HUD Area ONAP

will render a final decision within 30

days. A letter communicating the

decision is to be prepared and sent to

the IHA and the resident management

corporation, resident organization or

resident cooperative of the affected

development.

(g) Contents of proposal. (1) The

proposal from the resident management

corporation, resident organization or

resident cooperative of the affected

development shall at a minimum

include the following:

(i) The length of time the organization

has been in existence;

(ii) A description of current or past

activities which demonstrate the

organization’s organizational and

management capability or the planned

acquisition of such capability through a

partner or other outside entities;

(iii) A statement of financial

capability;

(iv) A description of involvement of

any non-resident organization (nonprofit, for-profit, governmental or other

entities), if any, the proposed division of

responsibilities between the two, and

the non-resident organization’s financial

capabilities;

(v) A plan for financing the purchase

of the property and a firm commitment

for funding resources necessary to

purchase the property and pay for any

necessary repairs;

(vi) A plan for the use of the property;

(vii) The proposed purchase price in

relation to the appraised value;

(viii) Justification for purchase at less

than the fair market value in accordance

with § 950.931(h), if appropriate;

(ix) Estimated time schedule for

completing the transaction;

(x) The response to the IHA’s terms of

sale;

(xi) A resolution from the resident

organization approving the proposal;

and

(xii) A proposed date of settlement,

generally not to exceed six months from

the date of IHA approval of the

proposal, or such period as the IHA may

determine to be reasonable.

(2) If the proposal is to purchase the

property for homeownership under

section 5(h) or HOPE 1, then the

requirements of section 18 of the United

States Housing Act of 1937 (42 U.S.C.

1437p) and this subpart do not apply,

and the applicable requirements shall be

those under the HOPE 1 guidelines, as

set forth at 24 CFR Subtitle A, App. A,

or the section 5(h) regulation, as set

forth in subpart P of this part. In order

for the IHA to consider a proposal to

purchase under section 412, using

homeownership opportunities under

section 5(h) or HOPE 1, the resident

management corporation, organization

or resident cooperative of the affected

development shall meet the provisions

of this subsection, including items in

paragraph (g)(1) of this section.

(3) If the proposal is to purchase the

property for other than the

aforementioned homeownership

programs or for uses other than

homeownership, then the proposal shall

meet all the disposition requirements of

section 18 of the United States Housing

Act of 1937 (42 U.S.C. 1437p) and this

subpart.

(h) IHA Obligations. (1) Prepare and

disperse the formal offer of sale to the

resident management corporation,

resident organization and resident

cooperative of the affected development.
18274 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(2) Evaluate proposals received and

make the selection based on the

considerations set forth in paragraph (b)

of this section. Issue letters of

acceptance and rejection.

(3) Prepare certifications, where

appropriate, as discussed in paragraph

(j)(3) of this section. The IHA shall

comply with its obligations under

§ 950.923(b)(1) regarding tenant

consultation and provide evidence to

HUD that it has met those obligations.

The IHA shall not act in an arbitrary

manner and shall give full and fair

consideration to any qualified resident

management corporation, resident

organization or resident cooperative of

the affected development and accept the

proposal if it meets the terms of sale.

(i) IHA application submission

requirements for proposed demolition or

disposition. (1) If the proposal from the

resident organization is rejected by the

IHA, and either there is no appeal by the

organization or the appeal has been

denied, the IHA shall submit its

demolition or disposition application to

HUD in accordance with section 18 of

the United States Housing Act of 1937

(42 U.S.C. 1437p) and this subpart. The

demolition or disposition application

shall include complete documentation

that the requirements of this section

have been met. IHAs shall submit

written documentation that the resident

management corporation, resident

organization and resident cooperative of

the affected development have been

apprised of their opportunity to

purchase under this section. This

documentation shall include a copy of

the signed and dated IHA notification

letter(s) to each organization informing

them of the IHA’s intention to submit an

application for demolition or

disposition and the responses from each

organization.

(2) If the IHA accepts the proposal of

the resident organization, the IHA shall

submit a disposition application in

accordance with section 18 of the

United States Housing Act of 1937 (42

U.S.C. 1437p) and this subpart, with

appropriate justification for a negotiated

sale and for sale at less than fair market

value, if applicable.

(3) HUD will not process an

application for demolition or

disposition unless the IHA provides

HUD with one of the following:

(i) Where no resident management

corporation, resident organization or

resident cooperative exists in the

affected development and the residents

of the affected development have not

formed a new organization, a

certification from either the executive

director or the board of commissioners

stating that no such organization(s)

exists and documentation that a

reasonable effort to inform residents of

their opportunity to organize has been

made; or

(ii) Where a resident management

corporation, resident organization or

resident cooperative exists in the

affected development one of the

following, either paragraph (i)(3)(ii)(A)

or (B) of this section:

(A) A board resolution or its

equivalent from each resident

management corporation, resident

organization or resident cooperative

stating that such organization has

received the IHA letter, and that it

understands the offer and waives its

opportunity to purchase the project, or

portion of the project, covered by the

demolition or disposition application.

The response should clearly state that

the resolution was adopted by the entire

organization at a formal meeting; or

(B) A certification from the executive

director or board of commissioners of

the IHA that the thirty (30) day

timeframe has expired and no response

was received to its offer.

§ 950.927 Specific criteria for HUD

approval of disposition requests.

In addition to other applicable

requirements of this subpart, HUD will

not approve a request for disposition

unless HUD determines that retention is

not in the best interests of the tenants

and the IHA, because at least one of the

following criteria is met:

(a) Developmental changes in the area

surrounding the project adversely affect

the health or safety of the tenants or the

feasible operation of the project by the

IHA.

(b) Disposition will allow the

acquisition, development, or

rehabilitation of other properties that

will be more efficiently or effectively

operated as low-income housing

projects, and that will preserve the total

amount of low-income housing stock

available to the community.

(c) There are other factors justifying

disposition that HUD determines are

consistent with the best interests of the

tenants and the IHA that are not

inconsistent with other provisions of the

Act.

(d) In the case of disposition of

property other than dwelling units:

(1) The property is determined by

HUD to be excess to the needs of the

project (after the end of the initial

operating period); or

(2) The disposition of the property is

incidental to, or does not interfere with,

continued operation of the remaining

portion of the project.

§ 950.928 Specific criteria for HUD

approval of demolition requests.

In addition to other applicable

requirements of this subpart, HUD will

not approve an application for

demolition unless HUD determines that

at least one of the following criteria is

met:

(a) In the case of demolition of all or

a portion of a project, the project, or a

portion of the project, is obsolete as to

physical condition, location, or other

factors, making it unusable for housing

purposes; and

(b) No reasonable program of

modifications, in keeping with the

provisions of subpart I of this part, is

feasible to return the project or portion

of the project to useful life.

§ 950.931 IHA application for HUD

approval.

Written approval by HUD shall be

required before the IHA may undertake

any transaction involving demolition or

disposition. To request approval, the

IHA shall submit an application to the

HUD Area ONAP that includes the

following:

(a) A description of the property

involved;

(b) A description of, as well as a

timetable for, the specific action

proposed (including, in the case of

disposition, the specific method

proposed);

(c) A statement justifying the

proposed disposition or demolition

under one or more of the applicable

criteria of §§ 950.927 or 950.928;

(d) If applicable, a plan that meets the

requirements of § 950.117 for the

relocation of tenants who would be

displaced by the proposed demolition or

disposition;

(e) A description of the IHA’s

consultations with tenants and any

tenant organizations (as required under

§ 950.923(b)(1)), with copies of any

written comments which may have been

submitted to the IHA and the IHA’s

evaluation of the comments;

(f) A replacement housing plan, as

required under § 950.935, and a

resolution by the governing body of the

unit of tribal or general local

government in which the project is

located, indicating approval of the

replacement plan;

(g) Evidence that the IHA has

complied with the requirement to offer

the project or portion of the project

proposed for demolition or disposition

to the resident organizations, as

required under § 950.925;

(h) The estimated balance of project

debt, if any, under the ACC for

development and modernization;

(i) In the case of disposition, an

estimate of the fair market value of the
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18275

property, established on the basis of one

independent appraisal, unless, as

determined by HUD:

(1) More than one appraisal is

warranted; or

(2) Another method of valuation is

clearly sufficient and the expense of an

independent appraisal is unjustified

because of the limited nature of the

property interest involved or other

available data;

(j) In the case of disposition, estimates

of the gross and net proceeds to be

realized, with an itemization of

estimated costs to be paid out of gross

proceeds and the proposed use of any

net proceeds in accordance with

§ 950.933;

(k) A copy of a resolution by the IHA’s

Board of Commissioners approving the

application;

(l) If determined to be necessary by

HUD, an opinion by the IHA’s legal

counsel that the proposed action is

consistent with applicable requirements

of Federal, State, tribal, and local laws;

and

(m) Any additional information

necessary to support the application and

assist HUD in making determinations

under this subpart M.

§ 950.933 Use of proceeds.

(a) Disposition. (1) If HUD approves

the disposition of real property of a

project, in whole or in part, the IHA

shall dispose of it promptly by public

solicitation of bids for not less than fair

market value, unless HUD authorizes

negotiated sale for reasons found to be

in the best interests of the IHA or the

Federal Government, or for sale for less

than fair market value (where permitted

by State, tribal, or local law), based on

commensurate public benefits to the

community, the IHA, or the Federal

Government justifying such an

exception.

(2) Net proceeds (after payment of

HUD-approved costs of disposition and

relocation under paragraph (a) of this

section) shall be used, subject to HUD

approval, as follows: first for the

retirement of outstanding obligations, if

any, issued to finance development or

modernization of the project, which in

the case of scattered site housing of an

IHA, shall be in an amount that bears

the same ratio to the total of such costs

and obligations as the number of units

disposed of bears to the total number of

units of the project at the time of

disposition; and thereafter for the

provision of housing assistance for lowincome families, through such measures

as modernization of low-income

housing or the acquisition,

development, or rehabilitation of other

properties to operate as low-income

housing.

(b) Demolition. If HUD has approved

demolition of a project, or a portion of

a project, and the proposed action is

part of a modernization program under

subpart I of this part, the costs of

demolition and of relocation of

displaced tenants may be included in

the modernization budget.

§ 950.935 Replacement housing plan.

(a) HUD may not approve an

application or furnish assistance under

this subpart unless the IHA submitting

the application for disposition or

demolition also submits a plan for the

provision of an additional decent, safe,

sanitary, and affordable dwelling unit

(at rents no higher than permitted under

the Act) for each dwelling unit to be

disposed of or demolished under the

application. The plan shall include any

one or a combination of the following:

(1) The acquisition or development of

additional low-income housing

dwelling units;

(2) The use of project-based assistance

under section 8 (as provided for in 24

CFR part 882, subpart G);

(3) The use of project-based assistance

under other Federal programs;

(4) The acquisition or development of

dwelling units assisted under a State or

local tribal government program that

provides for project-based assistance

comparable in terms of eligibility,

contribution to rent, and length of

assistance contract to assistance under

section 8(b)(1) of the Act; or

(5) The use of tenant-based assistance

under section 8 of the Act (excluding

vouchers under section 8(o) of the Act

(42 U.S.C. 1437f(o)), under the

conditions described in paragraph (b) of

this section.

(b) Tenant-based assistance under

section 8 may be approved under the

replacement plan only if:

(1) There is a finding by HUD that

replacement with project-based

assistance is not feasible; that the

supply of private rental housing actually

available to those who would receive

project-based assistance under the plan

is sufficient for the total number of

certificates and vouchers available in

the community after implementation of

the plan; and that this available housing

supply is likely to remain available for

the full term of the assistance; and

(2) HUD’s findings under paragraph

(b)(1) of this section are based on

objective information, which shall

include rates of participation by

landlords in the Section 8 program; size,

condition, and rent levels of available

rental housing as compared to Section 8

standards; the supply of vacant existing

housing meeting the Section 8 housing

quality standards with rents at or below

the fair market rent or the likelihood of

adjusting the fair market rent; the

number of eligible families waiting for

housing assistance under the Act; the

extent of discrimination practiced

against the types of individuals or

families to be served by the assistance;

and such additional data as HUD may

determine to be relevant in particular

circumstances.

(c) The plan shall be approved by the

unit of general local government

(including tribal government) in which

the project is located.

(d) The plan shall include a schedule

for carrying out all its terms within a

period consistent with the size of the

proposed disposition or demolition,

except that the schedule for completing

the plan shall in no event exceed six

years from the date specified to begin

plan implementation.

(e) The plan shall include a method

that ensures that at least the same total

number of individuals and families will

be provided housing, allowing for

replacement with units of different sizes

to accommodate changes in local

priority needs.

(f) The plan shall include an

assessment of the suitability of the

location of proposed replacement

housing based upon application of the

site selection criteria established in

§ 950.235.

(g) The plan shall contain assurances

that any replacement units acquired,

newly constructed, or rehabilitated will

meet the applicable accessibility

requirements set forth in 24 CFR 8.25.

Subpart N—[Reserved]

Subpart O—Resident Participation and

Opportunities General Provisions

§ 950.960 Purpose.

