62250 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Proposed Rules 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 970 and 972 

[Docket No. FR–5399–P–01] 

RIN 2577–AC82 

Public Housing Program: Demolition 

or Disposition of Public Housing 

Projects, and Conversion of Public 

Housing to Tenant-Based Assistance 

AGENCY: Office of the Assistant 

Secretary for Public and Indian 

Housing, HUD. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

revise and update HUD’s regulations 

governing the demolition and 

disposition of public housing. 

Currently, demolitions and dispositions 

are approved based on certification by a 

public housing agency (PHA) that 

certain conditions are met. This rule 

increases the oversight of demolition 

and disposition of public housing by 

requiring PHAs to submit more detailed 

justifications supporting such 

certifications, and specifying the 

requirements concerning the use of 

disposition proceeds, and other matters. 

The rule would also clarify and provide 

more detail related to existing 

requirements applicable to demolition 

and disposition such as resident 

relocation, and fair housing and civil 

rights compliance to ensure that PHAs 

properly abide by such requirements. 

The rule proposes to allow a PHA to 

request HUD permission to retain public 

housing property free of restrictions 

under the declaration of trust and 

annual contributions contract. In 

addition, the rule would update 

regulatory provisions to conform to 

certain requirements under the Housing 

and Economic Recovery Act of 2008, 

and clarify the definition of 

‘‘conversion’’ in HUD’s conversion of 

public housing regulations. 

DATES: Comment Due Date: December 

15, 2014. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this proposed rule to the Regulations 

Division, Office of General Counsel, 

Department of Housing and Urban 

Development, 451 7th Street SW., Room 

10276, Washington, DC 20410–0500. 

Communications must refer to the above 

docket number and title. There are two 

methods for submitting public 

comments. All submissions must refer 

to the above docket number and title. 

1. Submission of Comments by Mail. 

Comments may be submitted by mail to 

the Regulations Division, Office of 

General Counsel, Department of 

Housing and Urban Development, 451 

7th Street SW., Room 10276, 

Washington, DC 20410–0500. 

2. Electronic Submission of 

Comments. Interested persons may 

submit comments electronically through 

the Federal eRulemaking Portal at 

www.regulations.gov. HUD strongly 

encourages commenters to submit 

comments electronically. Electronic 

submission of comments allows the 

commenter maximum time to prepare 

and submit a comment, ensures timely 

receipt by HUD, and enables HUD to 

make them immediately available to the 

public. Comments submitted 

electronically through the 

www.regulations.gov Web site can be 

viewed by other commenters and 

interested members of the public. 

Commenters should follow the 

instructions provided on that site to 

submit comments electronically. 

Note: To receive consideration as public 

comments, comments must be submitted 

through one of the two methods specified 

above. Again, all submissions must refer to 

the docket number and title of the rule. 

No Facsimile Comments. Facsimile 

(FAX) comments are not acceptable. 

Public Inspection of Public 

Comments. All properly submitted 

comments and communications 

submitted to HUD will be available for 

public inspection and copying between 

8 a.m. and 5 p.m. weekdays at the above 

address. Due to security measures at the 

HUD Headquarters building, an advance 

appointment to review the public 

comments must be scheduled by calling 

the Regulations Division at 202–402– 

3055 (this is not a toll-free number). 

Individuals with speech or hearing 

impairments may access this number 

via TTY by calling the Federal Relay 

Service, toll-free, at 800–877–8339. 

Copies of all comments submitted are 

available for inspection and 

downloading at www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Kathleen Szybist, Program Analyst, 

Special Applications Center, Office of 

Public and Indian Housing, Department 

of Housing and Urban Development, 

121 S. Main Street, Suite 300, 

Providence, RI 02903; telephone 

number 401–277–8310 (this is not a tollfree number); email kathleen.a.szybist@

hud.gov. Hearing- or speech-impaired 

individuals may access this number 

through TTY by calling the toll-free 

Federal Relay Service at 800–877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary 

A. Purpose of Regulatory Action 

Need for regulation. HUD last updated 

its demolition and disposition 

regulations in 24 CFR part 970 in 2006 

(71 FR 62362, October 24, 2006). This 

regulation is necessary in order to 

update HUD’s regulations in accordance 

with the Housing and Economic 

Recovery Act of 2008 (Pub. L. 110–289, 

approved July 30, 2008) (HERA), which 

made certain changes to the 

requirements applicable to qualified 

PHAs, which are non-troubled PHAs 

whose public housing and Section 8 

units combined are fewer than 550 

units. Such PHAs are relieved from 

annual plan filing requirements, and 

consequently from demolition and 

disposition requirements that involve 

the annual plan. In addition, this 

regulation is necessary to add 

clarifications and requirements related 

to resident consultation, application 

processing, and other requirements that 

have until now been placed in notices 

to PHAs. This regulation would provide 

the requirements applicable to real 

property transactions and retention of 

projects by PHAs, a topic which HUD 

has addressed in practice under 24 CFR 

part 85 but which until now has not had 

specific regulatory standards. Finally, 

this regulation makes a needed 

clarification to HUD’s regulations at 24 

CFR part 972, which govern the 

conversion of public housing assistance 

to tenant-based assistance (conversion 

regulations). 

How this rule would meet the need. 

This rule would promulgate the HERArelated changes and the needed 

clarifications to the demolition and 

disposition regulations, would 

substantially clarify the existing 

regulations, and correct HUD’s 

conversion regulations. 

Legal authority for the regulation. 

HUD has general authority to make such 

rules and regulations as needed to carry 

out its functions, powers, and duties 

under 42 U.S.C. 3535(d). In addition, 

HUD has specific authority over the 

demolition and disposition of public 

housing under 42 U.S.C. 1437p. HUD 

has authority over conversion of 

assistance under 42 U.S.C. 1437t and 

1437z–5. 

B. Summary of the Major Provisions 

The rule would divide HUD’s 24 CFR 

part 970 into two subparts. Subpart A 

would comprise the current regulations 

applicable to demolitions and 

dispositions of public housing projects 

as provided under section 18 of the 

1937 Act. Subpart B would provide the 

requirements applicable to real property 


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transactions and retention of projects by 

PHAs. Additionally, this rule would 

issue a clarification to 24 CFR part 972 

on conversion of assistance. 

Subpart A 

Rules regarding leasing of the project 

and reconfiguration of interior space 

would be tightened to address abuses 

that have occurred. Currently, 24 CFR 

970.3(b)(10) does not limit the purposes 

for which a lease may be entered into. 

In order to clarify that leases should not 

be entered into to avoid obligations 

under the Annual Contributions 

Contract (ACC), this proposed rule 

would clarify this exception to indicate 

these leases should only be entered into 

for the limited purposes of allowing an 

owner-entity to show site control. Thus, 

the rule at § 970.3(b)(7), would permit, 

as an exception, the leasing of the entire 

project only for one year or less for the 

strictly limited purpose of allowing a 

prospective owner-entity to show site 

control in an application for funding for 

the redevelopment of the project. The 

rule would clarify that reconfiguration 

as an exception to demolition may only 

be done for an authorized use related to 

the normal operation of public housing 

and without demolition, as permitted by 

the ACC. 

The material on de minimis 

demolition, which is allowed by statute, 

would be revised to ensure that HUD 

receives a notice of the proposed action 

before it takes place and ensures that the 

statutory requirements are being met 

prior to the action. 

Generally, under the currently 

codified rule and this proposed rule, 

PHA property must be disposed of for 

fair market value (FMV). While the 

current rule, as an exception to the 

requirement that PHA property 

generally must be disposed for FMV, 

allows for the disposition of public 

housing for less than FMV if there is a 

commensurate public benefit to the 

community, the PHA, or the Federal 

Government, there are no further 

requirements ensuring that 

commensurate benefit is actually 

obtained. The proposed rule would add 

informational requirements to ensure 

that commensurate public benefit is 

actually being obtained for these types 

of dispositions. The information 

required would include anticipated 

future use of the property, a detailed 

description of any housing to be located 

on the property, the length of time the 

future use would be maintained, and 

other pertinent information. 

The rule would strengthen the 

application and resident consultation 

requirements. Regarding application 

requirements, the rule would enhance 

the information provided with the 

application to ensure that HUD has 

enough information regarding the action 

to make sure the PHA’s supporting 

certifications are correct so that HUD 

makes the appropriate decision. 

Demolition requests would (as the 

statute requires), be granted unless HUD 

has or obtains information contrary to 

the supporting certification of the PHA, 

or the application was not developed in 

consultation with the affected residents 

and appropriate local government 

officials. 

Regarding resident consultation, the 

proposed rule would provide more 

specificity to the resident consultation 

requirements to give PHAs better 

guidance and to ensure that resident 

consultation is as effective as possible. 

The rule would require the supporting 

evidence to include a description of the 

process of the consultations 

summarizing the dates, meetings, and 

issues raised by the residents and the 

PHA’s responses to those issues; 

meeting sign-in sheets; any written 

comments submitted by affected 

residents/groups along with the PHA’s 

responses to those comments; and any 

certifications or other written 

documentation that the PHA receives 

from the resident advisory board (RAB) 

and resident council regarding resident 

support or opposition. 

Regarding the relocation of residents 

made necessary by demolition or 

disposition, the rule would continue to 

incorporate the requirement that the 

housing being offered must meet 

Housing Quality Standards (HQS) (or 

such successor standard that HUD may 

adopt) and be in a location ‘‘not less 

desirable’’ than the housing the resident 

is being displaced from. However, the 

currently codified regulation does not 

define a ‘‘not less desirable’’ location. 

The proposed rule would define the 

‘‘not less desirable’’ location, within the 

definition of ‘‘comparable housing,’’ as 

not less desirable than the original 

neighborhood in terms of access to 

public transportation, employment, 

education, service, child care, medical 

services, shopping, recreational, and 

other amenities, considered in the 

aggregate (such that, for example, a large 

increase with respect to shopping and 

employment would outweigh a small 

deficit as to recreation). 

The proposed rule would also 

strengthen the notice to be provided to 

residents who would be relocated. The 

written notice would have to include a 

statement that the demolition, 

disposition, or combined application 

has been approved and that the action 

will occur, and a description of the 

process to relocate the residents. The 

written notice must be provided through 

an effective means of communication to 

persons with disabilities in accordance 

with 24 CFR 8.6 and in the appropriate 

non-English language or languages to 

persons with limited English 

proficiency as needed. The rule would 

specify that the notice must include a 

description of the (statutorily required) 

housing counseling services that will be 

available, including mobility 

counseling, and how a resident may 

access those services. The timing of the 

notice to residents would be specified as 

at least 90 days prior to the 

displacement date, except in cases of 

imminent threat to health and safety, 

but not before HUD has approved the 

application. 

The rule would codify HUD’s practice 

of allowing for timely demolitions made 

necessary by natural disasters and 

accidents to ensure the health and safety 

of residents. In such a case, if the PHA 

rebuilds the same number of dwelling 

units or non-dwelling structures that 

comprised the demolished project, the 

demolition (and any additional 

demolition required to carry out the 

redevelopment) shall not be subject to 

24 CFR part 970. If the PHA rebuilds 

less than all of the demolished 

structures or the project, the PHA shall 

submit a demolition application under 

this part within one year of such 

demolition to formalize and request 

official HUD approval for the action 

under this part. 

There has been increased frequency of 

dispositions that remove all of the 

housing and other property in a PHA’s 

inventory. To clarify the PHA’s 

obligations in this situation, a section 

would be added to require that once the 

action is complete and the PHA has no 

plans to develop any additional units, 

the PHA shall not expend any 

remaining Operating Funds, including 

operating reserves, other than for 

purposes related to the close-out of its 

public housing inventory, including 

audit requirements required by this 

section. Any remaining Operating 

Funds (including operating reserves and 

any unspent asset-repositioning fees 

received pursuant to 24 CFR 990.190(h)) 

would be required to be returned to 

HUD within 90 days of the date of 

removal of the project. The PHA may 

spend no more of its Capital Funds 

other than, with HUD approval, 

amounts required to close out contract 

obligations incurred prior to HUD’s 

approval of the action. 

The proposed rule would add civil 

rights requirements, including 

documentation that the PHA is not in 

violation of any civil rights law, 

compliance agreement, settlement 


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62252 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Proposed Rules 

agreement, or court order. Certifications 

would be required that the action will 

not violate any such law, settlement, 

order or other nondiscrimination 

requirements, and does not serve to 

maintain or increase segregation based 

on race, ethnicity, or disability. The rule 

would require a description of the civil 

rights-related characteristics (including 

race, color, religion, sex, national origin, 

familial status, and disability) of both 

the residents who will be displaced by 

the action, the residents anticipated to 

remain in a public housing project that 

is partially demolished or disposed of, 

and of the residents on the PHA’s 

waiting list (by bedroom size). The 

purpose of these requirements is to 

ensure that PHAs that request 

demolition or disposition are not in 

violation of any civil rights-related laws, 

agreements, or orders. 

Finally, the rule would revise 

currently codified § 970.35, ‘‘Reports 

and records’’ to strengthen HUD’s 

oversight and monitoring of demolition 

and disposition actions. 

Subpart B 

The proposed rule would add a 

subpart B to 24 CFR part 970, to allow 

PHAs and other owners of public 

housing to retain public housing 

property, including dwelling units, 

without the use restrictions under the 

ACC and Declaration of Trust (DOT). 

Section 18 does not apply to cases 

where a PHA retains property, rather 

than disposing of it to another party. 

Part 972—Conversion of Assistance 

HUD is also proposing to revise the 

definition of ‘‘conversion’’ in the part 

972 regulations that cover both 

voluntary and required conversion of 

public housing to tenant-based 

assistance to more accurately reflect 

what ‘‘conversion’’ means in the 

relevant statutory sections (for voluntary 

conversion, section 22 of the 1937 Act 

(42 U.S.C. 1437t); for required 

conversion, section 33 of the 1937 Act 

(42 U.S.C. 1437z–5). Currently, the 

regulations at 24 CFR 972.103 and 

972.203 (for voluntary and required 

conversion, respectively), define 

conversion as the removal of public 

housing units from the inventory of a 

Public Housing Agency (PHA), and the 

provision of tenant-based, or projectbased assistance for the residents of the 

PHA. While it is true that under the 

statutes the residents of a project 

undergoing conversion may be provided 

with alternate housing including 

project-based assistance, the statute 

provides that the conversion is only 

from public housing to tenant-based 

assistance. Therefore, HUD is proposing 

to revise these definitions accordingly to 

remove the reference to project-based 

assistance. 

C. Costs, Benefits, and Transfers 

Costs and Benefits 

The inception of this proposed rule 

does not come from a perceived market 

failure, but rather, from the desire to 

strengthen and streamline the 

demolition and disposition processes to 

reflect changes that have occurred in the 

public housing program over the last 20 

years. As such, while this proposed rule 

would marginally increase the 

administrative burden, it would provide 

greater clarity regarding the demolition 

and disposition process. 

The rule adds increased clarity and 

guidance to assist PHAs in determining 

when a demolition and/or disposition 

may be appropriate for their public 

housing inventories (e.g., so a PHA 

would be less likely to put the time into 

preparing and submitting an application 

to HUD that would not meet the criteria 

necessary for HUD approval and thus 

would not waste its or HUD’s staff time 

and resources. Based on the clarified 

and new guidance in the rule, some 

PHAs may sometimes opt not to apply 

for demolition/disposition and instead 

pursue other HUD tools—e.g., CFFP 

financing—for their public housing 

stock). 

The rule adds increased clarity and 

guidance on what HUD will require to 

approve an application submitted by a 

PHA (e.g., HUD will re-do the 

paperwork burden—HUD form—to 

make the application easier to fill out by 

PHAs). Applications submitted by PHAs 

will be more likely to be approved by 

HUD because PHAs will be better able 

to show they are meeting the applicable 

HUD criteria. Further, HUD’s review 

time will likely be significantly reduced, 

a benefit to both PHAs and HUD. 

On average, HUD’s special application 

center (SAC) estimates that the total 

additional administrative burden as a 

result of this rule is 162 hours per 

application per year. Each year, the 

center receives between 150 and 200 

applications for demolition and or 

disposition. If HUD assumes that the 

average hourly rate is $200, the total 

compliance cost would be between 

$4.86 million and $6.48 million a year. 

For example, the proposed rule would 

require that the determination of 

obsolescence be found by an 

independent architect or engineer that is 

not a regular employee of the PHA 

(§ 970.15(a)(2)). 

In addition, units that are demolished 

or disposed of do not receive full 

funding under the public housing 

operating and capital funds. Under the 

public housing program, these units 

receive a proration and under the 

capital funds, they receive replacement 

housing factor funds. Funds retained 

under the capital fund program are 

redistributed to PHAs (including the 

applying PHA) by formula. The same 

units removed from the inventory and 

the PHA will no longer receive 

operating funds for those units, but the 

PHA will also not have any operating or 

maintenance expenses for those units. 

The proposed rule would create very 

little additional financial flux. It is 

likely that the proposed rule may 

generate up to $2.23 million in 

additional compliance costs. These 

costs would constitute transfers to 

architects, engineers, lawyers, 

accountants, etc. For example, the 

proposed rule requires that the 

determination of obsolescence be found 

by an independent (that is not a regular 

employee of the PHA) architect or 

engineer. 

II. Background 

The Quality Housing and Work 

Responsibility Act of 1998 (Pub. L. 105– 

276, approved October 21, 1998) 

(QHWRA) made extensive amendments 

to the United States Housing Act of 

1937 (42 U.S.C. 1437 et seq.) (1937 Act) 

for the purpose of reforming and 

improving HUD’s public housing and 

tenant-based Section 8 housing 

assistance programs. Prior to QHWRA, 

HUD had to make specific findings 

regarding the obsolescence and the cost 

of rehabilitation of public housing, prior 

to approving any demolition or 

disposition of public housing. At that 

time, the Nation’s public housing 

supply had a large stock of dilapidated 

and unusable housing. QHWRA, among 

other things, amended section 18 of the 

1937 Act (42 U.S.C. 1437p) to allow for 

demolition if the PHA requesting 

demolition certifies to HUD that: (1) The 

project or portion of the public housing 

project is obsolete as to physical 

condition, location, or other factors, 

making it unsuitable for housing 

purposes; and (2) no reasonable program 

of modifications is cost-effective to 

return the public housing project or 

portion of the project to useful life. 

The 1937 Act provides that, in the 

case of partial demolition, the PHA 

must certify that the demolition will 

help to ensure the viability of the 

remaining portion of the project. In the 

case of disposition by sale or transfer, 

the PHA must certify that: (1) 

Conditions in the area surrounding the 

project adversely affect the health or 

safety of the residents or the feasible 

operation of the project by the PHA; or 


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1Certain technical corrections were made to the 

regulations by a January 23, 2008, final rule 

published at 73 FR 3868. 

2See Notice PIH 2012–7, issued February 2, 2012, 

pertaining to demolition/disposition of public 

housing and associated requirements; Notice PIH– 

2011–18, issued April 12, 2011, providing guidance 

on re-occupying public housing units proposed or 

approved for demolition, disposition, or transition 

to homeownership; Notice PIH–2008–17, providing 

guidance in the disposition of certain public 

housing assets. 

(2) disposition allows the acquisition, 

development, or rehabilitation of other 

properties that will be more efficiently 

or effectively operated as low-income 

housing. The PHA may also certify that 

the disposition is appropriate for other 

reasons, as long as those reasons are in 

the best interests of the residents and 

the PHA; consistent with the goals of 

the PHA as set forth in the PHA plan; 

and otherwise consistent with the goals 

of the 1937 Act. In the case of both 

demolition and disposition, the 1937 

Act contains specific requirements to 

which the PHA must certify for notice 

to residents residing in the project 90 

days prior to the action. Residents to be 

displaced, by statute, must be offered 

replacement housing, which may 

include tenant-based or project-based 

vouchers in addition to other public 

housing. 

There are several other statutory 

requirements governing demolition and 

disposition of public housing that relate 

to the following: Resident and local 

government consultation; the PHA 

planning process; relocation rights of 

residents; the use of the proceeds that 

result from disposition; residents’ 

opportunity to purchase the property 

subject to disposition in the case of a 

proposed disposition; consolidation of 

occupancy; demolition of a minimum 

number of units under an exception to 

many of the requirements of the statute 

(de minimis demolition); and the nonapplicability of the Uniform Relocation 

Assistance and Real Property 

Acquisition Policies Act (42 U.S.C. 4601 

et seq.) (URA) to demolition and 

disposition (section 18(g) of the 1937 

Act (42 U.S.C. 1437p(g)) (although 

displaced residents have specific rights 

to be relocated, and the PHA specific 

relocation responsibilities, including 

payment of the actual and reasonable 

relocation expenses of residents being 

displaced, section 18(a)(4)(B) of the 

1937 Act (42 U.S.C. 1437p(a)(4)(B))). 

In accordance with section 18(a) of 

the 1937 Act (42 U.S.C. 1437p(a)), HUD 

approves a demolition or disposition 

application from a PHA as long as the 

proper certification is made and the 

specified requirements are met. The 

only statutory exceptions to this 

requirement are: (1) That the PHA’s 

certifications pertaining to the 

demolition or disposition are 

inconsistent with information and data 

that is made available to HUD or that is 

requested by HUD; and (2) the PHA did 

not comply with the resident and local 

government consultation process. Under 

exception (1) HUD has the statutory 

right to request ‘‘information and data’’ 

regarding the proposed action in order 

to ascertain whether the PHA’s 

certifications do in fact comport with 

the facts (see section 18(b)(1) of the 1937 

Act (42 U.S.C. 1437p(b)(1)). 

III. This Proposed Rule 

HUD’s demolition and disposition 

regulations (24 CFR part 970), were 

promulgated by a final rule published 

on October 24, 2006, at 71 FR 62362, 

and no significant changes to the 

regulations have been made since that 

date.1 The Housing and Economic 

Recovery Act of 2008 (Pub. L. 110–289, 

approved July 30, 2008) (HERA) made 

certain changes to the requirements 

applicable to qualified PHAs, as this 

term was defined by section 2702 of 

HERA, and these changes therefore 

require certain corresponding changes 

to HUD’s demolition and disposition 

regulations. However, as recent notices 

issued by HUD’s Office of Public and 

Indian Housing (PIH) reflect, HUD has 

clarified, through such notices, existing 

regulatory requirements applicable to 

demolition and disposition, such as 

resident consultation, application 

processing, and PHA Plan requirements 

because the regulations did not provide 

the details that PHAs needed to execute 

the requirements as contemplated by 

law.2 Therefore, as more fully discussed 

below, this proposed rule revises HUD’s 

demolition and disposition regulations 

to add the details and further clarify 

certain requirements as presented in 

recent notices issued by PIH. 

Proposed Organization of Part 970 

This rule proposes to divide HUD’s 

regulations on demolition and 

disposition in 24 CFR part 970 into two 

subparts. Subpart A would comprise, 

with revisions, the current regulations 

applicable to demolitions and 

dispositions of public housing projects 

as provided under section 18 of the 

1937 Act. Subpart B would provide the 

requirements applicable to real property 

transactions and retention of projects by 

PHAs, to which 24 CFR part 85, which 

provides the administrative 

requirements for grants and cooperative 

agreements to state, local, and federally 

recognized Indian tribal governments, 

would apply. Part 85 does not apply to 

subpart A, as subpart A is issued 

pursuant to a superseding statutory 

authority, 42 U.S.C. 1437p. This nonapplicability is consistent with 24 CFR 

85.31(b), which provides an exception 

to part 85 for real property pursuant to 

Federal statutes. 

A. Purpose and Applicability (Subpart 

A) 

Purpose (§ 970.1). Section 970.1, 

which addresses the purpose of the part 

970 regulations, would be revised to 

reflect the new structure of the 

regulations. 

Applicability (§ 970.3). The 

applicability of subpart A, as stated in 

§ 970.3, would be revised to reflect 

changes to the applicability of the 

regulations. A new § 970.3(b)(1) would 

exempt from applicability, of the part 

970 regulations, those public housing 

projects that PHAs apply to retain under 

subpart B of this rule. The current 

§ 970.3(b)(1), which exempts PHAowned section 8 housing, or housing 

leased under former sections 10(c) or 23 

of the 1937 Act, would be redesignated 

as § 970.3(b)(2), and the current 

§ 970.3(b)(2), which exempts demolition 

or disposition before the date of funding 

availability (DOFA) of property acquired 

incident to the development of a public 

housing project, would be redesignated 

at § 970.3(b)(3). The conveyance 

exception for providing homeownership 

opportunities under § 970.3(b)(3) would 

be redesignated as § 970.3(b)(4) and 

revised to clarify that this 

homeownership exception applies to 

certain specified homeownership 

opportunities for low-income families. 

In addition, the references to specific 

homeownership programs would be 

updated to reflect new homeownership 

programs since the regulations were 

promulgated in 2006. Discontinued 

programs like the section 5(h) 

homeownership program (section 5(h) 

of the 1937 Act (42 U.S.C. 1437c(h)) 

would remain referenced in this section 

to reflect the continued applicability of 

the part 970 regulations to any units that 

remain to be administered under these 

discontinued programs. 

The exception for the leasing of nondwelling space incidental to the 

operation of the PHA is updated and 

clarified in proposed § 970.3(b)(5). 

Agreements with third parties in the 

form of leases or license agreements, 

only insofar as they are for authorized 

non-dwelling purposes related to public 

housing, are permitted, provided that 

such an agreement benefits the PHA and 

its residents; is consistent with the 

PHA’s plan, as determined by HUD; is 

consistent with the PHA’s annual 

contributions contract (ACC); and is 

approved in writing by HUD. 


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Proposed § 970.3(b)(6) would revise 

the currently codified § 970.3(b)(5), on 

the use of common areas and 

unoccupied dwelling units, similarly to 

clarify that the use must be for 

authorized non-dwelling purposes 

related to public housing. 

Proposed new § 970.3(b)(7) would 

permit, as an exception, the leasing of 

the entire project only for one year or 

less for a strictly limited purpose. That 

purpose is to allow a prospective ownerentity to show site control in an 

application for funding for the 

redevelopment of the project, such as 

low-income housing tax credits 

(LIHTC). Only the entire project, not 

individual dwelling units, may be 

leased under this exception. 

Proposed § 970.3(b)(8) would revise 

currently codified § 970.3(b)(6) on 

reconfiguration of interior space to 

clarify that reconfiguration as an 

exception to demolition may only be 

done for an authorized use related to the 

normal operation of public housing and 

without demolition as defined in 24 

CFR 970.5, as permitted by the ACC. As 

proposed, such reconfiguration would 

have to be done in accordance with all 

HUD requirements and approvals, and 

any resulting reduction in bedroom 

numbers would have to be reflected in 

the Inventory Management System 

(IMS)/PIH Information Center (PIC) or 

any future system for collecting similar 

information. 

Proposed § 970.3(b)(9) would revise 

currently codified § 970.3(b)(7), which 

relates to transfers, easements, and 

transfers of utility systems. The 

proposed rule would require that such 

easements, rights of way, and transfers 

be approved in writing. 

Based on experience since the 

regulations were promulgated in 2006, 

HUD has found that the general 

exception for leases of units or land for 

one year or less (currently codified 

§ 970.3(b)(10)) is not always being used 

for the intended purpose. Specifically, 

HUD has found that some PHAs have 

incorrectly relied on this exception to 

enter into leases that did not otherwise 

comply with the PHA’s ACC with HUD 

and other public housing requirements 

and this was never the intent of this 

exception. In addition, HUD has found 

that some PHAs incorrectly used this 

exception to avoid the disposition 

requirements of section 18 of the 1937 

Act (42 U.S.C. 1437p), for instance, by 

structuring a long-term lease as a oneyear lease and then renewing that lease 

every year. As a result, § 970.3(b)(10) is 

proposed to be removed by this rule. 

Proposed § 970.3(b)(5) specifies the 

conditions under which leases of units 

and other PHA property will be 

allowed. The current § 970.3(b)(8), 

which exempts a whole or partial taking 

by a public or quasi-public agency, 

would be redesignated at § 970.3(b)(10). 

Proposed § 970.3(b)(11) would clarify 

currently codified § 970.3(b)(11), which 

addresses conveyance of PHA property 

to allow for mixed-finance development 

under 24 CFR 905.604. As proposed, 

real property, including land, 

improvements, or both, may be acquired 

by a PHA with public housing or other 

funds, or donated to a PHA, and sold or 

otherwise transferred to an owner entity 

prior to DOFA, to enable the owner 

entity to develop the property using the 

mixed finance method in 24 CFR 

905.604. 

Proposed § 970.3(b)(12) clarifies that 

this exemption for disposition of vacant 

land for mixed-finance development is 

only an exemption from these 

regulations, and not from the statutory 

requirements in section 18 of the 1937 

Act, and only if the PHA submits an 

application in the form prescribed by 

HUD, and receives HUD approval of the 

application before commencing 

disposition of the property. 

Section 18(f) of the 1937 Act (42 

U.S.C. 1437p(f)) and the currently 

codified regulations at § 970.3(b)(13)) 

provide an exception for most 

requirements under the statute for 

demolition of the lesser of 5 dwelling 

units or 5 percent of the PHA’s total 

units in any 5-year period (referred to as 

de minimis demolition). HUD 

determined that environmental review, 

which has authority separate from the 

1937 Act, applies, which the current 

regulation reflects, and the proposed 

rule would continue to reflect. In 

addition, the 1937 Act states that such 

de minimis exception only applies if the 

space occupied by the demolished unit 

is used for meeting the service or other 

needs of public housing residents or the 

demolished unit was beyond repair. 

This proposed rule would revise 

§ 970.3(b)(13) to require that the PHA 

must receive acknowledgment by HUD 

of the required notification prior to the 

commencement of the demolition. Such 

requirement would confirm that HUD is 

in fact aware of the proposed demolition 

and proposed use of space before the 

demolition commences. 

Proposed § 970.3(b)(15) clarifies the 

current language to indicate that 

demolition of severely distressed units 

as a part of a revitalization plan in 

connection with a Choice 

Neighborhoods grant is exempt from 

these regulations. 

The proposed rule would add a new 

§ 970.3(b)(16) to provide for demolition 

of projects made necessary by disaster 

or sudden accident or casualty loss. It 

has been HUD’s practice, as reflected in 

the ACC, to allow for such demolitions 

in order to ensure the health and safety 

of public housing residents. 

At proposed § 970.3(b)(17), the rule 

would add an exception to this rule for 

dispositions of a de minimis nature that 

are necessary to correct and/or clarify 

legal descriptions to deed or ownership 

documents, provided such de minimis 

dispositions are approved by HUD. 

