[Federal Register Volume 85, Number 89 (Thursday, May 7, 2020)]
[Rules and Regulations]
[Pages 27133-27139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09298]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 5, 891, 960, and 982
[Docket No. FR 5743-F-05]
RIN 2502-AJ36
Streamlining Administrative Regulations for Multifamily Housing
Programs and Implementing Family Income Reviews Under the Fixing
America's Surface Transportation (FAST) Act
AGENCY: Office of the Deputy Secretary, HUD.
ACTION: Final rule.
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SUMMARY: On December 4, 2015, the President signed the Fixing America's
Surface Transportation Act (FAST Act) into law. The law contained
language that allowed public housing authorities (PHAs) and owners to
conduct full income recertifications for families with 90 percent or
more of their income from fixed income every 3 years instead of
annually. HUD issued an interim rule on December 12, 2017, to align the
current regulatory flexibilities with those provided in the FAST Act.
In addition, the interim rule sought to extend to certain multifamily
housing (MFH) programs some of the streamlining changes that were
proposed for and made only to the housing choice voucher (HCV) and
public housing (PH) programs. This final rule finalizes the regulatory
language to implement the FAST Act contained in the December 2017
interim rule, with one change to clarify that owners are not required
to make adjustments to non-fixed-income.
DATES: Effective June 8, 2020.
FOR FURTHER INFORMATION CONTACT: For questions, please contact the
following people (the phone numbers are not toll-free):
Multifamily Housing programs: Katherine Nzive, Director, Program
Administration Office, Asset Management and Portfolio Oversight, 202-
402-3440.
Housing Choice Voucher and Public Housing programs: Becky Primeaux,
Director, Housing Voucher Management and Occupancy Division, 202-402-
6050 or Monica Shepherd, Director, Public Housing Management and
Occupancy, 202-402-4059.
Persons with hearing or speech impairments may access these numbers
through TTY by calling the Federal Relay at 800-877-8339 (this is a
toll-free number). The above-listed contacts may also be reached by
mail at the following address: U.S. Department of Housing and Urban
Development, 451 7th Street SW, Washington, DC 20410.
SUPPLEMENTARY INFORMATION:
I. Background
On January 6, 2015, at 80 FR 423, HUD proposed a rule to implement
several statutory changes made in the Department of Housing and Urban
Development Appropriations Act, 2014 and also make multiple
administrative streamlining changes across several HUD programs. In
that proposed rule, some of these additional streamlining changes
applied only to the HCV and PH programs, not MFH programs.
Prior to the issuance of the final rule, on December 4, 2015, the
President signed the FAST Act (Pub. L. 114-94). While primarily a
transportation law, section 78001 of the FAST Act also amended the
United States Housing Act of 1937 to allow PHAs and owners in the HCV,
PH, and project-based rental assistance (PBRA) programs to eliminate
annual income reviews in some years by applying a cost of living
adjustment (COLA) determined by the Secretary to fixed-income sources
for families with incomes that are made up of at least 90 percent fixed
income. The PHA or owner is not required to verify non-fixed income
amounts for these families in years where no fixed-income review is
required but is still required to use third-party documentation for a
full income recertification every 3 years.
[[Page 27134]]
On December 12, 2017, at 82 FR 58335,\1\ HUD published an interim
final rule to implement the statutory provisions of the FAST Act and
modify the earlier streamlining regulations so that the procedures for
families meeting the 90 percent fixed-income threshold of the FAST Act
are as similar as possible to those for families who receive some, but
less than 90 percent, of their income from fixed-income sources. This
rule finalizes that interim final rule, along with one clarification.
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\1\ Please refer to this interim final rule for more background
on changes made to HUD's regulations at that stage.
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II. Changes Made at the Final Rule Stage
In response to public comment and as a result of further
consideration of certain issues by HUD, this final rule makes one
change to the December 12, 2017 interim final rule.
In Sec. 5.657, the December 12, 2017 interim final rule made
changes to an owner's option to apply a streamlined income
determination to families receiving fixed income. In paragraph
(d)(3)(i), the interim final rule stated that ``[f]or non-fixed income,
owners may choose, but are not required, to make appropriate
adjustments pursuant to'' the owner's obligation to conduct
reexaminations and redeterminations of family income and composition.
