Affirmatively Furthering Fair Housing, 2041-2061 [2020-00234]

Download as PDF 2041 Proposed Rules Federal Register Vol. 85, No. 9 Tuesday, January 14, 2020 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Parts 5, 91, 92, 570, 574, 576, 903, and 905 [Docket No. FR 6123–P–02] RIN 2577–AA97 Affirmatively Furthering Fair Housing Office of the Secretary, HUD. Proposed rule. AGENCY: ACTION: HUD recognizes that its program participants have a duty to affirmatively further fair housing (AFFH), which HUD finds essential to the appropriate administration of its grant programs. Program participants must certify that they AFFH and maintain documentation to support that certification. This rule proposes changes to HUD’s regulations regarding the reporting on program participants’ actions to AFFH so that HUD can effectively evaluate participants’ compliance with their AFFH obligations. This proposed rule would establish a uniform reporting process that respects the unique needs and difficulties faced by individual jurisdictions by assessing program participants on the concrete actions they take to AFFH and by leveraging objective metrics for fair housing choice to assist HUD’s evaluation of such actions. The proposed regulation would revise the definition of AFFH, develop metrics to allow comparison of jurisdictions, and require jurisdictions to certify that they will AFFH by identifying concrete steps the jurisdiction will take over the next 5 years. Jurisdictions would need to report on their progress toward the commitments in their AFFH certification through the regular consolidated plan reporting and review processes. Public housing agencies would demonstrate their efforts to AFFH through their participation in the consolidated plan process. DATES: Comment Due Date: March 16, 2020. lotter on DSKBCFDHB2PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 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 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 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: David Enzel, Deputy Assistant Secretary for Enforcement Programs, Office of Fair Housing and Equal Opportunity, Department of Housing and Urban Development, 451 7th Street SW, Room 5204; telephone number 202–402–5557 (this is not a toll-free number). This number may be accessed via TTY by calling the toll-free Federal Relay Service during working hours at 1–800– 877–8339. SUPPLEMENTARY INFORMATION: ADDRESSES: I. History The Fair Housing Act prohibits discrimination in the provision of housing based on race, color, religion, sex, handicap, familial status, or national origin.1 Section 808(e)(5) of the Fair Housing Act of 1968 (42 U.S.C. 3608(e)(5)) requires that the HUD 1 See PO 00000 42 U.S.C. 3604. Frm 00001 Fmt 4702 Sfmt 4702 Secretary ‘‘administer the programs and activities relating to housing and urban development in a manner affirmatively to further the policies of [the Fair Housing Act].’’ In addition, recipients of HUD funding are required by other statutes to certify they will AFFH: • Housing and Community Development Act. Jurisdictions directly receiving Community Development Block Grants must certify that they will AFFH (§ 104(b)(2), 42 U.S.C. 5304(b)(2)). Local governments receiving grants from a state must also certify they will AFFH (§ 106(d)(7)(B), 42 U.S.C. 5306(d)(7)(B)). • Cranston-Gonzalez National Affordable Housing Act. States and local governments receiving certain grants must certify they will AFFH as part of their 5-year comprehensive housing affordability strategy identifying needs for affordable and supportive housing for the following 5 years (§ 105(b)(15), 42 U.S.C. 12705(b)(15)). • United States Housing Act of 1937. Public housing agencies must include a certification they will AFFH as part of their annual plan (§ 5A(d)(16), 42 U.S.C. 1437c–1(d)(16)). Recipients of HUD funding, therefore, are required to affirmatively further the Fair Housing Act’s goal of promoting fair housing and equal opportunity. The Fair Housing Act and subsequent acts requiring certifications do not specify how HUD, or recipients of funding, are to AFFH, granting the Secretary broad discretion to define the precise scope of the AFFH obligation for HUD’s program participants, including the AFFH certification.2 Further, in Inclusive Communities, the Supreme Court warned that the Fair Housing Act ‘‘is not an instrument to force housing authorities to reorder their priorities’’ 3 and is not meant to remedy mere 2 See, e.g., United States v. Winthrop Towers, 628 F.2d 1028, 1036 (7th Cir. 1980) (‘‘HUD has broad discretion ‘to choose between alternative methods of achieving the national housing objectives set forth in the several applicable statutes.’ ’’) (quoting Shannon v. U.S. Dep’t of Hous. & Urban Dev., 436 F.2d 809, 819 (3d Cir. 1970)); see also Nat’l Fair Hous. Alliance, 330 F. Supp. 3d at 62 (D.D.C. Aug. 2018) (‘‘HUD has ‘broad discretion to choose between alternative methods of achieving the national housing objectives set forth in the several applicable statutes,’ . . . and the Court may not substitute its judgment for HUD’s in determining the best way of doing so.’’) (quoting Shannon 436 F.2d at 819). 3 Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507, 2522–23 (2015). E:\FR\FM\14JAP1.SGM 14JAP1 2042 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules statistical imbalances in housing for protected class members.4 HUD satisfies its own AFFH obligations in various ways, including by imposing site and neighborhood standards for HUD-funded development,5 requiring affirmative marketing of housing units to promote integrated neighborhoods,6 and designing its programs to be consistent with its AFFH obligation. HUD also uses the disparate impact theory as a method of addressing violations of the Fair Housing Act where there is not clear evidence of intent to discriminate. HUD’s grantee compliance monitoring advances the same goal—by requiring that grantees maintain records to support their AFFH certifications, HUD can use the information gathered to address violations of the Fair Housing Act that are not immediately apparent. In 2015, HUD issued a final rule 7 revising the AFFH reporting regulations for program participants. That rule required program participants to use a computer assessment tool to complete an Assessment of Fair Housing (AFH) by answering 92 questions on fair housing issues, priorities, and goals. Topics included segregation, racially or ethnically concentrated areas of poverty, significant disparities in access to opportunities, and disproportionate housing needs. The rule contemplated separate assessment tools for public housing agencies (PHAs), States and Insular Areas, and local governments. HUD released a tool for local governments 8 but never released a tool for States and Insular Areas, and the tool for PHAs never became operational. lotter on DSKBCFDHB2PROD with PROPOSALS II. Justification for Change While the statutory obligation to AFFH has not changed, HUD has, over time, required program participants to document their efforts and plans to AFFH in several different ways. Since the issuance of the 2015 final rule, HUD has determined that the current regulations are overly burdensome to 4 See, e.g., id. at 2522 (‘‘But disparate-impact liability has always been properly limited in key respects that avoid the serious constitutional questions that might arise under the [Fair Housing Act], FHA, for instance, if such liability were imposed based solely on a showing of a statistical disparity.’’) 5 See, e.g., 24 CFR 891.125; 983.57. 6 24 CFR part 200, subpart M. 7 ‘‘Affirmatively Furthering Fair Housing; Final Rule,’’ published July 16, 2015, at 80 FR 42272. 8 ‘‘Affirmatively Furthering Fair Housing: Announcement of Renewal of Approval of the Assessment Tool for Local Governments,’’ published January 13, 2017, at 82 FR 4391; ‘‘Affirmatively Furthering Fair Housing Assessment Tool: Announcement of Final Approved Document,’’ published December 31, 2015, at 80 FR 81840. VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 both HUD and grantees and are ineffective in helping program participants meet their reporting obligations for multiple reasons. While some of the burdens are a result of the assessment tools themselves, the tools are closely tied to the regulatory language, which HUD believes is too prescriptive in outcomes for jurisdictions. Therefore, HUD believes it is necessary to revise the codified regulation, not just the assessment tools. First, the AFH required significant resources from program participants, and its complexity and demands resulted in a high failure rate for jurisdictions to gain approval for their AFH in the first year of AFH submission. HUD became aware of significant deficiencies in the Local Government assessment tool that impeded completion and HUD acceptance of meaningful assessments by program participants. The number of questions, the open-ended nature of many questions, and the lack of prioritization between questions made the planning process both inflexible and difficult to complete. On May 15, 2017, HUD issued a notice inviting public comments to assist HUD in identifying existing regulations that may be outdated, ineffective, or excessively burdensome.9 Many commenters specifically indicated that, as program participants, they found the rule’s requirements to be (or likely to be) extremely resourceintensive and complicated, placing a strain on limited budgets. A representative of PHAs wrote that compliance with the ‘‘overly burdensome and impractical’’ rule 10 would be expensive, with particular concern for PHAs with small housing portfolios, while other commenters stated that the rule did not provide enough consideration to the fact that jurisdictions are limited geographically in what they can do, even when a jurisdiction is in a regional partnership. Of the 49 jurisdictions that were in the first group to submit an AFH between October 2016 and December 2017, 31 (63 percent) were either never accepted or were only accepted after HUD required revisions.11 While 9 ‘‘Reducing Regulatory Burden; Enforcing the Regulatory Reform Agenda Under Executive Order 13777,’’ published June 14, 2017, at 82 FR 22344. 10 See Lisa Stevens, Idaho Chapter of NAHRO letter to HUD Notice FR–6030–N–01 Reducing Regulatory Burden; Enforcing the Regulatory Reform Agenda Under Executive Order 13777, June 14, 2017, available at https://www.regulations.gov/ document?D=HUD-2017-0029-0109. 11 ‘‘Affirmatively Furthering Fair Housing: Withdrawal of the Assessment Tool for Local Governments,’’ published May 23, 2018, at 83 FR 23922. PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 regional AFHs allowed program participants to pool knowledge and resources, the joint AFHs had the same defects as individual AFHs.12 Program participants attempted to prepare successful AFHs by hiring outside consultants, redirecting resources that could have been used to support affordable housing directly.13 The sheer volume of data and variety of expertise required under the 2015 rule placed an undue burden on jurisdictions. While the assessment tool for PHAs was not finally implemented, under a published draft, PHAs would have been responsible for reporting on factors such as segregation levels and patterns dating back to 1990, community attitudes leading to observed patterns, and the presence or lack of private or public investment for the jurisdiction’s protected classes.14 The tool would also require PHAs to analyze and consider data and policies beyond their jurisdictional control and typical subject-matter expertise. For example, the rule required identifying disparities in ‘‘. . . access to public transportation, quality schools and jobs . . . [and] environmental health hazards’’ and ‘‘programs, policies, or funding mechanisms that affect disparities’’ to such access.15 A commenter on the advance notice of proposed rulemaking on AFFH regulations issued in 2018 noted that this jurisdictional analysis was simply too complex to be effectively completed by staff without specific statistical and mapping knowledge, as housing providers generally have staff with skills that lie in providing affordable housing services, but not in providing complex statistical data analysis.16 The same is likely true for many smaller jurisdictions. The 2015 rule also had public participation requirements that were similar to the consolidated plan citizen participation requirements, but it created a separate process for the AFH that duplicated the existing requirements for citizen participation and consultation with outside organizations that were already required for the consolidated plan. Jurisdictions were required to hold at least one public 12 Id. 13 Id. 14 PHA Assessment of Fair Housing Tool (https:// www.hudexchange.info/resources/documents/ Assessment-of-Fair-Housing-Tool-For-PublicHousing-Agencies-2017-01.pdf). 15 AFFH Rule, 80 FR at 42282. 16 Jim Hobbs, Housing Authority of Pikeville comment letter to FR–6123–A–01 Affirmatively Furthering Fair Housing: Streamlining and Enhancements, p. 1, October 12, 2018, available at https://www.regulations.gov/document?D=HUD2018-0060-0150. E:\FR\FM\14JAP1.SGM 14JAP1 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules lotter on DSKBCFDHB2PROD with PROPOSALS hearing specifically on their proposed AFFH strategies prior to publishing the AFH for comment. According to some commenters, these AFFH-specific hearings created high additional costs for jurisdictions.17 Second, the administration of the rule was burdensome to HUD. While implementing the 2015 rule, HUD spent over $3.5 million to provide technical assistance to the initial 49 jurisdictions. A workforce management plan, written by a contractor prior to the initial AFH submissions, estimated that HUD would need 538 full-time employees to conduct reviews of the AFHs submitted in 2019, given the increased number of jurisdictions originally scheduled to submit AFHs in 2019 (up to 682).18 Third, the 2015 rule’s scope was particularly burdensome because HUD did not tailor the rule depending on the program participant, other than through creating broad categories. Every jurisdiction, regardless of their size, civil rights record, or current housing conditions, had to go through the same AFH process, without the flexibility to identify their locality’s most relevant issues or to adapt their process to the unique conditions of the jurisdiction. Commenters expressed concerns that they lacked the capacity to analyze the several contributing factors prescribed by HUD and requested that HUD allow grantees flexibility in identifying issues and developing a course of action.19 Fourth, HUD determined that the 2015 rule focused too much on planning and process, and not enough on either the jurisdiction or HUD evaluating fair housing results. Jurisdictions were required to consider and provide extensive documentation for every question, regardless of whether the question or the expected answer advanced the jurisdiction’s duty to AFFH or was relevant to the needs of the jurisdiction. This uniform, processbased approach discouraged innovation, allowed the process to substitute for 17 See, e.g., Tiffany King, The Michigan State Housing Development Authority (MSHDA), comment letter to FR–6123–A–01 Affirmatively Furthering Fair Housing: Streamlining and Enhancements, p. 1, October 16, 2018, available at https://www.regulations.gov/document?D=HUD2018-0060-0369; Jennifer Eby comment letter to HUD Notice FR–6030–N–01 Reducing Regulatory Burden; Enforcing the Regulatory Reform Agenda Under Executive Order 13777, p. 2, June 14, 2017, available at https://www.regulations.gov/ document?D=HUD-2017-0029-0222. 18 AFFH Workforce Management Plan, April 29, 2016. 19 See, e.g., The City of Winston-Salem, NC comment letter to FR–6123–A–01 Affirmatively Furthering Fair Housing: Streamlining and Enhancements, p. 2, October 16, 2018, available at https://www.regulations.gov/document?D=HUD2018-0060-0357. VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 actual results, and made it difficult to evaluate and compare jurisdictions over time. Jurisdictions can advance fair housing in ways that HUD officials cannot predict because HUD lacks the extensive localized knowledge of State or local officials. The inherent nature of fitting jurisdictions into pre-determined categories and methods rather than evaluating jurisdictions based on results and achievements could discourage innovation and inhibit HUD’s ability to evaluate a jurisdiction’s improvement. Finally, the completion of the AFH required grantees to use specific data sets and HUD-provided tools, including extensive mapping data, locally available data, and data from various interest groups. The goal behind the assessment tools was to assist in compiling this information, but the scope of the task of providing quality tools proved difficult for HUD, given the wide variety of circumstances to which they applied from jurisdiction to jurisdiction, and the absence of a discrete statutory objective. For local jurisdictions, the tool was difficult to learn and operate and did not include all factors that jurisdictions deemed relevant, such as low-income housing tax credit supported projects. For PHAs and states, no tools were ever provided because of the challenge in developing appropriate data sets for both relatively large and small geographies, i.e., states and particular housing developments. While the 2015 rule was not fully implemented, HUD determined that the results from the limited roll-out (summarized above) were sufficient to cease further implementation. HUD therefore concluded that a new approach was required.20 On August 16, 2018, HUD published an Advance Notice of Proposed Rulemaking at 83 FR 40713, asking for the public’s input on changes that would: (1) Minimize regulatory burden while more effectively aiding program participants to meet their legal obligations; (2) create a process that is focused primarily on accomplishing positive results, rather than on performing analysis of community characteristics; (3) provide for greater local control and innovation; (4) seek to encourage actions that increase fair housing choice, including through greater housing supply; and (5) more efficiently utilize HUD resources. HUD received over 700 public comments in response. Many expressed support for the 2015 final rule and urged HUD to continue to implement its 20 Additional information was included in the Advance Notice of Proposed Rulemaking, ‘‘Affirmatively Furthering Fair Housing: Streamlining and Enhancements,’’ published October 15, 2018, at 83 FR 40713. PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 2043 requirements. These commenters cited the need for a way to enforce the AFFH requirement and cited the significant use of resources and public input that went into the creation of the 2015 rule. These commenters found the early results of the rule ‘‘promising’’ and believed that improving the tools would ease the burdens and improve the process. However, a large number of commenters opposed the 2015 rule. Some objected to the idea entirely, citing concerns for local control of zoning. Others felt that the requirements of the rule were too onerous, specifically the level of public participation needed and the scope of data that program participants were required to address. Commenters asked that program participants and PHAs be given broader discretion in their planning. Multiple commenters suggested that instead of the 2015 rule’s approach, HUD should find ways to use the AFFH process to provide incentives to increase housing supply and remove restrictive zoning regulations. HUD has considered these comments and suggestions in the development of this proposed rule. III. Goals of Proposed Rule HUD seeks to further both the spirit and the letter of the Fair Housing Act. Housing discrimination still takes place, and many jurisdictions continue to allow known barriers to fair housing— such as burdensome governmental processes, the concentration of substandard housing stock in specific areas, or restrictions based on the source of a tenant’s income—to exist. HUD intends this regulation to promote and provide incentives for innovations in the areas of affordable housing supply, access to housing, and improved housing conditions. This is part of HUD’s ongoing effort to improve regulations to allow and encourage innovative solutions to the housing problems facing America today. For example, there have been significant improvements in housing design and production products, as demonstrated in new designs for manufactured housing and reduced-size housing. Jurisdictions have also chosen to adopt changes in zoning laws that promote housing for the local workforce. Jurisdictions have amended historic preservation laws to permit redesign of buildings that are ill-suited for its community members with disabilities. Jurisdictions are promoting the provision of housing adjacent to transportation centers. As jurisdictions examine and discuss obstacles to fair housing, HUD anticipates such obstacles E:\FR\FM\14JAP1.SGM 14JAP1 lotter on DSKBCFDHB2PROD with PROPOSALS 2044 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules can, in part, be addressed through innovative approaches to design and building codes and the elimination of unnecessary fees and other regulatory barriers. HUD will spotlight jurisdictions achieving such new solutions, but will not mandate or prescribe specific actions. Therefore, HUD is proposing a new process to evaluate each jurisdiction’s efforts to AFFH that not only allows HUD to enforce civil rights requirements effectively but also empowers individual jurisdictions to develop new approaches to AFFH and share with their peer jurisdictions what has worked and what has not. This approach will allow HUD to target its resources where they are most needed while enabling jurisdictions to measure their progress, understand their successes or failures, and continue to improve their efforts, without a mandate from HUD on exactly what steps to take. This approach would allow HUD to highlight best practices and create a repository of ideas by drawing out the diffuse knowledge about fair housing held by local actors and encouraging policy experimentation. HUD hopes to leverage this knowledge by studying the best housing opportunity results across the country and encouraging jurisdictions to adopt best practices. This approach allows and provides incentives to local actors who know best the fair housing needs of their communities to take steps to further their particularized goals. As the Supreme Court stated in Inclusive Communities, while discussing the purpose of the Fair Housing Act, HUD should not ‘‘second-guess which of two reasonable approaches’’ should be taken or ‘‘force housing authorities to reorder their priorities’’ unnecessarily.21 The Fair Housing Act ‘‘does not decree a particular vision of urban development.’’ 22 HUD aims to take this into account and allow for the flexibility and innovation necessary to best further fair housing nationwide, recognizing that fair housing is an especially difficult and complex policy area because of the competing considerations that go into promoting fair housing and other valid governmental priorities. By proposing to reward jurisdictions that are performing well in their AFFH efforts and improving in ways that will benefit entire communities, HUD will provide incentives to both jurisdictions and the general public to find ways to help local jurisdictions improve their AFFH efforts. By increasing the number of people who benefit from an 21 Inclusive 22 Id. Communities, 135 S. Ct. at 2522. at 2523. VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 expansion of fair and affordable housing, HUD expects that a larger share of the local community will be motivated to participate in local discussions on how to AFFH and what strategies are best suited for the locality. Such incentives may encourage citizens and local businesses to participate in important local housing debates when they otherwise may have sat on the sidelines. HUD believes that having buy-in from a broad range of citizens and businesses in a community will result in a stronger AFFH effort and help reduce housing discrimination. HUD also recognizes that government policies, even when well-intentioned, can have negative results. This proposed policy of encouraging local experimentation is a recognition of the difficulties of crafting a top-down approach. HUD does not expect this proposed rule to be the final word on how recipients of HUD funding can AFFH. Rather, HUD anticipates that this will be the beginning of a flexible approach, consistent with constitutional mandates and statutory requirements, as HUD and jurisdictions gain additional evidence about what works and does not work to facilitate the advancement of fair housing. IV. Summary of Proposed Rule HUD believes that fair housing choice exists when a jurisdiction can foster the broad availability of affordable housing that is decent, safe, and sanitary and does so without housing discrimination. To that end, HUD is proposing to evaluate how program participants are carrying out their AFFH obligation as a threshold matter by using a series of data-based measures to determine whether a jurisdiction (1) is free of adjudicated fair housing claims; (2) has an adequate supply of affordable housing throughout the jurisdiction; and (3) has an adequate supply of quality affordable housing. Jurisdictions that score highly using these metrics (or through improvements over a 5-year cycle) would be eligible for various incentives in HUD programs. HUD would focus remedial resources and potential regulatory enforcement actions on the lowest performers. All program participants included in the consolidated plan process would be required to examine their own circumstances to determine how best to address their AFFH performance. HUD is proposing to modify the regulatory requirements of jurisdictions’ certifications that they will AFFH by requiring the jurisdictions to commit, in the certification, to taking specific steps to address obstacles to fair housing choice. As a result of HUD’s proposal to PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 include these commitments as part of the consolidated plan, jurisdictions would consult with all relevant stakeholders to develop AFFH commitments tailored to the needs and situations of the jurisdiction. HUD expects that jurisdictions would then be able to share with others, through HUD and otherwise, what worked and what did not work, allowing jurisdictions to learn from one another as they develop new approaches. PHAs would be required to participate in the development of this certification through their participation in the consolidated plan process; this participation and their own accompanying AFFH certification would be how PHAs fulfill their AFFH responsibilities. The previous AFFH process—which required lengthy submissions that averaged 204 pages but stretched as long as 832 pages 23—risked violating the organizational management maxim that if everything is a priority, nothing is a priority. In contrast, HUD believes that simplifying AFFH requirements would aid program participants in meeting their statutory civil rights obligations. It would also help HUD target its enforcement and technical assistance for jurisdictions receiving CDBG funds so that HUD’s efforts are directed where they are needed most. This would allow jurisdictions to focus on their most important fair housing goals so that the jurisdiction could achieve more of their aims, instead of trying to execute too many goals to be successful. By having jurisdictions focus on fewer elements, it would be easier for the public to provide relevant information and feedback, better enabling jurisdictions to take those contributions from the public into consideration. HUD welcomes comments on all aspects of the proposed rule and its potential impacts. However, there are areas where HUD is seeking very specific feedback on the proposal. These specific requests for comments are embedded in the preamble discussion. A. Definition of Affirmatively Furthering Fair Housing The current regulation defines AFFH as ‘‘taking meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity, replacing segregated living patterns with truly integrated and balanced living patterns, transforming racially and ethnically 23 See December 23, 2016, AFH of the City of Philadelphia and the Philadelphia Housing Authority, available at http://ohcdphila.org/wpcontent/uploads/2017/01/afh-2016-for-web.pdf. E:\FR\FM\14JAP1.SGM 14JAP1 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules lotter on DSKBCFDHB2PROD with PROPOSALS concentrated areas of poverty into areas of opportunity, and fostering and maintaining compliance with civil rights and fair housing laws.’’ 24 HUD proposes changing the definition of AFFH to ‘‘advancing fair housing choice within the program participant’s control or influence.’’ HUD is proposing a definition of ‘‘fair housing choice’’ to be allowing ‘‘individuals and families [to] have the opportunity and options to live where they choose, within their means, without unlawful discrimination related to race, color, religion, sex, familial status, national origin, or disability.’’ 25 Fair housing choice would consist of three components: (1) Protected choice, meaning the absence of discrimination. (2) Actual choice, meaning not only that affordable housing options exist (as defined by the jurisdiction based on the needs and resources of that jurisdiction), but that the information and resources are available to enable informed choices. This is intended to encourage jurisdictions to provide public education about fair housing, the protected classes, and the resources available to protected class members to protect their right to fair housing. (3) Quality choice, meaning that the available and affordable housing is decent, safe, and sanitary, and, for persons with disabilities, accessible as required under civil rights laws. This revised definition of AFFH would avoid a federal government directive for local action that does not align with the statutory directive or that goes go beyond the authority of subject jurisdictions. It would also alleviate the unintended consequences of discouraging the use of federal assistance in communities that need additional help instead of restrictions. It would provide a more tailored approach that would take into account local issues and concerns by allowing local jurisdictions to create custom approaches based on their unique circumstances. In addition, the revised definition would make it clear that fair housing is based on fair housing choice. Fair housing involves combatting discrimination across all the classes protected by the Fair Housing Act: color, religion, sex, disability, familial 24 24 CFR 5.152. Fair Housing Act uses the term ‘‘handicap.’’ See 42 U.S.C. 3604. However, the term ‘‘disability’’ is more commonly used and accepted today to refer to a physical or mental impairment that is protected under federal civil rights laws, the record of that impairment, or being perceived as having an impairment. Therefore, except when quoting from the Fair Housing Act, this preamble and proposed rule use the term ‘‘disability.’’ 25 The VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 status, and national origin. Finally, the revised AFFH definition would emphasize that a jurisdiction can AFFH in a variety of ways, according to the needs and means of the local community. The revised definition does not affect the responsibility of jurisdictions to comply with other relevant federal requirements and civil rights law. B. AFFH Certifications Each jurisdiction that submits a consolidated plan must submit a certification that it will AFFH. Currently, the certification consists of a statement that the jurisdiction will AFFH, but it does not specify the exact way the jurisdiction intends to AFFH. HUD is proposing to expand the certification so that the jurisdiction would commit to addressing at least three fair housing choice obstacles or goals over the next five years. By including AFFH planning as part of the consolidated plan process, HUD proposes to incorporate the public participation requirements of the consolidated plan, without imposing an additional burden on jurisdictions. PHAs, already required to participate in the consolidated plan process, would be required to certify, in every applicable annual plan, that they have consulted with the jurisdiction on how to satisfy their obligations to AFFH. This participation and certification would fulfill their AFFH responsibilities. Each jurisdiction would be required to submit at least three measurable, concrete goals it plans on reaching in the upcoming years or obstacles to fair housing choice it plans to address, within its scope of influence, to increase fair housing choice. HUD would expect these submissions to provide a brief and direct explanation of how pursuing each goal or alleviating each obstacle would further fair housing choice in their jurisdiction. HUD would review these goals or obstacles for completeness and verify they use concrete and measurable standards, but HUD would not require that the goals cover specific areas or reach certain thresholds. Jurisdictions may consider additional data other than what was used for the comparison metrics in deciding what steps to take, but they would be required to provide a narrative justification for the decisions and goals. The certification would not have to address all fair housing obstacles or identify every effort the jurisdiction would take, but it should identify crucial or material efforts that the jurisdiction would reasonably expect to undertake over the next five years. PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 2045 Question for Comment 1: Is three the appropriate number of goals a jurisdiction should submit? If not, what would be a more suitable number? Would a higher number more appropriately hold jurisdictions accountable to AFFH without imposing an undue burden? Question for Comment 2: How should HUD balance requiring overly prescriptive standards with ensuring integrity for data sources that support such goals? The certification would be informed by the nature of the program participant, its geographic scope, its size, and its financial, technical and managerial resources. The goals or obstacles identified in the certification would not need to be based on any HUDprescribed mode of analysis, such as examining a statistical analysis of housing patterns, using any specified data set, or reflecting original research or commissioned expert opinions, but they should reflect the practical experience and local insights of the program participant in conducting its ordinary housing-related operations, both with HUD funding and other programmatic efforts. HUD recognizes that jurisdictions may find many ways to advance fair housing that HUD officials cannot predict. Developing approaches to AFFH is a particularly difficult policy area, because a jurisdiction must consider competing factors within the jurisdiction that affect how best to AFFH, and State or local officials have the localized knowledge to balance those considerations. Therefore, HUD is not proposing to require that jurisdictions carry out specific steps to AFFH. This approach would allow jurisdictions to act as they deem necessary to achieve their results while allowing HUD to avoid micromanaging localities, ‘‘decree[ing] a particular vision of urban development,’’ 26 or ‘‘second-guess[ing] which of two reasonable approaches’’ a jurisdiction should take.27 It would preserve flexibility for jurisdictions to take action based on the needs, interests, and means of the local community, and respects the proper role and expertise of state and local authorities. Question for Comment 3: What, if any, aspects of the proposed rule and other policies not in the proposed rule, would motivate jurisdictions to more meaningfully engage in the AFFH planning process and make progress on the goals of the local AFFH plan? 26 Inclusive 27 Id. E:\FR\FM\14JAP1.SGM Communities, 135 S. Ct. at 2522–23. at 2512. 14JAP1 lotter on DSKBCFDHB2PROD with PROPOSALS 2046 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules However, HUD anticipates that jurisdictions may look to common ways to increase fair housing choice in their jurisdictions. HUD proposes including a non-exhaustive list in the regulation of conditions that HUD considers to be common barriers to fair housing choice. HUD would consider a goal to take concrete steps toward alleviating or improving one of these listed conditions as a justified method of affirmatively furthering fair housing, and therefore jurisdictions would not need to include an explanation of why the jurisdiction is pursuing solutions to these barriers. While the proposed list would serve as a resource for jurisdictions in identifying potential obstacles or goals, HUD is not requiring jurisdictions to choose from these barriers when developing their certifications. HUD seeks input on what specific barriers may be categorized as ‘‘common’’ and thus should be included in the list. HUD recognizes the broad sweep of the AFFH obligation, its nature which defies easy quantification, and its susceptibility to widely diverging but reasonable interpretations. In analyzing the statutory direction within the context of the Fair Housing Act and other applicable laws as a whole, HUD does not expect that program participants would be able to immediately and completely address each impediment which they identify. Further, the purpose of these goals would not be to bind the jurisdiction to a certain course of action. Rather, these goals would be intended to provide HUD with an explanation of how the jurisdictions plans to AFFH so that HUD can review the jurisdiction’s actions to determine whether, in HUD’s assessment, the jurisdiction is making a sufficient effort to AFFH. Although not expressly included on HUD’s proposed examples of common barriers (because they are generally legitimate and widely vary), jurisdictions should feel free to examine their State or local zoning laws and may determine that modifying these provisions is how they can best AFFH. HUD anticipates that program participants may undertake these types of actions because commenters stated that, outside of market forces, there are a number of structural barriers that could reduce the availability of housing overall, keeping housing prices high. For instance, cities may have zoning laws that restrict the ability of owners to build higher-density housing, or they may have elaborate housing production processes that result in would-be developers not getting the best use out of their land. One commenter noted that parties who would like to build more VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 housing might face multiple layers of bureaucracy, each with their own interests and levels of expertise, such as city planning departments, citizen zoning boards, historical commissions, public hearings, state environmental review boards, and city rental licensing departments.28 HUD considers changes to zoning laws to be a useful and appropriate tool to further fair housing choice. Jurisdictions are free to choose to undertake changes to zoning or land-use policies as one method of complying with the AFFH obligation; however, no jurisdiction may have their certification questioned because they do not choose to undertake zoning changes. HUD believes this is consistent with section 105(c)(1) of the Cranston-Gonzalez National Affordable Housing Act,29 which prohibits HUD from disapproving consolidated plans because a jurisdiction adopts or continues zoning ordinances or land-use policies. One commenter cited data that found that the ‘‘overall cost of housing in the United States is at least $3.4 trillion higher than it would be absent zoning regulations’’ and US GDP is about $2 trillion below its potential due to restrictive land-use regulations.30 According to one study cited by a commenter, ‘‘regulation imposed by all levels of government (whether local, state or federal) accounts for 32.1 percent of the cost of an average multifamily development.’’ 31 Numerous research studies provide supporting evidence of the commenters’ statements concerning the adverse impacts of restrictions on affordability and availability. A HUD report (2005) describes evidence from multiple studies indicating that regulating development increases the cost of housing. The estimated impact on prices varies by type of regulation studied and the context of the real estate market, and 28 Salim Furth, Mercatus Center at George Mason University letter to ANPR FR–6123–A–01 Affirmatively Furthering Fair Housing: Streamlining and Enhancements, October 16, 2018, p. 4, available at https://www.regulations.gov/ document?D=HUD-2018-0060-0026. 29 42 U.S.C. 12705(c)(1). 30 See Joshua Gottlieb comment letter to to FR– 6123–A–01 Affirmatively Furthering Fair Housing: Streamlining and Enhancements, October 16, 2018, available at https://www.regulations.gov/document ?D=HUD-2018-0060-0655. 31 National Association of Home Builders comment letter to ANPR FR–6123–A–01 Affirmatively Furthering Fair Housing: Streamlining and Enhancements, October 16, 2018, available at https://www.regulations.gov/document ?D=HUD-2018-0060-0489, citing Emrath, P. & Walter, C. Multifamily Cost of Regulation (2018), available at https://www.nahbclassic.org/ fileUpload_details.aspx?contentTypeID=3& contentID=262391&subContentID=712894. PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 ranges from 10 to 50 percent.32 A more extensive and critical review of published research (Quigley and Rosenthal, 2005) finds that ‘‘a number of credible papers seem to bear out theoretical expectations’’ that reducing the supply of developable land will raise housing prices.33 Sophisticated empirical research in the last decade has produced more convincing evidence that there is a direct link between regulation and housing affordability (Gyourko and Molloy, 2015).34 The impact of constraining development reaches beyond local housing and land markets. There is a macroeconomic cost of limiting housing production in the most productive cities. One study (Hsieh and Moretti, 2019) found that the misallocation of labor due to restrictive housing regulations lowered US economic growth by 36 percent from 1964 to 2009.35 Jurisdictions may examine their State or local laws, regulations, and government structure and determine that modifying these structural barriers to affordable housing is how they can best AFFH. Jurisdictions with high levels of deteriorated or low-quality housing may decide that they wish to focus on improving those measures. The jurisdiction could work to convince the local PHA to prioritize the rehabilitation of its units, or it could decide that the best way to spend flexible funds is to improve local housing conditions. Question for Comment 4: Are there other factors, in addition to the ones listed in this proposed regulation, which are generally considered to be inherent barriers to fair housing? Question for Comment 5: Should any of the factors listed as inherent barriers to fair housing be revised or removed? Should there be different inherent barriers for States than for other jurisdictions? Question for Comment 6: What process should HUD undertake for updating the list in regulations, and how frequently should these updates occur? 32 U.S. Department of Housing and Urban Development, 2005 ‘‘Why Not In Our Community?, Removing Barriers to Affordable Housing, An Update to the Report of the Advisory Commission on Regulatory Barriers to Affordable Housing.’’ 33 Quigley, John M., and Larry A. Rosenthal. 2005. ‘‘The Effects of Land Use Regulation on the Price of Housing: What Do We Know? What Can We Learn?’’ Cityscape: A Journal of Policy Development and Research 8 (1): 69–137. 34 Gyourko, J. and Molloy, R., 2015. Regulation and housing supply. In Handbook of regional and urban economics (Vol. 5, pp. 1289–1337). Elsevier. 35 Hsieh, Chang-Tai, and Enrico Moretti, 2019. ‘‘Housing Constraints and Spatial Misallocation.’’American Economic Journal: Macroeconomics 11 (2): 1–39. E:\FR\FM\14JAP1.SGM 14JAP1 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules lotter on DSKBCFDHB2PROD with PROPOSALS Finally, under the proposed rule, documentation used in the preparation of the AFFH certification would not need to be provided to HUD. However, such information would have to be retained and available for inspection by HUD according to the record retention requirements of the consolidated plan. C. Comparison Metrics To provide a way for jurisdictions to measure their progress in affirmatively furthering fair housing over time, and to allow HUD to verify that jurisdictions are taking actions and not just making plans, HUD is proposing a system that would use publicly available metrics to score and rank the CDBG-receiving jurisdictions that submit a consolidated plan that year. By using public data, HUD intends to create a ‘‘dashboard’’ that would allow jurisdictions to anticipate where they would rank and therefore plan ahead accordingly. This dashboard will further encourage engagement by allowing a jurisdiction to know exactly where it stands. These rankings would allow HUD to objectively determine a jurisdiction’s success in providing quality affordable housing without adjudicated adverse fair housing findings. This ranking system, while useful in helping HUD evaluating compliance with the jurisdiction’s requirement to AFFH, would not reflect a determination that the jurisdiction has complied with the Fair Housing Act. The proposed rule recognizes that jurisdictions face different challenges including tight or slack housing supply, job growth or decline, and shifts in population growth or decline. These different indicators would influence jurisdictions’ choices in promoting fair housing choice. A jurisdiction with high job growth and a tight housing market would have different priorities and abilities than a jurisdiction with job declines and a very open housing market. Both would also be different from a jurisdiction with high job growth but a commensurate growth in the availability of housing that keeps housing prices more affordable. HUD’s proposed regulation would compare jurisdictions receiving CDBG funds and submitting a consolidated plan with other similarly situated jurisdictions, taking into account the factors discussed above, to be developed for the final rule. HUD is also considering using different data sets for different categories of jurisdictions. The regulatory text is intended to be a broad outline of the specific data measures included in the comparison metric. HUD plans to publish a notice for public comment identifying the VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 specific sources of data and the method for creating a jurisdiction’s metric score when this rule is finalized. Question for Comment 7: What are the appropriate economic and population size/growth/decline market conditions categories of local CDBG-receiving jurisdictions that submit consolidated plans? Should there be different categories of States, as well? How many categories should there be? Question for Comment 8: Given the intentions of HUD for specific types of data discussed more fully below, are there specific data that HUD should use for certain categories and not for others? Question for Comment 9: What process should HUD undertake for updating the metrics, scoring, weighting, and other components, and how frequently should these updates occur? 1. Scope Under the proposed rule, HUD would only determine and compare metrics for jurisdictions that submit consolidated plans because they receive CDBG funds. This would allow HUD to rely on the geographic boundaries used by the CDBG program and to focus its resources on the jurisdictions that are likely receiving the most funding from HUD. Question for Comment 10: Should HUD also rank non-CDBG jurisdictions that still submit consolidated plans? What are the potential obstacles or problems with those rankings? 