Generally, these are dispositions of a 

very small amount of property, in some 

cases literally a few square feet, that 

should never have been owned by the 

PHA but through an error were added to 

the legal description of the property. It 

is necessary to correct these small 

inaccuracies because, if a PHA’s deed to 

public housing property reflects other 

than what was originally intended in 

the PHA’s acquisition of the property, a 

PHA may be subject to unanticipated 

liabilities. These small dispositions are 

authorized under section 18(a)(2)(B) of 

the 1937 Act (42 U.S.C. 1437p(a)(2)(B)), 

which states that a justification for 

disposition is that retention of the 

property is not in the best interests of 

the PHA because ‘‘the public housing 

agency has otherwise determined the 

disposition to be appropriate for reasons 

that are in the best interests of the 

residents and the public housing 

agency.’’ 

The proposed rule would add a new 

§ 970.3(b)(18), which would reorganize 

the consolidation of occupancy 

exception currently found at § 970.25(b), 

and authorized under section 18(e) of 

the 1937 Act (42 U.S.C. 1437p(e)). The 

purpose of such consolidation must be 

to improve the living conditions of 

residents or to provide greater efficiency 

in serving the residents. For example, in 

the case of older projects that are badly 

in need of modernization, health 

hazards, such as lack of heating and 

issues with plumbing, may occur in 

certain buildings. Residents can be 

consolidated into healthier buildings 

with vacancies so that the PHA can 

concentrate on providing services over a 

more compact and manageable area, and 

the residents have a better living 

environment. 

In addition, as it proposes for other 

exceptions, the rule would add legal 

parameters to ensure that PHAs take 

such consolidation actions pursuant to 

applicable federal laws and 

requirements, including the PHA’s 

written policies on admissions and 

continued occupancy, the PHA’s section 

8 Administrative Plan (24 CFR part 

982), and PHA Plan requirements (24 

CFR part 903). The PHA would be 

required as well to notify HUD in 


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advance of such occupancy 

consolidation. 

HUD proposes to add a new 24 CFR 

970.3(c) to clarify that the enumerated 

activities in § 970.3(b) are exempt from 

section 18 requirements only. As 

described in § 970.21(g) of this proposed 

rule, section 104(d) of the Housing and 

Community Development Act of 1974 

(42 U.S.C. 5304(d) (section 104(d)) 

operates independently of section 18 

and cannot be limited administratively 

by HUD. If any of the activities listed in 

§ 970.3(b) involve demolition or 

conversion of a lower-income dwelling 

unit, as those terms are defined in 24 

CFR part 42, subpart C, and include 

funding pursuant to the Community 

Development Block Grant Program (42 

U.S.C. 5301 et seq.), the Urban 

Development Action Grant Program (42 

U.S.C. 5318) or the HOME Investment 

Partnerships Program (42 U.S.C. 12701 

et seq.), the relocation assistance and 

one-for-one replacement requirements 

of section 104(d) may apply. 

Definitions (§ 970.5). The proposed 

rule would add several new definitions 

to this section, and revise or remove 

others. 

• Accessible or accessibility would be 

added, referencing the definition of 

‘‘accessible’’ at 24 CFR 8.3. 

• Commensurate public benefit 

would be added. While this phrase is 

used in current § 970.19 to describe a 

standard for disposition of a property 

for less than fair market value where 

there are other compensating benefits. 

However, currently the phrase is not 

defined. In order to eliminate any 

possible ambiguity about the applicable 

standard, HUD proposes to define this 

phrase. The definition would make clear 

that public benefits in this context are 

‘‘as approved by HUD.’’ The definition 

also supplies four general cases of 

commensurate public benefits: (1) 

Rental units with a 30-year use 

restriction; (2) homeownership units 

affordable to low-income families; (3) 

non-dwelling structures or facilities to 

serve low-income families as approved 

by HUD; and (4) other or additional 

benefits as approved by HUD, which 

may include, in part, planning and 

carrying out related activities under 

section 3 of the Housing and Urban 

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

1701u). 

• ‘‘Comparable housing’’ would be 

added. This term means housing that 

meets HQS (or such successor standard 

that HUD may adopt) and is appropriate 

in size for the household, and located in 

an area that is generally not less 

desirable than the location of the 

displaced resident’s current public 

housing unit. In determining 

comparable housing, a PHA shall also 

consider the following criteria (in 

aggregate): neighborhood safety; quality 

of local schools; accessibility of 

amenities (e.g., transportation, 

employment); and exposure to adverse 

environmental conditions. The 

comparable location should not expose 

displaced persons to increased 

segregation by race or national origin, 

poverty, crime or adverse environmental 

conditions. For residents with 

disabilities, comparable housing must 

include the accessibility features that 

the resident needs and must be located 

in the most integrated setting 

appropriate for the resident with respect 

to the residents’ ability to interact to the 

fullest extent possible with nondisabled persons and access to 

community-based services. Such 

housing is often subsidized housing, but 

does not have to be if there is 

comparable non-subsidized housing 

available on the private market. 

• ‘‘Demolition’’ would be revised 

from the definition in the currently 

codified § 970.5. The revised term 

defines demolition as the removal by 

razing or other means, in whole or in 

part, of one or more permanent 

buildings of a project such as to render 

the building(s) uninhabitable as defined 

by the applicable building occupancy 

code. The revised definition states that 

a demolition involves not only any four 

or more of the factors listed in the 

current definition (including envelope 

removal (roof, windows, exterior walls), 

kitchen removal, bathroom removal, 

electrical system removal (unit service 

panels and distribution circuits, and 

plumbing system removal (e.g., either 

the hot water heater or distribution 

piping in the unit, or both)), but also the 

lifting and relocating of a building from 

its existing site to another not covered 

by the same Declaration of Trust. 

• ‘‘Declaration of Trust (DOT)’’ is 

proposed to be added. This term is not 

currently defined in 24 CFR part 970, 

and it would be beneficial to define 

what the term means in this context. 

Generally, this term would refer to a 

legal instrument that grants HUD an 

interest in a project, and provides public 

notice that the project must be operated 

in accordance with all federal 

requirements for public housing. 

• ‘‘Displaced resident’’ would be 

added to § 970.5. This term means a 

resident of public housing, one that is 

assisted with Section 8, or is eligible for 

assistance under an MTW agency’s 

HUD-approved annual MTW plan, that 

is relocated permanently from the 

project as a direct result of a demolition 

and/or disposition action under this 

part. The term includes any members of 

the resident’s household and overincome residents who are, at the time of 

displacement, eligible for occupancy 

under PHA policies for continued 

occupancy or other special rent 

exceptions. 

• ‘‘Disposition’’ would be added. The 

proposed definition would include both 

sales and transfers to an independent 

legal entity under the relevant state’s 

law, including an affiliate that is legally 

independent. Under this definition, a 

PHA would be able to make a transfer 

to an affiliate such as a non-profit in 

which the PHA has a controlling 

interest, so long as the non-profit is a 

separate legal entity. A PHA could not 

dispose to an instrumentality of the 

PHA, because the instrumentality 

essentially is the PHA—it is fully 

controlled by the PHA and assumes the 

role of the PHA. ‘‘Affiliate’’ and 

‘‘instrumentality’’ are both defined at 24 

CFR 905.604(b)(3) and (4). 

• ‘‘Emergency’’ would be added. This 

term is defined to mean any occasion or 

instance, for which, in the 

determination of the President or HUD, 

federal assistance is needed to 

supplement state and local efforts and 

capabilities to save lives and protect 

property and public health and safety, 

or to lessen or avert the threat of a 

catastrophe in any part of the United 

States. This proposed definition is based 

on the definition of ‘‘emergency’’ found 

in 42 U.S.C. 5122. 

• ‘‘Fair Market Value (FMV)’’ would 

be added. This definition provides that 

FMV is the estimated value of a project, 

as determined by an independent 

appraiser contracted but not employed 

by the PHA, and completed within 6 

months of the application, unless HUD 

approves a longer time. This definition 

would capture the importance of the 

appraiser being independent of the PHA 

and the appraisal being completed on a 

timely basis. 

• ‘‘Major disaster’’ would be added. 

This term is defined to mean any 

natural catastrophe (including any 

hurricane, tornado, storm, high water, 

wind-driven water, tidal wave, tsunami, 

earthquake, volcanic eruption, 

landslide, mudslide, snowstorm, or 

drought), or, regardless of cause, any 

fire, flood, or explosion, in any part of 

the United States, which in the 

determination of the President causes 

damage of sufficient severity and 

magnitude to warrant major disaster 

assistance to supplement the efforts and 

available resources of states, local 

governments, and disaster relief 

organizations, or causes severe danger, 

hardship, or suffering, as determined by 

HUD. This proposed definition is based 


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62256 Federal Register / Vol. 79, No. 200 / Thursday, October 16, 2014 / Proposed Rules 

on the definition of ‘‘major hazard’’ 

found in 42 U.S.C. 5122. 

• The rule incorporates the general 

definition of ‘‘public housing agency 

(PHA),’’ at 24 CFR 5.100. 

• The rule would incorporate the 

definition of ‘‘public housing funds’’ 

from § 905.108, and specify that as to 

disposition proceeds that are public 

housing funds, § 970.20(d) applies. 

• The rule would add a definition of 

‘‘project’’ to clarify that the term refers 

to all public housing property (units, 

vacant land, air rights, non-dwelling 

and dwelling buildings, and 

appurtenant equipment and personal 

property purchased by the PHA using 

1937 Act funds) and has the same 

meaning as development, which is often 

used in other HUD issuances and 

guidance. In the currently codified part 

970, both terms are used. This proposed 

rule would use the term ‘‘project’’ as 

defined in preference to ‘‘development.’’ 

This rule would clarify that the term 

‘‘project’’ includes mixed-finance public 

housing units. Additionally, because by 

definition the term now includes 

appurtenant equipment and property, 

when a PHA disposes of a project or 

portion of a project, it is generally 

expected that the related appurtenances 

will be disposed of as well. 

• ‘‘Public housing unit’’ would be 

added to clarify what HUD means by the 

term in the context of demolition and 

disposition. The definition includes any 

dwelling unit in a project, including a 

dwelling unit developed for 

homeownership under the 1937 Act 

(other than units developed for 

homeownership under section 8(y) of 

the 1937 Act (42 U.S.C. 1437f(y)), 

because that is a tenant-based program 

and does not constitute a unit 

‘‘developed’’ for homeownership) prior 

to the transfer of title of that unit to the 

homebuyer. 

• The phrase ‘‘related to the normal 

operation of the project for public 

housing purposes’’ would be added to 

mean activities that are required or 

permitted to meet the obligations of the 

ACC, including the provision of lowincome housing and related services 

and other benefits to the residents of the 

PHA. This phrase is used in § 970.3. 

• ‘‘Resident’’ would be defined. The 

purpose of the definition is to clarify 

that a resident under part 970 includes 

an individual or family assisted under 

HUD’s Housing Choice Voucher 

program (section 8 program), or one that 

is eligible for assistance under an MTW 

agency’s HUD-approved annual MTW 

plan, in addition to those who reside in 

public housing, in accordance with the 

1937 Act. 

• The term ‘‘qualified PHA’’ would be 

added and defined as a PHA that is 

considered a ‘‘qualified public housing 

agency’’ under section 2702 of HERA, 

codified at section 5A(b)(3)(C) of the 

1937 Act (42 U.S.C. 1437c–1(b)(3)(C)). 

Essentially, this is a non-troubled PHA 

that does not have a recent failing 

Management Assessment Program score, 

and which has 550 or fewer units, 

considering only public housing units 

and vouchers under 42 U.S.C. 1437f(o). 

The proposed rule would add 

definitions for the following terms— 

‘‘Housing Quality Standards (HQS)’’, 

housing construction cost (HCC)’’, ‘‘lowincome families’’, ‘‘low-income 

housing’’, ‘‘PHA or Public Housing 

Agency,’’ ‘‘PHA Plan’’, and ‘‘Resident 

Management Corporation (RMC)’’—by 

cross-referencing to those terms found 

elsewhere in HUD’s codified 

regulations. The definition of ‘‘total 

development cost’’ would be removed 

because total development cost would 

be replaced by HCC. 

The proposed rule would also revise 

some existing definitions. The 

definition of ‘‘chief executive officer of 

a unit of local government’’ would 

clarify that the officer must have the 

authority to contractually bind the local 

government jurisdiction. The definition 

of ‘‘firm financial commitment’’ would 

be revised to remove the requirement 

that contingencies must be satisfied 

before the closing of the transaction. 

Other minor editorial changes are made 

to definitions to update terminology or 

correct errors. 

General requirements for HUD review 

and approval of a demolition, 

disposition, or combined application 

(§ 970.7). The proposed rule would 

make substantial revisions to § 970.7, 

the title of which would be revised to 

read ‘‘General requirements for HUD 

review and approval of a demolition, 

disposition, or combined application.’’ 

A paragraph on ‘‘Sufficiency of 

application’’ would be added to make 

explicit that HUD will not consider an 

application for demolition, disposition, 

or both, unless the application contains 

all the substantive information required 

in § 970.7 and in this part. 

Section 970.7(c), which addresses an 

application’s supporting 

documentation, would be revised to 

require additional material. 

Paragraph (c)(1) would require that 

the PHA not only ‘‘describe’’ the 

demolition or disposition action, but 

that the PHA has specifically authorized 

the action in its PHA plan or significant 

amendment to that plan, and the plan is 

consistent with any plans, policies, 

assessment, or strategies prepared 

pursuant to the PHA plan, for example, 

the deconcentration plan under 24 CFR 

903.2 or the obligation to affirmatively 

further fair housing (42 U.S.C. 

3608(e)(5)). An exception would be 

provided for qualified PHAs (those nontroubled PHAs whose public housing 

and Section 8 units combined are fewer 

than 550 units), which are not required 

to file PHA plans under HERA. In those 

cases, the qualified PHA must describe 

the proposed action at its required 

annual public hearing (or second public 

hearing if it determines to submit an 

application for demolition and/or 

disposition between its annual public 

hearings). Also, the PHA will certify 

that the proposed activities are 

consistent with its Deconcentration Plan 

(24 CFR 903.2), its obligation to 

affirmatively further fair housing (42 

U.S.C. 3608(e)(5)), and any applicable 

Consolidated Plan (24 CFR 91.2). 

Paragraph (c)(2), requiring a 

description of the property to be 

demolished, would be revised to require 

bedroom size, whether the units meet 

the accessibility requirements of Section 

504 of the Rehabilitation Act of 1973 (29 

U.S.C. 794) and HUD’s implementing 

regulations at 24 CFR part 8, and the 

acreage and legal description of the 

land. The description would include 

both dwelling and non-dwelling units. 

A new paragraph (c)(3) would be 

added to § 970.7 and would require 

information about the number of vacant 

units approved for the demolition, 

disposition, or combined action, and a 

narrative explanation of the reasons for 

any vacancies. The explanation could 

be, for example, health or safety issues 

have arisen; the PHA is consolidating 

occupancy under § 970.3(b)(18); or there 

is an emergency or major disaster. 

Paragraph (c)(4) would require a 

description of the demolition and/or 

disposition action, and, if disposition is 

involved, the method of disposition, 

which may include methods in addition 

to sale, such as leases, negotiated 

dispositions, and public bids. To ensure 

that future use of the property to be 

disposed of or demolished would be 

used for low-income housing purposes, 

this paragraph would also require a 

statement about the proposed future use 

of the property, including any 

anticipated subsidies expected to be 

used for future low-income housing on 

the site of the former project. 

The current § 970.7(a)(4), which 

requires the inclusion of a general 

timetable for the proposed action, 

would be redesignated at § 970.7(c)(5). 

The current § 970.7(a)(5), which 

requires a statement and other 

supporting documentation justifying the 

proposed demolition and/or disposition 

under the applicable criteria of 


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§§ 970.15 or 970.17, would be 

redesignated at § 970.7(c)(6). 

Proposed § 970.7(c)(2) would require 

the portion of the application that 

contains a description of all identifiable 

property to include appurtenant 

personal property and equipment, in 

conformance to the proposed definition 

of ‘‘project.’’ Such property and 

equipment would consist of items 

purchased with 1937 Act funds for use 

in connection with the project. 

Proposed § 970.7(c)(7) would revise 

currently codified § 970.7(a)(6) to add 

more specificity to the information 

submitted in the resident relocation 

plan, which is required when any 

residents will be displaced by a 

proposed demolition and/or disposition 

action. This additional information 

would include: 

• A certification that the PHA will 

comply with the relocation provisions 

of this part; 

• The estimated number of individual 

residents and families to be displaced; 

• The comparable housing resources 

the PHA will provide to displaced 

residents; 

• The type of housing counseling 

services the PHA plans to provide, 

including mobility counseling for 

residents, and affirmative marketing 

outreach to persons in groups whose 

representation among applicants and 

participants in the PHA’s housing 

programs is significantly less than in the 

PHA’s service area and those least likely 

to apply, including outreach appropriate 

to individuals with limited English 

proficiency, and accessible to persons 

with disabilities; 

• An estimate of the costs for housing 

counseling services and resident 

relocation (which requirement is 

currently in § 970.7(a)(11), which would 

be removed), and the expected source 

for payment for these expenses; 

• Evidence that displaced residents 

will be relocated in compliance with all 

civil rights and fair housing laws, 

including all affirmatively furthering 

fair housing regulations, the laws, and 

authorities listed in 24 CFR 5.105, and 

the identification of accessible units for 

displaced residents with disabilities; 

• Evidence that residents with 

disabilities will be relocated in housing 

that meets their accessibility needs in 

the most integrated setting appropriate 

to their needs, that is, the setting that 

enables individuals with a disability to 

interact with non-disabled persons to 

the greatest extent possible and provides 

access to community-based services; 

• A relocation timetable, which 

indicates the estimated number of days 

after HUD approval of the demolition, 

disposition, or combined action that the 

PHA plans to begin relocating residents; 

• Evidence that displaced residents 

will be relocated in compliance with all 

nondiscrimination and equal 

opportunity requirements; 

• A plan for determining and meeting 

the functional needs of displaced 

residents with disabilities, including 

communications assistance under 24 

CFR 8.6 and assistance in locating units 

that provide appropriate access to social 

services, reasonable accommodations, 

compliance with section 504 of the 

Rehabilitation Act of 1973; 

• A marketing plan that informs 

residents of affordable housing units or 

other new developments in the market 

area, especially to persons who may not 

be aware of the housing opportunity, 

and including information in languages 

other than English as needed; and 

• A plan and information under 

§ 970.21(d) if applicable. 

The relocation timetable information 

will be used to determine the PHA’s 

Operating Fund eligibility under 24 CFR 

part 990, which may include the PHA’s 

eligibility for an asset-repositioning fee 

(or add-on to Operating Funds) under 24 

CFR 990.190(h). As to comparable 

housing resources the PHA will provide 

to displaced residents, if some residents 

are not eligible to move to other public 

or assisted housing, the PHA must 

describe why such residents are not 

eligible and what resources it will make 

available to provide comparable housing 

for such displaced residents. 

This additional relocation information 

is to ensure that the PHA is ready and 

able to comply with Section 18 

relocation requirements if and when 

HUD approves the demolition, 

disposition, or combined action. The 

proposed § 970.7(c)(7) would also 

clarify that the Relocation Plan must be 

a separate written document that the 

PHA must prepare and submit as part of 

its application for demolition or 

disposition, or both. 

Proposed § 970.7(c)(8) would require 

more supporting evidence on a PHA’s 

required resident consultation than the 

current § 970.7(a)(7). The supporting 

evidence under the proposed rule must 

include: A description of the process of 

the consultations summarizing the 

dates, meetings, and issues raised by the 

residents and the PHA’s responses to 

those issues; meeting sign-in sheets; any 

written comments submitted by affected 

residents/groups along with the PHA’s 

responses to those comments; and any 

certifications or other written 

documentation that the PHA receives 

from the RAB (or equivalent body) and 

resident council regarding resident 

support or opposition. In addition, there 

must be a description and/or 

documentation evidencing that the PHA 

communicated with affected residents 

and other required groups in a manner 

that was effective for persons with 

hearing, visual, and other 

communications-related disabilities; 

that public hearing facilities and 

services were physically accessible to 

persons with disabilities; and that 

appropriate written or oral translations 

and language assistance services, as 

required, were provided for Limited 

English Proficient (LEP) individuals, 

consistent with the requirements of 24 

CFR 8.6. These requirements are to 

ensure that the required consultations 

are held and issues raised by residents 

are considered. 

The current § 970.7(a)(8), which 

requires the inclusion of evidence of 

compliance with the offering to resident 

organizations in the case of disposition, 

would be redesignated at § 970.7(c)(9). 

The current § 970.7(a)(9), which 

requires, in the case of disposition, the 

inclusion of the FMV of the project as 

established on the basis of at least one 

independent appraisal, unless otherwise 

determined by HUD, would be 

redesignated at § 970.7(c)(11). The 

current § 970.7(a)(10), which requires, 

in the case of disposition, the inclusion 

of estimates of the gross and net 

proceeds to be realized, would be 

redesignated at § 970.7(c)(12). 

Under proposed § 970.7(c)(13), in the 

case of a sale for less than FMV based 

on commensurate public benefit, HUD 

will consider the anticipated future use 

of the project after disposition required 

in § 970.7(c)(4)(iii). In addition, the 

supporting information for the 

application shall include: A detailed 

description of any housing that will be 

located on the property, including the 

number of units, bedroom size, 

accessibility, affordability, and priorities 

for displaced residents; the proposed 

length of time in which the acquiring 

entity will maintain the former project 

for the proposed future use (HUD will 

generally require the proposed future 

use remain as such for not less than 30 

years, but will consider other factors 

such as the extent of public benefits (e.g. 

number of affordable units) arising from 

proposed disposition and the FMV of 

the property in determining if a period 

of less than 30 years is acceptable); 

proposed legal documentation (e.g. use 

restriction, provision in ground lease, 

declaration of restrictive covenant) the 

PHA proposes to ensure the approved 

use; a plan to implement the 

requirement that income-eligible, 

displaced residents be offered an 

opportunity to return if housing units 

will be developed on-site at the former 


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project as outlined in § 970.21(d); and 

other information that HUD may require 

in order to make the determination. 

HUD’s part 970 regulations currently 

allow PHAs to request a waiver of the 

requirement to apply the proceeds of 

disposition to the repayment of 

outstanding debt (see § 970.19(e)(1)), 

which is required unless waived by 

HUD under section 18p(a)(5)(A) of the 

1937 Act (42 U.S.C. 1437p(a)(5)(A)). 

Proposed § 970.7(c)(14) provides more 

details about the types of debt waivers 

that can and cannot be requested. HUD 

does not have the statutory authority to 

waive modernization debt, such as 

Capital Fund Financing Program (CFFP) 

debt, Energy Performance Contracting 

(EPC) debt, and Operating Fund 

Financing Program (OFFP) debt. 

The current § 970.7(a)(13), which 

requires the inclusion a copy of a 

resolution by the PHA’s Board of 

Commissioners approving the specific 

demolition and/or disposition 

application, would be redesignated at 

§ 970.7(c)(16). The current 

§ 970.7(a)(14), which requires evidence 

that the application was developed in 

consultation with appropriate 

government officials, would be 

redesignated at § 970.7(c)(17). The 

proposed rule at § 970.7(c)(18) would 

revise the environmental review 

requirement in currently codified 

§ 970.13 to address environmental 

justice issues as applicable. 

The proposed rule would add 

submission requirements related to civil 

rights compliance. Proposed 

§ 970.7(c)(19) would add a requirement 

to submit a statement as to whether the 

PHA is subject to a voluntary 

compliance agreement (VCA), 

conciliation agreement, settlement 

agreement, consent order, consent 

decree, or any other civil rights related 

final judicial ruling or decision, in 

connection with the civil rights and fair 

housing rights of residents who will be 

affected by the proposed demolition, 

disposition, or combined action, and a 

certification that the demolition or 

disposition, or combined action does 

not violate any civil rights law, remedial 

order or agreement, VCA, conciliation 

agreement, final judgment, consent 

order, consent decree, settlement 

agreement, or any other civil rights 

related final judicial ruling or decision. 

This section would also require a 

certification that the proposed activities 

will not violate nondiscrimination or 

equal opportunity requirements, and 

that the PHA will meet affirmative 

obligations to provide equal housing 

opportunity, supported by: A statement 

that the proposed demolition and/or 

disposition will not prevent the PHA 

from fulfilling any VCA, conciliation 

agreement final judgment, consent 

order, consent decree, settlement 

agreement, or any other civil rights 

related final judicial ruling or decision, 

as well as a description of how the 

proposed demolition and/or disposition 

will help the PHA meet its affirmative 

obligations, including but not limited to 

the obligations to overcome 

discriminatory effects of the PHA’s use 

of 1937 Act funds pursuant to 24 CFR 

part 1 to address the obligation to 

affirmatively further fair housing (42 

U.S.C. 3608(e)(5)); deconcentration 

plans adopted by the PHA pursuant to 

24 CFR part 903; and housing 

accessibility, effective communications, 

and integration requirements under 24 

CFR part 8. 

The PHA would also certify that it 

does not have any outstanding charges 

from HUD or a substantially equivalent 

state or local fair housing agency 

concerning a violation of the Fair 

Housing Act (42 U.S.C. 3601–19); it is 

not a defendant in a Fair Housing Act 

lawsuit filed by the Department of 

Justice; it does not have outstanding 

letters of findings identifying 

noncompliance under title VI of the 

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

2000d–200d–4), section 504 of the 

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

294), or section 109 of the Housing and 

Community Development Act of 1974 

(42 U.S.C. 5309); and it has not received 

a cause determination from a 

substantially equivalent state or local 

fair housing agency concerning a 

violation of provisions of a state or local 

law prohibiting discrimination in 

housing based on sexual orientation, 

gender identity, or source of income; 

and any additional supporting 

information that may be requested by 

HUD, that shows that the proposed 

demolition and/or disposition will not 

maintain or increase segregation on the 

basis of race, ethnicity, or disability and 

will not otherwise violate applicable 

nondiscrimination or equal opportunity 

requirements, including a description of 

any affirmative efforts to prevent 

discriminatory effects. The purpose of 

these requirements is to ensure that 

PHAs that request demolition or 

disposition do not discriminate against 

residents, are not in violation of any 

civil rights-related law, agreements or 

orders, and that HUD can ensure that 

the residents who are displaced are not 

unlawfully segregated or denied 

appropriate housing because of their 

membership in a protected class. 

Proposed § 970.7(c)(20) would require 

a description of the civil rights-related 

characteristics (including race, color, 

religion, sex, national origin, familial 

status, and disability) of both the 

residents who will be displaced by the 

action, the residents anticipated to 

remain in a public housing project that 

is partially demolished or disposed of, 

and of the residents on the PHA’s 

waiting list (by bedroom size). The 

purpose of these requirements is to 

ensure that PHAs that request 

demolition or disposition are not in 

violation of any civil rights-related laws, 

agreements, or orders, and that HUD can 

ensure that the residents who are 

displaced are not unlawfully segregated 

or denied appropriate housing because 

of their membership in a protected 

class. 

Proposed §§ 970.7(c)(10), (c)(15), and 

(c)(21) would require material related to 

legal eligibility to undertake the 

demolition or disposition. In the case of 

disposition, a legal opinion would be 

required that the acquiring entity is a 

separate entity (i.e., an affiliate or fully 

independent entity rather than an 

instrumentality of the PHA) under the 

applicable state law. In the case where 

the PHA has applied for or been 

approved for financing under a HUD 

financing program such as the Capital 

Fund Financing Program (CFFP), the 

Operating Funding Financing Program 

(OFFP), or the Energy Performance 

Contract (EPC) program, the PHA must 

submit a legal opinion stating that the 

demolition, disposition, or combined 

action is permitted pursuant to the legal 

documentation associated with any 

such CFFP, OFFP, or EPC program. In 

addition the PHA must submit a general 

certification that it will comply with the 

program regulations and any conditions 

of HUD’s approval. 

Finally, proposed § 970.7(c)(22) 

would permit HUD to request any 

additional documentation it determines 

necessary to support the application and 

assist HUD in making a determination 

whether or not to approve it. 

Under both the current regulations 

and this proposed rule, a PHA must 

obtain written approval from HUD prior 

to demolishing or disposing of public 

housing (see § 970.7(a)). This proposed 

rule would allow HUD to require PHAs 

to adhere to certain terms and 

conditions based on the approval 

documents. Proposed § 970.7(d) states 

that if a PHA includes documentation, 

certifications, assurances, or legal 

opinions in its application that exceed 

the requirements of section 18 of the 

1937 Act or the regulations of part 970 

(e.g., that commit to provide residents 

with an opportunity to return to new 

affordable housing units that may be 

developed with disposition proceeds 

and/or on the public housing property 

when such an opportunity is not 


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required by this part), HUD may 

establish additional requirements, based 

on such documentation, in its approval 

of the demolition, disposition, or 

combined action. Further, this proposed 

section states that the PHA cannot vary 

from the terms and conditions of HUD 

approval without prior written approval 

from HUD. 

Currently codified § 970.7(b)(1) allows 

for PHAs to request rescission of an 

approval of a demolition or disposition 

application based on a board resolution 

and documentation that the conditions 

that led to the original request have 

significantly changed or been removed. 

Proposed § 970.7(e) would also allow a 

PHA to amend an earlier approval, on 

a case-by-case basis, based on the PHA’s 

submission (in the form prescribed by 

HUD) of an explanation and 

documentation, if applicable, 

evidencing the reason for the requested 

change. The current requirement at 

§ 970.7(b)(2), which provides that 

substitution or addition of units requires 

the submission of a new application for 

those units would be removed. 

Resident Participation and 

Opportunity To Purchase (§ 970.9). The 

proposed rule would provide more 

specificity to the resident consultation 

requirements to give PHAs better 

guidance and to ensure that resident 

consultation is as effective as possible. 

Proposed § 970.9(a) would list with 

specificity the residents and resident 

groups with which the PHA must 

consult, as well as specific steps 

required to be taken. Included in the 

consultation, in addition to residents 

residing in the project proposed for the 

action, would be any resident councils, 

resident organizations for the project, 

PHA-wide resident organizations that 

will be affected, and the applicable 

RAB. Consultation would mandatorily 

include the following: Providing a copy 

of the demolition, disposition, or 

combined application, or posting it on 

the PHA’s Web site, which must be 

accessible; consulting on any report on 

the environmental or health effects of 

the proposed activities; consulting on 

the final application; consulting on the 

relocation plan and opportunity to 

return to ACC units, if applicable; 

stating that residents and groups have 

the right to submit written comments, 

that the PHA will respond to those 

comments, and that the comments and 

responses will be submitted to HUD as 

part of the PHA’s application materials. 

