[Federal Register Volume 84, Number 217 (Friday, November 8, 2019)]
[Notices]
[Pages 60410-60429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24426]
[[Page 60410]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-7011-N-50]
30-Day Notice of Proposed Information Collection: Public Housing
Annual Contributions Contract for Capital and Operating Grant Funds:
30-Day Notice of Proposed Information Collection: Agency Information
Collection Activities: Public Housing Annual Contributions Contract for
Capital and Operating Grant Funds
AGENCY: Office of the Chief Information Officer, HUD.
ACTION: Notice.
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SUMMARY: HUD has submitted the information collection described below
to the Office of Management and Budget (OMB) for review and approval,
in accordance with the Paperwork Reduction Act. The public housing
program provides Operating Funds and Capital Funds to public housing
projects owned and operated by public housing agencies (PHAs), subject
to the terms and conditions contained in the federal award, HUD-53012.
HUD has revised the federal award based on current applicable
statutes and regulations as well as in response to public comments
received during the public comment period provided for by the 60-Day
Notice of Proposed Information Collection. These revisions are more
thoroughly described below. One notable revision is that HUD has
revised the title of the public housing federal award; previously
entitled Public Housing Annual Contributions Contract for Capital and
Operating Grant Funds, the award will now be entitled Annual
Contributions Terms and Conditions for the Public Housing Program. For
clarity and consistency, the award will continue to be referred to as
``ACC.'' Additionally, mixed-finance provisions in the proposed ACC
have been removed from the revised ACC and will instead be included in
an ACC amendment; a model mixed-finance ACC amendment is published
herewith.
This publication is to provide notice to PHAs of the revisions and
to give PHAs the opportunity to comment on such revisions. The purpose
of this notice is to allow for an additional 30 days of public comment.
Please note that the 30-Day Notice of Proposed Information Collection
for the Moving to Work Amendment to Consolidated Annual Contributions
Contract is published elsewhere in this issue of the Federal Register.
DATES: Comments Due Date: December 9, 2019.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposal. Comments should refer to the proposal by name and/or OMB
Control Number and should be sent to: HUD Desk Officer, Officer of
Management and Budget, New Executive Office Building, Washington, DC
20503; fax: 202-395-5806; email: [email protected].
FOR FURTHER INFORMATION CONTACT: Colette Pollard, Reports Management
Officer, QDAM, Department of Housing and Urban Development, 451 7th
Street SW, Washington, DC 20410; email Colette Pollard at
[email protected] or telephone 202-402-3400. Persons with hearing
or speech impairments may access this number through TTY by calling the
toll-free Federal Relay Service at (800) 877-8339. This is not a toll-
free number. Copies of available documents submitted to OMB may be
obtained from Ms. Pollard.
SUPPLEMENTARY INFORMATION: This notice informs the public that HUD has
submitted to OMB a request for approval of the information collection
described in Section A. The Federal Register notice that solicited
public comment on the information collection for a period of 60 days
was published on December 27, 2018 at 83 FR 66729.
A. Overview of Information Collection
Title of Information Collection: Annual Contributions Terms and
Conditions for the Public Housing Program.\1\
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\1\ The previous title was Public Housing Annual Contributions
Contract for Capital and Operating Grant Funds.
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OMB Approval Number: 2577-0075.
Type of Request: Revision of a currently approved collection.
Form Number: HUD-53012.\2\
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\2\ The forms listed in the 60-Day Notice were ``HUD-52840A,
HUD-53012A, HUD-53012B.'' HUD forms HUD-53012A and HUD-53012B have
been combined into one form, HUD-53012. HUD is not revising HUD-
52840A, the Capital Fund Program (CFP) Amendment to the Annual
Contributions Contract (ACC), with this proposed information
collection. The HUD-52840A (exp. 01/31/2021) is available at
HUDCLIPS, https://www.hud.gov/program_offices/administration/hudclips/forms. If HUD continues to use the HUD-52840A, it will be
incorporated into the ACC as an amendment. The forms approved as
part as OMB Control Number 2577-0075 that are not being revised at
this time are: HUD-51999; HUD-52190A; HUD-52190B; HUD-52840A; HUD-
52860, HUD-52860B, HUD-52860C; HUD-52860; HUD-52860E, and HUD-
52860F, HUD-52860G, HUD-5838 and HUD-5837 (expiration date of 01/31/
2021).
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Description of the need for the information and proposed use: The
proposed Annual Contributions Terms and Conditions for the Public
Housing Program (ACC) is necessary to establish the basic terms and
conditions for a PHA's public housing program and requires the PHA to
manage and operate its public housing projects in accordance with the
United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) (1937 Act)
and all applicable HUD requirements.
This 30-Day Notice of Proposed Information Collection provides PHAs
with notice of revisions to the current ACC form HUD-53012. The ACC
published in this notice updates HUD-53012 to streamline the ACC. In
order to further streamline the ACC and in response to public comments
received, the ACC published in this notice deletes or revises several
ACC provisions published in the 60-Day Notice of Proposed Information
Collection. Those revisions are summarized in Section E of this notice.
Additionally, HUD has summarized public comments and provided responses
to those comments in Section F of this notice.
Respondents: Public housing agencies.
Total Estimated Burdens: The burden costs associated with this
collection are as follows:
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Number of Responses per Burden hour Annual burden Hourly cost
Information collection respondents Frequency of response annum per response hours per response Cost
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HUD-92577 ACC................... 3,107 1 each................ 1 1.00 3,107 $52.88 $164,298
Mixed-Finance Amendment......... 94 1 each................ 1 1.00 94 52.88 4,970
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The burden costs shown represent burden associated with a one-time
execution of the ACC for all PHAs and the burden represented with each
one-time transactional execution of a Mixed-Finance Amendment to the
ACC, with
[[Page 60411]]
94 such transactions estimated to occur in any given year. Previously,
in the 60-Day PRA Notice published on December 27, 2018 at 83 FR 66729,
HUD over-estimated the estimated burden hours associated with the
execution of the ACC and the Mixed-Finance ACC Amendment. The burden
hours did not account for the fact that the ACC and Mixed-Finance ACC
Amendment have been streamlined and no longer repeat statutory and
regulatory requirements. Additionally, the burden hours included the
hours estimated for all HUD forms that are part of OMB Control Number
2577-0075, not just the ACC and the Mixed-Finance ACC Amendment. During
the 60-Day comment period, HUD received no comments related to the
estimated burden hours.
B. Solicitation of Public Comment
This notice is soliciting comments from members of the public and
affected parties concerning the collection of information described in
Section A on the following:
(1) 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) The accuracy of the agency's estimate of the burden of the
proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the
information to be collected; and
(4) Ways to 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.
HUD encourages interested parties to submit comments in response to
these questions.
C. Authority
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C.
Chapter 35.
D. Background
In 1995 the Department of Housing and Urban Development (HUD)
issued PIH Notice 95-44 which transmitted Consolidated Annual
Contributions Contract (ACC), Form HUD-53012A and Form HUD-53012B. The
forms were intended to replace the 1969 Consolidated ACC(s) (Form HUD-
53011), and any amendments to the ACC, between HUD and HAs with respect
to low-rent and homeownership public and Indian housing projects. HUD
noted that:
[t]he revised ACC eliminates the recitation of the specific
statutory, regulatory and executive order requirements to which a HA is
subject with respect to its public or Indian housing projects. Instead,
the HA is made subject to ``all applicable laws, executive orders and
regulations,'' whether or not these authorities are specifically
incorporated by reference in the ACC. The purpose of this revision is
to minimize the scope of the requirements contained in the ACC, so that
this document can remain a living and vital contract even after
statutes, executive orders and regulations to which a HA is subject are
enacted, promulgated, amended or repealed. With the execution of this
revised ACC, HUD intends to eliminate the obsolescence that has
developed over time in the existing ACC as a result of the enactment of
new legislation and the promulgation of new regulations that conflict
with specific requirements contained in the ACC.
HUD is further revising the ACC to achieve the goals first
articulated in 1995, to ``eliminate specific statutory, regulatory and
executive order requirements to which a PHA is subject . . . and to
minimize the scope of the requirements contained in the ACC.'' HUD's
intent is to include those terms and conditions that apply to the
acceptance and use of federal financial assistance for the public
housing program which are necessary to ``insure the lower income
character of the project involved in a manner consistent with the
public housing agency plan'' (42 U.S.C. 1437d), and that are not
already specifically included in HUD regulations at Title 24 of the
Code of Federal Regulations (CFR), the Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Awards (``Uniform Guidance'' at 2 CFR part 200), and/or made applicable
by statute.
HUD initially proposed a revised ACC through an information
collection Paperwork Reduction Act (PRA) 60-day Notice soliciting
public comment issued on March 1, 2016 at 81 FR 10651. The changes were
primarily additional requirements applicable to mixed-finance and
public housing development, and clarifications and updates consistent
with the Uniform Guidance. HUD received no public comments on the 60-
day notice. On September 6, 2017, HUD issued a 30-day notice soliciting
public comment at 82 FR 42106, and no comments were received. HUD
received considerable feedback on the ACC it issued. As a result, HUD
decided to re-open the ACC a second time for additional public comment.
On December 27, 2018 HUD published a revised ACC in the Federal
Register via a second PRA notice at 83 FR 66729. This notice provided
60-days for the public to comment on the revised ACC. The comments
received are summarized in Section F of this notice.
E. Overview of Significant Changes Made to the ACC
The following represents the most notable changes to the ACC.
However, other changes have also been made which may not be identified
below because they are editorial or non-material and minor changes. The
ACC should be reviewed in its entirety to determine the exact nature
and scope of these revisions. HUD has posted a document online that
provides a side-by-side comparison of the ACC proposed in the 60-Day
Notice and the ACC proposed in this 30-Day Notice. The side-by-side
document is available at https://www.hud.gov/program_offices/public_indian_housing/programs/ph/capfund/2018pi/acc.
The revised agreement is retitled slightly to more clearly
reflect its purpose. The new title is the Annual Contributions Terms
and Conditions for the Public Housing Program. For clarity and
consistency, the agreement will continue to be referred to as ``ACC.''
In the 1995 ACC, the PHA was made subject to ``all
applicable laws, executive orders and regulations,'' whether or not
these authorities are specifically incorporated by reference in the
ACC. The ACC published in the 60-day notice on December 27, 2018
contained similar language in Section 3 of the ACC (HUD Requirements).
The revised ACC requires the PHA to administer its Public Housing Funds
in compliance with all ``Public Housing Requirements,'' which include
the United States Housing Act of 1937 (1937 Act), HUD regulations at
Title 24 CFR, the Uniform Guidance, appropriations acts, and ``other
federal statutes, regulations and executive orders applicable to Public
Housing Funds and Public Housing Projects,'' as they exist now and
amended in the future, whether or not those requirements are
incorporated by reference in the ACC.
HUD deleted the following definitions: Annual
Contributions Contract, Consolidated Contributions Contract,
Cooperation Agreement, Fiscal Year, Grant Funding Exhibit, Operating
Costs (Operating Expenditures or Operating Expenses), Operating
Receipts, Operating Reserve, Program, Program Receipts, and Replacement
Reserve Account.
[[Page 60412]]
HUD has used the term ``public housing funds'' in a manner
that defines such term in Section 1. Additionally, in Section 1, HUD
has included by reference to existing regulations at Title 2 Part 200
of Code of Federal Regulations (CFR) the following terms: Federal
award, federal financial assistance, and recipient; and Section 2 has
included by reference to existing regulation at 24 CFR 905.108 the
definition of ``public housing project.'' In Section 2, the term Public
Housing Requirements is also defined. Finally, HUD has included a new
Section 11--Remedies, in response to public comments.