2. Data To determine each jurisdiction’s success at furthering fair housing choice, HUD would develop a scoring system based on quantitative data generated by publicly available datasets, such as data from the United States Census Bureau, including the American Community Survey, the United States Post Office, and HUD-generated data. These data would seek to represent how well a jurisdiction is providing affordable, quality housing free of violations of the Fair Housing Act and related statutes. HUD would create the scoring system using data related to affordable housing availability, the jurisdiction’s housing quality, and adjudicated complaints of violations of the Fair Housing Act or related statutes. HUD would re-evaluate the data set periodically and adjust them through further notice and comment. a. Lack of Adjudicated Fair Housing Violations One of the key ways HUD would confirm that program participants fulfill their AFFH responsibilities would be to PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 2047 reward only jurisdictions that are free of material civil rights violations. HUD recognizes that jurisdictions have multiple layers of civil rights enforcement, including state Attorneys General, Fair Housing Initiative Programs, the United States Department of Justice (‘‘DOJ’’), and HUD. HUD proposes to take all these methods of enforcement into account in determining a jurisdiction’s civil rights record. HUD proposes to include a yes or no indicator of whether the jurisdiction has an adversely adjudicated fair housing complaint brought by or on behalf of HUD or by the DOJ against the jurisdiction in the previous 5 years. By limiting this indicator to adverse determinations following adjudication, HUD would protect jurisdictions by only penalizing them on this indicator after they have had an opportunity for a hearing and full finding of facts. Jurisdictions with any such adjudicated violations within the previous 5 years would not be eligible for any benefits otherwise available to high-performing jurisdictions. Question for Comment 11: Are there other methods (aside from a yes or no indicator) for incorporating the complaints into the dashboard? Are there other data points HUD should include in this measure? Question for Comment 12: HUD is concerned that taking into account adversely adjudicated civil rights cases that were not brought by HUD or DOJ will encourage jurisdictions to settle civil rights claims rather than risk an adverse ruling that would affect the jurisdiction’s standing with HUD. HUD seeks comment on whether, and if so how, it could take these cases into account without unduly influencing civil rights litigation. Question for Comment 13: Are there circumstances in which a jurisdiction should not be held accountable for a negatively adjudicated complaint against a PHA? Are there ways to take adjudications against a PHA into account without penalizing the entire jurisdiction? b. Affordable Housing Fair housing choice requires not only the absence of discrimination but the existence of realistic housing options.36 As stated by Senator Walter Mondale in support of the Fair Housing Act, protection against discrimination does not itself ‘‘overcome the economic 36 See AFFH Rule Guidebook at 4, available at https://www.hudexchange.info/resources/ documents/AFFH-Rule-Guidebook.pdf, quoting 24 CFR 5.152. E:\FR\FM\14JAP1.SGM 14JAP1 lotter on DSKBCFDHB2PROD with PROPOSALS 2048 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules problem of those who could not afford to purchase the house of their choice.’’ 37 Ultimately, he continued, ‘‘the laws of supply and demand will take care of who moves into what house in which neighborhood.’’ 38 Members of protected classes often find their access to fair housing choice limited by economic factors brought on by a lack of affordable housing. Affordable housing can advance the goal of providing members of protected classes with access to the neighborhoods of their choice. Some protected class members may want to stay in their neighborhood to maintain access to deep community support systems or proximity to their job. Others who want to leave their neighborhood would benefit from reduced housing costs that make it easier for them to move. Encouraging policies that increase overall access to affordable housing allows residents to gain from improvements to housing conditions in their own neighborhood while providing flexibility to jurisdictions on how to achieve that affordability. Increasing the availability of affordable housing in a community would help low-income families. However, studies have demonstrated that single-parent households, elderly households, and households of color are more likely to be cost-burdened by housing.39 Increasing overall affordability will, therefore, help members of protected classes maximize their ability to live where they choose. Having a supply of affordable housing that is sufficient to meet the needs of a jurisdiction’s population is crucial to enabling families to live throughout the jurisdiction and promoting fair housing for all protected classes, so HUD is proposing to include data in the comparison metrics to evaluate a jurisdiction based on its availability of affordable housing. To do this, HUD is considering using metrics such as housing prices, fair market rents, the burden housing costs place on very-lowto moderate-income families, the ability of tenants with housing choice vouchers to access housing throughout the jurisdiction, and the existence of excess housing choice voucher reserves showing a failure to fully take advantage of voucher funding available to the jurisdiction. Question for Comment 14: Are there other data points HUD should use to 37 Speech by Senator Mondale on floor of the Senate, February 20, 1968, 114 Cong. Rec. 3421–22, 3421. 38 Id. at 3422. 39 The State of the Nation’s Housing 2018, Joint Center for Housing Studies of Harvard University, 2018, 30–31. VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 measure affordability as it relates to fair housing choice? If so, what considerations are needed in using this data to ensure an accurate measure? Question for Comment 15: What data sources may enable HUD to measure the extent to which residents are living in neighborhoods of their choice, consistent with their means? Question for Comment 16: With any of the data mentioned above, are there any factors, such as disparities in average income or job growth, for which HUD should control, to ensure that analysis of the data set is an accurate measure of access to fair and affordable housing? Question for Comment 17: Another idea HUD is considering is ranking jurisdictions based on ‘‘by right’’ land use or the amount of additional burden local regulations place on the housing market by unduly increasing housing costs. Do such measures exist? How could HUD work to create one? Question for Comment 18: Are there other measures that HUD could use or create to encourage the creation of additional housing that is affordable throughout a jurisdiction? c. Housing Quality and Physical Conditions Gains generated by widespread affordable housing are not meaningful unless that affordable housing is decent, safe, and sanitary. Without quality affordable housing, members of protected classes will face practical limitations in their housing choices. Individuals living in poor quality housing experience an increase in chronic illness,40 respiratory diseases,41 and injuries.42 Overcrowding can increase the transmissions of disease and psychological distress.43 These negative effects can be particularly harmful and long-lasting to children.44 40 Evans, J., Hyndman, S., Stewart-Brown, S., Smith, D., & Petersen, S., An epidemiological study of the relative importance of damp housing in relation to adult heath, J Epidemiol Community Health, pp. 677–686 (2000), available at https:// jech.bmj.com/content/54/9/677.long. 41 Institute of Medicine. Clearing the Air: Asthma and Indoor Air Exposures. Washington, DC: National Academy Press; 2000. 42 Tinetti ME, Speechley M, & Ginter SF., Risk factors for falls among elderly persons living in the community. N Engl J Med. 1988; 319:1701–1707. 43 Solari, Claudia D, and Robert D Mare, ‘‘Housing crowding effects on children’s wellbeing.’’ Social science research vol. 41,2 (2011): 464–76, available at https://www.ncbi.nlm.nih.gov/pmc/articles/ PMC3805127/. 44 Coley, R.L., Leventhal, T., Lynch, A.D., & Kull, M. (2013). Relations Between Housing Characteristics and the Well-Being of Low-Income Children and Adolescents. Developmental Psychology. Vol 49(9). Pages 1775–1789, available at https://www.ncbi.nlm.nih.gov/pmc/articles/ PMC3766502/. PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 Dilapidated or abandoned housing stock may also foster crime.45 Persistent health problems can also make it difficult for individuals to obtain and maintain employment, threatening their ability to maintain selfsufficiency. This can be particularly acute for individuals with physical disabilities and older adults, for whom deteriorating or inaccessible housing creates a much higher risk of injury. HUD is considering using worst-case housing needs data, which documents lack of kitchen facilities and adequate plumbing and overcrowding, to determine how well a jurisdiction is encouraging a supply of housing that is of sufficient quality. HUD would also like to consider the prevalence of housing with lead-based paint hazards that cause health issues and the quality of housing in jurisdictions according to HUD REAC inspection scores. Question for Comment 19: Are there other data points HUD should include to measure housing conditions as they relate to fair housing? If so, are there any additional considerations in using those data points necessary to ensure an accurate measure? Question for Comment 20: With any of the data mentioned above, should there be additional considerations to ensure that the data set is an accurate measure? 3. Rewards and Other Compliance Incentives HUD believes that the best way to further fair housing is to encourage collaboration and cooperation among all stakeholders within a jurisdiction, including government, PHAs, nonprofits, and private owners. This rule proposes to provide benefits to both jurisdictions and the entities within jurisdictions that, as demonstrated by comparison metrics, are successful with their AFFH efforts. In addition, this rule would empower HUD to concentrate its assistance and regulatory enforcement resources on the lowest AFFH performers. a. Rewards Within each category, HUD proposes to determine the jurisdictions that are outstanding AFFH performers, and grantees and applicants for funding located within those jurisdictions would be eligible for various benefits for the following 2 years. As more fully described below, HUD proposes that the benefits vary according to the program involved, but may include preference 45 See, e.g., Freedman, Matthew, and Emily G. Owens. ‘‘Low-income housing development and crime.’’ Journal of Urban Economics 70.2–3 (2011): 115–131. E:\FR\FM\14JAP1.SGM 14JAP1 lotter on DSKBCFDHB2PROD with PROPOSALS Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules points on Notices of Funding Availability (NOFAs) or eligibility to receive additional program funds due to reallocations of recaptured appropriated funds and other forms of regulatory relief. Beginning with the second consolidated plan cycle after the effective date of the rule, HUD also proposes to determine which jurisdictions had the greatest improvement in their metrics over the past five years. The most improved jurisdictions would also be eligible for benefits given to outstanding AFFH performers (if not otherwise already an outstanding AFFH performer). Question for Comment 21: How should HUD determine ranking of high and low AFFH performers? Should a baseline percentage be used (for example, the top 20 percent and bottom 20 percent), or should some other ranking be used (for example, a ‘‘natural break’’ in the distribution where there is a material distinction between jurisdictions)? If a percentage, what is the appropriate percentage, and why? Would it be appropriate to set a percentage and then allow the Secretary to deviate from that baseline when the data warrants it? What would be the effects of using each type of approach? Question for Comment 22: Should there be two tiers of rewards for high performing jurisdictions, such as ‘‘outstanding’’ and ‘‘high pass,’’ where ‘‘outstanding’’ performers received regulatory relief and extra funding, while ‘‘high pass’’ performers received just one category of relief, such as extra funding? What would be the effects of such an approach? Question for Comment 23: Should HUD reward improvement in a jurisdiction before the first 5-year cycle is complete? If so, how should HUD determine progress between consolidated plan submissions, and what possible benefits should be available? HUD is interested in determining which jurisdictions are the most effective at meeting their AFFH obligations. HUD believes that, by identifying top performers, other similarly situated jurisdictions can learn from these top performers and may be able to replicate successful practices. By identifying such top performers, HUD would be able to reward and provide incentives to jurisdictions that make significant efforts to address housing discrimination. This jurisdiction-driven approach would also allow the top performers to serve as a model for HUD in designing future programs and fair housing efforts. VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 HUD is proposing to reward outstanding AFFH performers through advantages in grant competitions. While many funding programs are based on a statutory formula, there are numerous grant programs, including Choice Neighborhood Planning and Implementation Grants, Jobs-Plus, leadbased paint reduction programs, ROSS and FSS programs, and the Fair Housing Initiative Program, where it may be appropriate to award points in the competition to applicants that are within outstanding AFFH jurisdictions. In the development of each competitive NOFA, HUD proposes to consider whether it is appropriate to use the grant funding to provide a benefit to potential recipients in an outstanding AFFH jurisdiction. In addition to potential NOFA bonuses, HUD would, in the development of future demonstration programs, consider whether the demonstration should prioritize participants in outstanding AFFH jurisdictions. Programs that may fall into this category include new designations of PHAs as Moving to Work (MTW) agencies, priorities for conversions of assistance under the Rental Assistance Demonstration (RAD) program, or selection for participation in mobility demonstrations. HUD is also considering whether outstanding AFFH jurisdictions should be eligible for various forms of regulatory relief, either from the AFFH process itself or as part of the larger programmatic regulatory requirements. HUD is also open to seeking additional statutory flexibility to reward outstanding AFFH jurisdictions. Question for Comment 24: Are there other rewards that HUD should consider for outstanding AFFH performers? Are there statutory or regulatory changes that HUD should pursue to increase the availability of such rewards? Question for Comment 25: Are there specific forms of regulatory relief that HUD should consider for outstanding AFFH performers? b. Compliance Incentives If a jurisdiction falls in the bottom ranking, HUD proposes to consider the accuracy of the jurisdiction’s AFFH certification under 24 CFR 91.5. The jurisdiction would have the opportunity to respond in writing to provide additional information to demonstrate that they are affirmatively furthering fair housing to the best of their ability. This demonstration may include evidence that the jurisdiction has taken concrete and measurable steps for improvement, additional information about specific obstacles faced in achieving AFFH PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 2049 goals, structural and systematic reasons for lack of movement in the comparison metrics, or other information the jurisdiction believes relevant. If HUD, following existing procedures, were to determine that the additional information provided by the jurisdiction is sufficient, HUD proposes to accept the certification. However, if the additional information was deemed insufficient, HUD proposes to reject the AFFH certification of the jurisdiction and to follow the procedures under 24 CFR 91.500 to provide the jurisdiction with the specific steps the jurisdiction must follow for HUD to accept the certification. Such steps may include additional public participation requirements for the development of the next AFFH certification or specific remedies for deficiencies HUD has discovered as part of the review process. If a jurisdiction continues to be unable to provide adequate assurances that it will AFFH, HUD proposes that the grant may be withheld. Question for Comment 26: Are there other remedies HUD should consider requiring of jurisdictions who are not improving in their comparison metrics? Just as with outstanding or improved AFFH performers, HUD is also very interested in identifying which jurisdictions may need further assistance in meeting their AFFH obligations. HUD believes that a jurisdiction that is struggling to improve on the neutral metrics, or falls significantly below its peers, may be a jurisdiction that needs help in other areas of compliance, as well. Therefore, HUD proposes to use the identification of the lowest performers in AFFH to target its resources in many areas, such as grant administration and regulatory oversight, not just in civil rights enforcement. HUD’s intent is not to punish pioneering jurisdictions for creative AFFH strategies that turn out not to be effective. HUD recognizes that sometimes unsuccessful efforts are just as important to learning as successful efforts. HUD would encourage jurisdictions to share lessons learned from unsuccessful efforts and successful efforts alike. HUD also expects that the annual report process would encourage jurisdictions to regularly consider whether their action plans are promoting change in the right direction and, if not, proposes to allow the jurisdictions a chance to recalibrate and change course. This would help create a cycle of accountability that allows jurisdictions to highlight successes, analyze failures, and course-correct, if necessary. E:\FR\FM\14JAP1.SGM 14JAP1 2050 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules Question for Comment 27: HUD is seeking input on possible mechanisms for sharing information across jurisdictions regarding the success of efforts to AFFH, and the extent to which any such mechanisms should become requirements of the regulation. 4. Appeals If a jurisdiction were to believe that an error, such as a failure to consider a relevant factor or a statistical anomaly, has resulted in the jurisdiction being improperly ranked, the jurisdiction would be able to respond to HUD by identifying the error and requesting a recalculation of the comparison metrics, or consideration of a factor which was not adequately accounted for in the comparison metrics. HUD would review the jurisdiction’s response and, if HUD determines it necessary, recalculate the jurisdiction’s ranking without impacting the rankings of others. D. Annual Performance Reports and Amendments lotter on DSKBCFDHB2PROD with PROPOSALS HUD recognizes that AFFH efforts may take time to realize results, but jurisdictions are encouraged to still work to AFFH on a consistent basis throughout their consolidated plan cycles. In the years between 5-year plans, jurisdictions would need to submit, in their annual performance reports under 24 CFR 91.520, annual progress updates to the goals or obstacles they submitted in their most recent AFFH certification. HUD is also proposing to add an AFFH component to the annual performance review conducted by HUD. This review would not be intended to substitute HUD’s judgment for the judgment of the jurisdiction. Instead, under HUD’s rational basis review, HUD would accept performance reports under 24 CFR 92.520, where the steps taken are each rationally related to the goal and obstacles identified in the jurisdiction’s AFFH certification. This language is intended to follow the judicial definition of rational basis review closely.46 46 See, e.g., McGowan v. Maryland, 366 U.S. 420, 425–26 (1961) (Under the rational basis standard, the constitutional safeguard of equal protection ‘‘is offended only if the classification rests on grounds wholly irrelevant to the achievement of the State’s objective. State legislatures are presumed to have acted within their constitutional power despite the fact that, in practice, their laws result in some inequality. A statutory determination will not be set aside if any statement of facts reasonably may be conceived to justify it.’’); see also James v. Strange, 407 U.S. 128, 140–42 (1972) (holding that rational basis review under the Equal Protection Clause ‘‘imposes a requirement of some rationality in the nature of the class singled out’’ and that treating one class of debtors differently from another VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 HUD believes that this level of review would provide the proper level of oversight without undue interference. HUD recognizes that affirmatively furthering fair housing is a necessarily complicated area implicating various policy concerns. Unlike enforcement actions for discrimination, HUD is seeking only to confirm that jurisdictions are fulfilling their statutory duty and will trust, in the absence of evidence to the contrary, that a jurisdiction’s preferred method of affirmatively furthering fair housing is a valid method of fulfilling its statutory duty. The Fair Housing Act does not mandate that jurisdictions be secondguessed for the reasonable choices they make. The Supreme Court in Inclusive Communities said that the Fair Housing Act is not a means of second-guessing the reasonable choices of jurisdictions.47 A higher level of scrutiny would invite second-guessing. This level of scrutiny also encourages experimentation and prevents HUD from substituting its judgment for that of local jurisdictions. HUD recognizes that some jurisdictions will pioneer methods of advancing fair housing, which may not always succeed but nevertheless should not be punished for their ingenuity. Jurisdictions would not be expected to address every goal or obstacle every year. However, under the proposed rule, HUD would expect that jurisdictions would, over the course of a 5-year period, follow through on all their commitments in their AFFH certification by taking some steps towards each of the goals in the AFFH certification. Following the same procedures as amendments to the consolidated plan, jurisdictions would be able to amend or change their goals if they discover a material barrier to achieving the goal or a reason why that goal is no longer the best means to AFFH. HUD would review these reports for completion and to verify that jurisdictions used concrete and measurable standards. HUD would not make a qualitative assessment of such reports. E. PHAs This rule seeks to tailor AFFH requirements applicable to PHAs while still verifying that PHAs are fulfilling their AFFH obligations. PHAs are already required to participate in the development of the consolidated plan actively. This rule would emphasize this requirement and establish that a without reason did not meet rational basis scrutiny). 47 Inclusive Communities, 135 S. Ct. at 2522. PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 PHA is generally required to AFFH only in its programs and in the areas under its direct control, and to certify that it will AFFH. A PHA would not be required to submit a certification detailing AFFH goals and obstacles. However, a PHA would be required to certify that it has consulted with the local jurisdiction on AFFH and would AFFH in its programs and in areas under its direct control. If a PHA has been subject to a HUD letter of finding or an adjudicated negative finding in a complaint brought by HUD or DOJ, finding a violation of the Fair Housing Act in the last two years, then HUD proposes that the PHA must include with its certification an explanation of what steps the PHA has taken and is taking to resolve the violation. Question for Comment 28: As discussed above concerning jurisdictions, HUD is concerned that taking into account adversely adjudicated civil rights cases which were not brought by HUD or DOJ will unduly encourage PHAs to settle civil rights claims rather than risk an adverse ruling affecting the PHA’s standing with HUD. HUD seeks comment on whether, and if so how, it could take these cases into account without unduly influencing civil rights litigation. Question for Comment 29: What should cooperation between PHAs and consolidated plan jurisdictions look like? Question for Comment 30: How should this rule balance the need for PHA engagement and contribution to an area’s AFFH requirements while not creating requirements that may be overly burdensome? V. Findings and Certifications Executive Orders 12866 and 13563, Regulatory Planning and Review Pursuant to 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 Executive Order. Executive Order 13563 (Improving Regulations and Regulatory Review) directs executive agencies to analyze regulations that are ‘‘outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.’’ Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and E:\FR\FM\14JAP1.SGM 14JAP1 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules lotter on DSKBCFDHB2PROD with PROPOSALS maintain flexibility and freedom of choice for the public. HUD believes that this proposed rule would empower local jurisdictions to determine how to AFFH rather than mandating that jurisdictions act on specific policies, and thus create a regulatory process that empowers individual jurisdictions to act on local determinations of need and within local budgetary and resource constraints. The proposed rule has been determined to be a ‘‘significant regulatory action,’’ as defined in section 3(f) of Executive Order 12866, but not economically significant. The docket file is available for public inspection online at www.regulations.gov. Executive Order 13771, Regulatory Costs 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. While the burden in creating a consolidated plan is expected to increase slightly as the jurisdiction prepares a Fair Housing Report, the overall burden on the jurisdiction is greatly lessened because the lengthy Assessment of Fair Housing (AFH), with its separate community engagement and reporting requirements, would be eliminated under this proposal. Jurisdictions would be able to determine their actions to AFFH based on their capacity and needs, allowing jurisdictions to avoid burdensome requirements beyond their abilities. The previously approved information collections for the AFFH Local Government and PHA and Assessment Tools (2529–0054 and 2529–0055, respectively) had a total, combined 665,862 burden hours for all respondents. This was due to the extensive nature of the tools and the additional public meeting requirements to complete an AFH. HUD has already temporarily withdrawn the Local Government Assessment Tool, and this proposed rule would make that removal permanent. By fully incorporating the proposed AFFH process into the existing consolidated plan process, HUD expects that the AFFH process will result in only 10 hours per response, or a total of 12,660 total hours, a significant reduction from the previous process requirements. The proposed rule significantly reduces the reporting burden for jurisdictions in the formulation of AFFH strategies, reducing costs by an estimated $23.7 million per year. Under the proposed rule, HUD would measure jurisdictions’ progress toward their identified AFFH goals through publicly available data focused on the VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 availability and quality of affordable housing, reward high performing jurisdictions with unspecified incentives, and provide technical assistance to low performing jurisdictions. Qualitatively, if the metrics and incentives are effective in influencing jurisdictions’ behavior, availability, and quality of affordable housing options should increase as Federal and local resources are devoted to such activities. Executive Order 12612, 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 This proposed rule is a policy document that sets out fair housing and nondiscrimination standards. Accordingly, under 24 CFR 50.19(c)(3), this proposed rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The undersigned certifies that this rule would not have a significant economic impact on a substantial number of small entities. This rule proposes to strengthen the way in which HUD and its program participants meet the requirement under the Fair Housing Act to take affirmative steps to further fair housing. The preamble identifies the statutes and executive orders that address this requirement and that place responsibility directly on certain HUD program participants, specifically, local governments, states, and PHAs, underscoring that the use of federal funds must promote housing choice and PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 2051 open communities. Although local governments, states, and PHAs must affirmatively further fair housing independent of any regulatory requirement imposed by HUD, HUD recognizes its responsibility to provide leadership and direction in this area, while preserving local determination of fair housing needs and strategies. This rule primarily focuses on establishing a regulatory framework by which program participants may more effectively report how they meet their statutory obligation to affirmatively further fair housing. This rule builds on the statutory requirements to affirmatively further fair housing in conjunction with the development of consolidated plans for state and local governments and PHA Plans for PHAs and, in doing so, provides for all program participants to comply with their statutory requirements in a costefficient and effective manner. Jurisdictions submitting consolidated plans do so usually because they receive State or Entitlement CDBG funds. In order to be an entitlement jurisdiction, the jurisdiction must be a principal city of a metropolitan statistical area, be a metropolitan city with a population of at least 50,000, or be a qualified urban county with a population of at least 200,000. This rule would change the certification requirements for PHAs in their annual plans to require that PHAs certify they will participate in the development of the consolidated plan. This participation will naturally be shaped by the needs and resources of the PHA. As discussed more fully in the ‘‘Executive Order 13771, Regulatory Costs’’ section, above, and in the proposed regulatory impact analysis (RIA), the rule proposes to reduce the administrative burden on program participants in preparing and submitting an AFFH certification to HUD as compared to the current AFH process. The proposed rule would do this by fully incorporating the AFFH process into the consolidated plan process and allowing jurisdictions to determine how to AFFH based on their unique combination of resources, economic situations, and local needs. Nevertheless, HUD is sensitive to the fact that the uniform application of requirements on entities of differing sizes may place a disproportionate burden on small entities. HUD, therefore, is soliciting alternatives for compliance from small entities as to how these small entities might comply in a way less burdensome to them. E:\FR\FM\14JAP1.SGM 14JAP1 2052 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501– 3520), 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 Office of Management and Budget (OMB) control number. The information collection requirements contained in this proposed rule have been approved by OMB under the Paperwork Reduction Act and assigned OMB control number 2506–0117 (Consolidated Plan, Annual Action Plan & Annual Performance Report). The collection requirement will be amended to reflect the altered burden contained in this proposed rule. HUD anticipates that the impact of this rule on document preparation time is reduced from the burden that it may otherwise be because the rule integrates the AFFH requirements with the consolidated and PHA planning processes. Additionally, states, local governments, and PHAs are already required to prepare written AFFH plans, undertake activities to overcome identified barriers to fair housing choice, and maintain records of the activities and their impacts. The principal differences imposed by this proposed rule would be that the program participants are no longer required to create plans based on specified data but would instead be permitted to determine how to AFFH Number of responses Total annual burden hours Total Annual Cost Information collection Hourly cost * Current Consolidated Plan for Localities and States Assessment Tool for Local Governments *** ................... Assessment Tool for PHAs ........................ Totals ........................... based on their local needs and available resources. In addition, because the AFFH process is wholly incorporated into the existing consolidated and PHA planning processes, local governments, states, and PHAs would not have to establish additional AFFH procedures. HUD published a notice on May 23, 2018, temporarily withdrawing the information collection in OMB Control Number 2529–0054, the Assessment Tool for Local Governments. This proposed rule makes that removal permanent, along with the removal of the Assessment Tool for PHAs, OMB Control Number 2529–0055. The burden of the information collections in this proposed rule is estimated as follows: New Current New Current New ** 1,266 1,266 393,338 405,998 $34 $13,373,492 $13,803,932 1,266 0 230,993 0 34 7,853,762 0 3,942 0 247,302 0 34 8,408,268 0 ........................ ........................ 871,633 405,998 ........................ 29,635,522 13,803,932 lotter on DSKBCFDHB2PROD with PROPOSALS * Estimates assume a blended hourly rate that is equivalent to a GS–12, Step 5, Federal Government Employee. ** Total localities of 1,266 includes 1,209 entitlements + 3 non-entitlements (Hawaii, Kauai, Maui), 4 Insular Areas (Guam, Mariana Islands, Samoa, Virgin Islands), and 50 states. *** This tool was temporarily taken down on May 23, 2018, by notice published at 83 FR 23922. 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 VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 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– 6123) 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 http://www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 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 http://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. 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. List of Subjects 24 CFR Part 5 Administrative practice and procedure, Aged, Claims, Crime, E:\FR\FM\14JAP1.SGM 14JAP1 2053 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules 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. 24 CFR Part 91 Aged; Grant programs-housing and community development; Homeless; Individuals with disabilities; Low and moderate income housing; Reporting and recordkeeping requirements. 24 CFR Part 92 Administrative practice and procedure; Low and moderate income housing; Manufactured homes; Rent subsidies; Reporting and recordkeeping requirements. 24 CFR Part 570 Administrative practice and procedure; American Samoa; Community development block grants; Grant programs-education; Grant programs-housing and community development; Guam; Indians; Loan programs-housing and community development; Low and moderate income housing; Northern Mariana Islands; Pacific Islands Trust Territory; Puerto Rico; Reporting and recordkeeping requirements; Student aid; Virgin Islands. 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 576 Community facilities; Grant programshousing and community development; Grant programs-social programs; Homeless; Reporting and recordkeeping requirements. 24 CFR Part 903 lotter on DSKBCFDHB2PROD with PROPOSALS Administrative practice and procedure; Public housing; Reporting and recordkeeping requirements. 24 CFR Part 905 Grant programs-housing and community development; Public housing; Reporting and recordkeeping requirements. Accordingly, for the reasons described in the preamble, HUD proposes to VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 amend 24 CFR parts 5, 91, 92, 570, 574, 576, 903, 905 as follows: PART 5—GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS 1. The authority citation for part 5, subpart A, continues to read as follows: ■ Authority: 29 U.S.C. 794, 42 U.S.C. 1437a, 1437c, 1437c–1(d), 1437d, 1437f, 1437n, 3535(d), and Sec. 327, Pub. L. 109–115, 119 Stat. 2936; 42 U.S.C. 3600–3620; 42 U.S.C. 5304(b); 42 U.S.C. 12101 et seq.; 42 U.S.C. 12704–12708; E.O. 11063, 27 FR 11527, 3 CFR, 1958–1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 Comp., p. 849. ■ 2. Revise § 5.150 to read as follows: § 5.150 Obligation to Affirmatively Further Fair Housing. (a)(1) Every recipient of HUD funding must affirmatively further fair housing by acting in a manner consistent with reducing obstacles within the participant’s sphere of influence to providing fair housing choice. HUD may consider a failure to meet the duty to affirmatively fair housing a violation of program requirements. (2) Fair housing choice means, within a HUD program participant’s sphere of influence, that individuals and families have the opportunity and options to live where they choose, within their means, without unlawful discrimination related to race, color, religion, sex, familial status, national origin, or disability. Fair housing choice encompasses: (i) Protected choice, which means access to housing without discrimination; (ii) Actual choice, which means not only that affordable housing options exist, but that information and resources are available to enable informed choice; and (iii) Quality choice, which means access to affordable housing options that are decent, safe, and sanitary, and, for persons with disabilities, access to accessible housing as required under civil rights laws. (b) Affirmatively furthering fair housing requires an effort that is in addition to, and not a substitute for, compliance with the specific requirements of the Fair Housing Act. (c) For the purposes of affirmatively furthering fair housing, HUD does not expect that recipients of funding will be able to immediately, completely, or to the satisfaction of all persons, address each impediment to fair housing choice, whether identified, known but not prioritized, or alleged by others. Nothing in this paragraph relieves jurisdictions of their obligations under other civil rights and fair housing statutes and regulations. PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 § 5.151 through § 5.154 Reserved] ■ ■ [Removed and 3. Remove § 5.151 through § 5.154. 4. Add § 5.155 to read as follows: § 5.155 Jurisdictional risk analyses. (a) Purpose. HUD will conduct an analysis and ranking of jurisdictions to determine which jurisdictions are especially succeeding at affirmatively furthering fair housing and which should be subject to an enhanced review and may need additional assistance to affirmatively further fair housing. This ranking is not a determination that the jurisdiction has complied with the Fair Housing Act. (b) Frequency. HUD will conduct the analysis and ranking every year. (c) Method. (1) HUD will, using publicly available data and databases, establish a base score for each jurisdiction regarding the extent to which there is an adequate supply of affordable and available quality housing for rent and for sale to support fair housing choice. The following are nonexclusive examples of the type of data for each jurisdiction: (i) Median home value and contract rent. (ii) Household cost burden. (iii) Percentage of dwellings lacking complete plumbing or kitchen facilities. (iv) Vacancy rates. (v) Rates of lead-based paint poisoning. (vi) Rates of subpar Public Housing conditions. (vii) Availability of housing accepting housing choice vouchers throughout the jurisdiction. (viii) The existence of excess housing choice voucher reserves. (ix) Availability of housing accessible to persons with disabilities. (2) HUD will initially establish and periodically evaluate the data used in paragraph (1) of this section through a Federal Register notice after opportunity for public comment. (3) HUD will create a ranking score for each jurisdiction, using a method to be specified in a Federal Register notice after opportunity for public comment, ranking jurisdictions more favorably for high relative performance in the objective measures set forth in paragraph (c)(1) of this section. HUD will then rank the jurisdictions based on this score, divided into the following categories: (i) Jurisdictions with population growth and tight housing markets. (ii) Jurisdictions with population growth and loose housing markets. (iii) Jurisdictions with population decline and tight housing markets. (iv) Jurisdictions with population decline and loose housing markets. E:\FR\FM\14JAP1.SGM 14JAP1 lotter on DSKBCFDHB2PROD with PROPOSALS 2054 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules (v) States with significant population growth. (vi) States without significant population growth. (d) Results. (1) After ranking the jurisdictions as described in paragraph (c)(3) of this section, HUD will designate the top ranking jurisdictions submitting a consolidated plan that year in each category as ‘‘outstanding AFFH performers’’ and the bottom ranking jurisdictions in each category as ‘‘lowranking jurisdictions.’’ Outstanding jurisdictions will, for the 24-month period following the approval of the jurisdiction’s consolidated plan, be eligible for potential benefits, including additional points in funding competitions and eligibility for additional program funds due to reallocations of recaptured funds as may be provided in NOFAs. Low-ranking jurisdictions may have their AFFH certifications questioned under 24 CFR part 91. (2) Beginning with the second submission of AFFH certifications under 24 CFR part 91 after [EFFECTIVE DATE OF FINAL RULE], HUD will determine how much each jurisdiction has improved according to the factors in paragraph (c) of this section. HUD will also designate as ‘‘outstanding AFFH performers’’ jurisdictions that have shown the most improvement since their last strategic plan submission. These jurisdictions will be eligible for the benefits of that designation for the 24-month period following the approval of the jurisdiction’s consolidated plan. (3)(i) No jurisdiction may be considered an outstanding AFFH performer if the jurisdiction or, for a local government, any PHA operating within the jurisdiction, has in the past five years been found by a court or administrative law judge in a case brought by or on behalf of HUD or by the United States Department of Justice to be in violation of civil rights law unless, at the time of the submission of the AFFH certification, the finding has been successfully appealed or otherwise set aside. (ii) No jurisdiction may be considered an outstanding AFFH performer if HUD has disapproved the previous certification to affirmatively further fair housing submitted for a consolidated plan or declared an annual performance report unsatisfactory under 24 CFR 91.520(i)(2) in the previous 5 years. (e) Appeals. (1) If a jurisdiction believes that an error has resulted in the jurisdiction being improperly designated a low-performing jurisdiction or not designated an outstanding AFFH performer, the jurisdiction may send a written VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 notification to HUD, identifying the error and requesting the recalculation of the comparison metrics or consideration of an additional factor. (2) HUD will review the request within 45 business days and either recalculate the jurisdiction’s ranking without affecting the rankings of other jurisdictions or send a written denial of the request to the jurisdiction explaining why the request was denied. § 5.156 through § 5.168 ■ [Removed] 5. Remove § 5.156 through § 5.168. PART 91—CONSOLIDATED SUBMISSIONS FOR COMMUNITY PLANNING AND DEVELOPMENT PROGRAMS 6. The authority citation for part 91 continues to read as follows: ■ Authority: 42 U.S.C. 3535(d), 3601–3619, 5301–5315, 11331–11388, 12701–12711, 12741–12756, and 12901–12912. 