Use of Indian Housing Block Grant Funds for Rental Assistance in Low-Income Housing Tax Credit Projects, 31944-31945 [E7-11054]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 72, Number 110 (Friday, June 8, 2007)]
[Proposed Rules]
[Pages 31944-31945]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-11054]



[[Page 31943]]

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Part III





Department of Housing and Urban Development





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24 CFR Part 1000



 Use of Indian Housing Block Grant Funds for Rental Assistance in Low-
Income Housing Tax Credit Projects; Proposed Rule

Federal Register / Vol. 72, No. 110 / Friday, June 8, 2007 / Proposed 
Rules

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 1000

[Docket No. FR-4999-P-01]
RIN 2577-AC61


Use of Indian Housing Block Grant Funds for Rental Assistance in 
Low-Income Housing Tax Credit Projects

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend the Indian Housing Block Grant 
(IHBG) program regulations to specify the conditions under which IHBG 
funds may be used for project-based or tenant-based rental assistance. 
The proposed rule clarifies that such rental assistance may be provided 
in a manner consistent with assistance provided under section 8 of the 
United States Housing Act of 1937 on behalf of a tenant receiving 
assistance under the Native American Housing Assistance and Self-
Determination Act of 1996 (NAHASDA).

DATES: Comment Due Date: August 7, 2007.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Room 10276, Washington, DC 20410-0500. Interested persons also may 
submit comments electronically through the Federal eRulemaking Portal 
at www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically so that HUD can make them immediately available 
to the public. Commenters should follow the instructions provided on 
that site to submit comments electronically. Facsimile (FAX) comments 
are not acceptable. In all cases, communications must refer to the 
docket number and title. All comments and communications submitted to 
HUD will be available for public inspection and copying between 8 a.m. 
and 5 p.m. weekdays at the above address. Due to security measures at 
the HUD Headquarters building, an advance appointment to review the 
public comments must be scheduled by calling the Regulations Division 
at (202) 708-3055 (this is not a toll-free number). Copies of all 
comments submitted are available for inspection and downloading at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Deborah Lalancette, Director, Office 
of Grants Management, Office of Native American Programs, United States 
Department of Housing and Urban Development, 1670 Broadway, 23rd Floor, 
Denver, CO 80202-4801; telephone (303) 675-1625 (this is not a toll-
free number). Persons with hearing or speech impairments may access 
this number through TTY by calling the toll-free Federal Information 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    The Native American Housing Assistance and Self-Determination Act 
of 1996 (25 U.S.C. 4101 et seq.) (NAHASDA) changed the way that housing 
assistance is provided to Native Americans. NAHASDA eliminated several 
separate assistance programs and replaced them with a single block 
grant program, known as the Indian Housing Block Grant (IHBG) program. 
NAHASDA and its implementing regulations recognize tribal self-
determination and self-governance while establishing reasonable 
standards of accountability. The regulations governing the IHBG program 
are located in part 1000 of HUD's regulations in title 24 of the Code 
of Federal Regulations.
    Under the IHBG program, HUD makes assistance available to eligible 
Indian tribes for affordable housing activities. The amount of 
assistance made available to each Indian tribe is determined using an 
allocation formula, developed with the active participation of Indian 
tribes and using negotiated rulemaking procedures. The IHBG allocation 
formula is based on factors that reflect the need of Indian tribes for 
affordable housing activities. Based on the amount of funding 
appropriated annually for the IHBG program, HUD calculates the annual 
grant for each Indian tribe and provides this information to the Indian 
tribes. An Indian Housing Plan (IHP) for each Indian tribe is then 
submitted to HUD. If the IHP is found to be in compliance with 
statutory and regulatory requirements, the grant is made. An Indian 
tribe (or its tribally designated housing entity (TDHE)) may use its 
IHBG funds for a wide range of affordable housing activities, including 
the provision of project-based or tenant-based rental assistance for 
eligible families.

II. Low-Income Housing Tax Credits

    In 1986, Congress amended the Internal Revenue Code to create the 
Low Income Housing Tax Credit (LIHTC) (see 26 U.S.C. 42), a tax 
incentive to promote the development of affordable rental housing. 
These tax credits encourage investment in affordable housing by 
providing developers a source of equity investment--an ownership 
interest in the housing project--in exchange for an agreement to limit 
rents to a level that would be affordable to low-income households. 
State housing agencies competitively allocate the credits to private 
developers who acquire, construct, or rehabilitate affordable rental 
housing.
    Eligible projects receive Federal income tax credits over a 10-year 
period using a formula that, in part, takes into account certain 
eligible costs called ``eligible basis.'' Generally, Federal grants 
used with respect to a building or for its operation thereof result in 
a dollar-for-dollar decrease in eligible basis. However, the Internal 
Revenue Service (IRS) has recognized that certain types of Federal 
rental assistance payments are not Federal grants that require a 
reduction in a building's eligible basis. They include payments made 
pursuant to section 8 of the United States Housing Act of 1937 (42 
U.S.C. 1437f) (Section 8) and comparable programs or methods of rental 
assistance designated by the Secretary of the Treasury by publication 
in the Federal Register or in the Internal Revenue Bulletin. (See the 
IRS regulations at 26 CFR 1.42-16(b).) Section 8 is the statutory 
authority for HUD's principal rental assistance programs--the tenant-
based Housing Choice Voucher program (with implementing regulations at 
24 CFR part 982) and the Project-Based Voucher program (with 
implementing regulations at 24 CFR part 983).
    HUD rental assistance programs (such as the project-based voucher 
program) address the requirements that apply when such program rental 
assistance is provided to tenants residing in LIHTC projects. However, 
the IHBG program regulations are silent with regard to the use of IHBG 
rental assistance in these projects. HUD has received requests from 
several Indian tribes and TDHEs that are IHBG recipients and wish to 
use their IHBG funds for LIHTC projects. Specifically, these requests 
came from eight IHBG recipients as well as one Native American housing 
association representing 32 Indian tribes, all requesting that HUD 
address the inability to use IHBG grants in LIHTC projects without 
penalty (i.e., without the amount of the grant coming out of a 
building's eligible basis). This proposed rule would address these 
tribal requests.