HUD has responded to public comments by excluding all
mixed-finance specific language in the revised ACC. HUD has determined
that, to the extent PHAs need mixed-finance terms that vary from what
is stated in the ACC, HUD will continue to work with PHAs on project-
specific solutions, including the use of the revised mixed-finance
amendment (a copy of HUD's revised model document is published
herewith), adding language to Regulatory and Operating Agreements that
are required for mixed-finance development, or adding language to the
restrictive covenant.
HUD has deleted the following sections from the 60-day
published ACC: Section 1--Definitions, Section 2--Mission of HUD and
PHA, Section 4--Cooperation Agreement, Section 9--Accounts, Records and
Government Access, Section 14--HUD in Possession of Project(s). Please
refer to Section G of this notice to review a chart summarizing these
deletions as well as the existing statutory or regulatory public
housing requirements that already apply to PHAs.
HUD has retained but revised in part the following
sections from the 60-day published ACC: Section 3--HUD Requirements
(retained in part at Section 2), Section 5--Declaration of Restriction
Covenants (retained in part at Section 4), Section 6--Disposition and
Encumbrances (retained in part at Section 3), Section 7--Insurance
Requirements (retained in section 5), Section 8--Employer Requirements
(retained at Section 6), Section 10--Grant Funding (revised and
retained in part at Section 1), Section 11--Depository (revised and
retained in part at Section 7), Section 12--Termination of a Project
(revised and retained in part at Section 10), Section 13--Notices,
Defaults, Remedies (retained in part at Section 9), Section 15--
Conflicts of Interests (revised and retained in part at Section 8),
Section 16--Civil Rights and Employment Requirements (retained in part
at Section 6), Section 17--Members or Delegates to Congress (HUD has
retained prohibition in Section 8), Section 18--Rights of Third Parties
(retained at Section 12), and Section 19--Waiver or Amendment (revised
and retained at Section 13).
F. Summary of Public Comments Responding to the 60-Day Information
Collection Notice
HUD received 79 comments on the revised ACC published on December
27, 2018 through www.regulations.gov. The comments can be found on the
www.regulations.gov website at https://www.regulations.gov/docket?D=HUD-2018-0103. HUD also received two additional letters
relating to the proposed ACC outside of the formal public comment
process: A letter from a public housing agency forwarded by Congressman
H. Morgan Griffith and a letter from Senator Charles E. Grassley.
ACC Generally
Comment: Commenters disagreed with HUD's characterization of the
ACC as a grant agreement for a variety of reasons. Commenters asked: If
the new ACC is substantively the same as the old ACC, why is HUD
revising it? Others felt that HUD was misinforming the public about its
ACC changes when HUD stated that it was simply adding requirements
applicable to mixed-finance public housing development and making minor
clarifications. Finally, some commenters felt HUD's primary motivation
for proposing these changes was its loss in the United States Court of
Federal Claims in suits contesting the Department's funding
distribution method used in 2012.
HUD Response: The changes update the ACC to reflect that the Office
of Management and Budget (OMB) revised its Uniform Guidance which
applies to all agencies that award federal financial assistance (with
regard to the public housing program, these requirements were formerly
covered in HUD regulations at 24 CFR part 85). The revised ACC ensures
that the Uniform Guidance is applied consistently, and that all PHAs
are subject to the same terms and conditions applicable to public
housing funds.
Additionally, the changes are intended to achieve the goals first
articulated in 1995 to eliminate ``the recitation of the specific
statutory, regulatory and executive order requirements to which a HA is
subject . . .'' (See PIH Notice 95-44 transmitting the 1995 ACC). This
revision further minimizes the scope of the requirements contained in
the ACC. Since 1995 there have been numerous changes to the specific
statutory, regulatory and executive order requirements to which a PHA
is subject with respect to its public projects. For example, on October
24, 2013 HUD revised the Capital Fund Program at 24 CFR part 905 (78 FR
63770). Part 905 combines and streamlines the former legacy public
housing modernization programs, including the Comprehensive Grant
Program, the Comprehensive Improvement Assistance Program and the
Public Housing Development Program (which encompasses mixed-finance
development).
More than 400 PHAs continue to operate under the 1969 version of
the ACC, which was developed prior to the conversion of the public
housing program from a loan program. In 1995, HUD noted PHAs that
failed to execute the revised ACC would continue to be governed by
requirements contained in their existing ACC with HUD, which in certain
instances was more restrictive than requirements established in the
revised 1995 ACC (e.g., the revised 1995 ACC eliminated the requirement
under section 307(A) of the 1969 version concerning the need for a
comparability analysis of PHA personnel policies and the 1969 ACC term
for PHA procurements set at two years with a one-year option with the
approval of HUD).
The ACC, pursuant to section 6(a) of the 1937 Act, sets forth the
terms and conditions deemed necessary by HUD to insure the low-income
character of public housing projects and that PHAs act in accordance
with Public Housing requirements. The ACC governs PHA conduct in
connection with its acceptance and receipt of federal assistance. While
addressing past litigation outcomes is not a principal purpose for
HUD's revisions to the ACC, HUD makes clear in the current version that
HUD has never contemplated money damages for action or inaction by HUD
with respect to the ACC. Nothing in the revised ACC forecloses avenues
for judicial relief from any HUD action that is arbitrary, capricious
or contrary to law.
Comment: A commenter stated that PHAs are confused, anxious, and
concerned as to what HUD's changes are trying to remedy.
HUD Response: The revised ACC ensures that the Uniform Guidance is
applied consistently, and that all PHAs are subject to the same terms
and conditions applicable to public housing funds. Additionally, the
changes eliminate specific statutory, regulatory and executive order
requirements to which a PHA is subject and to minimize the scope of the
requirements contained
[[Page 60413]]
in the ACC. There have been many changes to the public housing program
since 1995, which require that PHAs be more familiar with specific
regulatory requirements, and the 1969 or 1995 ACC versions may be
inconsistent or misleading.
Comment: Commenters disagreed with HUD's ``redefining'' of the ACC
as a grant agreement, and stated that the ACC is, and has always been,
a contract, and should consistently refer to itself as such. A comment
stated that Congress and HUD have consistently failed to view the
existing public housing CACC as a contract and need to treat public
housing contracts in the same way as the contracts for Project Based
Section 8.
HUD Response: The Public Housing program, which was initially a
loan program, was changed by Congress to a direct grant program in
1987, through which HUD awarded grants for the development and
operation of public housing (see sections 112 and 119 of the Housing
and Community Development Act of 1987, Public Law 100-242 (approved
Feb. 5, 1988) (the HCD Act)). Consequently, in 1988, HUD implemented
OMB Circular A-102, ``Grant Awards and Cooperative Agreements with
State and Local Governments,'' by codifying its provisions in 24 CFR
part 85 (March 11, 1988, 53 FR 8025, 8650). HUD made the public housing
program subject to 24 CFR part 85. Below is the statement HUD made
regarding Part 85 applicability to the public housing funding (53 FR
7875):
HUD previously took the position that annual contributions for
public housing development and modernization were not subject to
Circular A-102 requirements because the Federal assistance to public
housing agencies (PHAs) was in the form of loans and loan guarantee
commitments made by HUD. The Department's current method of funding
public housing development and modernization by means of capital grants
(as opposed to loans, as in the past) has the effect of subjecting
public housing development and modernization funding to A-102
requirements. Public housing operating subsidies are administered as
grants and therefore are also appropriate for A-102 grant management
treatment [emphasis added].
Accordingly, as a result of the changes to the program made by the
HCD Act, since 1988, HUD consistently administered the public housing
program subject to the requirements of 24 CFR part 85 (until such
requirements were superseded by the Uniform Guidance). In addition to
codifying A-102 at 24 CFR part 85, HUD codified the provisions of OMB
Circular A-133, ``Audits of States, Local Governments and Non-Profit
Organizations,'' in 24 CFR parts 84 and 85 in 1997 (November 18, 1997,
62 FR 61617), and such other circulars related to grants management. In
the intervening years since codifying the guidance in these circulars,
HUD has cross-referenced applicable provisions of 24 CFR part 85
throughout program regulations, including applicable regulations for
public housing development, modernization and operating funding.
The 1995 version of the ACC was revised against the backdrop of
these above-mentioned statutory and regulatory requirements (e.g., 24
CFR 941.103 (ACC definition), Sec. Sec. 941.612, and 968.103).
Consequently, the ACC, when it was revised in 1995 was an agreement
related to the receipt of public housing grant funding. In 1998, when
the public housing funding was fully converted to formula funding, HUD
continued to use the same version of the ACC and continued to subject
the formula funding and public housing program to the requirements of
24 CFR part 85. Nothing in the rulemaking processes for the Operating
Fund regulation or the Capital Fund regulation changed the form of the
funding that was being provided by HUD, and the Operating Fund and
Capital Fund Rules specifically included and made applicable the
requirements of Part 85. HUD's proposed changes to the ACC were
consistent with Congressional intent first expressed 1987.
Comment: HUD is seeking to ``redefine'' terms to position
themselves more favorably and insulate themselves from future
challenges/litigation.
HUD Response: HUD notes the consistency of its position in
litigation regarding the characterization of the federal financial
assistance provided for the public housing. Furthermore, such funding
is provided subject to a broad array of statutory and administrative
requirements, including appropriations acts. HUD's changes to the ACC
were not proposed in response to litigation, but HUD is aware of
litigation surrounding the ACC. HUD makes clear in the current version
that HUD has never contemplated money damages for action or inaction by
HUD with respect to the ACC. Nothing in the revised ACC forecloses
avenues for judicial relief from any HUD action that is arbitrary,
capricious or contrary to law.
While the United States Court of Appeals for the Federal Circuit
determined the Performance-Based Annual Contributions Contract (PBACC)
to be a procurement contract, no such court has made such a
determination with respect to the public housing ACC. In the absence of
legislation to the contrary, HUD is required to continue to administer
the public housing program consistent with the HCD Act of 1987, and
other applicable requirements.
Comment: ``Operating Receipts'' and ``Program Receipts'' are
interrelated terms, and changes to one affect the others. Commenters
said that ``program receipts,'' previously called ``operating
receipts,'' had been broadened. One commenter said ``this could
potentially recapture de-federalized funds and require HUD approval for
uses of all forms of income and proceeds produced by projects. The new
definition restricts the use of all program and operation funds to
public housing expenditures, which potentially captures de-federalized
funds.'' Similarly, other commenters expressed concerns that ``the
categories covered by `program receipts' has been broadened and could
potentially allow HUD to ``recapture de-federalized funds and require
HUD approval for uses of all forms of income and proceeds produced by
projects.'' Another commenter said ``[t]he definitions of Operating
Reserves, Operating Costs, Operating Receipts, and Program Receipts are
interrelated. HUD should explain and justify these definitions within
the framework of the APA.'' More specific concerns related to the
definition of Operating Receipts was that ``broadening this definition
to include `Program Receipts' results in controlling non-federal
resources earned by PHAs and the refederalization of fees paid into a
PHA's Central Office Cost Center.''
Finally, a number of comments expressed concerns about HUD's having
``restricted the definition of the term `operating expenses' or
`operating expenditures' to those costs which may be charged against
Operating Receipts in accordance with the CACC and HUD requirements.''
A commenter noted that ``[i]t is unclear what impacts these definition
changes will have on reserves and offsets of reserve balances for
operation expenses and . . . requests further clarity on these proposed
changes as they appear to be an attempt to change statutory funding
obligations.''