7. In § 91.5 revise the undesignated introductory text to read as follows. ■ § 91.5 Definitions. The terms Affirmatively Furthering Fair Housing, elderly person, and HUD are defined in 24 CFR part 5. * * * * * ■ 8. In § 91.100 revise paragraphs (a)(1), (c)(1), and (e) to read as follows: § 91.100 Consultation; local governments. (a) * * * (1) When preparing the consolidated plan, the jurisdiction shall consult with other public and private agencies that provide assisted housing, health services, and social services (including those focusing on services to children, elderly persons, persons with disabilities, persons with HIV/AIDS and their families, homeless persons), community-based and regionally-based organizations that represent protected class members, and organizations that enforce fair housing laws. When preparing the consolidated plan, the jurisdiction shall also consult with public and private organizations. Commencing with consolidated plans submitted on or after January 1, 2018, such consultations shall include broadband internet service providers, organizations engaged in narrowing the digital divide, agencies whose primary responsibilities include the management of flood prone areas, public land or water resources, and emergency management agencies. * * * * * (c) * * * (1) The jurisdiction shall consult with local PHAs operating in the jurisdiction regarding consideration of public housing needs, planned PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 programs and activities, strategies for affirmatively furthering fair housing, and proposed actions to affirmatively further fair housing in the consolidated plan. This consultation will help provide a better basis for the certification by the authorized official that the PHA Plan is consistent with the consolidated plan and the local government’s description of its strategy for affirmatively furthering fair housing and the manner in which it will address the needs of public housing and, where necessary, the manner in which it will provide financial or other assistance to a troubled PHA to improve the PHA’s operations and remove the designation of troubled, as well as obtaining PHA input on addressing fair housing issues in the Public Housing and Housing Choice Voucher programs. * * * * * (e) * * * (1) The jurisdiction shall consult with community-based and regionally based organizations that represent protected class members, and organizations that enforce fair housing laws, such as State or local fair housing enforcement agencies (including participants in the Fair Housing Assistance Program (FHAP)), fair housing organizations and other nonprofit organizations that receive funding under the Fair Housing Initiative Program (FHIP), and other public and private fair housing service agencies, to the extent that such entities operate within its jurisdiction. This consultation will help provide a better basis for the jurisdiction’s certification to affirmatively further fair housing and other portions of the consolidated plan concerning affirmatively furthering fair housing. Consultation must specifically seek input on how the goals identified in the jurisdiction’s certification to affirmatively further fair housing will inform the priorities and objectives of the consolidated plan. (2) This consultation must occur with any organizations that have relevant knowledge or data to inform the certification to affirmatively further fair housing and that are sufficiently independent and representative to provide meaningful feedback to a jurisdiction on the consolidated plan and its implementation. ■ 9. In § 91.105 revise paragraph (e)(1) to read as follows: § 91.105 Citizen participation plan; local governments. * * * * * (e) * * * (1)(i) Consolidated plan. The citizen participation plan must provide for at least two public hearings per year to obtain residents’ views and to respond E:\FR\FM\14JAP1.SGM 14JAP1 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules to proposals and questions, to be conducted at a minimum of two different stages of the program year. Together, the hearings must address housing and community development needs, development of proposed activities, proposed strategies and actions for affirmatively furthering fair housing, and a review of program performance. (ii) Minimum number of hearings. To obtain the views of residents of the community on housing and community development needs, including priority nonhousing community development needs and affirmatively furthering fair housing, the citizen participation plan must provide that at least one of these hearings is held before the proposed consolidated plan is published for comment. * * * * * ■ 10. In § 91.110 revise paragraph (a) to read as follows: lotter on DSKBCFDHB2PROD with PROPOSALS § 91.110 Consultation; States. (a) When preparing the consolidated plan, the State shall consult with public and private agencies that provide assisted housing (including any State housing agency administering public housing), health services, social services (including those focusing on services to children, elderly persons, persons with disabilities, persons with HIV/AIDS and their families, and homeless persons), and State-based and regionally based organizations that represent protected class members and organizations that enforce fair housing laws during preparation of the consolidated plan. (1) With respect to public housing or Housing Choice Voucher programs, the State shall consult with any housing agency administering public housing or the section 8 program on a Statewide basis, as well as all PHAs that certify consistency with the State’s consolidated plan. State consultation with these entities may consider public housing needs, planned programs and activities, strategies for affirmatively furthering fair housing, and proposed actions to affirmatively further fair housing. This consultation helps provide a better basis for the certification by the authorized official that the PHA Plan is consistent with the consolidated plan and the State’s description of its strategy for affirmatively furthering fair housing, and the manner in which the State will address the needs of public housing and, where applicable, the manner in which the State may provide financial or other assistance to a troubled PHA to improve its operations and remove such designation, as well as in obtaining PHA input on addressing fair housing issues VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 in public housing and the Housing Choice Voucher programs. This consultation also helps ensure that activities with regard to affirmatively furthering fair housing, local drug elimination, neighborhood improvement programs, and resident programs and services, funded under a PHA’s program and those funded under a program covered by the consolidated plan, are fully coordinated to achieve comprehensive community development goals and affirmatively further fair housing. If a PHA is required to implement remedies under a Voluntary Compliance Agreement, the State should consult with the PHA and identify actions the State may take, if any, to assist the PHA in implementing the required remedies. (2) The State shall consult with Statebased and regionally based organizations that represent protected class members, and organizations that enforce fair housing laws, such as State fair housing enforcement agencies (including participants in the Fair Housing Assistance Program (FHAP)), fair housing organizations and other nonprofit organizations that receive funding under the Fair Housing Initiative Program (FHIP), and other public and private fair housing service agencies, to the extent such entities operate within the State. This consultation will help provide a better basis for the State’s certification to affirmatively further fair housing, and other portions of the consolidated plan concerning affirmatively furthering fair housing. This consultation should occur with organizations that have the capacity to engage with data informing the certification to affirmatively further fair housing and be sufficiently independent and representative to provide meaningful feedback on the consolidated plan and its implementation. Consultation on the consolidated plan shall specifically seek input into how the goals identified in the jurisdiction’s certification to affirmatively further fair housing inform the priorities and objectives of the consolidated plan. When preparing the consolidated plan, the State shall also consult with public and private organizations. Commencing with consolidated plans submitted on or after January 1, 2018, such consultations shall include broadband internet service providers, organizations engaged in narrowing the digital divide, agencies whose primary responsibilities include the management of flood prone areas, public land or water resources, and emergency management agencies. * * * * * PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 2055 11. In § 91.115, revise the heading and introductory text of paragraph (b) and paragraphs (b)(3), (c), and (f) through (h) to read as follows: ■ § 91.115 Citizen participation plan; States. * * * * * (b) Development of the consolidated plan. The citizen participation plan must include the following minimum requirements for the development of the consolidated plan: * * * * * (3)(i) The citizen participation plan must state how and when adequate advance notice of the hearing will be given to residents, with sufficient information published about the subject of the hearing to permit informed comment. (Publishing small print notices in the newspaper a few days before the hearing does not constitute adequate notice. Although HUD is not specifying the length of notice required, HUD would consider 2 weeks adequate.) (ii) The citizen participation plan must provide that the hearing be held at a time and accessible location convenient to potential and actual beneficiaries, and with accommodation for persons with disabilities. The citizen participation plan must specify how it will meet these requirements. (iii) The citizen participation plan must identify how the needs of nonEnglish speaking residents will be met in the case of a public hearing where a significant number of non-English speaking residents can be reasonably expected to participate. * * * * * (c) Amendments—(1) Criteria for amendment to consolidated plan. The citizen participation plan must specify the criteria the State will use for determining what changes in the State’s planned or actual activities constitute a substantial amendment to the consolidated plan. (See § 91.505.) The citizen participation plan must include, among the criteria for a consolidated plan, substantial amendment changes in the method of distribution of such funds. (2) The citizen participation plan must provide residents and units of general local government with reasonable notice and an opportunity to comment on consolidated plan substantial amendments. The citizen participation plan must state how reasonable notice and an opportunity to comment will be given. The citizen participation plan must provide a period, of not less than 30 calendar days, to receive comments on the consolidated plan substantial amendment before the consolidated E:\FR\FM\14JAP1.SGM 14JAP1 2056 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules plan substantial amendment is implemented. (3) The citizen participation plan shall require the State to consider any comments or views of its residents and units of general local government received in writing, or orally at public hearings, if any, in preparing the substantial amendment of the consolidated plan. A summary of these comments or views, and a summary of any comments or views not accepted and the reasons why, shall be attached to the substantial amendment of the consolidated plan. * * * * * (f) Availability to the public. The citizen participation plan must provide that the consolidated plan as adopted, consolidated plan substantial amendments, and the performance report will be available to the public, including the availability of materials in a form accessible to persons with disabilities, upon request. The citizen participation plan must state how these documents will be available to the public. (g) Access to records. The citizen participation plan must require the State to provide its residents, public agencies, and other interested parties with reasonable and timely access to information and records relating to the State’s consolidated plan and use of assistance under the programs covered by this part during the preceding 5 years. (h) Complaints. The citizen participation plan shall describe the State’s appropriate and practicable procedures to handle complaints from its residents related to the consolidated plan, consolidated plan amendments, and the performance report. At a minimum, the citizen participation plan shall require that the State must provide a timely, substantive written response to every written resident complaint, within an established period of time (within 15 working days, where practicable, if the State is a CDBG grant recipient). * * * * * ■ 12. In § 91.205 revise paragraph (b) to read as follows: § 91.205 Housing and homeless needs assessment. lotter on DSKBCFDHB2PROD with PROPOSALS * * * * * (b) Categories of persons affected. (1) The plan shall estimate the number and type of families in need of housing assistance for: (i) Extremely low-income, lowincome, moderate-income, and middleincome families; (ii) Renters and owners; (iii) Elderly persons; (iv) Single persons; VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 (v) Large families; (vi) Public housing residents; (vii) Families on the public housing and Section 8 tenant-based waiting list; (viii) Persons with HIV/AIDS and their families; (ix) Victims of domestic violence, dating violence, sexual assault, and stalking; (x) Persons with disabilities; and (xi) Formerly homeless families and individuals who are receiving rapid rehousing assistance and are nearing the termination of that assistance. (2) The description of housing needs shall include a concise summary of the cost burden and severe cost burden, overcrowding (especially for large families), and substandard housing conditions being experienced by extremely low-income, low-income, moderate-income, and middle-income renters and owners compared to the jurisdiction as a whole. (The jurisdiction must define in its consolidated plan the terms ‘‘standard condition’’ and ‘‘substandard condition but suitable for rehabilitation.’’) * * * * * § 91.215 [Amended] 13. Amend § 91.215 by removing paragraph (a)(5). ■ 14. In § 91.220 revise paragraph (k)(1) to read as follows: ■ § 91.220 Action plan. * * * * * (k) * * * (1) Affirmatively furthering fair housing. Actions it plans to take during the next year that further the commitments identified in the jurisdiction’s certification to affirmatively further fair housing. * * * * * ■ 15. In § 91.225 revise paragraph (a)(1) to read as follows: § 91.225 Certifications. (a) * * * (1) Affirmatively furthering fair housing. Each jurisdiction is required to submit a certification that it will affirmatively further fair housing by addressing at least three goals towards fair housing choice or obstacles to fair housing choice, identified by the jurisdiction, that the jurisdiction intends to achieve or ameliorate, respectively. The identified goals or obstacles must have concrete and measurable outcomes or changes. (i) Jurisdictions must include with each goal or obstacle a brief description of how accomplishing the goal or ameliorating the obstacle affirmatively furthers fair housing in that jurisdiction, unless the obstacle is an obstacle to fair PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 housing choice identified from the following non-exhaustive list of obstacles which HUD considers to be inherent barriers to fair housing choice: (A) Lack of a sufficient supply of decent, safe, and sanitary housing that is affordable. (B) Lack of a sufficient supply of decent, safe, and sanitary housing that is affordable and accessible to people with disabilities. (C) Concentration of substandard housing stock in a particular area. (D) Not in derogation of applicable federal law or regulations, inflexible or unduly rigorous design standards or other similar barriers which unreasonably increase the cost of the construction or rehabilitation of low-tomid price housing or impede the development or implementation of innovative approaches to housing. (E) Lack of effective, timely, and costeffective means for clearing title issues, if such are prevalent in the community. (F) Source of income restrictions on rental housing. (G) administrative procedures which have the effect of restricting or otherwise materially impeding the approval of affordable housing development (H) High rates of housing-related lead poisoning in housing. (I) Artificial economic restrictions on the long-term creation of rental housing, such as certain types of rent control. (J) Unduly prescriptive or burdensome building and rehabilitation codes. (K) Arbitrary or excessive energy and water efficiency mandates. (L) Unduly burdensome wetland or environmental regulations. (M) Unnecessary manufacturedhousing regulations and restrictions. (N) Cumbersome or time-consuming construction or rehabilitation permitting and review procedures. (O) Tax policies which discourage investment or reinvestment. (P) Arbitrary or unnecessary labor requirements. (ii) Jurisdictions should focus on goals or obstacles within their control or partial control. If, in addition to identifying obstacles within the jurisdiction’s control or partial control, a jurisdiction identifies obstacles to fair housing choice not within its control or partial control, but which the jurisdiction determines deserve public or HUD scrutiny, the certification may also discuss those issues and include suggested solutions to address the obstacles. (iii) The goals or obstacles included in the certification are to be determined by the jurisdiction, and the specific steps E:\FR\FM\14JAP1.SGM 14JAP1 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules for the jurisdiction to take are to be informed by the nature of the jurisdiction, its geographic scope, its size, and its financial, technical, and managerial resources, and taking into consideration relevant public comments. The contents of the certification need not be based on any HUD-prescribed specific analysis or data but should reflect the practical experience and local insights of the jurisdiction, including objective quantitative and qualitative data as the jurisdiction deems appropriate. (iv) Following the procedures in § 91.500, HUD may question the accuracy of the certifications of lowranking jurisdictions, as defined in 24 CFR 5.155(d)(1). Jurisdictions may be asked to amend their certifications to commit the jurisdiction to goals that have a rational basis toward favorably affecting the metrics in 24 CFR 5.155(c). * * * * * ■ 16. Revise § 91.230 to read as follows: § 91.230 Monitoring. The plan must describe the standards and procedures that the jurisdiction will use to monitor activities carried out in furtherance of the plan, including strategies and actions that address the fair housing issues and goals identified in the jurisdiction’s certification to affirmatively further fair housing, and that the jurisdiction will use to ensure long-term compliance with requirements of the programs involved, including civil rights related program requirements, minority business outreach, and the comprehensive planning requirements. ■ 17. In § 91.235 revise paragraphs (c)(1) and (4) to read as follows: § 91.235 Special case; abbreviated consolidated plan. lotter on DSKBCFDHB2PROD with PROPOSALS * * * * * (c) * * * (1) Assessment of needs, resources, and planned activities. An abbreviated plan must contain sufficient information about needs, resources, and planned activities to address the needs to cover the type and amount of assistance anticipated to be funded by HUD. The plan must describe how the jurisdiction will affirmatively further fair housing in accordance with its certification to affirmatively further fair housing. * * * * * (4) Submissions, certifications, amendments, and performance reports. An Insular Area grantee that submits an abbreviated consolidated plan under this section must comply with the submission, certification, amendment, and performance report requirements of 24 CFR 570.440. This includes VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 certification that the grantee will affirmatively further fair housing, which means that it will take meaningful actions to further the goals identified in the certification to affirmatively further fair housing. * * * * * ■ 18. In § 91.305 revise paragraph (b) to read as follows: § 91.305 Housing and homeless needs assessment. * * * * * (b) Categories of persons affected. (1) The plan shall estimate the number and type of families in need of housing assistance for: (i) Extremely low-income, lowincome, moderate-income, and middleincome families; (ii) Renters and owners; (iii) Elderly persons; (iv) Single persons; (v) Large families; (vi) Public housing residents; (vii) Families on the public housing and Section 8 tenant-based waiting list; (viii) Persons with HIV/AIDS and their families; (ix) Victims of domestic violence, dating violence, sexual assault, and stalking; (x) Persons with disabilities; and (xi) Formerly homeless families and individuals who are receiving rapid rehousing assistance and are nearing the termination of that assistance. (2) The description of housing needs shall include a concise summary of the cost burden and severe cost burden, overcrowding (especially for large families), and substandard housing conditions being experienced by extremely low-income, low-income, moderate-income, and middle-income renters and owners compared to the state as a whole. (The state must define in its consolidated plan the terms ‘‘standard condition’’ and ‘‘substandard condition but suitable for rehabilitation.’’) * * * * * § 91.315 [Amended] 19. Amend § 91.315 by removing paragraph (a)(5). ■ 20. In § 91.320 revise paragraph (j)(1) to read as follows: ■ § 91.320 Action plan. * * * * * (j) * * * (1) Affirmatively furthering fair housing. Actions it plans to take during the next year that further the commitments in its certification to affirmatively further fair housing. * * * * * ■ 21. In § 91.325 revise paragraph (a)(1) to read as follows: PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 § 91.325 2057 Certifications. (a) * * * (1) Affirmatively furthering fair housing. Each State is required to submit a certification that it will affirmatively further fair housing by addressing at least three goals towards fair housing choice or obstacles to fair housing choice, identified by the jurisdiction, that the jurisdiction intends to achieve or ameliorate, respectively. The identified goals or obstacles must have concrete and measurable outcomes or changes. (i) States must include with each goal or obstacle a brief description of how accomplishing the goal or ameliorating the obstacle affirmatively furthers fair housing in that State, unless the obstacle is an obstacle to fair housing choice identified from the following non-exhaustive list of obstacles which HUD considers to be inherent barriers to fair housing choice: (A) Lack of a sufficient supply of decent, safe, and sanitary housing that is affordable. (B) Lack of a sufficient supply of decent, safe, and sanitary housing that is affordable and accessible to people with disabilities. (C) Concentration of substandard housing stock in a particular area. (D) Not in derogation of applicable federal law or regulations, inflexible or unduly rigorous design standards or other similar barriers which unreasonably increase the cost of the construction or rehabilitation of low-tomid price housing or impede the development or implementation of innovative approaches to housing. (E) Lack of effective, timely, and costeffective means for clearing title issues, if such are prevalent in the community. (F) Source of income restrictions on rental housing. (G) Regulatory provisions or other administrative practices that have the effect of restricting or otherwise materially impeding the approval of affordable housing development. (H) High rates of housing-related lead poisoning in housing. (I) Artificial economic restrictions on the long-term creation of rental housing, such as rent controls. (J) Unduly prescriptive or burdensome building and rehabilitation codes. (K) Arbitrary or excessive energy and water efficiency mandates. (L) Unduly burdensome wetland or environmental regulations. (M) Unnecessary manufacturedhousing regulations and restrictions. (N) Cumbersome or time-consuming construction or rehabilitation permitting and review procedures. E:\FR\FM\14JAP1.SGM 14JAP1 2058 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules (O) Tax policies which discourage investment or reinvestment. (P) Arbitrary or unnecessary labor requirements. (ii) States should focus on goals or obstacles within their control or partial control. If, in addition to identifying obstacles within the State’s control or partial control, a State identifies obstacles to fair housing choice not within its control or partial control, but which the State determines deserve public or HUD scrutiny, the certification may also discuss those issues and include suggested solutions to address the obstacles. (iii) The goals or obstacles included in the certification are to be determined by the State, and the specific steps for the State to take are to be informed by the nature of the State, its geographic scope, its size, and its financial, technical, and managerial resources, taking into consideration relevant public comments. The contents of the certification need not be based on any HUD-prescribed specific mode of analysis or data but should reflect the practical experience and local insights of the State, including quantitative and qualitative data as the jurisdiction deems appropriate. (iv) Following the procedures in § 91.500, HUD may question the accuracy of the certifications of lowranking States, as defined in 24 CFR 5.155(d)(1). States may be asked to amend their certifications to commit the jurisdiction to goals that have a rational basis toward favorably affecting the metrics in 24 CFR 5.155(c). * * * * * ■ 22. Revise § 91.415 to read as follows: lotter on DSKBCFDHB2PROD with PROPOSALS § 91.415 Strategic plan. Strategies and priority needs must be described in the consolidated plan, in accordance with the provisions of § 91.215, for the entire consortium. The consortium is not required to submit a nonhousing Community Development Plan; however, if the consortium includes CDBG entitlement communities, the consolidated plan must include the nonhousing Community Development Plans of the CDBG entitlement community members of the consortium. The consortium must set forth its priorities for allocating housing (including CDBG and ESG, where applicable) resources geographically within the consortium, describing how the consolidated plan will address the needs identified (in accordance with § 91.405), describing the reasons for the consortium’s allocation priorities, and identifying any obstacles there are to addressing underserved needs. VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 23. In § 91.420 revise paragraph (b) to read as follows: ■ § 91.420 Action plan. * * * * * (b) Description of resources and activities. The action plan must describe the resources to be used and activities to be undertaken to pursue its strategic plan, including actions the consortium plans to take during the next year that further the commitments in the consortium’s certification to affirmatively further fair housing. The consolidated plan must provide this description for all resources and activities within the entire consortium as a whole, as well as a description for each individual community that is a member of the consortium. * * * * * ■ 24. In § 91.425 revise paragraph (a)(1) to read as follows: § 91.425 Certifications. (a) * * * (1) General—(i) Affirmatively furthering fair housing. Each consortium must certify that it will affirmatively further fair housing by addressing at least three goals towards fair housing choice or obstacles to fair housing choice, identified by the consortium, the consortium intends to achieve or ameliorate. The identified goals or obstacles must have concrete and measurable outcomes or changes. (A) Consortia must include with each goal or obstacle a brief description of how accomplishing the goal or ameliorating the obstacle affirmatively furthers fair housing in the consortia’s jurisdiction, unless the obstacle is an obstacle to fair housing choice identified from the following nonexhaustive list of obstacles which HUD considers to be inherent barriers to fair housing choice: (1) Lack of a sufficient supply of decent, safe, and sanitary housing that is affordable. (2) Lack of a sufficient supply of decent, safe, and sanitary housing that is affordable and accessible to people with disabilities. (3) Concentration of substandard housing stock in a particular area. (4) Not in derogation of applicable federal law or regulations, inflexible or unduly rigorous design standards or other similar barriers which unreasonably increase the cost of the construction or rehabilitation of low-tomid price housing or impede the development or implementation of innovative approaches to housing. (5) Lack of effective, timely, and costeffective means for clearing title issues, if such are prevalent in the community. PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 (6) Source of income restrictions on rental housing. (7) Administrative procedures that have the effect of restricting or otherwise materially impeding the approval of affordable housing development. (8) High rates of housing-related lead poisoning in housing. (9) Artificial economic restrictions on the long-term creation of rental housing, such as rent controls. (10) Unduly prescriptive or burdensome building and rehabilitation codes. (11) Arbitrary or excessive energy and water efficiency mandates. (12) Unduly burdensome wetland or environmental regulations. (13) Unnecessary manufacturedhousing regulations and restrictions. (14) Cumbersome or time-consuming construction or rehabilitation permitting and review procedures. (15) Tax policies which discourage investment or reinvestment. (16) Arbitrary or unnecessary labor requirements. (B) Consortia should focus on goals or obstacles within their control or partial control. If, in addition to identifying obstacles within the consortium’s control or partial control, a consortium identifies obstacles to fair housing choice not within its control or partial control, but which the consortium determines deserve public or HUD scrutiny, the certification may also discuss those issues and include suggested solutions to address the obstacles. (C) The goals or obstacles included in the certification are to be determined by the consortium, and the specific steps for the consortium to take are to be informed by the nature of the consortium, its geographic scope, its size, and its financial, technical, and managerial resources, taking into consideration relevant public comments. The contents of the certification need not be based on any HUD-prescribed specific mode of analysis or data but should reflect the practical experience and local insights of the consortium, including quantitative and qualitative data as the jurisdiction deems appropriate. (D) Following the procedures in § 91.500, HUD may question the accuracy of the certifications of lowranking consortia, as defined in 24 CFR 5.155(d)(1). Consortia may be asked to amend their certifications to commit the consortium to goals that have a rational basis toward favorably affecting the metrics in 24 CFR 5.155(c). * * * * * E:\FR\FM\14JAP1.SGM 14JAP1 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules 25. In § 91.520, revise the introductory text in paragraphs (a) and (i) to read as follows: Authority: 42 U.S.C. 3535(d), 12 U.S.C. 1701x and 4568. § 91.520 § 92.104 plan. ■ Performance reports. (a) General. Each jurisdiction that has an approved consolidated plan shall annually review and report, in a form prescribed by HUD, on the progress it has made in carrying out its strategic plan and its action plan. The performance report must include a description of the resources made available, the investment of available resources, the geographic distribution and location of investments, the families and persons assisted (including the racial and ethnic status of persons assisted), actions taken pursuant to the jurisdiction’s certification to affirmatively further fair housing and any measurable results of those actions, and other actions indicated in the strategic plan and the action plan. This performance report shall be submitted to HUD within 90 days after the close of the jurisdiction’s program year. * * * * * (i) Evaluation by HUD. (1) HUD shall review the performance report and determine whether it is satisfactory. If a satisfactory report is not submitted in a timely manner, HUD may suspend funding until a satisfactory report is submitted, or may withdraw and reallocate funding if HUD determines, after notice and opportunity for a hearing, that the jurisdiction will not submit a satisfactory report. (2) With the steps the jurisdiction has taken to affirmatively further fair housing, HUD will deem that portion of the performance report ‘‘satisfactory’’ if the steps the jurisdiction has taken are rationally related to the goals or obstacles identified in the jurisdiction’s certification to affirmatively further fair housing. * * * * * ■ 26. Amend § 91.525 paragraph (a) by redesignating paragraph (5) as paragraph (6) and adding a new paragraph (5) to read as follows: lotter on DSKBCFDHB2PROD with PROPOSALS § 91.525 Performance review by HUD. (a) * * * (5) Extent to which the jurisdiction made progress towards the goals or obstacles identified in the jurisdiction’s certification to affirmatively further fair housing; and * * * * * PART 92—HOME INVESTMENT PARTNERSHIPS PROGRAM 27. The authority citation for part 92 continues to read as follows: ■ VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 ■ 28. Revise § 92.104 to read as follows: Submission of a consolidated A jurisdiction that has not submitted a consolidated plan to HUD must submit to HUD, not later than 90 calendar days after providing notification under § 92.103, a consolidated plan in accordance with 24 CFR part 91. ■ 29. In § 92.508 revise paragraph (a)(7)(i)(C) to read as follows: § 92.508 Recordkeeping. (a) * * * (7) * * * (i) * * * (C) Documentation of the actions the participating jurisdiction has taken to affirmatively further fair housing, including documentation related to the participating jurisdiction’s certification to affirmatively further fair housing as described in 24 CFR part 91. * * * * * PART 570—COMMUNITY DEVELOPMENT BLOCK GRANTS 30. The authority citation for part 570 continues to read as follows: ■ Authority: 12 U.S.C. 1701x, 1701 x–1; 42 U.S.C. 3535(d) and 5301–5320. 31. In § 570.3 revise the first sentence of the introductory text to read as follows: ■ § 570.3 Definitions. The terms Affirmatively Furthering Fair Housing, HUD, and Secretary are defined in 24 CFR part 5. * * * * * * * * § 570.205 [Amended] 32. Amend § 570.205 paragraph (a)(4) by removing paragraph (vii) and redesignating paragraph (viii) as (vii). ■ 33. In § 570.441 revise introductory text in paragraphs (b) and (3) to read as follows: ■ § 570.441 areas. Citizen participation—insular * * * * * (b) Citizen participation plan. The insular area jurisdiction must develop and follow a detailed citizen participation plan and must make the plan public. The plan must be completed and available before the statement for assistance is submitted to HUD, and the jurisdiction must certify that it is following the plan. The plan must set forth the jurisdiction’s policies and procedures for: * * * * * PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 2059 (3) Holding a minimum of two public hearings for the purpose of obtaining residents’ views and formulating or responding to proposals and questions. Each public hearing must be conducted at a different stage of the CDBG program year. Together, the hearings must address affirmatively furthering fair housing, community development and housing needs, development of proposed activities, proposed strategies and actions furthering the commitments in the certification to affirmatively further fair housing, and a review of program performance. There must be reasonable notice of the hearings, and the hearings must be held at times and accessible locations convenient to potential or actual beneficiaries, with reasonable accommodations, including materials in accessible formats, for persons with disabilities. The jurisdiction must specify in its citizen participation plan how it will meet the requirement for hearings at times and accessible locations convenient to potential or actual beneficiaries; * * * * * ■ 34. In § 570.487 revise paragraph (b) to read as follows: § 570.487 Other applicable laws and related program requirements. * * * * * (b) Affirmatively furthering fair housing. The Act requires the State to certify to the satisfaction of HUD that it will affirmatively further fair housing. The Act also requires each unit of general local government to certify that it will affirmatively further fair housing. The certification that the State will affirmatively further fair housing shall specifically require the State to assume the responsibility of fair housing planning by: (1) Taking meaningful actions to further the goals identified in the jurisdiction’s or State’s Strategic plan under 24 CFR part 91; and (2) Assuring that units of local government funded by the State comply with their certifications to affirmatively further fair housing. * * * * * ■ 35. In § 570.490, revise paragraphs (a)(1) and (b) to read as follows: § 570.490 Recordkeeping requirements. (a) * * * (1) The State shall establish and maintain such records as may be necessary to facilitate review and audit by HUD of the State’s administration of CDBG funds under § 570.493. The content of records maintained by the State shall be as jointly agreed upon by HUD and the States and sufficient to enable HUD to make the determinations described at § 570.493. For fair housing E:\FR\FM\14JAP1.SGM 14JAP1 2060 Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules and equal opportunity purposes, and as applicable, such records shall include documentation related to the State’s certification to affirmatively further fair housing, as described in 24 CFR part 91. The records shall also permit audit of the States in accordance with 24 CFR part 85. * * * * * (b) Unit of general local government’s record. The State shall establish recordkeeping requirements for units of general local government receiving CDBG funds that are sufficient to facilitate reviews and audits of such units of general local government under §§ 570.492 and 570.493. For fair housing and equal opportunity purposes, and as applicable, such records shall include documentation related to the State’s certification to affirmatively further fair housing under 24 CFR part 91. * * * * * ■ 36. In § 570.506 revise paragraph (g)(1) to read as follows: § 570.506 Records to be maintained. * * * * * (g) * * * (1) Documentation related to the recipient’s certification to affirmatively further fair housing under 24 CFR part 91. * * * * * ■ 37. In § 570.601 revise paragraph (a)(2) to read as follows: lotter on DSKBCFDHB2PROD with PROPOSALS § 570.601 Public Law 88–352 and Public Law 90–284; affirmatively furthering fair housing; Executive Order 11063. PART 574—HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS 38. The authority citation for part 574 continues to read as follows: VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 39. In § 574.530 revise paragraph (b) to read as follows: ■ § 574.530 Recordkeeping. * * * * * (b) Documentation related to the formula grantee’s certification to affirmatively further fair housing under 24 CFR part 91. * * * * * PART 576—EMERGENCY SOLUTIONS GRANTS PROGRAM 40. The authority citation for part 576 continues to read as follows: ■ Authority: 12 U.S.C. 1701x, 1701 x–1; 42 U.S.C. 11371 et seq., 42 U.S.C. 3535(d). 41. In § 576.500 revise paragraph (s)(1)(ii) to read as follows: ■ § 576.500 Recordkeeping and reporting requirements. * * * * * (s) * * * (1) * * * (ii) Documentation in regard to the recipient’s certification that the recipient will affirmatively further fair housing. * * * * * PART 903—PUBLIC HOUSING AGENCY PLANS 42. The authority citation for part 903 continues to read as follows: ■ Authority: 42 U.S.C. 1437c; 42 U.S.C. 1437c–1; Pub. L. 110–289; 42 U.S.C. 3535d. (a) * * * (2) Public Law 90–284, which is the Fair Housing Act (42 U.S.C. 3601–3620). In accordance with the Fair Housing Act, the Secretary requires that grantees administer all programs and activities related to housing and urban development in a manner to affirmatively further the policies of the Fair Housing Act. Furthermore, in accordance with section 104(b)(2) of the Act, for each community receiving a grant under subpart D of this part, the certification that the grantee will affirmatively further fair housing shall specifically require the grantee to take meaningful actions to further the goals identified in the grantee’s certification to affirmatively further fair housing under 24 CFR part 91. * * * * * ■ Authority: 12 U.S.C. 1701x, 1701 x–1; 42 U.S.C. 3535(d) and 5301–5320. 43. In § 903.7 revise paragraphs (o)(1) and (3) to read as follows: ■ § 903.7 What information must a PHA provide in the Annual Plan? * * * * * (o) * * * (1) The PHA must certify that it has consulted with the local jurisdiction on how to satisfy their obligations in common to affirmatively further fair housing, and that it will carry out its plan in conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d–2000d–4), the Fair Housing Act (42 U.S.C. 3601–19), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), title II of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.), and other applicable Federal civil right laws, and that it will affirmatively further fair housing in its programs and in areas under its direct control. * * * * * (3) If the PHA has been subject to an unresolved HUD letter of finding or a material finding of a civil rights PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 violation by a court or administrative law judge in an action brought by or on behalf of HUD or by the United States Department of Justice in the last two years that has not been successfully appealed or otherwise set aside at the time of the submission of the certification, then the PHA must include with its certification an explanation of what steps the PHA has taken and is taking to resolve the violation. * * * * * ■ 44. Revise § 903.15 to read as follows: § 903.15 What is the relationship of the public housing agency plans to the Consolidated Plan and a PHA’s Fair Housing Requirements? A PHA is obligated to affirmatively further fair housing, as contemplated in § 903.7(o). All admission and occupancy policies for public housing and Section 8 tenant-based housing programs must comply with Fair Housing Act requirements and other civil rights laws and regulations and with a PHA’s plans to affirmatively further fair housing. The PHA may not impose any specific income or racial quotas for any development or developments. (a) Nondiscrimination. A PHA must carry out its PHA Plan in conformity with the nondiscrimination requirements in Federal civil rights laws, including title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act, and the Fair Housing Act. A PHA may not assign housing to persons in a particular section of a community or to a development or building based on race, color, religion, sex, disability, familial status, or national origin for purposes of segregating populations. (b) Affirmatively Furthering Fair Housing. A PHA’s policies should be designed in conformity with any applicable certification to affirmatively further fair housing as part of a consolidated plan under 24 CFR part 91 and the PHA’s assessment of its fair housing needs. (1) The Fair Housing Act provides that PHAs must certify that they will affirmatively further fair housing. PHAs must affirmatively further fair housing as detailed in § 903.7(o). (2) Such affirmative steps may include, but are not limited to, marketing efforts, engagement with landlords to promote the acceptance of housing choice vouchers, use of nondiscriminatory tenant selection and assignment policies that lead to increased fair housing choice, additional applicant consultation and information, provision of additional supportive services and amenities to a E:\FR\FM\14JAP1.SGM 14JAP1 lotter on DSKBCFDHB2PROD with PROPOSALS Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Proposed Rules development (such as supportive services that enable an individual with a disability to transfer from an institutional setting into the community), and engagement in ongoing coordination with state and local aging and disability community and community-based organizations to provide additional community-based housing opportunities for individuals with disabilities and to connect such individuals with supportive services to enable an individual with a disability to transfer from an institutional setting into the community and facilitate the provision of such services at PHA properties. (c) Validity of certification. (1) A PHA’s certification under § 903.7(o) will be subject to challenge by HUD where it appears that a PHA fails to meet the requirements in 24 CFR 903.7(o). (2) If HUD challenges the validity of a PHA’s certification, HUD will do so in writing specifying the deficiencies, and will give the PHA an opportunity to respond to the particular challenge in writing. In responding to the specified deficiencies, a PHA must establish, as applicable, that it has complied with fair housing and civil rights laws and regulations, or has remedied violations of fair housing and civil rights laws and regulations, and has adopted policies and undertaken actions to affirmatively further fair housing, including, but not limited to, providing a full range of housing opportunities to applicants and tenants and taking affirmative steps as described in paragraph (d)(2) of this section in a nondiscriminatory manner. In responding to the PHA, HUD may accept the PHA’s explanation and withdraw the challenge, undertake further investigation, or pursue other remedies available under law. HUD will seek to obtain voluntary corrective action consistent with the specified deficiencies. In determining whether a PHA has complied with its certification, HUD will review the PHA’s circumstances relevant to the specified deficiencies, including characteristics of the population served by the PHA; characteristics of the PHA’s existing housing stock; and decisions, plans, goals, priorities, strategies, and actions of the PHA, including those designed to affirmatively further fair housing. ■ 45. In § 903.23 revise paragraph (f) to read as follows; § 903.23 What is the process by which HUD reviews, approves, or disapproves an Annual Plan? * * * * * (f) Recordkeeping. PHAs must maintain records reflecting actions to VerDate Sep<11>2014 16:45 Jan 13, 2020 Jkt 250001 affirmatively further fair housing, as described in § 903.7(o). PART 905—THE PUBLIC HOUSING CAPITAL FUND PROGRAM 46. The authority citation for part 905 continues to read as follows: ■ Authority: 42 U.S.C. 1437g, 42 U.S.C. 1437z–2, 42 U.S.C. 1437z–7, and 3535(d). 47. In § 905.308 revise paragraph (b)(1) to read as follows: ■ § 905.308 Federal requirements applicable to all Capital Fund activities. * * * * * (b) * * * (1) Nondiscrimination and equal opportunity. The PHA shall comply with all applicable nondiscrimination and equal opportunity requirements, including, but not limited to, the Department’s generally applicable nondiscrimination and equal opportunity requirements at 24 CFR 5.105(a) and the Architectural Barriers Act of 1968 (42 U.S.C. 4151 et seq.), and its implementing regulations at 24 CFR parts 40 and 41. The PHA shall affirmatively further fair housing in its use of funds under this part, following the requirements at 24 CFR 903.7(o). * * * * * Dated: January 6, 2020. Benjamin S. Carson, Sr., Secretary. [FR Doc. 2020–00234 Filed 1–13–20; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF THE TREASURY Internal Revenue Service [REG–125710–18] RIN 1545–BP07 Revised Applicability Dates for Regulations Under Section 382(h) Related to Built-in Gain and Loss Internal Revenue Service (IRS), Treasury. ACTION: Partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking. AGENCY: This document withdraws a portion of a notice of proposed rulemaking published in the Proposed Rules section of the Federal Register on September 10, 2019. That notice of proposed rulemaking contained proposed rules to provide guidance regarding the items of income and deduction that are included in the calculation of built-in gains and losses PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 under section 382 of the Internal Revenue Code (Code). If adopted, those proposed rules would apply to any ownership change occurring after the date the Treasury decision adopting those proposed rules as a final regulation is published in the Federal Register. This notice of proposed rulemaking would delay the applicability of those proposed rules and provide transition relief for eligible taxpayers. The proposed regulations in this notice of proposed rulemaking would affect corporations that experience an ownership change for purposes of section 382. DATES: Written or electronic comments must be received by March 16, 2020. Written or electronic requests for a public hearing and outlines of topics to be discussed at the public hearing must be received by March 16, 2020. ADDRESSES: Submit electronic submissions via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG–125710–18) by following the online instructions for submitting comments. Once submitted to the Federal eRulemaking Portal, comments cannot be edited or withdrawn. The Department of the Treasury (Treasury Department) and the IRS will publish for public availability any comment received to its public docket, whether submitted electronically or in hard copy. Send hard copy submissions to: Internal Revenue Service, CC:PA:LPD:PR (REG–125710–18), Room 5203, Post Office Box 7604, Ben Franklin Station, Washington, DC 20044. FOR FURTHER INFORMATION CONTACT: 26 CFR Part 1 SUMMARY: 2061 Concerning the proposed regulations, Jonathan R. Neuville at (202) 317–5363; concerning submissions of comments or requests for a public hearing, Regina L. Johnson at (202) 317–6901 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Background On September 10, 2019, the Treasury Department and the IRS published in the Federal Register (84 FR 47455) a notice of proposed rulemaking (REG– 125710–18) proposing revisions to the rules in §§ 1.382–2 and 1.382–7 (September 2019 proposed regulations). These rules would affect the determination of net built-in gains and losses and recognized built-in gains and losses under section 382(h) that, in turn, affect the limitation under section 382 on net operating losses and disallowed business interest expense under section 163(j). E:\FR\FM\14JAP1.SGM 14JAP1

