Streamlining Requirements Applicable to Formation of Consortia by Public Housing Agencies, 40019-40031 [2014-16151]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Proposed Rules]
[Pages 40019-40031]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16151]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5 and 943

[Docket No. FR-5578-P-01]
RIN 2577-AC89


Streamlining Requirements Applicable to Formation of Consortia by 
Public Housing Agencies

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise HUD's public housing agency 
(PHA) consortium regulations. These regulations provide the procedures 
by which PHAs may choose to administer their public housing and Section 
8 programs. The changes proposed are intended to increase 
administrative efficiencies associated with forming a consortium and to 
help ensure maximum family choice in locating suitable housing. The 
proposed rule

[[Page 40020]]

focuses mainly on establishing a new category of consortia for 
administration of the Section 8 Housing Choice Voucher (HCV) program. 
This type of consortium would be comprised of multiple PHAs that would 
become a single PHA, with a single jurisdiction and a single set of 
reporting and audit requirements, for purposes of administering the 
Section 8 HCV program. This type of consortium would be in addition to 
the consortium structure established in current consortium regulations 
which the Department is referring to as multiple-ACC consortium in this 
proposed rule. The proposed rule would also revise the categories of 
Section 8 programs eligible to be administered under a consortium, and 
establish new requirements regarding the timeframes for the 
establishment and dissolution of a consortium. Further, HUD has taken 
the opportunity afforded by this proposed rule to make several 
technical, nonsubstantive changes to improve the clarity and 
organization of the consortia regulations. HUD has also taken the 
opportunity afforded by this proposed rule to amend the definition of 
``public housing agency'' to be consistent with amendments to the 
United States Housing Act of 1937 (1937 Act), as provided for in the 
Consolidated Appropriations Act of 2014.

DATES: Comments Due Date: September 9, 2014.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, 451 7th Street SW., Room 10276, Department of Housing and 
Urban Development, Washington, DC 20410-0500. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of the General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410-0001.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available to 
the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note:  To receive consideration as public comments, comments 
must be submitted through one of the two methods specified above. 
Again, all submissions must refer to the docket number and title of 
the rule. No Facsimile Comments. Facsimile (fax) comments are not 
acceptable.

    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-708-3055 (this is 
not a toll-free number). Individuals with speech or hearing impairments 
may access this number via TTY by calling the Federal Relay Service at 
800-877-8339 (this is a toll-free number). Copies of all comments 
submitted are available for inspection and download at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Michael Dennis, Director, Office of 
Housing Voucher Programs, Office of Public and Indian Housing, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
4228, Washington, DC 20410-5000; telephone number 202-402-3882 (this is 
not a toll-free number). Persons with hearing or speech impairments may 
access these numbers through TTY by calling the Federal Relay Service 
at 800-877-8339 (this is a toll-free number).

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

A. Purpose of Regulatory Action

    HUD's current public housing consortium regulation poses hurdles to 
forming consortia. Through this proposed rulemaking, HUD is modifying 
its regulations to encourage PHAs to form consortia, as doing so 
enables PHAs to combine administrative functions to increase efficiency 
and effectiveness, may benefit smaller PHAs with economies-of-scale, 
and improves opportunities for housing choices. In particular, this 
rule seeks to increase administrative efficiencies associated with 
forming a consortium by improving the process for how consortia are 
formed, structured and dissolved. In addition, this rule supports PHAs 
mission to provide more suitable housing options for participants by 
allowing PHAs to operate as one entity throughout a region, as an 
incentive to PHAs to form consortia.

B. Summary of the Major Provisions of the Regulatory Action in Question

    This rule would establish a new category of consortia for 
administration of the Section 8 HCV program, called the single-Annual 
Contributions Contract (ACC) consortium. The proposed rule clarifies 
that PHAs are not precluded from joining a consortium solely because 
the PHA is the owner of a unit or project receiving rental assistance 
under section 8(o) of the 1937 Act (42 U.S.C. 1437f). The proposed rule 
describes how and when consortia can be formed and dissolved, the 
requirement that a single 5-Year Plan and Annual Plan must be submitted 
as a condition for formation of the consortium, and fiscal year end 
requirements that would be applicable to single-ACC and multiple-ACC 
consortia.
    Although the proposed rule is designed to encourage formation of 
consortia, the proposed rule would impose certain limitations. For 
example, Moving-to-Work (MTW) agencies may not form or join single-ACC 
or multiple-ACC consortia because MTW agencies operate under a 
different set of statutory and regulatory requirements.

II. Background

    The 1937 Act (42 U.S.C. 1437 et seq.) authorizes HUD's public 
housing and assisted housing programs, including the Section 8 HCV 
program. Section 13 of the 1937 Act (42 U.S.C. 1437k)\1\ authorizes 
``any 2 or more'' public housing agencies (PHAs) to form consortia 
``for the purpose of administering any or all of the housing programs'' 
of those PHAs. HUD's regulations implementing section 13 of the 1937 
Act are codified at 24 CFR part 943.\2\ The part 943 regulations 
describe the programs--specifically, public housing and the Section 8 
programs-- for which the housing providers participating in those 
programs are eligible to form consortia. The regulations also establish 
the minimum requirements relating to the formation and operation of a 
consortium and the

[[Page 40021]]

minimum requirements of consortium agreements.
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    \1\ As amended by section 515 of the Quality Housing and Work 
Responsibility Act of 1998 (Pub. L. 105-276, 112 Stat. 2549, 
approved January 27, 1998).
    \2\ HUD's final rule establishing 24 CFR part 943 was published 
on November 29, 2000 (65 FR 71204).
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    A consortium enables PHAs to combine administrative functions to 
increase efficiency and effectiveness, may benefit smaller PHAs with 
economies-of-scale, and improves opportunities for greater resident 
housing choice in the same region.
    Through this proposed rule, HUD is seeking to improve the process 
on how consortia are formed, structured, and dissolved. This proposed 
rule is also intended to encourage more PHAs to form consortia, which 
allows ultimately HUD and PHAs to provide more effective and efficient 
housing assistance to low-income families. This proposed rule has two 
primary goals: (1) Increase administrative efficiencies associated with 
forming a consortium; and (2) facilitate maximum resident choice in 
locating suitable housing within a region through consortia, without 
the administrative burden associated with the portability process and 
other policies.

