Housing Opportunity Through Modernization Act of 2016: Implementation of Sections 102, 103, and 104, 48820-48842 [2019-19774]
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Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Proposed Rules
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Indian tribes, or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes.
Regulatory Flexibility Act
The Acting Administrator, in
accordance with the Regulatory
Flexibility Act (5 U.S.C. 601–612)
(RFA), has reviewed this proposed rule
and by approving it certifies that it will
not have a significant economic impact
on a substantial number of small
entities. As discussed above, the
proposed scheduling of norfentanyl as
an immediate precursor of the schedule
II controlled substance, fentanyl, would
subject norfentanyl to all of the
regulatory controls and administrative,
civil, and criminal sanctions applicable
to the manufacture, distribution,
dispensing, importing, and exporting of
a schedule II controlled substance.
Norfentanyl is the immediate chemical
intermediary in a synthesis process
currently used by clandestine laboratory
operators for the illicit manufacture of
the schedule II controlled substance
fentanyl. The distribution of illicitly
manufactured fentanyl has caused an
unprecedented outbreak of thousands of
fentanyl-related overdoses in the United
States in recent years.
The DEA has not identified any use
for norfentanyl, other than its role as an
intermediary chemical in the
production of fentanyl. Based on the
review of import and quota information
for ANPP and fentanyl, the DEA
believes the vast majority, if not all, of
legitimate pharmaceutical fentanyl is
produced from ANPP (schedule II
immediate precursor for fentanyl), not
norfentanyl. The quantities of ANPP
permitted in the U.S., imported or
manufactured pursuant to a quota,
generally correspond with the quantities
of legitimate pharmaceutical fentanyl
produced in the U.S. Additionally, the
DEA is not aware of norfentanyl being
used for the manufacturing of legitimate
pharmaceutical fentanyl; however, the
DEA cannot rule out the possibility that
minimal quantities of norfentanyl are
used for this purpose. If there are any
quantities of norfentanyl used for the
manufacturing of legitimate
pharmaceutical fentanyl, the quantities
are believed to be small and
economically insignificant.
The DEA has identified 30 domestic
suppliers of norfentanyl. Based on
Small Business Administration size
standard for chemical distributors and
Statistics of U.S. Business data, 94.5%
or 28.4 (rounded to 28) are estimated to
be small entities. It is difficult to know
how much norfentanyl is distributed by
these suppliers. It is common for
chemical distributors to have items on
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their catalog while not actually having
any material level of sales. Based on the
review of import and quota information
for fentanyl and ANPP, where the
quantities of ANPP imported and
manufactured generally correspond
with the quantities of fentanyl
produced, the DEA believes any
quantity of sales from these distributors
for the legitimate pharmaceutical
fentanyl manufacturing is minimal.
Therefore, the DEA estimates the cost of
this rule on any affected small entity is
minimal. The DEA welcomes any public
comment regarding this estimate.
Because of these facts, this proposed
rule will not, if promulgated, result in
a significant economic impact on a
substantial number of small entities.
2. Amend § 1308.12 by adding a new
paragraph (g)(3)(ii) and adding and
reserving paragraph (g)(3)(iii) to read as
follows.
■
§ 1308.12
Schedule II.
*
*
*
*
*
(g) * * *
(3) * * *
(ii) N-phenyl-N-(piperidin-4yl)propionamide (norfentanyl)—8366
(iii) [Reserved]
*
*
*
*
*
Dated: September 6, 2019.
Uttam Dhillon,
Acting Administrator.
[FR Doc. 2019–19786 Filed 9–16–19; 8:45 am]
BILLING CODE 4410–09–P
Unfunded Mandates Reform Act of 1995
On the basis of information contained
in the ‘‘Regulatory Flexibility Act’’
section above, the DEA determined and
certifies pursuant to the Unfunded
Mandates Reform Act of 1995 (UMRA),
2 U.S.C. 1501 et seq., that this action
would not result in any Federal
mandate that may result ‘‘in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100,000,000 or more
(adjusted for inflation) in any one year
* * *.’’ Therefore, neither a Small
Government Agency Plan nor any other
action is required under provisions of
UMRA.
Paperwork Reduction Act
This proposed action does not impose
a new collection of information under
the Paperwork Reduction Act, 44 U.S.C.
3501–3521. This proposed action would
not impose recordkeeping or reporting
requirements on State or local
governments, individuals, businesses, or
organizations. An agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid OMB control number.
List of Subjects in 21 CFR Part 1308
Administrative practice and
procedure, Drug traffic control,
Reporting and recordkeeping
requirements.
For the reasons set out above, the DEA
proposes to amend 21 CFR part 1308 as
follows:
PART 1308—SCHEDULES OF
CONTROLLED SUBSTANCES
1. The authority citation for 21 CFR
part 1308 continues to read as follows:
■
Authority: 21 U.S.C. 811, 812, 871(b),
956(b), unless otherwise noted.
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DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Parts 5, 92, 93, 574, 960, 966,
982
[Docket No FR–6057–P–01]
RIN 2577–AD03
Housing Opportunity Through
Modernization Act of 2016:
Implementation of Sections 102, 103,
and 104
Office of the Assistant
Secretary for Public and Indian
Housing, Office of the Assistant
Secretary for Housing-Federal Housing
Commissioner, and Office of the
Assistant Secretary for Community
Planning and Development, HUD.
ACTION: Proposed rule.
AGENCY:
The Housing Opportunity
Through Modernization Act of 2016
(HOTMA) was enacted on July 29, 2016.
This proposed rule would revise HUD
regulations to put sections 102, 103, and
104 of HOTMA into effect. These
sections make sweeping changes to the
United States Housing Act of 1937,
particularly those affecting income
calculation and reviews. Section 102
changes requirements pertaining to
income reviews for public housing and
HUD’s Section 8 programs. Section 103
modifies the continued occupancy
standards of public housing residents
whose income has grown above the
threshold for initial eligibility. Section
104 sets maximum limits on the assets
that families residing in public housing
and Section 8 assisted housing may
have. Additionally, section 104 provides
that HUD must direct public housing
agencies to require that all applicants
for and recipients of assistance through
HUD’s public housing or Section 8
SUMMARY:
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Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Proposed Rules
programs provide authorization for
public housing agencies to obtain
financial records needed for eligibility
determinations. In addition to amending
regulations for HUD’s public housing
and Section 8 programs, this proposed
rule would change regulations of other
HUD programs that, for consistency,
adopted regulations of programs that are
based on statutory provisions amended
by sections 102 and 104. Therefore, this
rule makes changes that affect HUD’s
HOME Investment Partnerships,
Housing Trust Fund, and Housing
Opportunities for Persons With AIDS
programs, as well as HUD’s public
housing and Section 8 programs.
DATES: Comment Due Date: November
18, 2019.
ADDRESSES: Interested persons are
invited to submit comments regarding
this proposed rule. Copies of all
comments submitted are available for
inspection and downloading at
www.regulations.gov. To receive
consideration as public comments,
comments must be submitted through
one of the two methods specified below.
All submissions must refer to the above
docket number and title.
1. 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 their
timely receipt by HUD, and enables
HUD to make them immediately
available to the public. Comments
submitted electronically through the
www.regulations.gov website 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.
2. Submission of Comments by Mail.
Comments may be submitted by mail to
the Regulations Division, Office of
General Counsel, Department of
Housing and Urban Development, 451
7th Street SW, Room 10276,
Washington, DC 20410–0500.
FOR FURTHER INFORMATION CONTACT:
Public Housing, Housing Choice
Voucher (including project-based
vouchers), and moderate rehabilitation
programs, at HOTMAquestions@
hud.gov.
Multifamily Housing programs: Kate
Nzive, Director, Assisted Housing
Oversight Division, Office of
Multifamily Housing, at
katherine.a.nzive@hud.gov.
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HOME Investment Partnerships and
Housing Trust Fund programs: Virginia
Sardone, Director, Office of Affordable
Housing Programs, Office of Community
Planning and Development, at 202–708–
2684.
Housing Opportunities for Persons
With AIDS program: Rita Flegel,
Director, Office of HIV/AIDS Housing,
Office of Community Planning and
Development, at 202–402–5374.
Persons with hearing or speech
impairments may access the above
telephone numbers through TTY by
calling the Federal Relay Service, tollfree, at 800–877–8339.
The mailing address for each office
contact is Department of Housing and
Urban Development, 451 7th Street SW,
Washington, DC 20410.
SUPPLEMENTARY INFORMATION:
I. Background
On July 29, 2016, HOTMA was signed
into law (Pub. L. 114–201, 130 Stat.
782). HOTMA makes numerous changes
to statutes governing HUD programs,
including sections 3, 8, and 16 of the
United States Housing Act of 1937 (1937
Act). HUD issued a notice in the Federal
Register on October 24, 2016, at 81 FR
73030, announcing which statutory
changes made by HOTMA could be
implemented immediately and which
statutory changes require further action
by HUD.
On November 29, 2016, HUD
published another Federal Register
notice (81 FR 85996), seeking public
input on how HUD should determine
the income limit for public housing
residents, pursuant to section 103 of
HOTMA, and this was followed by a
July 26, 2018, notice (83 FR 35490) that
made some provisions of section 103 of
HOTMA effective. On January 18, 2017,
HUD published a Federal Register
notice (82 FR 5458), that made multiple
HOTMA provisions for the Housing
Choice Voucher (HCV) program,
unrelated to sections 102, 103, and 104,
effective and solicited public comment
on HUD’s implementation methods. The
conforming regulatory changes for the
HCV program provisions implemented
by the January 18, 2017, Federal
Register notice are not part of this
proposed rule and will be addressed
through a separate rulemaking.
Many of the statutory provisions in
HOTMA are intended to streamline
administrative processes and reduce
burdens on public housing agencies
(PHAs) and private owners. Sections
102, 103, and 104 of HOTMA require
that HUD make changes to its
regulations and take other actions—
some of which will also reduce burdens
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48821
on PHAs and private owners once
implemented.
A. HOTMA Section 102
Section 102 of HOTMA deals with
income reviews in HUD’s public
housing and Section 8 programs.
Section 102(a) amends section 3(a) of
the 1937 Act to revise the frequency of
family income reviews and the
calculation of income and requires
HUD, in consultation with other
appropriate Federal agencies, to develop
electronic procedures enabling PHAs to
access income determinations for other
Federal means-tested programs. Section
102(c) amends section 3(b) of the 1937
Act to change the definitions, for the
public housing and Section 8 programs,
of income and adjusted-income for each
member of the household who is 18
years or older and unearned income for
each dependent who is less than 18
years old. Section 102(d) amends
section 8(o) of the 1937 Act, which
authorizes the HCV Program, but
existing HUD regulations already reflect
the changes. Section 102(e) changes the
definition of ‘‘income’’ to ‘‘annual
adjusted income’’ for the Enhanced
Voucher Program. Section 102(f) strikes
the last sentence of paragraph (3) of
section 8(c) of the 1937 Act, eliminating
the requirement that reviews of family
income shall be made no less frequently
than annually for project-based housing.
Under section 102(h), statutory
amendments based on changes in
section 102 are not effective until the
beginning of the calendar year after
HUD has issued a notice or regulation
implementing the changes.
Some provisions in section 102 of
HOTMA do not require regulatory
changes and are not addressed in this
proposed rule. Section 102(b) requires
HUD to submit a certification letter to
Congress regarding hardship
exemptions to minimum monthly rent
and does not amend the 1937 Act or
prompt changes to HUD regulations.
Section 102(g)(1) states that HUD may
make appropriate adjustments in the
formula income of PHAs that experience
a material and disproportionate
reduction in rental income during the
first year in which the provisions of this
section are implemented. 24 CFR
990.110(c) currently provides that HUD
will address secondary elements that
will be used in the revised Operating
Fund Formula through nonregulatory
means, so this provision does not
require a regulatory change. Section
102(g)(2) requires that HUD submit a
report to Congress identifying and
calculating the impact of changes made
by sections 102 and 104 of HOTMA
during each of the first 2 years after the
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implementation of section 102. Section
102(i) requires HUD to conduct a study
on the impact any decreased amount of
deductions in income that result from
the implementation of this section has
on elderly and disabled families.
B. HOTMA Section 103
Section 103 of HOTMA amends
section 16(a) of the 1937 Act to place an
income limitation on a public housing
tenancy for families. The law requires
that after a family’s income has
exceeded 120 percent of the area
median income (AMI) (or a different
limitation established by HUD) for 2
consecutive years, a PHA must
terminate the family’s tenancy within 6
months after the expiration of the 2-year
period or charge the family a monthly
rent equal to the greater of (1) the
applicable Fair Market Rent or (2) the
amount of monthly subsidy for the unit,
including amounts from the operating
and capital fund, as determined by
regulations. For purposes of this
proposed rule, the income limit
established by HOTMA will be referred
to as the ‘‘over-income limit.’’ A PHA
must notify a family of the potential
changes to monthly rent 1 year after the
PHA determines that the family’s
income exceeds the over-income limit.
Pursuant to section 3(a)(5) of the 1937
Act, the over-income limit does not
apply in instances where a PHA
operating fewer than 250 public housing
units has admitted families with income
exceeding the over-income limit, if the
PHA is renting to those families because
there are no income-eligible families on
the PHA’s waiting list or applying for
public housing assistance. Each PHA
must submit a report annually to HUD
that specifies, as of the end of the year,
the number of families residing in
public housing with incomes exceeding
the over-income limit and the number of
families on the waiting lists for
admission to public housing projects.
Such reports must be publicly available.
The new language in section 16(a)(5)
of the 1937 Act sets the over-income
limit at 120 percent of the AMI.
However, HUD can adjust the overincome limit if the Secretary determines
that it is necessary due to prevailing
levels of construction costs or unusually
high or low family incomes, vacancy
rates, or rental costs. On July 26, 2018,
at 83 FR 35490, HUD published a final
notice in the Federal Register
implementing HUD’s methodology for
determining the over-income limit by
using the very low-income (VLI) 1 level
for the applicable area as the baseline
and multiplying it by 2.4. Because VLI
is preliminarily calculated as 50 percent
of the estimated area median income for
the family, in most cases this would
result in a figure matching 120 percent
of the area median income. However, in
areas where the VLI has been adjusted
to account for high or low housing costs
or to prevent it from being lower than
50 percent of the state, non-metro
median family income, the final amount
would result in an adjusted over-income
limit as well.
C. HOTMA Section 104
Section 104 of HOTMA amends
section 16 of the 1937 Act to set limits
on the assets that families residing in
public housing and families receiving
assistance under section 8 of the 1937
Act may own. In addition to providing
limitations on assets, this section
defines the term ‘‘net family assets’’ and
lists exclusions to the definition. The
section allows for families to self-certify
that they are not subject to the
limitation on assets, under certain
circumstances. Section 104 also grants
PHAs and owners authority to not
enforce the asset limitation, provided
HOPWA
(part 574)
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PBRA
Net Family Assets Definition (5.603).
Yes (§ 983.4) ..................
Annual Income Definition
(5.609(a)).
Annual Income Exclusions (5.609(b)).
Annual Income Calculation & Reexaminations
(5.609(c)).
II. This Proposed Rule
A. Affected Programs and Housing
Providers
HUD proposes to revise 24 CFR parts
5, 92, 93, 574, 960, and 982 in order to
implement sections 102, 103, and 104 of
HOTMA. Although sections 102, 103,
and 104 amend the 1937 Act, which
governs HUD’s public housing and
Section 8 programs, this proposed rule
also aligns policies and procedures
across program offices, where
appropriate, to include programs that
are administered by HUD’s Office of
Community Planning and Development,
including the HOME Investment
Partnerships (HOME), Housing Trust
Fund (HTF), and Housing Opportunities
for Persons With AIDS (HOPWA)
programs. Alignment will reduce
disparities between the programs and
better simplify program administration
for HUD grantees that manage multiple
programs.
B. HOTMA Section 102
Section 102 of HOTMA revises the
definition in the 1937 Act of family
income. Because a variety of programs
use this definition, HUD offers the
following chart showing which
programs (other than public housing
and the voucher programs) are affected
by various changes to the income
regulatory provisions in 24 CFR part 5:
Housing trust fund
(part 93)
202/811
Yes, or may use IRS income definition
(§ 93.151(b)(1)(i)).
Yes, or may use IRS income definition
(§ 891.105).
Yes (§ 983.4) ..................
Yes, except the value of
Yes, or may use IRS ina home of a participant
come definition
receiving short-term
(§ 92.203(b)(1)).
mortgage or utility assistance under
§ 574.300(b)(6) or
other homeownership
assistance eligible
under HOPWA is excluded (§ 574.310(f)(1)).
Yes (§ 574.310(d)(1)) ..... Yes (§ 92.203(b)(1)) .......
Yes (§ 93.151(b)(1)(i)) ....
Yes (§ 891.105).
Yes (§ 983.4) ..................
Yes (§ 574.310(d)(1)) .....
Yes (§ 92.203(b)(1)) .......
Yes (§ 93.151(b)(1)(i)) ....
Yes (§ 891.105).
Yes (§ 983.4) ..................
Yes (§ 574.310(d)(1)) .....
No ...................................
No ...................................
Yes (§ 891.105).
1 HUD’s income limits were developed by HUD’s
Office of Policy Development and Research and are
updated annually. Information about HUD’s income
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HOME
(part 92)
that the PHA or owner sets forth a
policy to that effect in its PHA plan or
in a plan adopted by the owner. Section
104 also directs HUD to direct PHAs to
require all applicants and recipients
under the 1937 Act to authorize the
PHA to obtain financial information
needed in connection with a
determination with respect to eligibility.
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limits and HUD’s methodology for adjusting income
limits as part of the income limit calculation can
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be found at https://www.huduser.gov/portal/
datasets/il.html.
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PBRA
HOPWA
(part 574)
HOME
(part 92)
Housing trust fund
(part 93)
Adjusted Income Mandatory Deductions
(5.611(a)).
Adjusted Income Additional Deductions
(5.611(b)).
Yes (§ 983.4) ..................
Yes (§ 574.310(d)(1)) .....
Yes (§ 92.203(e)) ............
Yes (§ 93.151(e)(1)) .......
Yes (§ 891.105).
Yes, ONLY when the
PHA is an owner
(§ 983.4).
Yes (§ 574.310(d)(1)) .....
Yes (§ 983.4) ..................
Yes (§ 574.310(d)(1)) .....
Asset restriction (5.618) ..
Yes (§ 5.618(e)) ..............
Yes, except for the provision of short-term
mortgage or utility assistance or other
homeownership assistance eligible under the
HOPWA program,
housing information
services, or supportive
services (§ 574.310(f)).
Yes, in PBRA and public
housing units or when
tenant receives Section
8 voucher assistance
(§ 93.151(e)(2)).
Yes, if the grantee elects
to do so in PBRA and
public housing units or
when tenant receives
Section 8 voucher assistance
(§ 93.151(e)(2)).
No ...................................
No.
Adjusted Income Financial Hardship Exemptions (5.611(c)).
Yes, in PBRA units or
when tenant receives
Section 8 voucher assistance
(§ 92.203(e)(3)).
Yes, if the grantee elects
to do so in PBRA units
or when tenant receives Section 8
voucher assistance
(§ 92.203(e)(3)).
Specific solicitation of comment 1:
What administrative burdens or other
considerations (particularly related to
Rental Assistance Demonstration
conversions) should HUD be aware of in
relation to certain sections applying to
public housing and the HCV and
project-based voucher (PBV) programs,
but not to project-based rental assistance
(PBRA) and Section 202/811?
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48823
1. Income Reexaminations
Section 102(a)(1) of HOTMA revises
the process by which PHAs and owners
are required to review family income.
To conform to these changes, this rule
proposes to revise 24 CFR 5.657, 24 CFR
960.257, and 24 CFR 982.516 for the
Section 8 PBRA programs, public
housing, and the HCV program
(including PBV). Currently, these
program regulations provide that
families may request an interim
reexamination of family income because
of any changes since the last
examination, and the PHA or owner
must make the interim determination
within a reasonable period of time after
the family’s request. HOTMA provides
that reviews of family income shall be
made upon the request of the family at
any time the income or deductions of
the family change by an amount that is
estimated to result in a decrease of 10
percent or more in annual adjusted
income, or of such lower amount as
HUD may establish or permit the PHA
or owner to establish. This proposed
rule would revise §§ 5.657, 960.257, and
982.516 to state that the owner or PHA
may decline to process a family’s
request for an interim reexamination if
the owner or PHA estimates the family’s
adjusted income will decrease by an
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amount that is less than 10 percent of
the family’s annual adjusted income.
The proposed rule further provides that
the owner or PHA may still choose to
process the family request for an interim
reexamination if the owner or PHA
estimates the family’s adjusted income
will decrease by less than 10 percent,
provided the owner or PHA has
established a standard for conducting
the interim reexamination that is more
generous to the family (e.g., the owner
or PHA will conduct an interim
reexamination if the decrease in family
income exceeds 5 percent of adjusted
income) and the PHA estimates the
family’s adjusted income will decrease
by an amount that exceeds the owner or
PHA threshold. HUD believes that while
the 10 percent standard is appropriate
as the HUD standard and consequently
is not exercising its discretion to
establish a lower threshold, owners and
PHAs should have the flexibility to
establish a lower threshold if they wish
to do so and are willing to take on the
additional administrative burden. The
owner or PHA may not establish an
alternative threshold that is less
generous to the family than the standard
10 percent decrease in adjusted income
(e.g., the owner or PHA will only
conduct an interim examination if the
decrease in family adjusted income is
estimated to be more than 20 percent
decrease in adjusted income).
Additionally, HOTMA states that
PHAs and owners must conduct a
reexamination of family income at any
time the family’s adjusted income is
estimated to have increased by 10
percent or more. This proposed rule
would revise §§ 5.657, 960.257, and
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202/811
No.
No.
982.516 to reflect this change and would
specify that the owner or PHA would be
required to conduct the reexamination
within a reasonable period of time after
the owner or PHA becomes aware of the
family’s change in income. HOTMA
provides some administrative relief to
this requirement by allowing PHAs or
owners to elect not to conduct an
income review in the last 3 months of
a certification period, and that
flexibility is incorporated into this
proposed rule. PHAs or owners may not
consider earned income of the family
when estimating whether the family’s
adjusted income has increased, unless
the increases in earned income
correspond to previous decreases
resulting from the family’s request for
an interim reexamination. This
proposed rule would provide a
definition for ‘‘earned income’’ in 24
CFR 5.100 that would apply when the
term is used throughout this rule. The
definition would mirror the definition
of earned income that is currently in 24
CFR 984.103.
Specific solicitation of comment 2:
HUD is specifically seeking comment
about the ‘‘reasonable period of time’’ in
which the PHA and owner must
conduct an interim reexamination. HUD
seeks comment on what should be
considered reasonable and whether this
rule should contain a specific time
frame by which the PHA or owner must
complete an interim reexamination.
HUD seeks comment on what such a
time frame might be (for example, 2
weeks from the time of the family
request, or the time the PHA or owner
is aware of the change in income or
family composition).
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Specific solicitation of comment 3:
HUD is seeking comments on whether
HUD should continue to require PHAs
and owners to use the Enterprise
Income Verification (EIV) System for
every income examination, or revise its
regulations at 24 CFR 5.233 to require
use of EIV only at initial and annual
reexaminations and not at interim
reexaminations. If HUD were to adopt
such a proposal, housing providers
could still use EIV for interim
reexaminations but would not be
required to use EIV. HUD is seeking
comments on whether such a proposal
would save time for PHAs and owners
without significantly impacting the
accuracy of the reexaminations.
2. Calculation of Family Income
Section 102(a)(1) of HOTMA also
describes how PHAs and owners must
calculate family income, and this
proposed rule would revise 24 CFR
5.609 to account for this. Specifically,
this proposed rule would revise § 5.609
to direct PHAs and owners to estimate
the income of the family for the
upcoming year to determine family
income for initial occupancy or for the
initial provision of housing assistance or
for an interim reexamination of family
income. In determining family income
for annual reviews, this proposed rule
would provide that the PHA or owner
must use the income of the family as
determined by the PHA or owner for the
preceding year, taking into account any
redetermination of income undertaken
during the preceding year. For example,
if a PHA had made a redetermination of
the family’s income during the
preceding year because the family’s
income had decreased by more than 10
percent, the PHA would be required at
the annual review to use that
redetermination to determine the
family’s income for the forthcoming
year. This will not apply in situations
where the PHA or owner uses a
streamlined income determination.
HOTMA provides that the PHA or
owner may make adjustments, as it
considers appropriate, to reflect current
income if during the previous 12-month
period there was a change in income
that was not accounted for in a
redetermination of income. However, in
order to properly account for income,
this rule proposes that the PHA or
owner must make adjustments to reflect
current income if during the previous
12-month period there was a change in
income that was not accounted for in a
redetermination of income. For
example, if a family reported a decrease
in income during the preceding year but
the PHA had not conducted an interim
redetermination because the decrease
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was less than 10 percent of the family’s
annual adjusted income, at the annual
review the PHA would be required to
adjust the determination of family
income to reflect the decrease.
HOTMA provides for a ‘‘safe harbor’’
for PHAs or owners who determine
family income prior to the application
of deductions based on timely income
determinations made for purposes of
other means-tested Federal public
assistance programs, including the
Temporary Assistance for Needy
Families block grant, Medicaid
assistance, and the Supplemental
Nutrition Assistance program. This
proposed rule adopts this language in
the new paragraph on calculation of
income in 24 CFR 5.609. Specifically,
HUD is permitting PHAs and owners to
utilize the income determinations,
regardless of definitional differences
between other forms of public assistance
and the respective HUD program. HUD
believes this maximizes the
streamlining benefit of the provision.
Further, HUD proposes to add the
Earned Income Tax Credit to the list of
means-tested Federal public assistance.
Specific solicitation of comment 4:
HUD is soliciting feedback on how
allowing PHAs and owners to use
income determinations from other forms
of public assistance may impact
program administration, and whether
HUD should establish requirements as
to which income determination should
be used if there is more than one
determination of income from other
public assistance programs available to
the PHA or owner.
Specific solicitation of comment 5:
HUD is soliciting feedback on whether
there are other forms of Federal public
assistance that should be added to the
‘‘safe harbor’’ list or whether HUD
should limit the number of such
programs.
3. Annualization of Income
In order to conform to HOTMA, this
proposed rule would also remove an
existing provision in 24 CFR 5.609 on
annualization of income, which states
that if it is not feasible to anticipate a
level of income over a 12-month period
(e.g., seasonal or cyclic income), or the
PHA believes that past income is the
best available indicator of expected
future income, the PHA may annualize
the income anticipated for a shorter
period, subject to a redetermination at
the end of the shorter period.
4. De Minimis Errors
HOTMA provides that a PHA or
owner will not be out of compliance
with the statute’s new provisions
regarding income review and income
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calculation solely due to any de
minimis errors made by the agency or
owner in calculating family income.
HOTMA does not define de minimis
error. HUD proposes to revise 24 CFR
5.609, 24 CFR 5.657, 24 CFR 960.257,
and 24 CFR 982.516 to provide that
PHAs and owners will not be
considered to have failed to comply
with the requirements involving the
calculation of income solely due to de
minimis errors. Under this proposed
rule, a de minimis error would be
defined as any error where the PHA’s or
owner’s calculation of a family’s income
or adjusted income varies from the
correct income or adjusted income by
no more than 5 percent. In such
instance, the PHA’s or owner’s income
determination would not be considered
incorrect for purposes of HUD’s
monitoring and compliance oversight
responsibilities. However, the PHA or
owner would still be required to take
necessary corrective action to repay a
family if the de minimis error in the
income determination resulted in the
family being overcharged for their rent.
Specific solicitation of comment 6:
HUD specifically seeks comment from
PHAs and owners on the methodology
HUD should use in determining what
constitutes a de minimis error. For
example, as alternatives to the 5 percent
figure discussed above, HUD could
calculate de minimis errors to be those
that do not exceed $30 per month for
any family, because a family’s share of
rent for 1937 Act programs is
approximately $30 for every $100 of
income. Or, HUD could calculate de
minimis errors as those that represent
less than 5 percent of all income
determinations made during a calendar
year.
5. Earned Income Disallowance
Section 102(a)(2) of HOTMA
eliminates section 3(d) of the 1937 Act,
which had thus far allowed for the
disallowance of earned income (EID)
from rent determinations. This section
had provided that the rent of certain
public housing residents or recipients of
Section 8 assistance could not be
increased as a result of increased
income due to employment during the
12-month period beginning on the date
on which the employment started, and
that following the expiration of that 12month period, the PHA must exclude
from the annual income of a qualified
family at least 50 percent of any
increase in the income of such family
member, as a result of employment, over
the family’s baseline income for the
subsequent 12-month period. Other
HUD programs, including the HOME,
HOPWA, and Supportive Housing
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programs, similarly adopted an EID for
persons with disabilities. Because the
EID is no longer authorized under the
1937 Act, this proposed rule would
eventually eliminate regulatory
references to it.
Despite the elimination of the EID
from HUD’s regulations, HUD proposes
to allow families who receive the EID
benefit as of the effective date of a final
rule implementing section 102 of
HOTMA to continue receiving the
benefits of EID until the allowed time
frame expires, per the framework
currently provided under § 5.617 or
§ 960.255. Given the time frames in
§ 5.617 or § 960.255, within 2 years from
the effective date of a final rule
implementing the elimination of EID, no
family would receive the EID benefit.
Specific solicitation of comment 7:
HUD specifically solicits comment on
this proposal to allow current recipients
of the EID benefit to continue to receive
the benefit until the allowed time frame
expires.
6. Definition of ‘‘Annual Income’’
Section 102(c) of HOTMA provides a
new definition for the term ‘‘income.’’
As a result, this proposed rule would
significantly revise HUD regulations in
24 CFR 5.609. Specifically, this rule
proposes to simplify the existing
definition of annual income by
removing the list of examples of income
sources and providing a broader
definition of income that mirrors the
definition of income provided by
HOTMA. HUD hopes that this
streamlining effort will reduce the
burden on PHAs and owners in
determining a family’s income and
reduce confusion about what should be
included as income.
This HOTMA definition sufficiently
encompasses what HUD considers to be
income under the current regulation,
with the exception of the treatment of
imputed returns on assets. Therefore, in
addition to the HOTMA definition of
income, this proposed rule would
specify that annual income also
includes the imputed return on assets
over $50,000, based on the current
passbook savings rate if the actual
income from assets cannot be computed.
The $50,000 figure will be adjusted for
inflation, in accordance with HOTMA.
By simplifying the definition of income
and streamlining the regulatory
provisions in § 5.609, HUD seeks to
reduce the complexity of the existing
income regulations.
HUD wants to be clear that income
sources that were previously included
in annual income are generally
unchanged. HUD is only simplifying the
definition to eliminate confusing
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regulatory language that excluded some
income that should have been included
and which increased litigation risk for
housing providers who rely on HUD’s
definition of income.
Specific solicitation of comment 8:
HUD is seeking feedback from interested
parties on the impact of the proposed
redefinition of annual income and
whether it simplifies the understanding
of what is included in annual income.
Specific solicitation of comment 9:
HUD solicits comment on what
inflationary index to use for purposes of
adjusting the amount of imputed return
on assets included in annual income,
and other provisions in HOTMA that
require amounts to be adjusted annually
for inflation.
7. Income Exclusions
Additionally, HUD proposes updating
the list of income exclusions to be
consistent with HOTMA and to
eliminate certain nonstatutory,
discretionary exclusions from income in
order to further streamline the income
determination process. This proposed
rule specifies that annual income does
not include amounts that are explicitly
excluded from the definition of income
in HOTMA, but removes current
exclusions for inheritances, capital
gains, gifts, and other sporadic income.