HUD Response: Operating Receipts is a term that was already defined
in the 1995 version of the ACC. The changes between the 1995 ACC and
the proposed ACC published in the 60-Day Notice were slight, and were
made primarily to align the term with the Uniform Guidance, and to make
the definition more consistent with 24 CFR
[[Page 60414]]
part 905, subpart F. Because PHAs are already bound by HUD regulations,
including the requirements of the Uniform Guidance, HUD has deleted
this definition from the ACC since it is adequately covered by
regulations.
Additionally, HUD considers the following definitions: Operating
Costs (Operating Expenditures or Operating Expenses), Operating
Reserve, Program, Program Receipts, and Replacement Reserve Account, to
be unnecessary due to regulatory coverage; and they have also been
deleted. The determination of eligible costs and the use of program
funds are covered by the Uniform Guidance and HUD regulations at Title
24 CFR, specifically those regulations at Parts 905 and 990.
As to concerns regarding the broadening of the term ``program
receipts,'' HUD agrees that HUD cannot regulate PHA activity outside of
the public housing program. However, program income (as that term is
defined at 2 CFR 200.80), non-rental income (as covered by statute and
by regulations determined by HUD), and proceeds from the sale of public
housing real property are already subject to federal statutes and
regulations. HUD has deleted the term ``program receipts'' as it is
redundant of regulatory and statutory requirements. HUD has no
intention of changing statutory funding obligations, and notes that
public housing funding is subject to various statutory requirements,
including funding requirements in the appropriations acts, HUD
regulations, and the Uniform Guidance.
PHA Mission
Comment: Many commenters indicated that the PHA mission needs to be
developed locally with public input and approval of its Board of
Commissioners rather than by contract with HUD. Commenters noted that
the addition of a requirement to comply with all applicable HUD
requirements, coupled with changes in the proposed Section 3 of the
ACC, unfairly imposes any HUD non-regulatory provisions, and the
Mission statement should be removed.
HUD Response: The ACC mission statement incorporated the essential
PHA requirements under Sections 2(a) and 3(a) of the 1937 Act, (42
U.S.C. 1437 note, and 1437a respectively), and has been part of the
1969 and 1995 ACC versions. By accepting public housing funds, the PHA
makes itself subject to the statutory requirement that property funded
with public housing assistance including dwelling units assisted with
public housing funds be rented only to low income families. Because the
mission statement is unnecessary and redundant of statutory and
regulatory requirements, this section has been deleted from the ACC.
PHAs are required to administer their Public Housing Funds in
compliance with all ``Public Housing Requirements'' which include the
1937 Act, HUD regulations at Title 24 CFR, the Uniform Guidance,
appropriations acts, and ``other federal statutes, regulations
executive orders applicable to Public Housing Funds and Public Housing
Projects,'' as they exist now and are amended in the future, whether or
not those requirements are incorporated by reference in the ACC.
HUD Requirements
Comment: Most commenters objected to including HUD-issued notices,
forms, and agreements as HUD requirements because, the commenters
state, these requirements do not have a regulatory or statutory basis.
HUD Response: The HUD Requirements section was added to the ACC as
a reminder. PHAs are already required in the 1995 version of the ACC to
comply with ``all applicable laws, executive orders, and regulations
that are not specifically incorporated [in the ACC] by reference''; and
under 24 CFR 905.108, to comply with HUD-issued ACC and amendments, HUD
notices, all applicable federal statutes, executive orders and
regulatory requirements, as amended. All required forms are issued
through the Paperwork Reduction Act process with public opportunity to
comment or are required by the regulations, which were properly
promulgated under the APA. However, to lessen confusion, the HUD
Requirements section has been deleted from the ACC, and the term ``HUD
Requirements'' has been replaced with the term used in existing
regulations at 24 CFR 905.108, ``Public Housing Requirements.''
Comment: MTW PHAs stated that requiring compliance with HUD's
notices, forms, and agreements would reduce MTW flexibilities.
HUD Response: The MTW Standard Agreement contains a provision that
it ``supersedes the terms and conditions of one or more ACCs between
the Agency and HUD, to the extent necessary for the Agency to implement
its MTW demonstration initiatives as laid out in the Agency's Annual
MTW Plan, as approved by HUD.'' This provision covers regulatory or
statutory waivers granted under the MTW Agreement and provisions in PIH
notices implementing provisions thereof to the extent of a conflict
between the authorized MTW activity and the Public Housing Requirement.
The MTW ACC amendment for the MTW expansion, similarly, amends the ACC
to the extent necessary to allow the agency to participate in the MTW
demonstration in accordance with the MTW Operations Notice. Because the
MTW ACC Amendment requires compliance with all HUD requirements not
exempted by the MTW Operations Notice, language has been added to that
document to clarify the applicability of subregulatory guidance
impacting MTW authorizations.
Cooperation Agreement
Comment: ``HUD should not have prior approval of Cooperation
Agreements entered into with local governments to address local needs.
Ratification or review to protect federal interest should be
sufficient. HUD has no right to inject itself into local negotiations
over changes to Cooperation Agreements.'' One commenter also noted that
``HUD's proposed involvement in local cooperation agreements will
potentially upend `win-win' arrangements between PHAs and local
governments that have ultimately benefited its tenants and communities
for years.'' Additionally, one commenter noted that ``[w]hile Section 4
of the proposed ACC requires a Cooperating [sic] Agreement to be in
effect, Cooperation Agreements do not apply to mixed finance projects
that have made an election pursuant to Section 35(f) of the United
States Housing Act of 1937, as amended.''
HUD Response: HUD's requirement concerning a local cooperation
agreement is authorized by statute and regulations. Specifically,
Section 5(e)(2) of the of the 1937 Act provides that Federal financial
assistance to PHAs shall not be made unless the governing body of the
locality involved enters into an agreement with the PHA providing for
the local cooperation required by the 1937 Act. In order to implement
this requirement, HUD requires PHAs to comply with the provisions of a
Cooperation Agreement in the form prescribed by HUD, which form has not
changed since 1968; and not terminate or amend the Cooperation
Agreement without prior written approval of HUD. HUD has a statutory
obligation to monitor and ensure the proper use of public housing
funds. However, in light of HUD's determination that this agreement
should not unnecessarily repeat statutory or regulatory requirements,
the proposed Section 4 has been deleted as the requirement for the HUD-
prescribed Cooperation Agreement is in the 1937 Act, and HUD
implementing regulations at 24 CFR part 905.
[[Page 60415]]
The ACC provides general terms that apply to all housing
authorities. As noted by the commenter, Section 35(f) of the 1937 Act
allows for a PHA to choose to exclude mixed finance projects from the
Section 6(d) tax exemption and the Cooperation Agreement. If a PHA does
not make that election, a Cooperation Agreement is required. If a PHA
makes that election, HUD regulations implement this requirement at 24
CFR 905.606(a)(8), and an express statement is not needed.
Declaration of Restrictive Covenants
Comment: One commenter stated that the ``DOT [Declaration of Trust]
signed by the PHA restricts the use of the units deeded to the PHA.
Units are to be used by low-income families.'' Another comment noted
that the use of ``shall'' in the proposed Section 5.a means this is a
requirement (vs. prior 1995 version that said ``may''), and that ``HUD
ought to clarify its reasoning behind this modification as it removes
PHA discretion and as such may negatively impact current project
implementation.''
HUD Response: The proposed Section 5 was updated to reflect
statutory and regulatory requirements that have been in effect since
the public housing program was a loan program--namely the use of
restrictive covenants to ensure the long-term use restrictions mandated
by the 1937 Act. For more than 30 years the form instrument prescribed
by HUD was a ``Declaration of Trust.'' See Form HUD-52190 (current DOT
form available at https://www.hud.gov/hudclips). The requirement that
the Declaration of Trust be the first recorded document against public
housing property is longstanding and ensures the long-term use of
public housing projects by low-income families. See 24 CFR 905.108
(definition of Declaration of Trust), 905.304, and 905.505(c)(4). The
use of ``may'' in Section 5.a of the 1995 version of the ACC applies to
the form of the instrument but not to the requirement for order of
recordation. Because of the mixed-finance program, HUD began to allow
the use of other HUD-approved instruments otherwise known as
declarations of restrictive covenants, and the change in language is
not intended to change this practice; however, the recordation
requirement is long-standing, and any exceptions have always required
HUD approval.
Comment: One commenter said ``[t]hough Section 5.b of the proposed
ACC requires a declaration be recorded against the Project `prior to
the recordation of any other encumbrance,' such requirement is
inconsistent with HUD's practice, and we advise HUD to instead require
such only `unless otherwise approved by HUD.' ''
HUD Response: The general requirement for any form of restrictive
covenant is that it be the first recorded document. See 24 CFR
905.505(c)(4). We believe waiver of the ACC provision (now located at
Section 4--Restrictive Covenants) is sufficient to allow HUD to
approve, after a finding of good cause, those circumstances when a
restrictive covenant is not recorded prior to the recordation of other
encumbrances.
Disposition and Encumbrances
Comment: A commenter stated as to proposed Section 6:
6.a: The general covenant against disposition and
encumbrances does not acknowledge that mixed finance projects will need
to enter into mortgages, use restrictions, and other encumbrances to
finance the projects. Accordingly, we would recommend HUD clearly state
that mixed finance projects will instead only be subject to the
provisions contained in the proposed Section 6.b.
6.b: Modifications are required in order to be consistent
with the standard language in prior HUD mixed finance deals that has
been vetted extensively with lenders and investors.
HUD Response: The HUD regulations at Title 24 CFR (in particular
those provisions at 24 CFR part 905, subpart F) address the concerns
raised by the commenter. HUD has not incorporated any mixed-finance
specific language in the revised ACC. However, in response to comments
HUD has revised the model Mixed-Finance Amendment. To the extent PHAs
need commitments for mixed finance approvals beyond what is stated in
the ACC, HUD will continue to work with PHAs on project-specific
solutions, including the use of a mixed-finance amendment, adding
language to the Regulatory and Operating Agreements that are required
for a mixed-finance development, or adding language to the restrictive
covenant.
HUD notes that it has revised the proposed published version of
Section 6. Additionally, Section 3 of the revised ACC published herein
makes specific reference to the Public Housing Requirements, which
include 42 U.S.C. 1437p and HUD regulations at 24 CFR part 970.
Comment: One commenter included a markup of proposed Section 6:
BILLING CODE 4210-67-P
[[Page 60416]]
[GRAPHIC] [TIFF OMITTED] TN08NO19.104
[[Page 60417]]
[GRAPHIC] [TIFF OMITTED] TN08NO19.105
[[Page 60418]]
[GRAPHIC] [TIFF OMITTED] TN08NO19.106
[[Page 60419]]
[GRAPHIC] [TIFF OMITTED] TN08NO19.107
BILLING CODE 4210-67-C
HUD Response: As previously stated, HUD has decided not to
incorporate any mixed-finance specific language in the revised ACC but
has revised the model Mixed-Finance Amendment. To the extent PHAs need
commitments for mixed finance approvals beyond what is stated in the
ACC, HUD will continue to work with PHAs on project-specific solutions,
including the use of a mixed-finance amendment, adding language to the
Regulatory and Operating Agreements that are required for a mixed-
finance development, or adding language to the restrictive covenant.
Insurance
Comment: HUD failed to allow for PHA's professional judgment on
risk and cost benefit of various types of insurance as well as ignoring
state law on tort immunity. Commenters requested that HUD indicate what
is adequate coverage. Commenters stated it is unnecessary for HUD to
collect and monitor Certifications of Insurance.