Agencies

[Federal Register Volume 85, Number 9 (Tuesday, January 14, 2020)]
[Proposed Rules]
[Pages 2041-2061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00234]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / 
Proposed Rules

[[Page 2041]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 91, 92, 570, 574, 576, 903, and 905

[Docket No. FR 6123-P-02]
RIN 2577-AA97


Affirmatively Furthering Fair Housing

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

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SUMMARY: HUD recognizes that its program participants have a duty to 
affirmatively further fair housing (AFFH), which HUD finds essential to 
the appropriate administration of its grant programs. Program 
participants must certify that they AFFH and maintain documentation to 
support that certification. This rule proposes changes to HUD's 
regulations regarding the reporting on program participants' actions to 
AFFH so that HUD can effectively evaluate participants' compliance with 
their AFFH obligations. This proposed rule would establish a uniform 
reporting process that respects the unique needs and difficulties faced 
by individual jurisdictions by assessing program participants on the 
concrete actions they take to AFFH and by leveraging objective metrics 
for fair housing choice to assist HUD's evaluation of such actions. The 
proposed regulation would revise the definition of AFFH, develop 
metrics to allow comparison of jurisdictions, and require jurisdictions 
to certify that they will AFFH by identifying concrete steps the 
jurisdiction will take over the next 5 years. Jurisdictions would need 
to report on their progress toward the commitments in their AFFH 
certification through the regular consolidated plan reporting and 
review processes. Public housing agencies would demonstrate their 
efforts to AFFH through their participation in the consolidated plan 
process.

DATES: Comment Due Date: March 16, 2020.