The purpose of this subpart O is to

recognize the importance of involving

residents in creating a positive living

environment and in contributing to the

successful operation of Indian housing.

§ 950.961 Applicability and scope.

(a) This subpart O applies to any

Indian housing authority (IHA) that has

an Annual Contributions Contract (ACC)

with the Department. This subpart does

not apply to housing assistance

payments under section 8 of the United

States Housing Act of 1937.

(b) This subpart O contains HUD’s

policies, procedures, and requirements

for the participation of Indian housing

residents in Indian housing

management.
18276 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(c) This subpart O is designed to

encourage increased resident

participation in Indian housing.

(d) This subpart O is not intended to

negate any pre-existing arrangements for

resident management in Indian housing

between an IHA and a resident

management corporation.

(e) This subpart O includes

requirements for the Family Investment

Centers (FIC) Program, which was

established by Section 515 of the

National Affordable Housing Act, which

created a new Section 22 of the Act. The

FIC program is designed to provide

families living in Indian housing with

better access to educational and

employment opportunities.

§ 950.962 Definitions.

Family Investment Center. A facility

in or near Indian housing which

provides families living in Indian

housing with better access to

educational and employment

opportunities to achieve self sufficiency

and independence.

Management. All activities for which

the IHA is responsible to HUD under the

ACC, within the definition of

‘‘operation’’ under the Act and the ACC,

including the development of resident

programs and services.

Management contract. A written

agreement between a resident

management corporation and an IHA, as

provided by § 950.969.

Project. For purposes of this subpart,

any of the following could be the subject

of a management contract:

(1) One or more contiguous buildings.

(2) An area of contiguous row houses.

(3) Scattered site buildings.

(4) Scattered site single-family units.

Resident management. The

performance of one or more

management activities for one or more

projects by a resident management

corporation under a management

contract with the IHA.

Resident Management Corporation

(RMC). A Resident Management

Corporation is an entity that proposes to

enter into, or enters into, a contract to

manage IHA property. The corporation

shall have each of the following

characteristics:

(1) It shall be a nonprofit organization

that is incorporated under the laws of

the State or Indian tribe in which it is

located.

(2) It may be established by more than

one resident organization, so long as

each such organization both approves

the establishment of the corporation and

has representation on the Board of

Directors of the corporation.

(3) It shall have an elected Board of

Directors.

(4) Its by-laws shall require the Board

of Directors to include representatives of

each resident organization involved in

establishing the corporation.

(5) Its voting members are required to

be residents of the project or projects it

manages.

(6) It shall be approved by the

resident organization. If there is no

organization, a majority of the

households of the project or projects

shall approve the establishment of such

an organization.

Resident Organization (RO). A

Resident Organization (or ‘‘Resident

Council’’ as defined in section 20 of the

Act) is an incorporated or

unincorporated nonprofit organization

or association that meets each of the

following criteria:

(1) It shall consist of residents only,

and only residents may vote.

(2) If it represents residents in more

than one development or in all of the

developments of an IHA, it shall fairly

represent residents from each

development that it represents.

(3) It shall adopt written procedures

providing for the election of specific

officers on a regular basis.

(4) It shall have a democratically

elected governing board. The voting

membership of the board shall consist

solely of the residents of the

development or developments that the

RO represents.

Resident-owned business. Any

business concern which is owned and

controlled by public housing residents.

(The term ‘‘resident-owned business’’

includes sole proprietorships.) For

purposes of this part, ‘‘owned and

controlled’’ means a business:

(1) Which is at least 51 percent owned

by one or more public housing

residents; and

(2) Whose management and daily

business operations are controlled by

one or more such individuals.

Resident participation. A process of

consultation between residents and the

IHA concerning matters affecting the

management of Indian housing.

§ 950.963 HUD’s role in activities under

this subpart.

(a) General. Subject to the

requirements of this part and other

requirements imposed on IHAs by the

ACC, statute or regulation, the form and

extent of resident participation or

resident management are local decisions

to be made jointly by ROs and the IHAs.

(b) Duty to bargain in good faith. If an

IHA refuses to negotiate with a RMC in

good faith or, after negotiations, refuses

to enter into a contract, the corporation

may file an informal appeal with HUD,

setting out the circumstances and

providing copies of relevant materials

evidencing the corporation’s efforts to

negotiate a contract. HUD shall require

the IHA to respond with a report stating

the IHA’s reasons for rejecting the

corporation’s contract offer or for

refusing to negotiate. Thereafter, HUD

shall require the parties (with or

without direct HUD participation) to

undertake or to resume negotiations on

a contract providing for resident

management, and shall take such other

actions as are necessary to resolve the

conflicts between the parties. If no

resolution is achieved within 90 days

from the date HUD required the parties

to undertake or resume such

negotiations, HUD shall serve notice on

both parties that administrative

remedies have been exhausted (except

that, pursuant to mutual agreement of

the parties, the time for negotiations

may be extended by no more than an

additional 30 days).

§ 950.964 Resident participation

requirements.

(a) IHA responsibilities. (1) An IHA

shall provide the residents or any

resident organization with current

information concerning the IHA’s

policies on resident participation in

management, including guidance on

information and recognition of a RO,

and, where appropriate, a RMC.

(2) An IHA shall consult with

residents or resident organizations (if

they exist), to determine the extent to

which residents desire to participate in

the management of their housing and

the specific methods that may be

mutually agreeable to the IHA and the

residents.

(3) When requested by residents, an

IHA shall provide appropriate guidance

to residents to assist them in

establishing and maintaining a RO, and,

where appropriate, a RMC.

(b) Recognition. A resident

organization may request that it be

recognized as the official organization

representing the residents in meetings

with the IHA or with other entities.

(c) Written understanding. At a

minimum, the IHA and the RO shall put

in writing their understanding

concerning the elements of their

relationship.

(d) Conflict of interest. Resident

council officers can not serve as

contractors or employees if they are in

policy making or supervisory positions

at the IHA.

§ 950.965 Funding resident participation.

Funding will be provided under

subpart J of this part, for the following:

(a) Resident Organizations. (1) Subject

to appropriations, the IHA shall provide
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18277

funds to ROs for resident participation

activities. Eligibility to receive operating

subsidy for duly elected RO activities at

$25 per unit per year is an additional

category of subsidy eligibility for units

represented by a duly elected resident

organization under the Performance

Funding System. Of this amount, $15

per unit per year shall fund resident

participation activities of the duly

elected ROs. Ten dollars per unit per

year shall fund IHA costs incurred in

carrying out resident participation

activities.

(2) The IHA and the duly elected

resident organization at each

development shall collaborate on how

the funds will be distributed for resident

participation activities. If disputes

regarding funding decisions arise

between the parties, the matter shall be

referred to the HUD Headquarters for

intervention. HUD ONAP Headquarters

may require the parties to undertake

further negotiations to resolve the

dispute. If no resolution is achieved

within 90 days from the date of

renegotiation, Headquarters shall take

appropriate actions to settle the dispute

in a fair and equitable manner.

(b) Stipends. (1) IHAs may provide

stipends to officers of the duly elected

RO. The stipend, which may be up to

$200 per month per officer, shall be

decided locally by the ROs and the IHA.

Subject to appropriations, the stipends

will be funded from the portion of the

operating subsidy funding for RO

expenses ($15.00 per unit per year). (See

definition of annual income in § 950.102

for exclusion for these stipends.)

(2) Funding provided by an IHA to a

duly elected RO may be made only

under a written agreement between the

IHA and a RO, which includes a RO

budget and assurance that all RO

expenditures will not contravene

provisions of law and will promote

serviceability, efficiency, economy and

stability in the operation of the local

development. The agreement shall

require the local RO to account to the

IHA for the use of the funds and permit

the IHA to inspect and audit the

resident council’s financial records

related to the agreement.

Tenant Opportunities Program

§ 950.966 General.

The Indian Tenant Opportunities

Program (TOP) (which is the program

similar to the public housing TOP for

public housing residents) provides

technical assistance for various

activities including resident

management for ROs/RMCs as

authorized by Section 20 of the Act. The

TOP provides opportunities for RO/

RMCs to improve living conditions and

resident satisfaction in Indian housing

communities.

§ 950.967 Eligible TOP activities.

Activities to be funded and carried

out by an eligible RO or resident

management corporation, as defined in

subpart B of this part, shall improve the

living conditions and Indian housing

operations and may include any

combination of, but are not limited to,

the following:

(a) Resident Capacity Building. (1)

Training Board members in community

organizing, Board development, and

leadership training;

(2) Determining the feasibility of

resident management enablement for a

specific project or projects; and

(3) Assisting in the actual creation of

a RMC, such as consulting and legal

assistance to incorporate, preparing bylaws and drafting a corporate charter.

(b) Resident Management. (1)

Training residents, as potential

employees of a RMC, in skills directly

related to the operation, management,

maintenance and financial systems of a

project;

(2) Training of residents with respect

to fair housing requirements; and

(3) Gaining assistance in negotiating

management contracts, and designing a

long-range planning system.

(c) Resident Management Business

Development. (1) Training related to

resident-owned business development

and technical assistance for job training

and placement in RMC developments;

(2) Technical assistance and training

in resident managed business

development through:

(i) Feasibility and market studies;

(ii) Development of business plans;

(iii) Outreach activities; and

(iv) Innovative financing methods

including revolving loan funds.

(3) Legal advice in establishing a

resident managed business entity.

(d) Social Support Needs (such as

self-sufficiency and youth initiatives).

(1) Feasibility studies to determine

training and social services needs;

(2) Training in management-related

trade skills, computer skills, etc;

(3) Management-related employment

training and counseling;

(4) Coordination of support services;

(5) Training for programs such as

child care, early childhood

development, parent involvement,

volunteer services, parenting skills,

before and after school programs;

(6) Training programs on health,

nutrition, and safety;

(7) Training in the development of

strategies to successfully implement a

youth program. For example, assessing

the needs and problems of the youth,

improving youth initiatives that are

currently active, and training youth,

housing authority staff, resident

management corporations, and resident

organizations on youth initiatives and

program activities; and

(8) Workshops for youth services,

child abuse and neglect prevention,

tutorial services, in partnership with

community-based organizations such as

local Boys and Girls Clubs, YMCA/

YWCA, Boy/Girl Scouts, Campfire, and

Big Brother/Big Sisters. Other HUD

programs such as the Youth Sports

Program and the Public Housing Drug

Elimination Programs also provide

funding in these areas.

(e) Homeownership Opportunity.

Determining feasibility for

homeownership by residents, including

assessing the feasibility of other housing

(including HUD owned or held single or

multi-family) affordable for purchase by

residents.

(f) General. (1) Required training on

HUD regulations and policies governing

the operation of low-income public and

Indian housing including contracting/

procurement regulations, financial

management, capacity building to

develop the necessary skills to assume

management responsibilities at the

development and property management;

(2) Purchasing hardware, i.e.,

computers and software, office

furnishings and supplies, in connection

with business development. Every effort

shall be made to acquire donated or

discounted hardware;

(3) Training in accessing other

funding sources; and

(4) Hiring trainers or other experts.

RO/RMCs shall ensure that this training

is provided by a qualified housing

management specialist, a community

organizer, the IHA, or other sources

knowledgeable about the program.

§ 950.968 Technical assistance.

To the extent that grant authority is

available, HUD shall provide financial

assistance to ROs or RMCs that obtain,

by contract or otherwise, technical

assistance for the development of

resident management entities, including

the formation of these entities; the

development of the management

capabilities of newly formed or existing

entities; the identification of the social

support needs of residents of projects,

and the securing of this support; and a

wide range of activities to further the

purposes of this subpart O.

§ 950.969 Resident management

requirements.

The following requirements apply

when an IHA and its residents are
18278 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

interested in providing for resident

performance of management functions

in one or more projects under this

subpart O.

(a) Resident management corporation.

Residents interested in contracting with

an IHA shall establish a RMC that meets

the requirements for such a corporation,

as specified in this subpart O.

(b) Management Contract. (1) A

management contract between the IHA

and a RMC is required for resident

management. The IHA and the

corporation may agree to the

performance by the corporation of any

or all management functions for which

the IHA is responsible to HUD under the

ACC, and any other functions not

inconsistent with the ACC and

applicable laws and regulations. The

management contract shall be in

conformance with the minimum

requirements established by HUD.

(2) The management contract may

include specific provisions governing

management personnel; compensation

for maintenance laborers and mechanics

and administrative employees employed

in the operation of the project, except

that the amount of this compensation

shall meet applicable labor standard

requirements of Federal law; rent

collection procedures; resident income

verification; resident eligibility

determinations; resident eviction; the

acquisition of supplies and materials;

and such other matters as the IHA and

the corporation determine to be

appropriate, and as HUD may specify in

administrative instructions.

(3) The management contract shall be

treated as a contracting out of services,

and shall be subject to any provision of

a collective bargaining agreement

regarding the contracting out of services

to which the IHA is subject.

(4) Provisions on competitive bidding

and requirements of prior written HUD

approval of contracts contained in the

ACC do not apply to the decision of an

IHA to contract with a RMC.

(c) Prohibited activities. An IHA may

not contract for assumption by the RMC

of the IHA’s underlying responsibilities

to HUD under the ACC.