HUD has found that these provisions
have caused confusion, there has been
inconsistent application of these
exclusions, and that these amounts
should be included as annual income.
HUD notes that with this change,
realized capital gains—meaning those
capital gains obtained from the sale of
property in a given year—would be
included as income under 24 CFR
5.609(a)(1). The value of unrealized
capital gains—meaning the value of any
increase in an asset from one year to the
next—would be included under the
definition of Net Family Assets, which
is used to determine imputed income
under 24 CFR 5.609(a)(2).
Under this proposed rule, insurance
payments remain excluded from annual
income. However, HUD would strike the
parentheses and the text enclosed in the
parentheses that is intended to clarify
that insurance payments include
payments under health and accident
insurance and worker’s compensation.
This proposed change does not
represent any change in policy and
payments under health and accident
insurance and worker’s compensation
would continue to be excluded from
annual income. HUD is proposing the
change because HUD believes the
current language has created more
confusion in terms of what is meant by
insurance payments than it has solved
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and to clarify that all insurance
payments should be excluded from
annual income, not just a select, few
types.
Specific solicitation of comment 10:
The proposed rule provides that
distributions from a nonrevocable trust
fund specifically provided to cover the
cost of medical expenses for a minor is
excluded income, as are any amounts
recovered in any civil action or
settlement based on a claim of
malpractice, negligence, or other breach
of duty, owed to a family member
arising out of law, that resulted in a
member of the family being disabled.
Distributions from a non-revocable trust
fund provided for other purposes would
be considered income. HUD is seeking
comment on whether this rule should
treat subsequent withdrawals of an
insurance payment or settlement for
personal or property losses (whether
related to a minor or not), or amounts
recovered in the aforementioned civil
action or settlement, as income. Start
here For example, while the initial lump
sum addition of an insurance payment
or an amount recovered in the civil
action or settlement would not count as
annual income, HUD seeks comment on
whether this rule should specify that
any amount the family subsequently
withdraws against the payment (e.g.,
from a bank account or trust fund into
which the insurance payment or
recovered amount was deposited) would
be considered income. If this rule were
to consider such subsequent
withdrawals as income, HUD seeks
comment on whether certain types of
withdrawals should be excluded from
annual income (in addition to the
existing exclusion of distributions from
a non-revocable trust fund specifically
provided to cover the medical expenses
of a minor). If the rule were to consider
such subsequent withdrawals as income
but exclude certain withdrawals that are
used for a particular purpose (e.g., the
family received an auto insurance
payment after an accident that totaled
the family car that the family deposited
in their checking account and then
subsequently used to purchase a
replacement vehicle), HUD seeks
comment on whether there are specific
requirements that could be added to
address the operational challenges that
a PHA or owner would face in
identifying, determining, and verifying
that the withdrawal should be either
included or excluded from annual
income. Finally, HUD is requesting
comment on whether the final rule
should simply count the lump-sum
insurance payment or settlement as
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income, rather than excluding it from
annual income at any point in time.
HOTMA provides HUD the discretion
to establish exclusions to income
beyond those explicitly listed in
HOTMA and any amount required by
Federal law to be excluded from
consideration as income. As a result,
with the exception of inheritances,
capital gains, gifts, and other sporadic
income, HUD proposes to maintain the
other exclusions currently listed in
§ 5.609, but would revise the
explanatory language for some of those
exclusions to provide greater clarity and
understanding. One of these exclusions
is for earnings in excess of $480 for fulltime students 18 years or older who are
not the head of household or spouse of
the head of household. This proposed
rule would effectively maintain that
exclusion, but provide that the $480
figure be adjusted annually for inflation.
As explained below, this is because
there is a mandatory $480 deduction for
dependents in the current regulations
that HOTMA requires be adjusted for
inflation, so the end result is that all
earned income of dependent students
should either be excluded or deducted
from income. Additionally, this
proposed rule would provide that the
amount of the existing exclusion for
adoption assistance payments, which is
payments in excess of $480 per adopted
child, would also be adjusted annually
for inflation.
This proposed rule would add
additional exclusions to income in order
to conform with HUD policy. This
proposed rule would provide that
amounts in or from ABLE accounts
created under section 529A of the
Internal Revenue Code (IRC) are
excluded from income. ABLE accounts
are tax-advantaged savings accounts for
individuals with disabilities. This
proposed rule would exclude the
income of foster adults from
consideration of family income in order
to prevent disincentives to housing such
persons, and would codify HUD’s
existing policy that state kinship or
guardianship care payments are
excluded from the definition of income.
Additionally, this proposed rule would
specify that loan proceeds (for example,
car loans or payday loans) must be
excluded from income. Loan proceeds
are not considered income by HUD
because they are typically a passthrough payment for the purpose of
purchasing something like a car. In the
case of a payday loan, a family uses a
paycheck as collateral, thus counting
such a loan as income would effectively
count that income amount twice.
This proposed rule would also add an
exclusion for payments received by
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Indian persons as a result of claims
relating to the mismanagement of assets
held in trust by the United States
(including payments from tribal trust
settlements), to the extent such
payments are also excluded from gross
income under the Internal Revenue
Code. HUD already consider such
payments to be excluded from annual
income, but relies on the current
exclusion for temporary, nonrecurring,
or sporadic income to do so, which this
proposed rule would remove.
Finally, the rule would codify longstanding practice of excluding from
annual income replacement housing
‘‘gap’’ payments that offset increased
rent and utility costs to families that are
displaced from one federally subsidized
housing unit and move into another
federally subsidized housing unit. HUD
currently excludes these payments from
income as ‘‘temporary, nonrecurring, or
sporadic income’’ under § 5.609(c)(9).
This rule preserves the gap payment
exclusion and clarifies that this
exclusion only exists to the extent that
the tenant’s out of pocket expenses for
rent and utilities in their new federally
subsidized housing are higher than they
were in their previous federally
subsidized housing. Later changes to a
tenant’s contribution due solely to
changes in family income, size, or
composition should not be considered
when determining if a gap has been
reduced or eliminated. If the gap is
reduced or eliminated because of
reasons such as a subsequent move by
the tenant or change in the subsidy
program applicable to the tenant’s unit,
and the tenant chooses to retain or
continue to receive their replacement
housing ‘‘gap’’ payment, then the
portion of the ‘‘gap’’ payment that is no
longer needed to close the gap should be
counted as income for purposes of
determining annual income under
§ 5.609.
HOTMA provides an income
exclusion for full-time dependent
students for any grant-in-aid or
scholarship amounts used for the costs
of tuition or books, and, in such
amounts as HUD may allow, for the cost
of room and board. In implementing this
provision and as part of this proposed
rule’s objective to simplify income
determinations, HUD proposes to
combine the student financial assistance
requirements under a new 24 CFR
5.609(b)(9) (currently, student financial
assistance exclusion requirements are
found at § 5.609(b)(9) and at
§ 5.609(c)(6)). The proposed rule
provides in general that the full amount
of student financial assistance paid
directly to the student or to the
education institution on the student’s
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behalf is excluded from annual income.
The rule defines financial assistance to
be any grant-in-aid, scholarship, or
other assistance amounts an individual
receives for the costs of tuition, books,
room and board, and other fees charged
to the student by the education
institution.
Since 2005, HUD’s Appropriations
Acts have placed limits on the amount
of financial assistance that is excluded
from income for students applying for
and receiving Section 8 assistance who
are not over the age of 23 with
dependent children. In accordance with
that statutory restriction, this proposed
rule would provide that, for those
students, the financial assistance in
excess of the cost of tuition and any
other required fees and charges under
the Higher Education Act of 1965, from
private sources, or an institution of
higher education, shall be considered
income. This categorization of funds as
income does not apply to public
housing students, students under other
HUD programs, or to Section 8 students
over the age of 23 with dependent
children, for whom the financial
assistance in excess of the cost of tuition
the individual receives for the cost of
books, room and board, and other fees
charged by the education institution is
excluded from annual income (in
addition to the financial assistance that
covers the student’s tuition).
HOTMA also provides an income
exclusion for any amount in or from, or
any benefits from, any Coverdell
educational savings account of or any
qualified tuition program under section
530 and section 529 of the Internal
Revenue Code of 1986, respectively. The
proposed rule covers these HOTMA
income exclusions under a new
§ 5.609(b)(10).
Additionally, HOTMA provides an
exclusion for payments related to aid
and attendance under 38 U.S.C. 1521 to
veterans in need of regular aid and
attendance, and this proposed rule
would include this exclusion.
Specific solicitation of comment 11:
HUD is soliciting feedback about
whether there are other income
exclusions that should be provided for
in this rulemaking. For example,
deferred disability benefits are excluded
from income under HOTMA and this
proposed rule, but the rule could
provide for exclusions from income for
all veteran’s disability benefits.
8. Adjusted Income
Section 102(c) of HOTMA makes
changes to ‘‘adjusted income’’ that
require revisions to 24 CFR 5.611.
Section 5.611 currently provides for a
mandatory deduction of $480 for each
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dependent. HOTMA provides for a
mandatory deduction of $480 for
minors, students, and persons with
disabilities who are not the head of the
household or that person’s spouse, and
provides that this figure be adjusted
annually for inflation and the actual
deduction should be determined for
each year by rounding such amount to
the next lowest multiple of $25.
HOTMA also provides HUD the
discretion to establish deductions in
addition to those listed in HOTMA. As
a result, HUD proposes to maintain the
$480 deduction for each dependent,
which amount will be annually adjusted
for inflation. In line with HOTMA’s
requirement, this rule would also
increase the deduction for any elderly or
disabled family from the current $400 to
$525, which amount will be annually
adjusted for inflation and rounded to
the next lowest multiple of $25.
This proposed rule would maintain
other deductions currently allowed,
such as those for child care and health
and medical expenses. However, to
conform to section 102(c) of HOTMA,
this proposed rule would revise the
deduction for health and medical
expenses. Currently, this deduction is
for the sum of (i) unreimbursed medical
expenses of any elderly family, and (ii)
the unreimbursed reasonable attendant
care and auxiliary apparatus expenses
for each member of the family who is a
person with disabilities, to the extent
necessary to enable any member of the
family to be employed. The deduction is
currently limited to the amount by
which these total expenses exceed three
percent of the family’s income. HOTMA
increases the health and medical
expense threshold from three percent to
10 percent. In other words, the health
and medical expense deduction is now
limited to the amount by which those
expenses exceed 10 percent of the
family’s annual income. This means
families who receive a health and
medical expense deduction at the time
the HOTMA change is implemented
may see a significant increase in their
non-deductible health and medical
expenses, which could result in an
increase in their adjusted income and
their rent. However, HUD notes that the
reduction in the family’s health and
medical expense deduction may be
offset to some degree by the HOTMA
change that increases the deduction for
elderly and disabled families from $400
to $525.
Section 102(c) provides that the
Secretary shall by regulation provide
hardship exemptions to the
requirements of the health and medical
expenses provision for impacted
families who demonstrate an inability to
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pay calculated rents because of financial
hardship, and that the regulations must
include a requirement to notify tenants
of any changes to determination of
adjusted income based on the
determination of the family’s claim of
financial hardship. In order to
implement this provision, this proposed
rule would provide, that if the family
can demonstrate an inability to pay the
new rent and the PHA or owner
determines that the family’s inability is
the result of the change in the medical
expense deduction (i.e., the increase in
the amount of non-deductible expenses
from 3 to 10 percent of family income),
the PHA or owner would be required to
recalculate the family’s adjusted
income. In recalculating the family’s
adjusted income, the PHA or owner
would deduct the amount of eligible
health and medical expenses that
exceeds 6.5 percent of the family’s
annual income instead of the normally
applicable 10 percent of family’s annual
income. HUD proposes a 6.5 percent
threshold because it is half-way between
the pre-HOTMA health and medical
expense threshold of three percent and
the new statutory 10 percent threshold.
Under this proposed rule, the family’s
hardship exemption would expire at the
family’s next regular income
reexamination or at such time that the
PHA or owner determines the family
can pay their rent under the normal
adjusted income calculation, whichever
comes first. The PHA or owner would
be required to notify the family in
writing of the change in the
determination of adjusted income, the
family’s rent resulting from the hardship
exemption, and when the hardship
exemption will expire. The intent of the
proposed regulation is to allow families
receiving hardship exemptions to
transition to their new adjusted income
and higher rent incrementally, rather
than immediately absorbing the full
increase as a result of the medical
expense deduction change.
Section 102(c) also allows a hardship
exemption for the child care expense
deduction, which provides that any
reasonable child care expenses
necessary to enable a member of the
family to be employed or to further his
or her education is deducted from
annual income. Under this proposed
rule, a hardship exemption would be
provided to allow the deduction for
reasonable child care costs to continue
in certain circumstances for a family
that no longer has a member that is
employed or seeking to further his or
her education. In order to qualify for the
hardship exemption, the family would
be required to demonstrate to the
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48827
satisfaction of the PHA or owner that
their inability to pay the increased rent
is due to the loss of the child care
deduction. In addition, the family
would also have to demonstrate why the
child care expense remains necessary
now that no family member is
employed, actively seeking
employment, or furthering his or her
education. For example, the family
member may have had to temporarily
suspend their educational pursuits as
the result of injury or illness, and due
to the injury or illness they are unable
to be the primary full-time care giver for
the child whose child care expenses
were deducted from the family’s
adjusted income. Under this proposed
rule, if the PHA or owner determines
that the family qualifies for the hardship
exemption, the PHA or owner would be
required to recalculate the family’s
adjusted income and continue to
include the deduction for the reasonable
child care expenses. As is the case with
the health and medical expense
hardship exemption, the child care
expense hardship exemption would be
temporary and would end no later than
the family’s next regular reexamination.
The child care hardship exemption
would also end at any point in time that
the PHA or owner determines that the
family is either able to pay the rent
without the child care expense
deduction or the need for the child care
expense no longer exists.
The PHA or owner would be required
to notify the family in writing of the
change in the determination of adjusted
income and the family’s rent for both
the adjusted medical expense deduction
and the continuation of the child care
deduction hardship exemptions. The
notice would also inform the family of
the temporary nature of the hardship
exemption and that the exemption will
expire at the earlier of the family’s next
regular income reexamination or at such
time the PHA or owner determines the
need for the hardship exemption no
longer exists.
Specific solicitation of comment 12:
HUD is soliciting feedback from affected
parties on the proposed implementation
of the hardship exemption for both the
health and medical expenses deduction
and child care deduction. Specifically,
HUD is soliciting comments on whether
there are better approaches to
implementing the hardship exemptions
than what is proposed in this rule,
whether HUD should establish specific
requirements or parameters as to how
the PHA or owner would determine that
the family is unable to pay the rent (for
example, the percentage of the family’s
income paid for rent and health and
medical expenses exceeds a certain
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percentage), or whether PHAs and
owners should be given broad
administrative discretion to establish
their own policies on how to make this
determination.
HUD’s current regulations provide
that for public housing, PHAs may
adopt additional deductions from
annual income. Under HOTMA, PHAs
may also choose to adopt additional
deductions from income for the voucher
programs, and the Section 8 projectbased rental assistance program (where
the PHA is an owner) in addition to
public housing. As such, this proposed
rule would provide that for public
housing and the voucher programs, and
where the PHA is an owner in the
Section 8 project-based rental assistance
program, PHAs may adopt additional
deductions from annual income.
Additionally, HOTMA requires that
HUD establish procedures to ensure that
any deductions adopted by PHAs do not
materially increase Federal
expenditures. Under this proposed rule,
PHAs that adopt permissive deductions
would not be eligible to receive any
program funding to cover the increased
cost to the impacted program. The rule
provides that the PHA would have to
identify the amount of subsidy provided
on behalf of the family that is
attributable to the permissive deduction
as required by HUD. This information
would then be used by HUD to ensure
that the cost of the permissive
deduction is not included in the subsidy
for the public housing program, renewal
funding for the HCV (including PBV)
program, or the housing assistance
payments provided to the PHA under
the Section 8 project-based programs.
Specific solicitation of comment 13:
HUD is soliciting feedback on whether
the proposed implementation of
permissive deductions (i.e., that a PHA
will not be eligible for additional
subsidy to cover the costs associated
with the deduction) has any unintended
consequences, or whether HUD should
define ‘‘material’’ differently. Further,
HUD is soliciting feedback on whether
the permissive deductions could be
used to provide incentives for
employment. For example, HUD could
permit PHAs to be eligible for additional
subsidy for certain permissive
deductions of earned income (e.g.,
permissive deductions of the first
$1,000 or $5,000 of earned income) or
other work-related income.
C. HOTMA Section 103
This proposed rule would create a
new 24 CFR 960.507 in HUD’s
regulations to implement section 103 of
HOTMA. Section 103 of HOTMA places
an income limitation on a public
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housing tenancy for families at 120
percent of the AMI. However, HUD can
adjust the over-income limit if HUD
determines that it is necessary due to
prevailing levels of construction costs or
unusually high or low family incomes,
vacancy rates, or rental costs. This
proposed rule would provide that the
over-income limit is determined by
using the very low-income (VLI) level
for the applicable area as the baseline
and multiplying it by 2.4. Pursuant to
section 3(a)(5) of the 1937 Act, the overincome limit does not apply in
instances where a PHA operating fewer
than 250 public housing units has
admitted families with income
exceeding the over-income limit, if the
PHA is renting to those families because
there are no income-eligible families on
the PHA’s waiting list or applying for
public housing assistance. To conform
to HOTMA, this proposed rule would
also remove existing 24 CFR 960.261
from HUD’s regulations, which provides
that PHAs may not evict or terminate
the tenancy of a family that is over the
income limit for public housing if the
family is participating in the Family
Self-Sufficiency program, or if it
currently receives the earned income
disallowance.
Following section 16(a)(5) of the 1937
Act, this proposed rule would provide
in § 960.507 that when a PHA becomes
aware, through an annual reexamination
or an interim reexamination of an
increase in income, that if a family’s
income exceeds the over-income limit,
the PHA must document that the family
exceeds the threshold. This would be
used to compare the family’s current
income with the family’s income one
year later. Once found to be overincome, the family’s income would be
reviewed one year later even if they
have chosen to pay the flat rent. This
proposed rule would also revise
§ 960.253(f) to conform to the new
requirements of section 103 by
providing that for families that choose
to pay a flat rent, once a family is
determined to be over-income, the PHA
must follow the documentation and
reexaminations requirements in
§ 960.507(c).
Under proposed § 960.507, if the
family’s income continues to exceed the
new over-income limit one year after the
initial determination by the PHA, the
PHA must, as required by section
16(a)(5) of the 1937 Act, provide written
notification to the family that their
income has exceeded the over-income
limit for one year. If the family’s income
continues to exceed the over-income
limit for the next 12 consecutive
months, the family would be subject to
either a higher rent or termination based
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on the PHA’s policies. If, however, a
PHA discovers through an annual or
interim reexamination that a previously
over-income family has income that is
now below the over-income limit, the
family would no longer be subject to
these provisions. The family would be
entitled to a new two-year grace period
if the family’s income once again
exceeds the over-income limit.
As reflected in this proposed rule,
HOTMA requires that after a family’s
income has exceeded the over-income
limit for two consecutive years, a PHA
must terminate the family’s tenancy
within 6 months after the expiration of
the two-year period or charge the family
a monthly rent equal to the greater of:
(1) The applicable Fair Market Rent
(FMR); or (2) the amount of monthly
subsidy for the unit including amounts
from the operating and capital fund, as
determined by regulations. To calculate
the monthly subsidy for a unit, HUD
would define the monthly amount of
Public Housing Capital and Operating
funds as the per unit subsidy amount
provided to a PHA for the development
in which the family resides for the most
recent year for which HUD has
calculated final eligibility. HUD would
publish such funding amounts annually.
PHAs would continue to charge these
families the non-over-income rent
amount (the family’s choice of incomebased or flat rent) for the time period
during the 6-month period before
termination.
HUD notes that PHAs are required to
establish policies for continued
occupancy in public housing. Through
the development of those policies, a
PHA is able to consider specific
circumstances in which they would
provide for flexibility in the
administration of over-income
requirements, provided such policies
are in compliance with the 1937 Act
and all applicable fair housing
requirements. PHAs are subject to,
among other fair housing and civil
rights authorities, Section 504 of the
Rehabilitation Act (Section 504), the
Fair Housing Act, and Title II of the
Americans with Disabilities Act (ADA),
which include, among other
requirements, the obligation to grant
reasonable accommodations that may be
necessary for persons with disabilities.
HOTMA requires PHAs to submit an
annual report that specifies the number
of families in public housing with
incomes exceeding the over-income
limit and the number of families on the
waiting lists for admission to public
housing. Because the report data must
reflect the numbers at the end of the
calendar year, not at the end of a PHA’s
reporting year, and because not all
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PHAs submit an annual plan, this report
will be a separate report from other
reporting requirements. However, HUD
is developing a tool that will make it
simple for PHAs to submit the relevant
numbers and make those numbers
public.
D. HOTMA Section 104
Section 104 of HOTMA establishes a
limitation on the amount and type of
assets that a family assisted under the
public housing or Section 8 programs
can possess. To conform to HOTMA,
this proposed rule would create a new
section 24 CFR 5.618 to HUD
regulations that would restrict
assistance to families based on assets.
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1. Assets Restriction
The new § 5.618 would provide that
families would be ineligible for
assistance under HUD’s public housing
or Section 8 programs if their net family
assets exceed $100,000. HOTMA
requires that this amount be adjusted
annually for inflation and, as discussed
earlier in this preamble HUD solicits
comment on the inflationary index that
should be used.
2. Real Property
To conform to HOTMA, § 5.618
would also provide that families could
not receive assistance if they have a
present ownership interest in, legal right
to reside in, and the effective legal
authority to sell real property in the
jurisdiction in which the property is
located that is suitable for occupancy by
the family as a residence. Under this
proposed rule, families would have to
demonstrate that in the jurisdiction in
which the property is located they do
not have a present ownership interest
in, legal right to reside in, or the legal
authority to sell the real property for the
property to be excluded from net family
assets. HUD proposes to exclude from
the real property restriction any
property that is jointly owned by a
member of the family and another
individual or individuals who would
not reside with the family. HUD
proposes this exclusion because an
assisted family may not have the
effective legal authority to sell such
property in the jurisdiction in which the
property is located, and depending on
the nature of the property or type of
joint ownership, may not be able to live
in the property.
Specific solicitation of comment 14:
HUD is soliciting comment about the
circumstances under which a family
may not have a present ownership
interest in, legal right to reside in, or
effective legal authority to sell real
property in the jurisdiction in which the
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property is located, and the feasibility of
families demonstrating this.
While HOTMA does not define what
it means for a property to be suitable for
occupancy, this proposed rule would
provide that a property is suitable for
occupancy unless that family can
demonstrate that the property: (i) Does
not meet the disability-related needs of
the family, including meeting physical
accessibility requirements; (ii) is not
sufficient for the size of the family, for
example, there are not enough
bedrooms; (iii) that it is geographically
located so as to provide a hardship for
the family; and (iv) that it is not safe to
reside in because of its physical
condition.
HOTMA provides certain exclusions
to the real property restriction.
Particularly, this restriction would not
apply to the following: (i) A
manufactured home for which the
family is receiving Section 8 tenantbased assistance; (ii) property for which
a family receives homeownership
assistance from a PHA; (iii) any person
who is a victim of domestic violence; or
(iv) to any family that is offering the
property for sale. Under this proposed
rule, in order to demonstrate that a
family is offering property for sale, a
PHA or owner could require that the
family provide evidence that the
property has been listed for sale. This
proposed rule would add that the
restriction in this section also does not
apply to victims of dating violence,
sexual assault, or stalking, and that the
terms ‘‘domestic violence,’’ ‘‘dating
violence,’’ ‘‘sexual assault,’’ and
‘‘stalking’’ are defined in HUD’s
regulations implementing the Violence
Against Women Act (VAWA).
Specific solicitation of comment 15:
HUD is soliciting feedback from the
public on how the exemption for
victims of domestic violence, dating
violence, sexual assault, or stalking will
be implemented and how it will
operate.
To provide context for the references
to real property in § 5.618, this proposed
rule would provide a new definition in
24 CFR 5.100 for ‘‘real property,’’
specifying that ‘‘real property’’ has the
same meaning as that provided under
the state law in which the real property
is located.
3. Self-Certification of Assets
In accordance with HOTMA, § 5.618
would also provide that the PHA or
owner could determine the net assets of
a family based on a certification by the
family that their net family assets do not
exceed $50,000 after annual adjustment
for inflation. This proposed rule would
also revise § 5.659 of the current
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regulations to reflect the requirement
that families can self-certify. Similarly,
§ 5.618 would provide that the PHA or
owner could determine that a family
does not have any present ownership
interest in any real property based on a
certification by the family to that effect.
4. Discretion on Enforcing the Asset
Limitation
This proposed rule would conform to
HOTMA by providing that PHAs and
owners have the discretion to choose
not to enforce the limitation on
eligibility based on assets, or may
establish exceptions to the restrictions
based on eligibility criteria, if the PHA
or owner does so in the PHA plan or
under a policy adopted by the owner.
In HOTMA and these regulations,
eligibility criteria for establishing
exceptions may provide for separate
treatment based on family type and may
be based on different factors, such as
age, disability, income, the ability of the
family to find suitable alternative
housing, and whether supportive
services are being provided. This
proposed rule clarifies that these
policies cannot violate fair housing
statutes or regulations. This means that
these policies cannot be implemented in
a manner that discriminates against any
protected classes.
HOTMA provides that PHAs and
owners who choose to enforce the asset
limitations may delay for a period of not
more than 6 months the eviction or
termination of a family that does not
meet the limitation on assets. This
proposed rule would clarify that it is the
start of the eviction or termination
proceedings that could not be delayed
for more than 6 months.
5. Net Family Assets
This proposed rule would revise the
definition of ‘‘net family assets’’ found
in 24 CFR 5.603 to align it with the
provisions in section 104 of HOTMA.
The new regulatory definition would
provide that the following will not be
considered to be part of net family
assets: (i) Equity in a manufactured
home where the family receives Section
8 tenant-based assistance; (ii) equity in
property for which a family receives
HCV homeownership assistance from a
PHA; (iii) Family Self-Sufficiency
Accounts; (iv) the value of any accounts
specifically dedicated for retirement; (v)
real property for which the family does
not have the effective legal authority
necessary to sell such property; (vi)
amounts recovered in any civil action or
settlement based on a claim of
malpractice, negligence, or other breach
of duty that resulted in a member of the
family being disabled; and (vii) the
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value of any Coverdell education
savings account or any qualified tuition
program under section 529 of the IRC.
HUD proposes to exclude from the
definition of net family assets the value
of any ABLE account created under
section 529A of the IRC. Per section 104
of HOTMA, with respect to nonrevocable trusts, the value of the trust
would not be considered an asset to the
family as long as the fund continues to
be held in trust. Any income
distribution from any trust would be
considered income, except in the case of
distributions from non-revocable trusts,
made to cover the medical expenses for
a minor. Additionally, this proposed
rule would continue some of the current
exclusions from net family assets,
including interest in Indian trust land.
HOTMA provides that the term ‘‘net
family assets’’ does not include the
value of personal property, except for
items of personal property of significant
value, as the Secretary may establish.
Therefore, this proposed rule would
revise the existing exclusion in HUD’s
regulations for the value of necessary
items of personal property, to provide
that the exclusion would apply to items
of personal property with a total value
under $50,000, other than necessary
items. HUD proposes to consider items
valued over $50,000 to be those of
‘‘significant value,’’ given HOTMA’s
provision that families may certify that
their net assets do not exceed $50,000.
Specific solicitation of comment 16:
HUD specifically seeks comment on the
proposal to exclude items of personal
property valued $50,000 or less, other
than necessary items, from the
calculation of net family assets, and
comments on what such necessary items
of personal property might be. Examples
might include a car that the family relies
on for transportation, or medical
equipment.
This proposed rule would make
additional changes to the definition of
net family assets for clarity. It would
eliminate the current exclusion from net
family assets for equity accounts in
HUD homeownership programs, as this
terminology is vague and unclear. As
mentioned above, the new definition for
net family assets would exclude equity
in a manufactured home where the
family receives Section 8 tenant-based
assistance and equity in property for
which a family receives homeownership
assistance from a PHA.
6. Authorization for Financial
Disclosures
Section 104 of HOTMA that states
that HUD must require PHAs to require
all applicants and recipients under the
1937 Act to authorize the PHA to obtain
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financial information needed in
connection with a determination with
respect to eligibility. Currently, 24 CFR
5.230 requires HUD assistance
applicants and participants to sign a
consent form that authorizes PHAs and
owners to obtain information from
certain sources in order to verify
income. Further, 24 CFR 5.232 outlines
that a refusal to sign the consent form
would lead to termination. Following
HOTMA’s mandate, this proposed rule
would amend § 5.230 to include a
provision authorizing PHAs to obtain
any financial record from any financial
institution, as the terms financial record
and financial institution are defined in
the Right to Financial Privacy Act (42
U.S.C. 1304), whenever the PHA
determines the record is needed in
connection with a determination of an
assistance applicant’s or participant’s
eligibility or level of benefits.
Additionally, this section currently
states the consent form must contain a
statement that the authorization to
release the information requested by the
consent form expires 15 months after
the date the consent form is signed.
HOTMA section 104 requires that the
authorization allowing PHAs to obtain
financial records from financial
institutions shall remain effective until
the earliest of: The rendering of a final
adverse decision for an assistance
applicant; the cessation of a
participant’s eligibility for assistance
from HUD and the PHA; or the express
revocation by the assistance applicant or
recipient (or applicable family member)
of the authorization, in a written
notification to HUD. In an effort to
streamline program administration, this
proposed rule would revise the section
to align the current authorization
consent timeline to the HOTMA
timeline, thereby reducing annual
burden on PHAs.
HOTMA provides PHAs with the
discretion to determine whether
applicants or recipients are ineligible for
benefits if they, or their family
members, refuse to provide or revoke
the authorization to obtain financial
records. Therefore, this proposed rule
would also revise 24 CFR 5.232, which
describes the penalties for failing to sign
the consent form required in § 5.230, to
clarify that the penalties in § 5.232 will
not apply if applicants or participants or
their family members revoke their
consent for the PHA to access financial
records, unless the PHA has established
a policy in their annual plan that
revocation of consent to access financial
records will result in denial or
termination of assistance or admission.
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E. CPD Program Changes
As discussed earlier in this preamble,
this proposed rule would make changes
to regulations for HUD’s HOME, HTF,
and HOPWA programs in order to better
align regulations pertaining to income
and assets among different HUD
programs. The HOME and HTF
programs are federal block grant
programs that provide annual grants to
States and local governments to create
decent, safe and affordable housing for
low-income, very low-income, and
extremely low-income families,
including homeless individuals. In
fiscal year 2018, HUD allocated over
$1.6 billion to the States and localities
nationwide to fund a wide range of
activities including building, buying,
and/or rehabilitating affordable housing
for rent or homeownership or providing
direct rental assistance to low-income
people. The HOME and HTF programs
often operate in conjunction with other
federal, state or local housing programs
and leverage community and private
equity in support of affordable housing.
To make housing affordable, HOME and
HTF funds are frequently combined
with other HUD federal programs such
as Project-Based Section 8 Rental
Assistance and used as gap financing in
rental housing developed with LowIncome Housing Tax Credits (LIHTC).
Many of these programs require the use
of the Part 5 definition of annual income
and adjusted income for the purpose of
determining income eligibility and/or
tenant payments.
