[Federal Register Volume 60, Number 73 (Monday, April 17, 1995)]
[Proposed Rules]
[Pages 19168-19170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9262]



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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 60, No. 73 / Monday, April 17, 1995 / 
Proposed Rules

[[Page 19168]]

DEPARTMENT OF AGRICULTURE

Rural Housing and Community Development Service
Rural Business and Cooperative Development Service
Rural Utilities Service
Consolidated Farm Service Agency

7 CFR Part 1944

RIN 0575--AB43


Housing Preservation Grant Program

AGENCIES: Rural Housing and Community Development Service, Rural 
Business and Cooperative Development Service, Rural Utilities Service, 
and Consolidated Farm Service Agency, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Housing and Community Development Service (RHCDS), a 
successor Agency to the Farmers Home Administration (FmHA), proposes to 
amend its Housing Preservation Grant regulations. The intended effect 
is to allow replacement housing where the grantee has determined that 
the costs for repair and rehabilitation on the recipient's (individual 
homeowners only) existing housing are not economically feasible or 
practical. These revisions will bring the regulations into conformance 
with the Housing and Community Development Act of 1992 amending the 
Housing Preservation Grant program, Section 533 of the Housing Act of 
1949.

DATES: Comments must be received on or before June 16, 1995.

ADDRESSES: Submit written comments to the office of the Chief, 
Regulations Analysis and Control Branch, Rural Economic and Community 
Development, Room 6348, South Agriculture Building, Washington, D.C. 
20250. All comments made pursuant to this notice will be available for 
public inspection at the above address.

FOR FURTHER INFORMATION CONTACT: Sue M. Harris, Senior Loan Specialist, 
Special Authorities Branch, Multiple Housing Processing Division, 
RHCDS, USDA, Washington, D.C. 20250, Telephone (202) 720-1606 (This is 
not a toll-free number).

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be not-significant for purpose of 
Executive Order 12866 and therefore has not been reviewed by OMB.
    The proposed regulation has been reviewed in light of Executive 
Order 12778 and meets the applicable standards provided in sections 
2(a) and 2(b)(2) of that Order. Provisions within this part which are 
inconsistent with state law are controlling. All administrative 
remedies pursuant to 7 CFR Part 1900 Subpart B must be exhausted prior 
to filing suit.

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB control number 0575-0115 in accordance with the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3507). This proposed rule does not 
revise or impose any new information collection or recordkeeping 
requirement from those approved by OMB.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR Part 1940, 
Subpart G, ``Environmental Program.'' It is the determination of RHCDS 
that this action does not constitute a major Federal action 
significantly affecting the quality of the human environment and, in 
accordance with the National Environmental Policy Act of 1969, P.L. 91-
190, an environmental impact statement is not required.
Programs Affected

    This program/activity is listed in the Catalog of Federal Domestic 
Assistance under number 10.433, Housing Preservation Grants.

Intergovernmental Consultation

    This program is subject to the provisions of Executive Order 12372 
which requires intergovernmental consultation with State and local 
officials (7 CFR part 3015, Subpart V, 48 FR 29115, June 24, 1983.)

Regulatory Flexibility Act

    The Administrator has determined that the proposed action will not 
have a significant economic impact on a substantial number of small 
entities because it contains normal business recordkeeping requirements 
and minimal essential reporting requirements. The proposed action will 
only affect a small number of rural communities.

Background and Drafting Information

    The proposed rule incorporates Title VII, Section 711 of the 
Housing and Community Development Act of 1992 (Pub. L. 102-550, dated 
October 28, 1992) amending Section 533 of the Housing Act of 1949, 42 
U.S.C. 1490m, allowing for replacement housing where the grantee has 
determined that the costs for repair and rehabilitation on the 
recipient's (individual homeowners only) existing housing is not 
economically feasible or practical. RHCDS is making no other 
significant changes other than allowing for replacement housing where 
the grantee has determined that the costs for repair and rehabilitation 
on the recipient's (individual homeowner) existing housing are not 
economically feasible or practical.