III. Summary of Proposed Changes to the Consortia of Public Housing 
Agencies

    This section of the preamble highlights key features of the 
proposed revisions to the consortium regulations.
    1. Change in definition of ``public housing agency.'' Section 212 
of the Consolidated Appropriations Act of 2014 (Pub. L. 113-76, 128 
Stat. 5, approved January 17, 2014) amends the definition of ``public 
housing agency'' at subparagraph (A) of section 3(b)(6) of the 1937 Act 
(42 U.S.C. 1437a(b)(6)(A)) to include in its general definition ``a 
consortium of such entities or bodies as approved by the Secretary.'' 
\3\ As a result, HUD is taking the opportunity afforded by this 
proposed rule to amend the definition of ``public housing agency'' in 
its regulations at 24 CFR 5.100 to be consistent with the statutory 
definition of ``public housing agency.''
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    \3\ Section 3(b)(6)(B)(i) of the 1937 Act already included ``a 
consortia of public housing agencies that the Secretary determines 
has the capacity and capability to administer a program for 
assistance under such section in an efficient manner'' in the 
definition of ``public housing agency'' for the Section 8 program. 
As a result of section 212 of the Consolidated Appropriations Act of 
2014, inclusion of consortia in the definition of a public housing 
agency will no longer be limited solely to the Section 8 program.
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    2. Single-Annual Contributions Contract consortium for the Section 
8 HCV program. Section 3(b)(6)(B) of the 1937 Act (42 U.S.C. 
1437a(b)(6)) defines the term ``public housing agency'' to include a 
consortium of PHAs that HUD ``determines has the capacity and 
capability to administer'' the Section 8 HCV program (including 
project-based vouchers and project-based certificates). Under the 
statutory language, such a consortium is a separate legal entity and a 
single PHA for purposes of administering the Section 8 HCV program. HUD 
is proposing to implement the statutory authority granted under section 
3(b)(6)(B) of the 1937 Act by establishing a new category of consortium 
for the administration of the Section 8 HCV program, to be known as a 
single-ACC consortium.
    While enactment of Section 212 of the Consolidated Appropriations 
Act of 2014 (as described in Section III.1 above) affords the 
opportunity to extend single-ACC consortia beyond the Section 8 HCV 
program, the Department has determined to move forward with publication 
of this proposed rule, which applies single-ACC consortia formation 
only to the Section 8 HCV program, so as to not further delay the 
opportunity for PHAs that desire to enter into this consortia type for 
their Section 8 HCV programs. However, in the future, the Department 
plans to further revise consortia regulations to allow single-ACC 
consortia formations, where applicable, beyond the section 8 HCV 
program. The decision on whether to form a single-ACC consortium is 
voluntary and PHAs may elect to form a multiple-ACC or a single-ACC 
consortium for administration of their Section 8 HCV programs.
    The jurisdiction for the single-ACC consortium includes all member 
PHA jurisdictions. For purposes of Section 8 HCV program 
administration, jurisdictional boundaries between individual consortium 
members will cease to exist during the term of the single-ACC 
consortium. Accordingly, the state and local law of each of the 
participating PHAs must authorize the operation of the HCV program 
across established jurisdictional boundaries.
    HUD anticipates that PHAs that form a single-ACC consortium for the 
purposes of voucher administration will see increased administrative 
efficiencies through one set of reporting and audit requirements, 
consolidated operations, a centralized waiting list, and a single set 
of policies and procedures. Families are also better served through the 
pooling of assets that occurs when forming a single-ACC consortium. 
Specifically, when resources are consolidated, the combined Section 8 
HCV program resources of all member agencies may assist in serving more 
families in the community.
    While the benefits of a single-ACC consortium are realized through 
an actual consolidation of different PHA Section 8 HCV programs, the 
single-ACC consortium could allow greater autonomy for consortium 
members that may still want to retain their own public housing or other 
housing assistance programs. Additionally, PHAs may choose to form a 
consortium advisory board or other mechanisms for retaining a greater 
level of local control in the consortium. Consortium members may also 
subsequently withdraw from a consortium and return to operating as a 
single PHA (within regulations and any contractual obligations to the 
consortium) for purposes of Section 8 HCV program administration.
    3. Eligibility of PHA owners of units or projects receiving rental 
assistance under section 8(o) of the 1937 Act. Under the proposed rule, 
PHAs that are owners of units receiving tenant-based rental assistance, 
or projects receiving project-based rental assistance, under section 
8(o) of the 1937 Act (42 U.S.C. 1437f(o)) would not be precluded from 
joining either a single-ACC or multiple-ACC consortium, provided that 
such Section 8 projects and units are administered in accordance with 
applicable regulations. Section 943.115(b)(3) of the current consortia 
regulations provides that formation of consortia does not apply to ``a 
PHA in its capacity as owner of a Section 8 project.'' The proposed 
rule would clarify that PHAs are not precluded from joining a 
consortium solely because the PHA is the owner of a unit or project 
receiving rental assistance under section 8(o) of the 1937 Act. 
Instead, the consortium would be required to administer such units or 
projects in accordance with applicable regulations.
    4. Consortium effective date and advance written notice to HUD. The 
proposed rule specifies that formation of a consortium will be 
effective as of January 1 of the following year, and that HUD must be 
notified of the intent to form a consortium at least 120 days in 
advance, in writing. HUD may approve an exception to this requirement.
    5. Consortia must exist for 5 years before they may dissolve. The 
proposed rule would require a consortium to exist for 5 years before 
any withdrawal from, or dissolution of, the consortium is allowed. HUD 
may (based upon a showing of good cause from the consortium) allow 
dissolution of, or withdrawal from, a consortium prior to completion of 
the 5-year term. The 5-year term represents the minimum amount of time 
a consortium must exist before it may dissolve or before members may 
withdraw from the consortium; however, the consortium may continue to 
exist beyond the 5-year term, unless dissolved. HUD proposes

[[Page 40022]]

requirement of an initial 5-year term to prevent premature dissolutions 
or withdrawals from a consortium, to encourage consortium formations 
that are carefully planned and executed, and in consideration of the 
time and resources involved in the PHAs' and HUD's processing of a 
consortium. Moreover, the dissolution of a consortium must be 
consistent with any actions to resolve outstanding civil rights actions 
of the consortium.
    6. Submission of a single PHA Plan. The proposed rule specifies 
that a single 5-Year Plan and Annual Plan must be submitted for the 
consortium. The PHA Plan for the consortium shall establish a single 
set of policies for the consortium as a whole; therefore, consortium 
members will be bound by the single PHA Plan and will not need to 
submit individual PHA Plans to HUD for the duration of their inclusion 
in the consortium. In establishing a single PHA Plan for the 
consortium, PHAs must evaluate the different set of policies in the 
existing PHA Plan for each individual PHA wishing to join the 
consortium and agree on a single set of policies most appropriate for 
the administration of the consortium.
    7. Fiscal Year End Requirement. The proposed rule specifies that, 
upon formation, PHAs joining a single-ACC consortium must adopt a new 
fiscal year end for the consortium. PHAs forming a multiple-ACC 
consortium must all adopt the same fiscal year end. Although the rule 
requires consortium formation to become effective on January 1, a 
consortium's fiscal year end does not necessarily have to coincide with 
that date.
    8. MTW PHAs not eligible to join a consortium. The proposed rule 
specifies that MTW agencies may not form or join single-ACC or 
multiple-ACC consortia. MTW agencies are not eligible to form or join a 
consortium because MTW agencies operate under a different set of 
statutory and regulatory requirements. MTW flexibilities accrue to an 
individual PHA; therefore, an MTW agency could not transfer its unique 
flexibilities to other PHAs by way of forming a consortium. Also, an 
MTW PHA's ability to use program funds interchangeably 
(``fungibility'') would create an administrative burden to other 
consortium members in terms of tracking, monitoring, and reporting the 
use of program funds and would directly conflict with the nature of the 
single-ACC consortium (which is considered a single PHA, and applies 
only for administration of the Section 8 HCV program). Lastly, the 
establishment of a single-ACC consortium by MTW PHAs would require 
execution of a new MTW agreement with the new single-ACC consortium 
entity, which is not allowed under current law.
    9. Other nonsubstantive changes. In addition to the changes 
proposed above, HUD would take the opportunity afforded by this 
proposed rule to make several technical, nonsubstantive, revisions to 
the part 943 regulations. These proposed amendments do not alter 
existing regulatory requirements; rather, they are intended to improve 
the organization and clarity of the regulations. For example, HUD 
proposes to remove the existing ``question and answer'' format of the 
section headings, and to renumber the sections comprising part 943.

IV. Specific Issues for Comment

    Although HUD invites comment on all aspects of this proposed rule, 
HUD specifically seeks comment on the following issues. All public 
comments received on the proposed rule will be considered in the 
development of the final rule.
    1. Organizational costs for a consortium. HUD is interested in 
addressing the costs that PHAs may incur in forming a consortium and 
ensuring a fair and equitable administrative fee structure for a 
consortium. For instance, there may be organizational costs associated 
with negotiating a consortium agreement and consolidating PHA 
operations, databases, and documents. HUD is seeking comment on whether 
the proposed rule addresses these costs effectively.
    2. Administrative fees for single- and multiple-ACC consortia. HUD 
proposes to calculate administrative fees for a single-ACC consortium 
using the same criteria that is now used for calculating administrative 
fees for any other PHA that covers more than one Fair Market Rent (FMR) 
area. Administrative fees for the single-ACC consortium will be 
calculated based on the published administrative fee rates covering the 
FMR area in which the single-ACC consortium has the greatest proportion 
of its participants on a date in time, as per PIH Information Center 
data, and the total number of vouchers under lease for the single-ACC 
consortium as of the first of each month, up to the baseline number of 
vouchers under the consortium's ACC. However, a consortium may apply to 
HUD for blended rates, based proportionately on all FMR areas in which 
program participants are located within the single-ACC consortium 
instead of only the FMR area where the preponderance of participants 
are located.
    To determine blended rates, HUD considers the published 
administrative fee rates for all single-ACC consortium FMR areas and 
all participants under lease in each of the areas on a date in time to 
calculate weighted averages. If the weighted averages result in higher 
administrative fee rates for the consortium, then the blended rates 
will be applied. If the result is lower, then the original 
administrative fee rates will be used. The blended rates will be based 
on the published administrative fee rate for each consortium member 
effective for the year in which the blended rate is requested. Blended 
rates apply only to the year for which requested. All consortium 
members are subject to the same proration regardless of a single-ACC 
consortium's approval for a blended rate. HUD seeks comment on whether 
use of a blended rate at the onset for calculating administrative fees 
is a preferable alternative. Also, the proposed rule allows a single-
ACC consortium to request higher administrative fees if it operates 
over a large geographic area. HUD defines ``large geographic area'' as 
an area covering multiple counties. Is HUD's definition of a large 
geographic area appropriate?
    Administrative fees for a multiple-ACC consortium's Section 8 HCV 
program will be calculated individually for each consortium member. The 
administrative fee calculation under a multiple-ACC consortium differs 
from that under a single-ACC consortium because the multiple-ACC 
consortium is structured differently than the single-ACC consortium. 
Under a multiple-ACC consortium each PHA retains its own ACC and 
program payments are made to the lead agency, on behalf of other 
consortium members, and then distributed by the lead agency based on 
the consortium agreement and HUD regulations.
    3. January 1 consortium effective date and consortium fiscal year 
end. HUD proposes to restrict the formation of a consortium to January 
1 of any given year and to require PHAs forming a single-ACC consortium 
to adopt a new fiscal year end for the consortium. In addition, PHAs 
forming a multiple-ACC consortium must all adopt the same fiscal year 
end. However, HUD recognizes that these requirements may delay or 
discourage potential consortium formations and invites comment 
specifically on this issue.
    4. 5-year consortium term. HUD also proposes to require a 
consortium to exist for 5 years before any withdrawal or dissolution 
from a consortium can take place, with the possibility for withdrawals 
or dissolutions prior to