In this final rule, HUD is revising this sentence to read that ``[f]or
non-fixed income, owners are not required to make adjustments pursuant
to'' the owner's obligation to conduct reexaminations and
redeterminations of family income and composition. HUD is making this
change at the final rule stage to clarify that owners are not required
to make such adjustments.
Identical changes are made to the language regarding the PHA's
option to apply a streamlined income determination to families
receiving fixed income. These changes affecting PHAs are made to
Sec. Sec. 960.257(c)(3)(i) and 982.516(b)(3)(i).
III. Discussion of Public Comments and HUD's Responses
The public comment period on the interim final rule closed on
January 11, 2018, and 15 public comments were received. Comments were
submitted by individual members of the public, Fair Housing advocacy
groups, housing associations, and PHAs. The following presents the
significant issues and questions related to the interim final rule
raised by the commenters, and HUD's responses to these issues and
questions.
A. Comments of Support
The comments were generally supportive. Commenters noted that it
would reduce costs and make it easier for seniors to recertify income.
Others supported the expansion of flexibilities and the streamlining of
administrative changes across the HCV, PH and MFH programs, as it would
reduce administrative burden on PHAs and MFH owners to make annual
rental assistance adjustments and make it easier for program staff to
apply consistent regulations.
B. Rule Applicability
Issue: Single-family housing. Commenters asked whether the rule
includes residential single-family housing.
HUD Response: The FAST Act interim rule was, and this final rule
is, only intended to include units assisted by multifamily housing
programs overseen by the Office of Housing, as well as all Public
Housing and Housing Choice Voucher units (both single- and
multifamily).
Issue: Project-Based Voucher (PBV) recertifications. Commenters
stated that the rule does not explicitly state that families with PBV
assistance qualify for triennial recertifications and requested that
the rule include specific language stating that PBV-assisted households
are eligible for triennial recertifications.
HUD Response: Income recertification requirements for the PBV
program follow HCV program rules and guidelines; therefore, the
provisions related to reexamination of income apply to the PBV program.
Issue: Additional guidance. Commenters asked that HUD include with
each provision the program office to which the provision applies, a
description of change, background information, effective date, and
whether the provision is mandatory or discretionary.
HUD Response: Applicability, description of change, background
information, and effective dates will be further defined in program
guidance. All provisions of this rule are discretionary.
C. Implementation
1. General Implementation
Issue: Plans. Commenters asked whether, outside of Section 202 or
Section 811, an owner would need to create a policy or update their
Tenant Selection Plan to reflect their choice of implementing the
streamlined method.
HUD Response: If an owner chooses to implement streamlined methods,
the tenant selection plan should be updated where the property's annual
recertification requirements and interim recertification reporting
policies are discussed.
Issue: Contract amendments. A commenter asked how HUD plans to
amend assistance contracts of owners.
HUD Response: HUD does not believe that the changes made by the
FAST Act interim rule necessitate a change in the assistance contracts
of owners. The FAST Act interim rule made the following changes, none
of which is addressed in a Housing Assistance Payment contract: (1)
Streamlining certification of fixed income; (2) allowing for family
declaration for assets under $5,000; and (3) allowing owners to make a
utility reimbursement of $45 or less on a quarterly basis. For the
Section 202 and Section 811 programs, the current regulations do not
contain the requirements around utility reimbursements in general,
leaving such requirements in the assistance contracts. Therefore, HUD
is not including regulatory text to implement these new flexibilities
in the final rule, but rather would be open to amending the assistance
contracts of any owners interested in taking advantage of this
flexibility. Owners of Section 202 and 811 properties should contact
their Contract Administrator or Account Executive if they wish to
request a contract amendment. To amend the 202 or 811 assistance
contract, owners will need to submit the standard form of contract
amendment which will be provided by HUD upon request. HUD will provide
instructions for execution and submission with the standard contract
amendment.