[[Page 31945]]

III. This Proposed Rule

    The proposed rule would add a new Sec.  1000.103 to specify the 
conditions under which IHBG funds may be used for tenant-based or 
project-based rental assistance. Proposed Sec.  1000.103 would clarify 
that IHBG funds may be used for project-based or tenant-based rental 
assistance. Further, the proposed rule clarifies that IHBG funds may be 
used for project-based or tenant-based rental assistance that is 
administered in a manner consistent with Section 8. IHBG funds used for 
project-based or tenant-based rental assistance must comply with the 
requirements of NAHASDA and 24 CFR part 1000. Only the Secretary of the 
Treasury may make a determination that project-based or tenant-based 
rental assistance complies with IRS regulations at 26 CFR 1.42-16(b) 
and, therefore, will not reduce the building's eligible basis. This 
proposed rule is necessary in order to begin the process of requesting 
IRS approval for the combination of IHBG funds with LIHTCs. This 
proposed rule, when promulgated in final form, will allow for such 
determination to be made. This proposed rule would not limit the range 
of eligible activities that an Indian tribe or TDHE may undertake. It 
merely will clarify one permissible use of IHBG funds.

IV. Findings and Certifications

Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866 (entitled ``Regulatory Planning and Review''). 
OMB determined that this rule is a ``significant regulatory action,'' 
as defined in section 3(f) of the Order (although not economically 
significant, as provided in section 3(f)(1) of the Order). Any changes 
made to the rule subsequent to its submission to OMB are identified in 
the docket file, which is available for public inspection in the 
Regulations Division, Office of General Counsel, Department of Housing 
and Urban Development, 451 Seventh Street, SW., Room 10276, Washington, 
DC 20410-0500. Due to security measures at the HUD Headquarters 
building, please schedule an appointment to review the docket file by 
calling the Regulations Divisions at (202) 708-3055 (this is not a 
toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal 
Information Relay Service at (800) 877-8339.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. This rule would 
clarify that IHBG funds may be used for project-based or tenant-based 
rental assistance that is provided in a manner consistent with 
assistance provided under section 8 of the United States Housing Act of 
1937 on behalf of a tenant receiving assistance under NAHASDA. This 
rule would not impose new requirements on IHBG program participants. 
Accordingly, the undersigned certifies that this rule will not have a 
significant economic impact on a substantial number of small entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic impact on a substantial number of small entities, 
HUD specifically invites comments regarding less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding of No Significant 
Impact is available for public inspection between the hours of 8 a.m. 
and 5 p.m. weekdays in the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 10276, Washington, DC 20410-0500. Due to security 
measures at the HUD Headquarters building, please schedule an 
appointment to review the rule docket file by calling the Regulations 
Division at (202) 708-3055 (this is not a toll-free number).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of section 6 of the Executive Order are met. This rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on state and local governments or preempt state 
law within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments, and on the private sector. This rule would not 
impose any Federal mandate on any State, local, or tribal government, 
or on the private sector, within the meaning of UMRA.

Catalog of Federal Domestic Assistance.

    The Catalog of Federal Domestic Assistance number applicable to the 
program affected by this rule is 14.862.

List of Subjects in 24 CFR Part 1000

    Aged, community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, 
Individuals with disabilities, Public housing, Reporting and 
recordkeeping requirements.

    For the reasons described in the preamble, HUD proposes to amend 24 
CFR part 1000 to read as follows:

PART 1000--NATIVE AMERICAN HOUSING ACTIVITIES

    1. The authority citation for part 1000 continues to read as 
follows:

    Authority: 25 U.S.C. 1401 et seq. and 42 U.S.C. 3535(d).

    2. Add Sec.  1000.103 to read as follows:


Sec.  1000.103  How may IHBG funds be used for tenant-based or project-
based rental assistance?

    (a) IHBG funds may be used for project-based or tenant-based rental 
assistance.
    (b) IHBG funds may be used for project-based or tenant-based rental 
assistance that is provided in a manner consistent with section 8 of 
the United States Housing Act of 1937 (42 U.S.C. 1437f).
    (c) IHBG funds used for project-based or tenant-based rental 
assistance must comply with the requirements of NAHASDA and this part.

    Dated: May 3, 2007.
Orlando J. Cabrera,
Assistant Secretary for Public and Indian Housing.
[FR Doc. E7-11054 Filed 6-7-07; 8:45 am]
BILLING CODE 4210-67-P