[[Page 40023]]

completion of the 5-year term with a showing of good cause. HUD 
recognizes that this requirement may discourage potential consortium 
formations, and invites comment specifically on whether the requirement 
is overly restrictive.
    5. Withdrawals from or additions to a consortium. The proposed rule 
provides that the withdrawal from single-ACC and multiple-ACC consortia 
by member PHAs must take place on the last day of the consortium's 
fiscal year. In addition, HUD proposes that all additions of PHAs to 
single-ACC and multiple-ACC consortia must take place on the first day 
of the consortium's fiscal year. However, HUD recognizes that these 
requirements may place undue burden on member PHAs and consortia, and 
invites comment specifically on these requirements.
    6. Voucher and funding distribution in the case of withdrawals from 
or dissolution of a single-ACC consortium. The proposed rule specifies 
how vouchers and funding would be distributed upon withdrawal from or 
dissolution of a single-ACC consortium. Upon dissolution or withdrawal, 
consortium members would leave the consortium with at least the same 
number of authorized baseline units they had under their ACC prior to 
joining the consortium (that is, the number of baseline units 
contributed by each member to the consortium upon its formation). HUD 
would therefore calculate the contract renewal funding allocation based 
on the number of leased vouchers located within their original 
jurisdiction at the time of withdrawal or dissolution, up to their 
original baseline number. HUD may, for good cause, allow for an 
alternative distribution of baseline units and leased vouchers. Funding 
is proposed to be distributed as follows: Budget authority for the year 
would be divided proportionately, based on the percentage of all leased 
units in the consortium that each consortium member would receive upon 
dissolution or withdrawal. Administrative fees would be paid to the 
withdrawing PHA and the remaining consortium per the current 
appropriations requirements. Net Restricted Assets and Unrestricted Net 
Assets would be distributed based on the percentage of the initial 
balance that was contributed by each PHA.
    The proposed rule also specifies how new incremental vouchers under 
a tenant protection action and under a special purpose voucher program 
would be distributed upon dissolution or withdrawal of a single-ACC 
consortium. New incremental vouchers under a special purpose voucher 
program (such as the Family Unification Program, HUD's Veterans Affairs 
Supportive Housing program, and the Non-elderly Disabled voucher 
program) would be distributed upon dissolution or withdrawal as 
specified by consortium members in the consortium agreement, provided 
that such voucher distribution is made in accordance with program 
requirements under each respective special purpose voucher. Tenant 
protection vouchers allocated to cover a public housing demolition, 
disposition, or conversion action would remain with the PHA that has 
ownership over the property upon dissolution or withdrawal. Tenant 
protection vouchers allocated to cover a multifamily housing conversion 
action would remain with the PHA that has jurisdiction over the 
converted project upon dissolution or withdrawal. If a converted 
project has overlapping jurisdictions, the consortium agreement would 
be required to specify which PHA will have jurisdiction over the 
converted project and therefore retain administration of the tenant 
protection vouchers associated with such project upon dissolution or 
withdrawal.
    With this background, HUD seeks comment specifically on whether the 
method of voucher and funding distribution as proposed in this rule 
equitably divides vouchers and funding among consortium members upon 
dissolution or withdrawal. Are there alternate methods of voucher and 
funding distribution that more equitably divide vouchers and funding 
when a consortium member withdraws or the single-ACC consortium 
dissolves? Should PHAs be given more discretion to set terms and 
conditions on dissolution or withdrawal?
    7. Partial coverage of a program. In the proposed rule, as in 
current part 943 of the regulations, a PHA is not authorized to enter a 
consortium for only part of its eligible program. For example, a PHA 
may not enter only part of its Section 8 HCV program into a single-ACC 
consortium or part of its public housing program into a multiple-ACC 
consortium. This provision is designed to increase administrative 
efficiencies. Allowing a PHA to enter a consortium for only part of its 
Section 8 or public housing program would result in as many or more PHA 
plans and reporting submissions, rather than fewer, and overlapping PHA 
plans and reports for the same program. On the other hand, allowing a 
PHA to enter a consortium for only part of its program may allow 
greater PHA choice in formation of a consortium, and may result in more 
PHAs choosing to form consortia. HUD invites comments specifically on 
whether the proposed rule's provision on partial coverage of a program 
is overly restrictive and whether PHAs will be less inclined to form 
consortia as a result of this provision.
    8. Single-ACC consortium. This proposed rule would authorize the 
formation of a single-ACC consortium for the administration of the 
Section 8 HCV program. As more fully described above in this preamble, 
such a consortium would be a single PHA, with a single jurisdiction, 
for purposes of administering the Section 8 HCV program. HUD 
anticipates that PHAs that form a single-ACC consortium for the 
purposes of voucher administration will see increased administrative 
efficiencies through one set of reporting and audit requirements, 
consolidated operations, a centralized waiting list, and a single set 
of policies and procedures. Moreover, HUD believes that families are 
also better served through the pooling of assets that occurs when 
forming a single-ACC consortium.
    HUD seeks comments from PHAs, tenant organizations, and other 
interested members of the public on the benefits of, and the potential 
administrative and statutory barriers to, forming a single-ACC 
consortium as provided for in this proposed rule. In particular, HUD is 
interested in comments regarding the following:
    (1) Because the state and local law of each participating PHA in a 
single-ACC consortium must authorize the operation of the HCV program 
across established jurisdictional boundaries, to what extent would 
current state and local laws limit a PHA from joining, or allow a PHA 
to join, a single-ACC consortia? If allowed by current state and local 
law, to what extent would PHAs use such authority to form single-
jurisdiction consortia?
    (2) What changes to the proposed regulatory requirements for 
single-ACC consortia may be needed to make the formation of such 
consortia a more valuable and attractive option, in terms of cost-
reduction benefits, administrative efficiencies, and housing choices 
for participants?
    (3) How should individual PHAs converting into a single-ACC 
consortium be held accountable for taking corrective action to resolve 
prior violations of civil rights, environmental, labor, or other 
requirements?

V. Findings and Certifications

Regulatory Review--Executive Order 13563

    Executive Order 13563 (Improving Regulations and Regulatory Review)

[[Page 40024]]

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.
    The broader purpose of the reform to HUD's PHA consortia 
regulations is to create a regulatory environment in which more PHAs 
are able to form consortia, without undue or unnecessary regulatory 
burden. This rule proposes to improve the process on how consortia are 
formed, structured, and dissolved, by increasing administrative 
efficiencies associated with forming a consortium and facilitating 
resident choice in locating suitable housing within a region. Today, 
there are at least 8 formal consortia encompassing a total of 35 PHAs 
in states including Alabama, Arizona, Ohio, Georgia, Illinois, Kansas, 
Kentucky, Texas, Oregon, and Washington. Current consortia typically 
are small PHAs that form consortia in order to spread the 
administrative costs of interacting with HUD. HUD anticipates that more 
consortia will form under the proposed regulations, which remove 
hurdles experienced by PHAs, thus amplifying the benefits of consortia.