Issue: Software. Commenters asked how the streamlining provisions
will be implemented with MFH's Tenant Rental Assistance Certification
System (TRACS). They asked whether the software packages will know what
to do if owners and agents either opt in or out of the streamlined
certifications. They suggested that some type of structure be
implemented so that Management Occupancy Reviews can be conducted
consistently across portfolios.
HUD Response: The provisions in this rule can be handled by the
current iteration of TRACS. Although streamlining certifications is now
permitted by owners, form HUD-50059 is still required to be completed
by owners and signed by tenants and submitted to TRACS. HUD will
consider changes to TRACS that may make tracking streamlined years
easier.
Issue: Medical expenses. Some commenters were concerned that the
rule does not address how to treat medical expenses for residents with
[[Page 27135]]
fixed income. They asked whether owners and agents should conduct full
recertifications for residents with medical expense claims while
conducting streamlined recertifications for residents that do not claim
medical expenses. They suggested that HUD specifically address the fact
that, while this rule does not incorporate the increased standard
medical deduction and new threshold for deduction of allowable medical
expenses or incorporate authority to use the past year's income and
expenses that will be coming as the Housing Opportunity through
Modernization Act (HOTMA) changes are implemented, HUD intends owners
and agents to continue to provide annual adjustments for verified
allowable medical expense deductions.
HUD Response: The FAST Act and the interim rule provide
administrative relief to PHAs and owners. PHAs and owners may elect a
streamlined income determination for families on a fixed income.
However, the provision only pertains to the verification of sources of
income. PHAs and owners must continue to conduct third-party
verification of deductions, including medical expenses deductions.
HUD proposed a rule to implement income changes made by HOTMA,
including medical expense deductions, published on September 17, 2019,
at 84 FR 48820. HUD does not perceive a conflict between the FAST Act
and HOTMA.
Issue: Relationship with current regulations. Commenters asked that
HUD reiterate that Notice H 2016-09 is still applicable and that owners
may continue streamlined verification for all fixed income sources,
regardless of overall percentage of total income.
HUD Response: The Streamlining Administrative Regulations for PH,
HCV, MFH, and Community Planning and Development programs final rule
(81 FR 12353) and its implementing guidance in Notice H 2016-09 are
still in effect alongside the provisions found in this rule.
Issue: Fixed-income sources. Commenters asked that HUD expand
qualified fixed-income sources to include Retirement Survivors and
Disability Income and income from Federal, State, local and private
pension plans if a family member receives such income through periodic
payments at reasonable predictable levels.
HUD Response: The definition of fixed income found in 24 CFR
5.657(2)(iv) includes ``other sources'' that are subject to adjustment
by a verifiable COLA or current rate of interest. Therefore, other
sources of fixed income are already included, if the source falls
within the framework established under this provision.
2. Income Verification
Issue: Commenters asked when owners and agents can and cannot
choose to verify non-fixed income. They asked whether owners and agents
must always verify non-fixed income regardless of the percentage of the
income that is fixed and if owners must adopt all provisions of the new
rule if they choose to adopt any. They asked that HUD emphasize that
housing agencies must apply annual reexaminations to households with 90
percent fixed income, but that PHAs have discretion to apply such
reexaminations to households with 100 percent fixed income.
HUD Response: Section 78001 of the FAST Act amended the United
States Housing Act of 1937 to allow PHAs and owners in the HCV, PH, and
PBRA programs to eliminate annual income reviews in some years by
applying a COLA determined by the Secretary to fixed income sources for
families with incomes that are made up of at least 90 percent fixed
income. The FAST Act did not require PHAs and owners to verify non-
fixed income amounts in years where no fixed-income review is required,
but did require them to use third-party documentation for a full income
recertification every 3 years.
The interim final rule and this final rule both reflect the FAST
Act by allowing PHAs and owners to use a COLA for fixed sources if such
sources make up at least 90 percent of a tenant's income. HUD has made
a slight adjustment in the regulatory text in this final rule to
clarify the language in Sec. Sec. 5.657(d)(3)(i), 960.257(c)(3)(i),
and 982.516(b)(3)(i) to emphasize that PHAs and owners are not required
to make adjustments for non-fixed income in such instances when using
streamlined income determinations.