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 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 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: David Enzel, Deputy Assistant 
Secretary for Enforcement Programs, Office of Fair Housing and Equal 
Opportunity, Department of Housing and Urban Development, 451 7th 
Street SW, Room 5204; telephone number 202-402-5557 (this is not a 
toll-free number). This number may be accessed via TTY by calling the 
toll-free Federal Relay Service during working hours at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. History

    The Fair Housing Act prohibits discrimination in the provision of 
housing based on race, color, religion, sex, handicap, familial status, 
or national origin.\1\ Section 808(e)(5) of the Fair Housing Act of 
1968 (42 U.S.C. 3608(e)(5)) requires that the HUD Secretary 
``administer the programs and activities relating to housing and urban 
development in a manner affirmatively to further the policies of [the 
Fair Housing Act].'' In addition, recipients of HUD funding are 
required by other statutes to certify they will AFFH:
---------------------------------------------------------------------------

    \1\ See 42 U.S.C. 3604.
---------------------------------------------------------------------------

     Housing and Community Development Act. Jurisdictions 
directly receiving Community Development Block Grants must certify that 
they will AFFH (Sec.  104(b)(2), 42 U.S.C. 5304(b)(2)). Local 
governments receiving grants from a state must also certify they will 
AFFH (Sec.  106(d)(7)(B), 42 U.S.C. 5306(d)(7)(B)).
     Cranston-Gonzalez National Affordable Housing Act. States 
and local governments receiving certain grants must certify they will 
AFFH as part of their 5-year comprehensive housing affordability 
strategy identifying needs for affordable and supportive housing for 
the following 5 years (Sec.  105(b)(15), 42 U.S.C. 12705(b)(15)).
     United States Housing Act of 1937. Public housing agencies 
must include a certification they will AFFH as part of their annual 
plan (Sec.  5A(d)(16), 42 U.S.C. 1437c-1(d)(16)).
    Recipients of HUD funding, therefore, are required to affirmatively 
further the Fair Housing Act's goal of promoting fair housing and equal 
opportunity. The Fair Housing Act and subsequent acts requiring 
certifications do not specify how HUD, or recipients of funding, are to 
AFFH, granting the Secretary broad discretion to define the precise 
scope of the AFFH obligation for HUD's program participants, including 
the AFFH certification.\2\ Further, in Inclusive Communities, the 
Supreme Court warned that the Fair Housing Act ``is not an instrument 
to force housing authorities to reorder their priorities'' \3\ and is 
not meant to remedy mere

[[Page 2042]]

statistical imbalances in housing for protected class members.\4\
---------------------------------------------------------------------------

    \2\ See, e.g., United States v. Winthrop Towers, 628 F.2d 1028, 
1036 (7th Cir. 1980) (``HUD has broad discretion `to choose between 
alternative methods of achieving the national housing objectives set 
forth in the several applicable statutes.' '') (quoting Shannon v. 
U.S. Dep't of Hous. & Urban Dev., 436 F.2d 809, 819 (3d Cir. 1970)); 
see also Nat'l Fair Hous. Alliance, 330 F. Supp. 3d at 62 (D.D.C. 
Aug. 2018) (``HUD has `broad discretion to choose between 
alternative methods of achieving the national housing objectives set 
forth in the several applicable statutes,' . . . and the Court may 
not substitute its judgment for HUD's in determining the best way of 
doing so.'') (quoting Shannon 436 F.2d at 819).
    \3\ Tex. Dep't of Hous. & Cmty. Affairs v. Inclusive Cmtys. 
Project, Inc., 135 S. Ct. 2507, 2522-23 (2015).
    \4\ See, e.g., id. at 2522 (``But disparate-impact liability has 
always been properly limited in key respects that avoid the serious 
constitutional questions that might arise under the [Fair Housing 
Act], FHA, for instance, if such liability were imposed based solely 
on a showing of a statistical disparity.'')
---------------------------------------------------------------------------

    HUD satisfies its own AFFH obligations in various ways, including 
by imposing site and neighborhood standards for HUD-funded 
development,\5\ requiring affirmative marketing of housing units to 
promote integrated neighborhoods,\6\ and designing its programs to be 
consistent with its AFFH obligation. HUD also uses the disparate impact 
theory as a method of addressing violations of the Fair Housing Act 
where there is not clear evidence of intent to discriminate. HUD's 
grantee compliance monitoring advances the same goal--by requiring that 
grantees maintain records to support their AFFH certifications, HUD can 
use the information gathered to address violations of the Fair Housing 
Act that are not immediately apparent.
---------------------------------------------------------------------------

    \5\ See, e.g., 24 CFR 891.125; 983.57.
    \6\ 24 CFR part 200, subpart M.
---------------------------------------------------------------------------

    In 2015, HUD issued a final rule \7\ revising the AFFH reporting 
regulations for program participants. That rule required program 
participants to use a computer assessment tool to complete an 
Assessment of Fair Housing (AFH) by answering 92 questions on fair 
housing issues, priorities, and goals. Topics included segregation, 
racially or ethnically concentrated areas of poverty, significant 
disparities in access to opportunities, and disproportionate housing 
needs. The rule contemplated separate assessment tools for public 
housing agencies (PHAs), States and Insular Areas, and local 
governments. HUD released a tool for local governments \8\ but never 
released a tool for States and Insular Areas, and the tool for PHAs 
never became operational.
---------------------------------------------------------------------------

    \7\ ``Affirmatively Furthering Fair Housing; Final Rule,'' 
published July 16, 2015, at 80 FR 42272.
    \8\ ``Affirmatively Furthering Fair Housing: Announcement of 
Renewal of Approval of the Assessment Tool for Local Governments,'' 
published January 13, 2017, at 82 FR 4391; ``Affirmatively 
Furthering Fair Housing Assessment Tool: Announcement of Final 
Approved Document,'' published December 31, 2015, at 80 FR 81840.
---------------------------------------------------------------------------

II. Justification for Change

    While the statutory obligation to AFFH has not changed, HUD has, 
over time, required program participants to document their efforts and 
plans to AFFH in several different ways. Since the issuance of the 2015 
final rule, HUD has determined that the current regulations are overly 
burdensome to both HUD and grantees and are ineffective in helping 
program participants meet their reporting obligations for multiple 
reasons. While some of the burdens are a result of the assessment tools 
themselves, the tools are closely tied to the regulatory language, 
which HUD believes is too prescriptive in outcomes for jurisdictions. 
Therefore, HUD believes it is necessary to revise the codified 
regulation, not just the assessment tools.
    First, the AFH required significant resources from program 
participants, and its complexity and demands resulted in a high failure 
rate for jurisdictions to gain approval for their AFH in the first year 
of AFH submission. HUD became aware of significant deficiencies in the 
Local Government assessment tool that impeded completion and HUD 
acceptance of meaningful assessments by program participants. The 
number of questions, the open-ended nature of many questions, and the 
lack of prioritization between questions made the planning process both 
inflexible and difficult to complete.
    On May 15, 2017, HUD issued a notice inviting public comments to 
assist HUD in identifying existing regulations that may be outdated, 
ineffective, or excessively burdensome.\9\ Many commenters specifically 
indicated that, as program participants, they found the rule's 
requirements to be (or likely to be) extremely resource-intensive and 
complicated, placing a strain on limited budgets. A representative of 
PHAs wrote that compliance with the ``overly burdensome and 
impractical'' rule \10\ would be expensive, with particular concern for 
PHAs with small housing portfolios, while other commenters stated that 
the rule did not provide enough consideration to the fact that 
jurisdictions are limited geographically in what they can do, even when 
a jurisdiction is in a regional partnership.
---------------------------------------------------------------------------

    \9\ ``Reducing Regulatory Burden; Enforcing the Regulatory 
Reform Agenda Under Executive Order 13777,'' published June 14, 
2017, at 82 FR 22344.
    \10\ See Lisa Stevens, Idaho Chapter of NAHRO letter to HUD 
Notice FR-6030-N-01 Reducing Regulatory Burden; Enforcing the 
Regulatory Reform Agenda Under Executive Order 13777, June 14, 2017, 
available at https://www.regulations.gov/document?D=HUD-2017-0029-0109.
---------------------------------------------------------------------------

    Of the 49 jurisdictions that were in the first group to submit an 
AFH between October 2016 and December 2017, 31 (63 percent) were either 
never accepted or were only accepted after HUD required revisions.\11\ 
While regional AFHs allowed program participants to pool knowledge and 
resources, the joint AFHs had the same defects as individual AFHs.\12\ 
Program participants attempted to prepare successful AFHs by hiring 
outside consultants, redirecting resources that could have been used to 
support affordable housing directly.\13\
---------------------------------------------------------------------------

    \11\ ``Affirmatively Furthering Fair Housing: Withdrawal of the 
Assessment Tool for Local Governments,'' published May 23, 2018, at 
83 FR 23922.
    \12\ Id.
    \13\ Id.
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    The sheer volume of data and variety of expertise required under 
the 2015 rule placed an undue burden on jurisdictions. While the 
assessment tool for PHAs was not finally implemented, under a published 
draft, PHAs would have been responsible for reporting on factors such 
as segregation levels and patterns dating back to 1990, community 
attitudes leading to observed patterns, and the presence or lack of 
private or public investment for the jurisdiction's protected 
classes.\14\ The tool would also require PHAs to analyze and consider 
data and policies beyond their jurisdictional control and typical 
subject-matter expertise. For example, the rule required identifying 
disparities in ``. . . access to public transportation, quality schools 
and jobs . . . [and] environmental health hazards'' and ``programs, 
policies, or funding mechanisms that affect disparities'' to such 
access.\15\ A commenter on the advance notice of proposed rulemaking on 
AFFH regulations issued in 2018 noted that this jurisdictional analysis 
was simply too complex to be effectively completed by staff without 
specific statistical and mapping knowledge, as housing providers 
generally have staff with skills that lie in providing affordable 
housing services, but not in providing complex statistical data 
analysis.\16\ The same is likely true for many smaller jurisdictions.
---------------------------------------------------------------------------

    \14\ PHA Assessment of Fair Housing Tool (https://www.hudexchange.info/resources/documents/Assessment-of-Fair-Housing-Tool-For-Public-Housing-Agencies-2017-01.pdf).
    \15\ AFFH Rule, 80 FR at 42282.
    \16\ Jim Hobbs, Housing Authority of Pikeville comment letter to 
FR-6123-A-01 Affirmatively Furthering Fair Housing: Streamlining and 
Enhancements, p. 1, October 12, 2018, available at https://www.regulations.gov/document?D=HUD-2018-0060-0150.
---------------------------------------------------------------------------

    The 2015 rule also had public participation requirements that were 
similar to the consolidated plan citizen participation requirements, 
but it created a separate process for the AFH that duplicated the 
existing requirements for citizen participation and consultation with 
outside organizations that were already required for the consolidated 
plan. Jurisdictions were required to hold at least one public

[[Page 2043]]

hearing specifically on their proposed AFFH strategies prior to 
publishing the AFH for comment. According to some commenters, these 
AFFH-specific hearings created high additional costs for 
jurisdictions.\17\
---------------------------------------------------------------------------

    \17\ See, e.g., Tiffany King, The Michigan State Housing 
Development Authority (MSHDA), comment letter to FR-6123-A-01 
Affirmatively Furthering Fair Housing: Streamlining and 
Enhancements, p. 1, October 16, 2018, available at https://www.regulations.gov/document?D=HUD-2018-0060-0369; Jennifer Eby 
comment letter to HUD Notice FR-6030-N-01 Reducing Regulatory 
Burden; Enforcing the Regulatory Reform Agenda Under Executive Order 
13777, p. 2, June 14, 2017, available at https://www.regulations.gov/document?D=HUD-2017-0029-0222.
---------------------------------------------------------------------------

    Second, the administration of the rule was burdensome to HUD. While 
implementing the 2015 rule, HUD spent over $3.5 million to provide 
technical assistance to the initial 49 jurisdictions. A workforce 
management plan, written by a contractor prior to the initial AFH 
submissions, estimated that HUD would need 538 full-time employees to 
conduct reviews of the AFHs submitted in 2019, given the increased 
number of jurisdictions originally scheduled to submit AFHs in 2019 (up 
to 682).\18\
---------------------------------------------------------------------------

    \18\ AFFH Workforce Management Plan, April 29, 2016.
---------------------------------------------------------------------------

    Third, the 2015 rule's scope was particularly burdensome because 
HUD did not tailor the rule depending on the program participant, other 
than through creating broad categories. Every jurisdiction, regardless 
of their size, civil rights record, or current housing conditions, had 
to go through the same AFH process, without the flexibility to identify 
their locality's most relevant issues or to adapt their process to the 
unique conditions of the jurisdiction. Commenters expressed concerns 
that they lacked the capacity to analyze the several contributing 
factors prescribed by HUD and requested that HUD allow grantees 
flexibility in identifying issues and developing a course of 
action.\19\
---------------------------------------------------------------------------

    \19\ See, e.g., The City of Winston-Salem, NC comment letter to 
FR-6123-A-01 Affirmatively Furthering Fair Housing: Streamlining and 
Enhancements, p. 2, October 16, 2018, available at https://www.regulations.gov/document?D=HUD-2018-0060-0357.
---------------------------------------------------------------------------

    Fourth, HUD determined that the 2015 rule focused too much on 
planning and process, and not enough on either the jurisdiction or HUD 
evaluating fair housing results. Jurisdictions were required to 
consider and provide extensive documentation for every question, 
regardless of whether the question or the expected answer advanced the 
jurisdiction's duty to AFFH or was relevant to the needs of the 
jurisdiction. This uniform, process-based approach discouraged 
innovation, allowed the process to substitute for actual results, and 
made it difficult to evaluate and compare jurisdictions over time. 
Jurisdictions can advance fair housing in ways that HUD officials 
cannot predict because HUD lacks the extensive localized knowledge of 
State or local officials. The inherent nature of fitting jurisdictions 
into pre-determined categories and methods rather than evaluating 
jurisdictions based on results and achievements could discourage 
innovation and inhibit HUD's ability to evaluate a jurisdiction's 
improvement.
    Finally, the completion of the AFH required grantees to use 
specific data sets and HUD-provided tools, including extensive mapping 
data, locally available data, and data from various interest groups. 
The goal behind the assessment tools was to assist in compiling this 
information, but the scope of the task of providing quality tools 
proved difficult for HUD, given the wide variety of circumstances to 
which they applied from jurisdiction to jurisdiction, and the absence 
of a discrete statutory objective. For local jurisdictions, the tool 
was difficult to learn and operate and did not include all factors that 
jurisdictions deemed relevant, such as low-income housing tax credit 
supported projects. For PHAs and states, no tools were ever provided 
because of the challenge in developing appropriate data sets for both 
relatively large and small geographies, i.e., states and particular 
housing developments.
    While the 2015 rule was not fully implemented, HUD determined that 
the results from the limited roll-out (summarized above) were 
sufficient to cease further implementation. HUD therefore concluded 
that a new approach was required.\20\ On August 16, 2018, HUD published 
an Advance Notice of Proposed Rulemaking at 83 FR 40713, asking for the 
public's input on changes that would: (1) Minimize regulatory burden 
while more effectively aiding program participants to meet their legal 
obligations; (2) create a process that is focused primarily on 
accomplishing positive results, rather than on performing analysis of 
community characteristics; (3) provide for greater local control and 
innovation; (4) seek to encourage actions that increase fair housing 
choice, including through greater housing supply; and (5) more 
efficiently utilize HUD resources.
---------------------------------------------------------------------------

    \20\ Additional information was included in the Advance Notice 
of Proposed Rulemaking, ``Affirmatively Furthering Fair Housing: 
Streamlining and Enhancements,'' published October 15, 2018, at 83 
FR 40713.
---------------------------------------------------------------------------

    HUD received over 700 public comments in response. Many expressed 
support for the 2015 final rule and urged HUD to continue to implement 
its requirements. These commenters cited the need for a way to enforce 
the AFFH requirement and cited the significant use of resources and 
public input that went into the creation of the 2015 rule. These 
commenters found the early results of the rule ``promising'' and 
believed that improving the tools would ease the burdens and improve 
the process.
    However, a large number of commenters opposed the 2015 rule. Some 
objected to the idea entirely, citing concerns for local control of 
zoning. Others felt that the requirements of the rule were too onerous, 
specifically the level of public participation needed and the scope of 
data that program participants were required to address. Commenters 
asked that program participants and PHAs be given broader discretion in 
their planning. Multiple commenters suggested that instead of the 2015 
rule's approach, HUD should find ways to use the AFFH process to 
provide incentives to increase housing supply and remove restrictive 
zoning regulations.
    HUD has considered these comments and suggestions in the 
development of this proposed rule.

III. Goals of Proposed Rule

    HUD seeks to further both the spirit and the letter of the Fair 
Housing Act. Housing discrimination still takes place, and many 
jurisdictions continue to allow known barriers to fair housing--such as 
burdensome governmental processes, the concentration of substandard 
housing stock in specific areas, or restrictions based on the source of 
a tenant's income--to exist.
    HUD intends this regulation to promote and provide incentives for 
innovations in the areas of affordable housing supply, access to 
housing, and improved housing conditions. This is part of HUD's ongoing 
effort to improve regulations to allow and encourage innovative 
solutions to the housing problems facing America today. For example, 
there have been significant improvements in housing design and 
production products, as demonstrated in new designs for manufactured 
housing and reduced-size housing. Jurisdictions have also chosen to 
adopt changes in zoning laws that promote housing for the local 
workforce. Jurisdictions have amended historic preservation laws to 
permit redesign of buildings that are ill-suited for its community 
members with disabilities. Jurisdictions are promoting the provision of 
housing adjacent to transportation centers. As jurisdictions examine 
and discuss obstacles to fair housing, HUD anticipates such obstacles

[[Page 2044]]

can, in part, be addressed through innovative approaches to design and 
building codes and the elimination of unnecessary fees and other 
regulatory barriers. HUD will spotlight jurisdictions achieving such 
new solutions, but will not mandate or prescribe specific actions.
    Therefore, HUD is proposing a new process to evaluate each 
jurisdiction's efforts to AFFH that not only allows HUD to enforce 
civil rights requirements effectively but also empowers individual 
jurisdictions to develop new approaches to AFFH and share with their 
peer jurisdictions what has worked and what has not. This approach will 
allow HUD to target its resources where they are most needed while 
enabling jurisdictions to measure their progress, understand their 
successes or failures, and continue to improve their efforts, without a 
mandate from HUD on exactly what steps to take. This approach would 
allow HUD to highlight best practices and create a repository of ideas 
by drawing out the diffuse knowledge about fair housing held by local 
actors and encouraging policy experimentation. HUD hopes to leverage 
this knowledge by studying the best housing opportunity results across 
the country and encouraging jurisdictions to adopt best practices.
    This approach allows and provides incentives to local actors who 
know best the fair housing needs of their communities to take steps to 
further their particularized goals. As the Supreme Court stated in 
Inclusive Communities, while discussing the purpose of the Fair Housing 
Act, HUD should not ``second-guess which of two reasonable approaches'' 
should be taken or ``force housing authorities to reorder their 
priorities'' unnecessarily.\21\ The Fair Housing Act ``does not decree 
a particular vision of urban development.'' \22\ HUD aims to take this 
into account and allow for the flexibility and innovation necessary to 
best further fair housing nationwide, recognizing that fair housing is 
an especially difficult and complex policy area because of the 
competing considerations that go into promoting fair housing and other 
valid governmental priorities.
---------------------------------------------------------------------------

    \21\ Inclusive Communities, 135 S. Ct. at 2522.
    \22\ Id. at 2523.
---------------------------------------------------------------------------

    By proposing to reward jurisdictions that are performing well in 
their AFFH efforts and improving in ways that will benefit entire 
communities, HUD will provide incentives to both jurisdictions and the 
general public to find ways to help local jurisdictions improve their 
AFFH efforts. By increasing the number of people who benefit from an 
expansion of fair and affordable housing, HUD expects that a larger 
share of the local community will be motivated to participate in local 
discussions on how to AFFH and what strategies are best suited for the 
locality. Such incentives may encourage citizens and local businesses 
to participate in important local housing debates when they otherwise 
may have sat on the sidelines. HUD believes that having buy-in from a 
broad range of citizens and businesses in a community will result in a 
stronger AFFH effort and help reduce housing discrimination.
    HUD also recognizes that government policies, even when well-
intentioned, can have negative results. This proposed policy of 
encouraging local experimentation is a recognition of the difficulties 
of crafting a top-down approach. HUD does not expect this proposed rule 
to be the final word on how recipients of HUD funding can AFFH. Rather, 
HUD anticipates that this will be the beginning of a flexible approach, 
consistent with constitutional mandates and statutory requirements, as 
HUD and jurisdictions gain additional evidence about what works and 
does not work to facilitate the advancement of fair housing.

IV. Summary of Proposed Rule

    HUD believes that fair housing choice exists when a jurisdiction 
can foster the broad availability of affordable housing that is decent, 
safe, and sanitary and does so without housing discrimination. To that 
end, HUD is proposing to evaluate how program participants are carrying 
out their AFFH obligation as a threshold matter by using a series of 
data-based measures to determine whether a jurisdiction (1) is free of 
adjudicated fair housing claims; (2) has an adequate supply of 
affordable housing throughout the jurisdiction; and (3) has an adequate 
supply of quality affordable housing. Jurisdictions that score highly 
using these metrics (or through improvements over a 5-year cycle) would 
be eligible for various incentives in HUD programs. HUD would focus 
remedial resources and potential regulatory enforcement actions on the 
lowest performers.
    All program participants included in the consolidated plan process 
would be required to examine their own circumstances to determine how 
best to address their AFFH performance. HUD is proposing to modify the 
regulatory requirements of jurisdictions' certifications that they will 
AFFH by requiring the jurisdictions to commit, in the certification, to 
taking specific steps to address obstacles to fair housing choice. As a 
result of HUD's proposal to include these commitments as part of the 
consolidated plan, jurisdictions would consult with all relevant 
stakeholders to develop AFFH commitments tailored to the needs and 
situations of the jurisdiction. HUD expects that jurisdictions would 
then be able to share with others, through HUD and otherwise, what 
worked and what did not work, allowing jurisdictions to learn from one 
another as they develop new approaches. PHAs would be required to 
participate in the development of this certification through their 
participation in the consolidated plan process; this participation and 
their own accompanying AFFH certification would be how PHAs fulfill 
their AFFH responsibilities.
    The previous AFFH process--which required lengthy submissions that 
averaged 204 pages but stretched as long as 832 pages \23\--risked 
violating the organizational management maxim that if everything is a 
priority, nothing is a priority. In contrast, HUD believes that 
simplifying AFFH requirements would aid program participants in meeting 
their statutory civil rights obligations. It would also help HUD target 
its enforcement and technical assistance for jurisdictions receiving 
CDBG funds so that HUD's efforts are directed where they are needed 
most. This would allow jurisdictions to focus on their most important 
fair housing goals so that the jurisdiction could achieve more of their 
aims, instead of trying to execute too many goals to be successful. By 
having jurisdictions focus on fewer elements, it would be easier for 
the public to provide relevant information and feedback, better 
enabling jurisdictions to take those contributions from the public into 
consideration.
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    \23\ See December 23, 2016, AFH of the City of Philadelphia and 
the Philadelphia Housing Authority, available at http://ohcdphila.org/wp-content/uploads/2017/01/afh-2016-for-web.pdf.
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    HUD welcomes comments on all aspects of the proposed rule and its 
potential impacts. However, there are areas where HUD is seeking very 
specific feedback on the proposal. These specific requests for comments 
are embedded in the preamble discussion.

A. Definition of Affirmatively Furthering Fair Housing

    The current regulation defines AFFH as ``taking meaningful actions 
that, taken together, address significant disparities in housing needs 
and in access to opportunity, replacing segregated living patterns with 
truly integrated and balanced living patterns, transforming racially 
and ethnically

[[Page 2045]]

concentrated areas of poverty into areas of opportunity, and fostering 
and maintaining compliance with civil rights and fair housing laws.'' 
\24\
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    \24\ 24 CFR 5.152.
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    HUD proposes changing the definition of AFFH to ``advancing fair 
housing choice within the program participant's control or influence.'' 
HUD is proposing a definition of ``fair housing choice'' to be allowing 
``individuals and families [to] have the opportunity and options to 
live where they choose, within their means, without unlawful 
discrimination related to race, color, religion, sex, familial status, 
national origin, or disability.'' \25\ Fair housing choice would 
consist of three components:
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    \25\ The Fair Housing Act uses the term ``handicap.'' See 42 
U.S.C. 3604. However, the term ``disability'' is more commonly used 
and accepted today to refer to a physical or mental impairment that 
is protected under federal civil rights laws, the record of that 
impairment, or being perceived as having an impairment. Therefore, 
except when quoting from the Fair Housing Act, this preamble and 
proposed rule use the term ``disability.''
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    (1) Protected choice, meaning the absence of discrimination.
    (2) Actual choice, meaning not only that affordable housing options 
exist (as defined by the jurisdiction based on the needs and resources 
of that jurisdiction), but that the information and resources are 
available to enable informed choices. This is intended to encourage 
jurisdictions to provide public education about fair housing, the 
protected classes, and the resources available to protected class 
members to protect their right to fair housing.
    (3) Quality choice, meaning that the available and affordable 
housing is decent, safe, and sanitary, and, for persons with 
disabilities, accessible as required under civil rights laws.
    This revised definition of AFFH would avoid a federal government 
directive for local action that does not align with the statutory 
directive or that goes go beyond the authority of subject 
jurisdictions. It would also alleviate the unintended consequences of 
discouraging the use of federal assistance in communities that need 
additional help instead of restrictions. It would provide a more 
tailored approach that would take into account local issues and 
concerns by allowing local jurisdictions to create custom approaches 
based on their unique circumstances.
    In addition, the revised definition would make it clear that fair 
housing is based on fair housing choice. Fair housing involves 
combatting discrimination across all the classes protected by the Fair 
Housing Act: color, religion, sex, disability, familial status, and 
national origin. Finally, the revised AFFH definition would emphasize 
that a jurisdiction can AFFH in a variety of ways, according to the 
needs and means of the local community.
    The revised definition does not affect the responsibility of 
jurisdictions to comply with other relevant federal requirements and 
civil rights law.

B. AFFH Certifications

    Each jurisdiction that submits a consolidated plan must submit a 
certification that it will AFFH. Currently, the certification consists 
of a statement that the jurisdiction will AFFH, but it does not specify 
the exact way the jurisdiction intends to AFFH. HUD is proposing to 
expand the certification so that the jurisdiction would commit to 
addressing at least three fair housing choice obstacles or goals over 
the next five years. By including AFFH planning as part of the 
consolidated plan process, HUD proposes to incorporate the public 
participation requirements of the consolidated plan, without imposing 
an additional burden on jurisdictions. PHAs, already required to 
participate in the consolidated plan process, would be required to 
certify, in every applicable annual plan, that they have consulted with 
the jurisdiction on how to satisfy their obligations to AFFH. This 
participation and certification would fulfill their AFFH 
responsibilities.
    Each jurisdiction would be required to submit at least three 
measurable, concrete goals it plans on reaching in the upcoming years 
or obstacles to fair housing choice it plans to address, within its 
scope of influence, to increase fair housing choice. HUD would expect 
these submissions to provide a brief and direct explanation of how 
pursuing each goal or alleviating each obstacle would further fair 
housing choice in their jurisdiction. HUD would review these goals or 
obstacles for completeness and verify they use concrete and measurable 
standards, but HUD would not require that the goals cover specific 
areas or reach certain thresholds. Jurisdictions may consider 
additional data other than what was used for the comparison metrics in 
deciding what steps to take, but they would be required to provide a 
narrative justification for the decisions and goals. The certification 
would not have to address all fair housing obstacles or identify every 
effort the jurisdiction would take, but it should identify crucial or 
material efforts that the jurisdiction would reasonably expect to 
undertake over the next five years.
    Question for Comment 1: Is three the appropriate number of goals a 
jurisdiction should submit? If not, what would be a more suitable 
number? Would a higher number more appropriately hold jurisdictions 
accountable to AFFH without imposing an undue burden?
    Question for Comment 2: How should HUD balance requiring overly 
prescriptive standards with ensuring integrity for data sources that 
support such goals?
    The certification would be informed by the nature of the program 
participant, its geographic scope, its size, and its financial, 
technical and managerial resources. The goals or obstacles identified 
in the certification would not need to be based on any HUD-prescribed 
mode of analysis, such as examining a statistical analysis of housing 
patterns, using any specified data set, or reflecting original research 
or commissioned expert opinions, but they should reflect the practical 
experience and local insights of the program participant in conducting 
its ordinary housing-related operations, both with HUD funding and 
other programmatic efforts.
    HUD recognizes that jurisdictions may find many ways to advance 
fair housing that HUD officials cannot predict. Developing approaches 
to AFFH is a particularly difficult policy area, because a jurisdiction 
must consider competing factors within the jurisdiction that affect how 
best to AFFH, and State or local officials have the localized knowledge 
to balance those considerations. Therefore, HUD is not proposing to 
require that jurisdictions carry out specific steps to AFFH. This 
approach would allow jurisdictions to act as they deem necessary to 
achieve their results while allowing HUD to avoid micromanaging 
localities, ``decree[ing] a particular vision of urban development,'' 
\26\ or ``second-guess[ing] which of two reasonable approaches'' a 
jurisdiction should take.\27\ It would preserve flexibility for 
jurisdictions to take action based on the needs, interests, and means 
of the local community, and respects the proper role and expertise of 
state and local authorities.
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    \26\ Inclusive Communities, 135 S. Ct. at 2522-23.
    \27\ Id. at 2512.
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    Question for Comment 3: What, if any, aspects of the proposed rule 
and other policies not in the proposed rule, would motivate 
jurisdictions to more meaningfully engage in the AFFH planning process 
and make progress on the goals of the local AFFH plan?