Paperwork Reduction Act

    The information collection requirements contained in this proposed 
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 2577-0235. In accordance with the Paperwork 
Reduction Act, HUD 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.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule will enable PHAs to establish cross-jurisdictional 
consortia that would be treated as a single PHA, with a single 
jurisdiction and a single set of reporting and audit requirements, for 
purposes of administering the HCV program in a more streamlined and 
less burdensome fashion. The regulatory streamlining provided by this 
rule should make it easier for PHAs, including small PHAs, to form 
consortia and achieve greater benefits. Although there may be some 
costs associated with the formation and operation of consortia, these 
are expected to be more than offset by the operational flexibilities 
afforded by the rule. Moreover, the formation of consortia is a 
voluntary action and, therefore, to the extent that the proposed rule 
would result in PHAs incurring any costs, it would be as a result of 
their own discretion. Accordingly, the undersigned certifies that this 
rule would not have a significant economic impact on a substantial 
number of small entities.
    Notwithstanding HUD's determination that this rule would not have a 
significant economic impact on a substantial number of small entities, 
HUD invites comments specifically 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 (FONSI) 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 et seq.). The FONSI 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 7th Street, SW., Room 
10276 Washington, DC 20410-0500. Due to security measures at the HUD 
Headquarters building, please schedule an appointment to review the 
FONSI by calling the Regulations Division at 202-708-3055 (this is not 
a toll-free number). Individuals with speech or hearing impairments may 
access this number via TTY by calling the Federal Relay Service at 800-
877-8339 (this is a toll-free number).

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 rule would not have 
federalism implications and would 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 proposed rule would 
not impose any Federal mandates 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 for the Housing 
Choice Voucher Program is 14.871.

Lists 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, Wages.

24 CFR Part 943

    Public housing, Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated in the preamble, HUD proposes 
to amend 24 CFR parts 5 and 943 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
1. The authority citation for 24 CFR part 5 continues to read as 
follows:

    Authority:  42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, 
3535(d), Sec. 327, Pub.L. 109-115, 119 Stat. 2936, and Sec. 607, 
Pub.L. 109-162, 119 Stat. 3051.

0
2. Amend Sec.  5.100 by revising the definition of ``Public Housing 
Agency (PHA)'' to read as follows:


Sec.  5.100  Definitions.

* * * * *
    Public Housing Agency (PHA) means any state, county, municipality, 
or other governmental entity or public body, or agency or 
instrumentality of these entities, that is authorized to engage or

[[Page 40025]]

assist in the development or operation of low-income housing under the 
1937 Act, or a consortium of such entities or bodies as approved by the 
Secretary.
* * * * *
0
3. Revise part 943 to read as follows:

PART 943--PUBLIC HOUSING AGENCY CONSORTIA AND JOINT VENTURES

Subpart A--General
Sec.
943.101 Purpose of this part.
943.103 Consortium.
943.105 Joint ventures and other business arrangements.
Subpart B--Single-ACC Consortium
943.201 Programs covered under this subpart.
943.203 Organization of a single-ACC consortium.
943.205 Jurisdiction of a single-ACC consortium.
943.207 Elements of a single-ACC consortium agreement.
943.209 Withdrawals from or additions to a single-ACC consortium.
943.211 Dissolution of a single-ACC consortium.
943.213 Voucher and funding distribution upon dissolution or 
withdrawal.
943.215 The relationship between HUD and a single-ACC consortium.
943.217 Organizational costs and administrative fees.
943.219 Planning, reporting, and financial accountability.
943.221 Responsibilities of a single-ACC consortium.
Subpart C--Multiple-ACC Consortium
943.301 Programs covered under this subpart.
943.303 Organization of a multiple-ACC consortium.
943.305 Jurisdiction of a multiple-ACC consortium.
943.307 Elements of a multiple-ACC consortium agreement.
943.309 Withdrawals from or additions to a multiple-ACC consortium.
943.311 Dissolution of a multiple-ACC consortium.
943.313 The relationship between HUD and a multiple-ACC consortium.
943.315 Organizational costs and administrative fees.
943.317 Planning, reporting, and financial accountability.
943.319 Responsibilities of member PHAs.
Subpart D--Subsidiaries, Affiliates, Joint Ventures in Public Housing
943.401 Programs and activities covered under this subpart.
943.403 Types of operating organizations for a participating PHA.
943.405 Financial impact of a subsidiary, affiliate, or joint 
venture on a PHA.
943.407 Financial accountability of a subsidiary, affiliate, or 
joint venture to HUD and the Federal Government.
943.409 Procurement standards for PHAs selecting partners for a 
joint venture.
943.411 Procurement standards apply for a PHA's joint venture 
partner.
943.413 Procurement standards for a joint venture.

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

Subpart A--General


Sec.  943.101  Purpose of this part.

    This part authorizes public housing agencies (PHAs), consistent 
with state and local law, to form consortia, joint ventures, 
affiliates, subsidiaries, partnerships, and other business arrangements 
under section 13 of the United States Housing Act of 1937 (42 U.S.C. 
1437k) (1937 Act). This part does not preclude a PHA from entering 
cooperative arrangements to operate its programs under other authority, 
as long as they are consistent with other program regulations and 
requirements.


Sec.  943.103  Consortium.

    (a) Consortium. Under the authority of section 13 of the 1937 Act, 
a PHA participating in a consortium shall enter into a consortium 
agreement under one of two forms: Single-Annual Contributions Contract 
(ACC) consortium or multiple-ACC consortium.
    (b) Single-ACC consortium. A single-ACC consortium consists of two 
or more PHAs that join together to perform planning, reporting, and 
other administrative and management functions of the Section 8 Housing 
Choice Voucher (HCV) program, as specified in a consortium agreement. 
Under a single-ACC consortium, the consortium becomes a separate legal 
entity and is considered a single PHA for purposes of the Section 8 HCV 
program. A single-ACC consortium must operate the Section 8 HCV program 
in accordance with all applicable program regulations. HUD funds the 
consortium as one PHA, and applies all reporting and audit requirements 
accordingly. The requirements for single-ACC consortia are contained in 
subpart B of this part.
    (c) Multiple-ACC Consortium. A multiple-ACC consortium consists of 
two or more PHAs that join together to perform planning, reporting, and 
other administrative functions for member PHAs, as specified in a 
consortium agreement. A multiple-ACC consortium submits a joint PHA 
plan, as applicable, and designates a lead PHA. The lead agency 
collects the assistance funds from HUD that would be paid to the member 
PHAs for the elements of their operations that are administered by the 
consortium and allocates them according to the consortium agreement. 
The lead agency also maintains the consortium's records and submits 
reports to HUD. Each member PHA in a multiple-ACC consortium retains 
its own ACC with HUD. The requirements for a multiple-ACC consortium 
are contained in subpart C of this part.


Sec.  943.105  Joint ventures and other business arrangements.

    Under section 13 of the 1937 Act, PHAs may form joint ventures, 
affiliates, subsidiaries, partnerships, and other business 
arrangements. The requirements for such arrangements are contained in 
subpart D of this part.

Subpart B--Single-ACC Consortium


Sec.  943.201  Programs covered under this subpart.

    (a) A PHA may enter a single-ACC consortium under this subpart 
solely for administration of the following programs:
    (1) The Section 8 HCV program (including project-based vouchers; 
project-based certificates; the Family Self-Sufficiency program; and 
special voucher housing types, including the HCV Homeownership Option);
    (2) Mainstream 5 vouchers, except that entities which are only 
authorized to administer Mainstream 5 vouchers may not join or form 
single-ACC consortia; and
    (3) Grants to consortium members in connection with the Section 8 
HCV program, to the extent not inconsistent with the terms of the 
governing documents for the grant program's funding source.
    (b) A PHA that is the owner of units receiving tenant-based rental 
assistance, or a project receiving project-based rental assistance, 
under section 8(o) of the 1937 Act, is not precluded from joining a 
single-ACC consortium, provided that such units or Section 8 projects 
are administered in accordance with 24 CFR 982.352(b) (for tenant-based 
vouchers) and 24 CFR 983.59 (for project-based vouchers). A PHA 
participating in the consortium may not serve as an independent entity 
for units or projects owned by a PHA within the consortium for purposes 
of 24 CFR 982.352(b) or 24 CFR 983.59.
    (c) Moving-To-Work (MTW) PHAs may not form or join a single-ACC 
consortium.
    (d) The single-ACC consortium must cover the PHA's whole HCV 
program under the ACC with HUD, including all authorized unit months 
and all funding.


Sec.  943.203  Organization of a single-ACC consortium.