This rule does not alleviate the responsibility to conduct
reexaminations each year, but rather changes the standards for income
verification during those reexaminations. ``Reexaminations'' encompass
more actions than income verifications. For example, reexaminations
consider verifications of expenses related to deductions, verifications
of family composition, compliance with the Community Service and Self
Sufficiency requirement in the public housing program, etc.
Issue: Triennial certifications. Commenters requested clarification
of the 3-year verification. They asked whether an owner or agent must
verify income at the beginning of every third year of tenancy or every
three calendar years from the date a tenant moves in. They requested
that HUD provide a common use form as a template or subsequent guidance
or examples for owners or agents.
HUD Response: The provisions of this rule are discretionary. Owners
that choose to implement streamlined annual recertifications must use
third-party verification of income at move-in for new tenants and for
existing tenants at the first annual recertification after the rule
becomes effective. Streamlined methods of verification of income may be
applied to the annual recertification the year after third-party
verified certification (year 2) and the next annual recertification
(year 3). Third-party verification of income must be used for the
following annual certification (year 4). HUD will not provide a common
use form at this time.
Issue: Staggered certifications. Commenters requested that PHAs be
allowed to stagger implementation of triennial recertifications of
assisted households to mitigate substantial increases in work at the
end of each triennial period.
HUD Response: Staggering recertifications has a potential impact of
disparate treatment among similarly situated families. PHAs and owners
choosing to implement triennial recertifications must afford all
households the equal ability to utilize options in the final rule. HUD
will not permit responsible entities to stagger recertifications.
Income verifications following new admissions or interim
reexaminations will naturally be staggered. Existing families will have
had the first triennial verification 3 years after implementation. Any
new admissions in the year following initial implementation for
existing families will have income verification in the year following
initial implementation and then 3 years after that.
Issue: Using prior certifications. Commenters stated that HUD
should allow the full certifications that owners and agents completed
prior to the implementation of the rule on March 12, 2018, to qualify
under the rule. They state that this would allow PHAs and owners to
benefit from the rule despite its delayed implementation.
HUD Response: The authority to utilize provisions of this rule was
not granted until March 12, 2018. Certifications completed prior to the
rule's implementation date cannot be included in the year 3 streamline
certification cycle. Additionally, the
[[Page 27136]]
first eligible COLA-based certification is April 2019.
Issue: Timing of implementation. Commenters asked that HUD make
clear that for housing agencies that choose to implement annual
reexaminations for fixed sources of income, lower voucher payment
standards for existing households under the lease will take effect on
the second annual recertification and not at the third. They also ask
that HUD clarify that housing agencies will not be required to wait to
implement triennial certifications.
HUD Response: Payment standards and the timing of their application
are not affected. PHAs are still required to process an annual
recertification and submit to PIH Information Center. Triennial
certifications may be implemented for new tenants at move-in and for
current tenants on or after March 12, 2018, at the next annual
recertification, following the update to the PHA's or owner's policy.
Issue: Previously reported income. Commenters stated that housing
agencies, owners, and managers should be allowed to use previously
reported income in years 1, 2, or 3 for purposes of calculating tenant
rent share and rent subsidy if the tenant has a transfer of unit,
relocation, or port-out.
HUD Response: For portability in the HCV program, the receiving PHA
has discretion to accept the most recent calculation of income on the
HUD-50058 or redetermine income. If the receiving PHA chooses to
redetermine income, a full reexamination would need to be completed.
For moves with continued assistance in the Voucher program or transfers
within a Public Housing property, PHAs are permitted to continue with
the streamlined schedule.
For MFH programs, unit transfers cannot occur between properties.
The new property must process a move-in certification and begin the
streamlined process from the third-party verified move-in
certification. For unit transfers within the property, owners are
permitted to continue with the streamlined schedule unless the transfer
involves circumstances that result in the family being unable to
certify that 90 percent of income is fixed and fixed sources have not
changed from the prior year.
D. Fraud and Confusion
Issue: Increased fraud and unreported income. Some commenters
stated that it will cause confusion and allow for mistakes, fraud,
unreported income, and mass income discrepancies. They stated that
decreased contact with households, especially non-elderly households
with members who are able to function in the workplace while receiving
traditional sources of fixed income, could create a rise of fraud,
unreported earned income, and deceit in the recertification process.