(d) Bonding and insurance. Before

assuming any management

responsibility under its contract, the

RMC shall provide fidelity bonding and

insurance, or equivalent protection that

is adequate (as determined by HUD and

the IHA) to protect HUD and the IHA

against loss, theft, embezzlement, or

fraudulent acts on the part of the

corporation or its employees.

§ 950.970 Management specialist.

The RO shall select, in consultation

with the IHA, a qualified Indian housing

management specialist to assist in

determining the feasibility of, and to

help establish, a RMC and to provide

training and other duties in connection

with operating the TOP project. The

Housing Management Specialist

(Trainer) can be a non-profit

organization, the IHA or a consultant.

§ 950.971 Operating subsidy, preparation

of operating budget, operating reserves,

and retention of excess revenues.

(a) Calculation of operating subsidy.

Operating subsidy will be calculated

separately for any project managed by a

resident management corporation. This

subsidy computation will be the same as

the separate computation made for the

balance of the projects in the IHA in

accordance with subpart J of this part,

with the following exceptions:

(1) The project managed by a resident

management corporation will have an

Allowable Expense Level based on the

actual expenses for the project in the

fiscal year immediately preceding

management under this subpart O.

These expenditures will include the

project’s share of any expenses which

are overhead or centralized IHA

expenditures. The expenses shall

represent a normal year’s expenditures

for the project, and shall exclude all

expenditures that are not normal fiscal

year expenditures as to amount or as to

the purpose for which expended.

Documentation of this expense level

shall be presented with the project

budget and approved by HUD. Any

project expenditures funded from a

source of income other than operating

subsidies or income generated by the

locally owned Indian housing program

will be excluded from the subsidy

calculation. For budget years after the

first budget year under management by

the resident management corporation,

the Allowable Expense Level will be

calculated as it is for all other projects,

in accordance with subpart J of this part.

(2) The resident management

corporation project will estimate

dwelling rental income based on the

rent roll of the project immediately

preceding the assumption of

management responsibility under this

subpart O, increased by the estimate of

inflation of resident income used in

calculating PFS subsidy.

(3) The resident management

corporation will exclude, from its

estimate of other income, any increased

income directly generated by activities

of the corporation or facilities operated

by the corporation.

(4) Any reduction in the subsidy of an

IHA that occurs as a result of fraud,

waste, or mismanagement by the IHA

shall not affect the subsidy calculation

for the resident management

corporation project.

(b) Calculation of total income and

preparation of operating budget. No

reduction. (1) Subject to paragraph (c) of

this section, the amount of funds

provided by an IHA to a project

managed by a resident management

corporation under this subpart may not

be reduced during the three-year period

beginning on the date a resident

management corporation first assumes

management responsibility for the

project.

(2) Treatment of technical assistance.

For purposes of determining the amount

of funds provided to a project under

paragraph (b)(1) of this section, the

provision of technical assistance by the

IHA to the resident management

corporation will not be included.

(3) Operating budget. The resident

management corporation and the IHA

shall submit a separate operating

budget, including the calculation of

operating subsidy eligibility in

accordance with paragraph (a) of this

section, for the project managed by a

resident management corporation to

HUD for approval. This budget will

reflect all project expenditures and will

identify which expenditures are related

to the responsibilities of the resident

management corporation and which are

related to functions which will continue

to be performed by the IHA.

(4) Operating reserves. (i) Each project

or part of a project that is operating in

accordance with the ACC amendment

relating to this subpart and in

accordance with a contract vesting

maintenance responsibilities in the

resident management corporation will

have transferred, into a sub-account of

the operating reserve of the host IHA, an

operating reserve. Where all

maintenance responsibilities for the

resident-managed project are the

responsibility of the corporation, the

amount of the reserve made available to

projects under this subpart will be the

per unit cost amount available in the

IHA operating reserve, exclusive of all

inventories, prepaids, and receivables

(at the end of the IHA fiscal year

preceding implementation), multiplied

by the number of units in the project

operated in accordance with the

provisions of this subpart. Where some,

but not all, maintenance responsibilities

are vested in the resident management

corporation, the contract may provide

for an appropriately reduced portion of

the operating reserve to be transferred

into the corporation’s subaccount.

(ii) The use of the reserve will be

subject to all administrative procedures

generally applicable to the Indian

housing program. Any expenditure of
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18279

funds from the reserve will be for

eligible expenditures which are

incorporated into an operating budget

subject to approval by HUD.

(iii) Investment of funds held in the

reserve will be in accordance with the

provisions of chapter 4 of the Financial

Management Handbook, 7475.1 REV,

and interest generated will be included

in the calculation of operating subsidy

in accordance with subpart J of this part.

(c) Adjustments to total income. (1)

Operating subsidy will reflect changes

in inflation, utility rates and

consumption, and changes in the

number of units in the project.

(2) In addition to the amount of

income derived from the project (from

sources such as rents and charges) and

the operating subsidy calculated in

accordance with paragraph (a) of this

section, the contract may specify that

income be provided to the project from

other sources of income of the IHA.

(3) The following conditions may not

affect the amounts to be provided to a

project managed by a resident

management corporation under this

subpart O:

(i) Any reduction in the total income

of an IHA that occurs as a result of

fraud, waste, or mismanagement by the

IHA; or

(ii) Any change in the total income of

an IHA that occurs as a result of projectspecific characteristics that are not

shared by the project managed by the

corporation under this subpart O.

(d) Retention of excess revenues. Any

income generated by a resident

management corporation that exceeds

the income estimated for the income

category involved shall be excluded in

subsequent years in calculating:

(1) The operating subsidy provided to

an IHA under subpart J of this part; and

(2) The funds provided by the IHA to

the resident management corporation.

(e) Use of retained revenues. Any

revenues retained by a resident

management corporation under

paragraph (d) of this section may only

be used for purposes of improving the

maintenance and operation of the

project, establishing business

enterprises that employ residents of

Indian housing, or acquiring additional

dwelling units for low-income families.

Units acquired by the resident

management corporation will not be

eligible for payment of operating

subsidy.

§ 950.972 TOP Audit and administrative

requirements.

(a) Annual audit of financial

statements. The financial statements of

a RMC managing a project under this

subpart shall be audited annually by a

licensed certified public accountant,

designated by the RMC, in accordance

with generally accepted government

audit standards. A written report of each

audit shall be forwarded to HUD and the

IHA within 30 days of issuance.

(b) Relationship to other authorities.

The requirements of paragraph (a) of

this section are in addition to any other

Federal law or other requirement that

would apply to the availability and

audit of financial statements of RMCs

under this part.

(c) General administrative

requirements. Except as modified by

this part, RMCs shall comply with the

requirements of OMB Circulars A–110

and A–122, as applicable.

Family Investment Centers (FIC)

Program

§ 950.980 General.

(a) The Family Investment Centers

(FIC) Program. This program provides

families living in Indian housing with

better access to educational and

employment opportunities by:

(1) developing facilities in or near

Indian housing for training and support

services;

(2) mobilizing public and private

resources to expand and improve the

delivery of such services;

(3) providing funding for such

essential training and support services

that cannot otherwise be funded; and

(4) improving the capacity of

management to assess the training and

service needs of families, coordinating

the provision of training and services

that meet such needs, and ensuring the

long-term provision of such training and

services.

(b) Supportive Services. New or

significantly expanded services

essential to providing families in Indian

housing with better access to

educational and employment

opportunities to achieve self-sufficiency

and independence. IHAs applying for

funds to provide supportive services

shall demonstrate that the services will

be provided at a higher level than

currently provided. Supportive services

may include:

(1) Child care;

(2) Employment training and

counseling;

(3) Computer skills training;

(4) Education including remedial

education; literacy training; completion

of secondary or post secondary

education and assistance in the

attainment of certificates of high school

equivalency;

(5) Business, entrepreneurial training

and counseling;

(6) Transportation necessary to enable

any participating family member to

receive available services or to commute

to his/her place of employment;

(7) Personal welfare (e.g. substance/

alcohol abuse treatment and counseling,

self-development counseling, etc.);

(8) Supportive Health Care Services

(e.g., outreach and referral services); and

(9) Any other services and resources,

including case management, determined

to be appropriate in assisting eligible

residents.

(c) FIC Service Coordinator. Any

person who is responsible for:

(1) Determining the eligibility and

assessing needs of families to be

serviced by the FIC;

(2) Assessing training and service

needs of eligible residents;

(3) Working with service providers to

coordinate the provision of services and

to tailor the services to the needs and

characteristics of eligible residents;

(4) Mobilizing public and private

resources to ensure that the supportive

services identified can be funded over

the five-year period, at least, following

the initial receipt of funding;

(5) Monitoring and evaluating the

delivery, impact and effectiveness of

any supportive service funded with

capital or operating assistance under the

FIC program;

(6) Coordinating the development and

implementation of the FIC Program with

other self-sufficiency, educational and

employment programs; and

(7) performing other duties and

functions that are appropriate for

providing eligible residents with better

access to educational and employment

opportunities.

§ 950.982 Eligibility.

An IHA may apply to establish one or

more FICs for more than one Indian

housing development. An IHA shall

demonstrate a firm commitment of

assistance from one or more sources

ensuring that supportive services will be

provided for not less than one year

following the completion of activities.

§ 950.983 FIC activities.

Activities that may be funded and

carried out by an eligible IHA may

include:

(a) The renovation, conversion, or

combination of vacant dwelling units to

create common areas to accommodate

the provision of supportive services;

(b) The renovation of existing

common areas to accommodate the

provision of supportive services;

(c) The acquisition, construction, or

renovation of facilities located near the

premises of one or more IHA

developments to accommodate the

provision of supportive services;

(d) The provision of not more than 15

percent of the total cost of supportive
18280 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

services (which may be provided

directly to eligible residents by the IHA

or by contract or lease through other

appropriate agencies or providers), but

only if the IHA demonstrates that:

(1) The supportive services are

appropriate to improve the access of

eligible residents to employment and

educational opportunities; and

(2) The IHA has made diligent efforts

to use or obtain other available

resources to fund or provide such

services; and

(e) The employment of service

coordinators.

§ 950.984 IHA role in activities under this

part.

An IHA shall develop a process that

ensures that RO/RMC representatives

and residents are fully informed of, and

have an opportunity to comment on, the

contents of the application and

activities at all stages of the application

and grant award process. The IHA shall

give full and fair consideration to the

comments and concerns of the

residents.

§ 950.985 HUD Policy on training,

employment, contracting, and

subcontracting of Indian housing residents.

In accordance with Section 3 of the

Housing and Urban Development Act of

1968 and the implementing regulations

at 24 CFR part 135, IHAs, their

contractors, and subcontractors shall

use best efforts, consistent with existing

Federal, State, tribal, and local laws and

regulations (including Section 7(b) of

the Indian Self-Determination and

Education Assistance Act), to give lowand very low-income persons the

training and employment opportunities

generated by Section 3 covered

assistance (as this term is defined in 24

CFR 135.7) and to give Section 3

business concerns the contracting

opportunities generated by Section 3

covered assistance.

§ 950.986 Grant set-aside assistance.

HUD may set-aside five percent of any

amounts available in each fiscal year

(subsequent to the first funding cycle) to

supplement grants previously awarded

under this program. These supplemental

grants would be awarded to IHAs that

demonstrate that funds cannot

otherwise be obtained and are needed to

provide adequate service levels to

residents.

§ 950.987 Resident compensation.

Residents employed pursuant to a FIC

grant shall be paid at a rate not less than

the highest of:

(a) The minimum wage that would be

applicable to the employee under the

Fair Labor Standards Act of 1938

(FLSA), if section 6(a)(1) of the FLSA

applied to the resident and if the

resident was not exempt under section

13 of the FLSA;

(b) The State, local, or tribal minimum

wage for the most nearly comparable

covered employment; or

(c) The prevailing rate of pay for

persons employed in similar public

occupations by the same employer.

§ 950.988 Administrative requirements.

Each IHA receiving a grant shall

submit to the Area ONAP annual

progress report describing and

evaluating the use of grant amounts

received under this program.

Subpart P—Section 5(h)

Homeownership Program

§ 950.1001 Purpose.

This part codifies the provisions of

the Section 5(h) Homeownership

Program for Indian housing, as

authorized by sections 5(h) and

6(c)(4)(D) of the United States Housing

Act of 1937 (the Act) and administered

by the Department of Housing and

Urban Development (HUD).

§ 950.1002 Applicability.

(a) General applicability. This subpart

P applies to low-income housing owned

by Indian Housing Authorities (IHAs),

subject to Annual Contributions

Contracts (ACCs) under the Act. The

terms ‘‘housing’’ or ‘‘low-income

housing,’’ as used in this subpart P, refer

to the types of properties described in

the preceding sentence, except as

indicated by the particular context. In

reference to housing properties,

‘‘development’’ means the same as

‘‘project’’ (as defined in the Act). Except

where otherwise indicated by the

context, ‘‘resident’’ means the same as

‘‘tenant,’’ as the latter term is used in

the Act, including Mutual Help and

Turnkey III homebuyers, as well as

rental tenants of low-income housing

and Section 8 residents, and references

to sale, purchase, conveyance, and

ownership include the types of interests

and transactions that are incident to

cooperative ownership.