    (a) A PHA that elects to form a single-ACC consortium may do so 
upon HUD approval, and in accordance with HUD

[[Page 40026]]

established guidelines and instructions. HUD approval of a single-ACC 
consortium will be based on the following:
    (1) That advance written notice of at least 120 days of the intent 
to form a single-ACC consortium has been given to HUD. HUD may, upon a 
showing of good cause, provide an exception to this requirement;
    (2) That all required documentation has been submitted including:
    (i) The Consortium Agreement;
    (ii) The 5-Year Plan and the Annual Plan, as applicable, in 
accordance with 24 CFR part 903 and any other statutory or HUD 
requirements (See Sec.  943.219, Planning, reporting, and financial 
accountability);
    (iii) A letter of intent signed by the executive director of every 
PHA wishing to join the single-ACC consortium, with an accompanying 
board resolution of each PHA;
    (iv) Supporting legal opinions satisfactory to HUD that the single-
ACC consortium's jurisdiction is consistent with the state and local 
laws of each consortium member;
    (v) Financial documentation for each PHA wishing to join the 
single-ACC consortium, including a final close-out audit for every PHA 
joining the single-ACC consortium, up to the effective date of the 
consortium;
    (vi) Certification that no PHA wishing to join the single-ACC 
consortium fails the civil rights compliance threshold for new funding, 
or, if applicable, that joining the consortium is consistent with the 
action(s) to resolve outstanding civil rights matters. HUD will not 
approve a PHA's conversion into a single-ACC consortium until either:
    (A) The PHA wishing to join takes corrective action to the 
satisfaction of HUD or another entity with authority to enforce a 
corrective action agreement or order; or
    (B) The single-ACC consortium demonstrates to HUD's satisfaction 
that it has assumed liability for taking the corrective action; and
    (vii) Any other form of documentation that HUD deems necessary and 
appropriate for approval of the single-ACC consortium;
    (3) The PHA's performance rating under the Section 8 Management and 
Assessment Program (SEMAP), and whether there are any open findings 
from an Office of Inspector General (OIG) audit, HUD Field Office (FO) 
monitoring review, financial audit, and/or any other HUD or HUD-
required review;
    (4) That the financial documentation submitted by each PHA in 
support of single-ACC consortium formation demonstrates that the 
single-ACC consortium will have the financial capability, as determined 
by HUD, to administer the programs and activities of the single-ACC 
consortium;
    (5) Any other factors that may indicate appropriateness of single-
ACC consortium formation, such as the PHA's capacity to administer its 
Section 8 HCV program, and the existing market conditions in the 
jurisdiction of each PHA joining the single-ACC consortium; and
    (6) That all other consortium requirements are met.
    (b) Upon HUD approval, the single-ACC consortium will become 
effective as of January 1 of the following year. HUD may, upon showing 
of good cause, provide an exception to this requirement.
    (c) A PHA that elects to form a single-ACC consortium must enter 
into a consortium agreement, which shall meet the minimum requirements 
established in Sec.  943.207 (Elements of a single-ACC consortium 
agreement) of this subpart. The executed consortium agreement must be 
submitted to HUD, and HUD may require modification to the consortium 
agreement before approving the formation of the single-ACC consortium.
    (d) PHAs joining a single-ACC consortium must adopt a new fiscal 
year end for the consortium.
    (e) The single-ACC consortium must be administered in accordance 
with the applicable provisions of this part; the consortium agreement; 
the PHA Plan, as applicable; other applicable HUD regulations and 
requirements; and state and local law.


Sec.  943.205  Jurisdiction of a single-ACC consortium.

    (a) A single-ACC consortium shall operate in a single consortium-
wide jurisdiction composed of the combined jurisdictions of all 
consortium members. Jurisdictional boundaries between individual 
consortium members will cease to exist for purposes of HCV program 
administration during the term of the consortium.
    (b) The single-ACC consortium jurisdiction must be consistent with 
the state and local law of each consortium member.


Sec.  943.207  Elements of a single-ACC consortium agreement.

    (a) The single-ACC consortium agreement governs the formation and 
operation of the consortium and must specify the following:
    (1) The name of each consortium member under the consortium 
agreement;
    (2) The functions to be performed by each consortium member during 
the term of the consortium;
    (3) The structure of the single-ACC consortium, which shall 
address, at a minimum, the establishment of a board of directors or 
similar governing body and designated officials;
    (4) The process for merging the consortium members' waiting lists 
upon formation of the single-ACC consortium, including the adoption of 
waiting list preferences (e.g., homeless) by the single-ACC consortium. 
This process must not have the purpose or effect of delaying or 
otherwise denying admission to the program based on race, color, 
national origin, sex, religion, disability, or familial status of any 
member of the applicant family;
    (5) The terms under which a PHA may join or withdraw from the 
single-ACC consortium. The consortium agreement shall conform to Sec.  
943.209 (Withdrawals from or additions to a single-ACC consortium) of 
this subpart;
    (6) How new incremental vouchers under a special purpose voucher 
program will be distributed among consortium members upon dissolution 
or withdrawal from the consortium; and
    (7) Which consortium member, upon dissolution or withdrawal, shall 
have jurisdiction over converted projects with overlapping 
jurisdictions under a multifamily housing tenant protection action.
    (b) The agreement must acknowledge that all consortium members are 
subject to the single-ACC PHA Plan.
    (c) The agreement must be signed by an authorized representative of 
each consortium member.


Sec.  943.209  Withdrawals from or additions to a single-ACC 
consortium.

    (a) Withdrawal refers to one or more consortium members leaving the 
single-ACC consortium without resulting in dissolution of the single-
ACC consortium.
    (b) Withdrawals from a single-ACC consortium may not occur until 
the initial 5-year consortium term has expired. HUD may, upon showing 
of good cause, allow withdrawals from a single-ACC consortium before 
completion of the initial 5-year term.
    (c) If the consortium has any outstanding civil rights matters, 
withdrawals from a single-ACC consortium may not occur unless the 
withdrawal is consistent with the action(s) to resolve such matters.
    (d) To provide for orderly transition, withdrawal of a PHA must 
take effect on the last day of the consortium's fiscal year, and 
addition of a PHA must take effect on the first day of the

[[Page 40027]]

consortium's fiscal year. The single-ACC consortium must notify HUD in 
writing of any additions or withdrawals at least 120 days in advance. 
This notification must include submission of the withdrawing member's 
replacement 5-Year Plan and Annual Plan, as applicable, in accordance 
with 24 CFR part 903 and any other statutory or HUD requirements.
    (e) Upon withdrawal from the single-ACC consortium, the withdrawing 
member must offer to each applicant currently on the single-ACC 
consortium's waiting list the opportunity to be placed on the 
withdrawing member's waiting list, with the date and time of their 
original application to the single-ACC consortium's waiting list. These 
applicants must not be considered nonresident applicants (for the 
purposes of restriction of portability under 982.353(c)) if the 
applicant was a resident applicant at the time of application to the 
single-ACC consortium's waiting list.
    (f) Upon a member's withdrawal from the single-ACC consortium, 
vouchers and funding, including net restricted assets and unrestricted 
net assets, will be distributed to the withdrawing member as specified 
in Sec.  943.213 (Voucher and funding distribution upon dissolution or 
withdrawal) of this subpart.


Sec.  943.211  Dissolution of a single-ACC consortium.

    (a) A single-ACC consortium may not be dissolved prior to the 
expiration of the initial 5-year consortium term. HUD may, upon showing 
of good cause, allow dissolution of a consortium prior to completion of 
the initial 5-year term. A single-ACC consortium will continue to exist 
beyond the initial 5-year consortium term, unless dissolved.
    (b) If the consortium has any outstanding civil rights matters, 
dissolution of a single-ACC consortium may not occur unless the 
dissolution is consistent with the action(s) to resolve such matters.
    (c) To provide for orderly transition, dissolution of the single-
ACC consortium must take effect on the last day of the consortium's 
fiscal year. The single-ACC consortium must notify HUD in writing of 
dissolution at least 120 days in advance of the dissolution effective 
date. This notification must include submission of all members' 
replacement 5-Year Plans and Annual Plans, as applicable, in accordance 
with 24 CFR part 903 and any other statutory or HUD requirements.
    (d) Upon dissolution, all withdrawing members must offer to each 
applicant currently on the single-ACC consortium's waiting list the 
opportunity to be placed on all of the withdrawing members' waiting 
lists, with the date and time of their original application to the 
single-ACC consortium's waiting list. These applicants must not be 
considered nonresident applicants (for the purposes of restriction of 
portability under Sec.  982.353(c)) if the applicant was a resident 
applicant at the time of application to the single-ACC consortium's 
waiting list.
    (e) Upon dissolution, vouchers and funding, including net 
restricted assets and unrestricted net assets, will be distributed 
among consortium members as specified in Sec.  943.213 (Voucher and 
funding distribution upon dissolution or withdrawal) of this subpart.


Sec.  943.213  Voucher and funding distribution upon dissolution or 
withdrawal.