HUD Response: HUD's primary concern is making sure that public
housing projects acquired, developed and assisted with federal
assistance, and public housing assets are covered from losses. This
provision has been in place since the 1969 ACC. The list of mandatory
and recommended, but optional insurance is consistent with, or required
by, 2 CFR 200.447 and 24 CFR
[[Page 60420]]
965 subpart B, and identifies those ``costs of insurance required or
approved and maintained, pursuant to the Federal award'' that are
allowable (2 CFR 200.447(a)). To further assist PHAs in understanding
HUD's intentions, HUD refers PHAs to its explanatory guidance on
insurance in PIH Notice 2016-13.
HUD will continue to require Certifications of Insurance and
require that PHAs keep copies of it in their records, and make them
available for inspection, subject to Public Housing Requirements. The
revised ACC removes the process of establishing a PHA self-insurance
fund, because 24 CFR 965.205(c) details this process.
Employer Requirements
Comment: Various commenters noted that a provision appearing in a
previously proposed ACC limiting the use of funds made available under
the 1937 Act for the salary, including bonuses, for PHA employees (30-
day notice published on September 6, 2017 at 82 FR 42106) is not
included in the proposed ACC. These commenters assert that the
elimination of this provision reflects HUD's understanding that it
lacks Congressional authorization to limit the use of funds made
available under the 1937 Act for PHA employee salaries.
HUD Response: HUD disagrees with commenters asserting that HUD
lacks Congressional authorization to limit the use of funds made
available under the 1937 Act for PHA salaries; since Federal Fiscal
Year (FFY) 2012, through HUD appropriations, Congress has imposed
limits on the amount of Section 8 HCV and Section 9 funds PHAs may use
for employee salaries. PIH Notice 2016-14 and PIH Notice 2018-13 detail
PHA salary limitations and PHA reporting responsibilities.
Additionally, for FY 2019, division G, title II, section 222 of the
Consolidated Appropriations Act, 2019 (under the heading ``General
Provisions--Department of Housing and Urban Development'') states:
``None of the funds made available by this Act, or any other Act, for
purposes authorized under section 8 (only with respect to the tenant-
based rental assistance program) and section 9 of the United States
Housing Act of 1937 (42 U.S.C. 1437 et seq.), may be used by any public
housing agency for any amount of salary, including bonuses, for the
chief executive officer of which, or any other official or employee of
which, that exceeds the annual rate of basic pay payable for a position
at level IV of the Executive Schedule at any time during any public
housing agency fiscal year 2019.'' PHAs remain subject to the
provisions contained in HUD appropriations, regardless of incorporation
into the Terms and Conditions agreement pursuant to Section 2 of the
revised ACC.
Accounts, Records, and Government Access
Comment: Section 9.b: Commenters state that the proposed Section
9.b would interfere with PHA compliance with information requests
pursuant to FOIA or local open records laws by requiring prior HUD
approval before releasing information contained in HUD's systems of
records. A few commenters express doubt that HUD would have the
capacity to track and approve PHA submissions and requests in a timely
fashion. A few commenters state that requiring HUD approval prior to a
release of records, especially in response to a valid information
request, could subject a PHA to liability for denying a request.
Additionally, the proposed provision could make it more difficult for
law enforcement entities to conduct investigations of issues such as
public benefit fraud.
One commenter stated that the proposed Section 9 does not make it
clear that Section 9.b refers only to data held within HUD's systems of
records. Another commenter states that section 9 would inhibit a PHA
from operating in a transparent manner by limiting the release of
information to stakeholders. A number of commenters assert that, as
independent entities and political subdivisions of States, PHAs are not
subject to HUD's control relating to transparency to the public.
Comment: Section 9.c: Numerous commenters assert that the proposed
Section 9.c of the proposed ACC would expose privileged communications,
records, and information, including records protected by attorney-
client privilege, to HUD examination.
Comment: Section 9.e: Several commenters state that the proposed
Section 9.e of the ACC could impact the ability of PHAs to engage in
data-sharing agreements and other arrangements with third-party
services providers. One MTW PHA expresses concern that the proposed
provision would hinder its ability to monitor, evaluate, and understand
policy questions that guide its MTW activities. Numerous commenters
stated that the proposed Section 9.e of the proposed ACC is overly
broad and would open all records of a PHA agent or contractor, not just
those records of work supporting the operation of public housing, to
HUD inspection. These commenters assert that PHA contractors and
partners will terminate their relationships with PHAs to protect their
confidential records. Alternatively, a couple of commenters state that
PHAs might have to pay higher costs to contractors or use substandard
contractors because of the HUD record inspection requirements contained
in the proposed Section 9.e. Several commenters express concern that
HUD might misuse its access to contractor records to obtain records
outside of HUD's authority. A few commenters suggest that the phrase
``assists in fulfilling any obligation under this CACC'' is too broad
and would capture too many activities. A couple of commenters assert
that HUD would make PHAs liable for the actions of independent
contractors and that it is unreasonable to impute contractor actions to
a PHA that could be deemed a PHA violation of the ACC.
HUD Response: HUD notes that the proposed Section 9 (or a similar
provision) has been included in the 1969 and 1995 versions of the ACC.
The change in language in the proposed 2018 version was to remind PHAs
of their responsibility to make information available consistent with
applicable statutory and administrative requirements, and that the
maintenance of information and the prohibition on sharing particular
information, such as tenant data, is prohibited by the same or similar
statutory and administrative requirements, including regulations issued
by HUD at title 24 CFR. HUD has removed the proposed Section 9 from the
ACC because PHAs remain subject to statutory and regulatory
recordkeeping and monitoring requirements (including HUD notices on
HUD's system of records (SORN) (e.g., https://www.hud.gov/sites/documents/DOC_15179.PDF, and https://www.hud.gov/program_offices/officeofadministration/privacy_act/pia/fednotice/SORNs_LoB#pih) in
connection with the use of financial assistance provided pursuant to
the 1937 Act. HUD recognizes attorney-client privilege as a
longstanding common law protection, and HUD does not unduly compel PHAs
to disclose privileged or work product protected information. However,
HUD reminds PHAs that the disclosure of information related to the
public housing program is required to be shared for various reasons.
Section 5(h)(1) of the 1937 Act (42 U.S.C. 1437c(h)(1)) provides
that when a PHA carries out activities using financial assistance
provided pursuant to the 1937 Act for the operation, modernization, and
development of public housing, the PHA must allow HUD access to books,
documents, and
[[Page 60421]]
records related to the activities. Section 5(h)(1) of the 1937 Act and
2 CFR 200.336 also require that the HUD Inspector General, Comptroller
General of the United States, and all of their authorized
representatives, have the right to inspect a PHA's records that pertain
to a public housing award. In the context of audits, pursuant to 2 CFR
200.501(g), PHAs are ``responsible for ensuring compliance for
procurement transactions which are structured such that the contractor
is responsible for program compliance or the contractor's records must
be reviewed to determine program compliance.'' To the extent that a PHA
contractor is responsible for public housing program compliance (e.g.,
under a management contract), PHAs are responsible for ensuring that
the contractor has adequate records. More specific recordkeeping
requirements include, but are not limited to, the requirements at 24
CFR 905.326 and 990.325.
Other 1937 Act statutory requirements that concern recordkeeping or
information sharing include section 42 U.S.C. 1437y (Provision of
information to law enforcement and other agencies) and 42 U.S.C.
1437n(e)(C)(4). Additionally, pursuant to Section 904 of the Stewart B.
McKinney Homeless Assistance Amendments Act of 1988 (``McKinney
Homeless Amendments''), tenant and participant income information
required or necessary to be collected by a PHA, for the purpose of
verifying income information pertinent to the applicant's or
participant's eligibility or level of benefits, must be kept under the
terms of the Privacy Act, as such terms are made applicable by HUD. The
McKinney Homeless Amendments are implemented at 24 CFR part 5. Pursuant
to 5 CFR 5.212(a), ``[t]he collection, maintenance, use, and
dissemination of [social security numbers] SSNs, [Employer
Identification Numbers] EINs, any information derived from SSNs and . .
. EINs and income information under this subpart shall be conducted, to
the extent applicable, in compliance with the Privacy Act (5 U.S.C.
552a) and all other provisions of Federal, State, and local law. Thus,
regardless of local open records laws, PHAs must retain records in
compliance with the McKinney Homeless Amendments the Privacy Act as
provided at 24 CFR part 5; other Public Housing requirements, including
HUD SORNs; and are required to get HUD approval to release information
maintained in HUD databases such as PIC.
Depository
Comment: Commenters stated that this section imposes federal
deposit and investment requirements on defederalized and non-federal
fees paid to PHAs' COCC, as well as contributions from affiliates and
subsidiaries. These commenters stated that HUD does not have the
authority to so impose such requirements.
HUD Response: Commenters misread the coverage of this requirement
and HUD's changes. The General Depository Agreement (GDA) (HUD-51999)
has been a requirement in the 1969 and 1995 ACC versions. The GDA is
just one part of HUD's implementation requirements imposed on HUD with
regard to the disbursement of federal funds before such funds have been
expended. Additionally, the GDA requirement applies to Public Housing
Funds, disposition proceeds and program income, and other funds that
are restricted, by statute or regulations, in their use, and/or are
received by or held for the account of the PHA in connection with the
development, operation, improvement and disposition of its public
housing property. These funds are to be insured or fully and
continuously collateralized above the federal insurance limits per the
General Depository Agreement and Department of the Treasury statutes
and regulations, including but not limited to 31 CFR part 202. HUD has
slightly revised this section in the ACC.
The changes to the ACC are not intended to address any future
changes to the Public Housing requirements regarding COCC.
HUD in Possession of Project(s)
Comment: Commenters stated that the proposed ACC must clarify that
a PHA's decision to subject its mixed-finance public housing units to
real estate taxes should not result in a violation of section 14.b(6)
of the ACC published in the 60-Day Notice, which states that
``termination of tax exemption (either real or personal property) on
behalf of a Project covered under the CACC'' constitutes a substantial
default. Commenters also recommend HUD insert the following sentence to
the proposed section 14.e to ensure HUD will not disturb a compliant
mixed finance Owner Entity's rights: ``Notwithstanding the forgoing,
for Mixed Finance projects, so long as the Owner Entity shall not be in
default of its obligations related to such a project, HUD shall not
exercise any rights under this sub-section 13.e. in such a manner as to
disturb the Owner Entity's and other participating parties' rights
under any Project agreements.''
HUD Response: The proposed Section 14 has been removed from the
ACC. HUD believes the provision is essentially redundant of
requirements at title 24 of the CFR, specifically 24 CFR part 907.
However, HUD has retained in the new section 9 (Substantial Default)
the standard for default under such ACC. Section 9 does not retain the
specific requirements for mixed finance public housing projects, which
are included in the model Mixed-Finance Amendment. The ACC provides
general terms that apply to all housing authorities. To the extent PHAs
need commitments for mixed finance approvals beyond what is stated in
the ACC, HUD will continue to work with PHAs on project-specific
solutions, including the use of a mixed-finance amendment, adding
language to the Regulatory and Operating Agreements that are required
for a mixed-finance development, or adding language to the restrictive
covenant. Whatever the project-specific solution, HUD would continue to
make clear that a PHA that subjects its mixed-finance public housing
units to real estate taxes is not in a violation of Public Housing
requirements.
Conflict of Interest
Comment: Many commenters objected to what was mistakenly understood
to be a ``new written conflict of interest'' standard for board
members. Commenters also stated that HUD lacks the authority to impose
such a requirement and the requirement may conflict with existing state
and local conflict of interest requirements involving public officials.