(b) Nonretroactivity. In the case of a

Section 5(h) homeownership plan that

was approved by HUD before October

21, 1991, no modifications or additional

requirements will be imposed, except

for reasonable administrative

procedures prescribed by HUD.

Similarly, in the case of a plan that was

approved after October 20, 1991, but

before December 12, 1994, no

modifications or additional

requirements will be imposed, except

for such reasonable administrative

procedures.

§ 950.1003 General authority for sale.

An IHA may sell all or a portion of a

development to eligible residents, as

defined under § 950.1008, for purposes

of homeownership, according to a

homeownership plan approved by HUD

under this subpart P. Upon sale in

accordance with the HUD-approved

homeownership plan, HUD will execute

a release of the title restrictions

prescribed by the ACC. Because the

property will no longer be subject to the

ACC after sale, it will cease to be

eligible for further HUD funding for

operating subsidies or modernization

under the Act upon conveyance of title

by the IHA. (That does not preclude any

other types of post-sale subsidies that

may be available, under other Federal,

tribal, State, or local programs, such as

the possibility of available assistance

under Section 8 of the Act, in

connection with a plan for cooperative

homeownership, if authorized by the

Section 8 regulations.)

§ 950.1004 Fundamental criteria for HUD

approval.

HUD will approve an IHA’s

homeownership plan if it meets all three

of the following criteria:

(a) Workability. The plan shall be

practically workable, with sound

potential for long-term success.

Financial viability, including the

capability of purchasers to meet the

financial obligations of homeownership,

is a critical requirement.

(b) Legality. The plan shall be

consistent with law, including the

requirements of this part and any other

applicable Federal, tribal, State, and

local statutes and regulations, and

existing contracts. Subject to the other

two criteria stated in this section, any

provision that is not contrary to those

legal requirements may be included in

the plan, at the discretion of the IHA,

whether or not expressly authorized in

this subpart P.

(c) Documentation. The plan shall be

clear and complete enough to serve as

a working document for

implementation, as well as a basis for

HUD review.

§ 950.1005 Resident consultation and

involvement.

(a) Resident input. In developing a

proposed homeownership plan, and in

carrying out the plan after HUD

approval, the IHA shall consult with

residents of the development involved,

and with any resident organization that

represents them, as necessary and

appropriate to provide them with

information and a reasonable

opportunity to make their views and

recommendations known to the IHA. If
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18281

the plan contemplates sale of units in an

entirely vacant development, the IHA

shall consult with the IHA-wide

resident organization, if any. While the

Act gives the IHA sole legal authority

for final decisions, as to whether or not

to submit a proposed homeownership

plan and the content of such a proposal,

the IHA shall give residents and their

resident organizations full opportunity

for input in the homeownership

planning process, and full consideration

of their concerns and opinions.

(b) Resident initiatives. Where

individual residents, a resident

management corporation (RMC), or

another form of resident organization

may wish to initiate discussion of a

possible homeownership plan, the IHA

shall negotiate with them in good faith.

Joint development and submission of

the plan by the IHA and RMC, or other

resident organization, is encouraged. In

addition, participation of an RMC or

other resident organization in the

implementation of the plan is

encouraged. (Approved by the Office of

Management and Budget under control

number 2577–0201).

§ 950.1006 Property that may be sold.

(a) Types of property. Subject to the

workability criterion of § 950.1004(a)

(including, for example, consideration

of common elements and other

characteristics of the property), a

homeownership plan may provide for

sale of one or more dwellings, along

with interests in any common elements,

comprising all or a portion of one or

more housing developments. A plan

may provide for conversion of existing

housing to homeownership or for

homeownership sale of newlydeveloped housing. (However, for lowincome housing units developed as

replacement housing for units

demolished or disposed of pursuant to

subpart M of this part, that subpart

requires that the initial occupants be

selected solely on the basis of the

requirements governing rental

occupancy (or Mutual Help occupancy,

if applicable), without reference to any

additional homeownership eligibility or

selection requirements under this

subpart P.) Mutual Help or Turnkey III

homeownership units may be converted

to Section 5(h) homeownership, upon

voluntary termination by any existing

Mutual Help or Turnkey III homebuyers

of their contractual rights and

amendment of the ACC, in a form

prescribed by HUD.

(b) Physical condition of property.

The property shall meet local code

requirements (or, if no local code exists,

the housing quality standards

established by HUD for the Section 8

Housing Assistance Payments Program

for Existing Housing, under 24 CFR part

882) and the requirements for

elimination of lead-based paint hazards

in HUD-associated housing, under

subpart C of 24 CFR part 35. When a

prospective purchaser with disabilities

requests accessible features, the features

shall be added in accordance with 24

CFR parts 8 and 9. Further, the property

shall be in good repair, with the major

components having a remaining useful

life that is sufficient to justify a

reasonable expectation that

homeownership will be affordable by

the purchasers. This standard shall be

met as a condition for conveyance of a

dwelling to an individual purchaser,

unless the terms of sale include

measures to assure that the work will be

completed within a reasonable time

after conveyance, not to exceed two

years (e.g., as a part of a mortgage

financing package that provides the

purchaser with a home improvement

loan or pursuant to a sound sweat

equity arrangement).

§ 950.1007 Methods of sale and

ownership.

(a) Permissible methods. Any

appropriate method of sale and

ownership may be used, such as fee

simple conveyance of single-family

dwellings or conversion of multifamily

buildings to resident-owned

cooperatives or condominiums.

(b) Direct or indirect sale. An IHA

may sell dwellings to residents directly

or (with respect to multifamily

buildings or a group of single-family

dwellings) through another entity

established and governed by, and solely

composed of, residents of the IHA’s lowincome housing, provided that:

(1) The other entity has the necessary

legal capacity and practical capability to

carry out its responsibilities under the

plan.

(2) The respective rights and

obligations of the IHA and the other

entity will be specified by a written

agreement that includes:

(i) Assurances that the other entity

will comply with all provisions of the

HUD-approved homeownership plan;

(ii) Assurances that the IHA’s

conveyance of the property to the other

entity will be subject to a title restriction

providing that the property may be

resold or otherwise transferred only by

conveyance of individual dwellings to

eligible residents, in accordance with

the HUD-approved homeownership

plan, or by reconveyance to the IHA,

and that the property will not be

encumbered by the other entity without

the written consent of the IHA;

(iii) Protection against fraud or misuse

of funds or other property on the part

of the other entity, its employees and

agents;

(iv) Assurances that the resale

proceeds will be used only for the

purposes specified by the HUDapproved homeownership plan;

(v) Limitation of the other entity’s

administrative and overhead costs, and

of any compensation or profit that may

be realized by the entity, to amounts

that are reasonable in relation to its

responsibilities and risks;

(vi) Accountability to the IHA and

residents for the recordkeeping,

reporting and audit requirements of

§ 950.1017;

(vii) Assurances that the other entity

will administer its responsibilities

under the plan in accordance with

applicable civil rights statutes and

implementing regulations, as described

in § 950.115; and

(viii) Adequate legal remedies for the

IHA and residents, in the event of the

other entity’s failure to perform in

accordance with the agreement.

§ 950.1008 Purchaser eligibility and

selection.

Standards and procedures for

eligibility and selection of the initial

purchasers of individual dwellings shall

be consistent with the following

provisions:

(a) Applications. Persons who are

interested in purchase shall submit

applications for that specific purpose,

and those applications shall be handled

separately from applications for other

IHA programs. For vacant units,

applications shall be dated as received

by the IHA and, subject to eligibility and

preference factors, selection shall be

made in the order of receipt.

Application for homeownership shall

not affect an applicant’s place on any

other IHA waiting list.

(b) Eligibility threshold. Subject to any

additional eligibility and preference

standards that are required or permitted

under this section, a homeownership

plan may provide for the eligibility of

residents of low-income housing owned

or leased by the seller IHA (including

Mutual Help and Turnkey III

homebuyers, who may elect to terminate

their existing homebuyer agreements in

favor of purchase under the Section 5(h)

homeownership plan) and residents of

other housing who are receiving

housing assistance under Section 8 of

the Act, under an ACC administered by

the seller IHA; provided that the

resident has been in lawful occupancy

for a minimum period specified in the

plan (not less than 30 days prior to

conveyance of title to the dwelling to be
18282 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

purchased). For residents of other

housing who are receiving housing

assistance under Section 8, the

minimum occupancy requirement may

be satisfied in the unit for which the

family is receiving Section 8 assistance

or the Indian housing unit. If the family

is to meet part or all of the minimum

occupancy requirement in the Indian

housing unit, the Section 8 assistance

shall be terminated before the family

moves into the Indian housing unit.

Indian housing units are ineligible for

Section 8 certificate and voucher

assistance as long as they remain under

the ACC as Indian housing.

(c) Applicants who do not meet

minimum residency requirement for

eligibility. (1) A homeownership plan, at

IHA discretion, may also permit

eligibility for applicants who do not

meet the minimum residency

requirement of paragraph (b) of this

section (30 days or more, as prescribed

by the homeownership plan) at the time

of application, provided that their

selection is conditioned upon

completion of the minimum residency

requirement prior to conveyance of title.

A plan may thus allow satisfaction of

the threshold requirements for

eligibility by:

(i) Existing low-income housing or

Section 8 residents with less than the

minimum period of residency;

(ii) Families who are already on the

IHA’s waiting lists; and

(iii) Other low-income families who

are neither low-income housing nor

Section 8 residents at the time of

application or selection.

(2) Applicants who are not already

low-income housing residents, however,

shall also satisfy the requirements for

admission to such housing.

(d) Compliance with lease obligations.

Eligibility shall be limited, however, to

residents who have been current in all

of their lease obligations (in the case of

Mutual Help or Turnkey III homebuyers,

obligations under their homebuyer

agreements) over a period of not less

than six months prior to conveyance of

title (or, if so provided by the

homeownership plan, such lesser period

as has elapsed since the beginning of

low-income housing or Section 8

tenure), including, but not limited to,

payment of rents (or homebuyer’s

monthly payments) and other charges

and reporting of all income that is

pertinent to determination of rents (or

homebuyer’s monthly payments). At the

IHA’s discretion, the homeownership

plan may allow a resident to remedy

under-reporting of income, provided

that proper reporting of income would

not have resulted in ineligibility for

admission to low-income housing or for

Section 8 assistance, by payment of the

resulting underpayment for rent (or

homebuyer’s monthly payments) prior

to conveyance of title to the

homeownership dwelling, either in a

lump sum or in installments over a

reasonable period. Alternatively, the

plan may permit payment within a

reasonable period after conveyance of

title, under an agreement secured by a

mortgage on the property.

(e) Affordability standard. Eligibility

shall be further limited to residents who

are capable of assuming the financial

obligations of homeownership, under

minimum income standards for

affordability, taking into account the

unavailability of operating subsidies

and modernization funds after

conveyance of the property by the IHA.

A homeownership plan may, however,

take account of any available subsidy

from other sources (e.g., in connection

with a plan for cooperative ownership,

assistance under Section 8 of the Act, if

available and authorized by the Section

8 regulations). Under this affordability

standard, an applicant shall meet the

following requirements:

(1) On an average monthly estimate,

the amount of the applicant’s payments

for mortgage principal and interest, plus

insurance, real estate taxes, utilities,

maintenance, and other regularlyrecurring homeownership costs (such as

condominium, cooperative, or other

homeownership association fees) will

not exceed the sum of 35 percent of the

applicant’s adjusted income, as defined

in this part.

(2) The applicant can pay any

amounts required for closing, such as a

downpayment (if any) and closing costs

chargeable to the purchaser, in

accordance with the homeownership

plan.

(f) Option to restrict eligibility. A

homeownership plan may, at the IHA’s

discretion, restrict eligibility to one or

more residency-based categories (e.g.,

for occupied units, eligibility may be

restricted to the existing residents of the

units to be sold; for vacant units,

eligibility may be restricted to lowincome housing residents only, or to

low-income housing residents plus any

one or more of the other residencybased categories that may be established

under paragraphs (b) and (c) of this

section), as may be reasonable in view

of the number of units to be offered for

sale and the estimated number of

eligible applicants in various categories

provided that the residency-based

preferences mandated by paragraph (g)

of this section are observed.

(g) Residency-based preferences. For

occupied units, a preference shall be

given to the existing residents of each of

the dwellings to be sold. For vacant

units (including units which are

voluntarily vacated), a preference shall

be given to residents of other lowincome housing units owned or leased

by the seller IHA (over any other

residency-based categories that may be

established by a homeownership plan

for Section 8 residents or for

nonresident applicants).

(h) Other eligibility or preference

standards. If consistent with the other

provisions of this section, a

homeownership plan may include any

other standards for eligibility or

preference, or both, at the discretion of

the IHA, that are not contrary to law.

(Approved by the Office of Management

and Budget under control number 2577–

0201).

§ 950.1009 Counseling, training, and

technical assistance.

Appropriate counseling shall be

provided to prospective and actual

purchasers, as necessary for each stage

of implementation of the

homeownership plan. Particular

attention shall be given to the terms of

purchase and financing, along with the

other financial and maintenance

responsibilities of homeownership. In

addition, where applicable, appropriate

training and technical assistance shall

be provided to any entity (such as an

RMC, other resident organization, or a

cooperative or condominium entity) that

has responsibilities for carrying out the

plan.