    (a) Vouchers will be distributed in the following manner upon 
dissolution or withdrawal:
    (1) Each consortium member will leave the consortium upon 
dissolution or withdrawal with at least the same number of authorized 
baseline units that the consortium member brought into the consortium 
at the time of its formation. HUD may, for good cause, allow for an 
alternative distribution of baseline units.
    (2) Each consortium member shall receive contract renewal funding 
allocations based on the number of leased vouchers located within their 
original jurisdiction at the time of withdrawal or dissolution, up to 
their original baseline number. HUD may, for good cause, allow for an 
alternative distribution of leased vouchers.
    (3) Tenant protection vouchers allocated to cover a public housing 
demolition, disposition, or conversion action will remain with the PHA 
that has ownership over the property. Tenant protection vouchers 
allocated to cover a multifamily housing conversion action shall remain 
with the PHA that has jurisdiction over the converted project. 
Administration of tenant protection vouchers under converted projects 
with overlapping jurisdictions shall remain with the PHA that has 
jurisdiction over the converted project as specified in the consortium 
agreement.
    (4) New incremental vouchers under a special purpose voucher 
program will be distributed as specified in the consortium agreement, 
provided that such voucher distribution is made in accordance with 
program requirements under each respective special purpose voucher 
program.
    (b) Funding will be distributed in the following manner upon 
dissolution or withdrawal:
    (1) Budget authority will be divided proportionately, based on the 
percentage of all leased units in the consortium that each consortium 
member will receive.
    (2) Administrative fees will be paid to the withdrawing PHA and the 
remaining consortium per the current appropriations requirements.
    (3) Net Restricted Assets and Unrestricted Net Assets will be 
distributed based upon the percentage of the initial balance that was 
contributed by each consortium member.


Sec.  943.215  The relationship between HUD and a single-ACC 
consortium.

    (a) HUD has a direct relationship with the single-ACC consortium, 
the same as it would have with any other PHA. Program funds will be 
disbursed to the single-ACC consortium in accordance with the 
consortium's ACC. Funding must be used in accordance with the 
consortium agreement, the PHA Plan, and HUD regulations and 
requirements.
    (b) HUD may take any of the remedies described in the ACC against 
an individual member in a single-ACC consortium, or against the single-
ACC consortium as a whole, if it determines that either has 
substantially violated--or is improperly administering--the 
requirements of the HCV program.


Sec.  943.217  Organizational costs and administrative fees.

    (a) The administrative fee for a single-ACC consortium will be 
determined based on the published administrative fee rates for the area 
in which the single-ACC consortium has the greatest proportion of its 
participants on a date in time and the total number of vouchers under 
lease for the single-ACC consortium as of the first of the month, up to 
the baseline number of vouchers under the single-ACC consortium's ACC.
    (b) A single-ACC consortium may apply to HUD for blended rates, 
which are determined based on a weighted average of the published 
administrative fee rates for all areas in which program participants 
are located within the single-ACC consortium and all participants under 
lease in each of the areas on a date in time. The blended rates will be 
based on the published administrative fee rate for each consortium 
member, effective for the year for which the blended rate is requested. 
Blended rates will only be applied if they result in a higher 
administrative fee rate for the single-

[[Page 40028]]

ACC consortium. Blended rates apply only to the year for which 
requested.
    (c) If appropriations are available, a single-ACC consortium may be 
eligible for a higher administrative fee in accordance with 24 CFR 
982.152(b)(2) if it operates over a large geographic area.
    (d) If appropriations are available, a single-ACC consortium may be 
eligible for administrative fees to cover extraordinary costs 
determined necessary by HUD, in accordance with 24 CFR 
982.152(a)(1)(iii)(C), during the initial year of operation of the 
consortium to provide for the organization and implementation of the 
single-ACC consortium.


Sec.  943.219  Planning, reporting, and financial accountability.

    (a) A single-ACC consortium is considered one PHA for purposes of 
Section 8 HCV program administration, including but not limited to, 
program accounts and records, audit requirements, and all PHA 
responsibilities under the ACC, the PHA administrative plan, and HUD 
regulations and other requirements.
    (b) Planning, reporting, and financial accountability apply to a 
single-ACC consortium as follows:
    (1) Upon creation of the single-ACC consortium, each member's 
assets, liabilities, and equity accounts, as related to the HCV 
program, are consolidated and reported on a consolidated balance sheet 
for purposes of single reporting in the Financial Assessment Subsystem 
for Public Housing Agencies (FASS-PH) and the Voucher Management System 
(VMS).
    (2) Prior to entering a single-ACC consortium, each PHA must agree 
to the completion of a final audit to close-out program accounts for 
all HCV programs, up to the effective date of the consortium. The final 
audit must be completed in accordance with 24 CFR 982.159. Once the 
audit is completed, remaining funds from all the PHAs' accounts must be 
transferred to the consortium.
    (3) During the term of the consortium agreement, the single-ACC 
consortium must submit a 5-Year Plan and Annual Plan, as applicable, 
for the consortium, in accordance with 24 CFR part 903 and any other 
statutory or HUD requirements. For any programs not covered by the 
single-ACC consortium (e.g., a consortium member administers a public 
housing program separately from the single-ACC consortium), consortium 
members must submit a separate 5-Year Plan and Annual Plan to HUD for 
those programs, as applicable, in accordance with 24 CFR part 903 and 
any other statutory or HUD requirements.
    (4) During the term of the consortium agreement, the single-ACC 
consortium must have a single Section 8 HCV administrative plan for the 
consortium, in accordance with 24 CFR 982.54 (Administrative plan).
    (5) The single-ACC consortium must maintain records and submit 
reports to HUD as a single PHA for purposes of Section 8 HCV program 
administration, in accordance with HUD regulations and requirements 
that account for all activities of the consortium. All consortium 
members will be bound by the 5-Year and Annual Plans and reports 
submitted to HUD by the single-ACC consortium for programs covered by 
the consortium.
    (6) Financial accountability rests with the single-ACC consortium 
and, thus, HUD will apply independent audit and performance assessment 
requirements on a consortium-wide basis.
    (7) A single-ACC consortium must keep a copy of the consortium 
agreement on file for inspection. The consortium agreement must also be 
a supporting statement to the PHA plan.


Sec.  943.221  Responsibilities of a single-ACC consortium.

    Each consortium member is responsible for the performance of the 
consortium and has an obligation to assure that all program funds are 
used in accordance with HUD regulations and requirements, and that the 
programs under the consortium are administered in accordance with HUD 
regulations and requirements. Any breach of program requirements is a 
breach of the consortium ACC, so each consortium member is responsible 
for the performance of the consortium as a whole.

Subpart C--Multiple-ACC Consortium


Sec.  943.301  Programs covered under this subpart.

    (a) PHAs may enter a multiple-ACC consortium under this subpart for 
administration of:
    (1) The public housing program;
    (2) The Section 8 HCV (including project-based vouchers; project-
based certificates; the Family Self-Sufficiency program; and special 
voucher housing types, including the HCV Homeownership Option);
    (3) The Section 8 Moderate Rehabilitation program, including the 
Single Room Occupancy program; and
    (4) Grants to consortium members in connection with Section 8 and 
public housing programs, to the extent not inconsistent with the terms 
of the governing documents for the grant program's funding source.
    (b) A PHA that is the owner of units receiving tenant-based rental 
assistance, or a project receiving project-based rental assistance, 
under section 8(o) of the 1937 Act, is not precluded from joining a 
multiple-ACC consortium, provided that such units or Section 8 projects 
are administered in accordance with 24 CFR 982.352(b) (for tenant-based 
vouchers) and 24 CFR 983.59 (for project-based vouchers). A PHA 
participating in the consortium may not serve as an independent entity 
for units or projects owned by PHAs within the consortium for purposes 
of 24 CFR 982.352(b) or 24 CFR 983.59.
    (c) MTW agencies may not form or join a multiple-ACC consortium.
    (d) If a PHA elects to enter a multiple-ACC consortium with respect 
to a category specified in paragraph (a) of this section, the 
consortium must cover the PHA's whole program under the ACC with HUD 
for that category, including all dwelling units and all funding.


Sec.  943.303  Organization of a multiple-ACC consortium.

