[Federal Register Volume 78, Number 101 (Friday, May 24, 2013)]
[Proposed Rules]
[Pages 31451-31454]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12456]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 5

[Docket No. FR-5586-P-01]
RIN 2501-AD60


Pet Ownership for the Elderly or Persons With Disabilities in 
Multifamily Rental Housing; Accumulation of Deposits for Costs 
Attributable to Pets

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

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SUMMARY: HUD regulations governing multifamily rental housing for the 
elderly or persons with disabilities allow for the residents of such 
housing to own common household pets, subject to the residents' paying 
a refundable pet deposit. Currently, the regulations require that 
owners of HUD-assisted multifamily rental housing for the elderly or 
persons with disabilities

[[Page 31452]]

collect the deposit and any increases in the deposit from the pet owner 
only through gradual accumulation; that is, an initial payment followed 
by subsequent monthly payments. This requirement does not exist for 
public housing agencies (PHAs) and owners of other HUD-assisted 
multifamily rental housing. Rather, HUD regulations provide PHAs and 
owners of other HUD-assisted multifamily rental housing discretion to 
determine whether to gradually accumulate a pet deposit and any 
increases to the pet deposit. This proposed rule would provide owners 
of HUD-assisted multifamily rental housing for the elderly or persons 
with disabilities, now subject to the gradual-accumulation pet deposit 
requirement, with the same flexibility, thereby bringing consistency to 
the pet deposit requirements for HUD programs and better enabling 
owners of such housing to handle the costs associated with pet 
ownership by tenants. This proposed rule only applies to policies for 
pets and not to service or assistance animals for persons with 
disabilities.

DATES: Comment Due Date: July 23, 2013.

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


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


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

FOR FURTHER INFORMATION CONTACT: Marie D. Head, Deputy Assistant 
Secretary for Multifamily Housing Programs, Department of Housing and 
Urban Development, 451 7th Street SW., Room 6106, Washington, DC 20410-
8000; telephone number 202-708-2495 (this is not a toll-free number). 
Persons with hearing or speech impairments may access this telephone 
number through TTY by calling the toll-free Federal Relay Service at 
800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 227 of the Housing and Urban-Rural Recovery Act of 1983 (12 
U.S.C. 1701r-1), provides for the ownership of common household pets in 
HUD's public and other HUD-assisted multifamily rental housing for the 
elderly or persons with disabilities. Section 227(a) provides that no 
owner or manager of federally assisted housing for the elderly or 
persons with disabilities \1\ may, as a condition of tenancy: (1) 
Prohibit or prevent any tenant from owning or having common household 
pets living in the dwelling accommodations or (2) restrict or 
discriminate against any person in connection with admission to, or 
continued occupancy of, covered housing because of the ownership of 
such pets or their presence in the dwelling accommodations. HUD's 
regulations implementing section 227 are codified at 24 CFR part 5, 
subpart C (entitled ``Pet Ownership for the Elderly or Persons with 
Disabilities'') (Sec. Sec.  5.300 to 5.380). These regulations apply to 
rental housing assisted by HUD under the following programs: (1) The 
public housing program, (2) programs administered by the Assistant 
Secretary for Housing-Federal Housing Commissioner, and (3) programs 
for which the governing regulations are in 24 CFR Chapter VIII.
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    \1\ The term used in this 1983 statute is ``handicapped.''
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    This rule only addresses HUD programs that fall within the second 
and third categories; specifically, the: (1) Rent Supplements (24 CFR 
part 200, subpart W), (2) Rental Assistance Payments (24 CFR part 236, 
subpart D), (3) Section 8 New Construction (24 CFR part 880), (4) 
Section 8 Substantial Rehabilitation (24 CFR part 881), (5) Section 8 
State Housing Agencies (24 CFR part 883), (6) Section 8 Set-Aside for 
Rural Rental Housing Projects (24 CFR part 884), (7) Section 8 Loan 
Management Set-Aside and Property Disposition (24 CFR part 886), (8) 
Section 202 Supportive Housing for the Elderly (24 CFR part 811, 
subpart B), (9) Section 811 Supportive Housing for Persons with 
Disabilities (24 CFR part 891, subpart C), and (10) Section 811 Project 
Rental Assistance Demonstration Program. For purposes of brevity and 
convenience, rental housing assisted under these programs is 
collectively referred to as ``covered multifamily rental housing.''
    For tenants residing in covered multifamily rental housing, Sec.  
5.318(d)(2)(iii) currently requires the gradual accumulation of the 
deposit by the pet owner, through an initial payment not to exceed $50 
when the pet is brought onto the premises and subsequent monthly 
payments not to exceed $10 per month until the amount of the deposit is 
reached. Section 5.318(d)(2) requires HUD to set the maximum pet 
deposit by notice, currently set at $300.\2\ Section 5.318(d)(2)(v)(A) 
also requires a gradual accumulation of any increase in the deposit, 
not to exceed $10 per month for these tenants.
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    \2\ See HUD, No. 4350.3 REV-1, Occupancy Requirements of 
Subsidized Multifamily Housing Programs (2009) at 6-24.
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    Other covered multifamily rental housing is subject to Sec.  
5.318(d)(2)(iv), which provides the owner with the discretion of 
establishing rules that ``may provide for the gradual accumulation of 
the deposit by the pet owner.'' The requirements for public housing are 
codified at Sec.  5.318(d)(3), and similarly provide that the pet rules 
adopted by a PHA ``may permit gradual