§ 950.1010 Nonpurchasing residents.

(a) Nonpurchasing resident’s options.

If an existing resident of a dwelling

authorized for sale under a

homeownership plan is ineligible for

purchase, or declines to purchase, the

resident shall be given the choice of

either relocation to other suitable and

affordable housing or continued

occupancy of the present dwelling on a

rental basis, at a rent no higher than that

permitted by the Act. Displacement

(permanent, involuntary move), in order

to make a dwelling available for sale, is

prohibited. In addition to applicable

program sanctions, a violation of the

displacement prohibition may trigger a

requirement to provide relocation

assistance in accordance with the

Uniform Relocation and Real Property

Acquisition Act of 1970 and

implementing regulations at 49 CFR part

24. Where continued rental occupancy

by a nonpurchasing resident is

contemplated after conveyance of the

property, the homeownership plan shall

include provision for any rental subsidy

required (e.g., Section 8 assistance, if

available and authorized by the Section
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18283

8 regulations). As soon as feasible after

they can be identified, all

nonpurchasing residents shall be given

written notice of their options under

this section.

(b) Relocation assistance. A

nonpurchasing resident who chooses to

relocate pursuant to this section shall be

offered the following relocation

assistance:

(1) Advisory services to assure full

choices and real opportunities to obtain

relocation within a full range of

neighborhoods where suitable housing

may be found, including timely

information, counseling, and

explanation of the resident’s rights

under applicable civil rights statutes

and implementing regulations, as

specified in § 950.115, and referrals to

suitable, safe, sanitary, and affordable

housing (at a rent no higher than

permitted by the Act), which is of the

resident’s choice, on a

nondiscriminatory basis, in accordance

with applicable civil rights statutes and

implementing regulations, as specified

in § 950.115. This requirement will be

met if the applicant is offered the

opportunity to relocate to another

suitable unit in other low-income

housing, under any of the housing

assistance programs under Section 8 of

the Act, or any other Federal, tribal,

State, or local program that is

comparable, as to standards of housing

quality, admission, and rent, to the

programs under the Act, and provides a

term of assistance of at least five years;

and

(2) Payment for actual, reasonable

moving and related expenses.

(c) Temporary relocation. A

nonpurchasing resident who must

relocate temporarily to permit work to

be carried out shall be provided

suitable, decent, safe, and sanitary

housing for the temporary period and

reimbursed for all reasonable out-ofpocket expenses incurred in connection

with the temporary relocation,

including the cost of moving to and

from the temporarily occupied housing

and any increase in monthly rent and

utility costs.

§ 950.1011 Nonroutine maintenance

reserve.

(a) When reserve is required. A

nonroutine maintenance reserve shall be

established for all multifamily

properties sold under a homeownership

plan. For single-family dwellings, such

a reserve shall not be required if the

availability of the funds needed for

nonroutine maintenance is adequately

addressed under the affordability

standard prescribed by the plan.

(b) Purpose of reserve. The purpose of

this reserve shall be to provide a source

of reserve funds for nonroutine

maintenance (including replacement),

as necessary to ensure the long-term

success of the plan, including protection

of the interests of the homeowners and

the IHA. The amounts to be set aside,

and other terms of this reserve, shall be

as necessary and appropriate for the

particular homeownership plan, taking

into account such factors as prospective

needs for nonroutine maintenance, the

homeowners’ financial resources, and

any special factors that may aggravate or

mitigate the need for such a reserve.

§ 950.1012 Purchase prices and financing.

(a) Below-market terms. To ensure

affordability by eligible purchasers, by

the standard adopted under § 906.8(e) of

this chapter, a homeownership plan

may provide for below-market purchase

prices or below-market financing, or a

combination of the two. Discounted

purchase prices may be determined on

a unit-by-unit basis, based on the

particular purchaser’s ability to pay, or

may be determined by any other fair and

reasonable method (e.g., uniform prices

for a group of comparable dwellings,

within a range of affordability by a

group of potential purchasers).

(b) Types of financing. Any type of

private or public financing may be used

(e.g., conventional, Federal Housing

Administration (FHA), Department of

Veterans Affairs (VA), Farmers’ Home

Administration (FmHA), or a tribal,

State, or local program). An IHA may

finance or assist in financing purchase

by any methods it may choose, such as

purchase-money mortgages, guarantees

of mortgage loans from other lenders,

shared equity, or lease-purchase

arrangements.

§ 950.1013 Protection against fraud and

abuse.

A homeownership plan shall include

appropriate protections against any risks

of fraud or abuse that are presented by

the particular plan, such as collusive

purchase for the benefit of nonresidents,

extended use of the dwelling by the

purchaser as rental property, or

collusive sale that would circumvent

the resale profit limitation of § 950.1014.

§ 950.1014 Limitation on resale profit.

(a) General. If a dwelling is sold to the

initial purchaser for less than fair

market value, the homeownership plan

shall provide for appropriate measures

to preclude realization by the initial

purchaser of windfall profit on resale.

‘‘Windfall profit’’ means all or a portion

of the resale proceeds attributable to the

purchase price discount (the fair market

value at date of purchase from the IHA

less the below-market purchase price),

as determined by one of the methods

described in paragraphs (b) through (d)

of this section. Subject to that

requirement, however, purchasers

should be permitted to retain any resale

profit attributable to appreciation in

value after purchase (or a portion of

such profit under a limited or shared

equity arrangement), along with any

portion of the resale profit that is fairly

attributable to improvements made by

them after purchase.

(b) Promissory note method. Where

there is potential for a windfall profit

because the dwelling unit is sold to the

initial purchaser for less than fair

market value, without a commensurate

limited or shared equity restriction, the

initial purchaser shall execute a

promissory note, payable to the IHA,

along with a mortgage securing the

obligation of the note, on the following

terms and conditions:

(1) The principal amount of

indebtedness shall be the lesser of:

(i) The purchase price discount, as

determined by the definition in

paragraph (a) of this section and stated

in the note as a dollar amount; or

(ii) The net resale profit, in an amount

to be determined upon resale by a

formula stated in the note. That formula

shall define net resale profit as the

amount by which the gross resale price

exceeds the sum of:

(A) The discounted purchase price;

(B) Reasonable sale costs charged to

the initial purchaser upon resale; and

(C) Any increase in the value of the

property that is attributable to

improvements paid for or performed by

the initial purchaser during tenure as a

homeowner.

(2) At the option of the IHA, the note

may provide for automatic reduction of

the principal amount over a specified

period of ownership while the property

is used as the purchaser’s family

residence, resulting in total forgiveness

of the indebtedness over a period of not

less than five years from the date of

conveyance, in annual increments of not

more than 20 percent. This does not

require an IHA’s plan to provide for any

such reduction at all, or preclude it from

specifying terms that are less generous

to the purchaser than those stated in the

foregoing sentence.

(3) To preclude collusive resale that

would circumvent the intent of this

section, the IHA shall (by an appropriate

form of title restriction) condition the

initial purchaser’s right to resell upon

approval by the IHA, to be based solely

on the IHA’s determination that the

resale price represents fair market value

or a lesser amount that will result in
18284 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

payment to the IHA, under the note, of

the full amount of the purchase price

discount (subject to any accrued

reduction, if provided for by the

homeownership plan pursuant to

paragraph (b)(2) of this section). If so

determined, the IHA shall be obligated

to approve the resale.

(4) The IHA may, in its sole

discretion, agree to subordination of the

mortgage that secures the promissory

note, in favor of an additional lien

granted by the purchaser as security for

a loan for home improvements or other

purposes approved by the IHA.

(c) Limited equity method. As a

second option, the requirement of this

section may be satisfied by an

appropriate form of limited equity

arrangement, restricting the amount of

net resale profit that may be realized by

the seller (the initial purchaser and

successive purchasers over a period

prescribed by the homeownership plan)

to the sum of:

(1) The seller’s paid-in equity;

(2) The portion of the resale proceeds

attributable to any improvements paid

for or performed by the seller during

homeownership tenure; and

(3) An allowance for a portion of the

property’s appreciation in value during

homeownership tenure, calculated by a

fair and reasonable method specified in

the homeownership plan (e.g.,

according to a price index factor or

other measure).

(d) Third option. The requirements of

this section may be satisfied by any

other fair and reasonable arrangement

that will accomplish the essential

purposes stated in paragraph (a) of this

section.

(e) Appraisal. Determinations of fair

market value under this section shall be

made on the basis of appraisal within a

reasonable time prior to sale, by an

independent appraiser to be selected by

the IHA.

§ 950.1015 Use of sale proceeds.

(a) General authority for use. Sale

proceeds may, after provision for sale

and administrative costs that are

necessary and reasonable for carrying

out the homeownership plan, be

retained by the IHA and used for

housing assistance to low-income

families (as such families are defined

under the Act). The term ‘‘sale

proceeds’’ includes all payments made

by purchasers for credit to the purchase

price (e.g., earnest money,

downpayments, payments out of the

proceeds of mortgage loans, and

principal and interest payments under

purchase-money mortgages), along with

any amounts payable upon resale under

§ 950.1014, and interest earned on all

such receipts. (Residual receipts, as

defined in the ACC, shall not be treated

as sale proceeds.)

(b) Permissible uses. Sale proceeds

may be used for any one or more of the

following forms of housing assistance

for low-income families, at the

discretion of the IHA and as stated in

the HUD-approved homeownership

plan:

(1) In connection with the

homeownership plan from which the

funds are derived, for purposes that are

justified to ensure the success of the

plan and to protect the interests of the

homeowners, the IHA and any other

entity with responsibility for carrying

out the plan. Nonexclusive examples

include nonroutine maintenance

reserves under § 950.1011, a reserve for

loans to homeowners to prevent or cure

default or for other emergency housing

needs; a reserve for any contingent

liabilities of the IHA under the

homeownership plan (such as IHA

guaranty of mortgage loans); and a

reserve for IHA repurchase, repair, and

resale of homes in the event of defaults.

(2) In connection with another HUDapproved homeownership plan under

this part, for assistance to purchasers

and for reasonable planning and

implementation costs.

(3) In connection with a tribal, State,

or local homeownership program for

low-income families, as described in the

homeownership plan, for assistance to

purchasers and for reasonable planning

and implementation costs. Under such

programs, sales proceeds may be used to

construct or acquire additional

dwellings for sale to low-income

families, or to assist such families in

purchasing other dwellings from public

or private owners.

(4) In connection with the IHA’s other

low-income housing that remains under

ACC, for any purposes authorized for

the use of operating funds under the

ACC and applicable provisions of the

Act and Federal regulations, as included

in the HUD-approved operating budgets.

Examples include maintenance and

modernization, augmentation of

operating reserves, protective services,

and resident services. Such use shall not

result in the reduction of the operating

subsidy otherwise payable to the IHA

for its other low-income housing.

(5) In connection with any other type

of Federal, tribal, State, or local housing

program for low-income families, as

described in the homeownership plan.

§ 950.1016 Replacement housing.

(a) Replacement requirement. As a

condition for transfer of ownership

under a HUD-approved homeownership

plan, the IHA shall obtain a funding

commitment, from HUD or another

source, for the replacement of each of

the dwellings to be sold under the plan.

Replacement housing may be provided

by one or any combination of the

following methods:

(1) Development by the IHA of

additional low-income housing under

this part (by new construction or

acquisition).

(2) Rehabilitation of vacant lowincome housing owned by the IHA.

(3) Use of five-year, tenant-based

certificate or voucher assistance under

Section 8 of the Act.

(4) If the homeownership plan is

submitted by the IHA for sale to

residents through an RMC, resident

organization, or cooperative association

that is otherwise eligible to participate

under this subpart, acquisition of nonpublicly-owned housing units, that the

RMC, resident organization, or

cooperative association will operate as

rental housing, comparable to IHAowned low-income housing as to term

of assistance, housing standards,

eligibility, and contribution to rent.

(5) Any other Federal, tribal, State, or

local housing program that is

comparable, as to housing standards,

eligibility, and contribution to rent, to

the programs referred to in paragraphs

(a)(1) through (a)(3) of this section, and

provides a term of assistance of not less

than five years.

(b) Funding commitments. Although a

HUD funding commitment is required if

the replacement housing requirement is

to be satisfied through any of the HUD

programs listed in paragraph (a) of this

section, HUD’s approval of a Section

5(h) homeownership plan on the

expectation that such a funding

commitment will be forthcoming shall

not constitute a binding obligation to

make such a commitment. Where the

requirement is to be satisfied under a

tribal, State, or local program, or a

Federal program not administered by

HUD, a funding commitment shall be

required from the proper authority.

(c) Use of sale proceeds to fund

replacement housing. Sale proceeds that

are generated under the homeownership

plan may be used under some of the

replacement housing options under

paragraph (a) of this section (e.g.,

rehabilitation of vacant public housing

units, or an eligible local program).