1. HOPWA
Section 859 of the AIDS Housing
Opportunity Act (42 U.S.C. 12908)
requires that HOPWA rental assistance
‘‘be provided to the extent practicable in
the manner’’ of the Section 8 program.
Therefore, HUD is proposing to
incorporate into the HOPWA
regulations in 24 CFR part 574 the
procedures on income examinations and
net family assets proposed for the public
housing, HCV, and Section 8 projectbased rental assistance programs in this
rule.
To determine the resident payment, as
in the Section 8 program, annual
reexaminations of family income will be
the standard under the proposed rule.
However, if a family has income from
fixed-income sources, grantees will be
able to apply a COLA to those sources
of income and will only perform a full
reexamination of income every three
years. If a family has at least 90 percent
of their income from fixed-income
sources, the grantees will be able to
apply a COLA to the entire income
amount, provided the family certifies
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that their income is at least 90 percent
fixed-income, and the grantee will only
have to conduct a full reexamination of
family income every three years.
In between full reexaminations, this
proposed rule would provide that
families receiving HOPWA assistance
may request an interim reexamination of
family income at any time, but grantees
are only required to conduct the
reexamination if the family’s adjusted
income, as defined in the revised 24
CFR 5.611, changes by an amount that
the grantee estimates will result in a
change of at least 10 percent in annual
adjusted income. HUD anticipates that
this will decrease the number of
reexaminations that HOPWA grantees
conduct.
The proposed rule further amends the
HOPWA regulations to cross reference
§ 5.611 more generally and eliminate the
reference to the earned income
disregard. These changes, which impact
calculation of the resident rent payment
under HOPWA, similarly impact HUD’s
Section 8 programs because of HOTMA.
Additionally, this proposed rule
would revise part 574 to apply the part
5 definition of net family assets to
HOTMA that applies to the Section 8
program, except the value of a home of
a participant receiving short-term
mortgage or utility assistance under
§ 574.300(b)(6) or other homeownership
assistance eligible under the HOPWA
program would be excluded from the
definition. This proposed rule would
also revise part 574 to incorporate
HOTMA’s provisions for restrictions on
assistance to families with certain assets
to the HOPWA program, but would
specify that the requirements in 24 CFR
5.618 do not apply to short-term
mortgage and utility assistance and
other homeownership assistance eligible
under the HOPWA program, or to
housing information services or
supportive services funded under
HOPWA.
2. HOME
The proposed rule at 24 CFR
92.203(b) would incorporate HUD’s
proposed revisions to the definition of
income at 24 CFR 5.609(a) and (b),
which is the definition of income
established by HOTMA, as well as
revisions to the definition of Net Family
Assets at 24 CFR 5.603 used to
determine the imputed income on assets
over $50,000 based on the current
passbook saving rate. In determining
annual income, a participating
jurisdiction would continue to exclude
income and asset enhancements derived
from HOME assistance pursuant to 24
CFR 92.203(d)(1) (e.g., the rental income
generated from HOME assistance
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provided to a multi-unit housing project
where the owner occupies one of the
units and rents out the other units
acquired through the HOME assistance),
and the value of a homeowner’s
principal residence pursuant to 24 CFR
92.203(b)(1) from the calculation of Net
Family Assets, as defined in 24 CFR
5.603.
This proposed rule would revise 24
CFR 92.203(c) to move the first sentence
into a new standalone paragraph (e) and
incorporate the second and third
sentences into paragraphs (e)(1) and
(e)(2). The new paragraph (e) would
incorporate the revisions to the
definition of adjusted income at 24 CFR
5.611(a)–(c). It would require
participating jurisdictions, when
determining a family’s adjusted income
for the purpose of determining the
appropriate amount of rent applicable to
a tenant in HOME units receiving
Federal or State project-based subsidy,
the to apply the mandatory deductions
from income established at 24 CFR
5.611(a). For units with tenant-based
rental assistance, § 92.203(e)(2) would
permit a participating jurisdiction to
apply the deductions at § 5.611(a) and
grant financial hardship exemptions
according to the requirements of
§ 5.611(c).
Finally, where a family applying for
or living in a HOME-assisted unit
receives assistance from the HCV
program or where a PHA is the owner
in the PBRA program, HUD proposes to
add § 92.203(e)(3) to require the use of
the deductions in § 5.611(a) and (b) to
calculate a family’s adjusted income. In
such cases, HUD would allow a
participating jurisdiction to accept a
PHA’s determination to grant a hardship
exemption under § 5.611(c).
Specific solicitation of comment 17:
HUD is seeking feedback from interested
parties on whether HUD should adopt
all revisions made to adjusted income
(mandatory deductions, additional
deduction and hardship exemptions, as
applicable) when combining HOME and
other federal programs such as Section
8 in a rental project.
Specific solicitation of comment 18:
HUD is seeking feedback from interested
parties on whether HUD should adopt
financial hardship exemptions for
families receiving HOME-funded tenantbased rental assistance.
For purposes of calculating tenant
income in the HOME program, HUD is
not proposing to adopt the new section
5.609(c) for determining income at
initial occupancy or interim
reexaminations and the timing
requirements of those determinations.
The HOME regulations permit
participating jurisdictions to choose, on
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48831
a program (e.g., homeownership) basis
and on a rental project by project basis,
one of two definitions of annual income:
(1) Annual income as defined at 24 CFR
5.609; or (2) the Internal Revenue
Service definition of ‘‘adjusted gross
income.’’ For families who are tenants
in HOME-assisted housing and not
receiving tenant-based rental assistance,
the HOME program requires a
participating jurisdiction to examine at
least 2 months of source documents
evidencing annual income at initial
occupancy. For subsequent income
determinations during the HOME
compliance period, the existing HOME
regulations permit a participating
jurisdiction to use one of three methods
to determine annual income. Adopting
24 CFR 5.609(c) for the HOME program
would impose different methods for
calculating and verifying income that
are more stringent than those currently
required by the HOME regulations. HUD
believes the methods described at 24
CFR 92.203(a)(1) provide a participating
jurisdiction more flexibility in
administering and managing its HOMEassisted rental housing portfolio.
Specific solicitation of comment 19:
In light of revisions made to 24 CFR
5.609(c)(3) to allow PHAs to accept a
timely income determination of a family
from another agency’s means-tested
Federal public assistance, HUD is
seeking feedback from interested parties
on whether 24 CFR 92.203(a)(1)(iii)
should specify what HUD considers
timely for purposes of accepting an
income determination of a family made
by an administrator of a government
program under which the family
receives benefits.
There is no independent statutory
basis in the HOME program for applying
the EID in 24 CFR 5.617 to persons with
disabilities who are tenants in HOMEassisted rental housing or who are
receiving tenant-based rental assistance.
HUD applied 24 CFR 5.617 to HOME
through 24 CFR 92.203(d)(3) to be
consistent with other programs
governed by the 1937 Act. With the
revision to the 1937 Act removing the
authority for disallowance of earned
income and the sunset of the
corresponding regulatory provision in
24 CFR 5.617(e), the HOME regulation
at 24 CFR 92.203(d)(3) would be revised
so that the applicability to HOME will
also sunset.
The HOME statute does not establish
a limitation on the amount of and type
of assets that a family assisted with
HOME funds can have. HUD is not
proposing to adopt the new asset
restriction for the HOME program.
Specific solicitation of comment 20:
HUD is seeking feedback from interested
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parties on whether HUD should adopt
asset restrictions for any housing
programs funded with HOME (e.g.,
homebuyer, rental, tenant-based rental
assistance and owner-occupied
rehabilitation), as well as when housing
programs funded with HOME are
combined with other federal programs
such as Section 8.
3. HTF
The proposed rule at 24 CFR
93.151(b) incorporates HUD’s proposed
revisions to the definition of annual
income at 24 CFR 5.609(a) and (b),
which is the definition of income
provided by HOTMA, as well as the
revisions to the definition of Net Family
Assets at 24 CFR 5.603 that are used to
determine the imputed income on assets
over $50,000 based on the current
passbook saving rate.
For purposes of calculating tenant
income in the HTF program, HUD is not
proposing to adopt the new section
5.609(c) for determining income at
initial occupancy or interim
reexaminations and the timing
requirements for those determinations.
For families who are tenants in HTFassisted housing, the HTF program
requires a grantee to examine at least 2
months of source documents evidencing
annual income at initial occupancy. For
subsequent income determinations
during the HTF compliance period, a
grantee may use one of three methods to
determine annual income. Adopting 24
CFR 5.609(c) for the HTF program
would impose methods for calculating
and verifying income that are more
stringent than those currently required
by the HTF regulations without
providing additional benefit to the
program. As HTF does not provide an
ongoing subsidy to grantees, HUD
believes the methods described at 24
CFR 93.151(d) provide a grantee more
flexibility in administering and
managing its HTF-assisted rental
housing portfolio.
Specific solicitation of comment 21:
In light of revisions made to 24 CFR
5.609(c)(3) to allow PHAs to accept a
timely income determination of a family
from another agency’s means-tested
Federal public assistance, HUD is
seeking feedback from interested parties
on whether 24 CFR 93.151(d) should
specify what HUD considers timely for
purposes of accepting an income
determination of a family made by an
administrator of a government program
under which the family receives
benefits.
This proposed rule would revise 24
CFR 93.151(b) to clarify that annual
income includes income from all
persons in the household regardless of
VerDate Sep<11>2014
16:32 Sep 16, 2019
Jkt 247001
which definition of annual income the
grantee applies to its HTF-assisted
program(s) or project(s). Furthermore,
this proposed rule would revise 24 CFR
93.151 to add a new paragraph (e) to
incorporate revisions to adjusted
income in § 5.611 and requires grantees
to apply the deductions in § 5.611(a) to
determine the tenant’s adjusted income.
For public housing, the HCV program,
and where the PHA is an owner in the
PBRA program, paragraph (e)(2) requires
the use of the deductions in § 5.611(a)
and (b) to determine the tenant’s
adjusted income and also permits a
grantee to accept a PHA’s decision to
grant financial hardship exemptions
under § 5.611(c) to a family.
The HTF statute did not establish a
limitation on the amount of and type of
assets that a family assisted with HTF
funds may have. HUD is not proposing
to adopt the new asset restriction for the
HTF program.
Specific solicitation of comment 22:
HUD is seeking feedback from interested
parties on whether HUD should adopt
asset restrictions for any housing
programs funded with HTF funds (e.g.,
homebuyer or rental housing), as well as
when HTF funds are combined with
other federal programs such as Section
8.
III. Findings and Certifications
Regulatory Review—Executive Orders
12866 and 13563
Under Executive Order 12866
(Regulatory Planning and Review), a
determination must be made whether a
regulatory action is significant and
therefore, subject to review by the Office
of Management and Budget (OMB) in
accordance with the requirements of the
order. Executive Order 13563
(Improving Regulations and Regulatory
Review) directs executive agencies to
analyze regulations that are ‘‘outmoded,
ineffective, insufficient, or excessively
burdensome, and to modify, streamline,
expand, or repeal them in accordance
with what has been learned.’’
The rule would update HUD
regulations for various programs to
conform to sections 102, 103, and 104
of HOTMA by listing specific criteria for
triggering family income reviews,
providing methods for calculating
family income, revising the definition of
income and adjusted income, setting a
limit on the amount and type of assets
that assisted families may have, revising
the definition of net family assets, and
requiring that applicants for and
recipients of assistance provide
authorization to PHAs to obtain
financial records. This proposed rule
was determined to be a significant
PO 00000
Frm 00039
Fmt 4702
Sfmt 4702
regulatory action under section 3(f) of
Executive Order 12866 (although not an
economically significant regulatory
action under the order). HUD has
prepared an initial Regulatory Impact
Analysis (RIA) that addresses the costs
and benefits of the proposed rule.
HUD’s RIA is part of the docket file for
this rule.
The docket file is available for public
inspection in the Regulations Division,
Office of the General Counsel, Room
10276, 451 7th Street SW, 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 Division at 202–
402–3055 (this is not a toll-free
number). Individuals with speech or
hearing impairments may access this
number via TTY by calling the Federal
Relay Service at toll-free 800–877–8339.
Executive Order 13771
Executive Order 13771, entitled
‘‘Reducing Regulation and Controlling
Regulatory Costs,’’ was issued on
January 30, 2017. This proposed rule is
expected to be an E.O. 13771
deregulatory action. HUD estimates that
this rule would have annual net cost
savings in the first year of about $2
million and after the first year, of about
$23 million to $27 million, accruing to
Public Housing Agencies, HOPWA
grantees, and Project-Based Rental
Assistance owners. Around 20,000 to
30,000 units may transfer from currently
assisted households to households on
the waitlist or new applicants. Further
details on the estimated cost savings of
this proposed rule can be found in the
rule’s RIA.
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 revises HUD
regulations in certain ways that will
reduce burden or provide flexibility for
PHAs and owners and other housing
providers. The proposed rule provides
specific events that trigger an interim
reexamination of family income,
whereas current regulations provide that
families may request reexaminations at
any time. The proposed rule provides
methods for calculating family income,
but also provides a safe harbor for PHAs
and owners who determine a family’s
income based on other means-tested
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Executive Order 13132, Federalism
Executive Order 13132 (entitled
‘‘Federalism’’) prohibits an agency from
publishing any rule that has Federalism
implications if the rule either imposes
substantial direct compliance costs on
state and local governments and is not
required by statute, or the rule preempts
state law, unless the agency meets the
consultation and funding requirements
of section 6 of the Executive Order. This
rule would not have Federalism
implications and would not impose
substantial direct compliance costs on
Information collection
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 numbers 2502–
0204, 2506–0133, and 2577–0083. HUD
expects to make changes to these
existing recordkeeping items consistent
with the changes in this proposed rule
and believes that the changes will result
in a decrease of burden of $8,337,744
and 345,495 hours.
HUD would change the HOPWA PRA
OMB No. 2506–0133 to reduce the
recordkeeping burden hours from 60
hours to 50 hours per grantee to reflect
the change to a triennial recertification
and the reduction in the frequency of
granting interim reexaminations. See
§ 574.310(e).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4;
approved March 22, 1995) (UMRA)
establishes requirements for Federal
agencies to assess the effects of their
regulatory actions on state, local, and
tribal governments, and on the private
Annual burden
Annual
number
Annual cost
Hourly cost
Current
New
Current
New
Recordkeeping for Competitive, Renewal,
and Formula Grantees ..............................
227
1
60.00
50.00
$23.85
$324,837
$270,698
Total .......................................................
........................
........................
Savings
2,270
........................
Savings
54,139
HUD would change the Section 8
project-based PRA OMB No–2502–0204
to reflect the regulatory change that a
new consent to release of information
would only apply at the time of initial
Information collection
tenancy, estimated at an approximate 80
percent reduction based on anticipated
number of new participants, and reduce
the number of certification compliances
conducted by project owners to
Number of responses
OMB No. 2502–0204
Current
Annual
number
New
represent the decrease in interim
reexaminations, estimated at 5 percent
of recertifications. See §§ 5.230 and
5.657.
Annual burden
Hours per
response
Annual cost
Hourly cost
Current
New
Current
New
Certification Compliance ...........
Consent for Release .................
1,597,764
1,597,764
1,517,876
302,022
1
1
.6333
.1667
1,011,864
266,347
961,271
50,347
$25.00
25.00
$25,296,600
6,658,675
$24,031,771
1,258,675
Total ...................................
....................
....................
....................
....................
Savings
266,593
....................
Savings
6,664,829
HUD would also change the Public
Housing and HCV programs PRA OMB
No. 2577–0083. HUD provides for a new
burden in the Public Housing context
for providing notices to over-income
tenants and reporting the number of
families on the waiting list annually,
jbell on DSK3GLQ082PROD with PROPOSALS
Environmental Impact
The proposed rule relates to
establishment and review of income
limits and exclusions with regard to
eligibility for or calculation of HUD
housing assistance or rental assistance
and related external administrative or
fiscal requirements and procedures that
do not constitute a development
decision that affects the physical
condition of specific project areas or
building sites. Accordingly, under 24
CFR 50.19(c)(6), this proposed rule is
categorically excluded from
environmental review under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Number of
responses
OMB No. 2502–0133
sector. This rule does not impose any
Federal mandates on any state, local, or
tribal government, or on the private
sector, within the meaning of the
UMRA.
state and local governments or preempt
state law within the meaning of the
Executive Order.
Federal public assistance programs.
Additionally, this proposed rule
provides for a limitation on assets, but
provides that PHAs and owners may
choose not to enforce this provision.
This proposed rule also provides that
applicants and recipients of assistance
must provide authorization for PHAs to
obtain financial records in order to
verify family income.
For the reasons presented, the
undersigned certifies that this rule will
not have a significant economic impact
on a substantial number of small
entities.
Information collection
Number of responses
OMB No.
Recertification (OMB No. 2577–
0083) ......................................
Over-Income Tenant Notification .........................................
VerDate Sep<11>2014
and the change includes a reduction in
burden for Public Housing and HCV to
reflect the decrease in interim
reexaminations, estimated at 5 percent
of recertifications. HUD would also
change the Public Housing and HCV
programs PRA OMB No. 2501–0014 to
Current
Annual
number
New
reflect the regulatory change that a new
consent to release information would
only apply at the time of initial tenancy,
estimated at an approximate 88 percent
reduction based on anticipated number
of new participants. See §§ 5.230,
960.257, 960.507 and 982.516.
Annual burden
Hours per
response
Annual cost
Hourly cost
Current
New
Current
New
2,398,462
2,278,539
1
.333
798,688
758,753
$17.50
$13,977,040
$13,278,178
....................
2,000
1
.1667
....................
333
17.50
....................
5,828
16:32 Sep 16, 2019
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PO 00000
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Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Proposed Rules
Information collection
Number of responses
OMB No.
Public Housing Waiting List
Data .......................................
Consent for Release (OMB No,
2501–0014) ............................
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Total ...................................
Current
New
Annual burden
Hours per
response
Annual cost
Hourly cost
Current
New
Current
New
....................
2,929
1
4
....................
11,716
17.50
....................
205,030
2 3,765,676
421,693
1
.1667
627,738
70,296
30.00
18,832,140
2,108,880
....................
....................
....................
....................
Savings
585,328
....................
Savings
17,225,264
HUD believes that there are no PRA
burden reductions for HOME and the
HTF programs. Also, HUD finds that
while changes to § 5.609, Annual
Income, and § 5.611, Adjusted Income,
will result in tenants providing different
information, the net burden will not
change. In accordance with the
Paperwork Reduction Act of 1995, an
agency may not conduct or sponsor, and
a person is not required to respond to,
a collection of information, unless the
collection displays a currently valid
OMB control number.
In accordance with 5 CFR
1320.8(d)(1), HUD is soliciting
comments from members of the public
and affected agencies concerning the
information collection requirements in
the proposed rule regarding:
(1) Whether the proposed collection
of information is necessary for the
proper performance of the functions of
the agency, including whether the
information will have practical utility;
(2) The accuracy of the agency’s
estimate of the burden of the proposed
collection of information;
(3) Whether the proposed collection
of information enhances the quality,
utility, and clarity of the information to
be collected; and
(4) Whether the proposed information
collection minimizes the burden of the
collection of information on those who
are to respond; including through the
use of appropriate automated collection
techniques or other forms of information
technology (e.g., permitting electronic
submission of responses).
Interested persons are invited to
submit comments regarding the
information collection requirements in
this rule. Under the provisions of 5 CFR
part 1320, OMB is required to make a
decision concerning this collection of
information between 30 and 60 days
after the publication date. Therefore, a
comment on the information collection
requirements is best assured of having
its full effect if OMB receives the
comment within 30 days of the
publication. This time frame does not
affect the deadline for comments to the
agency on the proposed rule, however.
2 This number is based on the PIH Information
Center (PIC) database and the Tenant Rental
Assistance Certification System (TRACS) database.
VerDate Sep<11>2014
Annual
number
16:32 Sep 16, 2019
Jkt 247001
Comments must refer to the proposed
rule by name and docket number (FR–
6057) and must be sent to:
HUD Desk Officer, Office of
Management and Budget, New
Executive Office Building,
Washington, DC 20503, Fax number:
202–395–6947
and
Colette Pollard, HUD Reports Liaison
Officer, Department of Housing and
Urban Development, 451 7th Street
SW, Room 2204, Washington, DC
20410
Interested persons may submit
comments regarding the information
collection requirements electronically
through the Federal eRulemaking Portal
at https://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
https://www.regulations.gov website 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.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic
Assistance numbers applicable to the
programs that would be affected by this
rule are: 14.195, 14.239, 14.241, 14.275,
14.850, 14.856, and 14.871.
List of Subjects
Administrative practice and
procedure, Aged, Claims, Crime,
Government contracts, Grant programshousing 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.
Frm 00041
Fmt 4702
Administrative practice and
procedure, Grant programs—housing
and community development, Low and
moderate income housing,
Manufactured homes, Rent subsidies,
and Reporting and recordkeeping
requirements.
24 CFR Part 93
Administrative practice and
procedure, Grant programshousing and
community development, Low- and
moderate-income housing,
Manufactured homes, Rent subsidies,
Reporting and recordkeeping
requirements.
24 CFR Part 574
Community facilities, Grant programshousing and community development,
Grant programs—social programs, HIV/
AIDS, Low and moderate income
housing, Reporting and recordkeeping
requirements
24 CFR Part 960
Aged, Grant programs—housing and
community development, Individuals
with disabilities, Pets, Public housing.
24 CFR Part 982
Grant programs—housing and
community development, Grant
programs—Indians, Indians, Public
housing, Rent subsidies, Reporting and
recordkeeping requirements.
Accordingly, for the reasons described
in the preamble, HUD proposes to
amend 24 CFR parts 5, 92, 93, 574, 960,
966, and 982 as follows:
PART 5—GENERAL HUD PROGRAM
REQUIREMENTS; WAIVERS
24 CFR Part 5
PO 00000
24 CFR Part 92
Sfmt 4702
1. The authority for part 5 continues
to read as follows:
■
Authority: 12 U.S.C. 1701x; 42 U.S.C.
1437a, 1437c, 1437d, 1437f, 1437n, 3535(d);
Sec. 327, Pub. L. 109–115, 119 Stat. 2936;
Sec. 607, Pub. L. 109–162, 119 Stat. 3051 (42
U.S.C. 14043e et seq.); E.O. 13279, 67 FR
77141, 3 CFR, 2002 Comp., p. 258; and E.O.
13559, 75 FR 71319, 3 CFR, 2010 Comp., p.
273.
2. In § 5.100, add in alphabetical order
the definitions for ‘‘earned income’’ and
‘‘real property’’ to read as follows:
■
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§ 5.100
Definitions.
*
*
*
*
*
Earned income means income or
earnings included in annual income
from wages, tips, salaries, other
employee compensation, and selfemployment. Earned income does not
include any pension or annuity, transfer
payments, or any cash or in-kind
benefits.
*
*
*
*
*
Real property as used in this part, has
the same meaning as that provided
under the state law in which the real
property is located.
*
*
*
*
*
■ 3. In § 5.210, revise the second
sentence in paragraph (a) and the first
sentence in paragraph (b)(2) to read as
follows:
§ 5.210 Purpose, applicability, and Federal
preemption.
(a) * * * This subpart B also enables
HUD and PHAs to obtain income
information about applicants and
participants in the covered programs
through computer matches with State
Wage Information Collection Agencies
(SWICAs) and Federal agencies, and
from financial institutions and
employers, in order to verify an
applicant’s or participant’s eligibility for
or level of assistance. * * *
(b) * * *
(2) The information covered by
consent forms described in this subpart
involves income information from
SWICAs and wages, income and
resource information from financial
institutions, net earnings from selfemployment, payments of retirement
income, and unearned income as
referenced at 26 U.S.C. 6103. * * *
*
*
*
*
*
■ 4. In § 5.230, revise paragraph (c)(4),
and add paragraph (c)(5) to read as
follows:
§ 5.230 Consent by assistance applicants
and participants.
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*
*
*
*
*
(c) * * *
(4) A provision authorizing PHAs to
obtain any financial record from any
financial institution, as the terms
financial record and financial
institution are defined in the Right to
Financial Privacy Act (42 U.S.C. 1304),
whenever the PHA determines the
record is needed to determine an
applicant’s or participant’s eligibility for
assistance or level of benefits; and
(5) A statement that the authorization
to release the information requested by
the consent form shall remain effective
until the earliest of:
(i) The rendering of a final adverse
decision for an assistance applicant;
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16:32 Sep 16, 2019
Jkt 247001
(ii) The cessation of a participant’s
eligibility for assistance from HUD and
the PHA; or
(iii) The express revocation by the
assistance applicant or recipient (or
applicable family member) of the
authorization, in a written notification
to HUD.
■ 5. In § 5.232, add paragraph (c) to read
as follows:
§ 5.232 Penalties for failing to sign
consent form.
*
*
*
*
*
(c) This section does not apply if the
applicant or participant, or any member
of the assistance applicant’s or
participant’s family revokes his/her
consent with respect to the ability of the
PHA to access financial records from
financial institutions, unless the PHA
establishes a policy in the PHA’s
Annual Plan that revocation of consent
to access financial records will result in
denial or termination of assistance or
admission.
■ 6. In § 5.601:
■ a. Amend paragraph (d) by removing
the phrases ‘‘HOME Investment
Partnerships Program (24 CFR part 92);’’
and ‘‘Housing Opportunities for Persons
with AIDS (24 CFR part 574); Shelter
Plus Care Program (24 CFR part 582);
Supportive Housing Program
(McKinney Act Homeless Assistance (24
CFR part 583);’’, and
■ b. Revise paragraph (e) to read as
follows:
§ 5.601
Purpose and applicability.
*
*
*
*
*
(e) Limitations on eligibility for
assistance based on assets, as provided
in § 5.618, in the Section 8 (tenant-based
and project-based) and public housing
programs.
■ 7. In § 5.603, add in alphabetical order
definitions for ‘‘Distribution from a
trust’’, ‘‘Foster adults’’, and ‘‘Minor’’,
and revise the definitions for ‘‘net
family assets’’ and ‘‘responsible entity’’
to read as follows:
§ 5.603
Definitions.
*
*
*
*
*
(b) * * *
Distribution from a trust. Any cash
payout to the beneficiary or any
payment to a third-party on behalf of the
beneficiary.
*
*
*
*
*
Foster adults. Persons with
disabilities, not related to the family,
who are unable to live alone.
*
*
*
*
*
Minor. A member of the family, other
than the head of family or spouse, who
is less than 18 years of age.
*
*
*
*
*
PO 00000
Frm 00042
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48835
Net family assets. (1) Net cash value
of all assets owned by the family, after
deducting reasonable costs that would
be incurred in disposing real property,
savings, stocks, bonds, and other forms
of investment.
(2) In determining net family assets,
PHAs or owners, as applicable, shall
include the value of any business or
family assets disposed of by an
applicant or tenant for less than fair
market value (including a disposition in
trust, but not in a foreclosure or
bankruptcy sale) during the two years
preceding the date of application for the
program or reexamination, as
applicable, in excess of the
consideration received therefor. In the
case of a disposition as part of a
separation or divorce settlement, the
disposition will not be considered to be
for less than fair market value if the
applicant or tenant receives important
consideration not measurable in dollar
terms.
(3) Excluded from the calculation of
net family assets are:
(i) Interests in Indian trust land;
(ii) Equity in a manufactured home
where the family receives assistance
under 24 CFR part 982;
(iii) Equity in property under the
Homeownership Option for which a
family receives assistance under 24 CFR
part 982.
(iv) Family Self-Sufficiency Accounts;
(v) Necessary items of personal
property, and all items of personal
property valued at $50,000 or less;
(vi) The value of any account under
a retirement plan recognized as such by
the Internal Revenue Service, including
individual retirement arrangements
(IRAs), employer retirement plans, and
retirement plans for self-employed
individuals;
(vii) Real property that the family
does not have the effective legal
authority to sell in the jurisdiction in
which the property is located;
(viii) Any amounts recovered in any
civil action or settlement based on a
claim of malpractice, negligence, or
other breach of duty owed to a family
member arising out of law, that resulted
in a member of the family being
disabled; and
(ix) The value of any Coverdell
education savings account under section
530 of the Internal Revenue Code of
1986, the value of any qualified tuition
program under section 529 of such
Code, and the value of any ABLE
account authorized under Section 529A
of such code.
(2) In cases where a trust fund has
been established and the trust is not
revocable by, or under the control of,
any member of the family or household,
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the value of the trust fund will not be
considered in the calculation of net
family assets, so long as the fund
continues to be held in trust.
*
*
*
*
*
Responsible entity. For § 5.611, in
addition to the definition of
‘‘responsible entity’’ in § 5.100,
‘‘responsible entity’’ means:
(1) For the Rent Supplement
Payments Program, the owner of the
multifamily project;
(2) For the Rental Assistance
Payments Program, the owner of the
Section 236 project;
(3) For the Section 202 Supportive
Housing Program for the Elderly, the
‘‘Owner’’ as defined in 24 CFR 891.205;
(4) For the Section 202 Direct Loans
for Housing for the Elderly and Persons
with Disabilities), the ‘‘Borrower’’ as
defined in 24 CFR 891.505; and
(5) For the Section 811 Supportive
Housing Program for Persons with
Disabilities, the ‘‘owner’’ as defined in
24 CFR 891.305.
*
*
*
*
*
■ 8. Revise § 5.609 to read as follows:
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§ 5.609
Annual income.
(a) Annual income means, with
respect to the family:
(1) All amounts, not specifically
excluded in paragraph (b) of this
section, received from all sources by
each member of the family who is 18
years of age or older or is the head of
household or spouse of the head of
household, plus unearned income by or
on behalf of each dependent who is less
than 18 years of age, and
(2) The imputed return on assets over
$50,000 based on the current passbook
savings rate, as determined by HUD, if
the actual income on assets over
$50,000 cannot be computed. The
$50,000 figure in this paragraph shall be
adjusted annually in accordance with a
commonly recognized inflationary
index, as determined by HUD.