The PHA would have to provide 

residents and resident groups with a 

reasonable time frame to submit written 

comments, and must respond to those 

comments within a reasonable time 

frame. 

In addition, PHAs must take steps to 

ensure that they communicate with 

public housing and rental assistance 

applicants and residents that are 

effective for persons with hearing, 

visual, and other communicationsrelated disabilities consistent with 

section 504 of the Rehabilitation Act of 

1973, and as applicable, the Americans 

with Disabilities Act (42 U.S.C. 12101 et 

seq.). This includes ensuring that 

notices, policies, and procedures are 

made available via accessible 

communication methods including the 

use of alternative formats, such as 

Braille, audio, large type, sign language 

interpreters, assistive listening devices, 

and other similar methods, and are 

written using plain language. 

Additionally, PHAs must ensure that 

the public meeting facilities and 

services used are physically accessible 

to persons with disabilities in 

accordance with section 504 of the 

Rehabilitation Act of 1973 and that 

Limited English Proficient (LEP) 

individuals will have meaningful access 

to programs and activities, in 

accordance with Title VI of the Civil 

Rights Act of 1974, as amended, 42 

U.S.C. 2000, and Executive Order 

13166. 

As part of the consultation, in 

addition to the requirement for the PHA 

to consult residents and resident 

organizations on the application as 

stated in proposed § 970.9(a)(5)(i) and 

(ii), the PHA must consult with the 

residents and resident organizations on 

any report on the environmental or 

health effects of the proposed 

demolition, disposition, or combined 

action (see proposed § 970.9(a)(5)(iii)). 

Proposed § 970.9(b) would require, 

similarly to the currently codified 

section, the PHA in appropriate 

circumstances to offer to sell the project 

proposed for disposition to any 

‘‘Established Eligible Organization,’’ 

which is defined as a resident 

organization, resident management 

corporation (RMC), or a nonprofit 

organization acting on behalf of the 

residents. Exceptions in proposed 

§ 970.9(b)(3) would be similar to those 

in the currently codified rule, with a 

few clarifications and updating of 

vocabulary. Proposed § 970.9(b)(4) 

would remove language referencing the 

partial disposition of PHA property and 

use the term ‘‘project’’ instead, under 

the proposed revised definition of 

which a partial disposition would be 

included. If there is no exception to the 

resident offer requirement and if an 

Established Eligible Organization has 

expressed an interest under § 970.9(c), 

then the procedures in proposed 

§ 970.11, ‘‘Procedures for the offer of 

sale to established eligible 

organizations,’’ would apply. 

Procedure for the Offer of Sale to an 

Established Eligible Organization 

(§ 970.11). Proposed § 970.11 would be 

generally similar to the currently 

codified section. However, current 

paragraph (d), ‘‘Contents of the initial 

written notification,’’ which states the 

information the PHA must provide to 

the Established Eligible Organization 

when it notifies them of the upcoming 

disposition, would be moved and 

redesignated as § 970.11(b), to 

immediately follow the requirement to 

send the notification (current 

paragraphs (b) and (c) accordingly 

would be redesignated (c) and (d)). 

Proposed § 970.11(b) would be 

revised largely to update terminology; 

however, a couple of substantive 

changes are proposed. Proposed 

§ 970.11(b)(1) replaces the phrase 

‘‘development, or portion of the 

development,’’ with the term ‘‘project,’’ 

which would also include a portion of 

a project. In addition, the proposed rule 

would add ‘‘the number of accessible 

units or units that otherwise contain 

accessible features’’ to the information 

that must be provided in the initial 

written notification. Proposed 

§ 970.11(b)(5) would revise currently 

codified § 970.11(d)(5), which states that 

public housing developments sold to 

resident organizations will not receive 

capital or operating funds after the 

disposition. The proposed rule would 

revise this general statement to indicate 

that if the Established Eligible 

Organization is an RMC and enters into 

an ACC with HUD, it will receive 

Operating and Capital Funds in 

accordance with 24 CFR part 964 

(Tenant Participation and Tenant 

Opportunities in Public Housing), the 

ACC, and applicable federal law and 

regulation. 

Proposed § 970.11(e), ‘‘Response to 

notice of sale,’’ would be updated to 

state that the count of the 30-day 

response time begins with the date the 

PHA’s notice is postmarked. 

Proposed § 970.11(h) would change 

the addressee for the letter of appeal 

from the field office director to HUD, 

and break the single paragraph into 2 

numbered paragraphs solely for better 

readability, and would specify the 

initial 30-day clock for HUD’s response 

begins to run on the date on which HUD 

receives the appeal. Proposed 

§ 970.11(i), which states the required 

contents of the Established Eligible 

Organization’s proposal, except for the 

use of updated terminology (for 

instance, using the terms ‘‘project’’ and 

‘‘Established Eligible Organization’’), 


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would be substantively the same as the 

current regulation. 

Proposed § 970.11(i)(6), which would 

require the resident organization’s 

proposal to include a plan for financing 

the purchase of the project similar to the 

currently codified § 970.11(i)(6), would 

also require the financing to include 

paying for any necessary accessibility 

modifications. 

Proposed § 970.11(j) summarizes the 

PHA’s responsibilities, which are to: 

Prepare and distribute the notice of 

disposition; evaluate the proposals 

received and make selections based on 

regulatory criteria in § 970.11(b); obtain 

the certifications from the executive 

director or board of commissioners 

required in § 970.11(k); consult with 

residents as required in § 970.9(a); not 

act in an arbitrary and capricious 

manner and give full and fair 

consideration to any offer from an 

Established Eligible Organization; and 

accept an offer if the offer meets the 

terms of sale. This section does not 

change the obligations that PHAs must 

currently meet under the codified 

regulations, but updates some 

terminology and provides some 

clarification to existing language where 

HUD thought further clarification would 

enhance understanding of the 

obligations required. 

Proposed § 970.11(k) would change its 

title from ‘‘PHA post-offer 

requirements’’ to ‘‘Offer by an 

Established Eligible Organization,’’ and, 

like the current § 970.11(k), would state 

the procedures that the PHA is to follow 

once a resident offer is made. Except for 

the removal of language related to a 

partial disposition because it is no 

longer needed under the new definition 

of ‘‘project,’’ this section is the same as 

in the currently codified regulation. 

Essentially, this section requires the 

PHA to fully document that it correctly 

followed the resident offer 

requirements, including a board 

resolution of each eligible organization 

that the eligible organization received 

the PHA’s offer, that the organization 

understands the offer, and that it waives 

its opportunity to purchase; 

alternatively, a certification of the 

executive director or board of 

commissioners of the PHA that the 30- 

day time has expired and no resident 

offer was received; or a certification, 

with supporting documentation, that the 

offer was rejected by the PHA. 

Civil Rights and Equal Opportunity 

Review (§ 970.12). The proposed rule 

would add a new § 970.12 that describes 

compliance with civil rights and equal 

opportunity requirements. HUD will 

review the PHA’s civil rights 

certification under section 5A(d)(16) of 

the 1937 Act (42 U.S.C. 1437c–1(d)(16)), 

and other related information that may 

be available to HUD or requested by 

HUD. Pursuant to § 970.29, HUD will 

disapprove a PHA’s application for 

demolition and/or disposition if HUD 

determines that any civil rights 

certifications or submissions required 

under this part are incomplete, 

inaccurate, or inconsistent with the 

requirements stated in this section. 

Environmental Review Requirements 

(§ 970.13). The environmental review 

requirements in proposed § 970.13 

would be substantively the same as in 

the currently codified § 970.13. 

Environmental review requirements 

apply to the demolition, disposition, or 

combined action being taken and any 

known future re-use. The current 

regulation and this proposed rule state 

four factors to be considered in 

determining whether a future re-use is 

‘‘known.’’ These factors are as follows: 

(1) That funding has been committed; 

(2) a grant application involving the site 

has been filed; (3) a government 

(federal, state, or local) has made a 

commitment to take an action that will 

facilitate a particular re-use of the site, 

and this may or may not be a physical 

action; and (4) that there are 

architectural, engineering, or design 

plans that go beyond preliminary stages. 

Section 3 Compliance (§ 970.14). 

Pursuant to section 3 of the Housing and 

Urban Development Act of 1968 (section 

3) (12 U.S.C. 1701u), and HUD’s 

regulation at 24 CFR part 135, HUD 

requires programs or projects funded by 

public housing funds to provide 

employment, training, contracting, and 

economic opportunities to the greatest 

extent feasible, to low and very-low 

income persons. The proposed rule 

would implement this requirement by 

adding a new § 970.14. This 

requirement applies to demolition and 

disposition (and combined) actions if 

public housing funds are used. If public 

housing funds are not used so that the 

requirement does not apply, planning 

and carrying out section 3 activities 

related to these proposed actions would 

satisfy, in part, the commensurate 

public benefit requirement for below 

FMV dispositions pursuant to § 970.19. 

Specific Criteria for HUD Approval of 

a Demolition Application (§ 970.15). 

Proposed § 970.15, like currently 

codified § 970.15, states the specific 

criteria for HUD approval of demolition 

applications, although the section 

would be reorganized and more detail 

would be added to some of the 

requirements. The proposed rule would 

reorganize this section to keep similar 

material together; for example, proposed 

§ 970.15(a)(1) would cover the factor of 

obsolescence making a project 

unsuitable for housing purposes, and 

then include the list of major problems 

indicative of obsolescence to 

subparagraphs. 

The problems that cause obsolescence 

for purposes of this rule are structural 

deficiencies, serious outstanding capital 

needs, and design or site issues such as 

severe erosion or flooding. While the 

currently codified regulation, at 

§ 970.15(b)(1)(i), lists specific kinds of 

structural deficiencies, HUD believes 

that other structural deficiencies than 

those mentioned could cause 

obsolescence. At the same time, HUD 

acknowledges that there must be some 

degree of objectivity in the obsolescence 

determination. Therefore, this rule 

would propose at § 970.15(a)(1)(i) that 

obsolescence be found by an 

independent (that is, not a regular 

employee of the PHA) architect or 

engineer. HUD will review the 

determination and supporting 

documentation, and may obtain 

additional information, to ensure 

against any discriminatory effects of the 

proposed demolition—such as 

avoidance of the obligation to provide 

accessible housing for persons with 

disabilities. Furthermore, HUD seeks to 

clarify that, if the issue is a site issue 

related to the location of the project, 

such as physical deterioration of the 

neighborhood, a change from residential 

to industrial or commercial 

development in the neighborhood, or 

environmental conditions as determined 

by an environmental review in 

accordance with HUD’s environmental 

regulations at 24 CFR part 50 or part 58, 

which jeopardize the suitability of the 

site or a portion of the site and its 

housing structures for residential use, 

then the proposed rule would require 

that the PHA simultaneously submit a 

disposition application. The reason for 

this proposed change is that if the site 

is not suitable for public housing such 

that existing public housing had to be 

demolished, it should not be 

redeveloped for low-income housing 

purposes in the future, even if of a lesser 

density. Instead, the PHA should 

dispose of the unsuitably located 

property. 

The criteria of ‘‘no reasonable 

program of modifications will be costeffective to return the project to its 

useful life’’ would be addressed in 

proposed § 970.15(a)(2). The test for cost 

effectiveness in this context would be 

revised from a percentage of total 

development cost based on type of 

structure (elevator or non-elevator), to a 

simple test as to whether the cost of 

modifications would exceed the HCC for 

new housing in effect at the time the 


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application is submitted to HUD. HCC is 

regularly updated and well understood 

by the public housing industry. 

In the case of partial demolitions, 

proposed § 970.15(b) would revise 

currently codified § 970.15(c) to remove 

the requirement for an additional PHA 

certification that the proposed action 

would reduce development density to 

allow better access by emergency 

services or improve marketability. 

Instead, in the case of contiguous (nonscattered site) projects, the PHA would 

have to certify that the demolition will 

help to ensure the viability of the 

remaining portion of the project. In the 

case of scattered site projects, the 

viability certification would not be 

required. Where there is no contiguous 

project, there is no ‘‘remaining portion 

of the project’’ that would be affected, 

so the viability concern would not 

apply. 

Proposed § 970.15(c) would require 

the PHA, unless the PHA also submits 

an application for disposition of the 

project at the same time it submits the 

demolition application, to also certify 

that the vacant land comprising the 

project after the demolition of the 

buildings shall be used for low-income 

housing purposes as permitted by the 

ACC, which purposes may initially 

include land banking as approved in 

writing by HUD if a use is not 

determined. In addition, proposed 

§ 970.15(d) would require a demolition 

to be completed in 2 years of the date 

of HUD approval, unless the PHA 

receives from HUD an extension in 

writing. Proposed paragraphs (c) and (d) 

of § 970.15 would be new requirements. 

Specific Criteria and Conditions for 

HUD Approval of a Disposition 

(§ 970.17). Proposed § 970.17, like 

currently codified § 970.17, states the 

specific reasons for which HUD may 

approve of disposition applications. The 

standard would in part remain the same 

as currently codified in regulation, 

which is that HUD will approve an 

application for disposition when 

retention of the project is not in the best 

interests of the residents or the PHA for 

at least one of these reasons: The 

conditions in the area surrounding the 

project adversely affect the health and 

safety of the residents (proposed 

§ 970.17(a)); disposition allows for the 

acquisition, development, or 

rehabilitation of other properties that 

will be operated as low-income housing 

more efficiently, effectively, or both 

(proposed § 970.17(b)); the PHA has 

determined the disposition to be 

appropriate (proposed § 970.17(c)); and, 

in the case of a disposition that does not 

include dwellings, the PHA must certify 

that the portion disposed of exceeds the 

needs of the project or the disposition 

is incidental to, or does not interfere 

with, the continued operation of the 

remainder of the project. 

In addition, the proposed rule would 

revise and add more detail to some of 

the existing standards. Proposed 

§ 970.17(b) would add examples of what 

would be considered more efficient and 

effective operation. In addition, the rule 

would require the PHA to demonstrate 

to the satisfaction of HUD that the units 

will be replaced with other low-income 

housing units. Section 970.17(b)(2) 

clarifies that the PHA must demonstrate 

to the satisfaction of HUD that sufficient 

replacement units are being provided in 

connection with the disposition of the 

property. The PHA should obtain 

sufficient value for the units to attain 

this replacement goal, which ensures 

that the PHA receives sufficient value 

for its units and also safeguards the 

Nation’s valuable low-income housing 

stock. It is worth noting in this 

connection that the Senate Committee 

on Appropriations, in Senate Report 

112–83 (September 21, 2011) stated, in 

a discussion of leveraging resources, 

that ‘‘The Committee is concerned that 

without an infusion of new resources to 

bring public housing stock into a state 

of good repair, irreplaceable affordable 

housing will be permanently lost’’ (p. 

108). The Committee also notes that the 

public housing stock continues to age, 

and that the current backlog of capital 

needs is $25.6 billion. In this 

environment, when disposing of public 

housing units, PHAs must receive 

sufficient compensation, after any 

required retirement of outstanding debt 

not waived by HUD, from the 

disposition to replace the dwelling units 

with other low-income housing units 

through acquisition, development, or 

rehabilitation. 

The replacement housing may, for 

example, be public housing units or 

project-based voucher units. Section 

970.17(b)(3) would provide that 

replacement housing units be developed 

on another property, that the PHA must 

have the replacement housing units or 

land for the new construction of the 

units identified at the time it submits its 

request to HUD, and that the PHA 

provide its financing plan for the 

replacement units. The disposition of 

the project must be an arms-length 

transaction at FMV and 100 percent of 

the proceeds must be used to acquire, 

develop, or rehabilitate the replacement 

units. The proposed rule would revise 

§ 970.17(c), which currently states that 

the PHA may also dispose of a project 

if the PHA has otherwise determined 

the disposition to be consistent with the 

goals of the PHA, the PHA Plan, and the 

1937 Act, to add that the disposition 

under this section (c) must be in the best 

interests of the residents and the PHA. 

In addition, the proposed rule would 

add an additional condition under this 

section. Specifically, the PHA may not 

dispose of a project under this section 

if the reason for disposition, as 

determined by HUD, falls under another 

regulatory section (such as § 970.7(a) or 

(b)); another law (such as voluntary 

conversion under section 22 of the 1937 

Act (42 U.S.C. 1437t) and required 

conversion under section 33 of the 1937 

Act (42 U.S.C. 1437z–5) or 

homeownership under section 32 of the 

1937 Act (42 U.S.C. 1437z–4)), or an 

eminent domain taking. HUD would 

consider the following reasons for 

disposition to be acceptable under this 

section: The project meets the criteria 

for obsolescence under § 970.15; the 

units will be rehabilitated through 

mixed-finance development method, 

and to reduce the number of public 

housing units in the project, the criteria 

under § 970.15 or another section of this 

part must be met; and other reasons 

determined by HUD to meet this 

criteria. In addition, proposed 

§ 970.17(d) would revise currently 

codified § 970.17(d) by clarifying the 

language of the provision. 

Requirements for the Disposition of a 

Project (§ 970.19). Proposed § 970.19 

would require that a project be disposed 

of for not less than FMV, unless HUD 

authorizes a disposition for less than 

FMV under § 970.19(b), which requires 

that a commensurate public benefit 

result from the disposition. The statute 

does not cover the amount that the PHA 

is required to obtain when disposing of 

public housing property, but instead 

appears to leave that element up to HUD 

regulation. In the case where there are 

proceeds from the disposition, the 

statute requires specified uses to be 

made of the proceeds, that is, retirement 

of bond debt that originally financed the 

project unless waived by the Secretary 

(see 42 U.S.C. 1437p(a)(5)(A)), and, to 

the extent that other proceeds remain, 

the provision of low-income housing or 

to benefit the residents of the public 

housing agency, or on-site commercial 

enterprises to serve the needs of the 

residents (see 42 U.S.C. 1437p(a)(5)(B)). 

Thus, the statute evidences an intent 

that the proceeds of disposition inure to 

the benefit of public housing residents. 

The statute does not explicitly cover the 

situation, however, where disposition is 

for less than FMV and hence there are 

no proceeds from the disposition to be 

applied as directed. Instead, that 

scenario is left to HUD regulation. 

HUD believes that in below-FMV 

dispositions, there needs to be some 


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assurance that the federal investment in 

public housing is not lost and the 

purpose of the investment continues to 

be fulfilled. Hence, the proposed rule 

would add a new § 970.19(c), while 

currently codified paragraph (c), which 

relates to obtaining an estimate of FMV, 

would be redesignated as paragraph 

(c)(i). This new paragraph would require 

that where a PHA disposes of a project 

at below FMV on the basis that there is 

a commensurate public benefit, the PHA 

execute a use restriction or other 

arrangement of public record, in a form 

acceptable to HUD, that will ensure that 

the property will be used for not less 

than 30 years for the public use that 

HUD approved. This period is 

commensurate with other PIH use 

restrictions. This proposed new measure 

would ensure that public funds are 

being used for appropriate purposes. 

The use restriction or other similar 

arrangement must be in a first priority 

lien position that would survive any 

other liens or foreclosures. The PHA 

would be responsible for monitoring 

and enforcing the use restriction 

throughout the term of the use 

restriction. HUD may take enforcement 

action against the PHA if the PHA fails 

to enforce the use restriction. 

Proposed § 970.19(a) and (b) are 

substantively similar to currently 

codified § 970.19(a), with the exception 

that the definition of commensurate 

public benefit is moved, to proposed 

§ 970.5. 

A new § 970.19(d) would provide that 

if a PHA is unable to dispose of a project 

containing obsolete units that is 

approved for disposition under 

§ 970.17(c)(1) in its ‘‘as is’’ condition 

despite due diligence and reasonable 

efforts, as determined by HUD, if 

requested by the PHA, HUD will 

approve a demolition of the project, in 

accordance with § 970.15 so that the 

PHA can proceed with demolition and 

then the disposition of only the vacant 

land comprising the project. 

In order to ensure timely action, the 

proposed rule would require at 

§ 970.19(e) that the disposition shall 

occur within 2 years of HUD’s approval, 

unless HUD extends the time in writing. 

In HUD’s experience, 2 years is usually 

sufficient time. This time limit is the 

same as HUD is proposing for 

demolition (see proposed § 970.15(d)). 

The proposed rule would also 

specifically address dispositions in 

which the property is transferred for 

more than one, but less than 30 years, 

such as by lease. Proposed § 970.19(f) 

would require the PHA to return the 

project to either return the property to 

the public housing inventory, including 

adding the property again to its ACC 

and placing a DOT on the property, or 

submit another disposition or other 

removal (e.g. demolition, 

homeownership, voluntary conversion) 

application, at the end of the temporary 

period. 

Proposed § 970.19(g) would require 

the PHA to ensure that the use of the 

property that HUD approved as the 

commensurate public benefit begin 

within 2 years of the date of disposition 

of the project, unless the PHA receives 

an extension from HUD in writing. This 

proposal, again, is intended to ensure 

timeliness in the use of public funds. 

Current § 970.19(b), which allows for 

the PHA to pay for the reasonable 

expenses of disposition and relocation 

cost for displaced residents, is 

redesignated § 970.19(h). 

Proposed § 970.19(h) and (i) would 

revise existing § 970.19(c) on obtaining 

an estimate of FMV and would add a 

provision on obtaining an estimate of 

FMV when a project is proposed for 

disposition via negotiated sale at less 

than FMV based on commensurate 

public benefit. In that case, HUD may 

accept any reasonable valuation of the 

property, which need not be obtained by 

hiring an independent appraiser, such 

as a tax assessor’s valuation. Because of 

the commensurate public benefit being 

obtained in lieu of FMV, the market 

valuation is not as critical, so HUD can 

rely on a less expensive and more easily 

available form of valuation than an 

appraisal. 

Use and treatment of Proceeds 

(§ 970.20). The proposed rule would 

move and revise the content on use of 

proceeds found in currently codified 

§ 970.19(e) and (f) into a new § 970.20, 

entitled ‘‘Use and treatment of 

proceeds.’’ The proposed revisions 

would provide additional detail on what 

HUD considers the appropriate uses of 

proceeds of disposition after the 

payment of HUD-approved costs of 

disposition and relocation. According to 

the 1937 Act, the proceeds are to be 

used: (1) For the retirement of 

outstanding debt, unless waived by 

HUD; (2) to the extent that any proceeds 

remain, for the provision of low-income 

housing or ‘‘to benefit the residents of 

the public housing agency’’; or (3) 

leveraging amounts for commercial 

enterprises appropriate to the needs of 

the residents. The proposed revisions 

would provide more detail regarding 

HUD’s interpretation of ‘‘to benefit the 

residents.’’ 

The proposed new section would 

provide that uses of proceeds that 

remain after debt obligations for 

providing low-income housing could 

include: Modernization of existing 

projects; development of a project; 

funding of homeownership units under 

sections 9, 24, or 32 of the 1937 Act (42 

U.S.C. 1437g, 1437v, and 1437z–4, 

respectively); construction, 

rehabilitation, and acquisition of units 

to be used as Section 8 housing, 

provided that the PHA complies with 

safe harbors in connection with such 

construction, rehabilitation, and/or 

acquisition, and executes a use 

agreement in a form acceptable to HUD 

ensuring that the property will be 

operated exclusively as Section 8 

housing for not less than 30 years, 

roughly commensurate with other use 

restrictions (along with other 

requirements, such as compliance with 

program regulations); benefits to the 

residents for uses permitted by HUD’s 

Operating Fund rule; and funding of 

shortfalls (but not new allocations) of 

vouchers under section 8 of the 1937 

Act (42 U.S.C. 1437f), subject to further 

HUD approval and discretion 

considering the applicable section 8 

statutory, regulatory, and funding 

requirements. Benefits to the residents 

(that is, benefits for public housing 

residents) for which funds could be 

used include, for example, job training, 

child care programs, and service 

coordination. Other housing and 

benefits to the residents may be 

approved by HUD as well. The net 

proceeds may be leveraged with other 

funds so long as the net proceeds are 

used on a pro-rata basis to fund only the 

approved uses. 

The proposed rule would require, in 

other contexts, expenditures of proceeds 

for the provision of low-income housing 

or for the benefit of PHA residents 

under this section to begin within 2 

years from the date of disposition 

approval and be completed (i.e., entirely 

expended for the approved use) within 

4 years unless HUD approves an 

extension in writing. The purpose of 

this proposal is to ensure timely use of 

public funds for their appropriate 

purposes, and to prevent banking public 

funds. These funds are appropriated and 

approved for particular public purposes, 

and should be used for those purposes 

in a timely manner. 

The rule would also provide that 

proceeds generated from dispositions 

are subject to all laws, regulations, and 

other requirements applicable to use 

approved by HUD unless otherwise 

approved by HUD in writing. Thus, for 

example, for development, equal 

opportunity and environmental 

requirements, requirements pertaining 

to section 3 of the Housing and Urban 

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

1701u) and the labor standards 

provisions of section 12 of the 1937 Act 

(42 U.S.C. 1437j), may all be applicable. 


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The one exception to this general rule 

is that where disposition proceeds are 

used with HUD approval for the 

development of public housing units, 

the disposition proceeds will not count 

toward the total development cost (TDC) 

limit pursuant to 24 CFR 905.314(c). 

If a PHA fails to use proceeds as 

required, HUD may recapture or require 

repayment of the proceeds, or take all 

other remedies available under law. 

Finally, the rule would require that 

upon immediate receipt of proceeds, 

and until expended for an approved use, 

a PHA must deposit the proceeds into 

an interest bearing account, subject to a 

HUD General Depository Agreement 

and/or an escrow agreement in a form 

acceptable to HUD. All accrued interest 

will be treated as additional proceeds, 

subject to this section. 

Relocation of Residents (§ 970.21). 

Proposed § 970.21(a) would revise the 

currently codified § 970.21(a) to include 

material concerning the written notice 

to residents who will be displaced, now 

required at § 970.21(e), with additional 

details provided. The written notice 

would have to include a statement that 

the demolition, disposition, or 

combined application has been 

approved and that the action will occur, 

and a description of the process to 

relocate the residents. The written 

notice must be provided through an 

effective communications means to 

persons with disabilities in accordance 

with 24 CFR 8.6 and in the appropriate 

non-English language to persons with 

limited English proficiency as needed. 

This section would also continue to 

incorporate the requirement that the 

housing being offered must meet HQS 

(or such equivalent or successor 

standard that HUD may adopt) and be 

in a location ‘‘not less desirable’’ than 

the housing the resident is being 

displaced from. The currently codified 

regulation does not define a ‘‘not less 

desirable’’ location. Under the proposed 

rule, a PHA would, in determining 

comparable housing, also consider the 

following criteria (in aggregate): 

Neighborhood safety; quality of local 

schools; accessibility of amenities (e.g., 

transportation, employment); and 

exposure to adverse environmental 

conditions. Relocation associated with 

demolition and disposition plans must 

be consistent with the PHA’s obligation 

to affirmatively further fair housing (42 

U.S.C. 3608(e)(5)). In no event shall a 

PHA commence a demolition or 

disposition of the building (or a 

combined action) in which a resident 

lives until each resident of the building 

is provided relocation assistance. 

Under proposed § 970.21(a)(4), the 

written notice would include a 

description of the comparable housing 

options that the PHA is offering to the 

resident, including the location of the 

housing to public transportation, 

employment, education, child care, 

medical services, shopping, and other 

amenities. The housing may include the 

types of housing currently codified at 

§ 970.21(a)(1)–(3) (as of the April 1, 

2013 edition of the Code of Federal 

Regulations). 

Under § 970.21(a)(5), the notice shall 

include statements that the PHA shall 

offer displaced residents comparable 

housing on a nondiscriminatory basis 

with respect to race, color, religion, 

national origin, disability, familial 

status, or sex, as required by civil rights 

laws. Under proposed § 970.21(a)(6), the 

PHA shall offer residents with 

disabilities comparable housing that 

includes the accessibility features 

needed by the resident and located in 

the most integrated setting appropriate 

for the resident. The most integrated 

setting appropriate to the needs of 

individuals with disabilities is the 

setting that enables individuals with 

disabilities to interact with nondisabled 

individuals to the fullest extent 

possible, in furtherance of the Supreme 

Court’s decision in Olmstead v. L.C., 

527 U.S. 581 (1999), and pursuant to 

HUD’s regulations at 24 CFR 8.4(d). The 

statement shall also include the right of 

displaced residents to a reasonable 

accommodation under Section 504 of 

the Rehabilitation Act of 1973, the Fair 

Housing Act, and the Americans with 

Disabilities Act, as applicable, and how 

to request such an accommodation. 

Section 18(a)(4)(B) of the 1937 Act (42 

U.S.C. 1437p(a)(4)(B)) requires the 

payment of ‘‘actual and reasonable 

relocation expenses’’ of each resident 

being displaced, as does the current 

regulation at § 970.21(e)(2). The 

proposed rule would add more detail to 

what constitutes ‘‘actual and reasonable 

relocation expenses.’’ Under proposed 

§ 970.21(a)(7), the PHA would provide 

for the payment of actual and reasonable 

relocation costs for each displaced 

resident, including reasonable 

accommodations for residents with a 

disability in accordance with Section 

504 of the Rehabilitation Act of 1973, 

essentially similar to currently codified 

970.21(e)(2). The proposed rule would 

further specify that the PHA shall pay 

for moving cost assistance, the payment 

of a displaced resident’s security or 

utility deposit (or both), at a comparable 

housing unit (provided that loans or 

grants made directly to displaced 

residents for new deposits are not 

permitted if the PHA’s source is either 

Capital or Operating Funds). The PHA 

would pay such deposits directly to the 

utility company, the landlord, or both, 

with the resident holding no interest in 

the funds. Any returns or refunds would 

go to the PHA directly. 

Section 18(a)(4)(D) of the 1937 Act (42 

U.S.C. 1437p(a)(4)(D)) provides that a 

PHA, as a condition of approval of its 

application, must provide ‘‘any 

necessary counseling for residents who 

are displaced’’ as a result of the 

demolition, disposition, or combined 

action. Proposed § 970.21(a)(8) would 

specify that the notice must include a 

description of the housing counseling 

services that will be available, including 

mobility counseling, and how a resident 

may access those services. 

Proposed § 970.21(a)(9) requires that 

if the provisions of section 104(d) of the 

Housing and Community Development 

Act of 1974 (42 U.S.C. 5304(d) (section 

104(d)), referenced in § 970.21(g), apply 

to the project, the notice required by 

§ 970.21(a) must explain the assistance 

available under section 104(d), which 

requires a residential antidisplacement 

and relocation assistance plan for 

certain grants. 