HUD Response: This is not a new conflict of interest standard for
board members. Sections 19 and 515 respectively, of the 1995 and 1969
versions of the ACC had conflict of interest provisions that covered
board members. Section 15.a. of the proposed ACC provides that PHAs
must maintain written standards of conduct covering conflicts of
interest and governing the performance of its board members,
executives, and employees engaged in the administration and operation
of Projects covered by the ACC. This requirement is consistent with the
Uniform Guidance at 2 CFR 200.112 and 200.318, which requires that PHAs
maintain written standards of conduct covering conflicts of interest.
For clarity HUD has revised the provision at Section 8 of the ACC.
Because PHAs are already bound by the Uniform Guidance, HUD revised the
section to reflect coverage when PHAs are using
[[Page 60422]]
public housing funds for its procurements (as required by the Uniform
Guidance); HUD includes members and delegates to Congress in the
covered classes for purposes of evaluating conflicts in PHA hiring and
procurement. Additionally, Section 8.e of the revised ACC repeats the
language in Section 14 of the 1995 version that public housing funds
cannot be used ``to pay any compensation for the services of members of
the PHA's Board of Commissioners.''
Civil Rights and Employment Requirements
Comment: A number of commenters stated that a sentence in the
Section 16.d of the proposed ACC, ``Civil Rights and Employment
Requirements,'' should be removed as irrelevant: ``The HA may,
consistent with applicable law and regulation, utilize work
requirements when and where appropriate.'' One commenter added that the
inclusion of this sentence could confuse PHAs and result in the
implementation of polices that harm vulnerable families.
HUD Response: HUD agrees with commenters that the inclusion of the
sentence would have been confusing; additionally, consistent with HUD's
removal of provisions that repeat existing statutory and regulatory
requirements, the proposed Section 16 has been removed from the final
ACC, but it has been retained in part and moved to Section 6 of the
ACC. Additionally, HUD includes by reference under Section 2 (Public
Housing Administration) PHA obligations to comply with statutory and
regulatory civil rights requirements. PHAs are also reminded that
section 5A of the 1937 Act states that PHAs ``will carry out the public
housing agency plan in conformity with title VI of the Civil Rights Act
of 1964 [42 U.S.C. 2000d et seq.], the Fair Housing Act [42 U.S.C. 3601
et seq.], section 504 of the Rehabilitation Act of 1973 [29 U.S.C.
794], and title II of the Americans with Disabilities Act of 1990 [42
U.S.C. 12131 et seq.], and will affirmatively further fair housing.''
Waiver or Amendment
Comment: A commenter suggested a need for an expiration date for
waivers and amendments to be agreed to in writing by HUD and the PHA.
Another commenter suggested that HUD must seek written agreement from
HAs to any proposed changes. Other comments noted that the ``most
responsible approach for HUD to take is for it to negotiate the
revision of the ACC with industry groups who then, if the negotiations
are fruitful, encourage their members to agree to the amendments.''
Commenters stated that ``the revised ACC provides that the contract can
be amended in writing, presumably only by HUD. Such a contract is an
illusory contract.'' Commenters stated that [t]he appropriate method to
implement a new CACC would be to work with representatives of local
housing authorities to arrive at a mutually agreeable product that
could be adopted by PHAs without controversy.''
HUD Response: Section 19 of the proposed ACC published in the 60-
Day Notice stated that ``[t]his agreement may be amended in writing.''
This provision was not intended to provide HUD with the ability to
unilaterally revise the ACC during its term. Pursuant to section 6(a)
of the 1937 Act, HUD is authorized to change the ACC terms and
conditions as the Secretary deems necessary, but these changes will not
alter the ACC terms and conditions applicable to prior year public
housing funds. In response to the comments, HUD has revised the ACC to
make clear that a PHA may request an amendment to the ACC.
Additionally, upon a request of a PHA, HUD may waive administrative
provisions in the ACC, based on a finding of good cause. HUD cannot
waive statutory prohibitions.
Paperwork Reduction Act (PRA), Administrative Procedures Act (APA), and
Negotiation
Comment: A few commenters state that use of the Paperwork Reduction
Act (``PRA'') is not a legitimate means with which to promulgate public
comment on the proposed ACC. A number of commenters assert that the
proposed ACC does not collect information, so the PRA does not apply.
Many commenters add that PRA standards for public comments do not
satisfy Administrative Procedures Act requirements. As noted by a few
commenters, while the Federal Register PRA notice provides a
description of proposed ACC revisions, it does not provide an
explanation of the underlying rationale, public policy purpose or
benefits, or statutory or regulatory basis of the proposed ACC
revisions. Additionally, these commenters assert that PRA does not
require HUD to formally respond to comments received. A few commenters
state that HUD's actions in revising the ACC are ``arbitrary and
capricious,'' and they assert that the proposed ACC Federal Register
notices have been deceptive. Finally, several commenters criticize
HUD's burden hour chart and cost estimate as being unrealistic.
A number of commenters state that HUD must promulgate changes to
the public housing ACC pursuant to Administrative Procedures Act (APA)
rulemaking rather than pursuant to PRA. Several commenters added that
statutory changes may also be required because the proposed ACC
includes significant substantive changes from the prior ACC.
HUD response: Information collection can occur by a number of
vehicles in addition to standard government forms. As discussed above,
the Public Housing program has been a grant program since 1987. The ACC
is an information collection under the definitions in 5 CFR
1320.3(c)(1), which states that a collection of information may be in
any form or format, including an agreement. The ACC is a form with an
OMB form number; therefore, review and public comment under the PRA are
appropriate.
Contrary to statements in the comments, the PRA process does
require solicitation of and response to public comments (see 5 CFR
1320.5(a)(1)(F) (requiring ``A summary of the public comments received
under Sec. 1320.8(d), including actions taken by the agency in
response to the comments''). In fact, HUD received 79 comments and is
here responding to the issues raised as well as providing its rationale
for proposed ACC revisions. HUD revises the ACC pursuant to its
inherent authority under the Department of Housing and Urban
Development Act (42 U.S.C. 3531 et seq.), and section 6 of the 1937
Act. A primary purpose of this revision is to minimize the scope of the
requirements contained in the ACC and to ensure that Public Housing
requirements are uniformly applied. More than 400 PHAs continue to
operate under the 1969 version of the ACC. The revised ACC ensures that
the Uniform Guidance is applied consistently, and that all PHAs are
subject to the same terms and conditions applicable to the receipt of
public housing funds.
Regarding the assertion that the proposed ACC Federal Register
notices have been deceptive, HUD has taken steps to clearly identify
the provisions that have been deleted, revised or retained. However,
the ACC should be reviewed in its entirety to determine the exact
nature and scope of any revisions.
As to the comment on the burden hour statement, HUD's prior
experience indicates that it is reasonable.
[[Page 60423]]
Comment: Some commenters argue that even if HUD followed APA
rulemaking requirements, APA rulemaking is not the appropriate method
by which to amend the public housing ACC because a regulation cannot
override or amend contract terms. A couple of commenters assert that
HUD must withdraw the proposed ACC and negotiate revisions to the 1995
ACC with PHAs. One commenter asserts that the proposed ACC needs to be
reviewed by ``an independent legal authority'' to determine its
fairness and compliance with statutes.
HUD response: Pursuant to section 6(a) of the 1937 Act, and section
200.38(b) of the Uniform Guidance, the Secretary has the authority to
include in the ACC such covenants, conditions, or provisions as he may
deem necessary in order to insure the low-income character of public
housing projects and that PHAs act in accordance with Public Housing
requirements; the Secretary is not obligated to negotiate with PHAs as
it is within his discretion what terms and conditions related to the
federal award are ``necessary.'' Accordingly, the Secretary, through
the ACC, establishes the necessary terms and conditions related to the
award of public housing funds. The terms and conditions of the ACC
published in this notice do not override or amend prior versions of the
ACC. The ACC terms and conditions apply to a PHA's public housing
funding received after execution. Prior awards of public housing
funding received by a PHA while subject to either the 1969 or 1995 ACC
will continue to be governed by the terms of those ACCs. To the extent
commenters were concerned that the ACC did not comply with relevant
statutes, the revised ACC minimizes the scope of the ACC requirements,
and eliminates the recitation of specific statutory and regulatory
requirements. As noted earlier, the PRA process requires solicitation
of and response to public comments.
Implementation of ACC
Comment: Several commenters stated that the new ACC must include
Board and Executive review and approval and signature by both HUD and
Housing Authorities.
HUD Response: The ACC serves as notice of the terms and conditions
that attach to HUD's award and the PHA's request for, acceptance, and
use of federal financial assistance. Execution of the ACC represents
acceptance of those terms and conditions undergirding all instruments
subsequently executed to provide public housing funding, including, but
not limited to SF-424 forms, Operating Fund budget letters, competitive
grant agreements, etc. Pursuant to Section 1.a of the ACC published in
this notice, such funding instruments will be incorporated into the ACC
as amendments or funding exhibits.
HUD agrees that entering into the ACC requires Board and Executive
Review. HUD expects the Board and Executive Review approval would be
conducted as part of same process engaged by PHAs before making
submissions for financial assistance through the Operating Fund and
Capital Fund formulas (e.g., using an SF-424 form). Electronic
signatures are permissible for HUD programs, and that option will be
made available for the ACC; however, HUD has added a signature line for
PHAs on the revised form for those PHAs that prefer or are required
under State law to effectuate agreements by a wet signature.
Comment: Two commenters did not think that drawing down funds
should result in an agreement between HUD and the PHA. One argued that
PHA staff lack authority to bind the PHA, which could make the
agreement unlawful or against the PHA's internal governing procedures.
HUD Response: A PHA's drawdown of funds is a certification by the
PHA that the funds are being drawn for, or in connection with, an
eligible activity under the public housing program. Federal financial
management requirements are based on the presumption that the personnel
in a PHA's organization who drawdown funds are authorized to do so.
Consequently, PHA employees should not be drawing down funds or taking
any other actions on behalf of the PHA without proper authority. Every
draw down or use of funding must be in compliance with HUD statutes,
regulations and other HUD requirements. It is incumbent on PHAs (not
HUD) to ensure that PHA personnel are authorized to act on their
behalf.
Moving to Work
Comment: MTW agencies commented that HUD was precluded from
revising the ACC by the 2016 appropriations act language extending the
current MTW agreements and by language regarding the ACC in the MTW
Standard Agreement.
HUD Response: HUD disagrees. The new ACC does not amend the MTW
Standard Agreement. The MTW Standard Agreement provision stating that
the agreement supersedes the terms of the ACC to the extent of a
conflict between the ACC and a HUD-approved MTW activity continues to
apply to the new ACC.
Comment: MTW agencies raised concerns that the new ACC would change
the funding formulas provided under those agreements and that it would
allow HUD to circumvent statutory requirements regarding offsets of MTW
PHA reserves.
HUD Response: The funding language in Attachment A of the MTW
Standard Agreement varies among MTW agencies. The majority of MTW
agencies do not have a unique funding formula for public housing funds
in their MTW agreements and receive public housing funds in accordance
with the same formulas and requirements as non-MTW PHAs. Agencies with
specific alternative formulas for public housing funds in their MTW
Agreements continue to have those same provisions in their MTW
Agreements under the new ACC. Further, the MTW Agreements were amended
in 2016 to incorporate the statutory provision prohibiting offset of
reserves equal to four months of operating expenses.
