[Federal Register Volume 79, Number 194 (Tuesday, October 7, 2014)]
[Proposed Rules]
[Pages 60590-60632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23276]
[[Page 60589]]
Vol. 79
Tuesday,
No. 194
October 7, 2014
Part II
Department of Housing and Urban Development
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24 CFR Parts 891 and 892
Supportive Housing and Services for the Elderly and Persons With
Disabilities: Implementing Statutory Reforms; Proposed Rule
Federal Register / Vol. 79 , No. 194 / Tuesday, October 7, 2014 /
Proposed Rules
[[Page 60590]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 891 and 892
[Docket No. FR-5576-P-01]
RIN 2502-AJ10
Supportive Housing and Services for the Elderly and Persons With
Disabilities: Implementing Statutory Reforms
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement amendments made by the
Section 202 Supportive Housing for the Elderly Act of 2010 (Section 202
Act of 2010) and the Frank Melville Supportive Housing Investment Act
of 2010 (Melville Act) to the authorizing statutes for HUD's supportive
housing for the elderly program, known as the Section 202 program, and
the supportive housing for persons with disabilities program, known as
the Section 811 program. These two statutes were enacted on January 4,
2011, and made important reforms to the Section 202 and Section 811
programs, several of which have already been implemented through
separate issuances, as discussed in the Supplementary Information
section of this rule. In addition to proposing regulations to implement
reforms of these two statutes, this proposed rule would implement
several other changes to align with the amendments made by the January
4, 2011, statutes, and streamline the Section 202 and Section 811
programs to better provide supportive housing for the elderly and
persons with disabilities. This proposed rule would establish the
requirements and procedures for the use of new project rental
assistance for supportive housing for persons with disabilities; the
implementation of an enhanced project rental assistance contract;
allowance of a set-aside for a number of units for elderly individuals
with functional limitations or other category of elderly persons as
defined in the notice of funding availability (NOFA); make significant
changes for the prepayment of certain loans for supportive housing for
the elderly; implement a new form of rental assistance called Senior
Preservation Rental Assistance Contracts (SPRACs); modernize the
capital advance for supportive housing for persons with disabilities;
and provide grant assistance for applicants without sufficient capital
to prepare a site for a funding competition. This rule also proposes to
establish the regulations for the Service Coordinators in Multifamily
Housing program and the Assisted Living Conversion program.
DATES: Comment Due Date. December 8, 2014.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Regulations Division, Office of General Counsel, 451
7th Street SW., Room 10276, Department of Housing and Urban
Development, Washington, DC 20410-0500. Communications must refer to
the above docket number and title. There are two methods for submitting
public comments. All submissions must refer to the above docket number
and title.
1. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of 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 comments, 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. All
submissions must refer to the docket number and title of the rule.
No Facsimile Comments. Facsimile (fax) comments are not acceptable.
Public Inspection of Public Comments. All properly submitted
comments and communications submitted to HUD will be available for
public inspection and copying between 8 a.m. and 5 p.m. eastern time,
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 through TTY by calling the
Federal Relay Service, toll free, at 800-877-8339. Copies of all
comments submitted are available for inspection and downloading at
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Alicia Anderson, Grant Policy and
Management Division, Office of Housing, Department of Housing and Urban
Development, 451 7th Street SW., Room 6142, Washington, DC 20410-7000;
telephone number 202-708-3000 (this is not a toll-free number).
Hearing- and speech-impaired persons may access this number through TTY
by calling the Federal Relay Service, toll free, at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose of the Regulatory Action
This rule proposes to implement certain reforms to HUD's Section
202 program and Section 811 program made by statutory changes to the
programs, enacted in January 2011, and which require regulations for
implementation. The Section 202 Act of 2010 (Pub. L. 111-372) includes
provisions to strengthen the availability of long-term, affordable
supportive housing for very low-income elderly persons by: Streamlining
the development procedures for new affordable housing units; supporting
the preservation of existing units; preventing displacement of elderly
project residents in the case of refinancing or recapitalization by
establishing the Senior Preservation Rental Assistance Contracts; and
supporting greater access to affordable supportive services for the
elderly.
The Melville Act of 2010 (Pub. L. 111-374), will offer additional
methods of financing new supportive housing for persons with
disabilities, as well as support the preservation of affordable rental
housing for individuals with disabilities and nonelderly disabled
families. The amendments will increase the production of new affordable
rental supportive housing units for persons with disabilities, while
promoting and facilitating community integration for persons with
significant and long-term disabilities. The availability of project
rental assistance funds will stimulate and support innovative state
approaches that will transform the provision of housing for extremely
low-income persons with disabilities, while providing voluntary access
to support and services that address the individual needs of persons
occupying the HUD supported housing units. This rule would implement
those components of
[[Page 60591]]
the statute that require regulations to make the new program features
operable.