Proposed § 970.21(b) covers the 

timing of the notification to residents of 

the upcoming action. Like currently 

codified § 970.21(e)(1), proposed 

§ 970.21(b) requires notification to 

residents at least 90 days prior to the 

displacement date, except in cases of 

imminent threat to health and safety. 

The proposed rule would define 

displacement date as the earliest date by 

which a resident who will be displaced 

by a demolition, disposition, or 

combined action shall be required to 

move. A PHA may not issue the 

notification prior to the date that HUD 

approves the application. Section 

18(a)(4)(A)(iii) of the 1937 Act (42 

U.S.C. 1437p(a)(4)(A)(iii)) and the 

current regulation at § 970.21(e)(1)(iii) 

require that each resident who is 

displaced from housing must be offered 

comparable housing and must be 

provided with actual and reasonable 

relocation assistance. The notice 

provisions in proposed § 970.21(a) 

reflect these requirements. 

Proposed § 970.21(c)(1) would 

provide that if a PHA offers a resident 

comparable housing in the form of 

tenant-based assistance under section 8 

of the 1937 Act, and the resident is 

unable to lease a dwelling unit during 

the initial 60-day leasing period 

provided under the Housing Choice 

Voucher program, the PHA may either 

(i) grant one or more extensions to the 

initial term in accordance with the 

voucher program regulations at 24 CFR 

982.303 as reflected in the PHA’s 

administrative plan; or (ii) provide the 

resident with another form of 


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comparable housing (e.g., public 

housing unit or project-based unit under 

section 8 of the 1937 Act). Proposed 

§ 970.21(c)(2) would provide that a PHA 

shall not commence the HUD-approved 

demolition or complete the HUDapproved disposition of a building until 

each resident who will be displaced by 

the action is relocated in accordance 

with the requirements of this part. 

As discussed in this preamble, the 

proposed rule would allow dispositions 

at below FMV based on commensurate 

public benefit. In such a case, if housing 

is developed on the site of the former 

project and is income-eligible, proposed 

§ 970.21(d) would provide that incomeeligible residents shall be offered the 

opportunity to return to the site once 

appropriately-sized units are available 

for occupancy. As part of its application 

for this type of disposition, the PHA 

would provide a plan that addresses 

how residents will be notified of the 

opportunity to return; the amount of 

time residents will have to exercise this 

opportunity; the source of funds from 

which the PHA or the new owner will 

pay the moving costs for moving the 

displaced residents back into the new 

units; and the process for selecting 

displaced residents who will be offered 

an opportunity to return (for example, 

lottery) if the number of new public 

housing units cannot accommodate all 

lease-compliant displaced residents at 

appropriate bedroom sizes. A displaced 

resident is ‘‘lease-compliant’’ for this 

purpose if the displaced resident 

(including household members whose 

names appear on their public housing 

lease) has not engaged in serious or 

repeated violations of material terms of 

the lease that result, or could result, in 

good cause to evict or terminate the 

assistance; 

Proposed § 970.21(e) would provide 

that if a resident who will be displaced 

by a demolition, disposition, or 

combined action, refuses to move or 

otherwise rejects the PHA’s offer(s) of 

comparable housing and relocation 

counseling and advisory services 

despite the PHA’s due diligence, the 

PHA may evict the tenant under state 

law as long as the PHA exercises due 

diligence in making continued efforts to 

offer the resident comparable housing 

and relocation counseling. 

Proposed § 970.21(f) would specify 

some of the sources of funding that may 

be used for relocation. Proposed 

§ 970.21(f) would state that sources of 

funding for relocation expenses include 

gross proceeds a PHA receives under 

this part, Capital Funds, section 8 

administrative fee funding (where 

section 8 assistance is offered as 

comparable housing), or other federal 

funds available for this purpose. 

Proposed § 970.21(g) would specify 

that if federal financial assistance under 

the Community Development Block 

Grant (CDBG) program (42 U.S.C. 5301 

et seq.); the Urban Development Action 

Grant (UDAG) program (42 U.S.C. 5318 

et seq.); or the HOME Investment 

Partnerships (HOME) program (42 

U.S.C. 12701 et seq.) is used in 

connection with the demolition of 

lower-income dwelling units, or 

conversion of such units to a use other 

than lower-income dwelling units, the 

project is subject to section 104(d) of the 

HCD Act of 1974, including the 

relocation payment and one-for-one 

replacement provisions as provided at 

24 CFR part 42, subpart C. Proposed 

§ 970.21(h) states that the URA does not 

apply to this part. 

Costs of Demolition and Relocation of 

Displaced Residents (§ 970.23). 

Proposed § 970.23 would add provisions 

and clarifications to currently codified 

§ 970.23. Proposed § 970.23(a) would 

clarify that a PHA may pay for 

relocation expenses with non-Federal 

funds or any eligible HUD funds, which 

may include Capital Funds. Proposed 

§ 970.23(b) would provide that the PHA 

may pay for the costs of demolition with 

non-Federal or any eligible funds, 

including Capital Fund. Proposed 

§ 970.23(c) would provide that where 

HUD has approved the demolition of a 

project and the proposed action is part 

of a program under the Capital Fund 

Program (24 CFR part 905), that the 

expenses of the demolition and of 

relocation of displaced residents must 

be included in the Capital Fund 

Submission pursuant to section 9(d) of 

the Act (42 U.S.C. 1437g(d)) or other 

eligible HUD funds. 

Required and Permitted Actions Prior 

to Approval (§ 970.25). Proposed 

§ 970.25 would update and clarify 

currently codified § 970.25. In addition 

to updating language, proposed 

§ 970.25(a) would clarify that HUD 

permission to take any actions related to 

demolition, disposition, or a combined 

action prior to HUD approval of the 

application, may only be granted in 

writing, and that a PHA may not delay 

or withhold maintenance on a project in 

such a way as to cause or allow it to 

meet the demolition criteria under 

§ 970.15. 

The consolidation of occupancy 

requirements would be covered under 

proposed § 970.3(b)(18), and so would 

be removed from currently codified 

§ 970.25(b) by this proposed rule. 

Proposed § 970.25(b) would provide that 

a PHA may lease public housing units 

at turnover while HUD is considering 

approval or after HUD has approved its 

application subject to the following 

conditions: The units are in decent, safe, 

and sanitary condition; the PHA 

determines that due to community 

housing needs or for other reasons 

consistent with its PHA Plan, leasing 

turnover units is in the best interests of 

the PHA, its residents, and community; 

and residents of units leased during 

such a period are provided with the 

relocation assistance required by 

proposed § 970.21. Where units are 

leased under this provision, the PHA’s 

Operating Fund continues to be 

calculated as stated in 24 CFR part 990 

(Public Housing Operating Fund). 

De Minimis Exception to Demolition 

Application Requirements (§ 970.27). 

Proposed § 970.27 is essentially the 

same as the current codified section. 

The basic requirements—that the 

demolition be limited to the lesser of 5 

dwelling units or 5 percent of the total 

number of units owned by the PHA, and 

that the space occupied by the 

demolished units be used for meeting 

the needs of PHA residents, or, 

alternatively, that the units were beyond 

repair—are found at proposed 

§ 970.27(a) and (c). 

The explanation of the 5-year period 

currently found at § 970.27(c) would be 

moved to proposed § 970.27(b). The 

reporting and recordkeeping 

requirements would be updated at 

proposed § 970.27(e). 

Proposed § 970.27(f) would clarify 

that any resident displaced by de 

minimis demolition would be entitled 

to housing assistance in accordance 

with federal laws and requirements, 

which include the PHA’s Admissions 

and Continued Occupancy Policy (24 

CFR part 966), the PHA’s section 8 

Administrative Plan (24 CFR part 982), 

PHA Plan requirements (24 CFR part 

903), and, except where the PHA 

provides the residents to be displaced 

with another public housing unit from 

its inventory, the URA. If CDBG or 

HOME funds are involved, the 

displaced resident shall be provided 

assistance under section 104(d) of the 

Housing and Community Development 

Act of 1974, where applicable. 

Criteria for HUD Disapproval of 

Demolition or Disposition Application 

(§ 970.29). Proposed § 970.29 would 

revise the currently codified § 970.29, 

specifically, the provision that an 

application can be rejected if it is clearly 

inconsistent with the PHA Plan. The 

section would explicitly state that 

failing to satisfy the application 

requirements is grounds for disapproval. 

The proposed rule would also specify in 

particular the civil rights related 


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requirements under § 970.12. There are 

minor technical updates to language. 

Effect on the Operating Fund Program 

and Capital Fund Program (§ 970.31). 

The proposed rule would remove 

§ 970.31 on replacement units as this 

material will be moved to the Capital 

Fund rule at 24 CFR part 905. Currently 

codified § 970.33, which states the 

applicability of the Operating Fund 

program (24 CFR part 990) and the 

Capital Fund program (24 CFR part 

905), would be redesignated as § 970.31. 

Demolition Due to Emergency, Major 

Disaster, or Accidental Loss (§ 970.33). 

Proposed § 970.33 would codify HUD’s 

practice in cases where PHAs must 

demolish housing due to an emergency 

or natural disaster. These terms are 

defined at proposed § 970.5. An 

‘‘emergency’’ is defined as it is in 

section 102(1) of the Robert T. Stafford 

Disaster Relief and Emergency 

Assistance Act (42 U.S.C. 5122(1)) 

(Stafford Act). ‘‘Major disaster’’ is 

defined similarly to the definition in the 

Stafford Act (see 42 U.S.C. 5122(2)), 

with the addition that it includes any 

natural catastrophe or, regardless of 

cause, fire, flood, or explosion, that 

causes damage of sufficient severity or 

magnitude to warrant demolition to 

alleviate the danger, loss, hardship, or 

suffering caused thereby. In such a case, 

if the PHA rebuilds the same number of 

dwelling units or non-dwelling 

structures that comprised the 

demolished project, the demolition (and 

any additional demolition required to 

carry out the redevelopment) shall not 

be subject to 24 CFR part 970. If the 

PHA rebuilds less than all of the 

demolished structures or the project, the 

PHA shall submit a demolition 

application under this part within one 

year of such demolition to formalize and 

request official HUD approval for the 

action under this part. 

Removal of All Projects in the PHA’s 

Public Housing Inventory (§ 970.35). 

Proposed § 970.35 would be added to 

address the increased frequency of such 

actions and to clearly codify the PHA’s 

responsibilities in this case, as well as 

to assist HUD and HUD field offices in 

monitoring and enforcing these 

requirements. In cases where a 

disposition application proposes to 

remove all structures and land in a 

PHA’s public housing inventory and the 

PHA has no plans to develop any 

additional projects, once the disposition 

is complete, the PHA shall not expend 

any remaining Operating Funds, 

including operating reserves, other than 

for purposes related to the close-out of 

its public housing inventory, including 

audit requirements required by this 

section. Any remaining Operating 

Funds (including operating reserves and 

any unspent asset-repositioning fees 

received pursuant to 24 CFR 990.190(h)) 

would be required to be returned to 

HUD within 90 days of the date of 

disposition of the project. The PHA may 

spend no more of its Capital Funds 

other than, with HUD approval, 

amounts required to close out contract 

obligations incurred prior to HUD’s 

approval of the disposition and amounts 

required to address imminent health 

and safety issues that arise at the project 

prior to completion of the disposition 

transaction. 

If the disposition was approved at 

below FMV based on commensurate 

public benefit, prior to expending any 

Capital Funds on the project for the 

purposes identified above, the PHA 

must notify HUD in writing of the 

planned expenditure of Capital Funds 

so that HUD can determine if any 

changes are necessary to the terms of its 

commensurate public benefit and/or if 

the disposition price should be adjusted 

to reflect the expenditure of funds; no 

Capital Funds may be expended after 

the date of disposition of the project and 

any remaining Capital Funds shall be 

returned to HUD within 180 days of 

such date of disposition. The PHA shall 

be ineligible to receive any Capital 

Funds (replacement housing factor 

funds) under 24 CFR 905.10(i), and any 

funds issued under this section shall be 

recaptured by HUD. 

Within 60 days after the disposition of 

all projects in its inventory, the PHA 

shall dispose of all equipment in its 

inventory that was acquired in whole or 

in part with 1937 Act funds in 

accordance with 24 CFR 85.32(c) (which 

addresses equipment acquired under a 

grant or subgrant), pursuant to a plan 

acceptable to HUD; and within 90 days 

of the date of disposition, the PHA must 

have an independent audit conducted 

on the close-out of its public housing 

inventory. 

Reports and Records (§ 970.37). 

Proposed § 970.37 would revise 

currently codified § 970.35, ‘‘Reports 

and records’’ to strengthen HUD’s 

oversight and monitoring of demolition 

and disposition actions. The 

information on demolition and sale or 

lease contracts currently found at 

§ 970.35(a)(1) and (2) would be retained 

at proposed § 970.37(a)(1) and (2), and 

a new paragraph (a)(3) would be added. 

This section would revise currently 

codified § 970.35 to require a report, in 

a form and frequency to be prescribed 

by HUD, until HUD determines that the 

report no longer needs to be submitted, 

containing the following information: (i) 

A description of resident relocation and 

timetable, including the number of 

families actually relocated by bedroom 

size; the types and location of 

comparable housing provided to each 

family; demographic information on 

family size, race, national origin, sex, 

and disability of relocated residents; 

reasonable accommodations that were 

provided in connection with the 

comparable housing; units to which 

residents were relocated that meet the 

accessibility requirements of Section 

504 of the Rehabilitation Act of 1973 

and HUD’s implementing regulations at 

24 CFR part 8 or that otherwise contain 

accessible features; the status of the 

Opportunity to Return Plan, including 

residents who express an interest in the 

plan; and the comparable housing 

offered to families that include a 

member with a disability that was 

located in a non-segregated setting, or, 

if non-segregated housing was not 

offered, an explanation of why the 

setting that was offered was the most 

integrated setting appropriate for the 

family, that is, the setting that enables 

the family to interact with non-disabled 

persons to the fullest extent possible 

and have access to community-based 

services; (ii) a description of the PHA’s 

use of the proceeds of disposition by 

providing a financial statement showing 

how the gross and net proceeds were 

expended by item and dollar amount, as 

approved by HUD; (iii) a description of 

any remaining disposition proceeds, 

including current balance (plus 

interest), bank information of where 

such proceeds are being held, and plans 

for expending such proceeds for the use 

approved by HUD within the required 

timeframe; (iv) for dispositions 

approved by HUD at less than FMV 

based on commensurate public benefit, 

a description of the current use of the 

property (e.g., owner, number of 

housing units developed), and a 

statement of how the property is being 

used for the HUD-approved use; (v) a 

description of whether any projectbased voucher contracts under section 8 

of the 1937 Act have been executed on 

a former public housing property 

approved for disposition and/or at 

housing developed, acquired, or 

constructed with disposition proceeds; 

and (vi) evidence that an audit has been 

conducted on the demolition, and/or 

disposition action within 3 years of 

completion of the demolition and/or 

disposition action. In addition, as in the 

current regulation, HUD would be able 

to ask for such additional information as 

HUD may require from time to time. 

B. Retention of Projects by PHAs Under 

24 CFR Part 85 

The proposed rule would add a 

subpart B to 24 CFR part 970, to allow 


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PHAs and other owners of public 

housing to retain public housing 

property, including dwelling units and 

appurtenant personal property and 

equipment that were purchased with 

1937 Act funds, without the use 

restrictions under the ACC and DOT. 

Section 18 does not apply to cases 

where a PHA retains property rather 

than disposing of it to another party. In 

the case of retention, 24 CFR part 85 

applies, particularly, § 85.31. 

Definitions (§ 970.39). Proposed 

§ 970.39 would provide that the 

definitions contained in § 970.5 would 

apply to subpart B. 

Applicability (§ 970.41). Under 

proposed § 970.41, disposition in this 

case would be under 24 CFR 85.31. 

Under proposed § 970.41, the PHA may 

retain title to property that is no longer 

needed provided that the PHA requests 

and is approved by HUD to retain the 

property. In order to approve a request 

under this section, HUD will generally 

require the PHA to compensate HUD for 

the federal government’s equity in the 

project (computed by applying HUD’s 

percentage of participation in the cost of 

the original purchase to the FMV of the 

property and subsequent 

modernization), but the PHA could 

request an exception to this repayment 

requirement, for good cause, in 

accordance with 24 CFR 85.6(c). If HUD 

finds the PHA has shown good cause for 

retaining the project under this section, 

HUD will release the ACC and DOT on 

the project. HUD’s approval may require 

the PHA to enter into certain use 

restrictions or may impose other 

requirements to ensure that the property 

is used for the HUD-approved purposes 

for a certain length of time. 

Removal of a project from public 

housing without a transfer to a third 

party (§ 970.43). Proposed § 970.43 

would clarify when a project can be 

removed from public housing without a 

transfer to a third party. HUD’s 

regulations at 24 CFR 85.31 provide that 

except as otherwise provided by federal 

statutes, real property will be used for 

the originally authorized purpose as 

long as needed for that purpose, and the 

grantee shall not dispose of or encumber 

its title or other interests. Proposed 

§ 970.43(a) would provide that when 

real property is no longer needed for the 

originally authorized purpose, the 

grantee will request disposition 

instructions from HUD. Section 18 of 

the 1937 Act and subpart A of part 970 

covers the procedures that PHAs must 

follow if they choose to sell or otherwise 

transfer title of the property. 

Section 85.31 of HUD’s regulations in 

24 CFR part 85 permits a PHA to retain 

title of real property that is no longer 

needed for its originally authorized 

purpose, provided the PHA requests and 

is approved by HUD to retain the 

property. Proposed § 970.43(b) would 

provide that HUD will generally require 

the PHA to compensate HUD for the 

federal government’s equity in the 

project (computed by applying HUD’s 

percentage of participation in the cost of 

the original purchase or construction to 

the FMV of the property and subsequent 

modernization), but the PHA could 

request an exception to this repayment 

requirement, for good cause, in 

accordance with 24 CFR 85.6(c). If HUD 

finds the PHA has shown good cause for 

retaining the project under this section, 

HUD will release the ACC and DOT on 

the project. HUD’s approval may require 

the PHA to enter into certain use 

restrictions or may impose other 

requirements to ensure that the property 

is used for the HUD-approved purposes 

for a certain length of time. 

Specific Criteria for HUD Approval of 

Requests (§ 970.45). Proposed § 970.45 

would list the specific criteria for HUD 

approval of retention of public housing 

without use restrictions under subpart 

B. In addition to showing that the 

project is no longer needed for public 

housing and there is good cause for the 

action, for projects that include 

dwelling units, HUD will require 

compliance with the regular disposition 

regulations under part 970, subpart A, 

particularly § 970.17. To determine 

applicable requirements, references to 

‘‘disposition’’ in subpart A shall mean 

‘‘retention of property’’ for subpart B. 

The PHA must also show that retention 

of projects with dwelling units will 

leverage the property so that the PHA 

can obtain financing to address deferred 

capital needs and otherwise better 

maintain and operate the units as lowincome housing. In addition, where 

there is resulting resident displacement, 

the PHA must comply with the 

relocation requirements in subpart A of 

this part. Vacant land may be retained 

(for example, as green space) as may 

nondwelling structures, if the structure 

is no longer needed by the PHA. 

Proposed § 970.45(c) would contain 

the applicable application requirements 

for retention requests. These application 

requirements are proposed to be parallel 

to the application requirements under 

subpart A found in proposed § 970.7(c), 

with the omission of those items that 

would not apply in the case of retention. 

Thus, § 970.7(c)(4), a description of the 

specific action proposed; 

§ 970.7(c)(7)(ii), a description of the 

comparable housing resources to be 

provided to any residents to be 

displaced; § 970.7(c)(9), related to the 

offering to resident organizations; 

§ 970.7(c)(10), the name of the acquiring 

entity in the case of dispositions; 

§§ 970.7(c)(11)–(13), having to do with 

disposition proceeds, FMV, and 

commensurate public benefit; and 

§ 970.7(c)(20), requiring a description of 

the race, color, religion, sex, national 

origin, familial status, and disability 

status of any residents who will be 

displaced. 

On the other hand, elements that are 

unique to property retention are 

proposed to be added to the application 

requirements. These include a 

description of the future ownership 

structure of the project; the anticipated 

future use of the project and the 

proposed length of time the PHA will 

maintain the former project for the 

anticipated future use; and, in the case 

of displacement of residents, if any, a 

certification that the PHA will comply 

with the URA (which does not apply 

under 42 U.S.C. 1437p and subpart A; 

instead, there are specific relocation 

requirements under both the statute and 

regulation). 

Revisions to Conversion Regulations 

HUD is also proposing to revise the 

definition of ‘‘conversion’’ in the part 

972 regulations that cover both 

voluntary and required conversion of 

public housing to tenant-based 

assistance to more accurately reflect 

what ‘‘conversion’’ means in the 

relevant statutory sections (for voluntary 

conversion, section 22 of the 1937 Act 

(42 U.S.C. 1437t); for required 

conversion, section 33 of the 1937 Act 

(42 U.S.C. 1437z–5). Currently, the 

regulations at 24 CFR 972.103 and 

972.203 (for voluntary and required 

conversion, respectively) define 

conversion as the removal of public 

housing units from the inventory of a 

Public Housing Agency (PHA), and the 

provision of tenant-based, or projectbased assistance for the residents of the 

PHA. While it is true that under the 

statutes the residents of a project 

undergoing conversion may be provided 

with alternate housing including 

project-based assistance, the statute 

provides that the conversion is only 

from public housing to tenant-based 

assistance. Therefore, HUD is proposing 

to revise these definitions accordingly to 

remove the reference to project-based 

assistance. 

HUD notes in this context that the 

voluntary conversion rule as currently 

codified at 24 CFR 972.212(d) states that 

HUD may require that funding for the 

initial year of tenant-based assistance be 

provided from the public housing 

Capital Fund, Operating Fund, or both. 

This is a regulatory provision not found 

in the voluntary conversion statute, 


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section 22(f) of the 1937 Act (42 U.S.C. 

1437t(f)), although that statute has a 

clause granting discretion to the 

Secretary in this area (‘‘[t]o the extent 

approved by the Secretary’’). HUD notes 

as a point of clarification that this 

statement is only true to the extent that 

use of Capital or Operating funds for 

this purpose is specifically provided for 

in appropriations acts, and that there is 

currently no appropriation, outside of 

the limited Rental Assistance 

Demonstration under the Consolidated 

and Further Continuing Appropriations 

Act, 2012 (Pub. L. 112–55, approved 

November 18, 2011), that allows either 

Operating or Capital fund 

appropriations to be used for this 

purpose. However, HUD is retaining this 

language in its regulations in case 

Congress chooses to grant HUD this 

ability in an upcoming appropriation. 

Specific Questions for Public Comment 

HUD welcomes public comments on 

any issue relevant to this rulemaking. 

HUD is also interested in public 

comments on the following specific 

subjects: 

• The proposed definition of 

‘‘commensurate public benefit’’ in 

proposed § 970.5; 

• Whether or not the definition of 

‘‘disposition’’ in proposed § 970.5 

should include a PHA’s transfer to the 

PHA’s own nonprofit instrumentality; 

• The requirements for a PHA to 

amend an existing approval under 

proposed § 970.7(e). For example, 

should the PHA be required to get a 

board resolution approving the 

amendment request? Should the PHA be 

required to consult residents and local 

government officials on the amendment 

request? Should it depend on whether 

the change is minor or significant? 

• The circumstances under which a 

PHA would want to only demolish 

structures on public housing property 

under proposed § 970.15 without also 

proceeding with a disposition of the 

vacant land after demolition 

(considering the land would remain 

under the conventional ACC and DOT 

and could only be used for public 

housing purposes, e.g., to construct new 

public housing units), and there is 

limited funding for such purposes; 

• In those instances where PHAs seek 

to both demolish and dispose of public 

housing projects as part of the same 

request, when would it be appropriate 

for HUD to allow a PHA to demolish 

obsolete structures (with HUD funds) 

only to immediately seek to dispose of 

the underlying vacant land, and 

whether HUD should instead require the 

PHA to dispose of the obsolete 

structures in their ‘‘as-is’’ obsolete 

condition and have the acquiring entity 

agree to demolish or otherwise dispose 

of or use that property? 

• The criteria HUD should use in 

determining if a project is obsolete as to 

location under § 970.15(a)(1)(ii) and 

whether HUD should require the PHA to 

simultaneously submit a disposition 

application in these instances; 

• For HUD to approve disposition 

under proposed § 970.17(b) for 

acquisition of other properties that will 

more efficiently or effectively operate as 

low-income housing, how far along 

must the development/acquisition of the 

replacement housing be? Is it enough 

that the PHA be irrevocably committed 

for the replacement units? Alternatively, 

is it enough that the PHAs have 

permanent financing in place and the 

actual replacement units identified? If 

the replacement units are public 

housing units, should a threshold 

requirement for approval under this 

section include those replacement units 

having met the applicable site and 

neighborhood standards? If the 

replacement units are not public 

housing but other low-income housing 

units (e.g., project-based Section 8 

units), how much involvement should 

HUD have in the development of those 

units to assure that they will be more 

effectively and efficiently operated as 

low-income housing than the units 

proposed for disposition? 

• For HUD to approve disposition 

under proposed § 970.17(b) for 

acquisition of other properties that will 

more efficiently or effectively operate as 

low-income housing, this rulemaking 

proposes that the minimum replacement 

amount be 75 percent of the units (all 

units housing families displaced by the 

action must be replaced). HUD would 

also consider a minimum of 50 percent, 

and would be interested in public 

comment on this issue; 

• Are there any additional factors 

HUD should consider when approving a 

disposition for less than FMV under 

§ 970.19(b)? Should the definition of 

commensurate public benefit under 

§ 970.5 be amended? 

• In what extent of planning should 

a PHA engage under § 970.25 without 

receiving HUD approval under section 

18? For instance, should a PHA issue 

RFQs or RFPs that assume HUD will 

approve a full or partial demolition and/ 

or disposition of the project? 

• In order to preserve and make most 

efficient use of appropriated funds, 

should HUD limit tenant protection 

vouchers (TPVs) to fewer than the 

number of occupied units being 

replaced in cases where the PHA can 

provide assistance from funds already 

allocated to it? 

IV. Findings and Certifications 

Paperwork Reduction Act 

The information collection 

requirements contained in this rule have 

been submitted to the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520). In accordance 

with the Paperwork Reduction Act 

(PRA), an agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless the collection displays a 

currently valid OMB control number. 

HUD currently collects information 

related to this rule through OMB PRA 

package 2577–0075 (which expires in 

August 2014). That information package 

includes submission requirements for 

the current 24 CFR part 970 rule, as well 

as submission requirements for 24 CFR 

part 972 (required and voluntary 

conversion), 24 CFR part 906 

(homeownership), and eminent domain 

takings and de minimis demolitions 

(both exempt from Section 18 and the 

requirements of 24 CFR part 970). HUD 

will revise this PRA package 2577–0075 

to reflect the changes made to this rule 

once the final version of this rule is 

published in the FR. 

HUD estimates the burden increase on 

PHAs from this rule as 161.75 hours. 

HUD estimates the average cost to the 

PHA (staff salary) for these hours to be 

approximately $30 per hour. The 

modest increase from the current rule 

will benefit PHAs, HUD, and public 

housing residents and in several general 

ways, including: 

(1) Faster application processing: 

HUD cannot process incomplete or 

substantially deficient applications. By 

clearly indicating (at a modest increase) 

the application submission materials 

that PHAs are required to provide about 

their proposed disposition and/or 

demolition actions, HUD staff will be 

less likely to reject an application for 

being incomplete or deficient. In 

addition, HUD staff will be able to more 

quickly process an application that 

meets the clearer requirements of this 

revised rule. Finally, HUD staff will be 

able to complete its civil rights 

compliance review in a much more 

streamlined and expeditious manner; 

(2) Better protection for public 

housing residents—in assuring PHAs 

comply with all applicable requirements 

related to resident relocation and 

consultation; 

(3) Better information for monitoring: 

HUD staff has an ongoing obligation to 

assure PHAs comply with the terms and 

requirements of Section 18, this revised 

rule, and the HUD approval letter. 

Sometimes these requirements extend 


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for 30+ years (use restrictions on land, 

receipt and use of proceeds). Requiring 

PHAs to submit annual reports to HUD 

will vastly assist HUD in its monitoring 

efforts. 

Specific explanations for the increase 

in burden hours are as follows: 

• 24 CFR 970.3(b)(5), (7), (9), and 

(18): HUD is clarifying that although 

these actions are exempt from Section 

18 and the ‘‘normal’’ submission 

requirements of 24 CFR 970.7, HUD 

approval is nevertheless required and 

this requires a very modest PRA 

submission requirement; 

• 24 CFR 970.3(b)(10): HUD is 

clarifying that although these eminent 

domain actions are exempt from Section 

18 and the ‘‘normal’’ submission 

requirements of 24 CFR 970.7, HUD 

approval is nevertheless required and 

this requires a PRA submission 

requirement as is currently captured in 

PRA package 2577–0075); 

• 24 CFR 970.3(c)(7): HUD is 

requiring PHAs to submit modestly 

more information about their relocation 

plans to HUD. The current rule requires 

PHAs to keep their relocation plans on 

file so the increased burden is minimal. 

This information will also assist HUD in 

doing a quicker civil rights compliance 

review; 

• 24 CFR 970.7(c)(8): HUD is 

requiring PHAs to submit modestly 

more information about their resident 

consultations to HUD, including 

communication to persons with 

disabilities. This information will also 

assist HUD in doing a quicker civil 

rights compliance review; 

• 24 CFR 970.7(c)(10) and (15): HUD 

is requiring PHAs to submit a legal 

opinion related to the acquiring entity 

(if applicable with dispositions) and 

outside financing (if applicable with 

CFFP, OFFP, or EPC). The legal opinion 

may be done by in-house PHA counsel 

or outside counsel. The purpose of this 

is to assure PHAs are aware of the legal 

implications of these disposition 

requirements; 

• 24 CFR 970.7(c)(13): In the case of 

disposition proposed at below FMV 

based on commensurate public benefit 

in accordance with § 970.19, HUD is 

clarifying the information that PHAs are 

required to submit including: (i) A 

detailed description of any housing that 

will be located on the property, 

including the number of units, bedroom 

sizes, accessibility, affordability, and 

priorities for displaced residents; (ii) 

The proposed length of time in which 

the acquiring entity will maintain the 

former project for the proposed future 

use (HUD will generally require the 

proposed future use remain as such for 

not less than 30 years, but will consider 

other factors such as the extent of public 

benefits (e.g., number of affordable 

units) arising from proposed disposition 

and the FMV of the property in 

determining if a period of less than 30 

years is acceptable); (iii) The plan to 

implement the opportunity to return 

requirement for existing residents’ as 

outlined in § 970.21(d); and (iv) The 

proposed legal documentation (e.g., use 

restriction, provision in ground lease, 

declaration of restrictive covenant) the 

PHA proposes to ensure the approved 

use. This information is necessary for 

HUD to fully evaluate and review the 

‘‘opportunity cost’’ of a PHA not 

disposing of public housing property at 

its FMV and using the proceeds for 

authorized purposes under the statute. 