They also stated that confusion is more likely if some project
residents verify annually while other verify every 3 years. They asked
that bank statements continue to be reviewed to avoid fraud and
unreported self-employment income.
HUD Response: HUD acknowledges the commenters' stated concerns. The
stated elements of risk were reviewed prior to publication of the rule.
Provisions of this rule are discretionary. Further guidance will be
provided by program offices for PHAs and owners who choose to implement
provisions of the rule.
Issue: Certifications. Commenters asked that the term ``three-year
certification'' be clarified, as they state it is unclear whether
residents must still provide annual certifications regarding assets and
income. They recommend replacing the word ``certification'' with
``declaration'' to avoid confusion with historical uses for the word
certification.
HUD Response: PHAs and owners must conduct reexamination of
household income and composition at least annually. This requirement
remains in effect and is completed during the annual recertification
process. The rule streamlines the annual recertification process by
modifying income and asset verification methods but does not impact the
requirement to reexamine the household income and composition at least
annually. Annual recertifications performed during the 3-year
streamlined certification cycle will continue to be referred to as a
certification.
Issue: Declaration of income. Commenters asked whether a tenant can
provide a single document declaring income or if documents must be
obtained for each source of fixed income.
HUD Response: For the annual recertification initiating the 3-year
certification cycle, PHAs and owners must adhere to established
verification methods. For the next two annual recertifications, if the
tenant declares the income has not changed, there is no need to collect
declarations for each source.
Issue: Enterprise Income Verification. Some commenters asked that
HUD include language from Notice H 2016-09 and Notice H 2010-19 on the
use of the Enterprise Income Verification (EIV) System in the rule so
that it is clear that owners must continue full income verification for
residents with more than 10 percent of income from non-fixed sources
and that owners may use current applicable interest rates available
from public sources or tenant-provided, third-party generated
documentation to determine interest income on net family assets.
HUD Response: The provisions of the rule do not change established
EIV requirements. EIV usage will be further defined in program
guidance. Requirements related to determining interest income on net
family assets are not changed are by this rule.
E. Increased Burden
1. Income verifications
Issue: In general. Commenters stated that the changes seem more
burdensome than the existing verification requirements and therefore
owners and agents will be less likely to choose the proposed method.
The commenters also stated that the rule would not be beneficial, as
the COLA or rate of interest on an individual's source of fixed-income
must be verified annually.
HUD Response: PHAs and owners have discretion in implementing
provisions in this rule. If the PHA or owner determines that the rule's
provisions are not beneficial, implementation is not required. To aid
in implementation, further guidance will be provided.
Issue: 90 percent calculation. Commenters stated that the interim
rule added the ``90 percent or more'' language to the streamlining
final rule, which would cause owners and agents to conduct additional
income calculations and could result in eligibility issues due to
calculation errors.
HUD Response: The FAST Act only permits streamlined determinations
for all income (including income from non-fixed-income sources) when
the family's income is 90 percent or more from fixed-income sources, so
the additional calculation is required by the statute. HUD recognizes
that this requirement entails a determination whether the 90 percent
threshold is met. However, PHAs and owners still retain the option to
not streamline determinations pursuant to the FAST Act, but rather only
streamline individual sources of income, per the March 8, 2016, final
rule (81 FR 12353).
Issue: Layering of assistance. Some commenters stated that owners
of projects with other affordability requirements or tenants who do not
have 90 percent of income fixed may still need to certify annually, and
therefore the proposed rule would not reduce burden. The commenters
also
[[Page 27137]]
stated that monitoring reporting cycles will be an increased burden to
project owners, as not all project residents will be on the same 3-year
reporting cycle.
HUD Response: It is understood that the streamlining efforts
identified in the FAST Act may not be beneficial in all scenarios.
Owners have the option of continuing to process annual recertifications
of family income and composition as done prior to this rule being
published. Owners must be aware of policies in other programs, however;
HUD cannot comment on programs that are not subject to FAST Act
provisions.