B. Summary of the Major Provisions of the Regulatory Action
This proposed rule, in addition to making conforming changes (those
changes for which there is no exercise of discretion by HUD), would
provide for grant assistance for applicants without sufficient capital
to prepare a housing site in order to compete for funding under the
Section 202 program or the Section 811 program; revise the development
cost limits for the Section 811 program; amend the requirements for
project rental assistance under the Section 811 program to allow for
adjustments upon renewal and for increases in emergency situations;
allow Section 811 owners to request the conversion of supportive
housing units for very low-income persons with disabilities; offer
voluntary services to persons with disabilities under the Section 811
program; allow Section 202 sponsors of projects to set aside a
percentage of units for elderly individuals with functional limitations
or other category of elderly persons, as defined in the notice of
funding availability (NOFA), in order to better align the Section 202
program with Federal, state, and local health care initiatives that
support very low-income elderly individuals and provide for enhanced
project rental assistance contracts. These contracts would be available
to a nonprofit organization submitting a new application under either
the Section 811 or Section 202 program, and accessing private capital,
to fund the construction or provide permanent financing for supportive
housing units for the elderly or persons with disabilities.
C. Costs and Benefits
The primary impact of this proposed rule will result from
implementation of the new Enhanced Project Rental Assistance Contracts
(ePRAC) program. This program would allow future operating subsidy to
pay debt service under specific circumstances not currently allowed. As
provided in the accompanying regulatory impact analysis (RIA) for this
rule, assuming a $20 million appropriations level, HUD estimates that
there will be $15 million leveraged for new construction, which, under
the assumptions used in HUD's RIA, is sufficient to fund an additional
76 units. The benefits from this proposed change are primarily to
tenants who are able to receive improved housing services and/or
additional budgetary flexibility from the additional units developed as
a result of the increased production. While improved housing
affordability is associated with greater budget flexibility, improved
housing more generally is often associated with improvements in
psychological and other health outcomes of tenants. However, HUD's RIA
notes that no funding has been made available for the development of
new units in Fiscal Years (FYs) 2012 and 2013; therefore, a significant
economic impact will not result from new construction under the Section
202 and 811 programs. The ePRAC program will also be available to
existing projects where the debt is used to make leveraged investments
that reduce operating costs by more than the cost of the debt service.
The RIA assumes a reduction of 20 percent in owner paid utilities,
which is an estimated savings of $7 million. Under the assumption that
the costs savings translate into available resources to pay debt
service over time, these savings could conceivably result in $96
million, using the same loan terms used for the estimate for new
construction. However, the actual savings will depend upon the number
of applications submitted for which HUD concludes the debt service
would result in ongoing operating costs savings in an amount greater
than the cost of the debt.
The benefit of the ePRAC program is the increased flexibility to
use operating funds to pay debt service, which is intended to result in
a net increase in capital funds available to construct and rehabilitate
projects in the Section 202 and 811 programs. The costs of the ePRAC
program are the additional debt service payments the owner must make,
and the costs of additional risks inherent in any increase in leverage
within a project. Though debt may increase the opportunity for up-front
investment, the interest on the debt is the cost of this benefit, which
increases the demands on operating funds in the future, and diminishes
what is available for other operating expenses. However, underwriting
seeks to ensure that the project's operations and finances remain
viable even with the possibility of this additional burden.
The other changes proposed by this rule will not create any new
costs or benefits. HUD is proposing to codify requirements for funded
programs (service coordinators and assisted living conversion) that, to
date, are found in NOFAs.
II. Background
A. Authorizing Statutes for Supportive Housing and Services for the
Elderly and Persons With Disabilities
The Section 202 program and the Section 811 program are HUD's core
programs for providing supportive housing to the elderly and persons
with disabilities, respectively. The purpose of these programs is to
allow elderly individuals and persons with disabilities to live as
independently as possible, but in an environment that provides access
to voluntary supportive services that may be needed. Section 202 of the
Housing Act of 1959 (see Pub. L. 86-372, approved September 23, 1959)
originally provided housing for the elderly and in the later years of
the Section 202 program also provided housing for persons with
disabilities. Under this public law, the Section 202 program was
officially the Section 202 Direct Loan Program for Housing for the
Elderly or Handicapped Families.\1\ The Cranston-Gonzalez National
Affordable Housing Act (NAHA) (Pub. L. 101-625, approved November 28,
1990) amended Section 202 to provide for separate authorization for
supportive housing for persons with disabilities. NAHA also changed the
Section 202 program into what is now known as the supportive housing
for the elderly program the differences between the old Section 202
program and the existing program is explained below. Section 202b of
the Housing Act of 1959 authorizes the conversion of elderly housing to
assisted living facilities, and the Housing and Community Development
Act of 1992, as originally enacted (Pub. L. 102-550, as approved
October 28, 1992) and subsequently amended, authorizes funding for
service coordinators in multifamily housing for the elderly and persons
with disabilities.