HUD is currently processing 

applications in a way that requests 

much of this information. This section 

of the proposed rule makes these 

requirements clearer and more 

transparent; 

• 24 CFR 970.7(e)(1): HUD is 

clarifying that PHAs must request HUD 

approval to amend any aspect of an 

approved demolition/disposition 

application; 

• 24 CFR 970.15(a)(1)(i): HUD is 

requiring that obsolescence be verified 

by an independent architect or engineer 

not employed by the PHA. PHAs area 

already required to submit supporting 

information about obsolescence, so this 

burden reporting increase is minimal in 

that it just requires the submission be 

prepared by a professional other than 

the PHA staff; 

• 24 CFR 970.17(b)(3): HUD is 

requiring documentation on its 

replacement housing plan to assure the 

PHA meets the requirements of this 

section, as newly implemented by this 

rule revision, including information on 

the financing plan, etc., for the 

replacement units; 

• 24 CFR 970.37(a)(3): To assure 

continued compliance with all statutory 

and regulatory requirements, HUD is 

reserving the right to require PHAS to 

submit reports in the form and 

frequency required by HUD. The 

purpose of this is to assist HUD with 

monitoring these actions (there has been 

a vast increase in OIG investigations and 

findings related to approved demolition 

and disposition actions). While this 

section is one of the largest increases in 

the reporting burden in this proposed 

rule, HUD thinks it is justified. 

However, the rule is written in a way 

that allows HUD to implement this and 

reduce the burden on some or all PHAs. 

For instance, HUD could further 

implement this in a way to require 

reporting under this section at a 

frequency of less than 1 time per year 

(e.g., on an as-requested basis). In 

addition, HUD could revise/reduce/

eliminate this burden, for instance, for 

small PHAs, per OMB’s other comment; 

• 24 CFR 970.45(a): HUD is requiring 

PHAs to submit documentation on 

assuring that it is justified, under these 

HUD criteria, to retain property free of 

federalized public housing restrictions 

(e.g., evidencing good cause) under the 

new subpart B. 

This information, like currently 

required information, will be collected 

via on-line application and reviewed by 

HUD’s Special Application Center 

(SAC) to ensure that PHAs meet the 

statutory and regulatory requirements 

necessary for HUD to approve inventory 

removal actions. HUD approval is 

necessary prior to PHAs removing their 

public housing property in order to 

protect the Federal interest in the public 

housing property under the ACC and 

Declaration of Trust. This information is 

also collected so that HUD has an 

accurate database of Federal public 

housing inventory and so the HUD Field 

Office can effectively monitor the 

implementation of the removal action. 

The burden of the information 

collections in this rule is estimated as 

follows: 

REPORTING AND RECORDKEEPING BURDEN

Section reference Number of 

respondents 

Number of 

responses per 

respondent 

Estimated 

average 

time for 

requirement 

(in hours) 

Estimated 

annual 

burden 

(in hours) 

970.3(b)(5) PHA request for HUD approval for agreement related to operation of public housing ................................................................................. 25 1 .15 7.5 

970.3(b)(7) PHA request for HUD approval for agreement of leasing of 

project ........................................................................................................... 5 1 .15 2.5 


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REPORTING AND RECORDKEEPING BURDEN—Continued 

Section reference Number of 

respondents 

Number of 

responses per 

respondent 

Estimated 

average 

time for 

requirement 

(in hours) 

Estimated 

annual 

burden 

(in hours) 

970.3(b)(9) PHA request for HUD approval for easements related to operation of public housing ................................................................................. 25 1 .15 7.5 

970.3(b)(10) Eminent Domain ......................................................................... 7 1 2 14 

970.3(b)(12) Dispositions for property developed pursuant to 24 CFR 

905.604 ........................................................................................................ 20 1 2 40 

970.3(b)(13) De Mimimis Demolition ............................................................... 15 1 2 30 

970.3(b)(16) Demolitions due to disaster ........................................................ 8 1 1 8 

970.3(b)(17) De Minimis Dispositions .............................................................. 3 1 .15 4.5 

970.3(b)(18) Occupancy Consolidation approval ............................................ 10 1 .15 1.5 

970.7(c)(1) Certification authorized in PHA Plan ............................................ 150 1 .05 7.5 

970.7(c)(2) Description of property .................................................................. 150 1 .10 15 

970.7(c)(3) Vacant units .................................................................................. 100 1 .05 5 

970.7(c)(4) Description of action proposed ..................................................... 150 1 .15 22.5 

970.7(c)(5) General Timeframe ....................................................................... 150 1 .05 7.5 

970.7(c)(6) Justification for action ................................................................... 150 1 1 150 

970.7(c)(7) Relocation Certification and plan .................................................. 100 1 1 100 

970.7(c)(8) Resident Consultation Description ................................................ 150 1 1 150 

970.7(c)(9) Offer to sell to residents or exception to offer to sell (disposition 

only) .............................................................................................................. 100 1 .10 10

970.7(c)(10) Legal Opinion as to acquiring entity (disposition only) ............... 100 1 .05 5 

970.7(c)(11) Fair market value of property (disposition only) ......................... 100 1 .10 10 

970.7(c)(12) Estimates of the gross and net proceeds to be realized and 

proposed uses (disposition only) ................................................................. 100 1 .45 45 

970.7(c)(13) Proposed commensurate public benefit in accordance for 

below FMV disposition (disposition only) ..................................................... 70 1 1 70 

970.7(c)(14) Debt Waiver (disposition only) .................................................... 100 1 .05 5 

970.7(c)(15) Legal Opinion as to other debt financing .................................... 50 1 .05 2.5 

970.7(c)(16) Board Resolution ........................................................................ 150 1 .05 7.5 

970.7(c)(17) Local government consultation ................................................... 150 1 .10 15 

970.7(c)(18) Environmental review .................................................................. 150 1 .10 15 

970.7(c)(19) Civil Rights Compliance Certification .......................................... 150 1 .15 22.5 

970.7(c)(20) Civil rights description of residents ............................................. 150 1 .50 50 

970.7(c)(21) Certification will comply with HUD approval ............................... 150 1 .05 5 

970.7(c)(22) Additional requested information ................................................ 100 1 .50 50 

970.7(e)(1) Amendments requests .................................................................. 100 1 1 100 

970.7(e)(2) Recession requests ...................................................................... 5 1 1 5 

970.35 Removal of all units in a PHA’s inventory, HUD approvals, and audit 10 1 2 20 

970.37 Record-keeping and reporting requirements ....................................... 250 1 1 250 

970.43 Requirements for HUD approval under subpart B .............................. 5 1 2 20 

Total Paperwork Burden for the New Rule .............................................. 1483 

Total Burden from Previous Rule (24 CFR part 970) .............................. 1321.25 

Total additional burden as a result of this rule ......................................... 161.75 

In accordance with 5 CFR 

1320.8(d)(1), HUD is soliciting 

comments from members of the public 

and affected agencies concerning this 

collection of information to: 

(1) Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; 

(2) Evaluate the accuracy of the 

agency’s estimate of the burden of the 

proposed collection of information; 

(3) Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

(4) Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated collection 

techniques or other forms of information 

technology, e.g., permitting electronic 

submission of responses. 

Interested persons are invited to 

submit comments regarding the 

information collection requirements in 

this rule. Comments must refer to the 

proposal by name and docket number 

(FR–5563) and must be sent to: 

HUD Desk Officer, Office of 

Management and Budget, New 

Executive Office Building, 

Washington, DC 20503, Fax: (202) 

395–6947; 

and 

Reports Liaison Officer, Office of Public 

and Indian Housing, Department of 

Housing and Urban Development, 451 

7th Street SW., Washington, DC 

20410. 

Interested persons may submit 

comments regarding the information 

collection requirements electronically 

through the Federal eRulemaking Portal 

at http://www.regulations.gov. HUD 

strongly encourages commenters to 

submit comments electronically. 

Electronic submission of comments 

allows the commenter maximum time to 

prepare and submit a comment, ensures 

timely receipt by HUD, and enables 

HUD to make them immediately 

available to the public. Comments 

submitted electronically through the 

http://www.regulations.gov Web site can 

be viewed by other commenters and 

interested members of the public. 

Commenters should follow the 


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3http://portal.hud.gov/hudportal/documents/

huddoc?id=PH_Capital_Needs.pdf. 

4The Congressional Budget Office (CBO) reports 

that the average total compensation for a federal 

government employee with a Master’s Degree was 

$65.30 in 2010 or $70 adjusted for inflation in 2013. 

CBO, comparing the Compensation of Federal and 

Private-Sector Employees, January 2012, available 

at http://www.cbo.gov. 

instructions provided on that site to 

submit comments electronically. 

Executive Order 12866—Regulatory 

Impact Analysis 

At the outset, it is determined that 

while the proposed rule is a significant 

regulatory action, it is not economically 

significant. The rule addresses 

programmatic concerns to an existing 

regulation, clarifies ambiguous language 

in program regulations, strengthens 

internal controls, and facilitates the full 

implementation of the demolition and 

disposition processes. To the extent that 

this proposed rule would alter the 

previous demolition/disposition 

requirements, it would do so in ways 

that are likely to leave the economic 

impact mostly unchanged. 

Notwithstanding, the proposed rule 

would marginally add to the 

administrative burden associated with 

added oversight and compliance and 

would generate some costs. Housing 

authorities and other program 

participants would also benefit from the 

added clarity in the demolition and 

disposition regulations. These program 

clarifications would also certainly 

translate into some cost savings. On 

average, HUD’s special application 

center (SAC) estimates that the total 

additional administrative burden as a 

result of this rule is 162 hours per 

application per year. Each year, the 

center receives between 150 and 200 

applications for demolition and or 

disposition. If we assume that the 

average hourly rate is $70, the total 

compliance cost would be between 

$1.70 million and $2.27 million a year. 

In regards to the above, it is 

concluded that this proposed rule is not 

a major rule under Executive Order 

12866 and OMB Circular A–4 as it 

would not result in transfers of funding 

to and among stakeholders of more than 

$100 million per year. 

Background 

HUD has promulgated a regulation, 24 

CFR part 970, detailing the 

administrative steps required to perform 

demolition/disposition activity in 

accordance with the 1937 Act, as 

authorized under section 18 of the 1937 

Act, 42 U.S.C. 1437p. A revision to 24 

CFR part 970 was published in the 

Federal Register on October 24, 2006, 

and took effect on November 24, 2006. 

A correction to the revised 24 CFR part 

970 was published in the Federal 

Register on January 23, 2008. 

Although demolition/disposition 

activity has always been permitted, 

HUD and its business partners have 

begun to actively pursue it as a 

management strategy option in the last 

twenty years with the HOPE VI 

program. This is due to the realization 

that some developments have 

difficulties associated not only with 

physical deterioration of the housing 

stock, but also with the overall 

condition of the community 

surrounding the public housing 

development subject to demolition or 

disposition. It is also true that a large 

portion of the housing now being 

proposed for demolition/disposition 

was built in the late 1940s and early 

1950s, and was built to a standard that 

is no longer acceptable for the general 

public. 

Currently, demolitions and 

dispositions are approved based on 

certification by the public housing 

agency (PHA) that certain conditions are 

met. About 150,000 of the 1.4 million 

public housing units available in 1989 

have been demolished, converted, or 

disposed of. The program would 

continue to lose thousands more units 

every year as properties continue to 

deteriorate. Based on the HUD’s 2010 

Capital Needs in the Public Housing 

Program study, there is no sign that this 

trend will change anytime soon. This 

Congressionally-funded study estimated 

that the aggregate national capital 

backlog exceeds $25.6 billion—or, 

$23,365 per unit—in the public housing 

portfolio alone.3

Costs and Benefits. 

The inception of this proposed rule 

does not come from a perceived market 

failure, but rather, from the desire to 

strengthen and streamline the 

demolition and disposition processes to 

reflect changes that have occurred in the 

public housing program over the last 20 

years. As such, while the proposed rule 

would marginally add administrative 

burden, this proposed rule would not 

have any significant financial or cost 

incidence on stakeholders, but it would 

create greater clarity regarding the 

demolition and disposition process. The 

rule adds increased clarity and guidance 

to assist PHAs in determining when a 

demolition and/or disposition may be 

appropriate for their public housing 

inventories (e.g., so a PHA would be less 

likely to put the time into preparing and 

submitting an application to HUD that 

would not meet the criteria necessary 

for HUD approval and thus would not 

waste its or HUD’s staff time and 

resources. Based on the clarified and 

new guidance in the rule, some PHAs 

may sometimes opt not to apply for 

demolition/disposition and instead 

pursue other HUD tools—e.g. CFFP 

financing—for their public housing 

stock); 

The rule adds increased clarity and 

guidance on what HUD will require to 

approve an application submitted by a 

PHA (e.g., HUD will re-do the 

paperwork burden—HUD form—to 

make the application easier to fill-out by 

PHAs. Applications submitted by PHAs 

will be more likely to be approved by 

HUD because PHAs will be better able 

to show that they are meeting the 

applicable HUD criteria. Further, HUD’s 

review time will likely be significantly 

reduced, a cost benefit to both PHAs 

and HUD). 

On average, HUD’s SAC estimates that 

the total additional administrative 

burden as a result of this rule is 162 

hours per application per year. Each 

year, the center receives between 150 

and 200 applications for demolition and 

or disposition. If we assume that the 

average hourly rate is $70, the total 

compliance cost would be between 

$1.70 million and $2.27 million a year.4

The proposed rule requires that the 

determination of obsolescence be found 

by an independent (that is not a regular 

employee of the PHA) architect or 

engineer. 

In addition, units that are demolished 

or disposed of do not receive full 

funding under the public housing 

operating and capital funds. Under the 

public housing program, these units 

receive a proration and under the 

capital funds, they receive replacement 

housing factor funds. Funds retained 

under the capital fund program are 

redistributed to PHAs (including the 

applying PHA) by formula. The same 

units removed from the inventory and 

the PHA will no longer receive 

operating funds for those units, but the 

PHA will also not have any operating or 

maintenance expenses for those units. 

Transfers 

The proposed rule would create very 

little additional financial flux. It is 

likely that the proposed rule may 

generate up to $2.23 million in 

additional compliance costs. These 

costs would constitute transfers to 

architects, engineers, lawyers, 

accountants, etc. For example, the 

proposed rule requires that the 

determination of obsolescence be found 

by an independent (that is not a regular 

employee of the PHA) architect or 

engineer. 


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Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) generally requires 

an agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements, unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. This proposed 

rule would not change existing 

requirements applicable to demolition 

and disposition of public housing, but 

would clarify and include additional 

detail regarding such requirements, to 

assist those PHAs that seek to demolish 

or dispose of public housing fully meet 

these requirements. 

The rule is voluntary. PHAs may 

choose to continue to retain all of their 

current public housing property and 

operate and maintain it in accordance 

with all public housing requirements 

(and obtain all available HUD funding to 

do this). For those entities that choose 

to demolish or dispose of public 

housing units, as discussed in Section 

III of this preamble, while the proposed 

rule would add marginally to 

administrative burden associated with 

increased oversight and enhanced 

compliance, the proposed rule would 

also generate savings through the greater 

clarity brought to existing requirements, 

as well as relieve the PHAs of the cost 

associated with the preexisting legal 

requirement to maintain all of their 

residential units in a condition that is 

decent, safe, sanitary, and in good repair 

(24 CFR 5.703). Additionally and 

importantly, the proposed rule does not 

alter the exemption from the annual 

PHA Plan requirements that are 

applicable to qualified public housing 

agencies, which are small agencies, 

which significantly reduces the 

administrative burden associated with 

demolishing or disposing of property. 

For those PHAs that choose to 

demolish or dispose of their public 

housing units, data shows that relatively 

few are small PHAs and the economic 

impact on those PHAs is not significant. 

Between January 2009–January 2014, 

HUD received approximately 930 

demolition and/or disposition 

applications from PHAs (an average of 

186/year). Of these approximately 930 

applications, approximately 136 were 

submitted by PHAs that are currently 

small PHAs (PHAs with inventories of 

50–249 public housing units) and 

approximately 16 applications were 

submitted by PHAs that are currently 

very small PHAs (PHAs with 

inventories of 1–49 of total public 

housing units) (note that some of these 

PHAs may have been large PHAs at the 

time of the application). Only 23 small 

and very small PHAs submitted more 

than one application during this period. 

Thus the demolition and/or disposition 

applications submitted by small and 

very small PHAs over the past 5 years 

represent only about 16.3 percent of all 

applications received. There are 

approximately 2,310 small or very small 

PHAs nationwide out of 3,089 total 

PHAs, and thus the percentage of all 

small or very small PHAs submitting 

applications over the last 5 years is only 

6.6 percent of all small or very small 

PHAs, and only 4.9 percent of all PHAs. 

Thus, there are not a substantial number 

of small entities involved. 

As noted in the Regulatory Impact 

Analysis, the average cost to PHAs is 

$70 per hour, and the average number 

of hours per application is 162, resulting 

in an average cost of $11,340. The 

average 2013 budget of small and very 

small PHAs is approximately $104,230 

in Capital Funds and $197,159 in 

Operating Funds, so this cost, on 

average, represents only 3.8 percent of 

a small PHA’s funding, which is not a 

significant impact. 

As also noted in Section III of this 

preamble, applying for demolition or 

disposition of a portion of the property 

has no economic impact on the PHA 

apart from this minor administrative 

cost; units are removed from the 

inventory and the PHA will no longer 

receive operating funds for those units, 

but the PHA will also not have any 

operating or maintenance expenses for 

those units. Furthermore, any resident 

relocation would be to existing PHA 

housing or funded through section 8 of 

the 1937 Act, 42 U.S.C. 1437f. 

Accordingly, HUD has determined that 

this rule would not have a significant 

economic impact on a substantial 

number of small entities. 

Notwithstanding HUD’s 

determination that this rule will not 

have a significant effect on a substantial 

number of small entities, HUD 

specifically invites comments regarding 

any less burdensome alternatives to this 

rule that will meet HUD’s objectives as 

described in this preamble. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531– 

1538) (UMRA) establishes requirements 

for federal agencies to assess the effects 

of their regulatory actions on state, 

local, and tribal governments and the 

private sector. This rule does not 

impose any Federal mandate on any 

state, local, or tribal government or the 

private sector within the meaning of 

UMRA. 

Environmental Impact 

A Finding of No Significant Impact 

with respect to the environment has 

been made in accordance with HUD 

regulations in 24 CFR part 50 that 

implement section 102(2)(C) of the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4332(2)(C)). The 

Finding is available for public 

inspection during regular business 

hours in the Regulations Division, 

Office of General Counsel, Department 

of Housing and Urban Development, 

451 7th Street SW., Room 10276, 

Washington, DC 20410–0500. Due to 

security measures at the HUD 

Headquarters building, please schedule 

an appointment to review the Finding 

by calling the Regulations Division at 

(202) 402–3055 (this is not a toll-free 

number). Individuals with speech or 

hearing impairments may access this 

number via TTY by calling the Federal 

Relay Service at (800) 877–8339. 

Executive Order 13132, Federalism 

Executive Order 13132 (entitled 

‘‘Federalism’’) prohibits, to the extent 

practicable and permitted by law, an 

agency from promulgating a regulation 

that has federalism implications and 

either imposes substantial direct 

compliance costs on state and local 

governments and is not required by 

statute or preempts state law, unless the 

relevant requirements of section 6 of the 

Executive order are met. This rule does 

not have federalism implications and 

does not impose substantial direct 

compliance costs on state and local 

governments or preempt state law 

within the meaning of the Executive 

order. 

Catalog of Federal Domestic Assistance 

Number 

The Catalog of Federal Domestic 

Assistance number for 24 CFR part 970 

is 14.850. 

List of Subjects in 24 CFR Parts 970 and 

972 

Grant programs—housing and 

community development, Public 

housing, Reporting and recordkeeping 

requirements. 

For the reasons stated in the 

preamble, HUD proposes to amend 24 

CFR parts 970 and 972 as follows: 

■ 1. 24 CFR part 970 is revised to read 

as follows: 


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PART 970—PUBLIC HOUSING 

PROGRAM—DEMOLITION OR 

DISPOSITION OF PUBLIC HOUSING 

PROJECTS 

Subpart A—Demolitions and Dispositions 

Under Section 18 of the U.S. Housing Act 

of 1937 

Sec. 

970.1 Purpose. 

970.3 Applicability. 

970.5 Definitions. 

970.7 General requirements for HUD review 

and approval of a demolition or 

disposition application. 

970.9 Resident participation—consultation 

and opportunity to purchase. 

970.11 Procedures for the offer of sale to an 

Established Eligible Organization. 

970.12 Civil rights and equal opportunity 

review. 

970.13 Environmental review requirements. 

970.14 Section 3 compliance. 

970.15 Specific criteria for HUD approval of 

a demolition application. 

970.17 Specific criteria and conditions for 

HUD approval of a disposition 

application. 

970.19 Requirements for the disposition of 

a project. 

970.20 Use and treatment of proceeds. 

970.21 Relocation of residents. 

970.23 Costs of demolition and relocation 

of displaced residents. 

970.25 Required and permitted actions 

prior to approval. 

970.27 De minimis exception to demolition 

application requirement. 

970.29 Criteria for HUD disapproval of a 

demolition or disposition application. 

970.31 Effect on Operating Fund Program 

and Capital Fund Program. 

970.33 Demolitions due to emergency, 

disaster, or accidental loss. 

970.35 Removal of all projects in the PHA’s 

public housing inventory. 

970.37 Reports and records. 

Subpart B—Real Property Transactions: 

Retention of Projects by Public Housing 

Agencies 

970.39 Definitions. 

970.41 Applicability. 

970.43 Removal of a project from public 

housing without a transfer to a third 

party. 

970.45 Specific criteria for HUD approval of 

requests under this subpart. 

Authority: 42 U.S.C. 1437p and 3535(d). 

Subpart A—Demolitions and 

Dispositions Under Section 18 of the 

U.S. Housing Act of 1937 

§ 970.1 Purpose. 

This part states requirements for HUD 

approval of applications for demolition 

or disposition (in whole or in part) of 

public housing projects assisted under 

Title I of the U.S. Housing Act of 1937 

(1937 Act). This subpart states the 

requirements applicable to demolitions 

and dispositions of public housing 

projects as provided under section 18 of 

the 1937 Act. Subpart B of this part 

states the requirements applicable to 

real property transactions and retention 

of projects by public housing agencies 

(PHAs). The regulations in 24 CFR part 

85 are not applicable to this subpart, 

and are addressed in subpart B of this 

part. 

§ 970.3 Applicability. 

(a) This subpart applies to public 

housing projects that are subject to an 

annual contributions contract (ACC) 

under the 1937 Act and which are 

proposed for demolition, disposition, or 

both, through an application under 

section 18 of the 1937 Act, and includes 

projects owned by PHAs; 

(b) This subpart does not apply to the 

following: 

(1) Public housing projects that PHAs 

apply to retain under subpart B of this 

part; 

(2) PHA-owned Section 8 housing, or 

housing leased under former sections 

10(c) or 23 of the 1937 Act; 

(3) Demolition or disposition before 

the date of full availability (DOFA) of 

property acquired incidental to the 

development of a project (however, this 

exception shall not apply to dwelling 

units under ACC); 

(4) The conveyance of projects for the 

purpose of providing homeownership 

opportunities for low-income families 

under sections 21 and 32 of the 1937 

Act (42 U.S.C. 1437s and 42 U.S.C. 

1437z–4, respectively), the 

homeownership program under former 

section 5(h) of the 1937 Act (42 U.S.C. 

1437c(h)), or other predecessor 

homeownership programs; 

(5) An agreement with a third party 

(e.g., leases or license, solar roof top 

lease, telecommunications lease, garden 

or park space) provided such agreement: 

(i) Benefits the PHA and its residents; 

(ii) Is consistent with the PHA’s Plan 

(as determined by HUD); 

(iii) Is consistent with the PHA’s ACC 

with HUD; and 

(iv) Is approved in writing by HUD; 

(6) The adaptation or utilization of 

portions of projects (including available 

common areas and unoccupied dwelling 

units) for authorized non-dwelling 

purposes related to public housing, 

including resident amenities, activities 

and services, and public housing 

administration; 

(7) The leasing of a project (but not 

individual dwelling units) for the 

purpose of enabling a prospective 

owner-entity to show site control in an 

application for funding for the 

redevelopment of the project, such as 

low-income housing tax credits 

(LIHTC), provided such lease is for one 

year or less and is approved by HUD in 

writing; 

(8) The reconfiguration of the interior 

space of buildings (e.g., moving or 

removing interior walls to change the 

design, sizes, or number of units) for an 

authorized use related to the normal 

operation of public housing, without 

‘‘demolition,’’ as defined in § 970.5. 

(This includes the reconfiguration of 

bedroom size, occupancy type, or 

changing the status of unit from 

dwelling to non-dwelling in accordance 

with all applicable HUD requirements 

and approvals. Changes in the number 

of units or number of bedrooms will be 

reflected in the PIH Information Center 

(PIC) or any future substitute system 

required by HUD); 

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

transfers of utility systems related to the 

normal operation of the project for 

public housing purposes as permitted 

by the ACC, provided such easements, 

rights-of-way, and transfers of utility 

systems are approved by HUD in 

writing; 

(10) A whole or partial taking by a 

public or quasi-public entity (taking 

agency) authorized to take real property 

by its use of police power or exercise of 

its power of eminent domain under state 

law. A taking does not qualify for the 

exception under this paragraph unless: 

(i) The taking agency has been 

authorized to acquire real property by 

use of its police power or power of 

eminent domain under its state law; 

(ii) The taking agency has taken at 

least the first step in formal proceedings 

under its state law; and 

(iii) If the taking is for a federally 

assisted project, the Uniform Relocation 

Assistance and Real Property 

Acquisition Policies Act of 1970 (URA) 

(42 U.S.C. 4601 et seq.) applies to any 

resulting displacement of residents and 

it is the responsibility of the taking 

agency to comply with applicable URA 

requirements; 

(11) Real property (vacant land and 

improvements) that is owned or has 

been acquired by, or donated to, a PHA 

with public housing or other funds and 

then conveyed, sold, or otherwise 

transferred to an owner-entity prior to 

DOFA to enable an owner-entity to 

develop the property using the mixedfinance development method at 24 CFR 

905.604; 

(12) Disposition of vacant land (but 

not units) comprising a project for 

development pursuant to the mixedfinance development method at 24 CFR 

905.604 are exempt from this regulation, 

but not Section 18 of the 1937 Act, and 

provided that the PHA: 

(i) Submits an application, in the form 

prescribed by HUD, that evidences to 

HUD’s satisfaction that it has complied 


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with the requirements of section 18 of 

the 1937 Act; and 

(ii) Receives HUD approval of that 

application before commencing the 

disposition of the project; 

(13) Demolition under the de minimis 

exception in § 970.27, except that the 

environmental review provisions apply, 

including the provisions at 

§§ 970.7(c)(18) and 970.13, provided 

that the PHA notifies HUD in the form 

prescribed and submits the documents 

and information outlined in § 970.27(e) 

and, except in cases of imminent threats 

to health or safety, HUD acknowledges 

the action in writing prior to the 

commencement of the demolition; 

(14) Demolition (but not disposition) 

of severely distressed units as part of a 

revitalization plan under section 24 of 

the 1937 Act (42 U.S.C. 1437v) (HOPE 

VI and Choice Neighborhoods) 

approved after October 21, 1998; 

(15) Demolition (but not disposition) 

of projects removed from a PHA’s 

inventory under section 33 of the 1937 

Act (42 U.S.C. 1437z–5); 

(16) Demolition of projects due to a 

disaster, sudden accidental or casualty 

loss, as permitted by the ACC and 

§ 970.33, provided the PHA submits the 

documents and information outlined in 

§ 970.33; 

(17) Dispositions of projects of a de 

minimis nature that are necessary to 

correct and/or clarify legal descriptions 

to deed or ownership documents, 

provided such de minimis dispositions 

are approved by HUD; and 

(18) Consolidation of occupancy 

within or among buildings of a project, 

or among projects, or with other lowincome housing for the purposes of 

improving living conditions of, or 

providing more efficient services to 

residents, provided such consolidation 

of occupancy is done in accordance 

with applicable federal laws and 

requirements, which may include the 

PHA’s written policies on admissions 

and continued occupancy, the PHA’s 

section 8 Administrative Plan (24 CFR 

part 982), and PHA Plan requirements 

(24 CFR part 903), and further provided 

the PHA notifies HUD in writing in 

advance of such occupancy 

consolidation. 

(c) The exclusion of activities in 

§ 970.3(b) from applicability of this 

subpart does not impair the 

applicability of other requirements that 

apply independently of section 18 of the 

1937 Act, including the requirements of 

section 104(d) of the Housing and 

Community Development Act of 1974 

(42 U.S.C. 5304(d)). 

§ 970.5 Definitions. 

1937 Act, is defined in 24 CFR 5.100. 

ACC, or annual contributions 

contract, is defined in 24 CFR 5.403. 

Accessible, or accessibility, means 

accessible to persons with disabilities as 

defined further in HUD’s regulations at 

24 CFR 8.3. 

Appropriate government officials 

mean the Chief Executive Officer or 

officers of a unit of general local 

government. 

Assistant Secretary means the 

Assistant Secretary for Public and 

Indian Housing at HUD. 

Chief Executive Officer 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 and who 

has the authority to contractually bind 

the jurisdiction. Examples of the chief 

executive officer of a unit of general 

local government are: The elected mayor 

of a municipality; the elected county 

executive of a county; the chairperson of 

a county commission or board in a 

county that has no elected county 

executive; and the official designated 

pursuant to law by the governing body 

of a unit of general local government. 

Commensurate public benefit means 

benefits to the residents of the PHA, the 

community, and/or the federal 

government, as approved by HUD. 