G. Chart Summarizing Statutory or Regulatory Public Housing
Requirements Deleted From the ACC Proposed in the 60-Day Notice
------------------------------------------------------------------------
Existing public
housing requirements
30-Day notice that apply to
60-Day notice proposed ACC proposed ACC deleted portions of
the 60-Day notice
proposed ACC
------------------------------------------------------------------------
Sec. 1--Definitions......... Deleted............. ``Cooperation
Agreement'' (24 CFR
905.108);
``Operating Costs''
(24 CFR 990.115);
``Operating
Receipts'' (2 CFR
200.80, Sec. 9(k)
and Sec. 18(a)(5)
of the 1937 Act);
``Program
Receipts'' (2 CFR
200.80); ``Public
Housing'' (24 CFR
905.108);
``Replacement
Reserve Account''
(Sec. 109 of HOTMA,
P.L. 114-201).
Sec. 2--Mission of HUD and Deleted............. Sec. 2(a), Sec.
HA. 3(b)(1) (``low-
income housing''
and ``public
housing'') and Sec.
3(b)(6) (``Public
Housing Agency'')
of the 1937 Act.
[[Page 60424]]
Sec. 3--HUD Requirements.... Sec. 2--Public ``Public housing
Housing requirements,'' 24
Administration CFR 905.108.
(deletes compliance
with HUD notices).
Sec. 4--Cooperation Deleted............. Sec. 5(e)(2) of the
Agreement(s). 1937 Act and 24 CFR
905.108.
Sec. 5--Declaration of Sec. 4--Restrictive Sec. 9(d)(3) and
Restrictive Covenants. Covenants (deletes 9(e)(3) of the 1937
description of Act and 24 CFR
instrument terms 905.108
and mixed-finance (``Declaration of
provisions). Trust,''
``Declaration of
Restrictive
Covenant''); 24 CFR
905.304(a); and 24
CFR 905.505(c);
[Mixed-finance
provisions will be
included in a mixed-
finance ACC
amendment].
Sec. 6--Disposition and Sec. 3--Encumbrances Sec. 18 of 1937 Act
Encumbrances. (deletes general and 24 CFR part 970
disposition [Mixed-finance
requirements and provisions will be
mixed-finance included in a mixed-
provisions). finance ACC
amendment].
Sec. 7--Insurance Sec. 5--Insurance 24 CFR 965.205(c)
Requirements. Requirements [Mixed-finance
(deletes self- provisions will be
insurance provision included in a mixed-
and mixed-finance finance ACC
provisions and amendment].
optional insurance
coverage).
Sec. 8--Employer Sec. 6--Civil Rights Civil rights laws,
Requirements. and Employer e.g., Title VI of
Sec. 16--Civil Rights and Requirements the Civil Rights
Employment Requirements. (deletes civil Act of 1964 (42
rights provisions U.S.C. 2000d; 24
summarizing civil CFR part 1); the
rights Fair Housing Act
requirements). (42 U.S.C. 3601-
3619; 24 CFR part
100); section 504
of the
Rehabilitation Act
of 1973 (29 U.S.C.
794; 24 CFR part
8); (the Age
Discrimination Act
of 1975 (42 U.S.C.
6101[not]6107; 24
CFR part 146); the
Americans with
Disabilities Act
(Pub. L. 101-336,
approved July 26,
1990; 28 CFR part
35); Executive
Order 11063 on
Equal Opportunity
in Housing (24 CFR
part 107);
Executive Order
11246 on Equal
Employment
Opportunity, as
amended by
Executive Order
11375 (41 CFR part
60); and Executive
Order 12892 on
Affirmatively
Furthering Fair
Housing.
Sec. 9--Accounts, Records, Deleted............. Sec. 5(h)(1) of the
and Government Access. 1937 Act; 2 CFR
200.336; 2 CFR
200.501(g); 24 CFR
905.326; 24 CFR
990.325; 42 USC
1437y and
1437n(e)(C)(4);
Sec. 904 of
McKinney Homeless
Amendments (42 USC
3544); and 5 CFR
5.212(a).
Sec. 10--Grant Funding...... Sec. 1--Annual 24 CFR 905.108
Contributions Terms (``Public Housing
and Conditions Requirements''
(a.k.a. ACC) include ``all
(revised and applicable federal
deletes specific statutes,''
information about including
funding appropriations
calculations). acts); 24 CFR part
905, subpart D
(Capital Fund
formula); and 24
CFR part 990,
subparts B-E
(Operating Fund
formula).
Sec. 11--Depository......... Sec. 7--Depository N/A.
(no significant
deletions).
Sec. 12--Termination of a Sec. 10--Termination N/A.
Project. (no significant
deletions).
Sec. 13--Notices, Defaults, Sec. 9--Substantial Sec. 6(j) and Sec.
Remedies. Default (deletes 6(g)(2) of the 1937
notice and Act; and 24 CFR
possession part 907,
provisions and particularly 24 CFR
deletes mixed- 907.5 [Mixed-
finance provisions). finance provisions
will be included in
a mixed-finance ACC
amendment].
Sec. 14--HUD in Possession Deleted............. Sec. 6(j)(3)(H) of
of Project(s). the 1937 Act.
Sec. 15--Conflict of Sec. 8--Conflict of 2 CFR 200.318(c) and
Interest. Interest (deletes Sec. 2(b)(1) of the
Sec. 17--Members or procurement 1937 Act; 24 CFR
Delegates to Congress. conflicts of part 964, subpart
interest and E.
resident board
member requirement).
Sec. 18--Rights of Third Sec. 12--Rights of N/A.
Parties. Third Parties (no
deletions).
Sec. 19--Waiver or Amendment Sec. 13--Waiver or N/A.
Amendment (no N/A.
significant
deletions).
Sec. 11--Remedies
(did not appear in
60-day notice
version of the ACC,
therefore no
deletions).
------------------------------------------------------------------------
Dated: November 5, 2019.
Colette Pollard,
Department Reports Management Officer, Office of the Chief Information
Officer.
Annual Contributions Terms and Conditions for the Public Housing
Program
U.S. Department of Housing and Urban Development
Office of Public and Indian Housing
1. Annual Contributions Terms and Conditions (a.k.a. ACC)--This
agreement between the Department of Housing and Urban Development (HUD)
and a Public Housing Agency (PHA) establishes HUD's basic terms and
conditions for the PHA's federally funded public housing program, and
is authorized pursuant to the United States Housing Act of 1937 (the
1937 Act), (42 United States Code (U.S.C.) Sec. 1437 et seq.).
a. The ACC includes any funding exhibits, or amendments, to the
ACC; and supersedes any previous ACC, or consolidated contributions
agreement for the public housing program.
b. The ACC together with the PHA's written submissions for public
housing funds including but not limited to, the SF-424 (or successor
document) and any exhibits to the SF-424 reflecting HUD's commitment to
provide such financial assistance, constitutes a federal award which is
not awarded under the Federal Acquisition Regulations.
c. Public housing funds are federal financial assistance provided
to a PHA pursuant to the 1937 Act for the development or operation of
public housing and include public housing formula funding. Public
housing formula funding is provided as non-competitive federal awards
for:
Capital funding provided to a PHA pursuant to section 9(d)
(42 U.S.C. 1437g(d) of the 1937 Act (the Public Housing Capital Fund
program), and
operating funding provided to PHAs pursuant to section
9(e) (the Public Housing Operating Fund program) (42 U.S.C. 1437g(e))
of the 1937 Act.
d. The terms ``federal award'' ``federal financial assistance'' and
``recipient'' are defined in 2 Code of Federal Regulations (CFR)
(Version 2018) at Sec. Sec. 200.38, 200.40(a)(1), and 200.86
respectively.
[[Page 60425]]
2. Public Housing Administration. The PHA shall administer its
public housing program for the provision of decent, safe, and sanitary
housing to eligible families in accordance with this agreement and
Public Housing Requirements. The PHA shall comply with, and shall
ensure compliance by, any contractors or subcontractors with, the
Public Housing Requirements.
a. Public Housing Requirements include but are not limited to:
The 1937 Act as it exists now and as it may be amended in
the future;
Regulations issued by HUD at Title 24 of the CFR and the
Uniform Guidance at 2 CFR part 200 as they exist now and as they may be
amended in the future;
Appropriations acts, as they exist now and amended in the
future; and
Other federal statutes, regulations and executive orders
applicable to Public Housing Funds and Public Housing Projects; as they
exist now and as they may be amended in the future.
b. Nothing herein shall release the PHA from compliance with all
applicable laws, executive orders, and regulations (as they exist now
or are amended in the future) applicable to the receipt, use, and
maintenance of public housing funds and public housing projects that
are not specifically incorporated herein by reference. The term
``public housing project'' is defined in 24 CFR 905.108.
3. Encumbrances. Except for dwelling leases with eligible families
for public housing dwelling units and normal uses associated with the
operation of dwelling units, the PHA shall not encumber (including the
pledge as collateral for a loan) a public housing project or portion
thereof, public housing funds, or other public housing assets without
the prior written approval of HUD.
4. Restrictive Covenants. Promptly upon the PHA's acquisition,
development, or assistance of any real property with public housing
funds, the PHA shall, consistent with Public Housing Requirements,
execute, file for record (prior to the recordation of any other
encumbrance), and maintain an instrument against the property (which
may be in the form of a declaration of trust, declaration of
restrictive covenant, or such other document), as approved or
prescribed by HUD.
5. Insurance Requirements. Consistent with 24 CFR 965.205 the PHA
shall procure adequate insurance to protect the PHA from financial loss
resulting from various hazards.
a. Mandatory Insurance Coverage. The following types of insurance
are required:
1. Commercial Property. Each policy must be written with a blanket
limit, on a replacement cost basis, and with an agreed value clause
eliminating any coinsurance provision.
2. Commercial General Liability.
3. Workers Compensation and Employers Liability.
4. Owned and Non-Owned Automobile Liability.
5. Theft, Disappearance, and Destruction, only if the amount of
cash and checks on hand at any one time exceeds the amount prescribed
by HUD.
6. Employee Dishonesty.
7. Boiler and Machinery only if steam boilers have been installed.
8. Flood Insurance for property located in a flood plain, as
determined in the Federal Government's National Flood Insurance
Program.
9. Lead-Based Paint Liability for PHAs undergoing lead-based paint
testing and abatement.
b. Optional Insurance Coverage. Subject to the Cost Principles of
the Uniform Guidance, the following insurance coverage is recommended
and can be purchased if the PHA determines that exposure exists:
1. Boiler and Machinery coverage is recommended if there is
extensive central, conditioning, electrical transformers, or similar
equipment.
2. Directors and Officers or Public Officials Liability.
3. Law Enforcement Liability: Highly recommended where the exposure
exists, and the Commercial General Liability insurer has excluded
coverage.
4. Fidelity Bond Coverage. The PHA is recommended to carry adequate
fidelity bond coverage, as required by HUD, of its officers, agents, or
employees handling cash or authorized to sign checks.
c. Authorized Insurance Companies. Insurance must be purchased from
an insurance company or other entity that is licensed or duly
authorized to write insurance in the State where the PHA is located. At
each renewal, the PHA shall promptly have certificates of insurance
submitted by the insurers to HUD describing the types of coverage,
limits of insurance, policy numbers, and inception and expiration
dates.
d. Waivers. Requests for waivers of this section not to purchase
any form of required insurance, must be submitted in writing to HUD for
approval and include specific justification and risk analysis.
e. Restoration--Unless the PHA received prior written approval of
HUD to the contrary, the PHA shall, to the extent that insurance
proceeds permit, promptly restore, reconstruct, and/or repair any
damaged or destroyed Public Housing Project, in accordance with all
Public Housing Requirements.
6. Civil Rights and Employer Requirements. Nothing herein shall
release the PHA from compliance with all applicable civil rights laws,
executive orders, and regulations applicable to the receipt, use, and
maintenance of Public Housing Funds; and the operation and development
of Public Housing Projects, that are not specifically incorporated
herein by reference. The PHA shall comply with all State and Federal
laws applicable to employee benefit plans and other conditions of
employment.