Where a homeownership plan provides

for sale proceeds to be used for

replacement housing, HUD approval of

the plan and execution of the IHA–HUD

implementing agreement shall satisfy

the funding commitment requirement of

paragraph (a) of this section, with regard

to the amount of replacement housing to

be funded out of sale proceeds.
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18285

(d) Consistency with current housing

needs. Replacement housing may differ

from the dwellings sold under the

homeownership plan, as to unit sizes or

family or elderly occupancy, if the IHA

determines that such change is

consistent with current local housing

needs for low-income families.

(e) Inapplicability to prior plans. This

section shall not apply to

homeownership plans that were

submitted to HUD under the Section

5(h) Homeownership Program prior to

October 1, 1990.

§ 950.1017 Records, reports, and audits.

The IHA shall be responsible for the

maintenance of records (including sale

and financial records) for all activities

incident to implementation of the

homeownership plan. Until all planned

sales of individual dwellings have been

completed, the IHA shall submit to HUD

annual sales reports, in a form

prescribed by HUD. The receipt,

retention, and expenditure of the sale

proceeds shall be covered in the regular

independent audits of the IHA’s housing

operations, and any supplementary

audits that HUD may find necessary for

monitoring. Where another entity is

responsible for sale of individual units,

pursuant to § 950.1007(b), the IHA shall

ensure that the entity’s responsibilities

include proper recordkeeping and

accountability to the IHA, sufficient to

enable the IHA to monitor compliance

with the approved homeownership

plan, to prepare its reports to HUD, and

to meet its audit responsibilities. All

books and records shall be subject to

inspection and audit by HUD and the

General Accounting Office (GAO).

(Approved by the Office of Management

and Budget under control number 2577–

0201).

§ 950.1018 Submission and review of

homeownership plan.

Whether to develop and submit a

proposed homeownership plan is a

matter within the discretion of each

IHA. An IHA may initiate a proposal at

any time, according to the following

procedures:

(a) Preliminary consultation with

HUD staff. Before submission of a

proposed plan, the IHA shall consult

informally with the appropriate HUD

Area ONAP to assess feasibility and the

particulars to be addressed by the plan.

(b) Submission to HUD. The IHA shall

submit the proposed plan, together with

supporting documentation, in a format

prescribed by HUD, to the appropriate

HUD Area ONAP.

(c) Conditional approval. Conditional

approval may be given, at HUD

discretion, when HUD determines that

to be justified. For example, conditional

HUD approval might be a necessary

precondition for the IHA to obtain the

funding commitments required to

satisfy the requirements for final HUD

approval of a complete homeownership

plan. Where conditional approval is

granted, HUD will specify the

conditions in writing. (Approved by the

Office of Management and Budget under

control number 2577–0201)

§ 950.1019 HUD approval and IHA-HUD

implementing agreement.

Upon HUD notification to the IHA

that the homeownership plan is

approvable (in final form that satisfies

all applicable requirements of this part),

the IHA and HUD will execute a written

implementing agreement, in a form

prescribed by HUD, to evidence HUD

approval and authorization for

implementation. The plan itself, as

approved by HUD, shall be incorporated

in the implementing agreement. Any of

the items of supporting documentation

may also be incorporated, if agreeable to

the IHA and HUD. The IHA shall be

obligated to carry out the approved

homeownership plan and other

provisions of the implementing

agreement without modification, except

with written approval by HUD.

(Approved by the Office of Management and

Budget under control number 2577–0201).

§ 950.1020 Content of homeownership

plan.

The homeownership plan shall

address the following matters, as

applicable to the particular factual

situation:

(a) Property description. A description

of the property, including identification

of the development and the specific

dwellings to be sold.

(b) Repair or rehabilitation. If

applicable, a plan for any repair or

rehabilitation required under

§ 950.1006, based on the assessment of

the physical condition of the property

that is included in the supporting

documentation.

(c) Purchaser eligibility and selection.

The standards and procedures to be

used for homeownership applications

and the eligibility and selection of

purchasers, consistent with the

requirements of § 950.1008.

(d) Sale and financing. Terms and

conditions of sale and financing (see

particularly §§ 950.1011 through

950.1014).

(e) Future consultation with residents.

A plan for consultation with residents

during the implementation stage (See

§ 950.1005). If appropriate, this may be

combined with the plan for counseling.

(f) Counseling. Counseling, training,

and technical assistance to be provided

in accordance with § 950.1009.

(g) Sale via other entity. If the plan

contemplates sale to residents via an

entity other than the IHA, a description

of that entity’s responsibilities and

information demonstrating that the

requirements of § 950.1007 have been

met or will be met in a timely fashion.

(h) Nonpurchasing residents. If

applicable, a plan for nonpurchasing

residents, in accordance with

§ 950.1010.

(i) Sale proceeds. An estimate of the

sale proceeds and an explanation of

how they will be used, in accordance

with § 950.1015.

(j) Replacement housing. A

replacement housing plan, in

accordance with § 950.1016.

(k) Administration. An administrative

plan, including estimated staffing

requirements.

(l) Recordkeeping, accounting and

reporting. A description of the

recordkeeping, accounting, and

reporting procedures to be used,

including those required by § 950.1017.

(m) Budget. A budget estimate,

showing the costs of implementing the

plan, and the sources of the funds that

will be used.

(n) Timetable. An estimated timetable

for the major steps required to carry out

the plan.

(Approved by the Office of Management and

Budget under control number 2577–0201).

§ 950.1021 Supporting documentation.

The following supporting

documentation shall be submitted to

HUD with the proposed homeownership

plan, as appropriate for the particular

plan:

(a) Estimate of value. An estimate of

the fair market value of the property,

including the range of fair market values

of individual dwellings, with

information to support the

reasonableness of the estimate. (The

purpose of this information is merely to

assist HUD in determining whether,

taking into consideration the estimated

fair market value of the property, the

plan adequately addresses any risks of

fraud and abuse, pursuant to § 950.1013,

and windfall profit on resale, pursuant

to § 950.1014. A formal appraisal need

not be submitted with the proposed

homeownership plan.)

(b) Physical assessment. An

assessment of the physical condition of

the property, based on the standards

specified in § 950.1006.

(c) Workability. A statement

demonstrating the practical workability

of the plan, based on analysis of data on

such elements as purchase prices, costs
18286 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

of repair or rehabilitation,

homeownership costs, family incomes,

availability of financing, and the extent

to which there are eligible residents

who are expected to be interested in

purchase. (See § 950.1004(a).)

(d) IHA commitment and capability.

Information to substantiate the

commitment and capability of the IHA

and any other entity with substantial

responsibilities for implementing the

plan.

(e) Resident planning input. A

description of resident consultation

activities carried out pursuant to

§ 950.1005 before submission of the

plan, with a summary of the views and

recommendations of residents and

copies of any written comments that

may have been submitted to the IHA by

individual residents and resident

organizations, and any other individuals

and organizations.

(f) Nondiscrimination certification.

The IHA’s certification that it will

administer the plan on a

nondiscriminatory basis, in accordance

with applicable civil rights laws and

implementing regulations, as described

in § 950.115, and will assure

compliance with those requirements by

any other entity that may assume

substantial responsibilities for

implementing the plan.

(g) Legal opinion. An opinion by legal

counsel to the IHA, stating that counsel

has reviewed the plan and finds it

consistent with all applicable

requirements of Federal, tribal, State,

and local law, including regulations as

well as statutes. In addition, counsel

shall identify the major legal

requirements that remain to be met in

implementing the plan, if approved by

HUD as submitted, indicating an

opinion about whether those

requirements can be met without special

problems that may disrupt the timetable

or other features contained in the plan.

(h) Board resolution. A resolution by

the IHA’s Board of Commissioners,

evidencing its approval of the plan.

(i) Other information. Any other

information that may reasonably be

required for HUD review of the plan.

Except for the IHA-HUD implementing

agreement under § 950.1019, HUD

approval is not required for documents

to be prepared and used by the IHA in

implementing the plan (such as

contracts, applications, deeds,

mortgages, promissory notes, and

cooperative or condominium

documents), if their essential terms and

conditions are described in the plan.

Consequently, those documents need

not be submitted as part of the plan or

the supporting documentation.

(Approved by the Office of Management

and Budget under control number 2577–

0201).

Subpart Q—[Reserved]

Subpart R—Family Self-Sufficiency

§ 950.3001 Purpose, scope, and

applicability.

(a) Purpose. The purpose of the

Family Self-Sufficiency (FSS) program

is to develop local strategies to

coordinate the use of public and Indian

housing assistance and housing

assistance under the section 8 rental

certificate and rental voucher programs

with public and private resources, to

enable families eligible to receive

assistance under these programs to

achieve economic independence and

self-sufficiency.

(b) Applicability. This subpart applies

to Indian housing authorities (IHA) that

elect to operate a local FSS program,

and when such an election is made, to

Indian housing assisted under the

United States Housing Act of 1937, and

developed or operated by an IHA in an

Indian area, as defined in § 950.102.

This subpart does not apply to the

Mutual Help Homeownership Program

or the Turnkey III Program. IHAs that

elect to participate in the FSS program

are not subject to minimum program

size requirements. Additionally, IHAs

that received Indian housing units

under the FSS incentive award

competitions are not subject to the

minimum program size requirements.

§ 950.3002 Program objectives.

The objective of the FSS program is to

reduce the dependency of low-income

families on welfare assistance, on

section 8, public, or Indian housing

assistance, or any Federal, State, or local

rent or homeownership subsidies. The

FSS program provides low-income

families opportunities for education, job

training, counseling, and other forms of

social service assistance, while living in

assisted housing, so that they may

obtain the education, employment, and

business and social skills necessary to

achieve self-sufficiency, as this term is

defined in § 950.3003. HUD will

measure the success of a local FSS

program not only by the number of

families who achieve self-sufficiency,

but also by the number of FSS families

who, as a result of participation in the

program, have family members who

obtain their first job, or who obtain

higher paying jobs; no longer need

benefits received under one or more

welfare programs; obtain a high school

diploma or higher education degree; or

accomplish similar goals that will assist

the family in obtaining economic

independence.

§ 950.3003 Definitions.

As used in this subpart R:

Certification means a written

assertion based on supporting evidence,

provided by the FSS family or the IHA,

as may be required under this subpart

R, and that:

(1) Shall be maintained by the IHA in

the case of the family’s certification, or

by HUD in the case of the IHA’s

certification;

(2) Shall be made available for

inspection by HUD, the IHA, and the

public, as appropriate; and

(3) Shall be deemed to be accurate for

purposes of this subpart R, unless the

Secretary or the IHA, as applicable,

determines otherwise after inspecting

the evidence and providing due notice

and opportunity for comment.

Contract of participation means a

contract in a form approved by HUD,

entered into between a participating

family and an IHA operating an FSS

program that sets forth the terms and

conditions governing participation in

the FSS program. The contract of

participation includes all individual

training and services plans, attached to

the contract as exhibits, entered into

between the IHA and all members of the

family who will participate in the FSS

program. For additional details, see

§ 950.3022.

Earned income means income or

earnings included in annual income

from wages, tips, salaries, other

employee compensation, and selfemployment. (See § 950.102.) Earned

income does not include any pension or

annuity, transfer payments, any cash or

in-kind benefits, or funds deposited in

or accrued interest on the FSS escrow

account established by an IHA on behalf

of a participating family.

Effective date of contract of

participation means the first day of the

month following the month in which

the FSS family and the IHA entered into

the contract of participation.

Eligible families mean current

residents of Indian housing.

Enrollment means the date that the

FSS family entered into the contract of

participation with the IHA.

Family Self-Sufficiency program or

FSS program means the program

established by an IHA within its

jurisdiction to promote self-sufficiency

among participating families, including

the provision of supportive services to

these families, as authorized by section

23 of the United States Housing Act of

1937 (42 U.S.C. 1437u).
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18287

FSS account means the FSS escrow

account authorized by section 23 of the

Act, and as provided by § 950.3025.

FSS credit means the amount credited

by the IHA to the participating family’s

FSS account.

FSS family or participating family

means a family that resides in Indian

housing, that elects to participate in the

FSS program, and whose designated

head of the family has signed the

contract of participation.

FSS related service program means

any program, publicly or privately

sponsored, that offers the kinds of

supportive services described in the

definition of ‘‘supportive services’’ set

forth in this section.

FSS slots means the total number of

Indian housing units that comprise the

minimum size of an IHA’s Indian

housing FSS program.

Head of FSS family means the adult

member of the FSS family who is the

head of the household for purposes of

determining income eligibility and rent.

Housing subsidies means assistance to

meet the costs and expenses of

temporary shelter, rental housing, or

homeownership, including rent,

mortgage, or utility payments.

Individual training and services plan

means:

(1) A written plan that is prepared for

the head of the FSS family, and each

adult member of the FSS family who

elects to participate in the FSS program,

by the IHA in consultation with the

family member, and that sets forth:

(i) The supportive services to be

provided to the family member;

(ii) The activities to be completed by

that family member; and

(iii) The agreed upon completion

dates for the services and activities.

(2) Each individual training and

services plan shall be signed by the IHA

and the participating family member,

and is attached to and incorporated as

part of the contract of participation. An

individual training and services plan

shall be prepared for the head of the

FSS family.

JOBS Program means the Job

Opportunities and Basic Skills Training

Program authorized under part F, title

IV of the Social Security Act (42 U.S.C.