General public improvements or public 

infrastructure such as streets and 

bridges, do not qualify as commensurate 

public benefits. HUD will generally 

consider the following to be 

commensurate public benefits: 

(1) Rental dwelling units (in a number 

approved by HUD) to house low-income 

families (as defined herein) for a period 

required by HUD of not less than 30 

years from the date such units are 

available for occupancy, and for which 

all lease-compliant public housing 

residents (as defined herein) who are 

displaced from a public housing project 

(as defined herein) due to a demolition 

and/or disposition under this part are 

provided with an opportunity to return 

to size-appropriate public housing units 

that are rebuilt on the site; 

(2) Homeownership dwelling units (in 

a number approved by HUD) affordable 

to low-income families; 

(3) Non-dwelling structures or 

facilities to serve low-income families, 

as approved by HUD; and 

(4) Other or additional benefits as 

approved by HUD (which may include, 

in part, planning and carrying out 

section 3 activities under section 3 of 

the Housing and Urban Development 

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

3 or section 3 activities) related to these 

proposed benefits)). 

Comparable housing means housing 

that meets housing quality standards 

(HQS) (or such successor standard that 

HUD may adopt) and is appropriate in 

size for the household. For residents 

with a disability, comparable housing 

must include the accessibility features 

needed by the resident and must be 

located in the most integrated setting 

appropriate for the resident with a 

disability (i.e., the setting that enables 

the resident to interact with nondisabled persons to the fullest extent 

possible and have access to communitybased services). Comparable housing 

must be located in an area that is 

generally not less desirable than the 

location of the displaced resident’s 

current public housing unit. In 

determining comparable housing, a PHA 

shall also consider the following criteria 

(in aggregate): Neighborhood safety; 

quality of local schools; accessibility of 

amenities (e.g., transportation, 

employment); and exposure to adverse 

environmental conditions. Relocation 

associated with demolition and 

disposition plans must be consistent 

with the PHA’s obligation to 

affirmatively further fair housing (42 

U.S.C. 3608(e)(5))). 

(1) Comparable housing for displaced 

residents is generally other subsidized 

housing and may include: 

(i) Tenant-based assistance under 

section 8 of the 1937 Act; 

(ii) Project-based assistance under 

section 8 of the 1937 Act; or 

(iii) Occupancy in a unit operated or 

assisted by a PHA at a rental rate paid 

by the resident that is comparable to the 

rental rate applicable to the public 

housing unit from which the resident is 

displaced. Comparable housing for a 

resident household which is not eligible 

for public or assisted housing or in cases 

where no other comparable subsidized 

housing is available may be provided by 

offering referrals to non-subsidized 

housing currently available on the 

private market, and may include 

another level of housing assistance, as 

adopted by the PHA and approved by 

HUD, in order to mitigate the costs of 

displacement. 

(2) [Reserved] 

Demolition means the removal by 

razing or other means, in whole or in 

part, of one or more permanent 

buildings of a project such as to render 

the building(s) uninhabitable as defined 

by the applicable building occupancy 

code. A demolition involves: 

(1) The lifting and relocation of a 

building from its existing site to another 

site not covered by the same DOT; or 

(2) The removal of 50 percent or more 

of a building’s partition walls in 


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addition to four or more of the 

following: 

(i) Envelope removal (roof, windows, 

exterior walls); 

(ii) Kitchen removal; 

(iii) Bathroom removal; 

(iv) Electrical system removal (unit 

service panels and distribution circuits); 

or 

(v) Plumbing system removal (e.g., 

either the hot water heater or 

distribution piping in the unit, or both). 

Declaration of Trust (DOT) means a 

legal instrument that grants HUD an 

interest in a project. It provides public 

notice that the project must be operated 

in accordance with all public housing 

federal requirements, including the 

requirement not to convey or otherwise 

encumber the property unless expressly 

authorized by federal law and/or HUD. 

Displaced resident means a ‘‘resident’’ 

as defined in this section that is 

relocated permanently from the project 

as a direct result of a demolition and/ 

or disposition action under this part. 

The term ‘‘displaced resident’’ means a 

resident displaced from a project under 

this part and includes, but is not limited 

to: 

(1) An eligible public housing 

resident (including any current 

members of the resident household) that 

lives in a project at the time the 

displacement is approved, subject to an 

ACC under the 1937 Act; and 

(2) An over-income or other resident 

who is otherwise ineligible for 

occupancy in public housing or other 

subsidized housing who, at the time the 

displacement is approved, resides in a 

project subject to an ACC under the Act 

but occupies a unit under PHA policies 

for continued occupancy or other 

special rent exceptions. 

Disposition means the sale or other 

transfer (e.g. ground lease) of a project 

that will cause HUD to terminate the 

ACC with respect to the project and 

release the DOT recorded against the 

project, provided that such sale or 

transfer is to a legal entity that is 

independent from the PHA under the 

applicable state law. 

DOFA, or date of full availability, 

means the last day of the month in 

which substantially all (95 percent or 

more) of the units in a project are 

available for occupancy. 

Emergency means any occasion or 

instance for which, in the determination 

of the President or HUD, federal 

assistance is needed to supplement state 

and local efforts and capabilities to save 

lives and to protect property and public 

health and safety, or to lessen or avert 

the threat of a catastrophe in any part of 

the United States. 

Established Eligible Organization 

means any resident council or any 

resident management corporation as 

those terms are defined in 24 CFR part 

964, or to a nonprofit organization 

acting on behalf of the residents. 

Fair Market Value (FMV) means the 

estimated market value of a project, as 

determined by an independent 

appraiser contracted but not employed 

by the PHA and completed within 6 

months of the date an application is 

submitted to HUD, unless a longer time 

is approved by HUD. 

Firm financial commitment means a 

commitment that obligates a creditable 

source, lender, or equity provider, to the 

lending or equity investment of a 

specific sum of funds to be made on or 

before a specific date(s) and may 

contain contingencies or conditions that 

must be satisfied by the borrower (or 

entity receiving equity investments). 

The condition of a firm commitment 

must be that it is enforceable by the 

borrower (or entity receiving the equity 

investment) upon the satisfaction of all 

contingencies or conditions. 

Housing Quality Standards (HQS) has 

the same meaning as 24 CFR part 982. 

Housing Construction Cost (HCC) has 

the same meaning as in 24 CFR part 905. 

Lease-compliant displaced resident 

means a displaced resident (including 

household members whose names 

appear on the public housing lease) who 

has not engaged in serious or repeated 

violations of material terms of the lease 

that result, or could result, in good 

cause to evict, and terminate the 

resident’s assistance. 

Low-income families has the same 

meaning as found in section 3 of the 

1937 Act (e.g., families with incomes 

that do not exceed 80 percent of area 

median income (AMI)). 

Low-income housing has the same 

meaning as section 3 of the 1937 Act 

(e.g., decent, safe, and sanitary 

dwellings assisted under the 1937 Act) 

and which may include public housing 

units and units assisted by funds from 

section 8 of the 1937 Act (e.g., tenantbased or project-based voucher units 

under section 8 of the 1937 Act, and 

homeownership units developed under 

sections 32, 24, or 9 of the 1937 Act.) 

Major disaster means any natural 

catastrophe (including any hurricane, 

tornado, storm, high water, wind-driven 

water, tidal wave, tsunami, earthquake, 

volcanic eruption, landslide, mudslide, 

snowstorm, or drought), or, regardless of 

cause, any fire, flood, or explosion, in 

any part of the United States, which: 

(1) In the determination of the 

President causes damage of sufficient 

severity and magnitude to warrant major 

disaster assistance under this 1937 Act 

to supplement the efforts and available 

resources of states, local governments, 

and disaster relief organizations; or 

(2) Causes severe danger, hardship, or 

suffering, as determined by HUD. 

PHA or Public Housing Agency is 

defined at 24 CFR 5.100. 

PHA Plan means the plan the PHA is 

required to prepare and/or submit to 

HUD under section 5(A) of the 1937 Act 

(42 U.S.C. 1437c–1) and 24 CFR part 

903, and which plan must be consistent 

with the jurisdiction’s Consolidated 

Plan under 24 CFR part 91 (the PHA 

Plan is generally the annual plan unless 

the PHA is a Moving to Work (MTW) 

agency in which case it means the 

Annual MTW Plan). 

Project means discrete property, 

including all necessary appurtenances 

(e.g., playgrounds, as well as equipment 

and personal property that has been 

acquired with HUD funds and used in 

the operation, maintenance, or 

improvement of the project) and other 

real property developed, acquired, or 

assisted with funds under the 1937 Act. 

A project may comprise vacant land 

and/or dwelling or non-dwelling 

structures. A project will generally have 

an identification number in the PIH 

Information Center (PIC), but may also 

include housing, including mixed 

finance public housing units, and other 

real property that has been acquired or 

otherwise developed with funds 

provided under the 1937 Act, but 

without prior HUD approval. A project 

may be owned by a PHA or, in whole 

or in part, by another owner entity 

pursuant to 24 CFR 905.604. A project 

is governed by an ACC. For purposes of 

this part, the term project includes any 

housing or other real property, 

regardless of whether the property 

comprises all or a portion of property on 

a given site and/or within a project 

number, and includes units developed 

pursuant to the mixed finance method 

at 24 CFR 905.604. The term project 

means the same as the word 

development used in other HUD 

systems and guidance. 

Public housing funds are defined at 

§ 905.108 and include disposition 

proceeds that a PHA may realize under 

42 U.S.C. 1437p. In the case of such 

proceeds, § 970.20(d) applies. 

Public housing unit means a dwelling 

unit in a project, including a dwelling 

unit developed for homeownership 

under the 1937 Act (other than units 

developed for homeownership under 

section 8(y) of the Act) prior to the 

transfer of title of that unit to the 

homebuyer. 

Qualified PHA means a PHA that is 

considered a ‘‘qualified public housing 

agency’’ under section 2702 of the 


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Housing and Economic Recovery Act of 

2008 (HERA), codified at section 

5A(b)(3) of the 1937 Act (42 U.S.C. 

1437c–1(b)(3)). 

Related to the normal operation of the 

project for public housing purposes 

means activities that are required or 

permitted to meet the obligations of the 

ACC, including the provision of lowincome housing and related services 

and other benefits to the residents of the 

PHA. 

Resident means an individual or 

family who in accordance with the 1937 

Act: 

(1) Is living in a public housing unit; 

(2) Is living in a unit that is assisted 

with funds under section 8 of the 1937 

Act; or 

(3) Is eligible for assistance under an 

MTW agency’s HUD-approved annual 

MTW plan. 

Resident Advisory Board (RAB) has 

the same meaning as in 24 CFR 

903.13(a). 

Resident Council means a resident 

organization, the role and requirements 

of which are as described in 24 CFR part 

964. 

Resident Management Corporation 

(RMC) has the same meaning as 24 CFR 

964.7. 

§ 970.7 General requirements for HUD 

review and approval of a demolition or 

disposition application. 

(a) Application for HUD approval. A 

PHA must obtain written approval from 

HUD before undertaking any transaction 

involving demolition and/or disposition 

of a project. Where a PHA demolishes 

or disposes of a project without HUD 

approval, no HUD funds may be used to 

fund the costs of demolition or 

disposition or reimburse the PHA for 

those costs. HUD will approve an 

application for demolition and/or 

disposition upon the submission of an 

application with the required 

certifications and the supporting 

information required by this section and 

§§ 970.15 or 970.17. Section 970.29 

specifies criteria for disapproval of an 

application. Approval of the application 

under this part does not imply approval 

of a request for additional funding, 

which the PHA must make separately 

under a program that makes such 

additional funding available. 

(b) Sufficiency of application. HUD 

will not consider an application for 

demolition, disposition, or both, unless 

the application contains all the 

substantial information set forth in 

§ 970.7 and in this part, and will return 

an incomplete application to the PHA. 

(c) Form of application. Applications 

for demolition and/or disposition shall 

be submitted in the form and manner 

prescribed by HUD. The supporting 

information shall include: 

(1) A certification that the PHA has 

specifically authorized the demolition 

and/or disposition action in its PHA 

Plan or significant amendment to that 

plan unless the PHA is a qualified PHA 

under the Housing and Economic 

Recovery Act of 2008 (HERA), and the 

proposed action is consistent with any 

plans, policies, assessments, or 

strategies prepared pursuant to the PHA 

Plan, such as the deconcentration plan 

(24 CFR 903.2) and the obligation to 

affirmatively further fair housing (42 

U.S.C. 3608(e)(5)). In the case of a 

qualified PHA, the PHA must describe 

the proposed demolition and/or 

disposition at its required annual public 

hearing (or a second public hearing if it 

determines to submit an application for 

demolition and/or disposition between 

its annual public hearings). Qualified 

PHAs must also comply with §§ 970.12 

and 970.7(c)(19) regarding civil rights 

and fair housing requirements in 

connection to 24 CFR part 903 and PHA 

Plans; 

(2) A description of all identifiable 

property (including dwelling and nondwelling units, bedroom size, and 

whether the units meet the accessibility 

requirements of Section 504 of the 

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

794) and HUD’s implementing 

regulations at 24 CFR part 8, other 

improvements, and land (acreage and 

legal description) in the project 

proposed for demolition and/or 

disposition, as well as equipment and 

personal property appurtenant to the 

project proposed for demolition and/or 

disposition; 

(3) The number of vacant units 

proposed for demolition and/or 

disposition and a narrative explanation 

for the reasons for the vacancies (e.g., 

health/safety issues, occupancy 

consolidation, emergency relocation due 

to disaster); 

(4) A description of the specific action 

proposed, such as: 

(i) Demolition, disposition, or 

demolition and disposition; 

(ii) If disposition is involved, the 

method of disposition (e.g., sale or lease 

terms, proposed compensation, 

negotiated or public bid disposition); 

(iii) The anticipated future use of the 

project after demolition and/or 

disposition, including any anticipated 

subsidies (e.g., low-income housing tax 

credits, Section 8 project-based 

vouchers, Section 8 tenant-based 

vouchers) that the PHA expects will be 

used for future dwelling that will be 

operated as housing for low-income 

families on the site of the former project; 

and 

(iv) Plans for replacement of 

demolished or disposed of housing, if 

any; 

(5) A general timetable for the 

proposed demolition and/or disposition, 

including the initial contract for 

demolition, the actual demolition, and, 

if applicable, the closing of sale or other 

form of disposition; 

(6) A statement and other supporting 

documentation justifying the proposed 

demolition and/or disposition under the 

applicable criteria of §§ 970.15 or 

970.17; 

(7) If any residents will be displaced 

by the proposed demolition and/or 

disposition, a certification that the PHA 

will comply with the relocation 

provisions of this part and a written 

relocation plan in compliance with this 

part that describes the proposed 

relocation of residents, and includes the 

following information: 

(i) The estimated number of 

individual residents and families to be 

displaced; 

(ii) The comparable housing resources 

the PHA will provide to displaced 

residents. If the source is tenant-based 

assistance under section 8 of the 1937 

Act, indicate if the PHA is relying on a 

future allocation of tenant-protection 

vouchers to complete the relocation and 

if the PHA’s desire to proceed with the 

action, if approved, is conditional upon 

its receipt of such vouchers. If some 

residents are not eligible to move to 

other public or assisted housing, the 

PHA must describe why such residents 

are not eligible and what resources it 

will make available to provide 

comparable housing for such displaced 

residents; 

(iii) The type of housing counseling 

services, including mobility counseling, 

to be provided to residents so that they 

are informed about comparable housing 

opportunities throughout the market 

area (e.g., showing residents who 

receive a tenant-based voucher 

comparable housing located in 

neighborhoods with low concentrations 

of poverty and high-performing 

schools), and plans for making this 

counseling available to persons with 

disabilities in accordance with the 

effective communication requirements 

at 24 CFR 8.6 and to residents with 

limited English proficiency; 

(iv) An estimate of the costs for 

housing counseling services and 

resident relocation, and the expected 

source for payment for these expenses; 

(v) A discussion of how the PHA will 

relocate residents in compliance with 

the non-discrimination and equal 

opportunity requirements specified 

under 24 CFR 5.105(a). This discussion 

shall include, but is not limited to, how 


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the PHA will make its best efforts to 

offer each displaced resident at least one 

unit of comparable housing that is 

located in a non-minority area with 

access to public transportation, 

employment, education, child care, 

medical services, shopping, and other 

amenities. The PHA shall provide 

census tract data for the location(s) of 

the comparable housing that it will offer 

to residents; 

(vi) A plan for determining the 

housing needs of displaced residents 

with disabilities and offering them 

comparable housing that includes the 

accessibility features needed by the 

resident with a disability in the most 

integrated setting appropriate for the 

resident (i.e., the setting that enables the 

resident with a disability to interact 

with non-disabled persons to the fullest 

extent possible and have access to 

community-based services); 

(vii) A plan and information required 

by § 970.21(d) if applicable; and 

(viii) A relocation timetable, which 

indicates the estimated number of days 

after HUD approval of the demolition 

and/or disposition action that the PHA 

plans to begin relocating residents. This 

information will be used to determine 

the PHA’s Operating Fund eligibility 

under 24 CFR part 990, which may 

include an asset-repositioning fee under 

24 CFR 990.190(h); 

(8) A description with supporting 

evidence of the PHA’s consultations 

with affected residents and other 

groups, as required under § 970.9(a). 

Supporting evidence shall include: A 

description of the process of the 

consultations summarizing the dates, 

meetings, and issues raised by the 

residents and the PHA’s responses to 

those issues; meeting sign-in sheets; any 

written comments submitted by affected 

residents/groups along with the PHA’s 

responses to those comments; any 

certifications or other written 

documentation that the PHA receives 

from the RAB (or equivalent body) and 

resident council regarding resident 

support or opposition; a description 

and/or documentation evidencing that 

the PHA communicated with affected 

residents and other required groups in 

a manner that was effective for persons 

with hearing, visual, and other 

communications-related disabilities 

consistent with 24 CFR 8.6 and that 

public hearing facilities and services 

were physically accessible to persons 

with disabilities, and that appropriate 

translations were provided for Limited 

English Proficient (LEP) individuals; 

(9) In the case of disposition, evidence 

of compliance with the offering to 

resident organizations, as required 

under § 970.9; 

(10) In the case of disposition, the 

name of the acquiring entity (e.g., buyer 

or ground lessee) and a legal opinion 

that the acquiring entity is a separate 

legal entity (i.e., an affiliate or fully 

independent entity rather than an 

instrumentality of the PHA) under the 

applicable state law; 

(11) In the case of disposition, the 

FMV of the project, as established on 

the basis of at least one independent 

appraisal, unless otherwise determined 

by HUD, as described in § 970.19; 

(12) In the case of disposition, 

estimates of the gross and net proceeds 

to be realized, with an itemization of 

estimated expenses to be paid out of 

gross proceeds and the proposed use of 

any net proceeds in accordance with 

§ 970.19; 

(13) In the case of disposition 

proposed at below FMV based on 

commensurate public benefit in 

accordance with § 970.19, HUD will 

consider the anticipated future use of 

the project after disposition described in 

§ 970.7(c)(3). In addition, the supporting 

information for the application shall 

include: 

(i) A detailed description of any 

housing that will be located on the 

property, including the number of units, 

bedroom sizes, accessibility, 

affordability, and priorities for 

displaced residents; 

(ii) The proposed length of time in 

which the acquiring entity will maintain 

the former project for the proposed 

future use (HUD will generally require 

the proposed future use remain as such 

for not less than 30 years, but will 

consider other factors such as the extent 

of public benefits (e.g., number of 

affordable units) arising from proposed 

disposition and the FMV of the property 

in determining if a period of less than 

30 years is acceptable); 

(iii) The plan to implement the 

opportunity to return requirement for 

existing residents’ as outlined in 

§ 970.21(d); 

(iv) The proposed legal 

documentation (e.g., use restriction, 

provision in ground lease, declaration of 

restrictive covenant) the PHA proposes 

to ensure the approved use; and 

(v) Other information as may be 

required by HUD in determining if a 

commensurate public benefit exists; 

(14) Where the PHA is requesting a 

waiver of the requirement for the 

application of proceeds for repayment of 

outstanding development debt, the PHA 

must request such a waiver in its 

application, however, modernization 

debt, such as Capital Fund Financing 

Program (CFFP) debt, Energy 

Performance Contracting (EPC) debt, 

and Operating Fund Financing Program 

(OFFP) debt cannot be waived and 

repayment is required; 

(15) In the case where the PHA has 

applied for and/or been approved for 

financing under any HUD program 

(including CFFP, the OFFP, and the EPC 

program) or any other financing 

requested pursuant to section 30 of the 

1937 Act (42 U.S.C. 1437z–2)), a legal 

opinion that the proposed demolition 

and/or disposition action is permitted 

pursuant to the legal documentation 

associated to that program; 

(16) A copy of a resolution by the 

PHA’s Board of Commissioners 

approving the specific demolition and/ 

or disposition application or, in the case 

of the report required under § 970.27(e) 

for ‘‘de minimis’’ demolitions, the Board 

of Commissioner’s resolution approving 

the ‘‘de minimis’’ action for that project. 

The resolution must be signed and 

dated after all resident and local 

government consultation has been 

completed; 

(17) Evidence that the application was 

developed in consultation with 

appropriate government officials as 

defined in § 970.5, including: 

(i) A description of the process of 

consultation with local government 

officials, which summarizes dates, 

meetings, and issues raised by the local 

government officials and the PHA’s 

responses to those issues; 

(ii) A signed and dated letter in 

support of the application from the chief 

executive officer of the unit of local 

government that demonstrates that the 

PHA has consulted with the appropriate 

local government officials on the 

proposed demolition or disposition; 

(iii) Where the local government 

consistently fails to respond to the 

PHA’s attempts at consultation, 

including letters, requests for meetings, 

public notices, and other reasonable 

efforts, documentation of those 

attempts; 

(iv) Where the PHA covers multiple 

jurisdictions (such as a regional housing 

authority), the PHA must meet these 

requirements for each of the 

jurisdictions where the PHA is 

proposing demolition or disposition of 

the project; 

(18) An approved environmental 

review of the proposed demolition and/ 

or disposition in accordance with 24 

CFR parts 50 or 58, including acting in 

accordance with the applicable 

environmental justice principles, for 

any demolition and/or disposition of the 

project covered under this part, as 

required under § 970.13; 

(19) Evidence of compliance with 

§ 970.12 including: 


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(i) A civil rights certification in a form 

and manner prescribed by HUD 

whereby the PHA certifies: 

(A) A description of how the 

proposed demolition and/or disposition 

will help the PHA meet its affirmative 

obligations including, but not limited to, 

the obligation and to overcome 

discriminatory effects of the PHA’s use 

of 1937 Act funds pursuant to part 1 of 

this title and the obligations to 

deconcentrate poverty (24 CFR part 903, 

subpart A) and affirmatively further fair 

housing (42 U.S.C. 3608(e)(5)); 

(B) It does not have any outstanding 

charges from HUD (or a substantially 

equivalent state or local fair housing 

agency) concerning a violation of the 

Fair Housing Act or substantially 

equivalent state or local fair housing law 

proscribing discrimination because of 

race, color, religion, sex, national origin, 

disability, or familial status; 

(C) It is not a defendant in a Fair 

Housing Act lawsuit filed by the 

Department of Justice; 

(D) It does not have outstanding 

letters of findings identifying 

noncompliance under title VI of the 

Civil Rights Act of 1964, section 504 of 

the Rehabilitation Act of 1973, or 

section 109 of the Housing and 

Community Development Act of 1974; 

and 

(E) It has not received a cause 

determination from a substantially 

equivalent state or local fair housing 

agency concerning a violation of 

provisions of a state or local law 

proscribing discrimination in housing 

based on sexual orientation, gender 

identity, or source of income; 

(ii) Additional supporting information 

that may be requested by HUD, if 

applicable, that shows that the proposed 

demolition and/or disposition will not 

maintain or increase segregation on the 

basis of race, ethnicity, or disability and 

will not otherwise violate applicable 

nondiscrimination or equal opportunity 

requirements, including a description of 

any affirmative efforts to prevent 

discriminatory effects; 

(20) A description and data regarding 

the race, color, religion, sex, national 

origin, familial status, and disability 

status of its residents who will be 

displaced by the action, the residents 

anticipated to remain in a public 

housing project that is partially 

demolished or disposed of, and the 

applicants on the PHA’s waiting list(s), 

by bedroom size; 

(21) A certification that the PHA will 

comply with this part and the terms and 

conditions of the HUD demolition and/ 

or disposition approval, including, if 

applicable, monitoring the future use of 

a former project, for compliance with 

HUD’s approval; and 

(22) Any additional information 

requested by and determined to be 

necessary to HUD to support the 

demolition and/or disposition 

application and assist HUD in making a 

determination to approve or disapprove 

the application under this part. 

(d) Approval documents. (1) If a PHA 

includes documentation, certifications, 

assurances, or legal opinions in its 

application that go above and beyond 

the requirements of section 18 or this 

part, HUD may include these as 

additional requirements in its approval 

of the demolition and/or disposition 

action. 

(2) A PHA shall not take any action 

contrary to the terms and conditions of 

HUD’s approval documents of a 

demolition and/or disposition action 

without obtaining prior written 

approval of the proposed change from 

HUD. 

(e) Amendments to and rescissions of 

approval. (1) HUD will consider a 

PHA’s request to amend an earlier 

approval on a case-by-case basis upon 

the PHA’s submission (in the form 

prescribed by HUD) of an explanation 

and documentation, if applicable, 

evidencing the reason for the requested 

change. 

(2) HUD will consider a PHA’s request 

to rescind an earlier approval to 

demolish and/or dispose of a project, 

where a PHA submits a resolution from 

the Board of Commissioners and 

submits documentation that the 

conditions that originally led to the 

request for demolition and/or 

disposition have significantly changed 

or been removed. 

§ 970.9 Resident participation— 

consultation and opportunity to purchase. 

(a) Resident consultation. PHAs must 

ensure that they communicate with 

public housing and rental assistance 

applicants and residents in a manner 

that is effective for persons with 

hearing, visual, and other 

communications-related disabilities 

consistent with section 504 of the 

Rehabilitation Act of 1973, and as 

applicable, the Americans with 

Disabilities Act. This includes ensuring 

that notices, policies, and procedures 

are made available via accessible 

communications methods including the 

use of alternative formats, such as 

Braille, audio, large type, sign language 

interpreters, and assistive listening 

devices, etc., and are written in plain 

language. Additionally, PHAs must 

ensure public hearing facilities and 

services are physically accessible to 

persons with disabilities in accordance 

with section 504 of the Rehabilitation 

Act of 1973 and that Limited English 

Proficient (LEP) individuals will have 

meaningful access to programs and 

activities, in accordance with Executive 

Order 13166. 

(1) A PHA must consult with the 

following residents and resident groups 

who will be affected by a proposed 

demolition, disposition, or combined 

action that is the subject of an 

application: 

(i) Residents who are residing in the 

project proposed for demolition and/or 

disposition; 

(ii) Resident council, if any; 

(iii) Resident management corporation 

for the project, if any; 

(iv) PHA-wide resident organization, 

if any; and 

(v) The Resident Advisory Board 

(RAB) (or equivalent body). 

(2) As part of such consultation, the 

PHA must either provide a copy of its 

demolition and/or disposition 

application to the residents and groups 

identified above, post the application on 

its Web site, or make the application 

available for review at its central office. 

Consultation must take place as follows: 

(i) On the final application submitted 

to HUD (e.g., even if the PHA consults 

the affected residents and groups early 

on in the application planning process, 

it must consult the residents and groups 

again on the final application); 

(ii) On any report on the 

environmental or health effects of the 

proposed activities; 

(iii) On the relocation plan, if any, for 

the demolition and/or disposition 

action; 

(iv) Informed by the PHA that they 

have a right to submit written comments 

about the application and that the PHA 

shall respond to those comments in 

writing to the residents and also submit 

such comments and responses to HUD. 

(v) Provided by the PHA with a 

reasonable timeframe in which they can 

submit written comments and must 

respond to those comments within a 

reasonable timeframe; and 

(vi) If applicable, consultation with 

Affected Resident and Resident Groups 

shall include information concerning 

the opportunity to return to ACC units 

under § 970.21(d). 

(b) Applicability of the requirement to 

sell to Established Eligible Organization. 

In the situation where the PHA applies 

to dispose of a project: 

(1) The PHA shall, in appropriate 

circumstances as determined by the 

Assistant Secretary, initially offer the 

project proposed for disposition to any 

Established Eligible Organization, if 

such Established Eligible Organization 

has expressed an interest in purchasing 


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the project for continued use as housing 

for low-income families in accordance 

with § 970.11. 

(2) If the Established Eligible 

Organization has expressed an interest 

in purchasing the project for continued 

use as housing for low-income persons, 

in order for its purchase offer to be 

considered, the Established Eligible 

Organization must: 

(i) In the case of a nonprofit 

organization, be acting on behalf of the 

residents of the project; and 

(ii) Demonstrate that it has obtained a 

firm commitment for the necessary 

financing within 60 days of the date of 

serving its written notice of interest 

under paragraph (b)(1) of this section. 

(3) The requirements of this section 

do not apply to the following cases, 

which have been determined not to 

present an appropriate opportunity for 

purchase by a resident organization: 

(i) A unit of state or local government 

requests to acquire vacant land that is 

less than two acres in order to build or 

expand its public services (e.g., a local 

government wishes to use the land to 

build or establish a police substation); 

(ii) A PHA seeks disposition to 

privately finance or otherwise develop 

housing for low-income families 

(including housing that is part of a 

mixed-income community) or to 

develop a non-dwelling facility to 

benefit low-income families (e.g., day 

care center or administrative building); 

(iii) Units that have been legally 

vacated in accordance with the HOPE VI 

program, the regulations at 24 CFR part 

971, or the regulations at 24 CFR part 

972, excluding projects where the PHA 

has consolidated vacancies; 

(iv) Distressed units required to be 

converted to tenant-based assistance 

under section 33 of the 1937 Act (42 

U.S.C. 1437z–5); or 

(v) Disposition of non-dwelling 

properties, including administration 

and community buildings, and 

maintenance facilities. 

(4) If the requirements of this section 

are not applicable, as provided in 

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

may proceed to submit to HUD its 

application under this part to dispose of 

the project, without affording an 

opportunity for purchase by a resident 

organization. However, PHAs must: 

(i) Consult with their residents in 

accordance with paragraph (a) of this 

section; and 

(ii) Submit documentation with date 

and signatures to support the 

applicability of one of the exceptions in 

paragraph (b)(3) of this section. 

(c) Established Eligible Organization 

purchase of project. Where there is an 

Established Eligible Organization that 

has expressed an interest in purchasing 

the project in accordance with the 

requirements of § 970.11, the PHA shall 

follow the procedures concerning such 

offer as described in such section. 

§ 970.11 Procedures for the offer of sale to 

an Established Eligible Organization. 

In making an offer of sale to an 

Established Eligible Organization, in the 

case of a proposed disposition, the PHA 

shall proceed as follows: 

(a) Initial written notification of sale 

of project. The PHA shall send an initial 

written notification to each Established 

Eligible Organization (for purposes of 

this section, an Established Eligible 

Organization that has been so notified is 

a ‘‘Notified Eligible Organization’’) of 

the proposed sale of the project. The 

notice of sale must include, at a 

minimum, the information listed in 

paragraph (b) of this section. 