[[Page 2046]]

    However, HUD anticipates that jurisdictions may look to common ways 
to increase fair housing choice in their jurisdictions. HUD proposes 
including a non-exhaustive list in the regulation of conditions that 
HUD considers to be common barriers to fair housing choice. HUD would 
consider a goal to take concrete steps toward alleviating or improving 
one of these listed conditions as a justified method of affirmatively 
furthering fair housing, and therefore jurisdictions would not need to 
include an explanation of why the jurisdiction is pursuing solutions to 
these barriers. While the proposed list would serve as a resource for 
jurisdictions in identifying potential obstacles or goals, HUD is not 
requiring jurisdictions to choose from these barriers when developing 
their certifications. HUD seeks input on what specific barriers may be 
categorized as ``common'' and thus should be included in the list.
    HUD recognizes the broad sweep of the AFFH obligation, its nature 
which defies easy quantification, and its susceptibility to widely 
diverging but reasonable interpretations. In analyzing the statutory 
direction within the context of the Fair Housing Act and other 
applicable laws as a whole, HUD does not expect that program 
participants would be able to immediately and completely address each 
impediment which they identify. Further, the purpose of these goals 
would not be to bind the jurisdiction to a certain course of action. 
Rather, these goals would be intended to provide HUD with an 
explanation of how the jurisdictions plans to AFFH so that HUD can 
review the jurisdiction's actions to determine whether, in HUD's 
assessment, the jurisdiction is making a sufficient effort to AFFH.
    Although not expressly included on HUD's proposed examples of 
common barriers (because they are generally legitimate and widely 
vary), jurisdictions should feel free to examine their State or local 
zoning laws and may determine that modifying these provisions is how 
they can best AFFH. HUD anticipates that program participants may 
undertake these types of actions because commenters stated that, 
outside of market forces, there are a number of structural barriers 
that could reduce the availability of housing overall, keeping housing 
prices high. For instance, cities may have zoning laws that restrict 
the ability of owners to build higher-density housing, or they may have 
elaborate housing production processes that result in would-be 
developers not getting the best use out of their land. One commenter 
noted that parties who would like to build more housing might face 
multiple layers of bureaucracy, each with their own interests and 
levels of expertise, such as city planning departments, citizen zoning 
boards, historical commissions, public hearings, state environmental 
review boards, and city rental licensing departments.\28\
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    \28\ Salim Furth, Mercatus Center at George Mason University 
letter to ANPR FR-6123-A-01 Affirmatively Furthering Fair Housing: 
Streamlining and Enhancements, October 16, 2018, p. 4, available at 
https://www.regulations.gov/document?D=HUD-2018-0060-0026.
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    HUD considers changes to zoning laws to be a useful and appropriate 
tool to further fair housing choice. Jurisdictions are free to choose 
to undertake changes to zoning or land-use policies as one method of 
complying with the AFFH obligation; however, no jurisdiction may have 
their certification questioned because they do not choose to undertake 
zoning changes. HUD believes this is consistent with section 105(c)(1) 
of the Cranston-Gonzalez National Affordable Housing Act,\29\ which 
prohibits HUD from disapproving consolidated plans because a 
jurisdiction adopts or continues zoning ordinances or land-use 
policies.
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    \29\ 42 U.S.C. 12705(c)(1).
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    One commenter cited data that found that the ``overall cost of 
housing in the United States is at least $3.4 trillion higher than it 
would be absent zoning regulations'' and US GDP is about $2 trillion 
below its potential due to restrictive land-use regulations.\30\ 
According to one study cited by a commenter, ``regulation imposed by 
all levels of government (whether local, state or federal) accounts for 
32.1 percent of the cost of an average multifamily development.'' \31\ 
Numerous research studies provide supporting evidence of the 
commenters' statements concerning the adverse impacts of restrictions 
on affordability and availability. A HUD report (2005) describes 
evidence from multiple studies indicating that regulating development 
increases the cost of housing. The estimated impact on prices varies by 
type of regulation studied and the context of the real estate market, 
and ranges from 10 to 50 percent.\32\ A more extensive and critical 
review of published research (Quigley and Rosenthal, 2005) finds that 
``a number of credible papers seem to bear out theoretical 
expectations'' that reducing the supply of developable land will raise 
housing prices.\33\ Sophisticated empirical research in the last decade 
has produced more convincing evidence that there is a direct link 
between regulation and housing affordability (Gyourko and Molloy, 
2015).\34\ The impact of constraining development reaches beyond local 
housing and land markets. There is a macroeconomic cost of limiting 
housing production in the most productive cities. One study (Hsieh and 
Moretti, 2019) found that the misallocation of labor due to restrictive 
housing regulations lowered US economic growth by 36 percent from 1964 
to 2009.\35\ Jurisdictions may examine their State or local laws, 
regulations, and government structure and determine that modifying 
these structural barriers to affordable housing is how they can best 
AFFH.
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    \30\ See Joshua Gottlieb comment letter to to FR-6123-A-01 
Affirmatively Furthering Fair Housing: Streamlining and 
Enhancements, October 16, 2018, available at https://www.regulations.gov/document?D=HUD-2018-0060-0655.
    \31\ National Association of Home Builders comment letter to 
ANPR FR-6123-A-01 Affirmatively Furthering Fair Housing: 
Streamlining and Enhancements, October 16, 2018, available at 
https://www.regulations.gov/document?D=HUD-2018-0060-0489, citing 
Emrath, P. & Walter, C. Multifamily Cost of Regulation (2018), 
available at https://www.nahbclassic.org/fileUpload_details.aspx?contentTypeID=3&contentID=262391&subContentID=712894.
    \32\ U.S. Department of Housing and Urban Development, 2005 
``Why Not In Our Community?, Removing Barriers to Affordable 
Housing, An Update to the Report of the Advisory Commission on 
Regulatory Barriers to Affordable Housing.''
    \33\ Quigley, John M., and Larry A. Rosenthal. 2005. ``The 
Effects of Land Use Regulation on the Price of Housing: What Do We 
Know? What Can We Learn?'' Cityscape: A Journal of Policy 
Development and Research 8 (1): 69-137.
    \34\ Gyourko, J. and Molloy, R., 2015. Regulation and housing 
supply. In Handbook of regional and urban economics (Vol. 5, pp. 
1289-1337). Elsevier.
    \35\ Hsieh, Chang-Tai, and Enrico Moretti, 2019. ``Housing 
Constraints and Spatial Misallocation.''American Economic Journal: 
Macroeconomics 11 (2): 1-39.
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    Jurisdictions with high levels of deteriorated or low-quality 
housing may decide that they wish to focus on improving those measures. 
The jurisdiction could work to convince the local PHA to prioritize the 
rehabilitation of its units, or it could decide that the best way to 
spend flexible funds is to improve local housing conditions.
    Question for Comment 4: Are there other factors, in addition to the 
ones listed in this proposed regulation, which are generally considered 
to be inherent barriers to fair housing?
    Question for Comment 5: Should any of the factors listed as 
inherent barriers to fair housing be revised or removed? Should there 
be different inherent barriers for States than for other jurisdictions?
    Question for Comment 6: What process should HUD undertake for 
updating the list in regulations, and how frequently should these 
updates occur?

[[Page 2047]]

    Finally, under the proposed rule, documentation used in the 
preparation of the AFFH certification would not need to be provided to 
HUD. However, such information would have to be retained and available 
for inspection by HUD according to the record retention requirements of 
the consolidated plan.

C. Comparison Metrics

    To provide a way for jurisdictions to measure their progress in 
affirmatively furthering fair housing over time, and to allow HUD to 
verify that jurisdictions are taking actions and not just making plans, 
HUD is proposing a system that would use publicly available metrics to 
score and rank the CDBG-receiving jurisdictions that submit a 
consolidated plan that year. By using public data, HUD intends to 
create a ``dashboard'' that would allow jurisdictions to anticipate 
where they would rank and therefore plan ahead accordingly. This 
dashboard will further encourage engagement by allowing a jurisdiction 
to know exactly where it stands. These rankings would allow HUD to 
objectively determine a jurisdiction's success in providing quality 
affordable housing without adjudicated adverse fair housing findings. 
This ranking system, while useful in helping HUD evaluating compliance 
with the jurisdiction's requirement to AFFH, would not reflect a 
determination that the jurisdiction has complied with the Fair Housing 
Act.
    The proposed rule recognizes that jurisdictions face different 
challenges including tight or slack housing supply, job growth or 
decline, and shifts in population growth or decline. These different 
indicators would influence jurisdictions' choices in promoting fair 
housing choice. A jurisdiction with high job growth and a tight housing 
market would have different priorities and abilities than a 
jurisdiction with job declines and a very open housing market. Both 
would also be different from a jurisdiction with high job growth but a 
commensurate growth in the availability of housing that keeps housing 
prices more affordable.
    HUD's proposed regulation would compare jurisdictions receiving 
CDBG funds and submitting a consolidated plan with other similarly 
situated jurisdictions, taking into account the factors discussed 
above, to be developed for the final rule. HUD is also considering 
using different data sets for different categories of jurisdictions.
    The regulatory text is intended to be a broad outline of the 
specific data measures included in the comparison metric. HUD plans to 
publish a notice for public comment identifying the specific sources of 
data and the method for creating a jurisdiction's metric score when 
this rule is finalized.
    Question for Comment 7: What are the appropriate economic and 
population size/growth/decline market conditions categories of local 
CDBG-receiving jurisdictions that submit consolidated plans? Should 
there be different categories of States, as well? How many categories 
should there be?
    Question for Comment 8: Given the intentions of HUD for specific 
types of data discussed more fully below, are there specific data that 
HUD should use for certain categories and not for others?
    Question for Comment 9: What process should HUD undertake for 
updating the metrics, scoring, weighting, and other components, and how 
frequently should these updates occur?
1. Scope
    Under the proposed rule, HUD would only determine and compare 
metrics for jurisdictions that submit consolidated plans because they 
receive CDBG funds. This would allow HUD to rely on the geographic 
boundaries used by the CDBG program and to focus its resources on the 
jurisdictions that are likely receiving the most funding from HUD.
    Question for Comment 10: Should HUD also rank non-CDBG 
jurisdictions that still submit consolidated plans? What are the 
potential obstacles or problems with those rankings?
2. Data
    To determine each jurisdiction's success at furthering fair housing 
choice, HUD would develop a scoring system based on quantitative data 
generated by publicly available datasets, such as data from the United 
States Census Bureau, including the American Community Survey, the 
United States Post Office, and HUD-generated data. These data would 
seek to represent how well a jurisdiction is providing affordable, 
quality housing free of violations of the Fair Housing Act and related 
statutes. HUD would create the scoring system using data related to 
affordable housing availability, the jurisdiction's housing quality, 
and adjudicated complaints of violations of the Fair Housing Act or 
related statutes. HUD would re-evaluate the data set periodically and 
adjust them through further notice and comment.
a. Lack of Adjudicated Fair Housing Violations
    One of the key ways HUD would confirm that program participants 
fulfill their AFFH responsibilities would be to reward only 
jurisdictions that are free of material civil rights violations. HUD 
recognizes that jurisdictions have multiple layers of civil rights 
enforcement, including state Attorneys General, Fair Housing Initiative 
Programs, the United States Department of Justice (``DOJ''), and HUD. 
HUD proposes to take all these methods of enforcement into account in 
determining a jurisdiction's civil rights record.
    HUD proposes to include a yes or no indicator of whether the 
jurisdiction has an adversely adjudicated fair housing complaint 
brought by or on behalf of HUD or by the DOJ against the jurisdiction 
in the previous 5 years. By limiting this indicator to adverse 
determinations following adjudication, HUD would protect jurisdictions 
by only penalizing them on this indicator after they have had an 
opportunity for a hearing and full finding of facts. Jurisdictions with 
any such adjudicated violations within the previous 5 years would not 
be eligible for any benefits otherwise available to high-performing 
jurisdictions.
    Question for Comment 11: Are there other methods (aside from a yes 
or no indicator) for incorporating the complaints into the dashboard? 
Are there other data points HUD should include in this measure?
    Question for Comment 12: HUD is concerned that taking into account 
adversely adjudicated civil rights cases that were not brought by HUD 
or DOJ will encourage jurisdictions to settle civil rights claims 
rather than risk an adverse ruling that would affect the jurisdiction's 
standing with HUD. HUD seeks comment on whether, and if so how, it 
could take these cases into account without unduly influencing civil 
rights litigation.
    Question for Comment 13: Are there circumstances in which a 
jurisdiction should not be held accountable for a negatively 
adjudicated complaint against a PHA? Are there ways to take 
adjudications against a PHA into account without penalizing the entire 
jurisdiction?
b. Affordable Housing
    Fair housing choice requires not only the absence of discrimination 
but the existence of realistic housing options.\36\ As stated by 
Senator Walter Mondale in support of the Fair Housing Act, protection 
against discrimination does not itself ``overcome the economic

[[Page 2048]]

problem of those who could not afford to purchase the house of their 
choice.'' \37\ Ultimately, he continued, ``the laws of supply and 
demand will take care of who moves into what house in which 
neighborhood.'' \38\ Members of protected classes often find their 
access to fair housing choice limited by economic factors brought on by 
a lack of affordable housing.
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    \36\ See AFFH Rule Guidebook at 4, available at https://www.hudexchange.info/resources/documents/AFFH-Rule-Guidebook.pdf, 
quoting 24 CFR 5.152.
    \37\ Speech by Senator Mondale on floor of the Senate, February 
20, 1968, 114 Cong. Rec. 3421-22, 3421.
    \38\ Id. at 3422.
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    Affordable housing can advance the goal of providing members of 
protected classes with access to the neighborhoods of their choice. 
Some protected class members may want to stay in their neighborhood to 
maintain access to deep community support systems or proximity to their 
job. Others who want to leave their neighborhood would benefit from 
reduced housing costs that make it easier for them to move. Encouraging 
policies that increase overall access to affordable housing allows 
residents to gain from improvements to housing conditions in their own 
neighborhood while providing flexibility to jurisdictions on how to 
achieve that affordability.
    Increasing the availability of affordable housing in a community 
would help low-income families. However, studies have demonstrated that 
single-parent households, elderly households, and households of color 
are more likely to be cost-burdened by housing.\39\ Increasing overall 
affordability will, therefore, help members of protected classes 
maximize their ability to live where they choose. Having a supply of 
affordable housing that is sufficient to meet the needs of a 
jurisdiction's population is crucial to enabling families to live 
throughout the jurisdiction and promoting fair housing for all 
protected classes, so HUD is proposing to include data in the 
comparison metrics to evaluate a jurisdiction based on its availability 
of affordable housing. To do this, HUD is considering using metrics 
such as housing prices, fair market rents, the burden housing costs 
place on very-low- to moderate-income families, the ability of tenants 
with housing choice vouchers to access housing throughout the 
jurisdiction, and the existence of excess housing choice voucher 
reserves showing a failure to fully take advantage of voucher funding 
available to the jurisdiction.
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    \39\ The State of the Nation's Housing 2018, Joint Center for 
Housing Studies of Harvard University, 2018, 30-31.
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    Question for Comment 14: Are there other data points HUD should use 
to measure affordability as it relates to fair housing choice? If so, 
what considerations are needed in using this data to ensure an accurate 
measure?
    Question for Comment 15: What data sources may enable HUD to 
measure the extent to which residents are living in neighborhoods of 
their choice, consistent with their means?
    Question for Comment 16: With any of the data mentioned above, are 
there any factors, such as disparities in average income or job growth, 
for which HUD should control, to ensure that analysis of the data set 
is an accurate measure of access to fair and affordable housing?
    Question for Comment 17: Another idea HUD is considering is ranking 
jurisdictions based on ``by right'' land use or the amount of 
additional burden local regulations place on the housing market by 
unduly increasing housing costs. Do such measures exist? How could HUD 
work to create one?
    Question for Comment 18: Are there other measures that HUD could 
use or create to encourage the creation of additional housing that is 
affordable throughout a jurisdiction?
c. Housing Quality and Physical Conditions
    Gains generated by widespread affordable housing are not meaningful 
unless that affordable housing is decent, safe, and sanitary. Without 
quality affordable housing, members of protected classes will face 
practical limitations in their housing choices.
    Individuals living in poor quality housing experience an increase 
in chronic illness,\40\ respiratory diseases,\41\ and injuries.\42\ 
Overcrowding can increase the transmissions of disease and 
psychological distress.\43\ These negative effects can be particularly 
harmful and long-lasting to children.\44\ Dilapidated or abandoned 
housing stock may also foster crime.\45\
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    \40\ Evans, J., Hyndman, S., Stewart-Brown, S., Smith, D., & 
Petersen, S., An epidemiological study of the relative importance of 
damp housing in relation to adult heath, J Epidemiol Community 
Health, pp. 677-686 (2000), available at https://jech.bmj.com/content/54/9/677.long.
    \41\ Institute of Medicine. Clearing the Air: Asthma and Indoor 
Air Exposures. Washington, DC: National Academy Press; 2000.
    \42\ Tinetti ME, Speechley M, & Ginter SF., Risk factors for 
falls among elderly persons living in the community. N Engl J Med. 
1988; 319:1701-1707.
    \43\ Solari, Claudia D, and Robert D Mare, ``Housing crowding 
effects on children's wellbeing.'' Social science research vol. 41,2 
(2011): 464-76, available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3805127/.
    \44\ Coley, R.L., Leventhal, T., Lynch, A.D., & Kull, M. (2013). 
Relations Between Housing Characteristics and the Well-Being of Low-
Income Children and Adolescents. Developmental Psychology. Vol 
49(9). Pages 1775-1789, available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3766502/.
    \45\ See, e.g., Freedman, Matthew, and Emily G. Owens. ``Low-
income housing development and crime.'' Journal of Urban Economics 
70.2-3 (2011): 115-131.
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    Persistent health problems can also make it difficult for 
individuals to obtain and maintain employment, threatening their 
ability to maintain self-sufficiency. This can be particularly acute 
for individuals with physical disabilities and older adults, for whom 
deteriorating or inaccessible housing creates a much higher risk of 
injury.
    HUD is considering using worst-case housing needs data, which 
documents lack of kitchen facilities and adequate plumbing and 
overcrowding, to determine how well a jurisdiction is encouraging a 
supply of housing that is of sufficient quality. HUD would also like to 
consider the prevalence of housing with lead-based paint hazards that 
cause health issues and the quality of housing in jurisdictions 
according to HUD REAC inspection scores.
    Question for Comment 19: Are there other data points HUD should 
include to measure housing conditions as they relate to fair housing? 
If so, are there any additional considerations in using those data 
points necessary to ensure an accurate measure?
    Question for Comment 20: With any of the data mentioned above, 
should there be additional considerations to ensure that the data set 
is an accurate measure?
3. Rewards and Other Compliance Incentives
    HUD believes that the best way to further fair housing is to 
encourage collaboration and cooperation among all stakeholders within a 
jurisdiction, including government, PHAs, nonprofits, and private 
owners. This rule proposes to provide benefits to both jurisdictions 
and the entities within jurisdictions that, as demonstrated by 
comparison metrics, are successful with their AFFH efforts. In 
addition, this rule would empower HUD to concentrate its assistance and 
regulatory enforcement resources on the lowest AFFH performers.
a. Rewards
    Within each category, HUD proposes to determine the jurisdictions 
that are outstanding AFFH performers, and grantees and applicants for 
funding located within those jurisdictions would be eligible for 
various benefits for the following 2 years. As more fully described 
below, HUD proposes that the benefits vary according to the program 
involved, but may include preference

[[Page 2049]]

points on Notices of Funding Availability (NOFAs) or eligibility to 
receive additional program funds due to reallocations of recaptured 
appropriated funds and other forms of regulatory relief.
    Beginning with the second consolidated plan cycle after the 
effective date of the rule, HUD also proposes to determine which 
jurisdictions had the greatest improvement in their metrics over the 
past five years. The most improved jurisdictions would also be eligible 
for benefits given to outstanding AFFH performers (if not otherwise 
already an outstanding AFFH performer).
    Question for Comment 21: How should HUD determine ranking of high 
and low AFFH performers? Should a baseline percentage be used (for 
example, the top 20 percent and bottom 20 percent), or should some 
other ranking be used (for example, a ``natural break'' in the 
distribution where there is a material distinction between 
jurisdictions)? If a percentage, what is the appropriate percentage, 
and why? Would it be appropriate to set a percentage and then allow the 
Secretary to deviate from that baseline when the data warrants it? What 
would be the effects of using each type of approach?
    Question for Comment 22: Should there be two tiers of rewards for 
high performing jurisdictions, such as ``outstanding'' and ``high 
pass,'' where ``outstanding'' performers received regulatory relief and 
extra funding, while ``high pass'' performers received just one 
category of relief, such as extra funding? What would be the effects of 
such an approach?
    Question for Comment 23: Should HUD reward improvement in a 
jurisdiction before the first 5-year cycle is complete? If so, how 
should HUD determine progress between consolidated plan submissions, 
and what possible benefits should be available?
    HUD is interested in determining which jurisdictions are the most 
effective at meeting their AFFH obligations. HUD believes that, by 
identifying top performers, other similarly situated jurisdictions can 
learn from these top performers and may be able to replicate successful 
practices. By identifying such top performers, HUD would be able to 
reward and provide incentives to jurisdictions that make significant 
efforts to address housing discrimination. This jurisdiction-driven 
approach would also allow the top performers to serve as a model for 
HUD in designing future programs and fair housing efforts.
    HUD is proposing to reward outstanding AFFH performers through 
advantages in grant competitions. While many funding programs are based 
on a statutory formula, there are numerous grant programs, including 
Choice Neighborhood Planning and Implementation Grants, Jobs-Plus, 
lead-based paint reduction programs, ROSS and FSS programs, and the 
Fair Housing Initiative Program, where it may be appropriate to award 
points in the competition to applicants that are within outstanding 
AFFH jurisdictions. In the development of each competitive NOFA, HUD 
proposes to consider whether it is appropriate to use the grant funding 
to provide a benefit to potential recipients in an outstanding AFFH 
jurisdiction.
    In addition to potential NOFA bonuses, HUD would, in the 
development of future demonstration programs, consider whether the 
demonstration should prioritize participants in outstanding AFFH 
jurisdictions. Programs that may fall into this category include new 
designations of PHAs as Moving to Work (MTW) agencies, priorities for 
conversions of assistance under the Rental Assistance Demonstration 
(RAD) program, or selection for participation in mobility 
demonstrations.
    HUD is also considering whether outstanding AFFH jurisdictions 
should be eligible for various forms of regulatory relief, either from 
the AFFH process itself or as part of the larger programmatic 
regulatory requirements. HUD is also open to seeking additional 
statutory flexibility to reward outstanding AFFH jurisdictions.
    Question for Comment 24: Are there other rewards that HUD should 
consider for outstanding AFFH performers? Are there statutory or 
regulatory changes that HUD should pursue to increase the availability 
of such rewards?
    Question for Comment 25: Are there specific forms of regulatory 
relief that HUD should consider for outstanding AFFH performers?
b. Compliance Incentives
    If a jurisdiction falls in the bottom ranking, HUD proposes to 
consider the accuracy of the jurisdiction's AFFH certification under 24 
CFR 91.5. The jurisdiction would have the opportunity to respond in 
writing to provide additional information to demonstrate that they are 
affirmatively furthering fair housing to the best of their ability. 
This demonstration may include evidence that the jurisdiction has taken 
concrete and measurable steps for improvement, additional information 
about specific obstacles faced in achieving AFFH goals, structural and 
systematic reasons for lack of movement in the comparison metrics, or 
other information the jurisdiction believes relevant.
    If HUD, following existing procedures, were to determine that the 
additional information provided by the jurisdiction is sufficient, HUD 
proposes to accept the certification. However, if the additional 
information was deemed insufficient, HUD proposes to reject the AFFH 
certification of the jurisdiction and to follow the procedures under 24 
CFR 91.500 to provide the jurisdiction with the specific steps the 
jurisdiction must follow for HUD to accept the certification. Such 
steps may include additional public participation requirements for the 
development of the next AFFH certification or specific remedies for 
deficiencies HUD has discovered as part of the review process. If a 
jurisdiction continues to be unable to provide adequate assurances that 
it will AFFH, HUD proposes that the grant may be withheld.
    Question for Comment 26: Are there other remedies HUD should 
consider requiring of jurisdictions who are not improving in their 
comparison metrics?
    Just as with outstanding or improved AFFH performers, HUD is also 
very interested in identifying which jurisdictions may need further 
assistance in meeting their AFFH obligations. HUD believes that a 
jurisdiction that is struggling to improve on the neutral metrics, or 
falls significantly below its peers, may be a jurisdiction that needs 
help in other areas of compliance, as well. Therefore, HUD proposes to 
use the identification of the lowest performers in AFFH to target its 
resources in many areas, such as grant administration and regulatory 
oversight, not just in civil rights enforcement.
    HUD's intent is not to punish pioneering jurisdictions for creative 
AFFH strategies that turn out not to be effective. HUD recognizes that 
sometimes unsuccessful efforts are just as important to learning as 
successful efforts. HUD would encourage jurisdictions to share lessons 
learned from unsuccessful efforts and successful efforts alike. HUD 
also expects that the annual report process would encourage 
jurisdictions to regularly consider whether their action plans are 
promoting change in the right direction and, if not, proposes to allow 
the jurisdictions a chance to recalibrate and change course. This would 
help create a cycle of accountability that allows jurisdictions to 
highlight successes, analyze failures, and course-correct, if 
necessary.

[[Page 2050]]

    Question for Comment 27: HUD is seeking input on possible 
mechanisms for sharing information across jurisdictions regarding the 
success of efforts to AFFH, and the extent to which any such mechanisms 
should become requirements of the regulation.
4. Appeals
    If a jurisdiction were to believe that an error, such as a failure 
to consider a relevant factor or a statistical anomaly, has resulted in 
the jurisdiction being improperly ranked, the jurisdiction would be 
able to respond to HUD by identifying the error and requesting a 
recalculation of the comparison metrics, or consideration of a factor 
which was not adequately accounted for in the comparison metrics. HUD 
would review the jurisdiction's response and, if HUD determines it 
necessary, recalculate the jurisdiction's ranking without impacting the 
rankings of others.

D. Annual Performance Reports and Amendments

    HUD recognizes that AFFH efforts may take time to realize results, 
but jurisdictions are encouraged to still work to AFFH on a consistent 
basis throughout their consolidated plan cycles. In the years between 
5-year plans, jurisdictions would need to submit, in their annual 
performance reports under 24 CFR 91.520, annual progress updates to the 
goals or obstacles they submitted in their most recent AFFH 
certification. HUD is also proposing to add an AFFH component to the 
annual performance review conducted by HUD. This review would not be 
intended to substitute HUD's judgment for the judgment of the 
jurisdiction. Instead, under HUD's rational basis review, HUD would 
accept performance reports under 24 CFR 92.520, where the steps taken 
are each rationally related to the goal and obstacles identified in the 
jurisdiction's AFFH certification. This language is intended to follow 
the judicial definition of rational basis review closely.\46\
---------------------------------------------------------------------------

    \46\ See, e.g., McGowan v. Maryland, 366 U.S. 420, 425-26 (1961) 
(Under the rational basis standard, the constitutional safeguard of 
equal protection ``is offended only if the classification rests on 
grounds wholly irrelevant to the achievement of the State's 
objective. State legislatures are presumed to have acted within 
their constitutional power despite the fact that, in practice, their 
laws result in some inequality. A statutory determination will not 
be set aside if any statement of facts reasonably may be conceived 
to justify it.''); see also James v. Strange, 407 U.S. 128, 140-42 
(1972) (holding that rational basis review under the Equal 
Protection Clause ``imposes a requirement of some rationality in the 
nature of the class singled out'' and that treating one class of 
debtors differently from another without reason did not meet 
rational basis scrutiny).
---------------------------------------------------------------------------

    HUD believes that this level of review would provide the proper 
level of oversight without undue interference. HUD recognizes that 
affirmatively furthering fair housing is a necessarily complicated area 
implicating various policy concerns. Unlike enforcement actions for 
discrimination, HUD is seeking only to confirm that jurisdictions are 
fulfilling their statutory duty and will trust, in the absence of 
evidence to the contrary, that a jurisdiction's preferred method of 
affirmatively furthering fair housing is a valid method of fulfilling 
its statutory duty. The Fair Housing Act does not mandate that 
jurisdictions be second-guessed for the reasonable choices they make. 
The Supreme Court in Inclusive Communities said that the Fair Housing 
Act is not a means of second-guessing the reasonable choices of 
jurisdictions.\47\ A higher level of scrutiny would invite second-
guessing. This level of scrutiny also encourages experimentation and 
prevents HUD from substituting its judgment for that of local 
jurisdictions. HUD recognizes that some jurisdictions will pioneer 
methods of advancing fair housing, which may not always succeed but 
nevertheless should not be punished for their ingenuity.
---------------------------------------------------------------------------

    \47\ Inclusive Communities, 135 S. Ct. at 2522.
---------------------------------------------------------------------------

    Jurisdictions would not be expected to address every goal or 
obstacle every year. However, under the proposed rule, HUD would expect 
that jurisdictions would, over the course of a 5-year period, follow 
through on all their commitments in their AFFH certification by taking 
some steps towards each of the goals in the AFFH certification.
    Following the same procedures as amendments to the consolidated 
plan, jurisdictions would be able to amend or change their goals if 
they discover a material barrier to achieving the goal or a reason why 
that goal is no longer the best means to AFFH. HUD would review these 
reports for completion and to verify that jurisdictions used concrete 
and measurable standards. HUD would not make a qualitative assessment 
of such reports.