Lists of Subjects for 7 CFR Part 1944

    Grant programs--Housing and community development, Home 
improvement, Loan programs--Housing and community development, 
Nonprofit organizations, Rural housing.

    Therefore, as proposed, Chapter XVIII, Title 7, Code of Federal 
Regulations, is amended as follows:

PART 1944--HOUSING

    1. The authority citation for Part 1944 continues to read as 
follows:

    Authority: 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 2.23 and 2.70.

Subpart N--Housing Preservation Grants

    2. Section 1944.651 is amended by removing the words ``if such 
person has capacity to contract'' in paragraph (b) and by revising the 
last two sentences of paragraph (a) to read as follows: [[Page 19169]] 


Sec. 1944.651  General.

    (a) * * * Such assistance will be used to reduce the cost of repair 
and rehabilitation, to remove or correct health or safety hazards, to 
comply with applicable development standards or codes, or to make 
needed repairs to improve the general living conditions of the 
resident(s), including improved accessibility by persons with 
handicaps. Individual housing that is owner/occupied and is determined 
by the grantee to be beyond repair or rehabilitation may qualify for 
replacement housing.
* * * * *
    3. Section 1944.652 is revised to read as follows:


Sec. 1944.652  Policy.

    (a) The policy of RHCDS is to provide HPG's to grantees to operate 
a program which finances repair and rehabilitation activities to 
individual housing, rental properties, or co-ops for very low- and low-
income persons. Individual housing that is owner/occupied and is 
determined by the grantee to be beyond repair or rehabilitation may 
qualify for replacement housing. Grantees are expected to:
    (1) Coordinate and leverage funding for repair and rehabilitation 
activities, as well as replacement housing, with housing and community 
development organizations and/or activities operating in the same 
geographic area; and
    (2) Focus the program to rural areas and smaller communities so 
that it serves very low- and low-income persons.
    (b) RHCDS intends to permit grantees considerable latitude in 
program design and administration. The forms or types of assistance 
must provide the greatest long term benefit to the greatest number of 
persons residing in individual housing, rental properties, or co-ops 
needing repair and rehabilitation, or replacement of individual 
housing.
    (c) Repairs and rehabilitation or replacement activities affecting 
properties on or eligible for listing on the National Register of 
Historic Places will be accomplished in a manner that supports national 
historic preservation objectives as specified in Sec. 1944.673 of this 
subpart.
    4. Section 1944.653 is amended by adding a sentence to the end of 
the paragraph to read as follows:


Sec. 1944.653  Objective.

    * * * Further, individual housing that is owner/occupied and is 
determined by the grantee to be beyond repair or rehabilitation may 
qualify for replacement, except as specified in Sec. 1944.659 of this 
subpart.
    5. Section 1944.656 is amended by adding a sentence to the end of 
the definition of ``Housing preservation'' and by adding the definition 
of ``Replacement housing'' in alphabetical order, to read as follows:


Sec. 1944.656  Definitions.

* * * * *
    Housing preservation. * * * The term housing preservation does not 
apply to replacement housing.
* * * * *
    Replacement housing. The replacement of existing, individual owner/
occupied housing where repair and/or rehabilitation assistance is not 
economically feasible or practical. The term replacement housing does 
not apply to housing preservation.
* * * * *


Sec. 1944.658  [Amended]

    6. Section 1944.658 is amended by adding the words ``, as well as 
for replacement housing'' after the word ``assistance'' in paragraph 
(a)(2).
    7. Section 1944.659 is added to read as follows:


Sec. 1944.659  Replacement housing.