(b) Contents of initial written 

notification. The initial written 

notification to each Established Eligible 

Organization under paragraph (a) of this 

section must include at a minimum the 

following: 

(1) An identification of the project 

involved in the proposed disposition, 

including the project number and 

location, the number of units and 

bedroom configuration, the number of 

accessible units or units that otherwise 

contain accessible features, the amount 

and use of non-dwelling space, the 

current physical condition (fire 

damaged, friable asbestos, lead-based 

paint test results), and percent of 

occupancy; 

(2) A copy of the appraisal of the 

project and any terms of sale to 

residents; 

(3) Disclosure and description of the 

PHA’s plans for reuse of land, if any, 

after the proposed disposition; 

(4) An identification of available 

resources (including its own and HUD’s) 

to provide technical assistance to the 

organization to help it to better 

understand its opportunity to purchase 

the project, the project’s value, and 

potential use; 

(5) A statement that any project sold 

to an Established Eligible Organization 

will not continue to receive grants from 

the Capital Fund and Operating Fund 

after the completion of the sale unless 

the Established Eligible Organization is 

also a Resident Management 

Corporation and such Resident 

Management Corporation enters into an 

ACC with HUD in accordance with 24 

CFR part 964; 

(6) Any and all terms of sale that the 

PHA will require, including a statement 

that the purchaser must use the project 

for low-income housing. If the PHA 

does not know all the terms of the offer 

of sale at the time of the notice of sale, 

the PHA shall include all the terms of 

sale of which it is aware. The PHA must 

supply the totality of all the terms of 

sale and all necessary material to the 

residents no later than 7 business days 

from the day the PHA receives the 

residents’ initial expression of interest; 

(7) A date by which an Established 

Eligible Organization must express its 

interest, in writing, in response to the 

PHA’s offer to sell the project proposed 

for demolition and/or disposition, 

which shall be up to 30 days from the 

date of the official written offer of sale 

from the PHA; and 

(8) A statement that the established 

eligible organization will be given 60 

days from the date of the PHA’s receipt 

of its letter expressing interest to 

develop and submit a proposal to the 

PHA to purchase the project and to 

obtain a firm financial commitment, as 

defined in § 970.5. The statement shall: 

(i) Explain that the PHA shall approve 

the proposal from an organization if the 

proposal meets the terms of sale and is 

supported by a firm commitment for 

financing; 

(ii) Provide that the PHA can consider 

accepting an offer from the organization 

that differs from the terms of sale; 

(iii) Explain that if the PHA receives 

proposals from more than one 

organization, the PHA shall select the 

proposal that meets the terms of sale, if 

any. In the event that two proposals 

from the project to be sold meet the 

terms of sale, the PHA shall choose the 

best proposal. The PHA may reject all 

proposals if none adequately meet terms 

of sale or may select the best available 

proposal. 

(c) Initial expression of interest. All 

Notified Eligible Organizations shall 

have 30 days to initially express an 

interest, in writing, in the offer (‘‘initial 

expression of interest’’). The initial 

expression of interest need not contain 

details regarding financing, acceptance 

of an offer of sale, or any other terms of 

sale. 

(d) Opportunity to obtain firm 

financial commitment by a notified 

eligible organization. If a Notified 

Eligible Organization expresses interest 

in writing during the 30-day period 

referred to in paragraph (b) of this 

section, no disposition of the project 

shall occur during the 60-day period 

beginning on the date of the receipt of 

the written notice of interest. During 

this period, the PHA must give the 

entity expressing interest an 

opportunity to obtain a firm financial 

commitment as defined in § 970.5 for 

the financing necessary to purchase the 

project. 


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(e) Response to the notice of sale. The 

Established Eligible Organization, or 

organizations have up to 30 days, from 

the date the notice is postmarked, to 

respond to the notice of sale from the 

PHA. The Established Eligible 

Organization shall respond to the PHA’s 

notice of sale by means of an initial 

expression of interest under paragraph 

(c) of this section. 

(f) Resident proposal. The Established 

Eligible Organization has up to 60 days 

from the date the PHA receives its 

initial expression of interest and 

provides all necessary terms and 

information to prepare and submit a 

proposal to the PHA for the purchase of 

the project of which the PHA plans to 

dispose, and to obtain a firm 

commitment for financing. The 

Established Eligible Organization’s 

proposal shall provide all the 

information requested in paragraph (i) 

of this section. 

(g) PHA review of proposals. The PHA 

has up to 60 days from the date of 

receipt of the proposal or proposals to 

review the proposals and determine 

whether they meet the terms of sale 

described in the PHA’s offer or offers. If 

the PHA determines that the proposal 

meets the terms of sale, within 14 days 

of the date of this determination, the 

PHA shall notify the organization of that 

fact and that the proposal has been 

accepted. If the PHA determines that the 

proposal differs from the terms of sale, 

the PHA may accept or reject the 

proposal at its discretion. 

(h) Appeals. An Established Eligible 

Organization has the right to appeal the 

PHA’s decision to the Assistant 

Secretary for Public and Indian 

Housing, or the Assistant Secretary’s 

designee, by sending a letter of appeal 

within 30 days of the date of the PHA’s 

decision to the Field Office of Public 

Housing Director. 

(1) The letter of appeal must include 

copies of the proposal and any related 

correspondence, along with a statement 

of reasons why the organization believes 

the PHA should have decided 

differently. 

(2) HUD shall render a decision 

within 30 days of the date the appeal is 

received by HUD, and notify the 

organization and the PHA by letter 

within 14 days of such decision. If HUD 

cannot render a decision within 30 

days, HUD will so notify the PHA and 

the Established Eligible Organization in 

writing, in which case HUD will have 

an additional 30 days in which to 

render a decision. HUD may continue to 

extend its time for decision in 30-day 

increments for a total of 120 days. Once 

HUD renders its decision, there is no 

further administrative appeal or remedy 

available. 

(i) Contents of the organization’s 

proposal. The Established Eligible 

Organization’s proposal shall at a 

minimum include the following: 

(1) The length of time the organization 

has been in existence; 

(2) A description of current or past 

activities that demonstrate the 

organization’s organizational and 

management capability, or the planned 

acquisition of such capability through a 

partner or other outside entities (in 

which case the proposal should state 

how the partner or outside entity meets 

this requirement); 

(3) To the extent not included in 

paragraph (i)(2) of this section, the 

Established Eligible Organization’s 

experience in the development of lowincome housing, or planned 

arrangements with partners or outside 

entities with such experience (in which 

case the proposal should state how the 

partner or outside entity meets this 

requirement); 

(4) A statement of financial capability; 

(5) A description of involvement of 

any non-resident organization (such as 

non-profit, for-profit, governmental, or 

other entities), if any, the proposed 

division of responsibilities between the 

non-resident organization and the 

Established Eligible Organization, and 

the non-resident organization’s financial 

capabilities; 

(6) A plan for financing the purchase 

of the project and a firm financial 

commitment as stated in paragraph (c) 

of this section for funding resources 

necessary to purchase the project and 

pay for any necessary repairs, including 

accessibility modifications; 

(7) A plan for using the project for 

low-income housing; 

(8) The proposed purchase price in 

relation to the appraised value; 

(9) Justification for purchase at less 

than the FMV of the project in 

accordance with § 970.19(a), if 

applicable; 

(10) Estimated time schedule for 

completing the transaction; 

(11) Any additional items necessary to 

respond fully to the PHA’s terms of sale; 

(12) A resolution from the Established 

Eligible Organization approving the 

proposal; and 

(13) A proposed date of settlement, 

generally not to exceed 6 months from 

the date of PHA approval of the 

proposal, or such period as the PHA 

may determine to be reasonable. 

(j) PHA responsibility. The PHA must: 

(1) Prepare and distribute the initial 

notice of sale pursuant to § 970.11(a), 

and, if any Established Eligible 

Organization expresses an interest, any 

further documents necessary to enable 

the organization, or organizations, to 

make an offer to purchase; 

(2) Evaluate proposals received, make 

the selection based on the 

considerations set forth in paragraph (b) 

of this section, and issue letters of 

acceptance or rejection; 

(3) Obtain certifications, where 

appropriate, as provided in paragraph 

(k) of this section; and 

(4) Comply with its requirements 

under § 970.9(a) regarding resident 

consultation and provide evidence to 

HUD that the PHA has met those 

obligations. The PHA shall not act in an 

arbitrary manner and shall give full and 

fair consideration to any offer from an 

Established Eligible Organization, and 

shall accept the proposal if the proposal 

meets the terms of sale. 

(k) Offer by an Established Eligible 

Organization. If an offer is made by an 

Established Eligible Organization, the 

PHA shall: 

(1) Submit its disposition application 

to HUD in accordance with section 18 

of the 1937 Act and this part. The 

disposition application must include 

complete documentation that the 

resident offer provisions of this part 

have been met. This documentation 

shall include: 

(i) A copy of the signed and dated 

PHA notification letter(s) to each 

Established Eligible Organization 

informing them of the PHA’s intention 

to submit an application for disposition, 

the organization’s right to purchase the 

project to be disposed of; and 

(ii) The responses from each 

organization. 

(2)(i) If the PHA accepts the proposal 

of an Established Eligible Organization, 

the PHA shall submit revisions to its 

disposition application to HUD in 

accordance with section 18 of the 1937 

Act and this part reflecting the 

arrangement with the Established 

Eligible Organization, with appropriate 

justification for a negotiated sale and for 

sale at less than fair market value, if 

applicable. 

(ii) If the PHA rejects the proposal of 

an Established Eligible Organization, the 

Established Eligible Organization may 

appeal as provided in paragraph (h) of 

this section. Once the appeal is 

resolved, or, if there is no appeal, and 

the 30 days allowed for appeal has 

passed, HUD shall proceed to approve 

or disapprove the application. 

(3) HUD will not process an 

application for disposition unless the 

PHA provides HUD with one of the 

following: 

(i) An official board resolution or its 

equivalent from each Established 

Eligible Organization stating that such 


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organization has received the PHA offer, 

and that it understands the offer and 

waives its opportunity to purchase the 

project covered by the disposition 

application; 

(ii) A certification from the executive 

director or board of commissioners of 

the PHA that the 30-day time frame to 

express interest has expired and no 

response was received to its offer; or 

(iii) A certification from the executive 

director or board of commissioners of 

the PHA with supporting 

documentation that the offer was 

rejected. 

§ 970.12 Civil rights and equal opportunity 

review. 

Demolition and/or disposition 

activities under this part (including de 

minimis demolition pursuant § 970.27) 

are subject to compliance with HUD’s 

nondiscrimination and equal 

opportunity requirements specified in 

24 CFR 5.105(a) and must be consistent 

with the PHA’s civil rights certification 

at section 5A(d)(16) of the 1937 Act (42 

U.S.C. 1437c–1(d)(16)) and the 

obligation to affirmatively further fair 

housing (42 U.S.C. 3608(e)(5)). Pursuant 

to § 970.29, HUD will disapprove a 

PHA’s application for demolition and/or 

disposition if HUD determines that the 

application is inconsistent with this 

section. 

§ 970.13 Environmental review 

requirements. 

(a) Activities under this part 

(including de minimis demolition 

pursuant to § 970.27) are subject to HUD 

environmental regulations in 24 CFR 

part 58. However, if a PHA objects in 

writing to the responsible entity 

performing the review under 24 CFR 

part 58, HUD may make a finding in 

accordance with 24 CFR 58.11(d) and 

perform the environmental review 

under the provisions of 24 CFR part 50. 

(b) The environmental review is 

limited to the demolition and/or 

disposition action and any known reuse, and is not required for any 

unknown future re-use. Factors that 

indicate that the future site reuse can 

reasonably be considered to be known 

include the following: 

(1) Private, Federal, state, or local 

funding for the site reuse has been 

committed; 

(2) A grant application involving the 

site has been filed with the Federal 

Government or a state or local unit of 

government; 

(3) The Federal Government or a state 

or unit of local government has made a 

commitment to take an action, including 

a physical action, that will facilitate a 

particular reuse of the site; and 

(4) Architectural, engineering, or 

design plans for the reuse exist that go 

beyond preliminary stages. 

(c) In the case of a demolition and/or 

disposition made necessary by a disaster 

that the President has declared under 

the Robert T. Stafford Disaster Relief 

and Emergency Assistance Act, 42 

U.S.C. 5121 et seq., or a disaster that has 

been declared under state law by the 

officer or entity with legal authority to 

make such declaration, the provisions of 

40 CFR 1506.11 will apply pursuant to 

24 CFR 50.43 and 58.33. 

§ 970.14 Section 3 compliance. 

Pursuant to section 3 of the Housing 

and Urban Development Act of 1968 

(section 3), HUD’s regulation to provide 

employment, training, contracting, and 

economic opportunities to the greatest 

extent feasible to section 3 residents or 

business concerns is applicable to any 

projects or activities funded by public 

housing funds, regardless of the amount 

of funds (24 CFR 135.3(a)(3)), including 

the demolition or disposition of public 

housing. PHAs must comply with 

section 3 if public housing funds are 

used to demolish a project and when 

disposition proceeds are used for 

section 3 covered assistance as defined 

in 24 CFR 135.3. In addition, in the 

event that section 3 does not apply to 

demolition and/or disposition actions, 

planning and carrying out section 3 

activities related to these proposed 

actions would satisfy, in part, the 

commensurate public benefit 

requirement for below fair market value 

(FMV) dispositions pursuant to 

§ 970.19. 

§ 970.15 Specific criteria for HUD approval 

of a demolition application. 

(a) In addition to other applicable 

requirements of this part, unless the 

application meets the criteria for 

disapproval under § 970.29, HUD will 

approve an application for demolition 

upon the PHA’s certification that the 

project proposed for demolition meets 

the following criteria: 

(1) The project is obsolete as to 

physical condition, location, or other 

factors, making it unsuitable for housing 

purposes. HUD shall consider the 

following major problems to be 

indicative of obsolescence: 

(i) As to physical condition: 

Structural deficiencies, serious 

outstanding capital needs, and/or other 

design or site problems (e.g., severe 

erosion or flooding), as evidenced by an 

independent architect or engineer not 

employed by the PHA); or 

(ii) As to location: Physical 

deterioration of the neighborhood, 

change from residential to industrial or 

commercial development, or 

environmental conditions as determined 

by an environmental review in 

accordance with 24 CFR part 50 or 58, 

which jeopardize the suitability of the 

site and its housing structures for 

residential use, provided the PHA 

simultaneously submits a disposition 

application pursuant to § 970.17; or 

(iii) As to other factors: Conditions 

that have seriously affected the 

marketability, usefulness, or 

management of the project; and 

(2) No reasonable program of 

modifications is cost-effective to return 

the project to its useful life as evidenced 

by at least one estimate of the 

rehabilitation cost of the project by an 

independent architect or engineer that is 

not a regular employee of the PHA. HUD 

generally shall not consider a program 

of modifications to be cost-effective if 

the costs of such program exceeds 

Housing Conservation Coordinators 

(HCC) in effect at the time the 

application is submitted to HUD; and 

(b) In the case of an application for 

demolition of a project that comprises 

less than all real property in a given 

project identification number, the PHA 

must also certify that the demolition 

will help to ensure the viability of the 

remaining portion of the project, except 

that this requirement shall not apply for 

applications where buildings are 

scattered non-contiguous sites. 

(c) Unless the PHA also submits an 

application to HUD for disposition of 

the project in accordance with § 970.17 

at the time it submits an application to 

HUD for the demolition of the project, 

the PHA must also certify that the 

vacant land comprising the project after 

demolition shall be used for low-income 

housing purposes, as permitted by the 

ACC, which may initially include land 

banking as approved in writing by HUD 

if a specific use is not determined. 

(d) The PHA shall demolish a project 

approved under this part within two 

years of the date of HUD approval 

(unless the PHA receives an extension 

from HUD in writing). 

§ 970.17 Specific criteria and conditions 

for HUD approval of a disposition 

application. 

In addition to other applicable 

requirements of this part, unless the 

application meets the criteria for 

disapproval under § 970.29, HUD will 

approve a request for disposition of a 

project if the PHA certifies that the 

retention of the project is not in the best 

interests of the residents and the PHA 

for at least one of the following reasons: 

(a) Conditions in the area surrounding 

the project (density, or industrial or 

commercial development) adversely 


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affect the health or safety of the 

residents or the feasible operation of the 

project by the PHA. 

(b)(1) Disposition allows for the 

acquisition, development, or 

rehabilitation of other properties that 

will be more efficiently and/or 

effectively operated as low-income 

housing (e.g., more energy efficient, 

better unit configurations to meet 

community needs, better location for 

resident jobs and transportation), 

provided that the PHA demonstrates to 

the satisfaction of HUD that public 

housing units will be replaced with 

other low-income housing units (e.g., 

public housing units or Section 8 

project-based voucher units). 

(2) In order to dispose of public 

housing units under paragraph (b)(1) of 

this section, a PHA must demonstrate to 

the satisfaction of HUD that sufficient 

replacement units are being provided in 

connection with the disposition of the 

property. A PHA must receive sufficient 

compensation from the disposition to 

replace not less than 75 percent of the 

public housing units (HUD encourages 

the PHA to replace as many units as is 

feasible through leveraging the 

proceeds) with other low-income 

housing units through acquisition, 

development, or rehabilitation as 

required by this part. Replacement units 

must be provided for all units housing 

families displaced by the disposition. 

(3) The following additional terms 

apply to dispositions under paragraph 

(b)(1) of this section: 

(i) The replacement housing units 

must be developed on another property 

(e.g., not on the same land as the 

existing project); 

(ii) The PHA must have the 

replacement housing units (or land for 

the new construction of the units) 

identified at the time it submits a 

request to HUD under this part; 

(iii) The PHA must provide its 

financing plan for the replacement 

units. HUD will evaluate the feasibility 

of the financing plan; and 

(iv) The disposition of the project 

must be an arms-length transaction at 

FMV and 100 percent of the proceeds 

must be used to acquire, develop, or 

rehabilitate the replacement housing 

units. While a PHA may dispose to an 

affiliate (as defined in 24 CFR 

905.604(b)(4)) that is an independent 

legal entity, a PHA may not dispose to 

its own instrumentality (as defined in 

24 CFR 905.604(b)(3)). 

(c) The PHA has otherwise 

determined the disposition to be 

appropriate for reasons that are in the 

best interests of the residents and the 

PHA, consistent with the goals of the 

PHA and the PHA Plan, and are 

otherwise consistent with the 1937 Act. 

The PHA may not dispose of a project 

under this section if the PHA’s reason 

for disposition (as determined by HUD) 

falls under another HUD regulation or 

federal statute (e.g., § 970.17(b)), 

voluntary or required conversion under 

sections 22 or 33 of the 1937 Act, 

homeownership under section 32 of the 

1937 Act, or proposed eminent domain 

taking). HUD considers each of the 

following reasons to be acceptable 

under this section: 

(1) The project meets the criteria for 

obsolescence under § 970.15; 

(2) The units will be rehabilitated 

through the mixed-finance development 

method. To reduce the number of public 

housing units in the project, the criteria 

under § 970.15 or another section 

specifically permitting demolition or 

disposition, such as §§ 970.15, 970.17 

(along with 970.19), 970.27, or 970.33, 

must be met; and 

(3) Other reasons determined by HUD 

to meet the criteria of § 970.17(c). 

(d) In the case of disposition of a 

project that does not include dwelling 

structures (e.g., includes non-dwelling 

community center structure, vacant 

land), the PHA certifies that: 

(1) The non-dwelling structure or land 

exceeds the needs of the project (after 

DOFA); and 

(2) The disposition is incidental to, or 

does not interfere with, the continued 

operation of the remainder of the 

project. 

§ 970.19 Requirements for the disposition 

of a project. 

(a) Where HUD approves the 

disposition of a project, the PHA shall 

dispose of the project for not less than 

FMV unless HUD authorizes a below 

FMV disposition under paragraph (b) of 

this section. 

(b) HUD may approve a PHA to 

dispose of a project, in whole or in part, 

for less than FMV (if permitted by state 

law) if HUD finds, in its sole discretion, 

that a commensurate public benefit will 

result from the disposition. 

(c) As a condition of HUD’s approval 

of a project for disposition at below 

FMV under paragraph (b) of this section 

and HUD’s release of the DOT on the 

project, HUD shall require the PHA to 

execute a use restriction, or other 

arrangement of public record, in a form 

acceptable to HUD, that will ensure to 

HUD’s satisfaction that the former 

project will be used for the 

commensurate public benefit use 

approved by HUD for a period of not 

less than 30 years, and such use 

restriction is in a first priority position 

against the property and survives 

foreclosure of any mortgages or other 

liens on the property. The PHA is 

responsible for monitoring and 

enforcing the required use restrictions 

throughout the use restriction term. 

HUD may impose sanctions or take 

other enforcement action against the 

PHA if the PHA fails to enforce the use 

restrictions. 

(d) If a PHA is unable to dispose of 

a project containing obsolete units that 

is approved for disposition under 

§ 970.17(c)(1) in its ‘‘as is’’ condition 

despite due diligence and reasonable 

efforts (as determined by HUD), if 

requested by the PHA, HUD will 

approve a demolition of the project (in 

accordance with § 970.15) so that the 

PHA can proceed with demolition and 

the disposition of only that vacant land 

comprising the project. 

(e) The PHA shall dispose of a project 

approved for disposition under this part 

within two years of the date of HUD 

approval (unless the PHA receives an 

extension from HUD in writing). 

(f) Where HUD approves the 

disposition of a project for a period 

greater than one year but fewer than 30 

years (e.g., via lease or other transfer), 

the PHA is required to return the project 

to its public housing inventory, 

including adding the property again to 

its ACC and placing a DOT on the 

property, (or submit another disposition 

or other removal application) at the end 

of the approved disposition period. 

(g) The PHA shall ensure the HUDapproved commensurate public benefit 

use commences within 2 years from the 

date of actual disposition of the project 

(unless the PHA receives an extension 

from HUD in writing). 

(h) A PHA may pay the reasonable 

expenses of disposition and relocation 

costs for displaced residents under 

§ 970.21 out of the gross proceeds, as 

approved by HUD. 

(i) To obtain an estimate of the FMV 

before the project is advertised for bid, 

the PHA shall have one independent 

appraisal performed on the project 

proposed for disposition, unless HUD 

determines that: 

(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 

project interest involved or other 

available data. 

(j) To obtain an estimate of the FMV 

when a project is proposed for 

disposition via a negotiated sale at less 

than FMV based on commensurate 

public benefit, HUD may accept a 

reasonable valuation of the project (e.g., 

tax assessor’s valuation). 


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§ 970.20 Use and treatment of proceeds. 

(a) Use of proceeds. Subject to HUD 

approval, a PHA shall use net proceeds, 

including any interest earned on the 

proceeds (after payment of HUDapproved costs of disposition and 

relocation under § 970.19(h)), as 

follows: 

(1) Unless waived by HUD, for the 

retirement of outstanding obligations, if 

any, issued to finance original 

development or modernization of the 

project; 

(2) For the payment of CFFP debt or 

later issued modernization debt on the 

project; and 

(3) To the extent that any net proceeds 

remain, after the application of proceeds 

in accordance with paragraphs (a)(1) 

and (2) of this section, for the provision 

of low-income housing or to benefit the 

residents of the PHA, which uses may 

include: 

(i) Modernization (as defined in 24 

CFR 905.108) of existing projects; 

(ii) Development (as defined in 24 

CFR 905.108) of a project; 

(iii) Funding of homeownership units 

in accordance with an approved 

homeownership plan under sections 9, 

24, and 32 of the 1937 Act (42 U.S.C. 

1437g, 1437v, and 1437z–4), 

respectively; 

(iv) Construction, rehabilitation, and/ 

or acquisition of dwelling units that will 

be assisted by funds under Section 8 of 

the 1937 Act, provided that: 

(A) The PHA complies with safe 

harbors as determined by HUD in 

connection with such construction, 

rehabilitation, and/or acquisition; 

(B) Complies with program 

regulations governing such assistance 

and the PHA executes a use agreement, 

in a form acceptable to HUD, to ensure 

the units will be operated exclusively as 

Section 8 units for not less than 30 

years; 

(4) Benefits to the residents of the 

PHA (e.g., job training, child care 

programs, service coordination), for uses 

permitted by HUD’s Operating Fund 

regulations at 24 CFR part 990; 

(5) Leveraging amounts for securing 

commercial enterprises on-site in public 

housing projects of the PHA, 

appropriate to serve the needs of the 

residents; 

(6) Funding of voucher shortfalls 

under section 8 of the 1937 Act, 

however, this is subject to further HUD 

approval and discretion considering the 

applicable section 8 statutory, 

regulatory, and funding requirements; 

and 

(7) Other housing assisted under the 

1937 Act or benefits to the residents of 

the PHA, as approved by HUD. 

(b) Net proceeds. Net proceeds which 

HUD approves for the purposes 

described in paragraph (a) of this 

section may be leveraged with other 

funds so long as the net proceeds are 

used on a pro-rata basis to fund only the 

approved uses (e.g., low-income 

housing units). 

(c) Expenditure of proceeds. 

Expenditure of the proceeds pursuant to 

paragraph (a) of this section must begin 

within 2 years from the date of 

disposition approval and be completed 

(i.e., entirely expended for the approved 

use) within 4 years (unless the PHA 

receives an extension from HUD in 

writing). 

(d) Disposition proceeds. Disposition 

proceeds are subject to all laws, 

regulations, and other requirements 

applicable to use approved by HUD 

unless otherwise approved by HUD in 

writing. For instance, if net disposition 

proceeds are approved by HUD for 

modernization of public housing units, 

they are considered public housing 

funds and are generally subject to the 

requirements of 24 CFR part 905. 

However, when net disposition 

proceeds are used with HUD approval 

for the development of public housing 

units, the disposition proceeds will not 

count toward total development cost 

limits as determined pursuant to 24 CFR 

905.314(c). Disposition proceeds may be 

used to supplement existing HAP 

contracts when there are funding 

shortages, but cannot be used to issue 

new vouchers. Federal requirements 

apply to disposition proceeds, including 

the Federal nondiscrimination and 

equal opportunity requirements stated 

in 24 CFR 5.105, environmental 

requirements, and, where applicable, 

the labor standard provisions of section 

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

section 3 of the HUD Act of 1968 (12 

U.S.C. 1701u). 42 U.S.C. 1437p(a)(5). 

(e) Recapture or repayment of 

proceeds. If a PHA fails to use proceeds 

as permitted by this section and 

approved by HUD or violates the term 

of the use agreement imposed to ensure 

proceeds are used in accordance with 

this part, HUD may recapture or require 

repayment of the proceeds or take all 

other available remedies available under 

law. 

(f) Treatment of proceeds. Upon 

immediate receipt of proceeds and until 

expended for an approved use, PHAs 

must deposit proceeds into an interest 

bearing account subject to HUD General 

Depository Agreement and/or an escrow 

agreement in a form acceptable to HUD. 

All accrued interest shall be treated as 

additional proceeds, subject to this 

section. 

§ 970.21 Relocation of residents. 

(a) Notification to residents—Content. 

A PHA shall provide a written notice to 

each resident who will be displaced by 

a demolition and/or disposition action 

approved under this part. Notices shall 

be provided via an effective 

communications means to persons with 

disabilities in accordance with 24 CFR 

8.6 and in the appropriate non-English 

language to persons with limited 

English proficiency as needed. The 

notice shall specifically include the 

following information: 

(1) A statement that the PHA’s 

application for the demolition and/or 

disposition of the project has been 

approved by HUD and the project will 

be demolished and/or disposed of; 

(2) A description of the process 

involved to relocate the residents, 

including that the residents will not be 

required to relocate until the conditions 

set forth in this section have been met, 

and in no event shall a PHA commence 

a demolition or disposition of the 

building (or a combined action) in 

which a resident lives until each 

resident of the building is provided 

relocation assistance in accordance with 

this section; 

(3) A statement that each displaced 

resident shall be offered comparable 

housing that, at minimum: 

(i) Meets the standards stated in the 

definition of ‘‘comparable housing’’ in 

§ 970.5; and 

(ii) Not be in a special flood hazard 

area as stated in 24 CFR 905.602(d)(11). 

(4) If tenant-based assistance under 

section 8 of the 1937 Act is provided for 

relocation, such assistance will not be 

considered to have fulfilled the PHA’s 

obligation to offer comparable housing 

under this section until the resident is 

actually relocated into such housing, or 

alternate housing is provided pursuant 

to paragraph (c) of this section; 

(5) A description of the comparable 

housing options that the PHA is offering 

to the resident. This description shall 

include the location of the comparable 

housing and specifically how it at 

minimum meets the requirements of 

comparable housing, as defined in 

§ 970.5; 

(6) A statement that comparable 

housing shall be offered to each resident 

on a nondiscriminatory basis, without 

regard to race, color, religion, sex, 

national origin, familial status, or 

disability in compliance with applicable 

federal, state, and local laws; 

(7) A statement that displaced 

residents with disabilities shall be 

offered comparable housing that 

includes the accessibility features 

needed by the resident with a disability 

and located in the most integrated 


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setting appropriate for the resident (i.e., 

the setting that enables the resident with 

a disability to interact with nondisabled persons to the fullest extent 

possible and have access to communitybased services). This statement shall 

also include the right of displaced 

residents to a reasonable 

accommodation under Section 504 of 

the Rehabilitation Act of 1973, the Fair 

Housing Act, and the Americans with 

Disabilities Act, as applicable, and how 

to request such an accommodation; 

(8) A statement that the PHA shall 

provide for the payment of the actual 

and reasonable relocation expenses of 

each displaced resident, including 

moving cost assistance, expenses 

necessary to provide reasonable 

accommodations for a resident with a 

disability in accordance with Section 

504 of the Rehabilitation Act of 1973, 

and the payment of a displaced 

resident’s security, utility, or both 

security and utility deposits at a 

comparable housing unit, provided that 

loans or grants directly to displaced 

residents for new deposits are not 

permitted if the PHA’s source is either 

Capital or Operating Funds. The PHA 

shall pay such deposits directly to the 

utility company or landlord with 

subsequent returns or refunds back to 

the PHA. The resident shall hold no 

interest in a utility or security deposit 

paid by the PHA; 

(9) A description of the housing 

counseling services, including mobility 

counseling, that will be available to the 

resident and how the resident can 

access these services; and 

(10) If the provisions of section 104(d) 

of the Housing and Community Act of 

1974 (42 U.S.C. 5304(d)) (section 

104(d)), referenced in § 970.21(g), apply 

to the project, the notice required by 

§ 970.21(a) must explain the assistance 

available under section 104(d). 