402(a)(19)).

JTPA means the Job Training

Partnership Act (29 U.S.C. 1579(a)).

Program Coordinating Committee or

PCC means the committee described in

§ 950.3012.

Secretary means the Secretary of

Housing and Urban Development.

Self-sufficiency means that an FSS

family is no longer receiving section 8,

public, or Indian housing assistance, or

any Federal, State, or local rent or

homeownership subsidies or welfare

assistance. Achievement of selfsufficiency, although an FSS program

objective, is not a condition for receipt

of the FSS account funds. (See

§ 950.3025).

Supportive services means those

appropriate services that an IHA will

make available, or cause to be made

available, to an FSS family under a

contract of participation, and may

include:

(1) Child care—child care of a type

that provides sufficient hours of

operation and serves an appropriate

range of ages;

(2) Transportation—transportation

necessary to enable participating family

members to receive available services,

or to commute to their places of

employment;

(3) Education—remedial education;

education for completion of secondary

or post secondary schooling;

(4) Employment—job training,

preparation, and counseling; job

development and placement; and

follow-up assistance after job placement

and completion of the contract of

participation;

(5) Personal welfare—substance/

alcohol abuse treatment and counseling;

(6) Household skills and

management—training in homemaking

and parenting skills; household

management; and money management;

(7) Counseling—counseling in the

areas of:

(i) The responsibilities of

homeownership;

(ii) Opportunities available for

affordable rental and homeownership in

the private housing market; and

(iii) Money management; and

(8) Other services—any other services

and resources, including case

management, reasonable

accommodations for individuals with

disabilities, that the IHA may determine

to be appropriate in assisting FSS

families to achieve economic

independence and self-sufficiency.

Unit size or size of unit refers to the

number of bedrooms in a dwelling unit.

§ 950.3004 Basic requirements of the FSS

program.

(a) Compliance with program

regulations. An FSS program

established under this subpart shall be

operated in conformity with the

regulations of this part.

(b) Compliance with Action Plan. An

FSS program established under this

subpart shall be operated in compliance

with an Action Plan, as described in

§ 950.3011, and provide comprehensive

supportive services as defined in

§ 950.3003.

(c) Compliance with equal

opportunity requirements. An FSS

program established under this subpart

shall be operated in compliance with all

applicable Indian housing regulations

and all applicable civil rights

authorities, including: the Indian Civil

Rights Act of 1968 (25 U.S.C. 1301–

1303); title VI of the Civil Rights Act of

1964 (42 U.S.C. 2000d), the Fair

Housing Act (42 U.S.C. 3601–3619);

section 504 of the Rehabilitation Act of

1973 (29 U.S.C. 794); the Age

Discrimination Act of 1975 (42 U.S.C.

6101–6107); Executive Order 11063 (3

CFR, 1959–1963 Comp., p. 652), as

amended by Executive Order 12259 (3

CFR, 1980 Comp., p. 307); section 7(b)

of the Indian Self-Determination and

Education Assistance Act (25 U.S.C.

450(e)(b)); section 3 of the Housing and

Urban Development Act of 1968 (12

U.S.C. 1701u); and the regulations

implementing these authorities. (The

Indian Civil Rights Act applies to IHAs

organized pursuant to tribal laws; and

Title VI of the Civil Rights Act of 1964

and the Fair Housing Act applies to

State authorized IHAs.)

§ 950.3011 Action Plan.

(a) General. To participate in the FSS

program, an IHA shall have a HUDapproved Action Plan that complies

with the requirements of this section.

(b) Development of Action Plan. The

Action Plan shall be developed by the

IHA in consultation with the chief

executive officer of the applicable unit

of general local government, and the

Program Coordinating Committee.

(c) Initial submission and revisions.

(1) Initial submission. Unless the dates

set forth in this paragraph are extended

by HUD for good cause, an IHA that is

establishing its first FSS program shall

submit an Action Plan to HUD for

approval within 90 days of notification

by HUD of approval of the IHA’s first

application for new housing units.

(2) Revision. Following initial

approval of the Action Plan by HUD, no

further approval of the Action Plan is

required unless the IHA proposes to

make policy changes to the Action Plan,

or HUD requires changes. Any changes

to the Action Plan shall be submitted to

and approved by HUD.

(d) Contents of Plan. The Action Plan

shall describe the policies and

procedures of the IHA for operation of

a local FSS program, and shall contain,

at a minimum, the following

information:

(1) Family demographics—a

description of the number, size,

characteristics, and other demographics

(including racial and ethnic data), and

the supportive service needs of the
18288 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

families expected to participate in the

FSS program;

(2) Estimate of participating

families—an estimate of the number of

eligible FSS families who can

reasonably be expected to receive

supportive services under the FSS

program, based on available and

anticipated Federal, tribal, State, local,

and private resources;

(3) Eligible families from other selfsufficiency programs—if applicable, the

number of eligible families, by program

type, who are participating in Operation

Bootstrap, Project Self-Sufficiency, or

any other local self-sufficiency program

who are expected to agree to execute an

FSS contract of participation;

(4) FSS family selection procedures—

a statement indicating the procedures to

be utilized to select families for

participation in the FSS program,

subject to the requirements governing

the selection of FSS families, set forth

in § 950.3013.

(5) Incentives to encourage

participation—a description of the

incentives that the IHA’s intends to offer

eligible families to encourage their

participation in the FSS program

(incentives plan). The incentives plan

shall provide for the establishment of

the FSS account in accordance with the

requirements set forth in § 950.3025,

and other incentives, if any, designed by

the IHA. The incentives plan shall be

part of the Action Plan.

(6) Outreach efforts—a description of:

(i) The IHA’s efforts, including

notification and outreach efforts, to

recruit FSS participants from among

eligible families; and

(ii) The IHA’s actions to be taken to

assure that both minority and

nonminority groups are informed about

the FSS program, and how the IHA will

make this information known (e.g.,

through door-to-door flyers, posters in

any common rooms, advertisements in

newspapers of general circulation, as

well as any media targeted to minority

groups).

(7) FSS activities and supportive

services—a description of the activities

and supportive services to be provided

by both public and private resources to

FSS families, and identification of the

public and private resources that are

expected to provide the supportive

services.

(8) Method for identification of family

support needs—a description of how the

FSS program will identify the needs and

deliver the services and activities

according to the needs of the FSS

families;

(9) Program termination, withholding

of services, and grievance procedures—

a description of the IHA’s policies

concerning: termination of participation

in the FSS program, withholding of

supportive services on the basis of a

family’s failure to comply with the

requirements of the contract of

participation, and the grievance and

hearing procedures available to FSS

families.

(10) Assurances of noninterference

with rights of nonparticipating

families—an assurance that a family’s

election not to participate in the FSS

program will not affect the family’s

admission to Indian housing or the

family’s right to occupancy in

accordance with its lease.

(11) Timetable for program

implementation—a timetable for

implementation of the FSS program, as

provided in § 950.3020(a)(1), including

the schedule for filling FSS slots with

eligible FSS families, as provided in

§ 950.3013;

(12) Certification of coordination—a

certification that development of the

services and activities under the FSS

program has been coordinated with the

JOBS Program; the programs provided

under the JTPA; and any other relevant

employment, child care, transportation,

training, and education programs (e.g.,

Job Training for the Homeless

Demonstration program) in the

applicable area, and that

implementation will continue to be

coordinated, in order to avoid

duplication of services and activities;

and

(13) Optional additional

information—such other information

that would help HUD determine the

soundness of the IHA’s proposed FSS

program.

(e) Eligibility of a combined program.

An IHA that wishes to operate a joint

FSS program with other IHAs may

combine its resources with one or more

IHAs to deliver supportive services

under a joint Action Plan that will

provide for the establishment and

operation of a combined FSS program

that meets the requirements of this

subpart.

(f) Single action plan. IHAs

implementing both a section 8 FSS

program and an Indian housing FSS

program may submit one Action Plan.

§ 950.3012 Program Coordinating

Committee (PCC).

(a) General. Each participating IHA

shall establish a PCC whose functions

will be to assist the IHA in securing

commitments of public and private

resources for the operation of the FSS

program within the IHA’s jurisdiction,

including assistance in developing the

Action Plan and in implementing the

program.

(b) Membership. (1) The PCC may

consist of representatives of the IHA and

of residents of Indian housing.

(2) Recommended membership.

Membership on the PCC also may

include representatives of the unit of

general local government served by the

IHA, local agencies (if any) responsible

for carrying out JOBS training programs

or programs under the JTPA, and other

organizations, such as other State, local,

or tribal welfare and employment

agencies, public and private education

or training institutions, child care

providers, nonprofit service providers,

private business, and any other public

and private service providers with

resources to assist the FSS program.

(c) Alternative committee. The IHA

may, in consultation with the chief

executive officer of the unit of general

local government served by the IHA,

utilize an existing entity as the PCC if

the membership of the existing entity

consists or will consist of the

individuals identified in paragraph

(b)(1) of this section, and also includes

individuals from the same or similar

organizations identified in paragraph

(b)(2) of this section.

§ 950.3013 FSS family selection

procedures.

(a) Preference in the FSS selection

process. An IHA has the option of giving

a selection preference for up to 50

percent of its FSS slots to eligible

families, as defined in § 950.3003, who

have one or more family members

currently enrolled in an FSS related

service program or on the waiting list

for such a program. The IHA may limit

the selection preference given to

participants in and applicants for FSSrelated service programs to one or more

eligible FSS-related service programs.

An IHA that chooses to exercise the

selection preference option shall

include the following information in its

Action Plan:

(1) The percentage of FSS slots, not to

exceed 50 percent of the total number of

FSS slots, for which it will give a

selection preference;

(2) The FSS related service programs

to which it will give a selection

preference to the programs’ participants

and applicants; and

(3) The method of outreach to, and

selection of, families with one or more

members participating in the identified

programs.

(b) FSS selection without preference.

For those FSS slots for which the IHA

chooses not to exercise the selection

preference provided in paragraph (a) of

this section, the FSS slots shall be filled

with eligible families in accordance

with an objective selection system, such
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18289

as a lottery, the length of time living in

subsidized housing, or the date the

family expressed an interest in

participating in the FSS program. The

objective system to be used by the IHA

shall be described in the IHA’s Action

Plan.

(c) Motivation as a selection factor. (1)

General. An IHA may screen families for

interest and motivation to participate in

the FSS program, provided that the

factors utilized by the IHA are those

which solely measure the family’s

interest and motivation to participate in

the FSS program.

(2) Permissible motivational screening

factors. Permitted motivational factors

include requiring attendance at FSS

orientation sessions or preselection

interviews, and assigning certain tasks

that indicate the family’s willingness to

undertake the obligations that may be

imposed by the FSS contract of

participation (e.g., contacting job

training or educational program

referrals). However, any tasks assigned

shall be those that may be readily

accomplishable by the family, based on

the family members’ educational level

and disabilities, if any. Reasonable

accommodations shall be made for

individuals with mobility, manual,

sensory, speech impairments, mental, or

developmental disabilities.

(3) Prohibited motivational screening

factors. Prohibited motivational

screening factors include the family’s

educational level, educational or

standardized motivational test results,

previous job history or job performance,

credit rating, marital status, number of

children, or other factors, such as

sensory or manual skills, and any

factors that may result in discriminatory

practices or treatment toward

individuals with disabilities or minority

or nonminority groups.

§ 950.3014 On-site facilities.

Each IHA may, subject to the approval

of HUD, make available and utilize

common areas or unoccupied units in

Indian housing projects to provide

supportive services under an FSS

program.

§ 950.3020 Program implementation.

(a) Program implementation deadline.

(1) Program start-up. Full delivery of the

supportive services to be provided to

the total number of families required to

be served under the program need not

occur within 12 months, but shall occur

by the deadline set forth in paragraph

(a)(2) of this section.

(2) Full enrollment and delivery of

services. Except as provided in

paragraph (a)(3) of this section, the IHA

shall have completed enrollment of the

total number of families to be served

under the FSS program and shall have

begun delivery of the supportive

services within two years from the date

of notification of approval of the

application for new Indian housing

units.

(3) Extension of program deadlines for

good cause. HUD may extend the

deadline set forth in either paragraph

(a)(1) or paragraph (a)(2) of this section

if the IHA requests an extension, and

the HUD Area ONAP determines that,

despite best efforts on the part of the

IHA, the development of new Indian

housing units will not occur within the

deadlines set forth in this paragraph (a),

the commitment by public or private

resources to deliver supportive services

has been withdrawn, the delivery of

such services has been delayed, or other

local circumstances that the HUD Area

ONAP determines warrants an

extension of the deadlines set forth in

paragraph (a) of this section.

(b) Program administration. An IHA

may employ appropriate staff, including

a service coordinator or program

coordinator, to administer its FSS

program, and may contract with an

appropriate organization to establish

and administer the FSS program,

including the FSS account, as provided

by § 950.3025.

§ 950.3021 Administrative fees.

The performance funding system

(PFS), provided under section 9(a) of the

Act, shall provide for the inclusion of

reasonable and administrative costs

incurred by IHAs in carrying out the

local FSS programs. These costs are

subject to appropriations by the

Congress.