(b) Annual income does not include
the following:
(1) Any imputed return on assets of
$50,000 or less, which figure shall be
adjusted annually in accordance with a
commonly recognized inflationary
index, as determined by HUD;
(2) Distribution from a non-revocable
trust fund specifically provided to cover
the cost of medical expenses for a
minor;
(3) Income from employment of
children (including foster children)
under the age of 18 years and foster
adults;
(4) Payments received for the care of
foster children or foster adults, or state
kinship or guardianship care payments;
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(5) Insurance payments and
settlement for personal or property
losses;
(6) Amounts received by the family
that are specifically for, or in
reimbursement of, the cost of medical
expenses for any family member;
(7) Any amounts recovered in any
civil action or settlement based on a
claim of malpractice, negligence, or
other breach of duty owed to a family
member arising out of law, that resulted
in a member of the family being
disabled;
(8) Income of a live-in aide, as defined
in § 5.403;
(9) The full amount of student
financial assistance paid directly to the
student or to the educational institution
on the student’s behalf, except this does
not apply for students applying for or
receiving section 8 assistance pursuant
to § 5.612 who are not over the age of
23 with dependent children. Financial
assistance is any grant-in-aid,
scholarship or other assistance amounts
an individual receives for the cost of
tuition, books, room and board, and fees
charged to the student by the education
institution. For students applying for or
receiving section 8 assistance who are
not over the age of 23 with dependent
children, the financial assistance in
excess of the cost of tuition and any
other required fees and charges under
the Higher Education Act of 1965 (20
U.S.C. 1001 et seq.), from private
sources, or an institution of higher
education (as defined under the Higher
Education Act of 1965 (20 U.S.C. 1002),
shall be considered income;
(10) Amounts from any Coverdell
education savings account under section
530 of the Internal Revenue Code of
1986, any qualified tuition program
under section 529 of such Code, and any
amounts from ABLE accounts under
section 529A of such Code;
(11) The special pay to a family
member serving in the Armed Forces
who is exposed to hostile fire;
(12)(i) Amounts received by a person
with a disability that are disregarded for
a limited time for purposes of
Supplemental Security Income
eligibility and benefits because they are
set aside for use under a Plan to Attain
Self-Sufficiency (PASS);
(ii) Amounts received by a participant
in other publicly assisted programs
which are specifically for or in
reimbursement of out-of-pocket
expenses incurred (special equipment,
clothing, transportation, child care, etc.)
and which are made solely to allow
participation in a specific program;
(iii) Amounts received under a
resident service stipend not to exceed
$200 per month. A resident service
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stipend is a modest amount received by
a resident for performing a service for
the PHA or owner, on a part-time basis,
that enhances the quality of life in the
development;
(iv) Incremental earnings and benefits
resulting to any family member from
participation in training programs
funded by HUD or in qualifying State or
local employment training programs
(including training programs not
affiliated with a local government) and
training of a family member as resident
management staff. Amounts excluded
by this provision must be received
under employment training programs
with clearly defined goals and
objectives, and are excluded only for the
period during which the family member
participates in the employment training
program;
(13) Reparation payments paid by a
foreign government pursuant to claims
filed under the laws of that government
by persons who were persecuted during
the Nazi era;
(14) Earned income of dependent fulltime students, except that the earned
income up to the amount of the
deduction for a dependent in § 5.611 of
each dependent student shall be
considered income;
(15) Adoption assistance payments in
excess of $480 per adopted child, which
amount will be adjusted annually in
accordance with a commonly
recognized inflationary index, as
determined by HUD;
(16) Deferred periodic amounts from
supplemental security income and
Social Security benefits that are
received in a lump sum amount or in
prospective monthly amounts or any
deferred Department of Veterans Affairs
disability benefits that are received in a
lump sum amount or in prospective
monthly amounts;
(17) Payments related to aid and
attendance under 38 U.S.C. 1521 to
veterans in need of regular aid and
attendance;
(18) Amounts received by the family
in the form of refunds or rebates under
State or local law for property taxes paid
on the dwelling unit;
(19) Payments provided by a State
Medicaid managed care system to a
family to keep a member who has a
disability living at home;
(20) Loan proceeds (the net amount
disbursed by a lender to a borrower,
under the terms of a loan agreement)
received by the family (e.g., proceeds
received by the family to finance the
purchase a car);
(21) Payments received by Indian
persons as a result of claims relating to
the mismanagement of assets held in
trust by the United States, to the extent
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such payments are also excluded from
gross income under the Internal
Revenue Code;
(22) Amounts that HUD is required by
Federal statute to exclude from
consideration as income for purposes of
determining eligibility or benefits under
a category of assistance programs that
includes assistance under any program
to which the exclusions set forth in
paragraph (b) of this section apply. A
notice will be published in the Federal
Register and distributed to PHAs and
housing owners identifying the benefits
that qualify for this exclusion. Updates
will be published and distributed when
necessary; or
(23) Replacement housing ‘‘gap’’
payments made in accordance with 49
CFR part 24 to a displaced person that
moves from a federally subsidized
housing unit and occupies another
federally subsidized housing unit when
such payments offset the increased out
of pocket cost to the displaced person
for rent and utilities because of the
displacement. Such replacement
housing ‘‘gap’’ payments are not
excluded from annual income, however,
to the extent that the increased cost of
rent and utilities is subsequently
reduced or eliminated and the displaced
person retains or continues to receive
the replacement housing ‘‘gap’’
payments.
(c) Calculation of Income. The PHA or
owner shall calculate family income as
follows:
(1) Initial occupancy or assistance
and interim reexaminations. The PHA
or owner shall estimate the income of
the family for the upcoming 12-month
period:
(i) To determine family income for
initial occupancy or for the initial
provision of housing assistance; or
(ii) To determine family income for an
interim reexamination of family income
under § 5.657(c), 24 CFR 960.257(b), or
24 CFR 982.516(c).
(2) Annual Reviews. (i) The PHA or
owner shall determine the income of the
family for the previous 12-month period
and use this figure as the family income
for annual reviews, except where the
PHA or owner uses a streamlined
income determination under § 5.657(d),
24 CFR 960.257(c), or 24 CFR
982.516(b).
(ii) In determining the income of the
family for the previous 12-month
period, the PHA or owner shall take into
consideration any redetermination of
income during the previous 12-month
period resulting from an interim
reexamination of family income under
§ 5.657(c), 24 CFR 960.257(b), or 24 CFR
982.516(c).
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(iii) The PHA or owner must make
adjustments to reflect current income if
there was a change in income during the
previous 12-month period that was not
accounted for in a redetermination of
income.
(3) The PHA or owner may determine
the family’s income prior to the
application of any deductions applied
in accordance with § 5.611 based on
timely income determinations made
within the previous 12-month period for
purposes of the following means-tested
Federal public assistance:
(i) The Temporary Assistance for
Needy Families block grant (42 U.S.C.
601, et seq.).
(ii) Medicaid assistance (42 U.S.C.
1396 et seq.).
(iii) The Supplemental Nutrition
Assistance Program (7 U.S.C. 2011 et
seq.).
(iv) The Earned Income Tax Credit (26
U.S.C. 32).
(v) Other forms of Federal public
assistance determined by the Secretary
to have comparable reliability and
announced through Federal Register
notice.
(4) The PHA or owner will not be
considered out of compliance with the
requirements in this paragraph (c) solely
due to de minimis errors in calculating
family income. A de minimis error is an
error where the PHA or owner
determination of family income varies
from the correct income determination
by no more than 5 percent. The PHA or
owner must still take any corrective
action necessary to repay a family if the
family has been overcharged for their
rent as a result of the de minimis error
in the income determination.
■ 9. Revise § 5.611 to read as follows:
§ 5.611
Adjusted income.
Adjusted income means annual
income (as determined under § 5.609) of
the members of the family residing or
intending to reside in the dwelling unit,
after making the following deductions:
(a) Mandatory deductions. (1) $480 for
each dependent, which amount will be
adjusted annually in accordance with a
commonly recognized inflationary
index, as determined by HUD, rounded
to the next lowest multiple of $25;
(2) $525 for any elderly family or
disabled family, which amount will be
adjusted annually in accordance with a
commonly recognized inflationary
index, as determined by HUD, rounded
to the next lowest multiple of $25;
(3) The sum of the following, to the
extent the sum exceeds ten percent of
annual income:
(i) Unreimbursed medical expenses of
any elderly family or disabled family;
and
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48837
(ii) Unreimbursed reasonable
attendant care and auxiliary apparatus
expenses for each member of the family
who is a person with disabilities, to the
extent necessary to enable any member
of the family (including the member
who is a person with disabilities) to be
employed. This deduction may not
exceed the earned income received by
family members who are 18 years of age
or older and who are able to work
because of such attendant care or
auxiliary apparatus; and
(4) Any reasonable child care
expenses necessary to enable a member
of the family to be employed or to
further his or her education.
(b) Additional deductions. (1) For
public housing, the Housing Choice
Voucher (HCV) program, and where the
PHA is the owner in the Section 8
project-based programs, a PHA may
adopt additional deductions from
annual income. A PHA that adopts such
deductions will not be eligible for an
increase in subsidy for the public
housing program, renewal funding for
the HCV program, or housing assistance
payments under the Section 8 projectbased programs to cover the cost of the
additional deductions. The PHA must
establish a written policy for such
deductions. The PHA must report to
HUD the increased subsidy cost
resulting from the additional deduction.
(2) For the HUD programs listed in
§ 5.601(d), the responsible entity shall
calculate such other deductions as
required and permitted by the
applicable program regulations.
(c) Financial hardship exemption for
unreimbursed medical expense and
child care expense deductions. (1)
Exemption for unreimbursed medical
expense deduction. A family may
request a financial hardship exemption
due to the change in the unreimbursed
medical expense deduction under
paragraph (a)(3) of this section, under
which the amount of unreimbursed
expenses that are not deductible has
been increased from 3 to 10 percent of
annual income. The family must
demonstrate to the responsible entity’s
satisfaction an inability to pay their rent
as a result of this change. If the hardship
exemption is approved, the responsible
entity must recalculate the family’s
adjusted income, and under paragraph
(a)(3) of this section deduct the sum of
the eligible expenses that exceeds 6.5
percent of annual income instead of 10
percent of annual income. The hardship
exemption and the resulting alternative
calculation for the unreimbursed
medical expenses deduction will end at
the family’s next regular examination or
such time that the responsible entity
determines the family can now pay the
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rent without the hardship exemption,
whichever comes first.
(2) Exemption to continue child care
expense deduction. A family may
request a financial hardship exemption
to continue the child care expense
deduction under paragraph (a)(4) of this
section. The responsible entity must
recalculate the family’s adjusted income
and continue the child care deduction if
the family demonstrates to the
responsible entity’s satisfaction that the
family is unable to pay their rent
because of loss of the child care expense
deduction and the child care expense is
still necessary even though the family
member is no longer employed or
furthering his or her education. The
hardship exemption allowing the child
care expense deduction to continue
ends at the earliest of:
(i) The family’s next regular
reexamination;
(ii) Such time the responsible entity
determines the need no longer exists for
the childcare expense if no adult family
member is employed or furthering their
education no longer exists; or
(iii) Such time the responsible entity
determines that family is able to pay
their rent without the hardship
exemption.
(3) Responsible entity determination
of family’s inability to pay the rent. The
responsible entity must establish a
policy on how it defines and determines
the family’s inability to pay the rent for
purposes of determining eligibility for a
hardship exemption under this
paragraph (c).
(4) Family notification. The
responsible entity must notify the
family in writing of the change in the
determination of adjusted income and
the family’s rent resulting from the
hardship exemption. The notice must
also inform the family that the hardship
exemption will expire at the family’s
next regular income reexamination or at
such time the responsibility entity
determines the exemption is no longer
necessary in accordance with paragraph
(c)(1) or (c)(2) of this section.
■ 10. Amend § 5.617 by adding
paragraph (e) to read as follows:
§ 5.617 Self-sufficiency incentives for
persons with disabilities—Disallowance of
increase in annual income.
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(e) Effective [EFFECTIVE DATE OF
FINAL RULE], this section will not
apply to any family who is not eligible
for and participating in the
disallowance of earned income under
this section on [EFFECTIVE DATE OF
FINAL RULE].
§ 5.617
■
[Removed]
11. Remove § 5.617.
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12. Add § 5.618 to subpart F to read
as follows:
■
§ 5.618 Restriction on assistance to
families based on assets.
(a) Restrictions based on net assets
and property ownership. (1) A dwelling
unit may not be rented, and assistance
may not be provided, either initially or
upon reexamination of family income,
to any family if:
(i) The net family assets (as defined in
§ 5.603) exceed $100,000, which amount
will be adjusted annually in accordance
with a commonly recognized
inflationary index, as determined by
HUD; or
(ii) The family has a present
ownership interest in, a legal right to
reside in, and the effective legal
authority to sell, in the jurisdiction in
which the property is located, real
property that is suitable for occupancy
by the family as a residence, except this
restriction does not apply to:
(A) Any property for which the family
is receiving assistance under 24 CFR
982.620; or under the Homeownership
Option in 24 CFR part 982;
(B) Any property that is jointly owned
by a member of the family and another
individual or individuals who would
not reside with the family;
(C) Any person that is a victim of
domestic violence, dating violence,
sexual assault, or stalking, as defined in
this part 5 (subpart L); or
(D) Any family that is offering such
property for sale.
(2) A property will be considered
‘‘suitable for occupancy’’ under
paragraph (a)(1)(ii) of this section unless
the family demonstrates that it:
(i) Does not meet the disability-related
needs for all members of the family,
including physical accessibility
requirements;
(ii) Is not sufficient for the size of the
family;
(iii) Is geographically located so as to
provide a hardship for the family; or
(iv) Is not safe to reside in because of
the physical condition of the property.
(b) Self-certification. (1) A PHA or
owner may determine the net assets of
a family based on a certification by the
family that the net family assets (as
defined in § 5.603) do not exceed
$50,000, which amount will be adjusted
annually in accordance with a
commonly recognized inflationary
index, as determined by HUD, without
taking additional steps to verify the
accuracy of the declaration. The
declaration must state the amount of
income the family expects to receive
from such assets; this amount must be
included in the family’s income.
(2) A PHA or owner may determine
compliance with paragraph (a)(1)(ii) of
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this section based on a certification by
a family that certifies that such family
does not have any present ownership
interest in any real property at the time
of the income determination or review.
(c) Enforcement. (1) When recertifying
the income of a family that is subject to
the restrictions in paragraph (a) of this
section, a PHA or owner may choose not
to enforce such restrictions, or
alternatively, may establish exceptions
to the restrictions based on eligibility
criteria.
(2) The PHA or owner may only
choose not to enforce the restrictions in
paragraph (a) of this section or establish
exceptions to such restrictions pursuant
to a policy set forth in the public
housing agency plan or under a policy
adopted by the owner.
(3) Eligibility criteria for establishing
exceptions may provide for separate
treatment based on family type and may
be based on different factors, such as
age, disability, income, the ability of the
family to find suitable alternative
housing, and whether supportive
services are being provided. Such
policies must be in conformance with
all applicable fair housing statutes and
regulations, as discussed in this part 5.
(d) Eviction delays. The PHA or
owner may delay for a period of not
more than 6 months the initiation of
eviction or termination proceedings of a
family based on noncompliance under
this provision.
(e) Applicability. This section applies
to the Section 8 (tenant-based and
project-based) and public housing
programs.
■ 13. In § 5.657, revise paragraph (c) and
add paragraph (e) to read as follows:
§ 5.657 Section 8 project-based assistance
programs: Reexamination of family income
and composition.
*
*
*
*
*
(c) Interim reexaminations. (1) A
family may request an interim
reexamination of family income. The
owner must make the interim
reexamination within a reasonable time
after the family request.
(2) The owner may decline to process
a family request for an interim
reexamination if the owner estimates
the family’s adjusted income will
decrease by an amount that is less than
10 percent of the family’s annual
adjusted income, or if the family’s
adjusted income will decrease by a
lower threshold amount that is less than
10 percent, if such lower threshold has
been established by the owner. If the
owner determines the estimated
decrease in family adjusted income is at
least 10 percent (or the lower alternative
threshold established by the owner) the
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owner must make the interim
reexamination within a reasonable time
after the family’s request.
(3) The owner must conduct a
reexamination of family income within
a reasonable time after the owner
becomes aware that the family’s
adjusted income (as defined in § 5.611)
has changed by an amount that the
owner estimates will result in an
increase of 10 percent or more in annual
adjusted income, except:
(i) The owner may not consider any
increase in the earned income of the
family when estimating whether the
family’s adjusted income has increased,
unless the family has previously
received an interim reduction under
paragraph (c)(2) of this section during
the year;
(ii) The owner may choose not to
conduct an interim reexamination in the
last three months of a certification
period; and
(iii) The owner will not be considered
out of compliance with the
requirements in this paragraph solely
due to de minimis errors in calculating
family income but is still obligated to
correct errors once the PHA becomes
aware of the errors. A de minimis error
is an error where the owner
determination of family income varies
from the correct income determination
by no more than 5 percent. The owner
must still take any corrective action
necessary to repay a family if the family
has been overcharged for their rent as a
result of the de minimis error in the
income determination.
(4) The owner must adopt policies
consistent with this section prescribing
when and under what conditions the
family must report a change in family
income or composition.
*
*
*
*
*
(e) Reviews of family income under
this section are subject to the provisions
in Section 904 of the Stewart B.
McKinney Homeless Assistance
Amendments Act of 1988 (42 U.S.C.
3544) and any applicable privacy rules
in subpart B of this part.
■ 14. In § 5.659, revise paragraph (e) to
read as follows:
§ 5.659 Family information and
verification.
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(e) Verification of assets. For a family
with net family assets (as the term is
defined in § 5.603) equal to or less than
$50,000, which amount will be adjusted
annually in accordance with a
commonly recognized inflationary
index, as determined by HUD, an owner
may accept, for purposes of
recertification of income, a family’s
declaration under § 5.618(b), except that
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the owner must obtain third-party
verification of all family assets every 3
years.
*
*
*
*
*
PART 92—HOME INVESTMENT
PARTNERSHIPS PROGRAM
15. The authority citation for part 92
continues to read as follows:
■
Authority: 42 U.S.C. 3535(d), 12 U.S.C.
1701x and 4568.
16. In § 92.203, add subject headings
to paragraphs (a) and (b), revise
paragraphs (b)(1), and (c), add a heading
to paragraph (d), revise paragraph (d)(1),
and add paragraph (e) to read as follows:
■
§ 92.203
Income determinations.
(a) Methods of determining income.
* * *
(b) Defining income for eligibility.
* * *
(1) Annual income as defined at 24
CFR 5.609 (a) and (b) (except when
determining the income of a homeowner
for an owner-occupied rehabilitation
project, the value of the homeowner’s
principal residence may be excluded
from the calculation of Net Family
Assets, as defined in 24 CFR 5.603); or
*
*
*
*
*
(c) Using Income Definitions. The
participating jurisdiction may use only
one definition of annual income for
each HOME-assisted program (e.g.,
downpayment assistance program) that
it administers and for each rental
housing project.
(d) Projecting Income. (1) The
participating jurisdiction must calculate
the annual income of the family by
projecting the prevailing rate of income
of the family at the time the
participating jurisdiction determines
that the family is income eligible.
Annual income includes income from
all persons in the household. Income or
asset enhancement derived from the
HOME-assisted project shall not be
considered in calculating annual
income.
*
*
*
*
*
(e) Determining Adjusted Income.
Although the participating jurisdiction
may use either of the definitions of
‘‘annual income’’ permitted in
paragraph (b) of this section to calculate
annual income, it must then apply
deductions from income in 24 CFR
5.611(a) to determine the family’s
adjusted income.
(1) The participating jurisdiction must
use a family’s adjusted income when
determining tenant contribution in units
receiving Federal or State project-based
rental subsidy pursuant to § 92.252(b).
(2) The participating jurisdiction may
base the amount of tenant-based rental
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48839
assistance on the adjusted income of the
family in accordance with § 92.209(h)
and may grant financial hardship
exemptions to a family receiving tenantbased rental assistance in accordance
with § 5.611(c) of this title.
(3) When a family applying for or
living in a HOME-assisted rental unit
receives section 8 housing choice
voucher assistance, or when a public
housing agency owns the HOMEassisted rental unit in the project-based
Section 8 programs, the participating
jurisdiction must apply the income
deductions in 24 CFR 5.611(a) and (b)
to determine the family’s adjusted
income and may accept a public
housing agency’s determination to grant
financial hardship exemptions to the
family under 24 CFR 5.611(c).
§ 92.203
[Amended]
17. Amend § 92.203 by removing
paragraph (d)(3).
■
PART 93—HOUSING TRUST FUND
18. The authority citation for part 93
continues to read as follows:
■
Authority: 42 U.S.C. 3535(d), 12 U.S.C.
4568.
19. In § 93.151, revise paragraph
(b)(1)(i) and add paragraphs (b)(3) and
(e) to read as follows:
■
§ 93.151
Income determinations.
*
*
*
*
*
(b) * * *
(1) * * *
(i) ‘‘Annual income’’ as defined at 24
CFR 5.609(a) and (b); or
*
*
*
*
*
(3) Annual income includes income
from all persons in the household.
*
*
*
*
*
(e) Adjusted Income. (1) Although the
grantee may use either of the definitions
of ‘‘annual income’’ permitted in
paragraph (b) of this section to calculate
annual income, the grantee must then
apply deductions established in 24 CFR
5.611(a) to determine the tenant’s
adjusted income.
(2) For public housing, the housing
choice voucher program, and where the
public housing agency is the owner in
the Section 8 project-based programs, a
grantee must apply the public housing
agency income deductions at 24 CFR
5.611(a) and (b) to determine the
family’s adjusted income and may
accept a public housing agency’s
determination to grant financial
hardship exemptions pursuant to 24
CFR 5.611(c).
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PART 574—HOUSING
OPPORTUNITIES FOR PERSONS WITH
AIDS
20. The authority citation for part 574
continues to read as follows:
■
Authority: 12 U.S.C. 1701x, 1701x–1; 42
U.S.C. 3535(d) and 5301–5320.
21. In § 574.310, revise paragraph
(d)(1); redesignate paragraph (e) as
paragraph (g), and add new paragraphs
(e) and (f) to read as follows:
■
§ 574.310 General Standards for eligible
housing activities.
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(d) * * *
(1) 30 percent of the family’s monthly
adjusted income (calculated under 24
CFR 5.611);
*
*
*
*
*
(e) Reexamination of family income.
(1) Annual reexaminations. For
purposes of determining resident rent
payments, grantees will conduct a
reexamination and redetermination of
family income every year.
(2) Interim reexaminations. (i) A
family may request an interim
reexamination of family income at any
time. The grantee must make the interim
reexamination within a reasonable
period of time after the family’s request.
(ii) Grantees may decline to process a
family request for an interim
reexamination if the grantee estimates
the family’s adjusted income will
decrease by an amount that is less than
10 percent of the family’s annual
adjusted income, or if the family’s
adjusted income will decrease by a
lower threshold amount that is less than
10 percent, if such lower threshold has
been established by the grantee. If the
grantee determines the estimated
decrease in family adjusted income is at
least 10 percent (or the lower alternative
threshold established by the grantee) the
grantee must make the interim
reexamination within a reasonable time
after the family’s request.
(iii) Grantees must conduct the
reexamination of family income within
a reasonable time after the grantee
becomes aware that the family’s
adjusted income (as defined in § 5.611
of this title) has changed by an amount
that the grantee estimates will result in
an increase of 10 percent or more in
annual adjusted income, except:
(A) The grantee may not consider any
increase in the earned income of the
family when estimating whether the
family’s adjusted income has increased
unless the family has previously
received an interim reduction under
paragraph (e)(2)(ii) of this section during
the year;
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(B) The grantee may choose not to
conduct an interim reexamination in the
last three months of a certification
period; and
(C) The grantee will not be considered
out of compliance with the
requirements in this paragraph solely
due to de minimis errors in calculating
family income but is still obligated to
correct errors once the grantee becomes
aware of the errors. A de minimis error
is an error where the grantee’s
determination of family income varies
from the correct income determination
by no more than 5 percent. The grantee
must still take any corrective action
necessary to repay a family if the family
has been overcharged for their rent as a
result of the de minimis error in the
income determination.
(iv) The grantee must adopt policies
consistent with this section prescribing
when and under what conditions the
family must report a change in family
income or composition.
(3) Streamlined income
determinations. (i) A grantee may elect
to apply a streamlined income
determination to families receiving
fixed income as described in paragraph
(e)(3)(iii) of this section.
(ii) Definition of fixed income. For
purposes of this section, fixed income
means periodic payments at reasonably
predictable levels from one or more of
the following sources:
(A) Social Security, Supplemental
Security Income, Supplemental
Disability Insurance.
(B) Federal, state, local, or private
pension plans.
(C) Annuities or other retirement
benefit programs, insurance policies,
disability or death benefits, or other
similar types of periodic receipts.
(D) Any other source of income
subject to adjustment by a verifiable
COLA or current rate of interest.
(iii) Method of streamlined income
determination. Grantees using the
streamlined income determination must
adjust a family’s income according to
the percentage of a family’s unadjusted
income that is from fixed income.
(A) When 90 percent or more of a
family’s unadjusted income consists of
fixed income, grantees using
streamlined income determinations
must apply a COLA or COLAs to the
family’s fixed-income sources, provided
that the family certifies both that 90
percent or more of their unadjusted
income is fixed income and that their
sources of fixed income have not
changed from the previous year. For
non-fixed income, grantees may choose
to make adjustments pursuant to
paragraph (e)(1) of this section.
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Fmt 4702
Sfmt 4702
(B) When less than 90 percent of a
family’s unadjusted income consists of
fixed income, grantees using
streamlined income determinations
must apply a COLA to each of the
family’s sources of fixed income.
Grantees must determine all other
income pursuant to paragraph (e)(1) of
this section.
(iv) COLA rate applied by grantees.
Grantees using streamlined income
determinations must adjust a family’s
fixed income using a COLA or current
interest rate that applies to each specific
source of fixed income and is available
from a public source or through tenantprovided, third-party-generated
documentation. If no public verification
or tenant-provided documentation is
available, then the grantee must obtain
third-party verification of the income
amounts in order to calculate the change
in income for the source.
(v) Triennial verification. For any
income determined pursuant to a
streamlined income determination, a
grantee must obtain third-party
verification of all income amounts every
3 years.
(f) Net family assets and restriction on
assistance to families based on assets.
(1) The definition of net family assets in
§ 5.603 of this title applies to this part,
except the value of a home of a
participant receiving short-term
mortgage or utility assistance under
§ 574.300(b)(6) or other homeownership
assistance eligible under the HOPWA
program is excluded from the definition.
(2) The requirements in § 5.618(a)
through (d) of this title on providing
assistance to families who have certain
assets apply to HOPWA assistance
provided under this part, except that
§ 5.618 of this title does not apply to the
provision of short-term mortgage or
utility assistance under § 574.300(b)(6)
or other homeownership assistance
eligible under the HOPWA program,
housing information services, as
described in § 574.300(b)(1), or
supportive services, as described in
§ 574.300(b)(7).
*
*
*
*
*
PART 960—ADMISSION TO, AND
OCCUPANCY OF, PUBLIC HOUSING
22. The authority citation for part 960
continues to read as follows:
■
Authority: 42 U.S.C. 1437a, 1437c, 1437d,
1437n, 1437z–3, and 3535(d).
23. In § 960.102, revise the definition
of ‘‘Over-income family’’ in paragraph
(b) to read as follows:
■
§ 960.102
*
Definitions.
*
*
(b) * * *
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*
Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Proposed Rules
Over-income family. A family whose
income exceeds the local over-income
limit. See subpart E of this part.
*
*
*
*
*
■ 24. In § 960.253, revise paragraph
(f)(1) to read as follows:
§ 960.253
Choice of rent.
*
*
*
*
*
(f) * * *
(1) For a family that chooses the flat
rent option, the PHA must conduct a
reexamination of family income and
composition at least once every three
years, except for families that are found
to be over-income. Once a family is
determined to be over-income, the PHA
must follow the documentation and
reexamination requirements under
§ 960.507(c).
■ 25. Amend § 960.255. by adding
paragraph (e) to read as follows:
§ 960.255 Self-sufficiency incentives—
Disallowance of increase in annual income.
*
*
*
*
*
(e) Effective [EFFECTIVE DATE OF
FINAL RULE], this section will not
apply to any family who is not eligible
for and participating in the
disallowance of earned income under
this section on [EFFECTIVE DATE OF
FINAL RULE].
§ 960.255
[Removed]
26. Remove § 960.255.
27. In § 960.257, revise paragraph (b),
and add paragraph (e) to read as follows:
■
■
§ 960.257 Family income and composition:
Annual and interim reexaminations.
jbell on DSK3GLQ082PROD with PROPOSALS
*
*
*
*
*
(b) Interim reexaminations. (1) A
family may request an interim
reexamination of family income or
composition because of any changes
since the last determination. The PHA
must conduct the interim reexamination
within a reasonable period of time after
the family request.
(2) The PHA may decline to process
a family request for an interim income
reexamination if the PHA estimates the
family’s adjusted income will decrease
by an amount that is less than 10
percent of the family’s annual adjusted
income, or if the family’s adjusted
income will decrease by a lower
threshold amount that is less than 10
percent, if such lower threshold has
been established by the PHA. If the PHA
determines the estimated decrease in
family adjusted income is at least 10
percent (or the lower alternative
threshold established by the PHA), the
PHA must conduct the interim income
reexamination within a reasonable
period of time after the family’s request.
(3) The PHA must conduct a
reexamination of family income within
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16:32 Sep 16, 2019
Jkt 247001
a reasonable time after the PHA
becomes aware that the family’s
adjusted income (as defined in 24 CFR
5.611) has changed by an amount that
the PHA estimates will result in an
increase of 10 percent or more in annual
adjusted income, except:
(i) The PHA may not consider any
increase in the earned income of the
family when estimating whether the
family’s adjusted income has increased,
unless the family has previously
received an interim reduction under
paragraph (b)(2) of this section during
the year;
(ii) The PHA may choose not to
conduct an interim reexamination in the
last three months of a certification
period; and
(iii) The PHA will not be considered
out of compliance with the
requirements in this paragraph solely
due to de minimis errors in calculating
family income but is still obligated to
correct errors once the PHA becomes
aware of the errors. A de minimis error
is an error where the PHA
determination of family income varies
from the correct income determination
by no more than 5 percent. The PHA
must still take any corrective action
necessary to repay a family if the family
has been overcharged for their rent as a
result of the de minimis error in the
income determination.
(4) The PHA must adopt policies
consistent with this section prescribing
when and under what conditions the
family must report a change in family
income or composition.
*
*
*
*
*
(e) Reviews of family income under
this section are subject to the provisions
in Section 904 of the Stewart B.
McKinney Homeless Assistance
Amendments Act of 1988 (42 U.S.C.
3544).
■ 28. In § 960.259, revise paragraph
(c)(2) to read as follows:
§ 960.259 Family information and
verification.
*
*
*
*
*
(c) * * *
(2) For a family with net family assets
(as the term is defined in 24 CFR 5.603)
equal to or less than $50,000, which
amount will be adjusted annually in
accordance with a commonly
recognized inflationary index, as
determined by HUD, a PHA may accept,
for purposes of recertification of
income, a family’s declaration under 24
CFR 5.618(b), except that the PHA must
obtain third-party verification of all
family assets every 3 years.
§ 960.261
■
[Removed]
29. Remove § 960.261.
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48841
30. Add § 960.507 to Subpart E read
as follows:
■
§ 960.507
limit.
Families exceeding the income
(a) In general. Families residing in
public housing may not, except as
provided in § 960.503, have incomes
that exceed the local over-income limit.
(b) Determination of over-income
limit. The local over-income limit is
determined by multiplying the
applicable income limit for a very lowincome family as defined in 24 CFR
5.603(b), by a factor of 2.4.
(c) Documenting over-income
families. (1) When a PHA becomes
aware, through an annual
reexamination, or an interim
reexamination for an increase in
income, that a family’s income exceeds
the applicable over-income limit, the
PHA must document that the family
exceeds the threshold.
(2) If, a year after the documentation
in paragraph (c)(1) of this section, the
PHA determines that the family still has
an income exceeding the over-income
limit, the PHA must provide written
notification to the family that their
income has exceeded the over-income
limit for one year, and that if the
family’s income continues to exceed the
over-income limit for the next 12
consecutive months, the family will be
subject to either a higher rent payment
or termination, based on the PHA’s
policies under paragraph (d).
(3) If a PHA discovers that a
previously over-income family has
income that is now below the overincome limit, the family is no longer
subject to these provisions. The family
is entitled to a new 2-year grace period
if the family’s income once again
exceeds the over-income limit.
(d) End of grace period. Once a family
has exceeded the over-income limit for
two consecutive years, the PHA must, as
detailed in its Admissions and
Continued Occupancy Policies
(ACOP)—
(1) Charge the family a monthly rent
equal to the greater of—
(i) The applicable fair market rent for
the unit; or
(ii) The amount of the monthly
subsidy provided for the unit, which
will be determined by summing the per
unit assistance provided to a public
housing property as calculated through
the applicable formulas for the Public
Housing Capital Fund and Public
Housing Operating Fund.