    (a) A PHA that elects to form a multiple-ACC consortium may do so 
upon HUD approval, and in accordance with HUD established guidelines 
and instructions. HUD approval of a multiple-ACC consortium will be 
based on the following:
    (1) That written notice of the intent to form a multiple-ACC 
consortium has been given to HUD at least 20 days in advance. HUD may, 
upon a showing of good cause, provide an exception to this requirement;
    (2) That all required documentation has been submitted including:
    (i) The Consortium Agreement;
    (ii) The 5-Year Plan and the Annual Plan, as applicable, in 
accordance with 24 CFR part 903 and any other statutory or HUD 
requirements (see Sec.  943.317, Planning, reporting, and financial 
accountability);
    (iii) A letter of intent signed by the executive director of every 
PHA wishing to join the multiple-ACC consortium, with the accompanying 
board resolution of each PHA;
    (iv) Any memoranda of understanding (MOUs) and/or other agreements 
to operate within the jurisdiction of other consortium members, 
including supporting legal opinions, satisfactory to HUD, that such 
agreements are in compliance with the applicable state and local laws 
of each consortium member;
    (v) Financial documentation for each PHA wishing to join the 
multiple-ACC

[[Page 40029]]

consortium, including a final close-out audit for every PHA joining the 
multiple-ACC consortium, up to the effective date of the consortium; 
and
    (vi) Any other form of documentation that HUD deems necessary and 
appropriate for approval of the multiple-ACC consortium;
    (3) That the lead agency is not designated as a ``troubled PHA'' by 
HUD under the Public Housing Assessment System (PHAS) or by the PHA's 
performance rating under Section 8 Management Assessment Program 
(SEMAP), and whether there are any open findings from an OIG audit, HUD 
FO monitoring review, financial audit, or any other HUD or HUD-required 
review;
    (4) That the financial documentation submitted by each PHA in 
support of multiple-ACC consortium formation demonstrates that the 
multiple-ACC consortium will have the financial capability to 
administer the programs and activities of the multiple-ACC consortium;
    (5) Any other factors that may indicate the appropriateness of a 
multiple-ACC consortium formation, such as the PHA's capacity to 
administer its programs, and the existing market conditions in the 
jurisdiction of each PHA joining the multiple-ACC consortium; and
    (6) That all other consortium requirements are met.
    (b) Upon HUD approval, the multiple-ACC consortium will become 
effective as of January 1 of the following year. HUD may, upon showing 
of good cause, provide an exception to this requirement.
    (c) A PHA that elects to form a multiple-ACC consortium must enter 
into a consortium agreement among the member PHAs, specifying a lead 
agency (see Sec.  943.307, Elements of a multiple-ACC consortium 
agreement). The executed consortium agreement must be submitted to HUD, 
and HUD may require modification to the consortium agreement before 
approving the formation of the multiple-ACC consortium. HUD enters into 
any necessary payment agreements with the lead agency and the other 
member PHAs (see Sec.  943.313, The relationship between HUD and a 
multiple-ACC consortium) to provide that HUD funding to the member PHAs 
for program categories covered by the consortium will be paid to the 
lead agency.
    (d) The lead agency must not be:
    (i) Designated as a ``troubled PHA'' by HUD under PHAS or by the 
PHA's performance rating under SEMAP, or
    (ii) Determined by HUD to fail the civil rights compliance 
threshold for new funding, or an agency that has had a PHAS designation 
withheld for civil rights or other reasons.
    (e) The lead agency is designated to receive HUD program payments 
on behalf of member PHAs, to administer HUD requirements for 
administration of the funds, and to apply the funds in accordance with 
the consortium agreement and HUD regulations and requirements.
    (f) The multiple-ACC consortium must submit a joint PHA Plan, as 
applicable, to HUD (see Sec.  943.317, Planning, reporting, and 
financial accountability).
    (g) The member PHAs must adopt the same fiscal year end so that the 
applicable periods for submission and review of the joint PHA plan, 
reporting, and audits are the same.
    (h) The multiple-ACC consortium must be administered in accordance 
with the applicable provisions of this part, the consortium agreement, 
the joint PHA Plan, as applicable, and other applicable HUD regulations 
and requirements.


Sec.  943.305  Jurisdiction of a multiple-ACC consortium.

    Each member PHA has its own jurisdiction, and will continue to 
operate in that jurisdiction. However, member PHAs may enter into 
memoranda of understanding (MOUs) and/or other agreements, in 
accordance with applicable state law, to operate within the 
jurisdictions of other member PHAs in order to further the goals of the 
consortium and to expand housing opportunities for assisted families.


Sec.  943.307  Elements of a multiple-ACC consortium agreement.

    (a) The multiple-ACC consortium agreement governs the formation and 
operation of the consortium. The consortium agreement must be 
consistent with any payment agreements between the member PHAs and HUD 
and must specify the following:
    (1) The names of the member PHAs and the program categories each 
PHA is including under the consortium agreement;
    (2) The name of the lead agency;
    (3) The functions to be performed by the lead agency and the other 
member PHAs during the term of the consortium;
    (4) The allocation of funds among member PHAs, including funding 
awards made following formation of the multiple-ACC consortium, and 
responsibility for administration of funds paid to the consortium;
    (5) The structure of the multiple-ACC consortium; and
    (6) The terms under which a PHA may join or withdraw from the 
multiple-ACC consortium. The consortium agreement shall conform to 
Sec.  943.309 (Withdrawals from or additions to a multiple-ACC 
consortium) of this subpart.
    (b) The agreement must acknowledge that the member PHAs are subject 
to the joint PHA Plan submitted by the lead agency.
    (c) The agreement must be signed by an authorized representative of 
each member PHA.


Sec.  943.309  Withdrawals from or additions to a multiple-ACC 
consortium.

    (a) Withdrawal refers to one or more consortium member leaving the 
multiple-ACC consortium without resulting in dissolution of the 
multiple-ACC consortium.
    (b) Withdrawals from a multiple-ACC consortium may not occur until 
the initial 5-year consortium term has expired. HUD may, upon showing 
of good cause, allow withdrawals from a multiple-ACC consortium before 
completion of the initial 5-year term.
    (c) If the consortium has any outstanding civil rights matters, 
withdrawals from a multiple-ACC consortium may not occur unless the 
withdrawal is consistent with the action(s) to resolve such matters.
    (d) To provide for orderly transition, withdrawal of a PHA must 
take effect on the last day of the consortium's fiscal year, and 
addition of a PHA must take effect on the first day of the consortium's 
fiscal year. The multiple-ACC consortium must notify HUD, in writing, 
of any additions or withdrawals at least 120 days in advance. This 
notification must include submission of the withdrawing member PHA's 
replacement 5-Year Plan and Annual Plan, as applicable, in accordance 
with 24 CFR part 903 and any other statutory or HUD requirements.
    (e) Because each member PHA retains its own ACC with HUD, upon 
withdrawal from the multiple-ACC consortium, the withdrawing PHA begins 
to operate in accordance with its own ACC with HUD.


Sec.  943.311  Dissolution of a multiple-ACC consortium.

    (a) A multiple-ACC consortium may not be dissolved prior to the 
expiration of the initial 5-year consortium term. HUD may, upon showing 
of good cause, allow dissolution of a consortium prior to completion of 
the initial 5-year term. A multiple-ACC consortium will continue to 
exist beyond the initial 5-year consortium term, unless dissolved.
    (b) If the consortium has any outstanding civil rights matters,

[[Page 40030]]

dissolution of a multiple-ACC consortium may not occur unless the 
dissolution is consistent with the action(s) to resolve such matters.
    (c) Dissolution of the multiple-ACC consortium must take effect on 
the last day of the consortium's fiscal year. The multiple-ACC 
consortium must notify HUD of the dissolution, in writing, at least 120 
days in advance. This notification must include submission of all 
member PHA's replacement 5-Year Plans and Annual Plans, as applicable, 
in accordance with 24 CFR part 903 and any other statutory or HUD 
requirements.
    (d) Because each member PHA retains its own ACC with HUD, upon 
dissolution of the consortium, each member PHA begins to operate as it 
did prior to the formation of the consortium.


Sec.  943.313  The relationship between HUD and a multiple-ACC 
consortium.

    (a) HUD has a direct relationship with the consortium through the 
joint PHA Plan, as applicable, and through one or more payment 
agreements, executed in a form prescribed by HUD, under which HUD and 
the member PHAs agree that program funds will be paid to the lead 
agency on behalf of the member PHAs. Such funds must be used in 
accordance with the consortium agreement, the joint PHA Plan, and HUD 
regulations and requirements.
    (b) HUD may take any of the remedies described in the ACC against 
an individual member in a multiple-ACC consortium or against the 
multiple-ACC consortium as a whole, if it determines that either has 
substantially violated--or is improperly administering--the 
requirements of any of its programs.


Sec.  943.315  Organizational costs and administrative fees.

    (a) The administrative fee for the Section 8 HCV program for each 
member PHA in a multiple-ACC consortium will be based on the published 
administrative fee for each member PHA prior to formation of the 
consortium.
    (b) If appropriations are available, a multiple-ACC consortium may 
be eligible, during the first year of operation of the consortium, for 
administrative fees to cover extraordinary costs determined necessary 
by HUD in accordance with 24 CFR 982.152(a)(1)(iii)(C) for the 
organization and implementation of the multiple-ACC consortium.