7. Depository. The PHA shall deposit and invest its public housing
funds received by, or held for the account of, the PHA in connection
with the development, operation, improvement, and disposition of its
Public Housing Project in accordance with the terms of a General
Depository Agreement (GDA). The GDA shall be in the form prescribed by
HUD and must be executed by the PHA and the depository.
a. Immediately upon the execution of a GDA, the PHA shall furnish
to HUD an executed or conformed copy thereof as HUD may require. A GDA
shall not be terminated except after 30 days' prior notice to HUD.
b. The PHA shall maintain records that identify the source and
application of funds in such a manner as to allow HUD to determine that
all funds are and have been expended in accordance with Public Housing
Requirements. Except as approved by HUD, and consistent with Public
Housing Requirements, funds provided as separate federal awards are not
fungible.
8. Conflict of Interest. In addition to any Uniform Guidance
conflict of interest requirements at 2 CFR Subpart D, PHAs are subject
to the following conflict of interest requirements:
a. Neither the PHA nor any of its contractors or subcontractors may
enter into any contract or arrangement, including employment contracts
or arrangements, in connection with the operation and administration of
the public housing program in which any of the following classes of
persons has any real or apparent interest, (direct or indirect), during
his or her tenure or for one year thereafter:
1. Any present or former member or officer of the PHA (except a
present tenant commissioner who does not serve on the governing body of
a resident corporation, and who does not occupy a policymaking position
with the resident corporation, the PHA or a business entity), or any
member of the officer's immediate family;
[[Page 60426]]
2. Any employee of the PHA, or any contractor, subcontractor or
agent of the PHA, who formulates policy or who influences decisions
with respect to the programs, or any member of the employee's immediate
family;
3. Any public official, member of a governing body, or State or
local legislator, who exercises functions or responsibilities with
respect to the programs, or any member of such individual's immediate
family; or
4. Any member of the Congress of the United States; or resident
commissioner. As used in this section, the term ``resident
commissioner'' refers to an individual appointed to oversee a territory
or possession of the United States of America, (e.g., Guam).
b. The officers, employees, and agents of the PHA shall neither
solicit nor accept gratuities, favors or anything of monetary value
from residents of public housing or participants in programs covered by
this agreement; nor enter into any financial arrangement (direct or
indirect) with public housing residents or participants in program
covered by this agreement. However, the PHA may set written standards
for situations in which a gift is an unsolicited item of nominal value.
c. Any member of the classes described in paragraph (a) of this
section must disclose their interest or prospective interest to the PHA
and HUD.
d. The conflict of interest prohibition under this section may be
waived by HUD for good cause if HUD is provided with written evidence
that (1) a prohibited contract or arrangement is permitted under State
and local law; and (2) the PHA Board of Commissioners supports the
waiver.
e. No Public Housing Funds may be used to pay any compensation for
the services of members of the PHA's Board of Commissioners.
f. For purposes of this section and the Uniform Guidance (or any
succeeding requirements thereto) the term ``immediate family member''
means: spouse, domestic partner, mother, father, mother-in-law, father-
in-law, brother, sister, brother-in-law, or sister-in-law, or child of
a covered class member (whether related as a full blood relative, or as
a ``half'' or ``step'' relative, e.g., a half-brother or stepchild).
9. Substantial Default. Upon the occurrence of a substantial
default by the PHA, as determined by HUD, the PHA shall (1) convey to
HUD title to the Project(s), or (2) deliver possession and control of
the Project(s) to HUD if, in the determination of HUD (which
determination shall be final and conclusive), such conveyance or
possession is necessary to achieve the purposes of the 1937 Act. HUD
shall also be entitled to any or all other remedies allowed by the
Public Housing Requirements. A substantial default is a serious and
material violation of any one or more of the covenants contained in
this agreement, or as defined in the Public Housing Requirements.
a. Events of substantial default under this agreement shall
include, but shall not be limited to any of the following occurrences:
(1) PHA's failure to maintain and operate the Public Housing Project in
a decent, safe, and sanitary manner; (2) PHA's encumbrance of any
Public Housing Project or portion thereof without HUD approval; (3)
abandonment of any Public Housing Project or assets by the PHA, (4) the
determination by HUD that the powers of the PHA to operate the public
housing program in accordance with the provisions of this agreement or
the Public Housing Requirements are curtailed or limited to an extent
that will prevent the accomplishment of the objectives of this
Agreement.
b. Nothing contained in this agreement shall prohibit or limit HUD
exercising any other right or remedy existing under applicable law, or
available at equity. HUD's exercise or non-exercise of any right or
remedy under this agreement shall not be construed as a waiver of HUD's
right to exercise that or any other right or remedy at any time.
10. Termination. If a Public Housing Project is disposed of
(through sale or other method), all related public housing funds shall
(in accordance with Public Housing Requirements) become part of another
Public Housing Project administered by the PHA. If no other Public
Housing Project exists, the remaining personal and real property
(including any funds held under or required to be held under a GDA)
shall be distributed as directed by HUD, consistent with Public Housing
Requirements, which may include remittance to HUD.
11. Breach. This agreement does not contemplate money damages as a
remedy for a breach of the agreement by HUD.
12. Rights of Third Parties. Nothing in this agreement shall be
construed as creating any right of any third party to enforce any
provision of this agreement, or to assert any claim against HUD or the
PHA.
13. Waiver or Amendment. The PHA may request a waiver or amendment
to this ACC. Any administrative right that HUD may have under this ACC
may be waived in writing by HUD for good cause.
Name:------------------------------------------------------------------
Signature and Title:---------------------------------------------------
Date:------------------------------------------------------------------
Department of Housing and Urban Development
PHA Acceptance: The PHA hereby accepts this agreement executed by
the Department of Housing and Urban Development on the above date as a
Recipient designated to receive federal financial assistance for public
housing, and agrees to comply with the terms and conditions of this
agreement, applicable Public Housing Requirements, and other
requirements of HUD now or hereafter in effect, pertaining to the
federal financial assistance provided the PHA for its public housing
program.
Name:------------------------------------------------------------------
Signature and Title:---------------------------------------------------
Date:------------------------------------------------------------------
Public Housing Agency
Mixed-Finance Amendment
To the Annual Contributions Terms and Conditions for the Public Housing
Program (ACC)
I. On _____ the United States Department of Housing and Urban
Development (``HUD'') and _____ (``PHA'') executed an Annual
Contributions Terms and Conditions for the Public Housing Program
(``ACC''), which establishes HUD's basic terms and conditions for the
PHA's federally funded public housing grant programs.
II. This Mixed-Finance Amendment to the ACC (``Mixed-Finance
Amendment'') sets forth additional requirements that apply to the
public housing units and related appurtenances (``Project Units'' or
``Project''), which are being developed as part of the larger
development known as _____ (the ``Development''), for which HUD
approved a development proposal and related evidentiary documents
(together known as the ``Development Proposal'') on _____.
III. The following amendments are made to the ACC and shall apply
to the Project Units and/or Project, unless otherwise approved by HUD.
A. Section 3, Encumbrances: The requirements of Section 3 of the
ACC are replaced with the following requirements:
1. Neither the Project Units nor any part thereof shall be
demolished or disposed of, encumbered in any way, or the assets of the
Project pledged as collateral for a loan, other than in accordance with
the terms of the Public Housing Requirements and only with prior
written approval of HUD, so long as this Mixed-Finance Amendment
[[Page 60427]]
remains in force with respect to the Project, with the exception of:
a. Mortgage, deeds of trust, and other financing arrangements
approved as part of the Development Proposal;
b. Dwelling leases with eligible families living in the Project;
c. Conveyance or dedication of land for use as streets, alleys, or
other public rights-of-way, and grants and easements for the
establishment, operation and maintenance of public utilities approved
as part of the Development Proposal;
d. A memorandum of ground lease for record against the Project
prior to recordation of the HUD restrictive covenant, as approved by
HUD as part of the Development Proposal; and,
e. Normal uses associated with operation of the Project.
2. No transfer, conveyance, or assignment of the Project shall be
made without the prior written approval of HUD of:
a. Any interest of a managing member, general partner, or
controlling stockholder (any such interest being referred to as a
``Controlling Interest'') of the Owner; or
b. a Controlling Interest in any entity which has a Controlling
Interest in the Owner; or
c. any other interest in the Owner, or in any partner or member
thereof, prior to the payment in full of all equity contributions, as
approved in the Development Proposal.
3. Notwithstanding the foregoing, HUD consent is not required where
a business organization that has a limited interest (non-controlling
and non-managing) in the Owner transfers a non-controlling and non-
managing interest in the business organization, provided that the
Owner:
a. Provides HUD with written notice of such transfer; and
b. certifies to HUD that the new owner of the limited interest
remains obligated to fund its equity contribution in accordance with
the terms of the organizational documents of the Owner.
4. Notwithstanding the foregoing, the prior approval of HUD shall
not be required for the exercise by the investor, i.e., limited
partner, limited owner, etc. or its affiliates (``Limited Interest''),
of their rights to remove a Controlling Interest of the Owner or
partner or member thereof and to designate an affiliate of the Limited
Interest as a substitute Controlling Interest under the terms of the
Partnership Agreement or Operating Agreement, provided that HUD is
given prior written notice of default and of the Limited Interest's
intent to exercise its right of removal and appointment under the
Partnership Agreement or Operating Agreement (the ``Notice''). However,
HUD consent shall be required for the appointment of any permanent
replacement Controlling Interest or substitute Controlling Interest
beyond a 90-day period. Such 90-day period will commence on the date of
the Notice (the ``Interim Replacement Period''). With notice and the
prior written approval of HUD, the Interim Replacement Period may be
extended for an additional 90 days to allow the Limited Interest to
find a permanent replacement Controlling Interest acceptable to HUD,
provided that prior to the expiration of such additional 90-day period,
the substitute Controlling Interest demonstrates that the Limited
Interest is continuing to fund (or has already funded) its equity
contribution, as required under the Partnership Agreement or Operating
Agreement, and that the Project continues to be operated in a manner
consistent with the Public Housing Requirements.
5. HUD and the PHA authorize a Controlling Interest to collaterally
assign and pledge its interest in the Owner to a construction and/or
permanent lender, and to allow a construction and/or permanent lender
to exercise any of its rights pursuant thereto, so long as the
construction and/or permanent lender gives prompt written notice to HUD
at the time it exercises such rights (the ``Pledge Notice''). However,
consent of HUD shall be required for the appointment of any permanent
replacement Controlling Interest or substitute Controlling Interest
(including construction and/or permanent lender or its Affiliates)
extending beyond a 90-day period. Such 90-day period will commence on
the date of the Pledge Notice (the ``Pledge Replacement Period''). With
notice to the PHA and notice and prior written consent of HUD, the
Pledge Replacement Period may be extended for an additional 90 days to
allow construction and/or permanent lender to find a permanent
replacement Controlling Interest acceptable to HUD and the PHA,
provided that prior to the expiration of such additional 90-day period,
the substitute Controlling Interest demonstrates that the Limited
Interest is continuing to fund (or has already funded) its equity
contribution as required by the Owner's Partnership Agreement (or, if
the Owner is a limited liability company, the Owner's Operating
Agreement) and that Project continues to be operated in accordance with
the Public Housing Requirements.
6. HUD will not unreasonably withhold, delay, or condition a
request by the Owner for HUD's consent to an internal reorganization of
the corporate or partnership structure of the Owner or any of the
partners, members or stockholders of the Owner.