(A) For the Public Housing Capital
Fund, the amount of Capital Funds
provided to the unit will be calculated
as the per unit Capital Fund assistance
provided to a PHA for the development
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Federal Register / Vol. 84, No. 180 / Tuesday, September 17, 2019 / Proposed Rules
in which the family resides for the most
recent funding year for which Capital
Funds have been allocated;
(B) For the Public Housing Operating
Fund, the amount of Operating Funds
provided to the unit will be calculated
as the per unit amount provided to the
public housing project where the unit is
located for the most recent funding year
for which a final funding eligibility
determination has been made;
(C) HUD will publish such funding
amounts no later than December 31st
each year; or
(2) Terminate the tenancy of the
family no more than 6 months after the
third determination that the family’s
income exceeds the income limit in
paragraph (a) of this section. PHAs must
continue to charge these families the
non-over-income rent amount (the
family’s choice of income-based or flat
rent) for the time period during the 6month period before termination.
(e) Reporting. Each PHA must submit
a report annually to HUD that specifies,
as of the end of the year, the number of
families residing in public housing with
incomes exceeding the over-income
limit and the number of families on the
waiting lists for admission to public
housing projects. These reports must
also be publicly available.
PART 966—PUBLIC HOUSING LEASE
AND GRIEVANCE PROCEDURE
31. The authority citation for part 966
continues to read as follows:
■
Authority: 42 U.S.C. 1437d and 3535(d).
32. In § 966.4, revise paragraph
(l)(2)(ii) to read as follows:
■
§ 966.4
Lease requirements.
*
*
*
*
*
(l) * * *
(2) * * *
(ii) Being over the income limit for the
program, as provided in 24 CFR
960.507.
PART 982—SECTION 8 TENANTBASED ASSISTANCE: HOUSING
CHOICE VOUCHER PROGRAM
33. The authority citation for part 982
continues to read as follows:
■
Authority: 42 U.S.C. 1437f and 3535(d).
34. In § 982.516, revise paragraphs
(a)(3), (c), and (d), and add paragraph (h)
to read as follows:
jbell on DSK3GLQ082PROD with PROPOSALS
■
§ 982.516 Family income and composition:
Annual and interim reexaminations.
(a) * * *
(3) For a family with net family assets
(as the term is defined in 24 CFR 5.603)
equal to or less than $50,000, which
amount will be adjusted annually in
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16:32 Sep 16, 2019
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accordance with a commonly
recognized inflationary index, as
determined by HUD, a PHA may accept,
for purposes of recertification of
income, a family’s declaration under 24
CFR 5.618(b), except that the PHA must
obtain third-party verification of all
family assets every 3 years.
*
*
*
*
*
(c) Interim reexaminations. (1) A
family may request an interim
determination of family income or
composition because of any changes
since the last determination. The PHA
must conduct an interim reexamination
within a reasonable period of time after
the family request.
(2) The PHA may decline to process
a family request for an interim income
reexamination if the owner or PHA
estimates the family’s adjusted income
will decrease by an amount that is less
than 10 percent of the family’s annual
adjusted income, or if the family’s
adjusted income will decrease by a
lower threshold amount that is less than
10 percent, if such lower threshold has
been established by the PHA. If the PHA
determines the estimated decrease in
family adjusted income is at least 10
percent (or the lower alternative
threshold established by the PHA), the
PHA must conduct the interim income
reexamination within a reasonable
period of time after the family’s request.
(3) The PHA must conduct a
reexamination of family income within
a reasonable time after the PHA
becomes aware that the family’s
adjusted income (as defined in 24 CFR
5.611) has changed by an amount that
the PHA estimates will result in an
increase of 10 percent or more in annual
adjusted income, except:
(i) The PHA may not consider any
increase in the earned income of the
family when estimating whether the
family’s adjusted income has increased,
unless the family has previously
received an interim reduction under
paragraph (c)(2) of this section during
the year;
(ii) The PHA may choose not to
conduct an interim reexamination in the
last three months of a certification
period; and
(iii) The PHA will not be considered
out of compliance with the
requirements in this paragraph solely
due to de minimis errors in calculating
family income but is still obligated to
correct errors once the PHA becomes
aware of the errors. A de minimis error
is an error where the PHA
determination of family income varies
from the correct income determination
by no more than 5 percent. The PHA
must still take any corrective action
PO 00000
Frm 00049
Fmt 4702
Sfmt 4702
necessary to repay a family if the family
has been overcharged for their rent as a
result of the de minimis error in the
income determination.
(4) The PHA must adopt policies
consistent with this section prescribing
when and under what conditions the
family must report a change in family
income or composition.
(d) Family reporting of change. The
PHA must adopt policies consistent
with this section prescribing when and
under what conditions the family must
report a change in family income or
composition.
*
*
*
*
*
(h) Reviews of family income under
this section are subject to the provisions
in Section 904 of the Stewart B.
McKinney Homeless Assistance
Amendments Act of 1988 (42 U.S.C.
3544).
Dated: August 13, 2019.
Brian D. Montgomery,
Acting Deputy Secretary.
[FR Doc. 2019–19774 Filed 9–16–19; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
46 CFR Part 11
[Docket No. USCG–2017–1025]
RIN 1625–AC42
Crediting Recent Sea Service of
Personnel Serving on Vessels of the
Uniformed Services
Coast Guard, DHS.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Coast Guard proposes to
increase from 3 years to 7 years the
period within which qualifying sea
service aboard vessels of the uniformed
services can be used to satisfy the
requirement for recent sea service to
qualify for a Merchant Mariner
Credential with a national officer
endorsement. This notice of proposed
rulemaking would implement into Coast
Guard regulations legislation that has
been codified in statute, and may
potentially increase the number of
merchant mariners available for
employment on commercial vessels.
DATES: Comments and related material
must be received by the Coast Guard on
or before November 18, 2019.
ADDRESSES: You may submit comments
identified by docket number USCG–
2017–1025 using the Federal
eRulemaking Portal at https://
SUMMARY:
E:\FR\FM\17SEP1.SGM
17SEP1
]]>Agencies
[Federal Register Volume 84, Number 180 (Tuesday, September 17, 2019)]
[Proposed Rules]
[Pages 48820-48842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19774]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 5, 92, 93, 574, 960, 966, 982
[Docket No FR-6057-P-01]
RIN 2577-AD03
Housing Opportunity Through Modernization Act of 2016:
Implementation of Sections 102, 103, and 104
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, and Office of the Assistant Secretary for Community
Planning and Development, HUD.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Housing Opportunity Through Modernization Act of 2016
(HOTMA) was enacted on July 29, 2016. This proposed rule would revise
HUD regulations to put sections 102, 103, and 104 of HOTMA into effect.
These sections make sweeping changes to the United States Housing Act
of 1937, particularly those affecting income calculation and reviews.
Section 102 changes requirements pertaining to income reviews for
public housing and HUD's Section 8 programs. Section 103 modifies the
continued occupancy standards of public housing residents whose income
has grown above the threshold for initial eligibility. Section 104 sets
maximum limits on the assets that families residing in public housing
and Section 8 assisted housing may have. Additionally, section 104
provides that HUD must direct public housing agencies to require that
all applicants for and recipients of assistance through HUD's public
housing or Section 8
[[Page 48821]]
programs provide authorization for public housing agencies to obtain
financial records needed for eligibility determinations. In addition to
amending regulations for HUD's public housing and Section 8 programs,
this proposed rule would change regulations of other HUD programs that,
for consistency, adopted regulations of programs that are based on
statutory provisions amended by sections 102 and 104. Therefore, this
rule makes changes that affect HUD's HOME Investment Partnerships,
Housing Trust Fund, and Housing Opportunities for Persons With AIDS
programs, as well as HUD's public housing and Section 8 programs.
DATES: Comment Due Date: November 18, 2019.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule. Copies of all comments submitted are available for
inspection and downloading at www.regulations.gov. To receive
consideration as public comments, comments must be submitted through
one of the two methods specified below. All submissions must refer to
the above docket number and title.
1. 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 their
timely receipt by HUD, and enables HUD to make them immediately
available to the public. Comments submitted electronically through the
www.regulations.gov website 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.
2. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street SW, Room 10276,
Washington, DC 20410-0500.
FOR FURTHER INFORMATION CONTACT:
Public Housing, Housing Choice Voucher (including project-based
vouchers), and moderate rehabilitation programs, at
[email protected].
Multifamily Housing programs: Kate Nzive, Director, Assisted
Housing Oversight Division, Office of Multifamily Housing, at
[email protected].
HOME Investment Partnerships and Housing Trust Fund programs:
Virginia Sardone, Director, Office of Affordable Housing Programs,
Office of Community Planning and Development, at 202-708-2684.
Housing Opportunities for Persons With AIDS program: Rita Flegel,
Director, Office of HIV/AIDS Housing, Office of Community Planning and
Development, at 202-402-5374.
Persons with hearing or speech impairments may access the above
telephone numbers through TTY by calling the Federal Relay Service,
toll-free, at 800-877-8339.
The mailing address for each office contact is Department of
Housing and Urban Development, 451 7th Street SW, Washington, DC 20410.
SUPPLEMENTARY INFORMATION:
I. Background
On July 29, 2016, HOTMA was signed into law (Pub. L. 114-201, 130
Stat. 782). HOTMA makes numerous changes to statutes governing HUD
programs, including sections 3, 8, and 16 of the United States Housing
Act of 1937 (1937 Act). HUD issued a notice in the Federal Register on
October 24, 2016, at 81 FR 73030, announcing which statutory changes
made by HOTMA could be implemented immediately and which statutory
changes require further action by HUD.
On November 29, 2016, HUD published another Federal Register notice
(81 FR 85996), seeking public input on how HUD should determine the
income limit for public housing residents, pursuant to section 103 of
HOTMA, and this was followed by a July 26, 2018, notice (83 FR 35490)
that made some provisions of section 103 of HOTMA effective. On January
18, 2017, HUD published a Federal Register notice (82 FR 5458), that
made multiple HOTMA provisions for the Housing Choice Voucher (HCV)
program, unrelated to sections 102, 103, and 104, effective and
solicited public comment on HUD's implementation methods. The
conforming regulatory changes for the HCV program provisions
implemented by the January 18, 2017, Federal Register notice are not
part of this proposed rule and will be addressed through a separate
rulemaking.
Many of the statutory provisions in HOTMA are intended to
streamline administrative processes and reduce burdens on public
housing agencies (PHAs) and private owners. Sections 102, 103, and 104
of HOTMA require that HUD make changes to its regulations and take
other actions--some of which will also reduce burdens on PHAs and
private owners once implemented.
A. HOTMA Section 102
Section 102 of HOTMA deals with income reviews in HUD's public
housing and Section 8 programs. Section 102(a) amends section 3(a) of
the 1937 Act to revise the frequency of family income reviews and the
calculation of income and requires HUD, in consultation with other
appropriate Federal agencies, to develop electronic procedures enabling
PHAs to access income determinations for other Federal means-tested
programs. Section 102(c) amends section 3(b) of the 1937 Act to change
the definitions, for the public housing and Section 8 programs, of
income and adjusted-income for each member of the household who is 18
years or older and unearned income for each dependent who is less than
18 years old. Section 102(d) amends section 8(o) of the 1937 Act, which
authorizes the HCV Program, but existing HUD regulations already
reflect the changes. Section 102(e) changes the definition of
``income'' to ``annual adjusted income'' for the Enhanced Voucher
Program. Section 102(f) strikes the last sentence of paragraph (3) of
section 8(c) of the 1937 Act, eliminating the requirement that reviews
of family income shall be made no less frequently than annually for
project-based housing. Under section 102(h), statutory amendments based
on changes in section 102 are not effective until the beginning of the
calendar year after HUD has issued a notice or regulation implementing
the changes.
Some provisions in section 102 of HOTMA do not require regulatory
changes and are not addressed in this proposed rule. Section 102(b)
requires HUD to submit a certification letter to Congress regarding
hardship exemptions to minimum monthly rent and does not amend the 1937
Act or prompt changes to HUD regulations. Section 102(g)(1) states that
HUD may make appropriate adjustments in the formula income of PHAs that
experience a material and disproportionate reduction in rental income
during the first year in which the provisions of this section are
implemented. 24 CFR 990.110(c) currently provides that HUD will address
secondary elements that will be used in the revised Operating Fund
Formula through nonregulatory means, so this provision does not require
a regulatory change. Section 102(g)(2) requires that HUD submit a
report to Congress identifying and calculating the impact of changes
made by sections 102 and 104 of HOTMA during each of the first 2 years
after the
[[Page 48822]]
implementation of section 102. Section 102(i) requires HUD to conduct a
study on the impact any decreased amount of deductions in income that
result from the implementation of this section has on elderly and
disabled families.
B. HOTMA Section 103
Section 103 of HOTMA amends section 16(a) of the 1937 Act to place
an income limitation on a public housing tenancy for families. The law
requires that after a family's income has exceeded 120 percent of the
area median income (AMI) (or a different limitation established by HUD)
for 2 consecutive years, a PHA must terminate the family's tenancy
within 6 months after the expiration of the 2-year period or charge the
family a monthly rent equal to the greater of (1) the applicable Fair
Market Rent or (2) the amount of monthly subsidy for the unit,
including amounts from the operating and capital fund, as determined by
regulations. For purposes of this proposed rule, the income limit
established by HOTMA will be referred to as the ``over-income limit.''
A PHA must notify a family of the potential changes to monthly rent 1
year after the PHA determines that the family's income exceeds the
over-income limit. Pursuant to section 3(a)(5) of the 1937 Act, the
over-income limit does not apply in instances where a PHA operating
fewer than 250 public housing units has admitted families with income
exceeding the over-income limit, if the PHA is renting to those
families because there are no income-eligible families on the PHA's
waiting list or applying for public housing assistance. Each PHA must
submit a report annually to HUD that specifies, as of the end of the
year, the number of families residing in public housing with incomes
exceeding the over-income limit and the number of families on the
waiting lists for admission to public housing projects. Such reports
must be publicly available.
The new language in section 16(a)(5) of the 1937 Act sets the over-
income limit at 120 percent of the AMI. However, HUD can adjust the
over-income limit if the Secretary determines that it is necessary due
to prevailing levels of construction costs or unusually high or low
family incomes, vacancy rates, or rental costs. On July 26, 2018, at 83
FR 35490, HUD published a final notice in the Federal Register
implementing HUD's methodology for determining the over-income limit by
using the very low-income (VLI) \1\ level for the applicable area as
the baseline and multiplying it by 2.4. Because VLI is preliminarily
calculated as 50 percent of the estimated area median income for the
family, in most cases this would result in a figure matching 120
percent of the area median income. However, in areas where the VLI has
been adjusted to account for high or low housing costs or to prevent it
from being lower than 50 percent of the state, non-metro median family
income, the final amount would result in an adjusted over-income limit
as well.
---------------------------------------------------------------------------
\1\ HUD's income limits were developed by HUD's Office of Policy
Development and Research and are updated annually. Information about
HUD's income limits and HUD's methodology for adjusting income
limits as part of the income limit calculation can be found at
https://www.huduser.gov/portal/datasets/il.html.
---------------------------------------------------------------------------
C. HOTMA Section 104
Section 104 of HOTMA amends section 16 of the 1937 Act to set
limits on the assets that families residing in public housing and
families receiving assistance under section 8 of the 1937 Act may own.
In addition to providing limitations on assets, this section defines
the term ``net family assets'' and lists exclusions to the definition.
The section allows for families to self-certify that they are not
subject to the limitation on assets, under certain circumstances.
Section 104 also grants PHAs and owners authority to not enforce the
asset limitation, provided that the PHA or owner sets forth a policy to
that effect in its PHA plan or in a plan adopted by the owner. Section
104 also directs HUD to direct PHAs to require all applicants and
recipients under the 1937 Act to authorize the PHA to obtain financial
information needed in connection with a determination with respect to
eligibility.
II. This Proposed Rule
A. Affected Programs and Housing Providers
HUD proposes to revise 24 CFR parts 5, 92, 93, 574, 960, and 982 in
order to implement sections 102, 103, and 104 of HOTMA. Although
sections 102, 103, and 104 amend the 1937 Act, which governs HUD's
public housing and Section 8 programs, this proposed rule also aligns
policies and procedures across program offices, where appropriate, to
include programs that are administered by HUD's Office of Community
Planning and Development, including the HOME Investment Partnerships
(HOME), Housing Trust Fund (HTF), and Housing Opportunities for Persons
With AIDS (HOPWA) programs. Alignment will reduce disparities between
the programs and better simplify program administration for HUD
grantees that manage multiple programs.
B. HOTMA Section 102
Section 102 of HOTMA revises the definition in the 1937 Act of
family income. Because a variety of programs use this definition, HUD
offers the following chart showing which programs (other than public
housing and the voucher programs) are affected by various changes to
the income regulatory provisions in 24 CFR part 5:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Housing trust fund
PBRA HOPWA (part 574) HOME (part 92) (part 93) 202/811
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Family Assets Definition Yes (Sec. 983.4).... Yes, except the value Yes, or may use IRS Yes, or may use IRS Yes, or may use IRS
(5.603). of a home of a income definition income definition income definition
participant receiving (Sec. (Sec. (Sec. 891.105).
short-term mortgage 92.203(b)(1)). 93.151(b)(1)(i)).
or utility assistance
under Sec.
574.300(b)(6) or
other homeownership
assistance eligible
under HOPWA is
excluded (Sec.
574.310(f)(1)).
Annual Income Definition (5.609(a)) Yes (Sec. 983.4).... Yes (Sec. Yes (Sec. Yes (Sec. Yes (Sec. 891.105).
574.310(d)(1)). 92.203(b)(1)). 93.151(b)(1)(i)).
Annual Income Exclusions (5.609(b)) Yes (Sec. 983.4).... Yes (Sec. Yes (Sec. Yes (Sec. Yes (Sec. 891.105).
574.310(d)(1)). 92.203(b)(1)). 93.151(b)(1)(i)).
Annual Income Calculation & Yes (Sec. 983.4).... Yes (Sec. No................... No................... Yes (Sec. 891.105).
Reexaminations (5.609(c)). 574.310(d)(1)).
[[Page 48823]]
Adjusted Income Mandatory Yes (Sec. 983.4).... Yes (Sec. Yes (Sec. Yes (Sec. Yes (Sec. 891.105).
Deductions (5.611(a)). 574.310(d)(1)). 92.203(e)). 93.151(e)(1)).
Adjusted Income Additional Yes, ONLY when the PHA Yes (Sec. Yes, in PBRA units or Yes, in PBRA and No.
Deductions (5.611(b)). is an owner (Sec. 574.310(d)(1)). when tenant receives public housing units
983.4). Section 8 voucher or when tenant
assistance (Sec. receives Section 8
92.203(e)(3)). voucher assistance
(Sec.
93.151(e)(2)).
Adjusted Income Financial Hardship Yes (Sec. 983.4).... Yes (Sec. Yes, if the grantee Yes, if the grantee No.
Exemptions (5.611(c)). 574.310(d)(1)). elects to do so in elects to do so in
PBRA units or when PBRA and public
tenant receives housing units or
Section 8 voucher when tenant receives
assistance (Sec. Section 8 voucher
92.203(e)(3)). assistance (Sec.
93.151(e)(2)).
Asset restriction (5.618).......... Yes (Sec. 5.618(e)). Yes, except for the No................... No................... No.
provision of short-
term mortgage or
utility assistance or
other homeownership
assistance eligible
under the HOPWA
program, housing
information services,
or supportive
services (Sec.
574.310(f)).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Specific solicitation of comment 1: What administrative burdens or
other considerations (particularly related to Rental Assistance
Demonstration conversions) should HUD be aware of in relation to
certain sections applying to public housing and the HCV and project-
based voucher (PBV) programs, but not to project-based rental
assistance (PBRA) and Section 202/811?
1. Income Reexaminations
Section 102(a)(1) of HOTMA revises the process by which PHAs and
owners are required to review family income. To conform to these
changes, this rule proposes to revise 24 CFR 5.657, 24 CFR 960.257, and
24 CFR 982.516 for the Section 8 PBRA programs, public housing, and the
HCV program (including PBV). Currently, these program regulations
provide that families may request an interim reexamination of family
income because of any changes since the last examination, and the PHA
or owner must make the interim determination within a reasonable period
of time after the family's request. HOTMA provides that reviews of
family income shall be made upon the request of the family at any time
the income or deductions of the family change by an amount that is
estimated to result in a decrease of 10 percent or more in annual
adjusted income, or of such lower amount as HUD may establish or permit
the PHA or owner to establish. This proposed rule would revise
Sec. Sec. 5.657, 960.257, and 982.516 to state that the owner or PHA
may decline to process a family's request for an interim reexamination
if the owner or PHA estimates the family's adjusted income will
decrease by an amount that is less than 10 percent of the family's
annual adjusted income. The proposed rule further provides that the
owner or PHA may still choose to process the family request for an
interim reexamination if the owner or PHA estimates the family's
adjusted income will decrease by less than 10 percent, provided the
owner or PHA has established a standard for conducting the interim
reexamination that is more generous to the family (e.g., the owner or
PHA will conduct an interim reexamination if the decrease in family
income exceeds 5 percent of adjusted income) and the PHA estimates the
family's adjusted income will decrease by an amount that exceeds the
owner or PHA threshold. HUD believes that while the 10 percent standard
is appropriate as the HUD standard and consequently is not exercising
its discretion to establish a lower threshold, owners and PHAs should
have the flexibility to establish a lower threshold if they wish to do
so and are willing to take on the additional administrative burden. The
owner or PHA may not establish an alternative threshold that is less
generous to the family than the standard 10 percent decrease in
adjusted income (e.g., the owner or PHA will only conduct an interim
examination if the decrease in family adjusted income is estimated to
be more than 20 percent decrease in adjusted income).
Additionally, HOTMA states that PHAs and owners must conduct a
reexamination of family income at any time the family's adjusted income
is estimated to have increased by 10 percent or more. This proposed
rule would revise Sec. Sec. 5.657, 960.257, and 982.516 to reflect
this change and would specify that the owner or PHA would be required
to conduct the reexamination within a reasonable period of time after
the owner or PHA becomes aware of the family's change in income. HOTMA
provides some administrative relief to this requirement by allowing
PHAs or owners to elect not to conduct an income review in the last 3
months of a certification period, and that flexibility is incorporated
into this proposed rule. PHAs or owners may not consider earned income
of the family when estimating whether the family's adjusted income has
increased, unless the increases in earned income correspond to previous
decreases resulting from the family's request for an interim
reexamination. This proposed rule would provide a definition for
``earned income'' in 24 CFR 5.100 that would apply when the term is
used throughout this rule. The definition would mirror the definition
of earned income that is currently in 24 CFR 984.103.
Specific solicitation of comment 2: HUD is specifically seeking
comment about the ``reasonable period of time'' in which the PHA and
owner must conduct an interim reexamination. HUD seeks comment on what
should be considered reasonable and whether this rule should contain a
specific time frame by which the PHA or owner must complete an interim
reexamination. HUD seeks comment on what such a time frame might be
(for example, 2 weeks from the time of the family request, or the time
the PHA or owner is aware of the change in income or family
composition).
[[Page 48824]]
Specific solicitation of comment 3: HUD is seeking comments on
whether HUD should continue to require PHAs and owners to use the
Enterprise Income Verification (EIV) System for every income
examination, or revise its regulations at 24 CFR 5.233 to require use
of EIV only at initial and annual reexaminations and not at interim
reexaminations. If HUD were to adopt such a proposal, housing providers
could still use EIV for interim reexaminations but would not be
required to use EIV. HUD is seeking comments on whether such a proposal
would save time for PHAs and owners without significantly impacting the
accuracy of the reexaminations.
2. Calculation of Family Income
Section 102(a)(1) of HOTMA also describes how PHAs and owners must
calculate family income, and this proposed rule would revise 24 CFR
5.609 to account for this. Specifically, this proposed rule would
revise Sec. 5.609 to direct PHAs and owners to estimate the income of
the family for the upcoming year to determine family income for initial
occupancy or for the initial provision of housing assistance or for an
interim reexamination of family income. In determining family income
for annual reviews, this proposed rule would provide that the PHA or
owner must use the income of the family as determined by the PHA or
owner for the preceding year, taking into account any redetermination
of income undertaken during the preceding year. For example, if a PHA
had made a redetermination of the family's income during the preceding
year because the family's income had decreased by more than 10 percent,
the PHA would be required at the annual review to use that
redetermination to determine the family's income for the forthcoming
year. This will not apply in situations where the PHA or owner uses a
streamlined income determination. HOTMA provides that the PHA or owner
may make adjustments, as it considers appropriate, to reflect current
income if during the previous 12-month period there was a change in
income that was not accounted for in a redetermination of income.
However, in order to properly account for income, this rule proposes
that the PHA or owner must make adjustments to reflect current income
if during the previous 12-month period there was a change in income
that was not accounted for in a redetermination of income. For example,
if a family reported a decrease in income during the preceding year but
the PHA had not conducted an interim redetermination because the
decrease was less than 10 percent of the family's annual adjusted
income, at the annual review the PHA would be required to adjust the
determination of family income to reflect the decrease.
HOTMA provides for a ``safe harbor'' for PHAs or owners who
determine family income prior to the application of deductions based on
timely income determinations made for purposes of other means-tested
Federal public assistance programs, including the Temporary Assistance
for Needy Families block grant, Medicaid assistance, and the
Supplemental Nutrition Assistance program. This proposed rule adopts
this language in the new paragraph on calculation of income in 24 CFR
5.609. Specifically, HUD is permitting PHAs and owners to utilize the
income determinations, regardless of definitional differences between
other forms of public assistance and the respective HUD program. HUD
believes this maximizes the streamlining benefit of the provision.
Further, HUD proposes to add the Earned Income Tax Credit to the list
of means-tested Federal public assistance.
Specific solicitation of comment 4: HUD is soliciting feedback on
how allowing PHAs and owners to use income determinations from other
forms of public assistance may impact program administration, and
whether HUD should establish requirements as to which income
determination should be used if there is more than one determination of
income from other public assistance programs available to the PHA or
owner.
Specific solicitation of comment 5: HUD is soliciting feedback on
whether there are other forms of Federal public assistance that should
be added to the ``safe harbor'' list or whether HUD should limit the
number of such programs.
3. Annualization of Income
In order to conform to HOTMA, this proposed rule would also remove
an existing provision in 24 CFR 5.609 on annualization of income, which
states that if it is not feasible to anticipate a level of income over
a 12-month period (e.g., seasonal or cyclic income), or the PHA
believes that past income is the best available indicator of expected
future income, the PHA may annualize the income anticipated for a
shorter period, subject to a redetermination at the end of the shorter
period.
4. De Minimis Errors
HOTMA provides that a PHA or owner will not be out of compliance
with the statute's new provisions regarding income review and income
calculation solely due to any de minimis errors made by the agency or
owner in calculating family income. HOTMA does not define de minimis
error. HUD proposes to revise 24 CFR 5.609, 24 CFR 5.657, 24 CFR
960.257, and 24 CFR 982.516 to provide that PHAs and owners will not be
considered to have failed to comply with the requirements involving the
calculation of income solely due to de minimis errors. Under this
proposed rule, a de minimis error would be defined as any error where
the PHA's or owner's calculation of a family's income or adjusted
income varies from the correct income or adjusted income by no more
than 5 percent. In such instance, the PHA's or owner's income
determination would not be considered incorrect for purposes of HUD's
monitoring and compliance oversight responsibilities. However, the PHA
or owner would still be required to take necessary corrective action to
repay a family if the de minimis error in the income determination
resulted in the family being overcharged for their rent.
Specific solicitation of comment 6: HUD specifically seeks comment
from PHAs and owners on the methodology HUD should use in determining
what constitutes a de minimis error. For example, as alternatives to
the 5 percent figure discussed above, HUD could calculate de minimis
errors to be those that do not exceed $30 per month for any family,
because a family's share of rent for 1937 Act programs is approximately
$30 for every $100 of income. Or, HUD could calculate de minimis errors
as those that represent less than 5 percent of all income
determinations made during a calendar year.
5. Earned Income Disallowance
Section 102(a)(2) of HOTMA eliminates section 3(d) of the 1937 Act,
which had thus far allowed for the disallowance of earned income (EID)
from rent determinations. This section had provided that the rent of
certain public housing residents or recipients of Section 8 assistance
could not be increased as a result of increased income due to
employment during the 12-month period beginning on the date on which
the employment started, and that following the expiration of that 12-
month period, the PHA must exclude from the annual income of a
qualified family at least 50 percent of any increase in the income of
such family member, as a result of employment, over the family's
baseline income for the subsequent 12-month period. Other HUD programs,
including the HOME, HOPWA, and Supportive Housing
[[Page 48825]]
programs, similarly adopted an EID for persons with disabilities.
Because the EID is no longer authorized under the 1937 Act, this
proposed rule would eventually eliminate regulatory references to it.
Despite the elimination of the EID from HUD's regulations, HUD
proposes to allow families who receive the EID benefit as of the
effective date of a final rule implementing section 102 of HOTMA to
continue receiving the benefits of EID until the allowed time frame
expires, per the framework currently provided under Sec. 5.617 or
Sec. 960.255. Given the time frames in Sec. 5.617 or Sec. 960.255,
within 2 years from the effective date of a final rule implementing the
elimination of EID, no family would receive the EID benefit.
Specific solicitation of comment 7: HUD specifically solicits
comment on this proposal to allow current recipients of the EID benefit
to continue to receive the benefit until the allowed time frame
expires.
6. Definition of ``Annual Income''
Section 102(c) of HOTMA provides a new definition for the term
``income.'' As a result, this proposed rule would significantly revise
HUD regulations in 24 CFR 5.609. Specifically, this rule proposes to
simplify the existing definition of annual income by removing the list
of examples of income sources and providing a broader definition of
income that mirrors the definition of income provided by HOTMA. HUD
hopes that this streamlining effort will reduce the burden on PHAs and
owners in determining a family's income and reduce confusion about what
should be included as income.
This HOTMA definition sufficiently encompasses what HUD considers
to be income under the current regulation, with the exception of the
treatment of imputed returns on assets. Therefore, in addition to the
HOTMA definition of income, this proposed rule would specify that
annual income also includes the imputed return on assets over $50,000,
based on the current passbook savings rate if the actual income from
assets cannot be computed. The $50,000 figure will be adjusted for
inflation, in accordance with HOTMA. By simplifying the definition of
income and streamlining the regulatory provisions in Sec. 5.609, HUD
seeks to reduce the complexity of the existing income regulations.
HUD wants to be clear that income sources that were previously
included in annual income are generally unchanged. HUD is only
simplifying the definition to eliminate confusing regulatory language
that excluded some income that should have been included and which
increased litigation risk for housing providers who rely on HUD's
definition of income.
Specific solicitation of comment 8: HUD is seeking feedback from
interested parties on the impact of the proposed redefinition of annual
income and whether it simplifies the understanding of what is included
in annual income.
Specific solicitation of comment 9: HUD solicits comment on what
inflationary index to use for purposes of adjusting the amount of
imputed return on assets included in annual income, and other
provisions in HOTMA that require amounts to be adjusted annually for
inflation.