Issue: Self-certification of assets. Commenters questioned whether
allowing residents to self-certify assets of $5,000 or less will reduce
administrative burden, as more effort may be used to monitor and
determine the amount of tenant pension than just verifying the tenant
pension.
HUD Response: PHAs and owners may accept tenant self-certification
for assets of $5,000 or less for years 2 and 3 of the streamlined 3-
year cycle. Provisions of the FAST Act affect the means by which income
is identified. PHAs and owners have discretion in implementing
provisions in this rule. If the rule's provisions are not beneficial,
implementation is not required.
2. Use of Forms
Issue: Form 9886. Commenters stated that HUD should not require
fixed-income households to complete HUD's 9886 authorization form to
access the Enterprise Income Verification each year. Instead, they
state that the 9886 authorization form should only be required for full
recertifications every 3 years. They ask that HUD extend the 9886
authorization form for at least 15 months to allow housing authorities
to benefit from triennial recertifications in early 2018.
HUD Response: HUD acknowledges the stated concern and suggestion of
the commenter. At this time, HUD is not extending the effective period
of forms HUD 9886 and 9887.
Issue: Reducing the number of forms. One commenter stated that HUD
should not require PHAs to collect all of the currently required
certification forms from fixed-income households during years 2 and 3
of the triennial period.
HUD Response: The required certification forms are in connection
with other HUD regulatory and statutory requirements. HUD does not have
the authority under this rule to discontinue the requirement to collect
these forms.
Issue: Bank statements. Commenters stated that it would be
difficult to obtain six consecutive bank statements for family
declarations of assets. They asked whether owners and agents would need
to use the tenants' declaration of asset income similar to the tax
credit program.
HUD Response: For move-ins and annual recertifications initiating
the 3-year streamlining cycle, PHAs and owners or agents must adhere to
current program guidance. For years 2 and 3, the rule requires
households to complete a declaration of assets of $5,000 or less.
F. Utility Allowances
1. Determination of Utility Allowance
Issue: Setting allowances. Commenters stated that the utility
allowance should not be a project-based allowance based on an
artificial average. The commenters stated that the utility allowance
should instead be based on the annual recertification process, wherein
each resident provides its own bills in the annual certification
process and the allowance is calculated as part of the resident's total
tenant payment. The commenters stated that the utilities reimbursements
should be made monthly, as it would otherwise be more difficult for
accounting to issue checks.
HUD Response: The process of determining utility allowance is
outside the scope of this rule. PHAs and owners have discretion to
utilize the provision of issuing utility reimbursements equal to or
less than $15 per month on a quarterly basis. If it is determined that
the provision will create administrative hardships, implementation is
not required.
2. Requests for Clarification
Issue: Hardships. Commenters requested clarification on what
policies owners/agents should adopt to assist tenants that might
experience a financial hardship under the rule. They stated that a
tenant that receives a utility reimbursement has very limited or no
income and therefore it would be difficult to determine what would
constitute a hardship. They asked whether HUD has analyzed or
calculated the amounts at which tenants may claim a financial hardship.
HUD Response: Hardship policies for utility reimbursements will be
addressed through program-specific guidance.
Issue: Contract amendments. Commenters asked HUD to provide clarity
on the process for 202 and 811 Project Rental Assistance Contracts
(PRACs) to amend their assistance contracts to incorporate changes to
utility reimbursement payments. They suggested HUD provide a
centralized point of contact to assist owners with amending assistance
contracts for this purpose.
HUD Response: The provisions of this rule do not affect the
regulation and program guidance governing the requirements of adjusting
utility allowances. PHAs and owners must perform utility allowance
adjustments in accordance with established guidance.
Issue: Relationship with annual reexaminations. Commenters asked
that HUD clarify that those housing agencies that implement annual
reexaminations for fixed sources of income would still have to adjust
tenant-paid utility allowances.
HUD Response: The provisions of this rule do not affect the
regulation and program guidance governing the requirements of adjusting
utility allowances. PHAs and owners must perform utility allowance
adjustments in accordance with established guidance.
G. COLA
1. Use and Adjustments of COLA
Issue: COLA adjustment. Commenters stated that COLA should be
adjusted so that all households pay their fair portion.