B. Section 4, Restrictive Covenants: The requirements of Section 4
of the ACC are replaced with the following requirements:
1. The PHA shall require the Owner to execute and file on record
against the Development, in the order approved by HUD, an instrument
against the property (which may be in the form of a declaration of
trust, declaration of restrictive covenants, or such other document as
approved or prescribed by HUD) that encumbers the property and confirms
the Owner's obligation to develop, maintain and operate the Project in
compliance with the Public Housing Requirements. This instrument may
not be modified, amended or released without the prior written approval
of HUD.
C. Section 5(e), Restoration: The requirements of Section 5(e) of
the ACC are replaced with the following requirements:
1. Taking or Casualty: In the event of a taking or threatened
taking by condemnation or other exercise of eminent domain of all or a
portion of the Development (collectively a ``Taking'') or the
occurrence of a fire or other casualty resulting in damage to all or a
portion of the Development (collectively a ``Casualty''), the following
shall apply:
The PHA shall promptly cause the restoration, reconstruction, and/
or repair (``Restoration'') of any damaged or destroyed property of the
Development, but only to the extent that insurance proceeds or
condemnation award proceeds (``Proceeds'') permit and only if
Restoration is feasible. The obligation for Restoration, to the extent
Proceeds and other funds (if any are made available by the Owner or the
PHA) permit, is also a requirement with which the Owner must comply, if
Restoration is feasible. In addition, each mortgagee must permit
Restoration if Proceeds permit and if Restoration is feasible (rather
than require application of Proceeds to reduce mortgage debt.)
Restoration is deemed ``feasible'' if (without limitation),
following Restoration, the financial viability of the Project would not
be materially impaired from its condition prior to the casualty,
including (without limitation) if tax benefits would not be materially
reduced or if committed sources of debt or equity financing would not
be relieved of their obligation to fund as a result of the Casualty.
However, a mortgage may provide and a mortgagee may exercise (with
HUD approval, as provided below), an option
[[Page 60428]]
to apply any Proceeds to repayment of the mortgage debt instead of
restoration, if any of the following conditions is met in the
reasonable determination of the mortgagee or, if different, the lender:
a. There is no substantial certainty of sufficient funds for
Restoration (whether from insurance proceeds, a condemnation award or
settlement, or other funds that may be provided by the Owner, the PHA
or other lenders);
b. there is no substantial certainty that Restoration will be
completed prior to the maturity date of the note secured by the
mortgage;
c. if the loan is a construction loan, there is no substantial
certainty that committed and sufficient loan repayment sources will be
available upon Restoration, completion and loan maturity;
d. there is no substantial certainty that the operating income of
the Development following Restoration will be sufficient to meet all
operating costs and other expenses, payments for reserves, and loan
repayment obligations relating to the Development;
e. there is no substantial certainty that Restoration of the
Development to a condition approved by lender will be completed prior
to the earlier of the maturity date of the loan or any fixed date
resulting from tax credit requirements or otherwise imposed by schedule
sources of repayment for the loan.
2. Restoration Is Not Feasible: In the event a lender, Owner and/or
PHA determines that Restoration is not feasible, the PHA shall apply to
HUD for approval not to restore the Project, which shall not be
unreasonably withheld, conditioned or delayed. Upon HUD approval not to
restore the project, Proceeds shall be applied as follows:
a. To pay-off or reduce outstanding mortgage debt in accordance
with the recordation order of the mortgage liens on the Development;
b. to reduce any outstanding indebtedness of the Owner to the PHA
for an unsecured loan;
c. to reimburse the PHA for any funds disbursed to the Owner for
development of the Development other than by loan. Such reimbursement
shall include any funds provided by the PHA for predevelopment work or
soft costs;
d. to the Owner, in an amount equal to the amount that the Owner or
its general partner or managing member is required to pay to any
investor member or partner in connection with the Casualty or Taking,
as provided for in the Owner's limited partnership agreement or
operating agreement, such as repurchase of an interest, the triggering
of ``credit adjusters'', or otherwise;
e. to the Owner, to the extent not otherwise covered by paragraph
(d), above, in an amount equal to the amount that the Owner is required
to pay or distribute upon dissolution in accordance with its limited
partnership agreement or operating agreement, including without
limitation all debts of the Owner whether to third persons or to
partners or members, and whether for funds advanced, property or
services, but disregarding for this purpose any provision in the
limited partnership agreement or operating agreement for distribution
of residual funds.
f. to the PHA an amount equal to the total ``cost of construction''
attributable to the Project Units, less the sum of (a), (b) and (c)
above; and,
g. to the Owner Entity.
3. Restoration Is Feasible--Partial Loss: In the event lender,
Owner Entity and/or PHA determine that Restoration is feasible and less
than all of the dwelling units in the Development are damaged,
destroyed or lost as a result of casualty or condemnation, the
following provisions shall apply:
a. If the Proceeds are sufficient to restore the Development to the
same number of units that existed prior to the Casualty or Taking, the
number of Project Units in the Development shall be the same number
(and bedroom configuration) that existed prior to the Casualty or
Taking.
b. If the Proceeds are not sufficient to restore the Development to
the same number of units that existed prior to the Casualty or Taking,
the number of Project Units in the Development shall be the same
percentage of the total number of units (and bedroom configuration) as
existed prior to the Casualty or Taking.
c. Any excess Proceeds remaining following redevelopment shall be
distributed as follows:
i. To pay-off or reduce outstanding mortgage debt in accordance
with the recordation order of the mortgage liens on the Development;
ii. to reduce any outstanding indebtedness of the Owner to the PHA
for an unsecured loan;
iii. to reimburse the PHA for any funds disbursed to the Owner
Entity for development of the Development other than by loan. Such
reimbursement shall include any funds provided by the PHA for
predevelopment work or soft costs;
iv. to the Owner, in an amount equal to the amount that the Owner
or its general partner or managing member is required to pay to any
investor member or partner in connection with the Casualty or Taking,
as provided for in the Owner's limited partnership agreement or
operating agreement, such as repurchase of an interest, the triggering
of ``credit adjusters'', or otherwise;
v. to the Owner, to the extent not otherwise covered by paragraph
(iii), above, in an amount equal to the amount that the Owner is
required to pay or distribute upon dissolution in accordance with its
limited partnership agreement or operating agreement, including without
limitation all debts of the Owner whether to third persons or to
partners or members, and whether for funds advanced, property or
services, but disregarding for this purpose any provision in the
limited partnership agreement or operating agreement for distribution
of residual funds;
vi. to the PHA an amount equal to the total ``cost of
construction'' attributable to the Project Units, less the sum of (i),
(ii) and (iii), above; and,
vii. to the Owner.
4. Restoration is Feasible--Total Loss: In the event that all of
the units in the Project are damaged, destroyed or lost as a result of
casualty or condemnation, and lender, Owner and/or PHA determine that
restoration is feasible, the following provisions shall apply:
a. If the Proceeds are sufficient to restore the Development to the
same number of units that existed prior to the Casualty or Taking, the
number of Project Units in the Development shall be the same number
(and bedroom configuration) that existed prior to the Casualty or
Taking.
b. If the Proceeds are not sufficient to restore the Development to
the same number of units that existed prior to the Casualty or Taking,
the number of Project Units in the Development shall be the same
percentage of the total number of units (and bedroom configuration) as
existed prior to the Casualty or Taking.
c. Any excess Proceeds remaining following redevelopment, shall be
distributed as follows:
i. To pay-off or reduce outstanding mortgage debt in accordance
with the recordation order of the mortgage liens on the Development;
ii. to reduce any outstanding indebtedness of the Owner Entity to
the PHA for an unsecured loan;
iii. to reimburse the PHA for any funds disbursed to the Owner
Entity for development of the Development other than by loan. Such
reimbursement shall include any funds provided by the PHA for
predevelopment work or soft costs;
iv. to the Owner, in an amount equal to the amount that the Owner
or its general partner or managing member is required to pay to any
investor member
[[Page 60429]]
or partner in connection with the Casualty or Taking, as provided for
in the Owner's limited partnership agreement or operating agreement,
such as repurchase of an interest, the triggering of ``credit
adjusters'', or otherwise;
v. to the Owner, to the extent not otherwise covered by paragraph
(iii), above, in an amount equal to the amount that the Owner is
required to pay or distribute upon dissolution in accordance with its
limited partnership agreement or operating agreement, including without
limitation all debts of the Owner whether to third persons or to
partners or members, and whether for funds advanced, property or
services, but disregarding for this purpose any provision in the
limited partnership agreement or operating agreement for distribution
of residual funds;
vi. to the PHA an amount equal to the total ``cost of
construction'' attributable to the Project Units, less the sum of (i),
(ii) and (iii), above; and,
vii. to the Owner.
5. The term ``cost of construction'' shall mean the total cost of
developing the Development, less land acquisition costs, if any,
included as part of the initial development budget.
6. The above restoration requirements must be incorporated into or
otherwise addressed by the Regulatory and Operating Agreement between
the PHA and the Owner (and ground lease, if applicable) and all
mortgage documents encumbering the Development shall be consistent with
these provisions.
D. Section 9, Substantial Default: In addition to the requirements
of Section 9 of the ACC, the following shall constitute an event of
substantial default under the ACC:
1. The drawdown and/or expenditure of Public Housing Funds is in an
amount greater than approved in the Development Proposal or in an
amount greater than allowed by the Public Housing Requirements;
2. a serious and material breach of any provision of the
Development Proposal; and,
3. a serious and material breach of any terms, covenants,
agreements, provisions, or warranties of:
a. The PHA, which in the opinion of HUD, adversely affects the
performance obligations of the PHA, the Owner, and/or other
participating parties; and
b. the Owner, partner, or other participating party, made in any
agreement or document submitted to HUD as part of the Development
Proposal, which, in the opinion of HUD, adversely affects the
performance obligations of the PHA, the Owner, partner, and/or other
participating parties.
4. HUD shall permit an Owner, partner, or lender to participate,
and may in its discretion, permit any other party to the Development to
participate in any appeal from a notice of substantial default
delivered by HUD to the PHA pursuant to this Mixed-Finance Amendment or
the Public Housing Requirements, with respect to the Project.
5. During the term of any agreement between the PHA and Owner, and
so long as the Owner shall not be in default of its obligations
thereunder, HUD agrees that in the event of the substantial default by
the PHA under this Mixed-Finance Amendment, HUD shall exercise any
remedies or sanctions authorized by the ACC and this Mixed-Finance
Amendment or the Public Housing Requirements, including taking
possession of the PHA's interest in the Project, in such a manner as
not to disturb the Owner's rights under any such agreements.
6. Any rights of the mortgagee under a Note and First Mortgage (if
any), including the right to exercise all remedies specified therein,
shall not be subordinate to any other obligations imposed upon the
Project, except as such obligations (a) shall be reflected in the HUD
restrictive covenant approved by HUD, as provided for in Paragraph B of
this Mixed-Finance Amendment, or a memorandum of lease (if applicable),
and/or any other recorded instrument which shall have been recorded
prior to the lien of the First Mortgage or (b) shall be the subject of
a subordination agreement with such mortgagee.
IV. Terms and Conditions: All other terms and conditions of the ACC
shall remain applicable to the Project, unless otherwise waived or
amended by HUD.
[Signature on the Following Page]
In consideration of the foregoing covenants, the parties do hereby
execute this Mixed-Finance ACC Amendment:
Housing Authority
By:--------------------------------------------------------------------
(signature)
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
United States of America
Secretary of Housing and Urban Development
By:--------------------------------------------------------------------
(signature)
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------
[FR Doc. 2019-24426 Filed 11-7-19; 8:45 am]
BILLING CODE 4210-67-P