7. Income Exclusions
Additionally, HUD proposes updating the list of income exclusions
to be consistent with HOTMA and to eliminate certain nonstatutory,
discretionary exclusions from income in order to further streamline the
income determination process. This proposed rule specifies that annual
income does not include amounts that are explicitly excluded from the
definition of income in HOTMA, but removes current exclusions for
inheritances, capital gains, gifts, and other sporadic income. HUD has
found that these provisions have caused confusion, there has been
inconsistent application of these exclusions, and that these amounts
should be included as annual income. HUD notes that with this change,
realized capital gains--meaning those capital gains obtained from the
sale of property in a given year--would be included as income under 24
CFR 5.609(a)(1). The value of unrealized capital gains--meaning the
value of any increase in an asset from one year to the next--would be
included under the definition of Net Family Assets, which is used to
determine imputed income under 24 CFR 5.609(a)(2).
Under this proposed rule, insurance payments remain excluded from
annual income. However, HUD would strike the parentheses and the text
enclosed in the parentheses that is intended to clarify that insurance
payments include payments under health and accident insurance and
worker's compensation. This proposed change does not represent any
change in policy and payments under health and accident insurance and
worker's compensation would continue to be excluded from annual income.
HUD is proposing the change because HUD believes the current language
has created more confusion in terms of what is meant by insurance
payments than it has solved and to clarify that all insurance payments
should be excluded from annual income, not just a select, few types.
Specific solicitation of comment 10: The proposed rule provides
that distributions from a nonrevocable trust fund specifically provided
to cover the cost of medical expenses for a minor is excluded income,
as are any amounts recovered in any civil action or settlement based on
a claim of malpractice, negligence, or other breach of duty, owed to a
family member arising out of law, that resulted in a member of the
family being disabled. Distributions from a non-revocable trust fund
provided for other purposes would be considered income. HUD is seeking
comment on whether this rule should treat subsequent withdrawals of an
insurance payment or settlement for personal or property losses
(whether related to a minor or not), or amounts recovered in the
aforementioned civil action or settlement, as income. Start here For
example, while the initial lump sum addition of an insurance payment or
an amount recovered in the civil action or settlement would not count
as annual income, HUD seeks comment on whether this rule should specify
that any amount the family subsequently withdraws against the payment
(e.g., from a bank account or trust fund into which the insurance
payment or recovered amount was deposited) would be considered income.
If this rule were to consider such subsequent withdrawals as income,
HUD seeks comment on whether certain types of withdrawals should be
excluded from annual income (in addition to the existing exclusion of
distributions from a non-revocable trust fund specifically provided to
cover the medical expenses of a minor). If the rule were to consider
such subsequent withdrawals as income but exclude certain withdrawals
that are used for a particular purpose (e.g., the family received an
auto insurance payment after an accident that totaled the family car
that the family deposited in their checking account and then
subsequently used to purchase a replacement vehicle), HUD seeks comment
on whether there are specific requirements that could be added to
address the operational challenges that a PHA or owner would face in
identifying, determining, and verifying that the withdrawal should be
either included or excluded from annual income. Finally, HUD is
requesting comment on whether the final rule should simply count the
lump-sum insurance payment or settlement as
[[Page 48826]]
income, rather than excluding it from annual income at any point in
time.
HOTMA provides HUD the discretion to establish exclusions to income
beyond those explicitly listed in HOTMA and any amount required by
Federal law to be excluded from consideration as income. As a result,
with the exception of inheritances, capital gains, gifts, and other
sporadic income, HUD proposes to maintain the other exclusions
currently listed in Sec. 5.609, but would revise the explanatory
language for some of those exclusions to provide greater clarity and
understanding. One of these exclusions is for earnings in excess of
$480 for full-time students 18 years or older who are not the head of
household or spouse of the head of household. This proposed rule would
effectively maintain that exclusion, but provide that the $480 figure
be adjusted annually for inflation. As explained below, this is because
there is a mandatory $480 deduction for dependents in the current
regulations that HOTMA requires be adjusted for inflation, so the end
result is that all earned income of dependent students should either be
excluded or deducted from income. Additionally, this proposed rule
would provide that the amount of the existing exclusion for adoption
assistance payments, which is payments in excess of $480 per adopted
child, would also be adjusted annually for inflation.
This proposed rule would add additional exclusions to income in
order to conform with HUD policy. This proposed rule would provide that
amounts in or from ABLE accounts created under section 529A of the
Internal Revenue Code (IRC) are excluded from income. ABLE accounts are
tax-advantaged savings accounts for individuals with disabilities. This
proposed rule would exclude the income of foster adults from
consideration of family income in order to prevent disincentives to
housing such persons, and would codify HUD's existing policy that state
kinship or guardianship care payments are excluded from the definition
of income. Additionally, this proposed rule would specify that loan
proceeds (for example, car loans or payday loans) must be excluded from
income. Loan proceeds are not considered income by HUD because they are
typically a pass-through payment for the purpose of purchasing
something like a car. In the case of a payday loan, a family uses a
paycheck as collateral, thus counting such a loan as income would
effectively count that income amount twice.
This proposed rule would also add an exclusion for payments
received by Indian persons as a result of claims relating to the
mismanagement of assets held in trust by the United States (including
payments from tribal trust settlements), to the extent such payments
are also excluded from gross income under the Internal Revenue Code.
HUD already consider such payments to be excluded from annual income,
but relies on the current exclusion for temporary, nonrecurring, or
sporadic income to do so, which this proposed rule would remove.
Finally, the rule would codify long-standing practice of excluding
from annual income replacement housing ``gap'' payments that offset
increased rent and utility costs to families that are displaced from
one federally subsidized housing unit and move into another federally
subsidized housing unit. HUD currently excludes these payments from
income as ``temporary, nonrecurring, or sporadic income'' under Sec.
5.609(c)(9). This rule preserves the gap payment exclusion and
clarifies that this exclusion only exists to the extent that the
tenant's out of pocket expenses for rent and utilities in their new
federally subsidized housing are higher than they were in their
previous federally subsidized housing. Later changes to a tenant's
contribution due solely to changes in family income, size, or
composition should not be considered when determining if a gap has been
reduced or eliminated. If the gap is reduced or eliminated because of
reasons such as a subsequent move by the tenant or change in the
subsidy program applicable to the tenant's unit, and the tenant chooses
to retain or continue to receive their replacement housing ``gap''
payment, then the portion of the ``gap'' payment that is no longer
needed to close the gap should be counted as income for purposes of
determining annual income under Sec. 5.609.
HOTMA provides an income exclusion for full-time dependent students
for any grant-in-aid or scholarship amounts used for the costs of
tuition or books, and, in such amounts as HUD may allow, for the cost
of room and board. In implementing this provision and as part of this
proposed rule's objective to simplify income determinations, HUD
proposes to combine the student financial assistance requirements under
a new 24 CFR 5.609(b)(9) (currently, student financial assistance
exclusion requirements are found at Sec. 5.609(b)(9) and at Sec.
5.609(c)(6)). The proposed rule provides in general that the full
amount of student financial assistance paid directly to the student or
to the education institution on the student's behalf is excluded from
annual income. The rule defines financial assistance to be any grant-
in-aid, scholarship, or other assistance amounts an individual receives
for the costs of tuition, books, room and board, and other fees charged
to the student by the education institution.
Since 2005, HUD's Appropriations Acts have placed limits on the
amount of financial assistance that is excluded from income for
students applying for and receiving Section 8 assistance who are not
over the age of 23 with dependent children. In accordance with that
statutory restriction, this proposed rule would provide that, for those
students, the financial assistance in excess of the cost of tuition and
any other required fees and charges under the Higher Education Act of
1965, from private sources, or an institution of higher education,
shall be considered income. This categorization of funds as income does
not apply to public housing students, students under other HUD
programs, or to Section 8 students over the age of 23 with dependent
children, for whom the financial assistance in excess of the cost of
tuition the individual receives for the cost of books, room and board,
and other fees charged by the education institution is excluded from
annual income (in addition to the financial assistance that covers the
student's tuition).
HOTMA also provides an income exclusion for any amount in or from,
or any benefits from, any Coverdell educational savings account of or
any qualified tuition program under section 530 and section 529 of the
Internal Revenue Code of 1986, respectively. The proposed rule covers
these HOTMA income exclusions under a new Sec. 5.609(b)(10).
Additionally, HOTMA provides an exclusion for payments related to
aid and attendance under 38 U.S.C. 1521 to veterans in need of regular
aid and attendance, and this proposed rule would include this
exclusion.
Specific solicitation of comment 11: HUD is soliciting feedback
about whether there are other income exclusions that should be provided
for in this rulemaking. For example, deferred disability benefits are
excluded from income under HOTMA and this proposed rule, but the rule
could provide for exclusions from income for all veteran's disability
benefits.
8. Adjusted Income
Section 102(c) of HOTMA makes changes to ``adjusted income'' that
require revisions to 24 CFR 5.611. Section 5.611 currently provides for
a mandatory deduction of $480 for each
[[Page 48827]]
dependent. HOTMA provides for a mandatory deduction of $480 for minors,
students, and persons with disabilities who are not the head of the
household or that person's spouse, and provides that this figure be
adjusted annually for inflation and the actual deduction should be
determined for each year by rounding such amount to the next lowest
multiple of $25. HOTMA also provides HUD the discretion to establish
deductions in addition to those listed in HOTMA. As a result, HUD
proposes to maintain the $480 deduction for each dependent, which
amount will be annually adjusted for inflation. In line with HOTMA's
requirement, this rule would also increase the deduction for any
elderly or disabled family from the current $400 to $525, which amount
will be annually adjusted for inflation and rounded to the next lowest
multiple of $25.
This proposed rule would maintain other deductions currently
allowed, such as those for child care and health and medical expenses.
However, to conform to section 102(c) of HOTMA, this proposed rule
would revise the deduction for health and medical expenses. Currently,
this deduction is for the sum of (i) unreimbursed medical expenses of
any elderly family, and (ii) the unreimbursed reasonable attendant care
and auxiliary apparatus expenses for each member of the family who is a
person with disabilities, to the extent necessary to enable any member
of the family to be employed. The deduction is currently limited to the
amount by which these total expenses exceed three percent of the
family's income. HOTMA increases the health and medical expense
threshold from three percent to 10 percent. In other words, the health
and medical expense deduction is now limited to the amount by which
those expenses exceed 10 percent of the family's annual income. This
means families who receive a health and medical expense deduction at
the time the HOTMA change is implemented may see a significant increase
in their non-deductible health and medical expenses, which could result
in an increase in their adjusted income and their rent. However, HUD
notes that the reduction in the family's health and medical expense
deduction may be offset to some degree by the HOTMA change that
increases the deduction for elderly and disabled families from $400 to
$525.
Section 102(c) provides that the Secretary shall by regulation
provide hardship exemptions to the requirements of the health and
medical expenses provision for impacted families who demonstrate an
inability to pay calculated rents because of financial hardship, and
that the regulations must include a requirement to notify tenants of
any changes to determination of adjusted income based on the
determination of the family's claim of financial hardship. In order to
implement this provision, this proposed rule would provide, that if the
family can demonstrate an inability to pay the new rent and the PHA or
owner determines that the family's inability is the result of the
change in the medical expense deduction (i.e., the increase in the
amount of non-deductible expenses from 3 to 10 percent of family
income), the PHA or owner would be required to recalculate the family's
adjusted income. In recalculating the family's adjusted income, the PHA
or owner would deduct the amount of eligible health and medical
expenses that exceeds 6.5 percent of the family's annual income instead
of the normally applicable 10 percent of family's annual income. HUD
proposes a 6.5 percent threshold because it is half-way between the
pre-HOTMA health and medical expense threshold of three percent and the
new statutory 10 percent threshold. Under this proposed rule, the
family's hardship exemption would expire at the family's next regular
income reexamination or at such time that the PHA or owner determines
the family can pay their rent under the normal adjusted income
calculation, whichever comes first. The PHA or owner would be required
to notify the family in writing of the change in the determination of
adjusted income, the family's rent resulting from the hardship
exemption, and when the hardship exemption will expire. The intent of
the proposed regulation is to allow families receiving hardship
exemptions to transition to their new adjusted income and higher rent
incrementally, rather than immediately absorbing the full increase as a
result of the medical expense deduction change.
Section 102(c) also allows a hardship exemption for the child care
expense deduction, which provides that any reasonable child care
expenses necessary to enable a member of the family to be employed or
to further his or her education is deducted from annual income. Under
this proposed rule, a hardship exemption would be provided to allow the
deduction for reasonable child care costs to continue in certain
circumstances for a family that no longer has a member that is employed
or seeking to further his or her education. In order to qualify for the
hardship exemption, the family would be required to demonstrate to the
satisfaction of the PHA or owner that their inability to pay the
increased rent is due to the loss of the child care deduction. In
addition, the family would also have to demonstrate why the child care
expense remains necessary now that no family member is employed,
actively seeking employment, or furthering his or her education. For
example, the family member may have had to temporarily suspend their
educational pursuits as the result of injury or illness, and due to the
injury or illness they are unable to be the primary full-time care
giver for the child whose child care expenses were deducted from the
family's adjusted income. Under this proposed rule, if the PHA or owner
determines that the family qualifies for the hardship exemption, the
PHA or owner would be required to recalculate the family's adjusted
income and continue to include the deduction for the reasonable child
care expenses. As is the case with the health and medical expense
hardship exemption, the child care expense hardship exemption would be
temporary and would end no later than the family's next regular
reexamination. The child care hardship exemption would also end at any
point in time that the PHA or owner determines that the family is
either able to pay the rent without the child care expense deduction or
the need for the child care expense no longer exists.
The PHA or owner would be required to notify the family in writing
of the change in the determination of adjusted income and the family's
rent for both the adjusted medical expense deduction and the
continuation of the child care deduction hardship exemptions. The
notice would also inform the family of the temporary nature of the
hardship exemption and that the exemption will expire at the earlier of
the family's next regular income reexamination or at such time the PHA
or owner determines the need for the hardship exemption no longer
exists.
Specific solicitation of comment 12: HUD is soliciting feedback
from affected parties on the proposed implementation of the hardship
exemption for both the health and medical expenses deduction and child
care deduction. Specifically, HUD is soliciting comments on whether
there are better approaches to implementing the hardship exemptions
than what is proposed in this rule, whether HUD should establish
specific requirements or parameters as to how the PHA or owner would
determine that the family is unable to pay the rent (for example, the
percentage of the family's income paid for rent and health and medical
expenses exceeds a certain
[[Page 48828]]
percentage), or whether PHAs and owners should be given broad
administrative discretion to establish their own policies on how to
make this determination.
HUD's current regulations provide that for public housing, PHAs may
adopt additional deductions from annual income. Under HOTMA, PHAs may
also choose to adopt additional deductions from income for the voucher
programs, and the Section 8 project-based rental assistance program
(where the PHA is an owner) in addition to public housing. As such,
this proposed rule would provide that for public housing and the
voucher programs, and where the PHA is an owner in the Section 8
project-based rental assistance program, PHAs may adopt additional
deductions from annual income. Additionally, HOTMA requires that HUD
establish procedures to ensure that any deductions adopted by PHAs do
not materially increase Federal expenditures. Under this proposed rule,
PHAs that adopt permissive deductions would not be eligible to receive
any program funding to cover the increased cost to the impacted
program. The rule provides that the PHA would have to identify the
amount of subsidy provided on behalf of the family that is attributable
to the permissive deduction as required by HUD. This information would
then be used by HUD to ensure that the cost of the permissive deduction
is not included in the subsidy for the public housing program, renewal
funding for the HCV (including PBV) program, or the housing assistance
payments provided to the PHA under the Section 8 project-based
programs.
Specific solicitation of comment 13: HUD is soliciting feedback on
whether the proposed implementation of permissive deductions (i.e.,
that a PHA will not be eligible for additional subsidy to cover the
costs associated with the deduction) has any unintended consequences,
or whether HUD should define ``material'' differently. Further, HUD is
soliciting feedback on whether the permissive deductions could be used
to provide incentives for employment. For example, HUD could permit
PHAs to be eligible for additional subsidy for certain permissive
deductions of earned income (e.g., permissive deductions of the first
$1,000 or $5,000 of earned income) or other work-related income.
C. HOTMA Section 103
This proposed rule would create a new 24 CFR 960.507 in HUD's
regulations to implement section 103 of HOTMA. Section 103 of HOTMA
places an income limitation on a public housing tenancy for families at
120 percent of the AMI. However, HUD can adjust the over-income limit
if HUD determines that it is necessary due to prevailing levels of
construction costs or unusually high or low family incomes, vacancy
rates, or rental costs. This proposed rule would provide that the over-
income limit is determined by using the very low-income (VLI) level for
the applicable area as the baseline and multiplying it by 2.4. Pursuant
to section 3(a)(5) of the 1937 Act, the over-income limit does not
apply in instances where a PHA operating fewer than 250 public housing
units has admitted families with income exceeding the over-income
limit, if the PHA is renting to those families because there are no
income-eligible families on the PHA's waiting list or applying for
public housing assistance. To conform to HOTMA, this proposed rule
would also remove existing 24 CFR 960.261 from HUD's regulations, which
provides that PHAs may not evict or terminate the tenancy of a family
that is over the income limit for public housing if the family is
participating in the Family Self-Sufficiency program, or if it
currently receives the earned income disallowance.
Following section 16(a)(5) of the 1937 Act, this proposed rule
would provide in Sec. 960.507 that when a PHA becomes aware, through
an annual reexamination or an interim reexamination of an increase in
income, that if a family's income exceeds the over-income limit, the
PHA must document that the family exceeds the threshold. This would be
used to compare the family's current income with the family's income
one year later. Once found to be over-income, the family's income would
be reviewed one year later even if they have chosen to pay the flat
rent. This proposed rule would also revise Sec. 960.253(f) to conform
to the new requirements of section 103 by providing that for families
that choose to pay a flat rent, once a family is determined to be over-
income, the PHA must follow the documentation and reexaminations
requirements in Sec. 960.507(c).
Under proposed Sec. 960.507, if the family's income continues to
exceed the new over-income limit one year after the initial
determination by the PHA, the PHA must, as required by section 16(a)(5)
of the 1937 Act, provide written notification to the family that their
income has exceeded the over-income limit for one year. If the family's
income continues to exceed the over-income limit for the next 12
consecutive months, the family would be subject to either a higher rent
or termination based on the PHA's policies. If, however, a PHA
discovers through an annual or interim reexamination that a previously
over-income family has income that is now below the over-income limit,
the family would no longer be subject to these provisions. The family
would be entitled to a new two-year grace period if the family's income
once again exceeds the over-income limit.
As reflected in this proposed rule, HOTMA requires that after a
family's income has exceeded the over-income limit for two consecutive
years, a PHA must terminate the family's tenancy within 6 months after
the expiration of the two-year period or charge the family a monthly
rent equal to the greater of: (1) The applicable Fair Market Rent
(FMR); or (2) the amount of monthly subsidy for the unit including
amounts from the operating and capital fund, as determined by
regulations. To calculate the monthly subsidy for a unit, HUD would
define the monthly amount of Public Housing Capital and Operating funds
as the per unit subsidy amount provided to a PHA for the development in
which the family resides for the most recent year for which HUD has
calculated final eligibility. HUD would publish such funding amounts
annually. PHAs would continue to charge these families the non-over-
income rent amount (the family's choice of income-based or flat rent)
for the time period during the 6-month period before termination.
HUD notes that PHAs are required to establish policies for
continued occupancy in public housing. Through the development of those
policies, a PHA is able to consider specific circumstances in which
they would provide for flexibility in the administration of over-income
requirements, provided such policies are in compliance with the 1937
Act and all applicable fair housing requirements. PHAs are subject to,
among other fair housing and civil rights authorities, Section 504 of
the Rehabilitation Act (Section 504), the Fair Housing Act, and Title
II of the Americans with Disabilities Act (ADA), which include, among
other requirements, the obligation to grant reasonable accommodations
that may be necessary for persons with disabilities.
HOTMA requires PHAs to submit an annual report that specifies the
number of families in public housing with incomes exceeding the over-
income limit and the number of families on the waiting lists for
admission to public housing. Because the report data must reflect the
numbers at the end of the calendar year, not at the end of a PHA's
reporting year, and because not all
[[Page 48829]]
PHAs submit an annual plan, this report will be a separate report from
other reporting requirements. However, HUD is developing a tool that
will make it simple for PHAs to submit the relevant numbers and make
those numbers public.
D. HOTMA Section 104
Section 104 of HOTMA establishes a limitation on the amount and
type of assets that a family assisted under the public housing or
Section 8 programs can possess. To conform to HOTMA, this proposed rule
would create a new section 24 CFR 5.618 to HUD regulations that would
restrict assistance to families based on assets.
1. Assets Restriction
The new Sec. 5.618 would provide that families would be ineligible
for assistance under HUD's public housing or Section 8 programs if
their net family assets exceed $100,000. HOTMA requires that this
amount be adjusted annually for inflation and, as discussed earlier in
this preamble HUD solicits comment on the inflationary index that
should be used.
2. Real Property
To conform to HOTMA, Sec. 5.618 would also provide that families
could not receive assistance if they have a present ownership interest
in, legal right to reside in, and the effective legal authority to sell
real property in the jurisdiction in which the property is located that
is suitable for occupancy by the family as a residence. Under this
proposed rule, families would have to demonstrate that in the
jurisdiction in which the property is located they do not have a
present ownership interest in, legal right to reside in, or the legal
authority to sell the real property for the property to be excluded
from net family assets. HUD proposes to exclude from the real property
restriction any property that is jointly owned by a member of the
family and another individual or individuals who would not reside with
the family. HUD proposes this exclusion because an assisted family may
not have the effective legal authority to sell such property in the
jurisdiction in which the property is located, and depending on the
nature of the property or type of joint ownership, may not be able to
live in the property.
Specific solicitation of comment 14: HUD is soliciting comment
about the circumstances under which a family may not have a present
ownership interest in, legal right to reside in, or effective legal
authority to sell real property in the jurisdiction in which the
property is located, and the feasibility of families demonstrating
this.
While HOTMA does not define what it means for a property to be
suitable for occupancy, this proposed rule would provide that a
property is suitable for occupancy unless that family can demonstrate
that the property: (i) Does not meet the disability-related needs of
the family, including meeting physical accessibility requirements; (ii)
is not sufficient for the size of the family, for example, there are
not enough bedrooms; (iii) that it is geographically located so as to
provide a hardship for the family; and (iv) that it is not safe to
reside in because of its physical condition.
HOTMA provides certain exclusions to the real property restriction.
Particularly, this restriction would not apply to the following: (i) A
manufactured home for which the family is receiving Section 8 tenant-
based assistance; (ii) property for which a family receives
homeownership assistance from a PHA; (iii) any person who is a victim
of domestic violence; or (iv) to any family that is offering the
property for sale. Under this proposed rule, in order to demonstrate
that a family is offering property for sale, a PHA or owner could
require that the family provide evidence that the property has been
listed for sale. This proposed rule would add that the restriction in
this section also does not apply to victims of dating violence, sexual
assault, or stalking, and that the terms ``domestic violence,''
``dating violence,'' ``sexual assault,'' and ``stalking'' are defined
in HUD's regulations implementing the Violence Against Women Act
(VAWA).
Specific solicitation of comment 15: HUD is soliciting feedback
from the public on how the exemption for victims of domestic violence,
dating violence, sexual assault, or stalking will be implemented and
how it will operate.
To provide context for the references to real property in Sec.
5.618, this proposed rule would provide a new definition in 24 CFR
5.100 for ``real property,'' specifying that ``real property'' has the
same meaning as that provided under the state law in which the real
property is located.
3. Self-Certification of Assets
In accordance with HOTMA, Sec. 5.618 would also provide that the
PHA or owner could determine the net assets of a family based on a
certification by the family that their net family assets do not exceed
$50,000 after annual adjustment for inflation. This proposed rule would
also revise Sec. 5.659 of the current regulations to reflect the
requirement that families can self-certify. Similarly, Sec. 5.618
would provide that the PHA or owner could determine that a family does
not have any present ownership interest in any real property based on a
certification by the family to that effect.
4. Discretion on Enforcing the Asset Limitation
This proposed rule would conform to HOTMA by providing that PHAs
and owners have the discretion to choose not to enforce the limitation
on eligibility based on assets, or may establish exceptions to the
restrictions based on eligibility criteria, if the PHA or owner does so
in the PHA plan or under a policy adopted by the owner.
In HOTMA and these regulations, eligibility criteria for
establishing exceptions may provide for separate treatment based on
family type and may be based on different factors, such as age,
disability, income, the ability of the family to find suitable
alternative housing, and whether supportive services are being
provided. This proposed rule clarifies that these policies cannot
violate fair housing statutes or regulations. This means that these
policies cannot be implemented in a manner that discriminates against
any protected classes.
HOTMA provides that PHAs and owners who choose to enforce the asset
limitations may delay for a period of not more than 6 months the
eviction or termination of a family that does not meet the limitation
on assets. This proposed rule would clarify that it is the start of the
eviction or termination proceedings that could not be delayed for more
than 6 months.
5. Net Family Assets
This proposed rule would revise the definition of ``net family
assets'' found in 24 CFR 5.603 to align it with the provisions in
section 104 of HOTMA. The new regulatory definition would provide that
the following will not be considered to be part of net family assets:
(i) Equity in a manufactured home where the family receives Section 8
tenant-based assistance; (ii) equity in property for which a family
receives HCV homeownership assistance from a PHA; (iii) Family Self-
Sufficiency Accounts; (iv) the value of any accounts specifically
dedicated for retirement; (v) real property for which the family does
not have the effective legal authority necessary to sell such property;
(vi) amounts recovered in any civil action or settlement based on a
claim of malpractice, negligence, or other breach of duty that resulted
in a member of the family being disabled; and (vii) the
[[Page 48830]]
value of any Coverdell education savings account or any qualified
tuition program under section 529 of the IRC. HUD proposes to exclude
from the definition of net family assets the value of any ABLE account
created under section 529A of the IRC. Per section 104 of HOTMA, with
respect to non-revocable trusts, the value of the trust would not be
considered an asset to the family as long as the fund continues to be
held in trust. Any income distribution from any trust would be
considered income, except in the case of distributions from non-
revocable trusts, made to cover the medical expenses for a minor.
Additionally, this proposed rule would continue some of the current
exclusions from net family assets, including interest in Indian trust
land.
HOTMA provides that the term ``net family assets'' does not include
the value of personal property, except for items of personal property
of significant value, as the Secretary may establish. Therefore, this
proposed rule would revise the existing exclusion in HUD's regulations
for the value of necessary items of personal property, to provide that
the exclusion would apply to items of personal property with a total
value under $50,000, other than necessary items. HUD proposes to
consider items valued over $50,000 to be those of ``significant
value,'' given HOTMA's provision that families may certify that their
net assets do not exceed $50,000.
Specific solicitation of comment 16: HUD specifically seeks comment
on the proposal to exclude items of personal property valued $50,000 or
less, other than necessary items, from the calculation of net family
assets, and comments on what such necessary items of personal property
might be. Examples might include a car that the family relies on for
transportation, or medical equipment.
This proposed rule would make additional changes to the definition
of net family assets for clarity. It would eliminate the current
exclusion from net family assets for equity accounts in HUD
homeownership programs, as this terminology is vague and unclear. As
mentioned above, the new definition for net family assets would exclude
equity in a manufactured home where the family receives Section 8
tenant-based assistance and equity in property for which a family
receives homeownership assistance from a PHA.
6. Authorization for Financial Disclosures
Section 104 of HOTMA that states that HUD must require PHAs to
require all applicants and recipients under the 1937 Act to authorize
the PHA to obtain financial information needed in connection with a
determination with respect to eligibility. Currently, 24 CFR 5.230
requires HUD assistance applicants and participants to sign a consent
form that authorizes PHAs and owners to obtain information from certain
sources in order to verify income. Further, 24 CFR 5.232 outlines that
a refusal to sign the consent form would lead to termination. Following
HOTMA's mandate, this proposed rule would amend Sec. 5.230 to include
a provision authorizing PHAs to obtain any financial record from any
financial institution, as the terms financial record and financial
institution are defined in the Right to Financial Privacy Act (42
U.S.C. 1304), whenever the PHA determines the record is needed in
connection with a determination of an assistance applicant's or
participant's eligibility or level of benefits. Additionally, this
section currently states the consent form must contain a statement that
the authorization to release the information requested by the consent
form expires 15 months after the date the consent form is signed. HOTMA
section 104 requires that the authorization allowing PHAs to obtain
financial records from financial institutions shall remain effective
until the earliest of: The rendering of a final adverse decision for an
assistance applicant; the cessation of a participant's eligibility for
assistance from HUD and the PHA; or the express revocation by the
assistance applicant or recipient (or applicable family member) of the
authorization, in a written notification to HUD. In an effort to
streamline program administration, this proposed rule would revise the
section to align the current authorization consent timeline to the
HOTMA timeline, thereby reducing annual burden on PHAs.
HOTMA provides PHAs with the discretion to determine whether
applicants or recipients are ineligible for benefits if they, or their
family members, refuse to provide or revoke the authorization to obtain
financial records. Therefore, this proposed rule would also revise 24
CFR 5.232, which describes the penalties for failing to sign the
consent form required in Sec. 5.230, to clarify that the penalties in
Sec. 5.232 will not apply if applicants or participants or their
family members revoke their consent for the PHA to access financial
records, unless the PHA has established a policy in their annual plan
that revocation of consent to access financial records will result in
denial or termination of assistance or admission.
E. CPD Program Changes
As discussed earlier in this preamble, this proposed rule would
make changes to regulations for HUD's HOME, HTF, and HOPWA programs in
order to better align regulations pertaining to income and assets among
different HUD programs. The HOME and HTF programs are federal block
grant programs that provide annual grants to States and local
governments to create decent, safe and affordable housing for low-
income, very low-income, and extremely low-income families, including
homeless individuals. In fiscal year 2018, HUD allocated over $1.6
billion to the States and localities nationwide to fund a wide range of
activities including building, buying, and/or rehabilitating affordable
housing for rent or homeownership or providing direct rental assistance
to low-income people. The HOME and HTF programs often operate in
conjunction with other federal, state or local housing programs and
leverage community and private equity in support of affordable housing.
To make housing affordable, HOME and HTF funds are frequently combined
with other HUD federal programs such as Project-Based Section 8 Rental
Assistance and used as gap financing in rental housing developed with
Low-Income Housing Tax Credits (LIHTC). Many of these programs require
the use of the Part 5 definition of annual income and adjusted income
for the purpose of determining income eligibility and/or tenant
payments.
1. HOPWA
Section 859 of the AIDS Housing Opportunity Act (42 U.S.C. 12908)
requires that HOPWA rental assistance ``be provided to the extent
practicable in the manner'' of the Section 8 program. Therefore, HUD is
proposing to incorporate into the HOPWA regulations in 24 CFR part 574
the procedures on income examinations and net family assets proposed
for the public housing, HCV, and Section 8 project-based rental
assistance programs in this rule.
To determine the resident payment, as in the Section 8 program,
annual reexaminations of family income will be the standard under the
proposed rule. However, if a family has income from fixed-income
sources, grantees will be able to apply a COLA to those sources of
income and will only perform a full reexamination of income every three
years. If a family has at least 90 percent of their income from fixed-
income sources, the grantees will be able to apply a COLA to the entire
income amount, provided the family certifies
[[Page 48831]]
that their income is at least 90 percent fixed-income, and the grantee
will only have to conduct a full reexamination of family income every
three years.
In between full reexaminations, this proposed rule would provide
that families receiving HOPWA assistance may request an interim
reexamination of family income at any time, but grantees are only
required to conduct the reexamination if the family's adjusted income,
as defined in the revised 24 CFR 5.611, changes by an amount that the
grantee estimates will result in a change of at least 10 percent in
annual adjusted income. HUD anticipates that this will decrease the
number of reexaminations that HOPWA grantees conduct.