HUD Response: The COLA is adjusted each year based on actual COLA.
The changes in rent are based on the change in COLA. Changing the
amount of the COLA is outside the scope of this rule.
Issue: Which COLA to use. Commenters asked that housing agencies,
owners, and managers use the Social Security Administration's COLA as
the single COLA, unless requested otherwise by a household.
HUD Response: The rule does not implicate the use of a single COLA.
PHAs and owners or agents must use the COLA applicable to the income
source.
2. Requests for Clarification
Issue: When to start using COLA. Commenters stated that HUD should
explicitly state that owners may begin to use the current SSA COLA as
of the rule effective date of March 12, 2018, to adjust the overall
total or each line item for the various sources of fixed sources of
income. They also state that this factor should apply to all other
income that comprise less than 10 percent of the total resident
incomes, where the owner chooses not to verify them.
HUD Response: The authority to utilize provisions of this rule was
not granted until March 12, 2018. Certifications completed prior to the
interim rule's implementation date cannot be included in the second or
[[Page 27138]]
third year of the streamline certification cycle. The first eligible
COLA-based certification is April 2019. For families with 90 percent or
more of their income from fixed sources, sources of non-fixed income
need not be adjusted and must not be adjusted by a COLA, but the PHA or
owner may choose to adjust sources of non-fixed income by the amount
determined on the basis of third-party verification.
The rule does not allow the use of a single COLA. PHAs and owners
or agents must use the COLA applicable to the income source.
Issue: Single COLA. Commenters asked that HUD provide more
information on whether owners should use a current COLA and explicitly
state that HUD will issue a notice before a single-value COLA can be
implemented.
HUD Response: The rule does not implicate the use of a single COLA.
PHAs and owners or agents must use the COLA applicable to the income
source.
Issue: Required interim recertifications. Commenters stated that
HUD should make explicit that interim recertifications are not required
of housing agencies, owners, or managers when the COLA is to take
effect, but the COLAs will instead be applied to household income on an
annual basis at their lease anniversary.
HUD Response: This rule requires that an adjustment be made at
annual recertification. HUD is not prohibiting interim recertifications
as a result of a change in the COLA. Tenants and owners must continue
to follow the income recertification requirements identified in the
lease agreement, and PHAs must follow the income recertification
requirements in their policies.
IV. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and therefore, subject to review by the Office of Management and Budget
(OMB) in accordance with the requirements of the order. Executive Order
13563 (Improving Regulations and Regulatory Review) directs executive
agencies to analyze regulations that are ``outmoded, ineffective,
insufficient, or excessively burdensome,'' and to modify, streamline,
expand, or repeal them in accordance with what has been learned.
Executive Order 13563 also directs that, where relevant, feasible, and
consistent with regulatory objectives, and to the extent permitted by
law, agencies are to identify and consider regulatory approaches that
reduce burdens and maintain flexibility and freedom of choice for the
public. This rule was not determined to be a ``significant regulatory
action'' as defined in section 3(f) of the Executive order.
As discussed in more detail in the December 12, 2017, interim final
rule, this final rule continues to further HUD's efforts to streamline
administrative requirements for owners receiving subsidies under the
HCV, PH, PBRA, Section 202 and Section 811 programs. Specifically, this
final rule continues to give PHAs and owners greater flexibilities in
determining tenant families' income and assets, and in issuing utility
reimbursements. The final rule also continues to provide PHAs and
owners with the discretion to implement these changes. Some may choose
the status quo; others will choose the streamlining alternative. By
allowing voluntary implementation, HUD enables participants to choose
their desired method of administration, which in many cases will
presumably be the least-cost method. Given that an unknown number of
PHAs and owners may choose the status quo, it is difficult to estimate
the savings with precision. Based on the assumptions above, the interim
final rule and this final rule expect aggregate savings to be
approximately $31.2 million ($24.9 million from income verification +
$0.6 million from utility reimbursement + $5.9 million from asset
verification).
Executive Order 13771
Executive Order 13771 entitled, ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017. The
interim final rule, published on December 12, 2017, at 82 FR 58335, was
considered an E.O. 13771 deregulatory action based on the cost savings
mentioned above. This final rule does not make substantive changes to
the interim final rule, and therefore does not contribute any
additional cost savings. However, the final rule continues the
potential for future cost savings established by the interim final
rule.