    Replacement housing applies only to existing, individual owner/
occupied housing. Replacement housing does not apply to rental 
properties (single-unit or multiple-unit) or to cooperative housing 
projects. The grantee is responsible for determining the extent of the 
repairs and rehabilitation prior to any assistance given to an 
individual homeowner. If the cost of such repairs and rehabilitation is 
not economically feasible or practical, then the grantee may consider 
replacing the existing housing with replacement housing, subject to the 
following:
    (a) The HPG grantee:
    (1) Shall document the total costs for all repairs and 
rehabilitation on the existing housing; and
    (2) Shall document the basis for the determination that the costs 
for all repairs and rehabilitation for the existing housing are not 
economically feasible or practical;
    (b) The individual homeowner:
    (1) Must meet all requirements of Sec. 1944.661 of this subpart;
    (2) Must have been denied a RHCDS section 502 loan;
    (3) Must lack the income and repayment ability to replace their 
existing home without the assistance of the HPG grantee; and
    (4) Must be able to afford the replacement housing on terms set 
forth by the HPG grantee;
    (c) The existing home:
    (1) Must be demolished to make way for the replacement housing; and
    (2) May not be sold to make way for the replacement housing;
    (d) The replacement housing:
    (1) May be either new housing or a dwelling brought onto the site 
of the existing housing;
    (2) May use no more than $15,000 in HPG funds;
    (3) Must meet all applicable requirements of Sec. 1944.16 of 
Subpart A of this part; and
    (4) May not be sold for a minimum of 5 years.
    (e) Any monies received by the homeowner from selling salvaged 
material after demolishing the existing home must be used towards the 
replacement housing.
    8. Section 1944.661 is amended by revising the introductory text of 
paragraph (b)(2) and paragraph (b)(3) to read as follows:


Sec. 1944.661  Individual homeowners--eligibility for HPG assistance.

* * * * *
    (b) * * *
    (2) An undivided or divided interest in the property to be 
repaired, rehabilitated, or replaced when not all of the owners are 
occupying the property. HPG assistance may be made in such cases when:
* * * * *
    (3) A leasehold interest in the property to be repaired, 
rehabilitated, or replaced. When the potential HPG recipient's 
``ownership'' interest in the property is based on a leasehold 
interest, the lease must be in writing and a copy must be included in 
the grantee's file. The unexpired portion of the lease must not be less 
than 5 years and must permit the recipient to make modifications to the 
structure or replace it without increasing the recipient's lease cost.
* * * * *
    9. Section 1944.664 is amended by redesignating paragraphs (d) 
through (g) as (e) through (h) respectively, by revising the words ``to 
make improvements that'' to read ``where they'' in the first sentence 
of the introductory text of newly redesignated paragraph (f); by adding 
the words ``or replacement housing'' after the word ``preservation'' in 
the introductory text of newly redesignated paragraph (g); by revising 
the section heading, paragraph (a), and newly redesignated paragraphs 
(h)(1) and (h)(3); and by adding paragraph (d) to read as follows:


Sec. 1944.664  Housing preservation and replacement housing assistance.

    (a) Grantees are responsible for providing loans, grants, or other 
comparable assistance to homeowners, [[Page 19170]] owners of rental 
properties, co-ops for housing preservation or for replacement housing 
as described in Sec. 1944.656 of this subpart.
* * * * *
    (d) Authorized replacement housing assistance includes, but is not 
limited to:
    (1) Building a dwelling and providing related facilities for use by 
the individual homeowner as a permanent resident;
    (2) Providing a safe and sanitary water and waste disposal system, 
together with related plumbing and fixtures, which will meet local 
health department requirements;
    (3) Providing minimum site preparation, including grading, 
foundation plantings, and minimal landscaping;
    (4) Providing special design features or equipment when necessary 
because of physical handicap or disability of the HPG recipient or 
member of the household;
    (5) Purchasing and installing approved energy saving measures and 
approved furnaces and space heaters which use a type of fuel that is 
commonly used, and is economical and dependably available;
    (6) Providing storm cellars and similar protective structures, if 
typical for the area;
    (7) Paying real estate taxes which are due and payable on the 
existing dwelling/site at the time of closing, if this amount is not a 
substantial part of the HPG assistance;
    (8) Providing living area for the HPG recipient and all members of 
the household as specified in Sec. 1944.16 (c) of subpart A of this 
part; and
    (9) Moving a dwelling onto the site of the demolished, previously 
existing housing and meeting all HPG housing preservation requirements 
for repair and rehabilitation;
    (10) Providing funds for demolishing the existing housing; and
    (11) Any other cost that is reasonable and justifiable directly 
related to replacement activities.
* * * * *
    (h) * * *
    (1) Assist in the construction or completion of an addition 
(excluding paragraph (c)(11) of this section) or a new dwelling. This 
paragraph does not apply to replacement housing.
* * * * *
    (3) Repair or rehabilitate, as well as replace any property located 
in the Coastal Barrier Resources System.
    10. Section 1944.665 is amended by revising the heading and the 
first sentence to read as follows:


Sec. 1944.665  Supervision and inspection of work.

    Grantees are responsible for supervising all rehabilitation and 
repair work, as well as replacement housing financed with HPG 
assistance. * * *
Sec. 1944.666  [Amended]

    11. Section 1944.666 is amended by revising the reference 
``Sec. 1944.64 (f)'' to read ``Sec. 1944.664 (g)'' in the last sentence 
of paragraph (b)(3), and by adding the words ``, as well as for 
replacement housing (individual homeowners only)'' after the word 
``rehabilitation'' in paragraph (b)(6).


Sec. 1944.667  [Amended]

    12. Section 1944.667 is amended by adding the words ``, or for 
individual homes replaced,'' after the word ``rehabilitated'' in the 
second sentence of the introductory text of paragraph (a).
    13. Section 1944.670 is amended by revising paragraph (b) to read 
as follows:


Sec. 1944.670  Project income.

* * * * *
    (b) Grantees are encouraged to establish a program which reuses 
income from loans after the grant period for continuing repair and 
rehabilitation activities, as well as for individual housing replaced.
    14. Section 1944.671 is amended by revising paragraph (a)(2) to 
read as follows:


Sec. 1944.671  Equal opportunity requirements and outreach efforts.

* * * * *
    (a) * * *
    (2) The term ``residential real estate-related transaction'' 
includes the making or purchasing of loans, grants, or other financial 
assistance for purchasing, constructing, improving, repairing, or 
rehabilitating a unit or dwelling, as well as for replacement housing 
for individual homeowners.
* * * * *
    15. Section 1944.672 is amended by adding the words ``or housing 
replacement'' after the word ``preservation'' in the fourth sentence of 
paragraph (b); in paragraph (d), by revising the reference ``Paragraph 
VII of exhibit C of this subpart'' to read ``Paragraph VIII of exhibit 
C of this subpart''; and by revising the first sentence of paragraphs 
(a) and (b) to read as follows:


Sec. 1944.672  Environmental requirements.

* * * * *
    (a) The approval of an HPG grant for the repair, rehabilitation, or 
replacement of dwellings shall be a Class I action. * * *
    (b) The use of HPG funds by the grantee to repair, rehabilitate, or 
replace specific dwellings is generally exempt from an RHCDS 
environmental
review. * * *
* * * * *


Sec. 1944.673  [Amended]

    16. Section 1944.673 is amended by adding the words ``and 
replacement housing'' after the word ``preservation'' in the section 
heading, and by revising the words ``rehabilitation or repair'' to read 
``rehabilitation, repair, or replacement'' in the first sentence of 
paragraph (b).
    17. Section 1944.683 is amended by redesignating paragraphs (b)(3) 
through (b)(7) as paragraphs (b)(4), through (b)(8) respectively, by 
adding the words ``, as well as for replacement housing,'' after the 
word ``rehabilitation'' in newly redesignated paragraph (b)(4)(i) and 
after the word ``financed'' in newly redesignated paragraph (b)(8), and 
by adding a new paragraph (b)(3) to read as follows:


Sec. 1944.683  Reporting requirements.

* * * * *
    (b) * * *
    (3) The use of HPG and any other funds for replacement housing.
* * * * *
    Dated: March 22, 1995.
Michael V. Dunn,
Acting Under Secretary, Rural Economic and Community Development.
[FR Doc. 95-9262 Filed 4-14-95; 8:45 am]
BILLING CODE 3410-07-U