The proposed rule further amends the HOPWA regulations to cross
reference Sec. 5.611 more generally and eliminate the reference to the
earned income disregard. These changes, which impact calculation of the
resident rent payment under HOPWA, similarly impact HUD's Section 8
programs because of HOTMA.
Additionally, this proposed rule would revise part 574 to apply the
part 5 definition of net family assets to HOTMA that applies to the
Section 8 program, except the value of a home of a participant
receiving short-term mortgage or utility assistance under Sec.
574.300(b)(6) or other homeownership assistance eligible under the
HOPWA program would be excluded from the definition. This proposed rule
would also revise part 574 to incorporate HOTMA's provisions for
restrictions on assistance to families with certain assets to the HOPWA
program, but would specify that the requirements in 24 CFR 5.618 do not
apply to short-term mortgage and utility assistance and other
homeownership assistance eligible under the HOPWA program, or to
housing information services or supportive services funded under HOPWA.
2. HOME
The proposed rule at 24 CFR 92.203(b) would incorporate HUD's
proposed revisions to the definition of income at 24 CFR 5.609(a) and
(b), which is the definition of income established by HOTMA, as well as
revisions to the definition of Net Family Assets at 24 CFR 5.603 used
to determine the imputed income on assets over $50,000 based on the
current passbook saving rate. In determining annual income, a
participating jurisdiction would continue to exclude income and asset
enhancements derived from HOME assistance pursuant to 24 CFR
92.203(d)(1) (e.g., the rental income generated from HOME assistance
provided to a multi-unit housing project where the owner occupies one
of the units and rents out the other units acquired through the HOME
assistance), and the value of a homeowner's principal residence
pursuant to 24 CFR 92.203(b)(1) from the calculation of Net Family
Assets, as defined in 24 CFR 5.603.
This proposed rule would revise 24 CFR 92.203(c) to move the first
sentence into a new standalone paragraph (e) and incorporate the second
and third sentences into paragraphs (e)(1) and (e)(2). The new
paragraph (e) would incorporate the revisions to the definition of
adjusted income at 24 CFR 5.611(a)-(c). It would require participating
jurisdictions, when determining a family's adjusted income for the
purpose of determining the appropriate amount of rent applicable to a
tenant in HOME units receiving Federal or State project-based subsidy,
the to apply the mandatory deductions from income established at 24 CFR
5.611(a). For units with tenant-based rental assistance, Sec.
92.203(e)(2) would permit a participating jurisdiction to apply the
deductions at Sec. 5.611(a) and grant financial hardship exemptions
according to the requirements of Sec. 5.611(c).
Finally, where a family applying for or living in a HOME-assisted
unit receives assistance from the HCV program or where a PHA is the
owner in the PBRA program, HUD proposes to add Sec. 92.203(e)(3) to
require the use of the deductions in Sec. 5.611(a) and (b) to
calculate a family's adjusted income. In such cases, HUD would allow a
participating jurisdiction to accept a PHA's determination to grant a
hardship exemption under Sec. 5.611(c).
Specific solicitation of comment 17: HUD is seeking feedback from
interested parties on whether HUD should adopt all revisions made to
adjusted income (mandatory deductions, additional deduction and
hardship exemptions, as applicable) when combining HOME and other
federal programs such as Section 8 in a rental project.
Specific solicitation of comment 18: HUD is seeking feedback from
interested parties on whether HUD should adopt financial hardship
exemptions for families receiving HOME-funded tenant-based rental
assistance.
For purposes of calculating tenant income in the HOME program, HUD
is not proposing to adopt the new section 5.609(c) for determining
income at initial occupancy or interim reexaminations and the timing
requirements of those determinations. The HOME regulations permit
participating jurisdictions to choose, on a program (e.g.,
homeownership) basis and on a rental project by project basis, one of
two definitions of annual income: (1) Annual income as defined at 24
CFR 5.609; or (2) the Internal Revenue Service definition of ``adjusted
gross income.'' For families who are tenants in HOME-assisted housing
and not receiving tenant-based rental assistance, the HOME program
requires a participating jurisdiction to examine at least 2 months of
source documents evidencing annual income at initial occupancy. For
subsequent income determinations during the HOME compliance period, the
existing HOME regulations permit a participating jurisdiction to use
one of three methods to determine annual income. Adopting 24 CFR
5.609(c) for the HOME program would impose different methods for
calculating and verifying income that are more stringent than those
currently required by the HOME regulations. HUD believes the methods
described at 24 CFR 92.203(a)(1) provide a participating jurisdiction
more flexibility in administering and managing its HOME-assisted rental
housing portfolio.
Specific solicitation of comment 19: In light of revisions made to
24 CFR 5.609(c)(3) to allow PHAs to accept a timely income
determination of a family from another agency's means-tested Federal
public assistance, HUD is seeking feedback from interested parties on
whether 24 CFR 92.203(a)(1)(iii) should specify what HUD considers
timely for purposes of accepting an income determination of a family
made by an administrator of a government program under which the family
receives benefits.
There is no independent statutory basis in the HOME program for
applying the EID in 24 CFR 5.617 to persons with disabilities who are
tenants in HOME-assisted rental housing or who are receiving tenant-
based rental assistance. HUD applied 24 CFR 5.617 to HOME through 24
CFR 92.203(d)(3) to be consistent with other programs governed by the
1937 Act. With the revision to the 1937 Act removing the authority for
disallowance of earned income and the sunset of the corresponding
regulatory provision in 24 CFR 5.617(e), the HOME regulation at 24 CFR
92.203(d)(3) would be revised so that the applicability to HOME will
also sunset.
The HOME statute does not establish a limitation on the amount of
and type of assets that a family assisted with HOME funds can have. HUD
is not proposing to adopt the new asset restriction for the HOME
program.
Specific solicitation of comment 20: HUD is seeking feedback from
interested
[[Page 48832]]
parties on whether HUD should adopt asset restrictions for any housing
programs funded with HOME (e.g., homebuyer, rental, tenant-based rental
assistance and owner-occupied rehabilitation), as well as when housing
programs funded with HOME are combined with other federal programs such
as Section 8.
3. HTF
The proposed rule at 24 CFR 93.151(b) incorporates HUD's proposed
revisions to the definition of annual income at 24 CFR 5.609(a) and
(b), which is the definition of income provided by HOTMA, as well as
the revisions to the definition of Net Family Assets at 24 CFR 5.603
that are used to determine the imputed income on assets over $50,000
based on the current passbook saving rate.
For purposes of calculating tenant income in the HTF program, HUD
is not proposing to adopt the new section 5.609(c) for determining
income at initial occupancy or interim reexaminations and the timing
requirements for those determinations. For families who are tenants in
HTF-assisted housing, the HTF program requires a grantee to examine at
least 2 months of source documents evidencing annual income at initial
occupancy. For subsequent income determinations during the HTF
compliance period, a grantee may use one of three methods to determine
annual income. Adopting 24 CFR 5.609(c) for the HTF program would
impose methods for calculating and verifying income that are more
stringent than those currently required by the HTF regulations without
providing additional benefit to the program. As HTF does not provide an
ongoing subsidy to grantees, HUD believes the methods described at 24
CFR 93.151(d) provide a grantee more flexibility in administering and
managing its HTF-assisted rental housing portfolio.
Specific solicitation of comment 21: In light of revisions made to
24 CFR 5.609(c)(3) to allow PHAs to accept a timely income
determination of a family from another agency's means-tested Federal
public assistance, HUD is seeking feedback from interested parties on
whether 24 CFR 93.151(d) should specify what HUD considers timely for
purposes of accepting an income determination of a family made by an
administrator of a government program under which the family receives
benefits.
This proposed rule would revise 24 CFR 93.151(b) to clarify that
annual income includes income from all persons in the household
regardless of which definition of annual income the grantee applies to
its HTF-assisted program(s) or project(s). Furthermore, this proposed
rule would revise 24 CFR 93.151 to add a new paragraph (e) to
incorporate revisions to adjusted income in Sec. 5.611 and requires
grantees to apply the deductions in Sec. 5.611(a) to determine the
tenant's adjusted income. For public housing, the HCV program, and
where the PHA is an owner in the PBRA program, paragraph (e)(2)
requires the use of the deductions in Sec. 5.611(a) and (b) to
determine the tenant's adjusted income and also permits a grantee to
accept a PHA's decision to grant financial hardship exemptions under
Sec. 5.611(c) to a family.
The HTF statute did not establish a limitation on the amount of and
type of assets that a family assisted with HTF funds may have. HUD is
not proposing to adopt the new asset restriction for the HTF program.
Specific solicitation of comment 22: HUD is seeking feedback from
interested parties on whether HUD should adopt asset restrictions for
any housing programs funded with HTF funds (e.g., homebuyer or rental
housing), as well as when HTF funds are combined with other federal
programs such as Section 8.
III. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and therefore, subject to review by the Office of Management and Budget
(OMB) in accordance with the requirements of the order. Executive Order
13563 (Improving Regulations and Regulatory Review) directs executive
agencies to analyze regulations that are ``outmoded, ineffective,
insufficient, or excessively burdensome, and to modify, streamline,
expand, or repeal them in accordance with what has been learned.''
The rule would update HUD regulations for various programs to
conform to sections 102, 103, and 104 of HOTMA by listing specific
criteria for triggering family income reviews, providing methods for
calculating family income, revising the definition of income and
adjusted income, setting a limit on the amount and type of assets that
assisted families may have, revising the definition of net family
assets, and requiring that applicants for and recipients of assistance
provide authorization to PHAs to obtain financial records. This
proposed rule was determined to be a significant regulatory action
under section 3(f) of Executive Order 12866 (although not an
economically significant regulatory action under the order). HUD has
prepared an initial Regulatory Impact Analysis (RIA) that addresses the
costs and benefits of the proposed rule. HUD's RIA is part of the
docket file for this rule.
The docket file is available for public inspection in the
Regulations Division, Office of the General Counsel, Room 10276, 451
7th Street SW, 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 Division at 202-402-3055
(this is not a toll-free number). Individuals with speech or hearing
impairments may access this number via TTY by calling the Federal Relay
Service at toll-free 800-877-8339.
Executive Order 13771
Executive Order 13771, entitled ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017. This
proposed rule is expected to be an E.O. 13771 deregulatory action. HUD
estimates that this rule would have annual net cost savings in the
first year of about $2 million and after the first year, of about $23
million to $27 million, accruing to Public Housing Agencies, HOPWA
grantees, and Project-Based Rental Assistance owners. Around 20,000 to
30,000 units may transfer from currently assisted households to
households on the waitlist or new applicants. Further details on the
estimated cost savings of this proposed rule can be found in the rule's
RIA.
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 revises HUD regulations in certain ways that
will reduce burden or provide flexibility for PHAs and owners and other
housing providers. The proposed rule provides specific events that
trigger an interim reexamination of family income, whereas current
regulations provide that families may request reexaminations at any
time. The proposed rule provides methods for calculating family income,
but also provides a safe harbor for PHAs and owners who determine a
family's income based on other means-tested
[[Page 48833]]
Federal public assistance programs. Additionally, this proposed rule
provides for a limitation on assets, but provides that PHAs and owners
may choose not to enforce this provision. This proposed rule also
provides that applicants and recipients of assistance must provide
authorization for PHAs to obtain financial records in order to verify
family income.
For the reasons presented, the undersigned certifies that this rule
will not have a significant economic impact on a substantial number of
small entities.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has Federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This 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.
Environmental Impact
The proposed rule relates to establishment and review of income
limits and exclusions with regard to eligibility for or calculation of
HUD housing assistance or rental assistance and related external
administrative or fiscal requirements and procedures that do not
constitute a development decision that affects the physical condition
of specific project areas or building sites. Accordingly, under 24 CFR
50.19(c)(6), this proposed rule is categorically excluded from
environmental review under the National Environmental Policy Act of
1969 (42 U.S.C. 4321).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (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
does not impose any Federal mandates on any state, local, or tribal
government, or on the private sector, within the meaning of the UMRA.
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 numbers 2502-0204, 2506-0133, and 2577-0083. HUD
expects to make changes to these existing recordkeeping items
consistent with the changes in this proposed rule and believes that the
changes will result in a decrease of burden of $8,337,744 and 345,495
hours.
HUD would change the HOPWA PRA OMB No. 2506-0133 to reduce the
recordkeeping burden hours from 60 hours to 50 hours per grantee to
reflect the change to a triennial recertification and the reduction in
the frequency of granting interim reexaminations. See Sec. 574.310(e).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Information collection Annual burden Annual cost
----------------------------------------- Number of Annual number -------------------------------- Hourly cost -------------------------------
OMB No. 2502-0133 responses Current New Current New
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recordkeeping for Competitive, Renewal, 227 1 60.00 50.00 $23.85 $324,837 $270,698
and Formula Grantees...................
---------------------------------------------------------------------------------------------------------------
Total............................... .............. .............. Savings 2,270 .............. Savings 54,139
--------------------------------------------------------------------------------------------------------------------------------------------------------
HUD would change the Section 8 project-based PRA OMB No-2502-0204
to reflect the regulatory change that a new consent to release of
information would only apply at the time of initial tenancy, estimated
at an approximate 80 percent reduction based on anticipated number of
new participants, and reduce the number of certification compliances
conducted by project owners to represent the decrease in interim
reexaminations, estimated at 5 percent of recertifications. See
Sec. Sec. 5.230 and 5.657.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Information collection Number of responses Annual burden Annual cost
-------------------------------------------------------------- Annual Hours per -------------------------- Hourly cost -------------------------
OMB No. 2502-0204 Current New number response Current New Current New
--------------------------------------------------------------------------------------------------------------------------------------------------------
Certification Compliance........... 1,597,764 1,517,876 1 .6333 1,011,864 961,271 $25.00 $25,296,600 $24,031,771
Consent for Release................ 1,597,764 302,022 1 .1667 266,347 50,347 25.00 6,658,675 1,258,675
--------------------------------------------------------------------------------------------------------------------
Total.......................... ........... ........... ........... ........... Savings 266,593 ........... Savings 6,664,829
--------------------------------------------------------------------------------------------------------------------------------------------------------
HUD would also change the Public Housing and HCV programs PRA OMB
No. 2577-0083. HUD provides for a new burden in the Public Housing
context for providing notices to over-income tenants and reporting the
number of families on the waiting list annually, and the change
includes a reduction in burden for Public Housing and HCV to reflect
the decrease in interim reexaminations, estimated at 5 percent of
recertifications. HUD would also change the Public Housing and HCV
programs PRA OMB No. 2501-0014 to reflect the regulatory change that a
new consent to release information would only apply at the time of
initial tenancy, estimated at an approximate 88 percent reduction based
on anticipated number of new participants. See Sec. Sec. 5.230,
960.257, 960.507 and 982.516.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Information collection Number of responses Annual burden Annual cost
-------------------------------------------------------------- Annual Hours per -------------------------- Hourly cost -------------------------
OMB No. Current New number response Current New Current New
--------------------------------------------------------------------------------------------------------------------------------------------------------
Recertification (OMB No. 2577-0083) 2,398,462 2,278,539 1 .333 798,688 758,753 $17.50 $13,977,040 $13,278,178
Over-Income Tenant Notification.... ........... 2,000 1 .1667 ........... 333 17.50 ........... 5,828
[[Page 48834]]
Public Housing Waiting List Data... ........... 2,929 1 4 ........... 11,716 17.50 ........... 205,030
Consent for Release (OMB No, 2501- \2\ 421,693 1 .1667 627,738 70,296 30.00 18,832,140 2,108,880
0014)............................. 3,765,676
--------------------------------------------------------------------------------------------------------------------
Total.......................... ........... ........... ........... ........... Savings 585,328 ........... Savings 17,225,264
--------------------------------------------------------------------------------------------------------------------------------------------------------
HUD believes that there are no PRA burden reductions for HOME and
the HTF programs. Also, HUD finds that while changes to Sec. 5.609,
Annual Income, and Sec. 5.611, Adjusted Income, will result in tenants
providing different information, the net burden will not change. In
accordance with the Paperwork Reduction Act of 1995, an agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information, unless the collection displays a currently
valid OMB control number.
---------------------------------------------------------------------------
\2\ This number is based on the PIH Information Center (PIC)
database and the Tenant Rental Assistance Certification System
(TRACS) database.
---------------------------------------------------------------------------
In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments
from members of the public and affected agencies concerning the
information collection requirements in the proposed rule regarding:
(1) Whether the proposed collection of information is necessary for
the proper performance of the functions of the agency, including
whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the
proposed collection of information;
(3) Whether the proposed collection of information enhances the
quality, utility, and clarity of the information to be collected; and
(4) Whether the proposed information collection minimizes the
burden of the collection of information on those who are to respond;
including through the use of appropriate automated collection
techniques or other forms of information technology (e.g., permitting
electronic submission of responses).
Interested persons are invited to submit comments regarding the
information collection requirements in this rule. Under the provisions
of 5 CFR part 1320, OMB is required to make a decision concerning this
collection of information between 30 and 60 days after the publication
date. Therefore, a comment on the information collection requirements
is best assured of having its full effect if OMB receives the comment
within 30 days of the publication. This time frame does not affect the
deadline for comments to the agency on the proposed rule, however.
Comments must refer to the proposed rule by name and docket number (FR-
6057) and must be sent to:
HUD Desk Officer, Office of Management and Budget, New Executive Office
Building, Washington, DC 20503, Fax number: 202-395-6947
and
Colette Pollard, HUD Reports Liaison Officer, Department of Housing and
Urban Development, 451 7th Street SW, Room 2204, Washington, DC 20410
Interested persons may submit comments regarding the information
collection requirements electronically through the Federal eRulemaking
Portal at https://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 https://www.regulations.gov website 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.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers applicable to
the programs that would be affected by this rule are: 14.195, 14.239,
14.241, 14.275, 14.850, 14.856, and 14.871.
List of Subjects
24 CFR Part 5
Administrative practice and procedure, Aged, Claims, Crime,
Government contracts, Grant programs-housing and community development,
Individuals with disabilities, Intergovernmental relations, Loan
programs-housing and community development, Low and moderate income
housing, Mortgage insurance, Penalties, Pets, Public housing, Rent
subsidies, Reporting and recordkeeping requirements, Social security,
Unemployment compensation, Wages.
24 CFR Part 92
Administrative practice and procedure, Grant programs--housing and
community development, Low and moderate income housing, Manufactured
homes, Rent subsidies, and Reporting and recordkeeping requirements.
24 CFR Part 93
Administrative practice and procedure, Grant programshousing and
community development, Low- and moderate-income housing, Manufactured
homes, Rent subsidies, Reporting and recordkeeping requirements.
24 CFR Part 574
Community facilities, Grant programs-housing and community
development, Grant programs--social programs, HIV/AIDS, Low and
moderate income housing, Reporting and recordkeeping requirements
24 CFR Part 960
Aged, Grant programs--housing and community development,
Individuals with disabilities, Pets, Public housing.
24 CFR Part 982
Grant programs--housing and community development, Grant programs--
Indians, Indians, Public housing, Rent subsidies, Reporting and
recordkeeping requirements.
Accordingly, for the reasons described in the preamble, HUD
proposes to amend 24 CFR parts 5, 92, 93, 574, 960, 966, and 982 as
follows:
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
0
1. The authority for part 5 continues to read as follows:
Authority: 12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437d,
1437f, 1437n, 3535(d); Sec. 327, Pub. L. 109-115, 119 Stat. 2936;
Sec. 607, Pub. L. 109-162, 119 Stat. 3051 (42 U.S.C. 14043e et
seq.); E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and E.O.
13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273.
0
2. In Sec. 5.100, add in alphabetical order the definitions for
``earned income'' and ``real property'' to read as follows:
[[Page 48835]]
Sec. 5.100 Definitions.
* * * * *
Earned income means income or earnings included in annual income
from wages, tips, salaries, other employee compensation, and self-
employment. Earned income does not include any pension or annuity,
transfer payments, or any cash or in-kind benefits.
* * * * *
Real property as used in this part, has the same meaning as that
provided under the state law in which the real property is located.
* * * * *
0
3. In Sec. 5.210, revise the second sentence in paragraph (a) and the
first sentence in paragraph (b)(2) to read as follows:
Sec. 5.210 Purpose, applicability, and Federal preemption.
(a) * * * This subpart B also enables HUD and PHAs to obtain income
information about applicants and participants in the covered programs
through computer matches with State Wage Information Collection
Agencies (SWICAs) and Federal agencies, and from financial institutions
and employers, in order to verify an applicant's or participant's
eligibility for or level of assistance. * * *
(b) * * *
(2) The information covered by consent forms described in this
subpart involves income information from SWICAs and wages, income and
resource information from financial institutions, net earnings from
self-employment, payments of retirement income, and unearned income as
referenced at 26 U.S.C. 6103. * * *
* * * * *
0
4. In Sec. 5.230, revise paragraph (c)(4), and add paragraph (c)(5) to
read as follows:
Sec. 5.230 Consent by assistance applicants and participants.
* * * * *
(c) * * *
(4) A provision authorizing PHAs to obtain any financial record
from any financial institution, as the terms financial record and
financial institution are defined in the Right to Financial Privacy Act
(42 U.S.C. 1304), whenever the PHA determines the record is needed to
determine an applicant's or participant's eligibility for assistance or
level of benefits; and
(5) A statement that the authorization to release the information
requested by the consent form shall remain effective until the earliest
of:
(i) The rendering of a final adverse decision for an assistance
applicant;
(ii) The cessation of a participant's eligibility for assistance
from HUD and the PHA; or
(iii) The express revocation by the assistance applicant or
recipient (or applicable family member) of the authorization, in a
written notification to HUD.
0
5. In Sec. 5.232, add paragraph (c) to read as follows:
Sec. 5.232 Penalties for failing to sign consent form.
* * * * *
(c) This section does not apply if the applicant or participant, or
any member of the assistance applicant's or participant's family
revokes his/her consent with respect to the ability of the PHA to
access financial records from financial institutions, unless the PHA
establishes a policy in the PHA's Annual Plan that revocation of
consent to access financial records will result in denial or
termination of assistance or admission.
0
6. In Sec. 5.601:
0
a. Amend paragraph (d) by removing the phrases ``HOME Investment
Partnerships Program (24 CFR part 92);'' and ``Housing Opportunities
for Persons with AIDS (24 CFR part 574); Shelter Plus Care Program (24
CFR part 582); Supportive Housing Program (McKinney Act Homeless
Assistance (24 CFR part 583);'', and
0
b. Revise paragraph (e) to read as follows:
Sec. 5.601 Purpose and applicability.
* * * * *
(e) Limitations on eligibility for assistance based on assets, as
provided in Sec. 5.618, in the Section 8 (tenant-based and project-
based) and public housing programs.
0
7. In Sec. 5.603, add in alphabetical order definitions for
``Distribution from a trust'', ``Foster adults'', and ``Minor'', and
revise the definitions for ``net family assets'' and ``responsible
entity'' to read as follows:
Sec. 5.603 Definitions.
* * * * *
(b) * * *
Distribution from a trust. Any cash payout to the beneficiary or
any payment to a third-party on behalf of the beneficiary.
* * * * *
Foster adults. Persons with disabilities, not related to the
family, who are unable to live alone.
* * * * *
Minor. A member of the family, other than the head of family or
spouse, who is less than 18 years of age.
* * * * *
Net family assets. (1) Net cash value of all assets owned by the
family, after deducting reasonable costs that would be incurred in
disposing real property, savings, stocks, bonds, and other forms of
investment.
(2) In determining net family assets, PHAs or owners, as
applicable, shall include the value of any business or family assets
disposed of by an applicant or tenant for less than fair market value
(including a disposition in trust, but not in a foreclosure or
bankruptcy sale) during the two years preceding the date of application
for the program or reexamination, as applicable, in excess of the
consideration received therefor. In the case of a disposition as part
of a separation or divorce settlement, the disposition will not be
considered to be for less than fair market value if the applicant or
tenant receives important consideration not measurable in dollar terms.
(3) Excluded from the calculation of net family assets are:
(i) Interests in Indian trust land;
(ii) Equity in a manufactured home where the family receives
assistance under 24 CFR part 982;
(iii) Equity in property under the Homeownership Option for which a
family receives assistance under 24 CFR part 982.
(iv) Family Self-Sufficiency Accounts;
(v) Necessary items of personal property, and all items of personal
property valued at $50,000 or less;
(vi) The value of any account under a retirement plan recognized as
such by the Internal Revenue Service, including individual retirement
arrangements (IRAs), employer retirement plans, and retirement plans
for self-employed individuals;
(vii) Real property that the family does not have the effective
legal authority to sell in the jurisdiction in which the property is
located;
(viii) Any amounts recovered in any civil action or settlement
based on a claim of malpractice, negligence, or other breach of duty
owed to a family member arising out of law, that resulted in a member
of the family being disabled; and
(ix) The value of any Coverdell education savings account under
section 530 of the Internal Revenue Code of 1986, the value of any
qualified tuition program under section 529 of such Code, and the value
of any ABLE account authorized under Section 529A of such code.
(2) In cases where a trust fund has been established and the trust
is not revocable by, or under the control of, any member of the family
or household,
[[Page 48836]]
the value of the trust fund will not be considered in the calculation
of net family assets, so long as the fund continues to be held in
trust.
* * * * *
Responsible entity. For Sec. 5.611, in addition to the definition
of ``responsible entity'' in Sec. 5.100, ``responsible entity'' means:
(1) For the Rent Supplement Payments Program, the owner of the
multifamily project;
(2) For the Rental Assistance Payments Program, the owner of the
Section 236 project;
(3) For the Section 202 Supportive Housing Program for the Elderly,
the ``Owner'' as defined in 24 CFR 891.205;
(4) For the Section 202 Direct Loans for Housing for the Elderly
and Persons with Disabilities), the ``Borrower'' as defined in 24 CFR
891.505; and
(5) For the Section 811 Supportive Housing Program for Persons with
Disabilities, the ``owner'' as defined in 24 CFR 891.305.
* * * * *
0
8. Revise Sec. 5.609 to read as follows:
Sec. 5.609 Annual income.
(a) Annual income means, with respect to the family:
(1) All amounts, not specifically excluded in paragraph (b) of this
section, received from all sources by each member of the family who is
18 years of age or older or is the head of household or spouse of the
head of household, plus unearned income by or on behalf of each
dependent who is less than 18 years of age, and
(2) The imputed return on assets over $50,000 based on the current
passbook savings rate, as determined by HUD, if the actual income on
assets over $50,000 cannot be computed. The $50,000 figure in this
paragraph shall be adjusted annually in accordance with a commonly
recognized inflationary index, as determined by HUD.
(b) Annual income does not include the following:
(1) Any imputed return on assets of $50,000 or less, which figure
shall be adjusted annually in accordance with a commonly recognized
inflationary index, as determined by HUD;
(2) Distribution from a non-revocable trust fund specifically
provided to cover the cost of medical expenses for a minor;
(3) Income from employment of children (including foster children)
under the age of 18 years and foster adults;
(4) Payments received for the care of foster children or foster
adults, or state kinship or guardianship care payments;
(5) Insurance payments and settlement for personal or property
losses;
(6) Amounts received by the family that are specifically for, or in
reimbursement of, the cost of medical expenses for any family member;
(7) Any amounts recovered in any civil action or settlement based
on a claim of malpractice, negligence, or other breach of duty owed to
a family member arising out of law, that resulted in a member of the
family being disabled;
(8) Income of a live-in aide, as defined in Sec. 5.403;
(9) The full amount of student financial assistance paid directly
to the student or to the educational institution on the student's
behalf, except this does not apply for students applying for or
receiving section 8 assistance pursuant to Sec. 5.612 who are not over
the age of 23 with dependent children. Financial assistance is any
grant-in-aid, scholarship or other assistance amounts an individual
receives for the cost of tuition, books, room and board, and fees
charged to the student by the education institution. For students
applying for or receiving section 8 assistance who are not over the age
of 23 with dependent children, the financial assistance in excess of
the cost of tuition and any other required fees and charges under the
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), from private
sources, or an institution of higher education (as defined under the
Higher Education Act of 1965 (20 U.S.C. 1002), shall be considered
income;
(10) Amounts from any Coverdell education savings account under
section 530 of the Internal Revenue Code of 1986, any qualified tuition
program under section 529 of such Code, and any amounts from ABLE
accounts under section 529A of such Code;
(11) The special pay to a family member serving in the Armed Forces
who is exposed to hostile fire;
(12)(i) Amounts received by a person with a disability that are
disregarded for a limited time for purposes of Supplemental Security
Income eligibility and benefits because they are set aside for use
under a Plan to Attain Self-Sufficiency (PASS);
(ii) Amounts received by a participant in other publicly assisted
programs which are specifically for or in reimbursement of out-of-
pocket expenses incurred (special equipment, clothing, transportation,
child care, etc.) and which are made solely to allow participation in a
specific program;
(iii) Amounts received under a resident service stipend not to
exceed $200 per month. A resident service stipend is a modest amount
received by a resident for performing a service for the PHA or owner,
on a part-time basis, that enhances the quality of life in the
development;
(iv) Incremental earnings and benefits resulting to any family
member from participation in training programs funded by HUD or in
qualifying State or local employment training programs (including
training programs not affiliated with a local government) and training
of a family member as resident management staff. Amounts excluded by
this provision must be received under employment training programs with
clearly defined goals and objectives, and are excluded only for the
period during which the family member participates in the employment
training program;
(13) Reparation payments paid by a foreign government pursuant to
claims filed under the laws of that government by persons who were
persecuted during the Nazi era;
(14) Earned income of dependent full-time students, except that the
earned income up to the amount of the deduction for a dependent in
Sec. 5.611 of each dependent student shall be considered income;
(15) Adoption assistance payments in excess of $480 per adopted
child, which amount will be adjusted annually in accordance with a
commonly recognized inflationary index, as determined by HUD;
(16) Deferred periodic amounts from supplemental security income
and Social Security benefits that are received in a lump sum amount or
in prospective monthly amounts or any deferred Department of Veterans
Affairs disability benefits that are received in a lump sum amount or
in prospective monthly amounts;
(17) Payments related to aid and attendance under 38 U.S.C. 1521 to
veterans in need of regular aid and attendance;
(18) Amounts received by the family in the form of refunds or
rebates under State or local law for property taxes paid on the
dwelling unit;
(19) Payments provided by a State Medicaid managed care system to a
family to keep a member who has a disability living at home;
(20) Loan proceeds (the net amount disbursed by a lender to a
borrower, under the terms of a loan agreement) received by the family
(e.g., proceeds received by the family to finance the purchase a car);
(21) Payments received by Indian persons as a result of claims
relating to the mismanagement of assets held in trust by the United
States, to the extent
[[Page 48837]]
such payments are also excluded from gross income under the Internal
Revenue Code;
(22) Amounts that HUD is required by Federal statute to exclude
from consideration as income for purposes of determining eligibility or
benefits under a category of assistance programs that includes
assistance under any program to which the exclusions set forth in
paragraph (b) of this section apply. A notice will be published in the
Federal Register and distributed to PHAs and housing owners identifying
the benefits that qualify for this exclusion. Updates will be published
and distributed when necessary; or
(23) Replacement housing ``gap'' payments made in accordance with
49 CFR part 24 to a displaced person that moves from a federally
subsidized housing unit and occupies another federally subsidized
housing unit when such payments offset the increased out of pocket cost
to the displaced person for rent and utilities because of the
displacement. Such replacement housing ``gap'' payments are not
excluded from annual income, however, to the extent that the increased
cost of rent and utilities is subsequently reduced or eliminated and
the displaced person retains or continues to receive the replacement
housing ``gap'' payments.