E. PHAs

    This rule seeks to tailor AFFH requirements applicable to PHAs 
while still verifying that PHAs are fulfilling their AFFH obligations. 
PHAs are already required to participate in the development of the 
consolidated plan actively. This rule would emphasize this requirement 
and establish that a PHA is generally required to AFFH only in its 
programs and in the areas under its direct control, and to certify that 
it will AFFH. A PHA would not be required to submit a certification 
detailing AFFH goals and obstacles. However, a PHA would be required to 
certify that it has consulted with the local jurisdiction on AFFH and 
would AFFH in its programs and in areas under its direct control. If a 
PHA has been subject to a HUD letter of finding or an adjudicated 
negative finding in a complaint brought by HUD or DOJ, finding a 
violation of the Fair Housing Act in the last two years, then HUD 
proposes that the PHA must include with its certification an 
explanation of what steps the PHA has taken and is taking to resolve 
the violation.
    Question for Comment 28: As discussed above concerning 
jurisdictions, HUD is concerned that taking into account adversely 
adjudicated civil rights cases which were not brought by HUD or DOJ 
will unduly encourage PHAs to settle civil rights claims rather than 
risk an adverse ruling affecting the PHA's standing with HUD. HUD seeks 
comment on whether, and if so how, it could take these cases into 
account without unduly influencing civil rights litigation.
    Question for Comment 29: What should cooperation between PHAs and 
consolidated plan jurisdictions look like?
    Question for Comment 30: How should this rule balance the need for 
PHA engagement and contribution to an area's AFFH requirements while 
not creating requirements that may be overly burdensome?

V. Findings and Certifications

Executive Orders 12866 and 13563, Regulatory Planning and Review

    Pursuant to 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 Executive Order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and

[[Page 2051]]

maintain flexibility and freedom of choice for the public. HUD believes 
that this proposed rule would empower local jurisdictions to determine 
how to AFFH rather than mandating that jurisdictions act on specific 
policies, and thus create a regulatory process that empowers individual 
jurisdictions to act on local determinations of need and within local 
budgetary and resource constraints.
    The proposed rule has been determined to be a ``significant 
regulatory action,'' as defined in section 3(f) of Executive Order 
12866, but not economically significant. The docket file is available 
for public inspection online at www.regulations.gov.

Executive Order 13771, Regulatory Costs

    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. 
While the burden in creating a consolidated plan is expected to 
increase slightly as the jurisdiction prepares a Fair Housing Report, 
the overall burden on the jurisdiction is greatly lessened because the 
lengthy Assessment of Fair Housing (AFH), with its separate community 
engagement and reporting requirements, would be eliminated under this 
proposal. Jurisdictions would be able to determine their actions to 
AFFH based on their capacity and needs, allowing jurisdictions to avoid 
burdensome requirements beyond their abilities.
    The previously approved information collections for the AFFH Local 
Government and PHA and Assessment Tools (2529-0054 and 2529-0055, 
respectively) had a total, combined 665,862 burden hours for all 
respondents. This was due to the extensive nature of the tools and the 
additional public meeting requirements to complete an AFH. HUD has 
already temporarily withdrawn the Local Government Assessment Tool, and 
this proposed rule would make that removal permanent. By fully 
incorporating the proposed AFFH process into the existing consolidated 
plan process, HUD expects that the AFFH process will result in only 10 
hours per response, or a total of 12,660 total hours, a significant 
reduction from the previous process requirements.
    The proposed rule significantly reduces the reporting burden for 
jurisdictions in the formulation of AFFH strategies, reducing costs by 
an estimated $23.7 million per year. Under the proposed rule, HUD would 
measure jurisdictions' progress toward their identified AFFH goals 
through publicly available data focused on the availability and quality 
of affordable housing, reward high performing jurisdictions with 
unspecified incentives, and provide technical assistance to low 
performing jurisdictions. Qualitatively, if the metrics and incentives 
are effective in influencing jurisdictions' behavior, availability, and 
quality of affordable housing options should increase as Federal and 
local resources are devoted to such activities.

Executive Order 12612, 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

    This proposed rule is a policy document that sets out fair housing 
and nondiscrimination standards. Accordingly, under 24 CFR 50.19(c)(3), 
this proposed rule is categorically excluded from environmental review 
under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
seq.).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The undersigned 
certifies that this rule would not have a significant economic impact 
on a substantial number of small entities.
    This rule proposes to strengthen the way in which HUD and its 
program participants meet the requirement under the Fair Housing Act to 
take affirmative steps to further fair housing. The preamble identifies 
the statutes and executive orders that address this requirement and 
that place responsibility directly on certain HUD program participants, 
specifically, local governments, states, and PHAs, underscoring that 
the use of federal funds must promote housing choice and open 
communities. Although local governments, states, and PHAs must 
affirmatively further fair housing independent of any regulatory 
requirement imposed by HUD, HUD recognizes its responsibility to 
provide leadership and direction in this area, while preserving local 
determination of fair housing needs and strategies.
    This rule primarily focuses on establishing a regulatory framework 
by which program participants may more effectively report how they meet 
their statutory obligation to affirmatively further fair housing. This 
rule builds on the statutory requirements to affirmatively further fair 
housing in conjunction with the development of consolidated plans for 
state and local governments and PHA Plans for PHAs and, in doing so, 
provides for all program participants to comply with their statutory 
requirements in a cost-efficient and effective manner.
    Jurisdictions submitting consolidated plans do so usually because 
they receive State or Entitlement CDBG funds. In order to be an 
entitlement jurisdiction, the jurisdiction must be a principal city of 
a metropolitan statistical area, be a metropolitan city with a 
population of at least 50,000, or be a qualified urban county with a 
population of at least 200,000. This rule would change the 
certification requirements for PHAs in their annual plans to require 
that PHAs certify they will participate in the development of the 
consolidated plan. This participation will naturally be shaped by the 
needs and resources of the PHA.
    As discussed more fully in the ``Executive Order 13771, Regulatory 
Costs'' section, above, and in the proposed regulatory impact analysis 
(RIA), the rule proposes to reduce the administrative burden on program 
participants in preparing and submitting an AFFH certification to HUD 
as compared to the current AFH process. The proposed rule would do this 
by fully incorporating the AFFH process into the consolidated plan 
process and allowing jurisdictions to determine how to AFFH based on 
their unique combination of resources, economic situations, and local 
needs.
    Nevertheless, HUD is sensitive to the fact that the uniform 
application of requirements on entities of differing sizes may place a 
disproportionate burden on small entities. HUD, therefore, is 
soliciting alternatives for compliance from small entities as to how 
these small entities might comply in a way less burdensome to them.

[[Page 2052]]

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520), 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 Office of Management and Budget 
(OMB) control number. The information collection requirements contained 
in this proposed rule have been approved by OMB under the Paperwork 
Reduction Act and assigned OMB control number 2506-0117 (Consolidated 
Plan, Annual Action Plan & Annual Performance Report). The collection 
requirement will be amended to reflect the altered burden contained in 
this proposed rule.
    HUD anticipates that the impact of this rule on document 
preparation time is reduced from the burden that it may otherwise be 
because the rule integrates the AFFH requirements with the consolidated 
and PHA planning processes. Additionally, states, local governments, 
and PHAs are already required to prepare written AFFH plans, undertake 
activities to overcome identified barriers to fair housing choice, and 
maintain records of the activities and their impacts. The principal 
differences imposed by this proposed rule would be that the program 
participants are no longer required to create plans based on specified 
data but would instead be permitted to determine how to AFFH based on 
their local needs and available resources. In addition, because the 
AFFH process is wholly incorporated into the existing consolidated and 
PHA planning processes, local governments, states, and PHAs would not 
have to establish additional AFFH procedures.
    HUD published a notice on May 23, 2018, temporarily withdrawing the 
information collection in OMB Control Number 2529-0054, the Assessment 
Tool for Local Governments. This proposed rule makes that removal 
permanent, along with the removal of the Assessment Tool for PHAs, OMB 
Control Number 2529-0055.
    The burden of the information collections in this proposed rule is 
estimated as follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Number of responses          Total annual burden hours                           Total Annual Cost
         Information collection          ----------------------------------------------------------------  Hourly cost * -------------------------------
                                              Current           New           Current           New                           Current           New
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consolidated Plan for Localities and            ** 1,266           1,266         393,338         405,998             $34     $13,373,492     $13,803,932
 States.................................
Assessment Tool for Local Governments              1,266               0         230,993               0              34       7,853,762               0
 ***....................................
Assessment Tool for PHAs................           3,942               0         247,302               0              34       8,408,268               0
                                         ---------------------------------------------------------------------------------------------------------------
Totals..................................  ..............  ..............         871,633         405,998  ..............      29,635,522      13,803,932
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Estimates assume a blended hourly rate that is equivalent to a GS-12, Step 5, Federal Government Employee.
** Total localities of 1,266 includes 1,209 entitlements + 3 non-entitlements (Hawaii, Kauai, Maui), 4 Insular Areas (Guam, Mariana Islands, Samoa,
  Virgin Islands), and 50 states.
*** This tool was temporarily taken down on May 23, 2018, by notice published at 83 FR 23922.

    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-
6123) 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 http://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 http://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.

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.

List of Subjects

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime,

[[Page 2053]]

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 91

    Aged; Grant programs-housing and community development; Homeless; 
Individuals with disabilities; Low and moderate income housing; 
Reporting and recordkeeping requirements.

24 CFR Part 92

    Administrative practice and procedure; Low and moderate income 
housing; Manufactured homes; Rent subsidies; Reporting and 
recordkeeping requirements.

24 CFR Part 570

    Administrative practice and procedure; American Samoa; Community 
development block grants; Grant programs-education; Grant programs-
housing and community development; Guam; Indians; Loan programs-housing 
and community development; Low and moderate income housing; Northern 
Mariana Islands; Pacific Islands Trust Territory; Puerto Rico; 
Reporting and recordkeeping requirements; Student aid; Virgin Islands.

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 576

    Community facilities; Grant programs-housing and community 
development; Grant programs-social programs; Homeless; Reporting and 
recordkeeping requirements.

24 CFR Part 903

    Administrative practice and procedure; Public housing; Reporting 
and recordkeeping requirements.

24 CFR Part 905

    Grant programs-housing and community development; Public housing; 
Reporting and recordkeeping requirements.

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR parts 5, 91, 92, 570, 574, 576, 903, 905 as 
follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
1. The authority citation for part 5, subpart A, continues to read as 
follows:

    Authority: 29 U.S.C. 794, 42 U.S.C. 1437a, 1437c, 1437c-1(d), 
1437d, 1437f, 1437n, 3535(d), and Sec. 327, Pub. L. 109-115, 119 
Stat. 2936; 42 U.S.C. 3600-3620; 42 U.S.C. 5304(b); 42 U.S.C. 12101 
et seq.; 42 U.S.C. 12704-12708; E.O. 11063, 27 FR 11527, 3 CFR, 
1958-1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 Comp., 
p. 849.

0
2. Revise Sec.  5.150 to read as follows:


Sec.  5.150  Obligation to Affirmatively Further Fair Housing.

    (a)(1) Every recipient of HUD funding must affirmatively further 
fair housing by acting in a manner consistent with reducing obstacles 
within the participant's sphere of influence to providing fair housing 
choice. HUD may consider a failure to meet the duty to affirmatively 
fair housing a violation of program requirements.
    (2) Fair housing choice means, within a HUD program participant's 
sphere of influence, that individuals and families have the opportunity 
and options to live where they choose, within their means, without 
unlawful discrimination related to race, color, religion, sex, familial 
status, national origin, or disability. Fair housing choice 
encompasses:
    (i) Protected choice, which means access to housing without 
discrimination;
    (ii) Actual choice, which means not only that affordable housing 
options exist, but that information and resources are available to 
enable informed choice; and
    (iii) Quality choice, which means access to affordable housing 
options that are decent, safe, and sanitary, and, for persons with 
disabilities, access to accessible housing as required under civil 
rights laws.
    (b) Affirmatively furthering fair housing requires an effort that 
is in addition to, and not a substitute for, compliance with the 
specific requirements of the Fair Housing Act.
    (c) For the purposes of affirmatively furthering fair housing, HUD 
does not expect that recipients of funding will be able to immediately, 
completely, or to the satisfaction of all persons, address each 
impediment to fair housing choice, whether identified, known but not 
prioritized, or alleged by others. Nothing in this paragraph relieves 
jurisdictions of their obligations under other civil rights and fair 
housing statutes and regulations.


Sec.  5.151 through Sec.  5.154  [Removed and Reserved]

0
3. Remove Sec.  5.151 through Sec.  5.154.
0
4. Add Sec.  5.155 to read as follows:


Sec.  5.155  Jurisdictional risk analyses.

    (a) Purpose. HUD will conduct an analysis and ranking of 
jurisdictions to determine which jurisdictions are especially 
succeeding at affirmatively furthering fair housing and which should be 
subject to an enhanced review and may need additional assistance to 
affirmatively further fair housing. This ranking is not a determination 
that the jurisdiction has complied with the Fair Housing Act.
    (b) Frequency. HUD will conduct the analysis and ranking every 
year.
    (c) Method. (1) HUD will, using publicly available data and 
databases, establish a base score for each jurisdiction regarding the 
extent to which there is an adequate supply of affordable and available 
quality housing for rent and for sale to support fair housing choice. 
The following are non-exclusive examples of the type of data for each 
jurisdiction:
    (i) Median home value and contract rent.
    (ii) Household cost burden.
    (iii) Percentage of dwellings lacking complete plumbing or kitchen 
facilities.
    (iv) Vacancy rates.
    (v) Rates of lead-based paint poisoning.
    (vi) Rates of subpar Public Housing conditions.
    (vii) Availability of housing accepting housing choice vouchers 
throughout the jurisdiction.
    (viii) The existence of excess housing choice voucher reserves.
    (ix) Availability of housing accessible to persons with 
disabilities.
    (2) HUD will initially establish and periodically evaluate the data 
used in paragraph (1) of this section through a Federal Register notice 
after opportunity for public comment.
    (3) HUD will create a ranking score for each jurisdiction, using a 
method to be specified in a Federal Register notice after opportunity 
for public comment, ranking jurisdictions more favorably for high 
relative performance in the objective measures set forth in paragraph 
(c)(1) of this section. HUD will then rank the jurisdictions based on 
this score, divided into the following categories:
    (i) Jurisdictions with population growth and tight housing markets.
    (ii) Jurisdictions with population growth and loose housing 
markets.
    (iii) Jurisdictions with population decline and tight housing 
markets.
    (iv) Jurisdictions with population decline and loose housing 
markets.

[[Page 2054]]

    (v) States with significant population growth.
    (vi) States without significant population growth.
    (d) Results. (1) After ranking the jurisdictions as described in 
paragraph (c)(3) of this section, HUD will designate the top ranking 
jurisdictions submitting a consolidated plan that year in each category 
as ``outstanding AFFH performers'' and the bottom ranking jurisdictions 
in each category as ``low-ranking jurisdictions.'' Outstanding 
jurisdictions will, for the 24-month period following the approval of 
the jurisdiction's consolidated plan, be eligible for potential 
benefits, including additional points in funding competitions and 
eligibility for additional program funds due to reallocations of 
recaptured funds as may be provided in NOFAs. Low-ranking jurisdictions 
may have their AFFH certifications questioned under 24 CFR part 91.
    (2) Beginning with the second submission of AFFH certifications 
under 24 CFR part 91 after [EFFECTIVE DATE OF FINAL RULE], HUD will 
determine how much each jurisdiction has improved according to the 
factors in paragraph (c) of this section. HUD will also designate as 
``outstanding AFFH performers'' jurisdictions that have shown the most 
improvement since their last strategic plan submission. These 
jurisdictions will be eligible for the benefits of that designation for 
the 24-month period following the approval of the jurisdiction's 
consolidated plan.
    (3)(i) No jurisdiction may be considered an outstanding AFFH 
performer if the jurisdiction or, for a local government, any PHA 
operating within the jurisdiction, has in the past five years been 
found by a court or administrative law judge in a case brought by or on 
behalf of HUD or by the United States Department of Justice to be in 
violation of civil rights law unless, at the time of the submission of 
the AFFH certification, the finding has been successfully appealed or 
otherwise set aside.
    (ii) No jurisdiction may be considered an outstanding AFFH 
performer if HUD has disapproved the previous certification to 
affirmatively further fair housing submitted for a consolidated plan or 
declared an annual performance report unsatisfactory under 24 CFR 
91.520(i)(2) in the previous 5 years.
    (e) Appeals. (1) If a jurisdiction believes that an error has 
resulted in the jurisdiction being improperly designated a low-
performing jurisdiction or not designated an outstanding AFFH 
performer, the jurisdiction may send a written notification to HUD, 
identifying the error and requesting the recalculation of the 
comparison metrics or consideration of an additional factor.
    (2) HUD will review the request within 45 business days and either 
recalculate the jurisdiction's ranking without affecting the rankings 
of other jurisdictions or send a written denial of the request to the 
jurisdiction explaining why the request was denied.


Sec.  5.156 through Sec.  5.168  [Removed]

0
5. Remove Sec.  5.156 through Sec.  5.168.

PART 91--CONSOLIDATED SUBMISSIONS FOR COMMUNITY PLANNING AND 
DEVELOPMENT PROGRAMS

0
6. The authority citation for part 91 continues to read as follows:

    Authority: 42 U.S.C. 3535(d), 3601-3619, 5301-5315, 11331-11388, 
12701-12711, 12741-12756, and 12901-12912.

0
7. In Sec.  91.5 revise the undesignated introductory text to read as 
follows.


Sec.  91.5  Definitions.

    The terms Affirmatively Furthering Fair Housing, elderly person, 
and HUD are defined in 24 CFR part 5.
* * * * *
0
8. In Sec.  91.100 revise paragraphs (a)(1), (c)(1), and (e) to read as 
follows:


Sec.  91.100  Consultation; local governments.

    (a) * * *
    (1) When preparing the consolidated plan, the jurisdiction shall 
consult with other public and private agencies that provide assisted 
housing, health services, and social services (including those focusing 
on services to children, elderly persons, persons with disabilities, 
persons with HIV/AIDS and their families, homeless persons), community-
based and regionally-based organizations that represent protected class 
members, and organizations that enforce fair housing laws. When 
preparing the consolidated plan, the jurisdiction shall also consult 
with public and private organizations. Commencing with consolidated 
plans submitted on or after January 1, 2018, such consultations shall 
include broadband internet service providers, organizations engaged in 
narrowing the digital divide, agencies whose primary responsibilities 
include the management of flood prone areas, public land or water 
resources, and emergency management agencies.
* * * * *
    (c) * * * (1) The jurisdiction shall consult with local PHAs 
operating in the jurisdiction regarding consideration of public housing 
needs, planned programs and activities, strategies for affirmatively 
furthering fair housing, and proposed actions to affirmatively further 
fair housing in the consolidated plan. This consultation will help 
provide a better basis for the certification by the authorized official 
that the PHA Plan is consistent with the consolidated plan and the 
local government's description of its strategy for affirmatively 
furthering fair housing and the manner in which it will address the 
needs of public housing and, where necessary, the manner in which it 
will provide financial or other assistance to a troubled PHA to improve 
the PHA's operations and remove the designation of troubled, as well as 
obtaining PHA input on addressing fair housing issues in the Public 
Housing and Housing Choice Voucher programs.
* * * * *
    (e) * * *
    (1) The jurisdiction shall consult with community-based and 
regionally based organizations that represent protected class members, 
and organizations that enforce fair housing laws, such as State or 
local fair housing enforcement agencies (including participants in the 
Fair Housing Assistance Program (FHAP)), fair housing organizations and 
other nonprofit organizations that receive funding under the Fair 
Housing Initiative Program (FHIP), and other public and private fair 
housing service agencies, to the extent that such entities operate 
within its jurisdiction. This consultation will help provide a better 
basis for the jurisdiction's certification to affirmatively further 
fair housing and other portions of the consolidated plan concerning 
affirmatively furthering fair housing. Consultation must specifically 
seek input on how the goals identified in the jurisdiction's 
certification to affirmatively further fair housing will inform the 
priorities and objectives of the consolidated plan.
    (2) This consultation must occur with any organizations that have 
relevant knowledge or data to inform the certification to affirmatively 
further fair housing and that are sufficiently independent and 
representative to provide meaningful feedback to a jurisdiction on the 
consolidated plan and its implementation.
0
9. In Sec.  91.105 revise paragraph (e)(1) to read as follows:


Sec.  91.105  Citizen participation plan; local governments.

* * * * *
    (e) * * *
    (1)(i) Consolidated plan. The citizen participation plan must 
provide for at least two public hearings per year to obtain residents' 
views and to respond

[[Page 2055]]

to proposals and questions, to be conducted at a minimum of two 
different stages of the program year. Together, the hearings must 
address housing and community development needs, development of 
proposed activities, proposed strategies and actions for affirmatively 
furthering fair housing, and a review of program performance.
    (ii) Minimum number of hearings. To obtain the views of residents 
of the community on housing and community development needs, including 
priority nonhousing community development needs and affirmatively 
furthering fair housing, the citizen participation plan must provide 
that at least one of these hearings is held before the proposed 
consolidated plan is published for comment.
* * * * *
0
10. In Sec.  91.110 revise paragraph (a) to read as follows:


Sec.  91.110  Consultation; States.

    (a) When preparing the consolidated plan, the State shall consult 
with public and private agencies that provide assisted housing 
(including any State housing agency administering public housing), 
health services, social services (including those focusing on services 
to children, elderly persons, persons with disabilities, persons with 
HIV/AIDS and their families, and homeless persons), and State-based and 
regionally based organizations that represent protected class members 
and organizations that enforce fair housing laws during preparation of 
the consolidated plan.
    (1) With respect to public housing or Housing Choice Voucher 
programs, the State shall consult with any housing agency administering 
public housing or the section 8 program on a Statewide basis, as well 
as all PHAs that certify consistency with the State's consolidated 
plan. State consultation with these entities may consider public 
housing needs, planned programs and activities, strategies for 
affirmatively furthering fair housing, and proposed actions to 
affirmatively further fair housing. This consultation helps provide a 
better basis for the certification by the authorized official that the 
PHA Plan is consistent with the consolidated plan and the State's 
description of its strategy for affirmatively furthering fair housing, 
and the manner in which the State will address the needs of public 
housing and, where applicable, the manner in which the State may 
provide financial or other assistance to a troubled PHA to improve its 
operations and remove such designation, as well as in obtaining PHA 
input on addressing fair housing issues in public housing and the 
Housing Choice Voucher programs. This consultation also helps ensure 
that activities with regard to affirmatively furthering fair housing, 
local drug elimination, neighborhood improvement programs, and resident 
programs and services, funded under a PHA's program and those funded 
under a program covered by the consolidated plan, are fully coordinated 
to achieve comprehensive community development goals and affirmatively 
further fair housing. If a PHA is required to implement remedies under 
a Voluntary Compliance Agreement, the State should consult with the PHA 
and identify actions the State may take, if any, to assist the PHA in 
implementing the required remedies.
    (2) The State shall consult with State-based and regionally based 
organizations that represent protected class members, and organizations 
that enforce fair housing laws, such as State fair housing enforcement 
agencies (including participants in the Fair Housing Assistance Program 
(FHAP)), fair housing organizations and other nonprofit organizations 
that receive funding under the Fair Housing Initiative Program (FHIP), 
and other public and private fair housing service agencies, to the 
extent such entities operate within the State. This consultation will 
help provide a better basis for the State's certification to 
affirmatively further fair housing, and other portions of the 
consolidated plan concerning affirmatively furthering fair housing. 
This consultation should occur with organizations that have the 
capacity to engage with data informing the certification to 
affirmatively further fair housing and be sufficiently independent and 
representative to provide meaningful feedback on the consolidated plan 
and its implementation. Consultation on the consolidated plan shall 
specifically seek input into how the goals identified in the 
jurisdiction's certification to affirmatively further fair housing 
inform the priorities and objectives of the consolidated plan. When 
preparing the consolidated plan, the State shall also consult with 
public and private organizations. Commencing with consolidated plans 
submitted on or after January 1, 2018, such consultations shall include 
broadband internet service providers, organizations engaged in 
narrowing the digital divide, agencies whose primary responsibilities 
include the management of flood prone areas, public land or water 
resources, and emergency management agencies.
* * * * *
0
11. In Sec.  91.115, revise the heading and introductory text of 
paragraph (b) and paragraphs (b)(3), (c), and (f) through (h) to read 
as follows:


Sec.  91.115  Citizen participation plan; States.

* * * * *
    (b) Development of the consolidated plan. The citizen participation 
plan must include the following minimum requirements for the 
development of the consolidated plan:
* * * * *
    (3)(i) The citizen participation plan must state how and when 
adequate advance notice of the hearing will be given to residents, with 
sufficient information published about the subject of the hearing to 
permit informed comment. (Publishing small print notices in the 
newspaper a few days before the hearing does not constitute adequate 
notice. Although HUD is not specifying the length of notice required, 
HUD would consider 2 weeks adequate.)
    (ii) The citizen participation plan must provide that the hearing 
be held at a time and accessible location convenient to potential and 
actual beneficiaries, and with accommodation for persons with 
disabilities. The citizen participation plan must specify how it will 
meet these requirements.
    (iii) The citizen participation plan must identify how the needs of 
non-English speaking residents will be met in the case of a public 
hearing where a significant number of non-English speaking residents 
can be reasonably expected to participate.
* * * * *
    (c) Amendments--(1) Criteria for amendment to consolidated plan. 
The citizen participation plan must specify the criteria the State will 
use for determining what changes in the State's planned or actual 
activities constitute a substantial amendment to the consolidated plan. 
(See Sec.  91.505.) The citizen participation plan must include, among 
the criteria for a consolidated plan, substantial amendment changes in 
the method of distribution of such funds.
    (2) The citizen participation plan must provide residents and units 
of general local government with reasonable notice and an opportunity 
to comment on consolidated plan substantial amendments. The citizen 
participation plan must state how reasonable notice and an opportunity 
to comment will be given. The citizen participation plan must provide a 
period, of not less than 30 calendar days, to receive comments on the 
consolidated plan substantial amendment before the consolidated

[[Page 2056]]

plan substantial amendment is implemented.
    (3) The citizen participation plan shall require the State to 
consider any comments or views of its residents and units of general 
local government received in writing, or orally at public hearings, if 
any, in preparing the substantial amendment of the consolidated plan. A 
summary of these comments or views, and a summary of any comments or 
views not accepted and the reasons why, shall be attached to the 
substantial amendment of the consolidated plan.
* * * * *
    (f) Availability to the public. The citizen participation plan must 
provide that the consolidated plan as adopted, consolidated plan 
substantial amendments, and the performance report will be available to 
the public, including the availability of materials in a form 
accessible to persons with disabilities, upon request. The citizen 
participation plan must state how these documents will be available to 
the public.
    (g) Access to records. The citizen participation plan must require 
the State to provide its residents, public agencies, and other 
interested parties with reasonable and timely access to information and 
records relating to the State's consolidated plan and use of assistance 
under the programs covered by this part during the preceding 5 years.
    (h) Complaints. The citizen participation plan shall describe the 
State's appropriate and practicable procedures to handle complaints 
from its residents related to the consolidated plan, consolidated plan 
amendments, and the performance report. At a minimum, the citizen 
participation plan shall require that the State must provide a timely, 
substantive written response to every written resident complaint, 
within an established period of time (within 15 working days, where 
practicable, if the State is a CDBG grant recipient).
* * * * *
0
12. In Sec.  91.205 revise paragraph (b) to read as follows:


Sec.  91.205  Housing and homeless needs assessment.

* * * * *
    (b) Categories of persons affected. (1) The plan shall estimate the 
number and type of families in need of housing assistance for:
    (i) Extremely low-income, low-income, moderate-income, and middle-
income families;
    (ii) Renters and owners;
    (iii) Elderly persons;
    (iv) Single persons;
    (v) Large families;
    (vi) Public housing residents;
    (vii) Families on the public housing and Section 8 tenant-based 
waiting list;
    (viii) Persons with HIV/AIDS and their families;
    (ix) Victims of domestic violence, dating violence, sexual assault, 
and stalking;
    (x) Persons with disabilities; and
    (xi) Formerly homeless families and individuals who are receiving 
rapid re-housing assistance and are nearing the termination of that 
assistance.
    (2) The description of housing needs shall include a concise 
summary of the cost burden and severe cost burden, overcrowding 
(especially for large families), and substandard housing conditions 
being experienced by extremely low-income, low-income, moderate-income, 
and middle-income renters and owners compared to the jurisdiction as a 
whole. (The jurisdiction must define in its consolidated plan the terms 
``standard condition'' and ``substandard condition but suitable for 
rehabilitation.'')
* * * * *


Sec.  91.215  [Amended]

0
13. Amend Sec.  91.215 by removing paragraph (a)(5).
0
14. In Sec.  91.220 revise paragraph (k)(1) to read as follows:


Sec.  91.220  Action plan.

* * * * *
    (k) * * *
    (1) Affirmatively furthering fair housing. Actions it plans to take 
during the next year that further the commitments identified in the 
jurisdiction's certification to affirmatively further fair housing.
* * * * *
0
15. In Sec.  91.225 revise paragraph (a)(1) to read as follows:


Sec.  91.225  Certifications.