Information Collection Requirements
The information collection requirements contained in this final
rule have been approved by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and
assigned OMB control number 2502-0204. In accordance with the Paperwork
Reduction Act of 1995, an agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information,
unless the collection displays a currently valid OMB control number.
Environmental Review
This final rule involves external administrative requirements and
procedures related to calculation of HUD rental assistance that do not
constitute a development decision affecting the physical condition of
specific project areas or building sites. Accordingly, under 24 CFR
50.19(c)(6), this final rule is categorically excluded from
environmental review under the National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on State and local
governments and is not required by statute, or the rule preempts State
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive order. This final rule does not have
federalism implications and does not impose substantial direct
compliance costs on State and local governments nor preempt State law
within the meaning of the Executive order.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers applicable to
the program affected by this final rule are 14.157, 14.181, 14.195,
14.850, and 14.871.
List of Subjects
24 CFR Part 5
Administrative practice and procedure, Aged, Claims, Crime,
Government contracts, Grant programs--housing and community
development, Individuals with disabilities, Intergovernmental
relations, Loan programs--housing and community development, Low and
moderate income housing, Mortgage insurance, Penalties, Pets, Public
housing, Rent subsidies, Reporting and recordkeeping requirements,
Social security, Unemployment compensation.
24 CFR Part 891
Aged, Grant programs--housing and community development,
Individuals with disabilities, Loan programs--housing and community
development, Rent subsidies, Reporting and recordkeeping requirements.
[[Page 27139]]
24 CFR Part 960
Aged, Grant programs-housing and community development, Individuals
with disabilities, Pets, Public housing.
24 CFR Part 982
Grant programs--housing and community development, Grant programs--
Indians, Indians, Public housing, Rent subsidies, Reporting and
recordkeeping requirements.
Accordingly, the interim rule amending 24 CFR parts 5, 891, 960,
and 982, which was published at 82 FR 58335 on December 12, 2017, is
adopted as final with the following changes:
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
0
1. The authority citation for part 5 continues to read as follows:
Authority: 12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437d,
1437f, 1437n, 3535(d); Sec. 327, Pub. L. 109-115, 119 Stat. 2936;
Sec. 607, Pub. L. 109-162, 119 Stat. 3051 (42 U.S.C. 14043e et
seq.); E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and E.O.
13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273.
0
2. In Sec. 5.657, revise the last sentence in paragraph (d)(3)(i) to
read as follows:
Sec. 5.657 Section 8 project-based assistance programs:
Reexamination of family income and composition.
* * * * *
(d) * * *
(3) * * *
(i) * * * For non-fixed income, owners are not required to make
adjustments pursuant to paragraph (b) of this section.
* * * * *
PART 960--ADMISSION TO, AND OCCUPANCY OF, PUBLIC HOUSING
0
3. The authority citation for part 960 continues to read as follows:
0
4. In Sec. 960.257, revise the last sentence in paragraph (c)(3)(i) to
read as follows:
Sec. 960.257 Family income and composition: Annual and interim
reexaminations.
* * * * *
(c) * * *
(3) * * *
(i) * * * For non-fixed income, the PHA is not required to make
adjustments pursuant to paragraph (a) of this section.
* * * * *
PART 982--SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER
PROGRAM
0
5. The authority citation for part 982 continues to read as follows:
Authority: 42 U.S.C. 1437f and 3535(d).
0
6. In Sec. 982.516, revise the last sentence in paragraph (b)(3)(i) to
read as follows:
Sec. 982.516 Family income and composition: Annual and interim
reexaminations.
* * * * *
(b) * * *
(3) * * *
(i) * * * For non-fixed income, the PHA is not required to make
adjustments pursuant to paragraph (a) of this section.
* * * * *
Dated: April 27, 2020.
Brian D. Montgomery,
Assistant Secretary for Housing, Federal Housing Commissioner.
[FR Doc. 2020-09298 Filed 5-6-20; 8:45 am]
BILLING CODE 4210-67-P