Sec.  943.317  Planning, reporting, and financial accountability.

    (a) During the term of the consortium agreement, the consortium 
must submit joint 5-Year Plans and joint Annual Plans, as applicable, 
for all member PHAs, in accordance with 24 CFR part 903 and any other 
statutory or HUD requirements. For any programs not covered by the 
multiple-ACC consortium (e.g., a member PHA administers a public 
housing or Section 8 HCV program separately from the multiple-ACC 
consortium), member PHAs must submit a separate 5-Year Plan and Annual 
Plan to HUD for those programs, as applicable, in accordance with 24 
CFR part 903 and any other statutory or HUD requirements.
    (b) The lead agency must maintain records and submit reports to 
HUD, in accordance with HUD regulations and requirements, for all of 
the member PHAs. All PHAs will be bound by the 5-Year and Annual Plans 
and reports submitted to HUD by the multiple-ACC consortium for 
programs covered by the consortium.
    (c) Each member PHA must keep a copy of the consortium agreement on 
file for inspection. The consortium agreement must also be a supporting 
document to the joint PHA Plan.
    (d) Prior to entering a multiple-ACC consortium, each PHA must 
agree to the completion of a final audit to close-out program accounts 
for all programs covered by the multiple-ACC consortium, up to the 
effective date of the consortium.
    (e) Independent audits and performance assessment requirements will 
be applied in the following way:
    (1) Where the lead agency will manage substantially all programs 
and activities of the consortium, HUD interprets financial 
accountability to rest with the consortium and, thus, HUD will apply 
independent audit and performance assessment requirements on a 
consortium-wide basis.
    (2) Where the lead agency will not manage substantially all 
programs and activities of a consortium, the consortium shall indicate 
in its PHA Plan submission which PHAs have financial accountability for 
the programs. The determination of financial accountability shall be 
made in accordance with generally accepted accounting principles, as 
determined in consultation with an independent public accountant. In 
such situations, HUD will apply independent audit and performance 
assessment requirements consistent with that determination. With 
respect to any consortium, however, HUD may determine (based on a 
request from the multiple-ACC consortium or other circumstances) to 
apply independent audit and performance requirements on a different 
basis where this would promote sound management.


Sec.  943.319  Responsibilities of member PHAs.

    Despite participation in a consortium, each member PHA remains 
responsible for its own obligations under its ACC with HUD. This means 
that each member PHA has an obligation to assure that all program 
funds, including funds paid to the lead agency for administration by 
the consortium, are used in accordance with HUD regulations and 
requirements, and that the PHA's program is administered in accordance 
with HUD regulations and requirements. Any breach of program 
requirements with respect to a program covered by the consortium 
agreement is a breach of the ACC with each of the member PHAs, so each 
PHA is responsible for the performance of the consortium.

Subpart D--Subsidiaries, Affiliates, Joint Ventures in Public 
Housing


Sec.  943.401  Programs and activities covered under this subpart.

    (a) This subpart applies to the provision of a PHA's public housing 
administrative and management functions, and to the provision (or 
arranging for the provision) of supportive and social services in 
connection with public housing. This subpart does not apply to 
activities of a PHA that are subject to the requirements of 24 CFR part 
905, subpart F.
    (b) For purposes of this subpart, the term ``joint venture 
partner'' means a member (other than a PHA) in a joint venture, 
partnership, or other business arrangement or contract for services 
with a PHA.
    (c) This part does not affect a PHA's authority to use joint 
ventures, as may be permitted under state law, when using funds that 
are not 1937 Act funds.


Sec.  943.403  Types of operating organizations for a participating 
PHA.

    (a) A PHA may create and operate a wholly owned or controlled 
subsidiary or other affiliate; and may enter into joint ventures, 
partnerships, or other business arrangements with individuals, 
organizations, entities, or governmental units. A subsidiary or 
affiliate may be a nonprofit corporation. A subsidiary or affiliate may 
be an organization controlled by the same persons who serve on the 
governing board of the PHA or who are employees of the PHA.
    (b) The purpose of any of these operating organizations would be to 
administer programs of the PHA.


Sec.  943.405  Financial impact of a subsidiary, affiliate, or joint 
venture on a PHA.

    Income generated by subsidiaries, affiliates, or joint ventures 
formed under

[[Page 40031]]

the authority of this subpart is to be used for low-income housing or 
to benefit the residents assisted by the PHA. This income will not 
cause a decrease in funding provided under the public housing program, 
except as otherwise provided under the Operating Fund and Capital Fund 
formulas.


Sec.  943.407  Financial accountability of a subsidiary, affiliate, or 
joint venture to HUD and the Federal Government.

    The subsidiary, affiliate, or joint venture is subject to the same 
authority of HUD, HUD's Inspector General, and the Comptroller General 
to audit its conduct.


Sec.  943.409  Procurement standards for PHAs selecting partners for a 
joint venture.

    (a) The requirements of 24 CFR part 85 are applicable to this part, 
subject to paragraph (b) of this section, in connection with the PHA's 
public housing program.
    (b) A PHA may use competitive proposal procedures for 
qualifications-based procurement (Request for Qualifications), or may 
solicit a proposal from only one source (``sole source'') to select a 
joint venture partner to perform an administrative or management 
function of its public housing program or to provide, or arrange to 
provide, supportive or social services covered under this part, under 
the following circumstances:
    (1) The proposed joint venture partner has under its control and 
will make available to the partnership substantial, unique, and 
tangible resources or other benefits that would not otherwise be 
available to the PHA on the open market (e.g., planning expertise, 
program experience, or financial or other resources). In this case, the 
PHA must maintain documentation to substantiate both the cost 
reasonableness of its selection of the proposed partner and the unique 
qualifications of the partner; or
    (2) A resident group or a PHA subsidiary is willing and able to act 
as the PHA's partner in performing administrative and management 
functions or to provide supportive or social services. This entity must 
comply with the requirements of 24 CFR part 84 (if the entity is a 
nonprofit) or 24 CFR part 85 (if the entity is a state or local 
government) with respect to its selection of the members of the team, 
and the members must be paid on a cost-reimbursement basis only. The 
PHA must maintain documentation that indicates both the cost 
reasonableness of its selection of a resident group or PHA subsidiary 
and the ability of that group or subsidiary to act as the PHA's partner 
under this provision.


Sec.  943.411  Procurement standards apply for a PHA's joint venture 
partner.

    (a) General. A joint venture partner is not a grantee or subgrantee 
and, accordingly, is not required to comply with 24 CFR part 84 or 24 
CFR part 85 in its procurement of goods and services under this part. 
The partner must comply with all applicable state and local procurement 
and conflict of interest requirements with respect to its selection of 
entities to assist in PHA program administration.
    (b) Exception. If the joint venture partner is a subsidiary, 
affiliate, instrumentality, or identity of interest party of the PHA, 
it is subject to the requirements of 24 CFR part 85. HUD may, on a 
case-by-case basis, exempt such a joint venture partner from the need 
to comply with requirements under 24 CFR part 85 if HUD determines that 
the joint venture has developed an acceptable alternative procurement 
plan.
    (c) Contracting with identity-of-interest parties. A joint venture 
partner may contract with an identity-of-interest party for goods or 
services, or a party specified in the selected bidder's response to a 
Request for Proposal or Request for Qualifications (as applicable), 
without the need for further procurement if:
    (1) The PHA can demonstrate that its original competitive selection 
of the partner clearly anticipated the later provision of such goods or 
services;
    (2) Compensation of all identity-of-interest parties is structured 
to ensure there is no duplication of profit or expenses; and
    (3) The PHA can demonstrate that its selection is reasonable based 
upon prevailing market costs and standards, and that the quality and 
timeliness of the goods or services is comparable to that available in 
the open market. For purposes of this paragraph (c), an ``identity-of-
interest party'' means a party that is wholly owned or controlled by, 
or that is otherwise affiliated with, the partner or the PHA. The PHA 
may use an independent organization experienced in cost valuation to 
determine the cost reasonableness of the proposed contracts.


Sec.  943.413  Procurement standards for a joint venture.

    (a) When the joint venture as a whole is controlled by the PHA or 
an identity-of-interest party of the PHA, the joint venture is subject 
to the requirements of 24 CFR part 85.
    (b) If a joint venture is not controlled by the PHA or an identity-
of-interest party of the PHA, then the rules that apply to the other 
partners apply. (See Sec.  943.411, Procurement standards apply for a 
PHA's joint venture partner).

    Dated: June 9, 2014.
Sandra B. Henriquez,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 2014-16151 Filed 7-10-14; 8:45 am]
BILLING CODE 4210-67-P