    (a) * * *
    (1) Affirmatively furthering fair housing. Each jurisdiction is 
required to submit a certification that it will affirmatively further 
fair housing by addressing at least three goals towards fair housing 
choice or obstacles to fair housing choice, identified by the 
jurisdiction, that the jurisdiction intends to achieve or ameliorate, 
respectively. The identified goals or obstacles must have concrete and 
measurable outcomes or changes.
    (i) Jurisdictions must include with each goal or obstacle a brief 
description of how accomplishing the goal or ameliorating the obstacle 
affirmatively furthers fair housing in that jurisdiction, unless the 
obstacle is an obstacle to fair housing choice identified from the 
following non-exhaustive list of obstacles which HUD considers to be 
inherent barriers to fair housing choice:
    (A) Lack of a sufficient supply of decent, safe, and sanitary 
housing that is affordable.
    (B) Lack of a sufficient supply of decent, safe, and sanitary 
housing that is affordable and accessible to people with disabilities.
    (C) Concentration of substandard housing stock in a particular 
area.
    (D) Not in derogation of applicable federal law or regulations, 
inflexible or unduly rigorous design standards or other similar 
barriers which unreasonably increase the cost of the construction or 
rehabilitation of low-to-mid price housing or impede the development or 
implementation of innovative approaches to housing.
    (E) Lack of effective, timely, and cost-effective means for 
clearing title issues, if such are prevalent in the community.
    (F) Source of income restrictions on rental housing.
    (G) administrative procedures which have the effect of restricting 
or otherwise materially impeding the approval of affordable housing 
development
    (H) High rates of housing-related lead poisoning in housing.
    (I) Artificial economic restrictions on the long-term creation of 
rental housing, such as certain types of rent control.
    (J) Unduly prescriptive or burdensome building and rehabilitation 
codes.
    (K) Arbitrary or excessive energy and water efficiency mandates.
    (L) Unduly burdensome wetland or environmental regulations.
    (M) Unnecessary manufactured-housing regulations and restrictions.
    (N) Cumbersome or time-consuming construction or rehabilitation 
permitting and review procedures.
    (O) Tax policies which discourage investment or reinvestment.
    (P) Arbitrary or unnecessary labor requirements.
    (ii) Jurisdictions should focus on goals or obstacles within their 
control or partial control. If, in addition to identifying obstacles 
within the jurisdiction's control or partial control, a jurisdiction 
identifies obstacles to fair housing choice not within its control or 
partial control, but which the jurisdiction determines deserve public 
or HUD scrutiny, the certification may also discuss those issues and 
include suggested solutions to address the obstacles.
    (iii) The goals or obstacles included in the certification are to 
be determined by the jurisdiction, and the specific steps

[[Page 2057]]

for the jurisdiction to take are to be informed by the nature of the 
jurisdiction, its geographic scope, its size, and its financial, 
technical, and managerial resources, and taking into consideration 
relevant public comments. The contents of the certification need not be 
based on any HUD-prescribed specific analysis or data but should 
reflect the practical experience and local insights of the 
jurisdiction, including objective quantitative and qualitative data as 
the jurisdiction deems appropriate.
    (iv) Following the procedures in Sec.  91.500, HUD may question the 
accuracy of the certifications of low-ranking jurisdictions, as defined 
in 24 CFR 5.155(d)(1). Jurisdictions may be asked to amend their 
certifications to commit the jurisdiction to goals that have a rational 
basis toward favorably affecting the metrics in 24 CFR 5.155(c).
* * * * *
0
16. Revise Sec.  91.230 to read as follows:


Sec.  91.230  Monitoring.

    The plan must describe the standards and procedures that the 
jurisdiction will use to monitor activities carried out in furtherance 
of the plan, including strategies and actions that address the fair 
housing issues and goals identified in the jurisdiction's certification 
to affirmatively further fair housing, and that the jurisdiction will 
use to ensure long-term compliance with requirements of the programs 
involved, including civil rights related program requirements, minority 
business outreach, and the comprehensive planning requirements.
0
17. In Sec.  91.235 revise paragraphs (c)(1) and (4) to read as 
follows:


Sec.  91.235  Special case; abbreviated consolidated plan.

* * * * *
    (c) * * *
    (1) Assessment of needs, resources, and planned activities. An 
abbreviated plan must contain sufficient information about needs, 
resources, and planned activities to address the needs to cover the 
type and amount of assistance anticipated to be funded by HUD. The plan 
must describe how the jurisdiction will affirmatively further fair 
housing in accordance with its certification to affirmatively further 
fair housing.
* * * * *
    (4) Submissions, certifications, amendments, and performance 
reports. An Insular Area grantee that submits an abbreviated 
consolidated plan under this section must comply with the submission, 
certification, amendment, and performance report requirements of 24 CFR 
570.440. This includes certification that the grantee will 
affirmatively further fair housing, which means that it will take 
meaningful actions to further the goals identified in the certification 
to affirmatively further fair housing.
* * * * *
0
18. In Sec.  91.305 revise paragraph (b) to read as follows:


Sec.  91.305  Housing and homeless needs assessment.

* * * * *
    (b) Categories of persons affected. (1) The plan shall estimate the 
number and type of families in need of housing assistance for:
    (i) Extremely low-income, low-income, moderate-income, and middle-
income families;
    (ii) Renters and owners;
    (iii) Elderly persons;
    (iv) Single persons;
    (v) Large families;
    (vi) Public housing residents;
    (vii) Families on the public housing and Section 8 tenant-based 
waiting list;
    (viii) Persons with HIV/AIDS and their families;
    (ix) Victims of domestic violence, dating violence, sexual assault, 
and stalking;
    (x) Persons with disabilities; and
    (xi) Formerly homeless families and individuals who are receiving 
rapid re-housing assistance and are nearing the termination of that 
assistance.
    (2) The description of housing needs shall include a concise 
summary of the cost burden and severe cost burden, overcrowding 
(especially for large families), and substandard housing conditions 
being experienced by extremely low-income, low-income, moderate-income, 
and middle-income renters and owners compared to the state as a whole. 
(The state must define in its consolidated plan the terms ``standard 
condition'' and ``substandard condition but suitable for 
rehabilitation.'')
* * * * *


Sec.  91.315  [Amended]

0
19. Amend Sec.  91.315 by removing paragraph (a)(5).
0
20. In Sec.  91.320 revise paragraph (j)(1) to read as follows:


Sec.  91.320  Action plan.

* * * * *
    (j) * * *
    (1) Affirmatively furthering fair housing. Actions it plans to take 
during the next year that further the commitments in its certification 
to affirmatively further fair housing.
* * * * *
0
21. In Sec.  91.325 revise paragraph (a)(1) to read as follows:


Sec.  91.325  Certifications.

    (a) * * *
    (1) Affirmatively furthering fair housing. Each State is required 
to submit a certification that it will affirmatively further fair 
housing by addressing at least three goals towards fair housing choice 
or obstacles to fair housing choice, identified by the jurisdiction, 
that the jurisdiction intends to achieve or ameliorate, respectively. 
The identified goals or obstacles must have concrete and measurable 
outcomes or changes.
    (i) States must include with each goal or obstacle a brief 
description of how accomplishing the goal or ameliorating the obstacle 
affirmatively furthers fair housing in that State, unless the obstacle 
is an obstacle to fair housing choice identified from the following 
non-exhaustive list of obstacles which HUD considers to be inherent 
barriers to fair housing choice:
    (A) Lack of a sufficient supply of decent, safe, and sanitary 
housing that is affordable.
    (B) Lack of a sufficient supply of decent, safe, and sanitary 
housing that is affordable and accessible to people with disabilities.
    (C) Concentration of substandard housing stock in a particular 
area.
    (D) Not in derogation of applicable federal law or regulations, 
inflexible or unduly rigorous design standards or other similar 
barriers which unreasonably increase the cost of the construction or 
rehabilitation of low-to-mid price housing or impede the development or 
implementation of innovative approaches to housing.
    (E) Lack of effective, timely, and cost-effective means for 
clearing title issues, if such are prevalent in the community.
    (F) Source of income restrictions on rental housing.
    (G) Regulatory provisions or other administrative practices that 
have the effect of restricting or otherwise materially impeding the 
approval of affordable housing development.
    (H) High rates of housing-related lead poisoning in housing.
    (I) Artificial economic restrictions on the long-term creation of 
rental housing, such as rent controls.
    (J) Unduly prescriptive or burdensome building and rehabilitation 
codes.
    (K) Arbitrary or excessive energy and water efficiency mandates.
    (L) Unduly burdensome wetland or environmental regulations.
    (M) Unnecessary manufactured-housing regulations and restrictions.
    (N) Cumbersome or time-consuming construction or rehabilitation 
permitting and review procedures.

[[Page 2058]]

    (O) Tax policies which discourage investment or reinvestment.
    (P) Arbitrary or unnecessary labor requirements.
    (ii) States should focus on goals or obstacles within their control 
or partial control. If, in addition to identifying obstacles within the 
State's control or partial control, a State identifies obstacles to 
fair housing choice not within its control or partial control, but 
which the State determines deserve public or HUD scrutiny, the 
certification may also discuss those issues and include suggested 
solutions to address the obstacles.
    (iii) The goals or obstacles included in the certification are to 
be determined by the State, and the specific steps for the State to 
take are to be informed by the nature of the State, its geographic 
scope, its size, and its financial, technical, and managerial 
resources, taking into consideration relevant public comments. The 
contents of the certification need not be based on any HUD-prescribed 
specific mode of analysis or data but should reflect the practical 
experience and local insights of the State, including quantitative and 
qualitative data as the jurisdiction deems appropriate.
    (iv) Following the procedures in Sec.  91.500, HUD may question the 
accuracy of the certifications of low-ranking States, as defined in 24 
CFR 5.155(d)(1). States may be asked to amend their certifications to 
commit the jurisdiction to goals that have a rational basis toward 
favorably affecting the metrics in 24 CFR 5.155(c).
* * * * *
0
22. Revise Sec.  91.415 to read as follows:


Sec.  91.415  Strategic plan.

    Strategies and priority needs must be described in the consolidated 
plan, in accordance with the provisions of Sec.  91.215, for the entire 
consortium. The consortium is not required to submit a nonhousing 
Community Development Plan; however, if the consortium includes CDBG 
entitlement communities, the consolidated plan must include the 
nonhousing Community Development Plans of the CDBG entitlement 
community members of the consortium. The consortium must set forth its 
priorities for allocating housing (including CDBG and ESG, where 
applicable) resources geographically within the consortium, describing 
how the consolidated plan will address the needs identified (in 
accordance with Sec.  91.405), describing the reasons for the 
consortium's allocation priorities, and identifying any obstacles there 
are to addressing underserved needs.
0
23. In Sec.  91.420 revise paragraph (b) to read as follows:


Sec.  91.420  Action plan.

* * * * *
    (b) Description of resources and activities. The action plan must 
describe the resources to be used and activities to be undertaken to 
pursue its strategic plan, including actions the consortium plans to 
take during the next year that further the commitments in the 
consortium's certification to affirmatively further fair housing. The 
consolidated plan must provide this description for all resources and 
activities within the entire consortium as a whole, as well as a 
description for each individual community that is a member of the 
consortium.
* * * * *
0
24. In Sec.  91.425 revise paragraph (a)(1) to read as follows:


Sec.  91.425  Certifications.

    (a) * * *
    (1) General--(i) Affirmatively furthering fair housing. Each 
consortium must certify that it will affirmatively further fair housing 
by addressing at least three goals towards fair housing choice or 
obstacles to fair housing choice, identified by the consortium, the 
consortium intends to achieve or ameliorate. The identified goals or 
obstacles must have concrete and measurable outcomes or changes.
    (A) Consortia must include with each goal or obstacle a brief 
description of how accomplishing the goal or ameliorating the obstacle 
affirmatively furthers fair housing in the consortia's jurisdiction, 
unless the obstacle is an obstacle to fair housing choice identified 
from the following non-exhaustive list of obstacles which HUD considers 
to be inherent barriers to fair housing choice:
    (1) Lack of a sufficient supply of decent, safe, and sanitary 
housing that is affordable.
    (2) Lack of a sufficient supply of decent, safe, and sanitary 
housing that is affordable and accessible to people with disabilities.
    (3) Concentration of substandard housing stock in a particular 
area.
    (4) Not in derogation of applicable federal law or regulations, 
inflexible or unduly rigorous design standards or other similar 
barriers which unreasonably increase the cost of the construction or 
rehabilitation of low-to-mid price housing or impede the development or 
implementation of innovative approaches to housing.
    (5) Lack of effective, timely, and cost-effective means for 
clearing title issues, if such are prevalent in the community.
    (6) Source of income restrictions on rental housing.
    (7) Administrative procedures that have the effect of restricting 
or otherwise materially impeding the approval of affordable housing 
development.
    (8) High rates of housing-related lead poisoning in housing.
    (9) Artificial economic restrictions on the long-term creation of 
rental housing, such as rent controls.
    (10) Unduly prescriptive or burdensome building and rehabilitation 
codes.
    (11) Arbitrary or excessive energy and water efficiency mandates.
    (12) Unduly burdensome wetland or environmental regulations.
    (13) Unnecessary manufactured-housing regulations and restrictions.
    (14) Cumbersome or time-consuming construction or rehabilitation 
permitting and review procedures.
    (15) Tax policies which discourage investment or reinvestment.
    (16) Arbitrary or unnecessary labor requirements.
    (B) Consortia should focus on goals or obstacles within their 
control or partial control. If, in addition to identifying obstacles 
within the consortium's control or partial control, a consortium 
identifies obstacles to fair housing choice not within its control or 
partial control, but which the consortium determines deserve public or 
HUD scrutiny, the certification may also discuss those issues and 
include suggested solutions to address the obstacles.
    (C) The goals or obstacles included in the certification are to be 
determined by the consortium, and the specific steps for the consortium 
to take are to be informed by the nature of the consortium, its 
geographic scope, its size, and its financial, technical, and 
managerial resources, taking into consideration relevant public 
comments. The contents of the certification need not be based on any 
HUD-prescribed specific mode of analysis or data but should reflect the 
practical experience and local insights of the consortium, including 
quantitative and qualitative data as the jurisdiction deems 
appropriate.
    (D) Following the procedures in Sec.  91.500, HUD may question the 
accuracy of the certifications of low-ranking consortia, as defined in 
24 CFR 5.155(d)(1). Consortia may be asked to amend their 
certifications to commit the consortium to goals that have a rational 
basis toward favorably affecting the metrics in 24 CFR 5.155(c).
* * * * *

[[Page 2059]]

0
25. In Sec.  91.520, revise the introductory text in paragraphs (a) and 
(i) to read as follows:


Sec.  91.520  Performance reports.

    (a) General. Each jurisdiction that has an approved consolidated 
plan shall annually review and report, in a form prescribed by HUD, on 
the progress it has made in carrying out its strategic plan and its 
action plan. The performance report must include a description of the 
resources made available, the investment of available resources, the 
geographic distribution and location of investments, the families and 
persons assisted (including the racial and ethnic status of persons 
assisted), actions taken pursuant to the jurisdiction's certification 
to affirmatively further fair housing and any measurable results of 
those actions, and other actions indicated in the strategic plan and 
the action plan. This performance report shall be submitted to HUD 
within 90 days after the close of the jurisdiction's program year.
* * * * *
    (i) Evaluation by HUD. (1) HUD shall review the performance report 
and determine whether it is satisfactory. If a satisfactory report is 
not submitted in a timely manner, HUD may suspend funding until a 
satisfactory report is submitted, or may withdraw and reallocate 
funding if HUD determines, after notice and opportunity for a hearing, 
that the jurisdiction will not submit a satisfactory report.
    (2) With the steps the jurisdiction has taken to affirmatively 
further fair housing, HUD will deem that portion of the performance 
report ``satisfactory'' if the steps the jurisdiction has taken are 
rationally related to the goals or obstacles identified in the 
jurisdiction's certification to affirmatively further fair housing.
* * * * *
0
26. Amend Sec.  91.525 paragraph (a) by redesignating paragraph (5) as 
paragraph (6) and adding a new paragraph (5) to read as follows:


Sec.  91.525  Performance review by HUD.

    (a) * * *
    (5) Extent to which the jurisdiction made progress towards the 
goals or obstacles identified in the jurisdiction's certification to 
affirmatively further fair housing; and
* * * * *

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

0
27. 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
28. Revise Sec.  92.104 to read as follows:


Sec.  92.104  Submission of a consolidated plan.

    A jurisdiction that has not submitted a consolidated plan to HUD 
must submit to HUD, not later than 90 calendar days after providing 
notification under Sec.  92.103, a consolidated plan in accordance with 
24 CFR part 91.
0
29. In Sec.  92.508 revise paragraph (a)(7)(i)(C) to read as follows:


Sec.  92.508  Recordkeeping.

    (a) * * *
    (7) * * *
    (i) * * *
    (C) Documentation of the actions the participating jurisdiction has 
taken to affirmatively further fair housing, including documentation 
related to the participating jurisdiction's certification to 
affirmatively further fair housing as described in 24 CFR part 91.
* * * * *

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

0
30. The authority citation for part 570 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 
5301-5320.

0
31. In Sec.  570.3 revise the first sentence of the introductory text 
to read as follows:


Sec.  570.3  Definitions.

    The terms Affirmatively Furthering Fair Housing, HUD, and Secretary 
are defined in 24 CFR part 5. * * *
* * * * *


Sec.  570.205  [Amended]

0
32. Amend Sec.  570.205 paragraph (a)(4) by removing paragraph (vii) 
and redesignating paragraph (viii) as (vii).
0
33. In Sec.  570.441 revise introductory text in paragraphs (b) and (3) 
to read as follows:


Sec.  570.441  Citizen participation--insular areas.

* * * * *
    (b) Citizen participation plan. The insular area jurisdiction must 
develop and follow a detailed citizen participation plan and must make 
the plan public. The plan must be completed and available before the 
statement for assistance is submitted to HUD, and the jurisdiction must 
certify that it is following the plan. The plan must set forth the 
jurisdiction's policies and procedures for:
* * * * *
    (3) Holding a minimum of two public hearings for the purpose of 
obtaining residents' views and formulating or responding to proposals 
and questions. Each public hearing must be conducted at a different 
stage of the CDBG program year. Together, the hearings must address 
affirmatively furthering fair housing, community development and 
housing needs, development of proposed activities, proposed strategies 
and actions furthering the commitments in the certification to 
affirmatively further fair housing, and a review of program 
performance. There must be reasonable notice of the hearings, and the 
hearings must be held at times and accessible locations convenient to 
potential or actual beneficiaries, with reasonable accommodations, 
including materials in accessible formats, for persons with 
disabilities. The jurisdiction must specify in its citizen 
participation plan how it will meet the requirement for hearings at 
times and accessible locations convenient to potential or actual 
beneficiaries;
* * * * *
0
34. In Sec.  570.487 revise paragraph (b) to read as follows:


Sec.  570.487  Other applicable laws and related program requirements.

* * * * *
    (b) Affirmatively furthering fair housing. The Act requires the 
State to certify to the satisfaction of HUD that it will affirmatively 
further fair housing. The Act also requires each unit of general local 
government to certify that it will affirmatively further fair housing. 
The certification that the State will affirmatively further fair 
housing shall specifically require the State to assume the 
responsibility of fair housing planning by:
    (1) Taking meaningful actions to further the goals identified in 
the jurisdiction's or State's Strategic plan under 24 CFR part 91; and
    (2) Assuring that units of local government funded by the State 
comply with their certifications to affirmatively further fair housing.
* * * * *
0
35. In Sec.  570.490, revise paragraphs (a)(1) and (b) to read as 
follows:


Sec.  570.490  Recordkeeping requirements.

    (a) * * * (1) The State shall establish and maintain such records 
as may be necessary to facilitate review and audit by HUD of the 
State's administration of CDBG funds under Sec.  570.493. The content 
of records maintained by the State shall be as jointly agreed upon by 
HUD and the States and sufficient to enable HUD to make the 
determinations described at Sec.  570.493. For fair housing

[[Page 2060]]

and equal opportunity purposes, and as applicable, such records shall 
include documentation related to the State's certification to 
affirmatively further fair housing, as described in 24 CFR part 91. The 
records shall also permit audit of the States in accordance with 24 CFR 
part 85.
* * * * *
    (b) Unit of general local government's record. The State shall 
establish recordkeeping requirements for units of general local 
government receiving CDBG funds that are sufficient to facilitate 
reviews and audits of such units of general local government under 
Sec. Sec.  570.492 and 570.493. For fair housing and equal opportunity 
purposes, and as applicable, such records shall include documentation 
related to the State's certification to affirmatively further fair 
housing under 24 CFR part 91.
* * * * *
0
36. In Sec.  570.506 revise paragraph (g)(1) to read as follows:


Sec.  570.506  Records to be maintained.

* * * * *
    (g) * * *
    (1) Documentation related to the recipient's certification to 
affirmatively further fair housing under 24 CFR part 91.
* * * * *
0
37. In Sec.  570.601 revise paragraph (a)(2) to read as follows:


Sec.  570.601  Public Law 88-352 and Public Law 90-284; affirmatively 
furthering fair housing; Executive Order 11063.

    (a) * * *
    (2) Public Law 90-284, which is the Fair Housing Act (42 U.S.C. 
3601-3620). In accordance with the Fair Housing Act, the Secretary 
requires that grantees administer all programs and activities related 
to housing and urban development in a manner to affirmatively further 
the policies of the Fair Housing Act. Furthermore, in accordance with 
section 104(b)(2) of the Act, for each community receiving a grant 
under subpart D of this part, the certification that the grantee will 
affirmatively further fair housing shall specifically require the 
grantee to take meaningful actions to further the goals identified in 
the grantee's certification to affirmatively further fair housing under 
24 CFR part 91.
* * * * *

PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS

0
38. The authority citation for part 574 continues to read as follows:

    Authority: 12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 
5301-5320.

0
39. In Sec.  574.530 revise paragraph (b) to read as follows:


Sec.  574.530  Recordkeeping.

* * * * *
    (b) Documentation related to the formula grantee's certification to 
affirmatively further fair housing under 24 CFR part 91.
* * * * *

PART 576--EMERGENCY SOLUTIONS GRANTS PROGRAM

0
40. The authority citation for part 576 continues to read as follows:

    Authority:  12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 11371 et seq., 
42 U.S.C. 3535(d).

0
41. In Sec.  576.500 revise paragraph (s)(1)(ii) to read as follows:


Sec.  576.500  Recordkeeping and reporting requirements.

* * * * *
    (s) * * *
    (1) * * *
    (ii) Documentation in regard to the recipient's certification that 
the recipient will affirmatively further fair housing.
* * * * *

PART 903--PUBLIC HOUSING AGENCY PLANS

0
42. The authority citation for part 903 continues to read as follows:

    Authority: 42 U.S.C. 1437c; 42 U.S.C. 1437c-1; Pub. L. 110-289; 
42 U.S.C. 3535d.

0
43. In Sec.  903.7 revise paragraphs (o)(1) and (3) to read as follows:


Sec.  903.7  What information must a PHA provide in the Annual Plan?

* * * * *
    (o) * * *
    (1) The PHA must certify that it has consulted with the local 
jurisdiction on how to satisfy their obligations in common to 
affirmatively further fair housing, and that it will carry out its plan 
in conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d-2000d-4), the Fair Housing Act (42 U.S.C. 3601-19), section 504 
of the Rehabilitation Act of 1973 (29 U.S.C. 794), title II of the 
Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.), and 
other applicable Federal civil right laws, and that it will 
affirmatively further fair housing in its programs and in areas under 
its direct control.
* * * * *
    (3) If the PHA has been subject to an unresolved HUD letter of 
finding or a material finding of a civil rights violation by a court or 
administrative law judge in an action brought by or on behalf of HUD or 
by the United States Department of Justice in the last two years that 
has not been successfully appealed or otherwise set aside at the time 
of the submission of the certification, then the PHA must include with 
its certification an explanation of what steps the PHA has taken and is 
taking to resolve the violation.
* * * * *
0
44. Revise Sec.  903.15 to read as follows:


Sec.  903.15  What is the relationship of the public housing agency 
plans to the Consolidated Plan and a PHA's Fair Housing Requirements?

    A PHA is obligated to affirmatively further fair housing, as 
contemplated in Sec.  903.7(o). All admission and occupancy policies 
for public housing and Section 8 tenant-based housing programs must 
comply with Fair Housing Act requirements and other civil rights laws 
and regulations and with a PHA's plans to affirmatively further fair 
housing. The PHA may not impose any specific income or racial quotas 
for any development or developments.
    (a) Nondiscrimination. A PHA must carry out its PHA Plan in 
conformity with the nondiscrimination requirements in Federal civil 
rights laws, including title VI of the Civil Rights Act of 1964, 
section 504 of the Rehabilitation Act of 1973, the Americans with 
Disabilities Act, and the Fair Housing Act. A PHA may not assign 
housing to persons in a particular section of a community or to a 
development or building based on race, color, religion, sex, 
disability, familial status, or national origin for purposes of 
segregating populations.
    (b) Affirmatively Furthering Fair Housing. A PHA's policies should 
be designed in conformity with any applicable certification to 
affirmatively further fair housing as part of a consolidated plan under 
24 CFR part 91 and the PHA's assessment of its fair housing needs.
    (1) The Fair Housing Act provides that PHAs must certify that they 
will affirmatively further fair housing. PHAs must affirmatively 
further fair housing as detailed in Sec.  903.7(o).
    (2) Such affirmative steps may include, but are not limited to, 
marketing efforts, engagement with landlords to promote the acceptance 
of housing choice vouchers, use of nondiscriminatory tenant selection 
and assignment policies that lead to increased fair housing choice, 
additional applicant consultation and information, provision of 
additional supportive services and amenities to a

[[Page 2061]]

development (such as supportive services that enable an individual with 
a disability to transfer from an institutional setting into the 
community), and engagement in ongoing coordination with state and local 
aging and disability community and community-based organizations to 
provide additional community-based housing opportunities for 
individuals with disabilities and to connect such individuals with 
supportive services to enable an individual with a disability to 
transfer from an institutional setting into the community and 
facilitate the provision of such services at PHA properties.
    (c) Validity of certification. (1) A PHA's certification under 
Sec.  903.7(o) will be subject to challenge by HUD where it appears 
that a PHA fails to meet the requirements in 24 CFR 903.7(o).
    (2) If HUD challenges the validity of a PHA's certification, HUD 
will do so in writing specifying the deficiencies, and will give the 
PHA an opportunity to respond to the particular challenge in writing. 
In responding to the specified deficiencies, a PHA must establish, as 
applicable, that it has complied with fair housing and civil rights 
laws and regulations, or has remedied violations of fair housing and 
civil rights laws and regulations, and has adopted policies and 
undertaken actions to affirmatively further fair housing, including, 
but not limited to, providing a full range of housing opportunities to 
applicants and tenants and taking affirmative steps as described in 
paragraph (d)(2) of this section in a nondiscriminatory manner. In 
responding to the PHA, HUD may accept the PHA's explanation and 
withdraw the challenge, undertake further investigation, or pursue 
other remedies available under law. HUD will seek to obtain voluntary 
corrective action consistent with the specified deficiencies. In 
determining whether a PHA has complied with its certification, HUD will 
review the PHA's circumstances relevant to the specified deficiencies, 
including characteristics of the population served by the PHA; 
characteristics of the PHA's existing housing stock; and decisions, 
plans, goals, priorities, strategies, and actions of the PHA, including 
those designed to affirmatively further fair housing.
0
45. In Sec.  903.23 revise paragraph (f) to read as follows;


Sec.  903.23  What is the process by which HUD reviews, approves, or 
disapproves an Annual Plan?

* * * * *
    (f) Recordkeeping. PHAs must maintain records reflecting actions to 
affirmatively further fair housing, as described in Sec.  903.7(o).

PART 905--THE PUBLIC HOUSING CAPITAL FUND PROGRAM

0
46. The authority citation for part 905 continues to read as follows:

    Authority: 42 U.S.C. 1437g, 42 U.S.C. 1437z-2, 42 U.S.C. 1437z-
7, and 3535(d).

0
47. In Sec.  905.308 revise paragraph (b)(1) to read as follows:


Sec.  905.308  Federal requirements applicable to all Capital Fund 
activities.

* * * * *
    (b) * * *
    (1) Nondiscrimination and equal opportunity. The PHA shall comply 
with all applicable nondiscrimination and equal opportunity 
requirements, including, but not limited to, the Department's generally 
applicable nondiscrimination and equal opportunity requirements at 24 
CFR 5.105(a) and the Architectural Barriers Act of 1968 (42 U.S.C. 4151 
et seq.), and its implementing regulations at 24 CFR parts 40 and 41. 
The PHA shall affirmatively further fair housing in its use of funds 
under this part, following the requirements at 24 CFR 903.7(o).
* * * * *

    Dated: January 6, 2020.
Benjamin S. Carson, Sr.,
Secretary.
[FR Doc. 2020-00234 Filed 1-13-20; 8:45 am]
BILLING CODE 4210-67-P