[[Page 31453]]

accumulation of the pet deposit by the pet owner.''
    HUD's March 8, 1996, final rule (61 FR 9536) establishing the pet 
ownership regulations explained that the differing requirements 
governing deposits were based on the fact that tenants in the affected 
covered multifamily rental housing are, as a general rule, lower income 
and may have difficulty making the pet deposit. While this is still 
generally true, the regulatory mandate that owners gradually accumulate 
deposit amounts has also sometimes imposed an undue hardship for owners 
of covered multifamily housing. When funds are needed for repairs and 
replacements, fumigation, and animal care facilities shortly after a 
tenant brings a pet onto the premises, the accumulated pet deposit may 
be insufficient to pay repair and clean-up costs. Consequently, the 
owner may have to use the housing's Reserve for Replacement account or 
the tenant's security deposit to fund required repairs if a sufficient 
pet deposit has not been accumulated.

II. This Proposed Rule

    To address this concern and distinction in HUD regulations, the 
proposed rule would amend the regulations to no longer mandate the 
gradual accumulation of pet deposits in the covered multifamily rental 
housing, and provide owners of such housing with the discretion to: (1) 
Provide for the gradual accumulation of the pet deposit, and (2) 
provide for the gradual accumulation of approved pet deposit 
increases.\3\ In making this regulatory change, owners of covered 
multifamily rental housing would not be prohibited from providing for 
gradual accumulation of the deposit and increases in the pet deposit by 
the pet owner. The proposed rule will enable owners to determine how to 
collect the pet owner deposit based on the same rules that apply to 
other HUD-assisted rental housing; however, owners should consider the 
income characteristics of its tenants when setting pet deposit policies 
and are encouraged to continue to provide for gradual accumulation from 
lower-income residents where economically feasible given the costs of 
operating the housing project.
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    \3\ This proposed rule only applies to policies for pets and not 
to service or assistance animals for persons with disabilities. 
Service and assistance animals are covered by separate HUD 
regulations at 24 CFR 5.303.
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III. Cost and Benefits of the Proposed Rule

    As discussed in this preamble, the purpose of this proposed rule is 
to bring consistency to the pet deposit requirements for HUD programs 
and better enable owners of such housing to handle the costs associated 
with pet ownership by tenants. While difficult to predict, HUD has 
determined that the discounted benefits of the proposed rule may cause 
negligible transfers to tenants if the owner of their dwelling chooses 
to opt out of the gradual payment requirement. Assuming a pet deposit 
in a range from $100 to $300 and a 3 or 7 percent annual discount rate, 
the financial impact of the rule may range from $232,000 to $9.86 
million.
    Currently, about 936,000 households in HUD assisted multifamily 
rental housing are classified as either elderly or disabled and will 
potentially be impacted by the change in regulation. It is very 
unlikely, however, that all elderly or disabled households in the 
concerned programs will own a pet and therefore be subject to the rule. 
Recognizing that about 62 percent of households in the United States 
own a pet, and applying that proportion to our target population, we 
derive an estimate of the number of affected households to be 580,000. 
We also make the cautious assumption that all of the 580,000 households 
are affected. The rule provides owners of housing the option to collect 
upfront fees. The total impact (cost to the tenants) will be as 
follows:

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                                                                                    Pet deposit
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Status-Quo (Current Rule with Gradual Payment)..................            $100            $200            $300
    --Upfront Payment...........................................              50              50              50
    --Monthly Payment...........................................              10              10              10
    --Number of Months..........................................               5              15              25
Present value payments at 3% annual discount....................           99.60             197             292
Present value payments at 7% annual discount....................           99.20             193             283
Cost of Rule (per Household at 3%)..............................            0.40               3               8
Cost of Rule (per Household at 7%)..............................            0.80               7              17
Total Elderly or Disabled Household in HUD Multifamily Rental            580,000         580,000         580,000
 Housing that own pets..........................................
Total Potential Impact (per Household at 3%)....................         232,000       1,740,000       4,640,000
Total Potential Impact (per Household at 7%)....................         464,000       4,060,000       9,860,000
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    The potential benefits of the rule include a reduced burden on 
owners who have to cover costs associated with repairs, replacements, 
fumigation, and animal facilities when such costs result from pets on 
the premises and accrue before the entire pet deposit is accumulated 
and decrease the time and money spent to manage the gradual 
accumulation of the required pet deposit. There are also administrative 
costs associated with the management of pet-deposit accounts. Under 
current HUD regulations, there is a need to manage the gradual 
accumulation of the required pet deposit and the proposed rule will 
eliminate such a need. The implementation of this proposed rule will 
result in some savings, however small, for the owners if they do not 
have to manage the monthly payments of pet deposits.
    Based on this analysis, HUD has determined that the implementation 
of this proposed rule will not be economically significant under 
Executive Order 12866 \4\ and OMB Circular A- 4.\5\
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    \4\ Office of Management and Budget, Economic Analysis of 
Federal Regulations Under Executive Order 12866, January 11, 1996, 
http://www.whitehouse.gov/omb/inforeg/riaguide.html.
    \5\ http://www.whitehouse.gov/omb/inforeg/cirular-a4.pdf.
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IV. Findings and Certifications

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule would revise HUD's regulations governing the manner 
in which an owner of covered multifamily rental housing may require 
tenants of such

[[Page 31454]]

housing who maintain pets to pay a pet deposit. As discussed in the 
preamble, owners of covered multifamily rental housing were subject to 
different rules concerning pet deposits than rules that applied to 
other HUD-assisted rental housing. This proposed rule would provide 
owners of such covered multifamily rental housing with the discretion 
to determine whether to gradually accumulate a pet deposit, thereby 
bringing consistency to the pet deposit requirements for HUD rental 
housing programs and better enabling owners to handle the costs 
associated with pet ownership by tenants. Accordingly, the undersigned 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic impact on a substantial number of small entities, 
HUD specifically invites comments regarding less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Environmental Impact

    This proposed rule does not direct, provide for assistance or loan 
and mortgage insurance for, or otherwise govern or regulate, real 
property acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule 
is categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or preempts state law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive Order. This proposed rule would not have 
federalism implications and would not impose substantial direct 
compliance costs on state and local governments or preempt state law 
within the meaning of the Executive Order.

Unfunded Mandates Reform Act

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

Lists of Subjects in 24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and community development, Low and 
moderate income housing, Mortgage insurance, Penalties, Pets, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Social security, Unemployment compensation, Wages.

    For the reasons set forth in the preamble, HUD proposes to amend 24 
CFR part 5 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

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

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

0
2. Amend Sec.  5.318 as follows:
0
a. Revise paragraphs (d)(2)(iii) and (iv);
0
b. Remove paragraph (d)(2)(v); and
0
c. Redesignate paragraph (d)(2)(vi) as (d)(2)(v).
    The revisions read as follows:


Sec.  5.318  Discretionary pet rules.

* * * * *
    (d) * * *
    (2) * * *
    (iii) The pet rules may provide for gradual accumulation of the pet 
deposit by the pet owner.
    (iv) The project owner may (subject to the HUD-prescribed limits) 
provide for gradual accumulation of an increase in the amount of the 
pet deposit by amending the house pet rules in accordance with Sec.  
5.353.
* * * * *

    Dated: May 1, 2013.
Shaun Donovan,
Secretary.
[FR Doc. 2013-12456 Filed 5-23-13; 8:45 am]
BILLING CODE 4210-67-P