(b) Notification to residents—Timing. 

(1) Except in cases of imminent threat 

to health or safety, no resident of a 

project approved by HUD for demolition 

and/or disposition shall be required to 

move unless he or she has been 

provided with the written notice 

required by § 970.21(a) at least 90 days 

prior to the displacement date. 

Displacement date means the earliest 

date by which a resident who will be 

displaced by a demolition and/or 

disposition action under this part shall 

be required to move. 

(2) The notification required by 

paragraph (a) of this section shall not be 

issued to any resident prior to the date 

HUD approves the PHA’s application for 

demolition and/or disposition. 

(c) Offer of comparable housing. The 

PHA shall ensure that each displaced 

resident is offered comparable housing 

and provided with the relocation 

assistance required by this part. 

(1) If a PHA offers a resident 

comparable housing in the form of 

tenant-based assistance under section 8 

of the 1937 Act, and the resident is 

unable to lease a dwelling unit during 

the initial period of not less than 60- 

days, the PHA may either: 

(i) Grant one or more extensions to the 

initial term in accordance with 24 CFR 

part 982 as reflected in its 

administrative plan; or 

(ii) Provide the resident with another 

form of comparable housing (e.g., public 

housing unit or project-based unit under 

section 8 of the 1937 Act). 

(2) The PHA shall not commence the 

HUD-approved demolition or complete 

the HUD-approved disposition of a 

building until each resident who will be 

displaced by the action is relocated in 

accordance with the requirements of 

this part. 

(d) Plan of return. If HUD approves a 

below fair market value (FMV) 

disposition of a project based on 

commensurate public benefit under 

§ 970.19 and housing units will be 

developed on-site at the former project, 

income-eligible, displaced residents 

shall be provided with the opportunity 

to return to the new, appropriately sized 

units once those units are available for 

occupancy. The PHA shall develop a 

plan to implement this opportunity to 

return requirement and the plan must 

address the following: 

(1) How residents will be notified of 

the opportunity to return; 

(2) The amount of time residents will 

have to exercise the opportunity to 

return, from the date of the notice; 

(3) The source of funds from which 

the PHA or the new owner will pay the 

moving costs for moving the displaced 

residents back into the new units; and 

(4) The process for selecting displaced 

residents who will be offered an 

opportunity to return (for example, 

lottery) if the number of new public 

housing units cannot accommodate all 

lease-compliant displaced residents (as 

defined in § 970.5) at appropriate 

bedroom sizes. This opportunity to 

return requirement does not negate the 

PHA’s responsibility to provide 

permanent comparable housing to all 

displaced residents in accordance with 

this part. 

(e) Refusal or rejection. If a resident 

who will be displaced by a demolition, 

disposition, or combined action, refuses 

to move or otherwise rejects the PHA’s 

offer(s) of comparable housing and 

relocation counseling and advisory 

services despite the PHA’s due diligence 

and continued efforts to offer the 

resident comparable housing and 

counseling and advisory services, HUD 

shall consider the PHA to have satisfied 

the relocation requirements of this 

section if the PHA must resort to 

eviction of the resident as long as the 

PHA exercises due diligence in making 

continued efforts to offer the resident 

comparable housing and relocation 

counseling. 

(f) Funding sources. Sources of 

funding for relocation expenses related 

to demolition and/or disposition may 

include, but are not limited to, gross 

proceeds a PHA receives under this 

part, Capital Funds, section 8 

administrative fee funding (where 

section 8 assistance is offered as 

comparable housing), or other federal 

funds currently available for this 

purpose. 

(g) Certain funding requirements. If 

Federal financial assistance under the 

Community Development Block Grant 

(CDBG) program (42 U.S.C. 5301 et 

seq.); the Urban Development Action 

Grant (UDAG) program (42 U.S.C. 5318 

et seq.); or the HOME Investment 

Partnerships (HOME) program (42 

U.S.C. 12701 et seq.) is used in 

connection with the demolition of 

lower-income dwelling units, or 

conversion of such units to a use other 

than lower-income dwelling units, the 

project is subject to section 104(d) of the 

Housing and Community Development 

Act of 1974, including the relocation 

payment and one-for-one replacement 

provisions as provided at 24 CFR part 

42, subpart C. For purposes of this 

paragraph (g), lower-income dwelling 

units and conversion shall have the 

definitions in 24 CFR part 42 and units 

in projects under this part are 

considered lower-income dwelling 

units. 

(h) URA. The URA shall not apply to 

demolitions and/or dispositions actions 

under this part. 

§ 970.23 Costs of demolition and 

relocation of displaced residents. 

(a) A PHA may pay for the relocation 

expenses it incurs under § 970.21 with 

non-federal funds or any eligible HUD 

funds, which may include Capital 

Funds or proceeds received for a 

disposition under this part. 

(b) A PHA may pay for the costs of 

demolition with non-federal funds or 

any eligible HUD funds, which may 

include Capital Funds when HUD 

approves a demolition under § 970.15. 

(c) Where HUD has approved the 

demolition of a project and the 

proposed action is part of a program 

under the Capital Fund Program (24 

CFR part 905), the expenses of the 

demolition and of relocation of 


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displaced residents must be included in 

the Capital Fund Submission pursuant 

to section 9(d) of the 1937 Act (42 

U.S.C. 1437g(d)) or other eligible HUD 

funds. 

§ 970.25 Required and permitted actions 

prior to approval. 

(a) A PHA may not take any action to 

demolish and/or dispose of a project 

without obtaining prior written HUD 

approval under this part. 

(1) HUD funds may not be used to pay 

for the expense to demolish or dispose 

of a project unless HUD approval has 

been obtained under this part. 

(2) Until the PHA receives HUD 

approval, the PHA shall continue to 

meet its ACC obligations to maintain 

and operate the project as public 

housing. A PHA may not delay or 

withhold maintenance on a project in 

such a way as to cause or allow it to 

meet the demolition criteria under 

§ 970.15. 

(3) The PHA may engage in planning 

activities, analysis, or consultations 

without seeking HUD approval. 

Planning activities may include project 

viability studies, capital planning, 

relocation and replacement housing 

planning, and comprehensive 

occupancy planning. 

(4) The PHA must continue to provide 

full housing services to all residents that 

remain in the project. 

(b) A PHA may lease public housing 

units at turnover to eligible residents 

while HUD is considering, or after HUD 

has approved, its application for 

demolition and/or disposition of the 

project, provided that: 

(1) The units are in decent, safe, and 

sanitary condition; 

(2) The PHA determines that due to 

community housing needs or for other 

reasons consistent with its PHA Plan, 

leasing turnover units is in the best 

interests of the PHA, its residents, and 

community; and 

(3) Residents of units leased during 

such a period are provided with the 

relocation assistance required by 

§ 970.21. The PHA’s Operating Fund 

eligibility will continue to be calculated 

as stated in 24 CFR part 990. 

§ 970.27 De minimis exception to 

demolition application requirement. 

(a) A PHA may demolish public 

housing units in a project without HUD 

approval if the PHA is proposing to 

demolish not more than the lesser of: 

(1) 5 dwelling units; or 

(2) 5 percent of the total dwelling 

units owned by the PHA over any 5-year 

period. 

(b) The 5-year period referred to in 

paragraph (a)(2) of this section is the 5 

years counting backward from the date 

of the proposed de minimis demolition, 

except that any demolition performed 

prior to October 21, 1998, will not be 

counted against the 5 units or 5 percent 

of the total, as applicable. For example, 

if a PHA that owns 1,000 housing units 

wishes to demolish units under this de 

minimis provision on July 1, 2004, and 

previously demolished 2 units under 

this provision on September 1, 2000, 

and 2 more units on July 1, 2001, the 

PHA would be able to demolish 1 

additional unit for a total of 5 in the 

preceding 5 years. As another example, 

if a PHA that owns 60 housing units as 

of July 1, 2004, had demolished 2 units 

on September 1, 2000, and 1 unit on 

July 1, 2001, that PHA would not be 

able to demolish any further units under 

this ‘‘de minimis’’ provision until after 

September 1, 2005, because it would 

have already demolished 5 percent of its 

total. 

(c) In order to qualify for this 

exemption, one of the following criteria 

must be met: 

(1) The space occupied by the 

demolished unit must be used for 

meeting the service or other needs of 

public housing residents (e.g., use of 

space to construct a laundry facility, 

community center, child care facility, 

office space for a service coordinator; or 

for use as open space or garden); or 

(2) The unit(s) being demolished must 

be beyond repair. 

(d) PHAs utilizing this section will 

comply with environmental review 

requirements at § 970.13 and, if 

applicable, the requirements of 24 CFR 

8.23. 

(e) For recordkeeping purposes, PHAs 

that wish to demolish units under this 

section shall submit the information 

required in § 970.7(c)(2), (16), (18), and 

(19) in addition to a certification that 

the unit(s) being demolished meets one 

of the two conditions in paragraph (c) of 

this section. HUD will accept such a 

certification unless it has independent 

information that the requirements for 

‘‘de minimis’’ demolition have not been 

met. Additionally, PHAs demolishing 

units under this section must comply 

with the reporting and recordkeeping 

requirements of § 970.37. 

(f) Any resident displaced by a ‘‘de 

minimis’’ demolition under this section 

shall be provided with housing 

assistance in accordance with 

applicable federal laws and 

requirements, which may include the 

PHA’s Admissions and Continued 

Occupancy Policy (ACOP) (24 CFR part 

966), the PHA’s section 8 

Administrative Plan (24 CFR part 982), 

and PHA Plan requirements (24 CFR 

part 903), and if CDBG or HOME funds 

are involved, section 104(d) of the 

Housing and Community Development 

Act of 1974. 

§ 970.29 Criteria for HUD disapproval of a 

demolition or disposition application. 

HUD will disapprove an application 

for demolition and/or disposition if 

HUD determines that: 

(a) The applicant failed to satisfy the 

application requirements contained in 

§ 970.7; 

(b) Any certification or submission 

made by the PHA under this part is 

clearly inconsistent with: 

(1) Any information and data 

available to HUD related to the 

requirements of this part, including 

failure to meet the requirements for the 

justification for demolition and/or 

disposition as found in §§ 970.15 or 

970.17 and the civil rights requirements 

referenced in § 970.12; or 

(2) Information or data requested by 

HUD; or 

(c) The application was not developed 

in consultation with: 

(1) Residents who will be affected by 

the proposed demolition or disposition 

as required in § 970.9; and 

(2) Each RAB and resident council, if 

any, of the project (that will be affected 

by the proposed demolition and/or 

disposition as required in § 970.9), and 

appropriate government officials as 

required in § 970.7. 

§ 970.31 Effect on Operating Fund 

Program and Capital Fund Program. 

The provisions of 24 CFR part 990, 

the Public Housing Operating Fund 

Program, and 24 CFR part 905, the 

Public Housing Capital Fund Program, 

apply. 

§ 970.33 Demolitions due to emergency, 

disaster, or accidental loss. 

(a) A PHA may demolish a project 

without HUD approval if a project 

suffers abrupt damage from an 

Emergency, Major Disaster, or other 

event outside of the control of the PHA 

to the extent necessary to maintain the 

project in a safe condition or to 

eliminate an unattractive nuisance, and 

to the extent such demolition is 

permitted by section 13 of the ACC and 

§ 970.3(b)(16). For funding requirements 

under the Capital Fund related to 

emergencies and disasters, the 

requirements of 24 CFR part 905 apply. 

(b) If the PHA rebuilds the same 

number of dwelling units or nondwelling structures that comprised the 

demolished project, the demolition (and 

any additional demolition required to 

carry out the redevelopment) shall not 

be subject to this part. 

(c) If the PHA decides not to rebuild 

the same number of structures with the 


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same number of units at the project, the 

PHA shall submit a demolition 

application under this part within one 

year of such demolition to formalize, 

and request official HUD approval for 

the action under this part, unless HUD 

specifically authorizes, in writing, a 

lesser number of units. If the PHA 

decides to rebuild fewer structures at 

the project, regardless of the number of 

units, the PHA shall submit a 

demolition application under this part 

within one year of the action. 

§ 970.35 Removal of all projects in the 

PHA’s public housing inventory. 

If a proposed disposition action (or 

combined demolition and disposition 

action) will remove all projects 

(including dwelling units, non-dwelling 

structures, and underlying land) in a 

PHA’s public housing inventory and the 

PHA has no plans to develop any 

additional projects, the following 

additional provisions apply: 

(a) Operating Funds. After the 

disposition is complete, the PHA shall 

not expend any remaining Operating 

Funds (including operating reserves) 

other than for purposes related to the 

close-out of its public housing 

inventory, including audit requirements 

required by this section. Any remaining 

Operating Funds (including operating 

reserves and any unspent assetrepositioning fees received pursuant to 

24 CFR 990.190) shall be returned to 

HUD within 90 days of the date of 

disposition of the project. 

(b) Capital Funds. (1) If the project 

will not be retained as public housing 

after the disposition is approved, the 

PHA may spend no more of its Capital 

Funds without HUD approval, and then 

only if the amounts are required to close 

out contract obligations incurred prior 

to HUD’s approval of the disposition 

and/or to address imminent health and/ 

or safety issues that arise at the project 

prior to completion of the disposition 

transaction. However, if the disposition 

was approved for disposition at below 

fair market value based on 

commensurate public benefit, prior to 

expending Capital Funds for the 

purposes permitted in this section, the 

PHA must notify HUD in writing of the 

planned expenditure of Capital Funds 

so that HUD can determine if any 

changes are necessary to the terms of its 

commensurate public benefit, if the 

disposition price should be adjusted to 

reflect the expenditure of funds, or both. 

(2) No Capital Funds may be 

expended after the date of disposition of 

the project and any remaining Capital 

Funds shall be returned to HUD within 

180 days of such date of disposition. 

The PHA shall be ineligible to receive 

any Capital Funds (replacement housing 

factor funds) under 24 CFR 905.10(i), 

and any funds issued under this section 

shall be recaptured by HUD. 

(c) If a PHA owns any equipment or 

other personal property that it acquired 

or has maintained with 1937 Act funds, 

which property was not included in the 

disposition of all projects in its 

inventory or any particular project to 

which the equipment or personal 

property appertained, the PHA shall, 

within 60 days after the disposition, 

dispose of all such remaining personal 

equipment and other personal property 

in its inventory that was acquired in 

whole or in part with 1937 Act funds 

pursuant to a plan acceptable to HUD. 

(d) Within 90 days of the date of 

disposition, the PHA must have an 

independent audit conducted on the 

close-out of its public housing 

inventory. 

§ 970.37 Reports and records. 

(a) After HUD approval of demolition 

or disposition of all or part of a project, 

the PHA shall provide the following to 

HUD: 

(1) Date of execution of each 

demolition contract by entering the 

appropriate information into HUD’s 

applicable data system, or providing the 

information by another method HUD 

may require, within a week of executing 

such contract; 

(2) Date of execution of sales or lease 

contracts by entering the appropriate 

information into HUD’s applicable data 

system, or providing the information by 

another method HUD may require, 

within a week of execution; 

(3) A report, in a form and frequency 

prescribed by HUD (until HUD 

determines that the report no longer 

needs to be submitted), containing the 

following information: 

(i) A description of resident relocation 

and timetable, including: 

(A) The number of families actually 

relocated by bedroom size and the types 

and locations (including census tract) of 

comparable housing offered to each 

family; 

(B) A description of the Fair Housing 

Act protected classes of relocated 

residents; 

(C) Reasonable accommodations that 

were provided to residents in 

connection with the comparable 

housing, in accordance with Section 504 

of the Rehabilitation Act of 1973; 

(D) Units where residents were 

relocated that meet federal accessibility 

standards or that otherwise contain 

accessible features; 

(E) The status of the Opportunity to 

Return Plan, including residents who 

express an interest in the plan; and 

(F) The comparable housing that was 

offered to families that include a 

member with a disability that was 

located in a non-segregated setting. If 

such a family was not offered 

comparable housing in a non-segregated 

setting, the PHA must explain why the 

comparable housing that it offered was 

the most integrated setting appropriate 

for the family (i.e., the setting that 

enables the family member with a 

disability to interact with non-disabled 

persons to the fullest extent possible 

and have access to community-based 

services); 

(ii) A description of the PHA’s use of 

the proceeds of disposition by providing 

a financial statement showing how the 

gross and net proceeds were expended 

by item and dollar amount, as approved 

by HUD; 

(iii) A description of any remaining 

disposition proceeds, including current 

balance (plus interest), bank information 

of where such proceeds are being held, 

and plans for expending such proceeds 

for the use approved by HUD within the 

required timeframe; 

(iv) For dispositions approved by 

HUD at less than fair market value based 

on commensurate public benefit, a 

description of the current use of the 

property (e.g., owner, number of 

housing units developed), and a 

statement of how the property is being 

used for the HUD-approved use; and 

(v) A description of whether any 

project-based voucher contracts under 

Section 8 of the 1937 Act have been 

executed on a former public housing 

property approved for disposition and/ 

or at housing developed, acquired, or 

constructed with disposition proceeds; 

and 

(vi) Evidence that an audit has been 

conducted on the demolition and/or 

disposition within 3 years of completion 

of the demolition and/or disposition 

action; and 

(4) Such other information as HUD 

may from time to time require. 

(b) [Reserved] 

Subpart B—Real Property 

Transactions: Retention of Projects by 

Public Housing Agencies 

§ 970.39 Definitions. 

All definitions in § 970.5 shall apply 

to this subpart. 

§ 970.41 Applicability. 

This subpart applies when a PHA 

proposes to retain ownership of a 

project without public housing DOT and 

ACC restrictions (e.g., clean title) in 

accordance with 24 CFR 85.31. This 

subpart is an alternative to disposing of 

projects under subpart A of this part and 


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is another option available to PHAs to 

determine the future of their public 

housing stock. Actions under this 

subpart may especially assist PHAs in 

preserving their public housing stock. 

§ 970.43 Removal of a project from public 

housing without a transfer to a third party. 

(a) General. HUD’s regulations at 24 

CFR 85.31 provide that except as 

otherwise provided by federal statutes, 

real property will be used for the 

originally authorized purpose as long as 

needed for that purpose, and the grantee 

shall not dispose of or encumber its title 

or other interests. When real property is 

no longer needed for the originally 

authorized purpose, the grantee will 

request disposition instructions from 

HUD. Section 18 of the 1937 Act and 

subpart A of this part covers the 

procedures that PHAs must follow if 

they choose to sell or otherwise transfer 

title of the property, except as stated in 

§ 970.43(b). 

(b) Retention of property (no PHA 

transfer of title). Section 85.31 of HUD’s 

regulations (24 CFR 85.31) permits a 

PHA to retain title of real property that 

is no longer needed for its originally 

authorized purpose, provided the PHA 

requests and is approved by HUD to 

retain the property. In order to approve 

a request under this section, HUD will 

generally require the PHA to 

compensate HUD for the federal 

government’s equity in the project 

(computed by applying HUD’s 

percentage of participation in the cost of 

the original purchase or construction to 

the FMV of the property and subsequent 

modernization), but the PHA could 

request an exception to this repayment 

requirement, for good cause, in 

accordance with 24 CFR 85.6(c). If HUD 

finds the PHA has shown good cause for 

retaining the project under this section, 

HUD will release the ACC and DOT on 

the project. HUD’s approval may require 

the PHA to enter into certain use 

restrictions, or may impose other 

requirements to ensure that the property 

is used for the HUD-approved purposes 

for a certain length of time. 

§ 970.45 Specific criteria for HUD approval 

of requests under this subpart. 

(a) Minimum requirements. The PHA 

shall comply with HUD requirements 

and application procedures relative to 

this subpart. At a minimum, to obtain 

HUD approval under this subpart, a 

PHA must demonstrate that: 

(1) The project is no longer needed for 

the operation of public housing; and 

(2) There is good cause for the action 

(and, if applicable, for any request for an 

exception to the repayment 

requirement). 

(b) Retention requests. HUD may 

accept retention of title requests under 

this subpart in three instances: 

(1) Retention of projects that include 

dwelling units (e.g., in order to leverage 

the property or attach project-based 

assistance under section 8 of the 1937 

Act), as well as appurtenant equipment, 

and personal property, in accordance 

with all program requirements, so that 

the project can be better operated and 

maintained as long-term low-income 

housing; 

(2) Retention of vacant land (e.g., to 

retain limited green-space as part of a 

mixed-finance redevelopment); and 

(3) Retention of a central warehouse 

building or other non-dwelling structure 

(e.g., if the structure is no longer 

needed). 

(c) Form of application. Applications 

for retentions under this part shall be 

submitted in the form and manner 

prescribed by HUD. The supporting 

information shall include: 

(1) A certification that the PHA has 

specifically authorized the retention 

action in its PHA Plan or significant 

amendment to that plan unless the PHA 

is a Qualified PHA under the Housing 

and Economic Recovery Act of 2008 

(HERA), and the proposed action is 

consistent with any plans, policies, 

assessments, or strategies prepared 

pursuant to the PHA Plan, such as the 

deconcentration plan (24 CFR 903.2) 

and the obligation to affirmatively 

further fair housing (42 U.S.C. 

3608(e)(5)). In the case of a qualified 

PHA, the PHA must describe the 

proposed retention at its required 

annual public hearing (or a second 

public hearing if it determines to submit 

an application for retention between its 

annual public hearings). Qualified PHAs 

must also comply with §§ 970.12 and 

970.7(c)(19) regarding civil rights and 

fair housing requirements in connection 

to 24 CFR part 903 and PHA Plans; 

(2) A description of all identifiable 

property (including dwelling and nondwelling units, bedroom size, and 

whether the units meet the accessibility 

requirements of Section 504 of the 

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

794) and HUD’s implementing 

regulations at 24 CFR part 8, other 

improvements, and land (acreage and 

legal description) in the project 

proposed for retention; and equipment 

and personal property appurtenant to 

the project proposed for retention; 

(3) The number of vacant units 

proposed for retention and a narrative 

explanation for the reasons for the 

vacancies (e.g., health/safety issues, 

occupancy consolidation, emergency 

relocation due to disaster); 

(4) A description of the future 

ownership structure of the project by 

the PHA (e.g., fee title by the PHA, 

ownership by the PHA’s 

instrumentality, ownership by a Limited 

Partnership or LLC that is controlled by 

the PHA); 

(5) The anticipated future use of the 

project after HUD approval under this 

part, including any rehabilitation of 

units and/or demolition and any 

anticipated subsidies (e.g., low-income 

housing tax credits Section 8 projectbased vouchers, Section 8 tenant-based 

vouchers) that the PHA expects will be 

used for future dwelling that will be 

operated as housing for low-income 

families on the site of the former project; 

(6) A general timetable for the 

proposed action, including the 

anticipated relocation start date, if 

applicable, and the anticipated transfer 

date to an instrumentality, limited 

partnership or LLC, if applicable; 

(7) A statement and other supporting 

documentation justifying the proposed 

action, including a statement justifying 

a waiver to the repayment provision of 

24 CFR 85.31 based on 24 CFR 85.6(c) 

if applicable. Such a statement shall 

include: 

(i) A detailed description of the 

proposed future use of the project, 

including a description of any housing 

that will be located on the property after 

de-federalization under this part, 

including the number of units, bedroom 

sizes, accessibility, affordability, and 

priorities for displaced residents; 

(ii) The proposed length of time in 

which the PHA will maintain the former 

project for the proposed future use 

(HUD will generally require the 

proposed future use remain as such for 

not less than 30 years, but will consider 

other factors such as the extent of public 

benefits (e.g., number of affordable 

units) arising from the proposed action 

of the property in determining if a 

period of less than 30 years is 

acceptable); and 

(iii) The proposed legal 

documentation (e.g., use restriction, 

provision in ground lease, declaration of 

restrictive covenant) the PHA proposes 

to ensure the approved use. 

(8) A description of any displacement 

of residents (temporary or permanent) 

that will occur based on this action, 

along with a certification that the PHA 

will comply with the URA and has a 

written relocation plan on file at its 

central office that includes: 

(i) The estimated number of 

individual residents and families to be 

displaced, if any (and whether the 

relocation is temporary or permanent); 


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(ii) The housing resources the PHA 

will provide to displaced residents, if 

any; and 

(iii) The type of housing counseling 

services, including mobility counseling, 

to be provided to displaced residents, if 

any; 

(iv) An estimate of the costs for 

housing counseling services and 

resident relocation, and the expected 

source for payment for these expenses; 

(v) A plan for determining the 

housing needs of any displaced 

residents with disabilities and offering 

them comparable housing that includes 

the accessibility features needed by the 

resident with a disability in the most 

integrated setting appropriate for the 

resident (i.e., the setting that enables the 

resident with a disability to interact 

with non-disabled persons to the fullest 

extent possible and have access to 

community-based services); 

(9) A description with supporting 

evidence of the PHA’s consultations 

with any residents who are residing in 

the project; the resident council (if any), 

the resident management corporation 

for the project, if any; the PHA-wide 

resident organization, if any; and the 

Resident Advisory Board (RAB). 

Supporting evidence shall include: A 

description of the process of the 

consultations summarizing the dates, 

meetings, and issues raised by the 

residents and the PHA’s responses to 

those issues; meeting sign-in sheets; any 

written comments submitted by affected 

residents/groups along with the PHA’s 

responses to those comments; any 

certifications or other written 

documentation that the PHA receives 

from the RAB (or equivalent body) and 

resident council regarding resident 

support or opposition; a description 

and/or documentation evidencing that 

the PHA communicated with affected 

residents and other required groups in 

a manner that was effective for persons 

with hearing, visual, and other 

communications-related disabilities 

consistent with 24 CFR 8.6 and that 

public hearing facilities and services 

were physically accessible to persons 

with disabilities, and that appropriate 

translations were provided for Limited 

English Proficient (LEP) individuals; 

(10) Where the PHA is requesting a 

waiver of the requirement for the 

application of proceeds for repayment of 

outstanding development debt, the PHA 

must request such a waiver in its 

application. However, modernization 

debt, such as Capital Fund Financing 

Program (CFFP) debt, Energy 

Performance Contracting (EPC) debt, 

and Operating Fund Financing Program 

(OFFP) debt cannot be waived and 

repayment is required; 

(11) In the case where the PHA has 

applied for and/or been approved for 

financing under any HUD program 

(including CFFP, the OFFP, and the EPC 

program) or any other financing 

requested pursuant to section 30 of the 

1937 Act (42 U.S.C. 1437z–2)), a legal 

opinion that the proposed retention 

action is permitted pursuant to the legal 

documentation associated to that 

program; 

(12) A copy of a resolution by the 

PHA’s Board of Commissioners 

approving the retention under this part; 

(13) Evidence that the application was 

developed in consultation with local 

government officials. Supporting 

evidence should include a signed and 

dated letter in support of the application 

from the chief executive officer of the 

unit of local government; 

(14) An approved environmental 

review of the proposed action under this 

part in accordance with 24 CFR part 50 

or 58, including acting in accordance 

with the applicable environmental 

justice principles; 

(15) A civil rights certification in a 

form and manner prescribed by HUD 

whereby the PHA certifies: 

(i) A description of how the proposed 

action under this part will help the PHA 

meet its affirmative obligations 

including, but not limited to, the 

obligation and to overcome 

discriminatory effects of the PHA’s use 

of 1937 Act funds pursuant to part 1 of 

this title and the obligations to 

deconcentrate poverty (24 CFR part 903, 

subpart A) and affirmatively further fair 

housing (42 U.S.C. 3608(e)(5)); and 

(ii) It does not have any outstanding 

charges from HUD (or a substantially 

equivalent state or local fair housing 

agency) concerning a violation of the 

Fair Housing Act or substantially 

equivalent state or local fair housing law 

proscribing discrimination because of 

race, color, religion, sex, national origin, 

disability, or familial status. 

(iii) It is not a defendant in a Fair 

Housing Act lawsuit filed by the 

Department of Justice; 

(iv) It does not have outstanding 

letters of findings identifying 

noncompliance under title VI of the 

Civil Rights Act of 1964, section 504 of 

the Rehabilitation Act of 1973, or 

section 109 of the Housing and 

Community Development Act of 1974; 

and 

(v) It has not received a cause 

determination from a substantially 

equivalent state or local fair housing 

agency concerning a violation of 

provisions of a state or local law 

proscribing discrimination in housing 

based on sexual orientation, gender 

identity, or source of income; 

(vi) Additional supporting 

information that may be requested by 

HUD, if applicable, that shows that the 

proposed action will not maintain or 

increase segregation on the basis of race, 

ethnicity, or disability and will not 

otherwise violate applicable 

nondiscrimination or equal opportunity 

requirements, including a description of 

any affirmative efforts to prevent 

discriminatory effects; 

(16) A certification that the PHA will 

comply with this part and the terms and 

conditions of the HUD retention 

approval, including, if applicable, 

monitoring the future use of a former 

project, for compliance with HUD’s 

approval; and 

(17) Any additional information 

requested by and determined to be 

necessary to HUD to support the 

proposed retention action, and to assist 

HUD in making a determination to 

approve or disapprove the application 

under this part. 

PART 972—CONVERSION OF PUBLIC 

HOUSING TO TENANT-BASED 

ASSISTANCE 

■ 2. The authority citation for part 972 

continues to read as follows: 

Authority: 42 U.S.C. 1437t, 1437z–5, and 

3535(d). 

Subpart A—Required Conversion of 

Public Housing Developments 

■ 3. Revise § 972.103 to read as follows: 

§ 972.103 Definition of ‘‘conversion.’’ 

For purposes of this subpart, the term 

‘‘conversion’’ means the removal of 

public housing units from the inventory 

of a PHA, and the replacement of the 

converted project or portion with 

tenant-based assistance. The term 

‘‘conversion,’’ as used in this subpart, 

does not necessarily mean the physical 

removal of the public housing 

development. 

Subpart B—Voluntary Conversion of 

Public Housing Developments 

■ 4. Revise § 972.203 to read as follows: 

§ 972.203 Definition of ‘‘conversion.’’ 

For purposes of this subpart, the term 

‘‘conversion’’ means the removal of 

public housing units from the inventory 

of a PHA, and the replacement of the 

converted project or portion with 

tenant-based assistance. The term 

‘‘conversion,’’ as used in this subpart, 

does not necessarily mean the physical 

removal of the public housing 

development. 


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Dated: October 3, 2014. 

Jemine A. Bryon, 

Acting Assistant Secretary for Public and 

Indian Housing. 

[FR Doc. 2014–24068 Filed 10–15–14; 8:45 am] 

BILLING CODE 4210–67–P 


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