(c) Calculation of Income. The PHA or owner shall calculate family
income as follows:
(1) Initial occupancy or assistance and interim reexaminations. The
PHA or owner shall estimate the income of the family for the upcoming
12-month period:
(i) To determine family income for initial occupancy or for the
initial provision of housing assistance; or
(ii) To determine family income for an interim reexamination of
family income under Sec. 5.657(c), 24 CFR 960.257(b), or 24 CFR
982.516(c).
(2) Annual Reviews. (i) The PHA or owner shall determine the income
of the family for the previous 12-month period and use this figure as
the family income for annual reviews, except where the PHA or owner
uses a streamlined income determination under Sec. 5.657(d), 24 CFR
960.257(c), or 24 CFR 982.516(b).
(ii) In determining the income of the family for the previous 12-
month period, the PHA or owner shall take into consideration any
redetermination of income during the previous 12-month period resulting
from an interim reexamination of family income under Sec. 5.657(c), 24
CFR 960.257(b), or 24 CFR 982.516(c).
(iii) The PHA or owner must make adjustments to reflect current
income if there was a change in income during the previous 12-month
period that was not accounted for in a redetermination of income.
(3) The PHA or owner may determine the family's income prior to the
application of any deductions applied in accordance with Sec. 5.611
based on timely income determinations made within the previous 12-month
period for purposes of the following means-tested Federal public
assistance:
(i) The Temporary Assistance for Needy Families block grant (42
U.S.C. 601, et seq.).
(ii) Medicaid assistance (42 U.S.C. 1396 et seq.).
(iii) The Supplemental Nutrition Assistance Program (7 U.S.C. 2011
et seq.).
(iv) The Earned Income Tax Credit (26 U.S.C. 32).
(v) Other forms of Federal public assistance determined by the
Secretary to have comparable reliability and announced through Federal
Register notice.
(4) The PHA or owner will not be considered out of compliance with
the requirements in this paragraph (c) solely due to de minimis errors
in calculating family income. A de minimis error is an error where the
PHA or owner determination of family income varies from the correct
income determination by no more than 5 percent. The PHA or owner must
still take any corrective action necessary to repay a family if the
family has been overcharged for their rent as a result of the de
minimis error in the income determination.
0
9. Revise Sec. 5.611 to read as follows:
Sec. 5.611 Adjusted income.
Adjusted income means annual income (as determined under Sec.
5.609) of the members of the family residing or intending to reside in
the dwelling unit, after making the following deductions:
(a) Mandatory deductions. (1) $480 for each dependent, which amount
will be adjusted annually in accordance with a commonly recognized
inflationary index, as determined by HUD, rounded to the next lowest
multiple of $25;
(2) $525 for any elderly family or disabled family, which amount
will be adjusted annually in accordance with a commonly recognized
inflationary index, as determined by HUD, rounded to the next lowest
multiple of $25;
(3) The sum of the following, to the extent the sum exceeds ten
percent of annual income:
(i) Unreimbursed medical expenses of any elderly family or disabled
family; and
(ii) Unreimbursed reasonable attendant care and auxiliary apparatus
expenses for each member of the family who is a person with
disabilities, to the extent necessary to enable any member of the
family (including the member who is a person with disabilities) to be
employed. This deduction may not exceed the earned income received by
family members who are 18 years of age or older and who are able to
work because of such attendant care or auxiliary apparatus; and
(4) Any reasonable child care expenses necessary to enable a member
of the family to be employed or to further his or her education.
(b) Additional deductions. (1) For public housing, the Housing
Choice Voucher (HCV) program, and where the PHA is the owner in the
Section 8 project-based programs, a PHA may adopt additional deductions
from annual income. A PHA that adopts such deductions will not be
eligible for an increase in subsidy for the public housing program,
renewal funding for the HCV program, or housing assistance payments
under the Section 8 project-based programs to cover the cost of the
additional deductions. The PHA must establish a written policy for such
deductions. The PHA must report to HUD the increased subsidy cost
resulting from the additional deduction.
(2) For the HUD programs listed in Sec. 5.601(d), the responsible
entity shall calculate such other deductions as required and permitted
by the applicable program regulations.
(c) Financial hardship exemption for unreimbursed medical expense
and child care expense deductions. (1) Exemption for unreimbursed
medical expense deduction. A family may request a financial hardship
exemption due to the change in the unreimbursed medical expense
deduction under paragraph (a)(3) of this section, under which the
amount of unreimbursed expenses that are not deductible has been
increased from 3 to 10 percent of annual income. The family must
demonstrate to the responsible entity's satisfaction an inability to
pay their rent as a result of this change. If the hardship exemption is
approved, the responsible entity must recalculate the family's adjusted
income, and under paragraph (a)(3) of this section deduct the sum of
the eligible expenses that exceeds 6.5 percent of annual income instead
of 10 percent of annual income. The hardship exemption and the
resulting alternative calculation for the unreimbursed medical expenses
deduction will end at the family's next regular examination or such
time that the responsible entity determines the family can now pay the
[[Page 48838]]
rent without the hardship exemption, whichever comes first.
(2) Exemption to continue child care expense deduction. A family
may request a financial hardship exemption to continue the child care
expense deduction under paragraph (a)(4) of this section. The
responsible entity must recalculate the family's adjusted income and
continue the child care deduction if the family demonstrates to the
responsible entity's satisfaction that the family is unable to pay
their rent because of loss of the child care expense deduction and the
child care expense is still necessary even though the family member is
no longer employed or furthering his or her education. The hardship
exemption allowing the child care expense deduction to continue ends at
the earliest of:
(i) The family's next regular reexamination;
(ii) Such time the responsible entity determines the need no longer
exists for the childcare expense if no adult family member is employed
or furthering their education no longer exists; or
(iii) Such time the responsible entity determines that family is
able to pay their rent without the hardship exemption.
(3) Responsible entity determination of family's inability to pay
the rent. The responsible entity must establish a policy on how it
defines and determines the family's inability to pay the rent for
purposes of determining eligibility for a hardship exemption under this
paragraph (c).
(4) Family notification. The responsible entity must notify the
family in writing of the change in the determination of adjusted income
and the family's rent resulting from the hardship exemption. The notice
must also inform the family that the hardship exemption will expire at
the family's next regular income reexamination or at such time the
responsibility entity determines the exemption is no longer necessary
in accordance with paragraph (c)(1) or (c)(2) of this section.
0
10. Amend Sec. 5.617 by adding paragraph (e) to read as follows:
Sec. 5.617 Self-sufficiency incentives for persons with
disabilities--Disallowance of increase in annual income.
* * * * *
(e) Effective [EFFECTIVE DATE OF FINAL RULE], this section will not
apply to any family who is not eligible for and participating in the
disallowance of earned income under this section on [EFFECTIVE DATE OF
FINAL RULE].
Sec. 5.617 [Removed]
0
11. Remove Sec. 5.617.
0
12. Add Sec. 5.618 to subpart F to read as follows:
Sec. 5.618 Restriction on assistance to families based on assets.
(a) Restrictions based on net assets and property ownership. (1) A
dwelling unit may not be rented, and assistance may not be provided,
either initially or upon reexamination of family income, to any family
if:
(i) The net family assets (as defined in Sec. 5.603) exceed
$100,000, which amount will be adjusted annually in accordance with a
commonly recognized inflationary index, as determined by HUD; or
(ii) The family has a present ownership interest in, a legal right
to reside in, and the effective legal authority to sell, in the
jurisdiction in which the property is located, real property that is
suitable for occupancy by the family as a residence, except this
restriction does not apply to:
(A) Any property for which the family is receiving assistance under
24 CFR 982.620; or under the Homeownership Option in 24 CFR part 982;
(B) Any property that is jointly owned by a member of the family
and another individual or individuals who would not reside with the
family;
(C) Any person that is a victim of domestic violence, dating
violence, sexual assault, or stalking, as defined in this part 5
(subpart L); or
(D) Any family that is offering such property for sale.
(2) A property will be considered ``suitable for occupancy'' under
paragraph (a)(1)(ii) of this section unless the family demonstrates
that it:
(i) Does not meet the disability-related needs for all members of
the family, including physical accessibility requirements;
(ii) Is not sufficient for the size of the family;
(iii) Is geographically located so as to provide a hardship for the
family; or
(iv) Is not safe to reside in because of the physical condition of
the property.
(b) Self-certification. (1) A PHA or owner may determine the net
assets of a family based on a certification by the family that the net
family assets (as defined in Sec. 5.603) do not exceed $50,000, which
amount will be adjusted annually in accordance with a commonly
recognized inflationary index, as determined by HUD, without taking
additional steps to verify the accuracy of the declaration. The
declaration must state the amount of income the family expects to
receive from such assets; this amount must be included in the family's
income.
(2) A PHA or owner may determine compliance with paragraph
(a)(1)(ii) of this section based on a certification by a family that
certifies that such family does not have any present ownership interest
in any real property at the time of the income determination or review.
(c) Enforcement. (1) When recertifying the income of a family that
is subject to the restrictions in paragraph (a) of this section, a PHA
or owner may choose not to enforce such restrictions, or alternatively,
may establish exceptions to the restrictions based on eligibility
criteria.
(2) The PHA or owner may only choose not to enforce the
restrictions in paragraph (a) of this section or establish exceptions
to such restrictions pursuant to a policy set forth in the public
housing agency plan or under a policy adopted by the owner.
(3) Eligibility criteria for establishing exceptions may provide
for separate treatment based on family type and may be based on
different factors, such as age, disability, income, the ability of the
family to find suitable alternative housing, and whether supportive
services are being provided. Such policies must be in conformance with
all applicable fair housing statutes and regulations, as discussed in
this part 5.
(d) Eviction delays. The PHA or owner may delay for a period of not
more than 6 months the initiation of eviction or termination
proceedings of a family based on noncompliance under this provision.
(e) Applicability. This section applies to the Section 8 (tenant-
based and project-based) and public housing programs.
0
13. In Sec. 5.657, revise paragraph (c) and add paragraph (e) to read
as follows:
Sec. 5.657 Section 8 project-based assistance programs: Reexamination
of family income and composition.
* * * * *
(c) Interim reexaminations. (1) A family may request an interim
reexamination of family income. The owner must make the interim
reexamination within a reasonable time after the family request.
(2) The owner may decline to process a family request for an
interim reexamination if the owner estimates the family's adjusted
income will decrease by an amount that is less than 10 percent of the
family's annual adjusted income, or if the family's adjusted income
will decrease by a lower threshold amount that is less than 10 percent,
if such lower threshold has been established by the owner. If the owner
determines the estimated decrease in family adjusted income is at least
10 percent (or the lower alternative threshold established by the
owner) the
[[Page 48839]]
owner must make the interim reexamination within a reasonable time
after the family's request.
(3) The owner must conduct a reexamination of family income within
a reasonable time after the owner becomes aware that the family's
adjusted income (as defined in Sec. 5.611) has changed by an amount
that the owner estimates will result in an increase of 10 percent or
more in annual adjusted income, except:
(i) The owner may not consider any increase in the earned income of
the family when estimating whether the family's adjusted income has
increased, unless the family has previously received an interim
reduction under paragraph (c)(2) of this section during the year;
(ii) The owner may choose not to conduct an interim reexamination
in the last three months of a certification period; and
(iii) The owner will not be considered out of compliance with the
requirements in this paragraph solely due to de minimis errors in
calculating family income but is still obligated to correct errors once
the PHA becomes aware of the errors. A de minimis error is an error
where the owner determination of family income varies from the correct
income determination by no more than 5 percent. The owner must still
take any corrective action necessary to repay a family if the family
has been overcharged for their rent as a result of the de minimis error
in the income determination.
(4) The owner must adopt policies consistent with this section
prescribing when and under what conditions the family must report a
change in family income or composition.
* * * * *
(e) Reviews of family income under this section are subject to the
provisions in Section 904 of the Stewart B. McKinney Homeless
Assistance Amendments Act of 1988 (42 U.S.C. 3544) and any applicable
privacy rules in subpart B of this part.
0
14. In Sec. 5.659, revise paragraph (e) to read as follows:
Sec. 5.659 Family information and verification.
* * * * *
(e) Verification of assets. For a family with net family assets (as
the term is defined in Sec. 5.603) equal to or less than $50,000,
which amount will be adjusted annually in accordance with a commonly
recognized inflationary index, as determined by HUD, an owner may
accept, for purposes of recertification of income, a family's
declaration under Sec. 5.618(b), except that the owner must obtain
third-party verification of all family assets every 3 years.
* * * * *
PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM
0
15. The authority citation for part 92 continues to read as follows:
Authority: 42 U.S.C. 3535(d), 12 U.S.C. 1701x and 4568.
0
16. In Sec. 92.203, add subject headings to paragraphs (a) and (b),
revise paragraphs (b)(1), and (c), add a heading to paragraph (d),
revise paragraph (d)(1), and add paragraph (e) to read as follows:
Sec. 92.203 Income determinations.
(a) Methods of determining income. * * *
(b) Defining income for eligibility. * * *
(1) Annual income as defined at 24 CFR 5.609 (a) and (b) (except
when determining the income of a homeowner for an owner-occupied
rehabilitation project, the value of the homeowner's principal
residence may be excluded from the calculation of Net Family Assets, as
defined in 24 CFR 5.603); or
* * * * *
(c) Using Income Definitions. The participating jurisdiction may
use only one definition of annual income for each HOME-assisted program
(e.g., downpayment assistance program) that it administers and for each
rental housing project.
(d) Projecting Income. (1) The participating jurisdiction must
calculate the annual income of the family by projecting the prevailing
rate of income of the family at the time the participating jurisdiction
determines that the family is income eligible. Annual income includes
income from all persons in the household. Income or asset enhancement
derived from the HOME-assisted project shall not be considered in
calculating annual income.
* * * * *
(e) Determining Adjusted Income. Although the participating
jurisdiction may use either of the definitions of ``annual income''
permitted in paragraph (b) of this section to calculate annual income,
it must then apply deductions from income in 24 CFR 5.611(a) to
determine the family's adjusted income.
(1) The participating jurisdiction must use a family's adjusted
income when determining tenant contribution in units receiving Federal
or State project-based rental subsidy pursuant to Sec. 92.252(b).
(2) The participating jurisdiction may base the amount of tenant-
based rental assistance on the adjusted income of the family in
accordance with Sec. 92.209(h) and may grant financial hardship
exemptions to a family receiving tenant-based rental assistance in
accordance with Sec. 5.611(c) of this title.
(3) When a family applying for or living in a HOME-assisted rental
unit receives section 8 housing choice voucher assistance, or when a
public housing agency owns the HOME-assisted rental unit in the
project-based Section 8 programs, the participating jurisdiction must
apply the income deductions in 24 CFR 5.611(a) and (b) to determine the
family's adjusted income and may accept a public housing agency's
determination to grant financial hardship exemptions to the family
under 24 CFR 5.611(c).
Sec. 92.203 [Amended]
0
17. Amend Sec. 92.203 by removing paragraph (d)(3).
PART 93--HOUSING TRUST FUND
0
18. The authority citation for part 93 continues to read as follows:
Authority: 42 U.S.C. 3535(d), 12 U.S.C. 4568.
0
19. In Sec. 93.151, revise paragraph (b)(1)(i) and add paragraphs
(b)(3) and (e) to read as follows:
Sec. 93.151 Income determinations.
* * * * *
(b) * * *
(1) * * *
(i) ``Annual income'' as defined at 24 CFR 5.609(a) and (b); or
* * * * *
(3) Annual income includes income from all persons in the
household.
* * * * *
(e) Adjusted Income. (1) Although the grantee may use either of the
definitions of ``annual income'' permitted in paragraph (b) of this
section to calculate annual income, the grantee must then apply
deductions established in 24 CFR 5.611(a) to determine the tenant's
adjusted income.
(2) For public housing, the housing choice voucher program, and
where the public housing agency is the owner in the Section 8 project-
based programs, a grantee must apply the public housing agency income
deductions at 24 CFR 5.611(a) and (b) to determine the family's
adjusted income and may accept a public housing agency's determination
to grant financial hardship exemptions pursuant to 24 CFR 5.611(c).
[[Page 48840]]
PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS
0
20. The authority citation for part 574 continues to read as follows:
Authority: 12 U.S.C. 1701x, 1701x-1; 42 U.S.C. 3535(d) and 5301-
5320.
0
21. In Sec. 574.310, revise paragraph (d)(1); redesignate paragraph
(e) as paragraph (g), and add new paragraphs (e) and (f) to read as
follows:
Sec. 574.310 General Standards for eligible housing activities.
* * * * *
(d) * * *
(1) 30 percent of the family's monthly adjusted income (calculated
under 24 CFR 5.611);
* * * * *
(e) Reexamination of family income. (1) Annual reexaminations. For
purposes of determining resident rent payments, grantees will conduct a
reexamination and redetermination of family income every year.
(2) Interim reexaminations. (i) A family may request an interim
reexamination of family income at any time. The grantee must make the
interim reexamination within a reasonable period of time after the
family's request.
(ii) Grantees may decline to process a family request for an
interim reexamination if the grantee estimates the family's adjusted
income will decrease by an amount that is less than 10 percent of the
family's annual adjusted income, or if the family's adjusted income
will decrease by a lower threshold amount that is less than 10 percent,
if such lower threshold has been established by the grantee. If the
grantee determines the estimated decrease in family adjusted income is
at least 10 percent (or the lower alternative threshold established by
the grantee) the grantee must make the interim reexamination within a
reasonable time after the family's request.
(iii) Grantees must conduct the reexamination of family income
within a reasonable time after the grantee becomes aware that the
family's adjusted income (as defined in Sec. 5.611 of this title) has
changed by an amount that the grantee estimates will result in an
increase of 10 percent or more in annual adjusted income, except:
(A) The grantee may not consider any increase in the earned income
of the family when estimating whether the family's adjusted income has
increased unless the family has previously received an interim
reduction under paragraph (e)(2)(ii) of this section during the year;
(B) The grantee may choose not to conduct an interim reexamination
in the last three months of a certification period; and
(C) The grantee will not be considered out of compliance with the
requirements in this paragraph solely due to de minimis errors in
calculating family income but is still obligated to correct errors once
the grantee becomes aware of the errors. A de minimis error is an error
where the grantee's determination of family income varies from the
correct income determination by no more than 5 percent. The grantee
must still take any corrective action necessary to repay a family if
the family has been overcharged for their rent as a result of the de
minimis error in the income determination.
(iv) The grantee must adopt policies consistent with this section
prescribing when and under what conditions the family must report a
change in family income or composition.
(3) Streamlined income determinations. (i) A grantee may elect to
apply a streamlined income determination to families receiving fixed
income as described in paragraph (e)(3)(iii) of this section.
(ii) Definition of fixed income. For purposes of this section,
fixed income means periodic payments at reasonably predictable levels
from one or more of the following sources:
(A) Social Security, Supplemental Security Income, Supplemental
Disability Insurance.
(B) Federal, state, local, or private pension plans.
(C) Annuities or other retirement benefit programs, insurance
policies, disability or death benefits, or other similar types of
periodic receipts.
(D) Any other source of income subject to adjustment by a
verifiable COLA or current rate of interest.
(iii) Method of streamlined income determination. Grantees using
the streamlined income determination must adjust a family's income
according to the percentage of a family's unadjusted income that is
from fixed income.
(A) When 90 percent or more of a family's unadjusted income
consists of fixed income, grantees using streamlined income
determinations must apply a COLA or COLAs to the family's fixed-income
sources, provided that the family certifies both that 90 percent or
more of their unadjusted income is fixed income and that their sources
of fixed income have not changed from the previous year. For non-fixed
income, grantees may choose to make adjustments pursuant to paragraph
(e)(1) of this section.
(B) When less than 90 percent of a family's unadjusted income
consists of fixed income, grantees using streamlined income
determinations must apply a COLA to each of the family's sources of
fixed income. Grantees must determine all other income pursuant to
paragraph (e)(1) of this section.
(iv) COLA rate applied by grantees. Grantees using streamlined
income determinations must adjust a family's fixed income using a COLA
or current interest rate that applies to each specific source of fixed
income and is available from a public source or through tenant-
provided, third-party-generated documentation. If no public
verification or tenant-provided documentation is available, then the
grantee must obtain third-party verification of the income amounts in
order to calculate the change in income for the source.
(v) Triennial verification. For any income determined pursuant to a
streamlined income determination, a grantee must obtain third-party
verification of all income amounts every 3 years.
(f) Net family assets and restriction on assistance to families
based on assets. (1) The definition of net family assets in Sec. 5.603
of this title applies to this part, except the value of a home of a
participant receiving short-term mortgage or utility assistance under
Sec. 574.300(b)(6) or other homeownership assistance eligible under
the HOPWA program is excluded from the definition.
(2) The requirements in Sec. 5.618(a) through (d) of this title on
providing assistance to families who have certain assets apply to HOPWA
assistance provided under this part, except that Sec. 5.618 of this
title does not apply to the provision of short-term mortgage or utility
assistance under Sec. 574.300(b)(6) or other homeownership assistance
eligible under the HOPWA program, housing information services, as
described in Sec. 574.300(b)(1), or supportive services, as described
in Sec. 574.300(b)(7).
* * * * *
PART 960--ADMISSION TO, AND OCCUPANCY OF, PUBLIC HOUSING
0
22. The authority citation for part 960 continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437n, 1437z-3, and
3535(d).
0
23. In Sec. 960.102, revise the definition of ``Over-income family''
in paragraph (b) to read as follows:
Sec. 960.102 Definitions.
* * * * *
(b) * * *
[[Page 48841]]
Over-income family. A family whose income exceeds the local over-
income limit. See subpart E of this part.
* * * * *
0
24. In Sec. 960.253, revise paragraph (f)(1) to read as follows:
Sec. 960.253 Choice of rent.
* * * * *
(f) * * *
(1) For a family that chooses the flat rent option, the PHA must
conduct a reexamination of family income and composition at least once
every three years, except for families that are found to be over-
income. Once a family is determined to be over-income, the PHA must
follow the documentation and reexamination requirements under Sec.
960.507(c).
0
25. Amend Sec. 960.255. by adding paragraph (e) to read as follows:
Sec. 960.255 Self-sufficiency incentives--Disallowance of increase in
annual income.
* * * * *
(e) Effective [EFFECTIVE DATE OF FINAL RULE], this section will not
apply to any family who is not eligible for and participating in the
disallowance of earned income under this section on [EFFECTIVE DATE OF
FINAL RULE].
Sec. 960.255 [Removed]
0
26. Remove Sec. 960.255.
0
27. In Sec. 960.257, revise paragraph (b), and add paragraph (e) to
read as follows:
Sec. 960.257 Family income and composition: Annual and interim
reexaminations.
* * * * *
(b) Interim reexaminations. (1) A family may request an interim
reexamination of family income or composition because of any changes
since the last determination. The PHA must conduct the interim
reexamination within a reasonable period of time after the family
request.
(2) The PHA may decline to process a family request for an interim
income reexamination if the PHA estimates the family's adjusted income
will decrease by an amount that is less than 10 percent of the family's
annual adjusted income, or if the family's adjusted income will
decrease by a lower threshold amount that is less than 10 percent, if
such lower threshold has been established by the PHA. If the PHA
determines the estimated decrease in family adjusted income is at least
10 percent (or the lower alternative threshold established by the PHA),
the PHA must conduct the interim income reexamination within a
reasonable period of time after the family's request.
(3) The PHA must conduct a reexamination of family income within a
reasonable time after the PHA becomes aware that the family's adjusted
income (as defined in 24 CFR 5.611) has changed by an amount that the
PHA estimates will result in an increase of 10 percent or more in
annual adjusted income, except:
(i) The PHA may not consider any increase in the earned income of
the family when estimating whether the family's adjusted income has
increased, unless the family has previously received an interim
reduction under paragraph (b)(2) of this section during the year;
(ii) The PHA may choose not to conduct an interim reexamination in
the last three months of a certification period; and
(iii) The PHA will not be considered out of compliance with the
requirements in this paragraph solely due to de minimis errors in
calculating family income but is still obligated to correct errors once
the PHA becomes aware of the errors. A de minimis error is an error
where the PHA determination of family income varies from the correct
income determination by no more than 5 percent. The PHA must still take
any corrective action necessary to repay a family if the family has
been overcharged for their rent as a result of the de minimis error in
the income determination.
(4) The PHA must adopt policies consistent with this section
prescribing when and under what conditions the family must report a
change in family income or composition.
* * * * *
(e) Reviews of family income under this section are subject to the
provisions in Section 904 of the Stewart B. McKinney Homeless
Assistance Amendments Act of 1988 (42 U.S.C. 3544).
0
28. In Sec. 960.259, revise paragraph (c)(2) to read as follows:
Sec. 960.259 Family information and verification.
* * * * *
(c) * * *
(2) For a family with net family assets (as the term is defined in
24 CFR 5.603) equal to or less than $50,000, which amount will be
adjusted annually in accordance with a commonly recognized inflationary
index, as determined by HUD, a PHA may accept, for purposes of
recertification of income, a family's declaration under 24 CFR
5.618(b), except that the PHA must obtain third-party verification of
all family assets every 3 years.
Sec. 960.261 [Removed]
0
29. Remove Sec. 960.261.
0
30. Add Sec. 960.507 to Subpart E read as follows:
Sec. 960.507 Families exceeding the income limit.
(a) In general. Families residing in public housing may not, except
as provided in Sec. 960.503, have incomes that exceed the local over-
income limit.
(b) Determination of over-income limit. The local over-income limit
is determined by multiplying the applicable income limit for a very
low-income family as defined in 24 CFR 5.603(b), by a factor of 2.4.
(c) Documenting over-income families. (1) When a PHA becomes aware,
through an annual reexamination, or an interim reexamination for an
increase in income, that a family's income exceeds the applicable over-
income limit, the PHA must document that the family exceeds the
threshold.
(2) If, a year after the documentation in paragraph (c)(1) of this
section, the PHA determines that the family still has an income
exceeding the over-income limit, the PHA must provide written
notification to the family that their income has exceeded the over-
income limit for one year, and that if the family's income continues to
exceed the over-income limit for the next 12 consecutive months, the
family will be subject to either a higher rent payment or termination,
based on the PHA's policies under paragraph (d).
(3) If a PHA discovers that a previously over-income family has
income that is now below the over-income limit, the family is no longer
subject to these provisions. The family is entitled to a new 2-year
grace period if the family's income once again exceeds the over-income
limit.
(d) End of grace period. Once a family has exceeded the over-income
limit for two consecutive years, the PHA must, as detailed in its
Admissions and Continued Occupancy Policies (ACOP)--
(1) Charge the family a monthly rent equal to the greater of--
(i) The applicable fair market rent for the unit; or
(ii) The amount of the monthly subsidy provided for the unit, which
will be determined by summing the per unit assistance provided to a
public housing property as calculated through the applicable formulas
for the Public Housing Capital Fund and Public Housing Operating Fund.
(A) For the Public Housing Capital Fund, the amount of Capital
Funds provided to the unit will be calculated as the per unit Capital
Fund assistance provided to a PHA for the development
[[Page 48842]]
in which the family resides for the most recent funding year for which
Capital Funds have been allocated;
(B) For the Public Housing Operating Fund, the amount of Operating
Funds provided to the unit will be calculated as the per unit amount
provided to the public housing project where the unit is located for
the most recent funding year for which a final funding eligibility
determination has been made;
(C) HUD will publish such funding amounts no later than December
31st each year; or
(2) Terminate the tenancy of the family no more than 6 months after
the third determination that the family's income exceeds the income
limit in paragraph (a) of this section. PHAs must continue to charge
these families the non-over-income rent amount (the family's choice of
income-based or flat rent) for the time period during the 6-month
period before termination.
(e) Reporting. Each PHA must submit a report annually to HUD that
specifies, as of the end of the year, the number of families residing
in public housing with incomes exceeding the over-income limit and the
number of families on the waiting lists for admission to public housing
projects. These reports must also be publicly available.
PART 966--PUBLIC HOUSING LEASE AND GRIEVANCE PROCEDURE
0
31. The authority citation for part 966 continues to read as follows:
Authority: 42 U.S.C. 1437d and 3535(d).
0
32. In Sec. 966.4, revise paragraph (l)(2)(ii) to read as follows:
Sec. 966.4 Lease requirements.
* * * * *
(l) * * *
(2) * * *
(ii) Being over the income limit for the program, as provided in 24
CFR 960.507.
PART 982--SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER
PROGRAM
0
33. The authority citation for part 982 continues to read as follows:
Authority: 42 U.S.C. 1437f and 3535(d).
0
34. In Sec. 982.516, revise paragraphs (a)(3), (c), and (d), and add
paragraph (h) to read as follows:
Sec. 982.516 Family income and composition: Annual and interim
reexaminations.
(a) * * *
(3) For a family with net family assets (as the term is defined in
24 CFR 5.603) equal to or less than $50,000, which amount will be
adjusted annually in accordance with a commonly recognized inflationary
index, as determined by HUD, a PHA may accept, for purposes of
recertification of income, a family's declaration under 24 CFR
5.618(b), except that the PHA must obtain third-party verification of
all family assets every 3 years.
* * * * *
(c) Interim reexaminations. (1) A family may request an interim
determination of family income or composition because of any changes
since the last determination. The PHA must conduct an interim
reexamination within a reasonable period of time after the family
request.
(2) The PHA may decline to process a family request for an interim
income reexamination if the owner or PHA estimates the family's
adjusted income will decrease by an amount that is less than 10 percent
of the family's annual adjusted income, or if the family's adjusted
income will decrease by a lower threshold amount that is less than 10
percent, if such lower threshold has been established by the PHA. If
the PHA determines the estimated decrease in family adjusted income is
at least 10 percent (or the lower alternative threshold established by
the PHA), the PHA must conduct the interim income reexamination within
a reasonable period of time after the family's request.
(3) The PHA must conduct a reexamination of family income within a
reasonable time after the PHA becomes aware that the family's adjusted
income (as defined in 24 CFR 5.611) has changed by an amount that the
PHA estimates will result in an increase of 10 percent or more in
annual adjusted income, except:
(i) The PHA may not consider any increase in the earned income of
the family when estimating whether the family's adjusted income has
increased, unless the family has previously received an interim
reduction under paragraph (c)(2) of this section during the year;
(ii) The PHA may choose not to conduct an interim reexamination in
the last three months of a certification period; and
(iii) The PHA will not be considered out of compliance with the
requirements in this paragraph solely due to de minimis errors in
calculating family income but is still obligated to correct errors once
the PHA becomes aware of the errors. A de minimis error is an error
where the PHA determination of family income varies from the correct
income determination by no more than 5 percent. The PHA must still take
any corrective action necessary to repay a family if the family has
been overcharged for their rent as a result of the de minimis error in
the income determination.
(4) The PHA must adopt policies consistent with this section
prescribing when and under what conditions the family must report a
change in family income or composition.
(d) Family reporting of change. The PHA must adopt policies
consistent with this section prescribing when and under what conditions
the family must report a change in family income or composition.
* * * * *
(h) Reviews of family income under this section are subject to the
provisions in Section 904 of the Stewart B. McKinney Homeless
Assistance Amendments Act of 1988 (42 U.S.C. 3544).
Dated: August 13, 2019.
Brian D. Montgomery,
Acting Deputy Secretary.
[FR Doc. 2019-19774 Filed 9-16-19; 8:45 am]
BILLING CODE 4210-67-P