§ 950.3022 Contract of participation.

(a) General. Each family that is

selected to participate in an FSS

program shall enter into a contract of

participation with the IHA that operates

the FSS program in which the family

will participate. The contract of

participation shall be signed by the head

of the FSS family.

(b) Form and content of contract. (1)

General. The contract of participation,

which incorporates the individual

training and services plan, shall be in

the form prescribed by HUD, and shall

set forth the principal terms and

conditions governing participation in

the FSS program, including the rights

and responsibilities of the FSS family

and of the IHA, the services to be

provided to, and the activities to be

completed by, the head of the FSS

family, and each adult member of the

family who elects to participate in the

program.

(2) Interim goals. The individual

training and services plan, incorporated

in the contract of participation, shall

establish specific interim and final goals

by which the IHA and the family may

measure the family’s progress toward

fulfilling its obligations under the

contract of participation, and becoming

self-sufficient. For each participating

FSS family that is a recipient of welfare

assistance, the IHA shall establish as an

interim goal that the family become

independent from welfare assistance

and remain independent from welfare

assistance for at least one year before

expiration of the term of the contract of

participation, including any extension

thereof.

(3) Compliance with lease terms. The

contract of participation shall provide

that one of the obligations of the FSS

family is to comply with the terms and

conditions of the Indian housing lease.

(4) Employment obligation. (i) Head of

family’s obligation. The head of the FSS

family shall be required under the

contract of participation to seek and

maintain suitable employment during

the term of the contract and any

extension thereof. Although other

members of the FSS family may seek

and maintain employment during the

term of the contract, only the head of

the FSS family is required to seek and

maintain suitable employment.

(ii) Seek employment. The obligation

to seek employment means that the

head of the FSS family has applied for

employment, attended job interviews,

and has otherwise followed through on

employment opportunities.

(iii) Determination of suitable

employment. A determination of

suitable employment shall be made by

the IHA based on the skills, education,

and job training of the individual that

has been designated the head of the FSS

family, and based on the available job

opportunities within the jurisdiction

served by the IHA.

(5) Consequences of noncompliance

with contract. The contract of

participation shall specify that if the

FSS family fails to comply with the

terms and conditions of the contract of

participation, the IHA may:

(i) Withhold the supportive services;

or

(ii) Terminate the family’s

participation in the FSS program.

(c) Contract term. The contract of

participation shall provide that each

FSS family will be required to fulfill

those obligations to which the

participating family has committed

itself under the contract of participation

no later than 5 years after the effective

date of the contract.
18290 Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations

(d) Contract extension. The IHA shall,

in writing, extend the term of the

contract of participation for a period not

to exceed two years for any FSS family

that requests, in writing, an extension of

the contract, provided that the IHA

finds that good cause exists for granting

the extension. The family’s written

request for an extension shall include a

description of the need for the

extension. As used in this paragraph (d)

of this section, ‘‘good cause’’ means

circumstances beyond the control of the

FSS family, as determined by the IHA,

such as a serious illness or involuntary

loss of employment. Extension of the

contract of participation will entitle the

FSS family to continue to have amounts

credited to the family’s FSS account in

accordance with § 950.3025.

(e) Unavailability of supportive

services. (1) Good faith effort to replace

unavailable services. If a social service

agency fails to deliver the supportive

services pledged under an FSS family

member’s individual training and

services plan, the IHA shall make a good

faith effort to obtain these services from

another agency.

(2) Assessment of necessity of

services. If the IHA is unable to obtain

the services from another agency, the

IHA shall reassess the family members’

needs, and determine whether other

available services would achieve the

same purpose. If other available services

would not achieve the same purpose,

the IHA shall determine whether the

unavailable services are integral to the

FSS family’s advancement or progress

toward self-sufficiency. If the

unavailable services are:

(i) Determined not to be integral to the

FSS family’s advancement toward selfsufficiency, the IHA shall revise the

individual training and services plan to

delete these services, and modify the

contract of participation to remove any

obligation on the part of the FSS family

to accept the unavailable services, in

accordance with paragraph (f) of this

section; or

(ii) Determined to be integral to the

FSS family’s advancement toward selfsufficiency (which may be the case if

the affected family member is the head

of the FSS family), the IHA shall declare

the contract of participation null and

void.

(f) Modification. The IHA and the FSS

family may mutually agree to modify

the contract of participation. The

contract of participation may be

modified in writing with respect to the

individual training and services plan,

the contract term in accordance with

paragraph (d) of this section, and

designation of the head of the family.

(g) Completion of the contract. The

contract of participation is considered to

be completed, and a family’s

participation in the FSS program is

considered to be concluded, when one

of the following occurs:

(1) The FSS family has fulfilled all of

its obligations under the contract of

participation on or before the expiration

of the contract term, including any

extension thereof; or

(2) Thirty (30) percent of the monthly

adjusted income of the FSS family

equals or exceeds the published existing

housing fair market rent for the size of

the unit for which the FSS family

qualifies based on the IHA’s occupancy

standards. The contract of participation

will be considered completed and the

family’s participation in the FSS

program concluded on this basis even

though the contract term, including any

extension thereof, has not expired, and

the family members who have

individual training and services plans,

have not completed all the activities set

forth in their plans.

(h) Termination of the contract. The

contract of participation may be

terminated before the expiration of the

contract term, and any extension

thereof, by:

(1) Mutual consent of the parties;

(2) The failure of the FSS family to

meet its obligations under the contract

of participation without good cause;

(3) The family’s withdrawal from the

FSS program;

(4) Such other act as is deemed

inconsistent with the purpose of the

FSS program; or

(5) By operation of law.

(i) Transitional supportive service

assistance. An IHA may continue to

offer to a former FSS family who has

completed its contract of participation

and whose head of the family is

employed, appropriate FSS supportive

services in becoming self-sufficient (if

the family still resides in Indian

housing), or in remaining self-sufficient

(if the family no longer resides in Indian

or other assisted housing).

§ 950.3024 Total tenant payment and

increases in family income.

(a) Calculation of total tenant

payment. Total tenant payment for a

family participating in the FSS program

is determined in accordance with the

regulations set forth in §§ 950.315

through 950.325.

(b) Increases in FSS family income.

Any increase in the earned income of an

FSS family during its participation in an

FSS program may not be considered as

income or a resource for purposes of

eligibility of the FSS family for other

benefits, or amount of benefits payable

to the FSS family, under any other

program administered by HUD, unless

the income of the FSS family equals or

exceeds 80 percent of the median

income of the area (as determined by

HUD, with adjustments for smaller and

larger families).

§ 950.3025 FSS account.

(a) Establishment of FSS account. (1)

General. The IHA shall deposit the FSS

account funds of all families

participating in the IHA’s FSS program

into a single depository account. The

IHA shall deposit the FSS account funds

in one or more of the HUD-approved

investments.

(2) Accounting for FSS account funds.

(i) Accounting records. The total of the

FSS account funds will be supported in

the IHA accounting records by a

subsidiary ledger showing the balance

applicable to each FSS family. During

the term of the contract of participation,

the IHA shall credit monthly, to each

family’s FSS account, the amount of the

FSS credit determined in accordance

with paragraph (b) of this section.

(ii) Proration of investment income.

The investment income for funds in the

FSS account will be prorated and

credited to each family’s FSS account

based on the balance in each family’s

FSS account at the end of the period for

which the investment income is

credited.

(iii) Reduction of amounts due by FSS

family. If the FSS family has not paid

the family contribution towards rent, or

other amounts, if any, due under the

Indian housing lease, the balance in the

family’s FSS account shall be reduced

by that amount before prorating the

interest income. If the FSS family has

fraudulently under-reported income, the

amount credited to the FSS account will

be based on the income amounts

originally reported by the FSS family.

(3) Reporting on FSS account. Each

IHA will be required to make a report,

at least once annually, to each FSS

family on the status of the family’s FSS

account. At a minimum, the report will

include:

(i) The balance at the beginning of the

reporting period;

(ii) The amount of the family’s rent

payment that was credited to the FSS

account, during the reporting period;

(iii) Any deductions made from the

account for amounts due the IHA before

interest is distributed;

(iv) The amount of interest earned on

the account during the year; and

(v) The total in the account at the end

of the reporting period.

(b) FSS credit. (1) Computation of

amount. For purposes of determining

the FSS credit, ‘‘family rent’’ means the
Federal Register / Vol. 60, No. 68 / Monday, April 10, 1995 / Rules and Regulations 18291

total tenant payment as defined in this

part 950. The FSS credit shall be

computed as follows:

(i) For FSS families that are very lowincome families, the FSS credit shall be

the amount that is the lesser of:

(A) Thirty (30) percent of the family’s

current monthly adjusted income less

the family rent, which is obtained by

disregarding any increase in earned

income (as defined in § 950.3003) from

the effective date of the contract of

participation; or

(B) The current family rent less the

family rent at the time of the effective

date of the contract of participation.

(ii) For FSS families that are lowincome families but not very lowincome families, the FSS credit shall be

the amount determined according to

paragraph (b)(1)(i) of this section, but

that shall not exceed the amount

computed for 50 percent of median

income.

(2) Ineligibility for FSS credit. FSS

families that are not low-income

families shall not be entitled to any FSS

credit.

(3) Cessation of FSS credit. The IHA

shall not make any additional credits to

the FSS family’s FSS account when the

FSS family has completed the contract

of participation, as defined in

§ 950.3022(g), or when the contract of

participation is terminated or otherwise

nullified.

(c) Disbursement of FSS account

funds. (1) General. The amount in an

FSS account, in excess of any amount

owed to the IHA by the FSS family, as

provided in paragraph (a)(3)(iii) of this

section, shall be paid to the head of the

FSS family when the contract of

participation has been completed as

provided in § 950.3022(g), and if at the

time of contract completion, the head of

FSS family submits to the IHA a

certification, as defined in § 950.3003,

that, to the best of his or her knowledge

and belief, no member of the FSS family

is a recipient of welfare assistance.

(2) Disbursement before expiration of

contract term. (i) If the IHA determines

that the FSS family has fulfilled its

obligations under the contract of

participation before the expiration of the

contract term, and the head of the FSS

family submits a certification that, to the

best of his or her knowledge, no member

of the FSS family is a recipient of

welfare assistance, the amount in the

family’s FSS account, in excess of any

amount owed to the IHA by the FSS

family as provided in paragraph

(a)(3)(iii) of this section, shall be paid to

the head of the FSS family.

(ii) If the IHA determines that the FSS

family has fulfilled certain interim goals

established in the contract of

participation and needs a portion of the

FSS account funds for purposes

consistent with the contract of

participation, such as completion of

higher education (i.e., college, graduate

school), or job training, or to meet startup expenses involved in creation of a

small business, the IHA may, at the

IHA’s sole option, disburse a portion of

the funds from the family’s FSS account

to assist the family to meet those

expenses.

(3) Verification of family certification.

Before disbursement of the FSS account

funds to the family, the IHA may verify

that the FSS family is no longer a

recipient of welfare assistance by

requesting copies of any documents that

may indicate whether the family is

receiving any welfare assistance, and

contacting welfare agencies.

(d) Succession to FSS account. If the

head of the FSS family ceases to reside

with other family members in the Indian

housing unit, the remaining members of

the FSS family, after consultation with

the IHA, shall have the right to

designate another family member to

receive the funds in accordance with

paragraph (d) (1) or (2) of this section.

(e) Use of FSS account funds for

homeownership. An FSS family may use

its FSS account funds for the purchase

of a home, including the purchase of a

home under one of HUD’s

homeownership programs, or other

Federal, State, or local homeownership

programs, unless such use is prohibited

by the statute or regulations governing

the particular homeownership program.

(f) Forfeiture of FSS account funds. (1)

Conditions for forfeiture. Amounts in

the FSS account shall be forfeited upon

the occurrence of the following:

(i) The contract of participation is

terminated, as provided in

§§ 950.3022(e) or 950.3022(h); or

(ii) The contract of participation is

completed by the family, as provided in

§ 950.3022(g), but the FSS family is

receiving welfare assistance at the time

of expiration of the term of the contract

of participation, including any

extension thereof.

(2) Treatment of forfeited FSS account

funds. FSS account funds forfeited by

the FSS family will be credited to the

IHA’s operating reserves and counted as

other income in the calculation of the

PFS operating subsidy eligibility for the

next budget year.

§ 950.3030 Reporting.

Each IHA that carries out an FSS

program under this subpart shall submit

to HUD, in the form prescribed by HUD,

a report regarding its FSS program. The

report shall include the following

information:

(a) A description of the activities

carried out under the program;

(b) A description of the effectiveness

of the program in assisting families to

achieve economic independence and

self-sufficiency;

(c) A description of the effectiveness

of the program in coordinating resources

of communities to assist families to

achieve economic independence and

self-sufficiency; and

(d) Any recommendations by the IHA

or the appropriate local program

coordinating committee for legislative or

administrative action that would

improve the FSS program and ensure

the effectiveness of the program.

Dated: March 30, 1995.

Joseph Shuldiner,

Assistant Secretary for Public and Indian

Housing.

[FR Doc. 95–8346 Filed 4–7–95; 8:45 am]

BILLING CODE 4210–33–P