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\1\ The statutory name for this program uses the term
``handicapped families.''
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Section 202 of the Housing Act of 1959--Supportive Housing for the
Elderly
Section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) authorizes
HUD's supportive housing program for the elderly (Section 202 program).
The program enables elderly persons to live with dignity and
independence by providing supportive housing that accommodates special
needs and provides services tailored to the needs of such elderly
persons. Originally, the Section 202 program began as a direct loan
program, which provided low-interest construction loans to nonprofit
[[Page 60592]]
developers to create moderate-income housing for the elderly.
HUD continues to administer Section 202 direct loans; however, they
are no longer issued. In 1991, HUD transformed the program into one
that provides capital advances instead of direct loans, where funds are
given to nonprofit developers to construct and/or rehabilitate housing
for very low-income elderly. Under this model, such Federal assistance
requires no repayment and is interest free as long as the project is
available for very low-income elderly persons, in accordance with the
applicable Section 202 program requirements, for no less than 40 years.
If the owner defaults on the terms and conditions of the Section 202
program, the owner is liable for the entire balance of the capital
advance amount with interest and penalties. The capital advance model
also began providing project rental assistance to fund the difference
between the HUD-approved operating costs of the project and the
tenant's contribution toward rent, to assist the owners with the
operation of the project.
HUD is taking a renewed look at the Section 202 program and is
making several enhancements to the program. Specifically, the current
section 202 of the Housing Act of 1959 contains several important
authorizations for HUD that will be implemented by this rule. First,
HUD has authority under section 202(b) of the Housing Act of 1959 to
provide assistance for other expenses as necessary to expand the supply
of supportive housing for the elderly, which gives HUD the authority to
provide technical assistance for preliminary work in the development of
such housing. Second, HUD has authority under section 202(c) of the
Housing Act of 1959 to provide an enhanced project rental assistance
contract option, which is similar to senior preservation rental
assistance contracts (in connection with the prepayment and refinancing
of Section 202 projects). Section 202(c) gives HUD the broad authority
to implement project rental assistance contracts in accordance with the
goals of the Section 202 program. Third, section 202(f) of the Housing
Act of 1959 gives HUD the broad authority to set the selection criteria
for the Section 202 program, in order to make sure funds are used
effectively. Such authority allows HUD to set selection criteria to
give a priority for assistance to housing that will provide support to
elderly individuals with functional limitations. Fourth, section
202(g)(1) of the Housing Act of 1959 states that HUD must ensure that
housing assisted under the Section 202 program provides a range of
services tailored to the needs of the category or categories of elderly
persons occupying such housing; thereby, providing HUD the authority to
make sure the needs of elderly persons with functional limitations are
met. Lastly, section 202(j)(1) of the Housing Act of 1959 authorizes
HUD to provide technical assistance grants for applicants with limited
resources in order for the applicants to fully participate in the
Section 202 program.
Section 202b of the Housing Act of 1959-Assisted Living Conversion
Section 202b of the Housing Act of 1959 (12 U.S.C. 1701q-2)
authorizes grants for the substantial capital repair of elderly housing
or the conversion of elderly housing to assisted living facilities (the
Assisted Living Conversion program). Assisted living facilities are
designed to accommodate the frail elderly and persons with disabilities
who can live independently but need assistance with activities of daily
living (e.g., assistance with eating, bathing, grooming, dressing, and
home management activities.) Assisted living facilities must provide
support services such as personal care, transportation, meals,
housekeeping, and laundry. Generally, funding for assisted living
facilities covers basic physical conversion of existing project units,
common and service spaces.
Section 811 of the Cranston-Gonzalez National Affordable Housing Act of
1990--Supportive Housing for Persons With Disabilities
Section 811 of the Cranston-Gonzalez National Affordable Housing
Act (NAHA) (42 U.S.C. 8013) authorizes HUD's supportive housing for
persons with disabilities (Section 811 program) and allows persons with
disabilities to live as independently as possible by providing capital
advances to increase the supply of supportive housing for such persons.
In addition, the Section 811 program provides project rental assistance
to fund the difference between the HUD-approved operating costs of the
project and the tenants' contribution toward rent. In addition, similar
to section 202 of the Housing Act of 1959, section 811 of NAHA contains
several important program authorizations that will be implemented by
this rule and have been strengthened by the Melville Act. For example,
section 811(b)(2) of NAHA authorizes HUD to provide assistance for
other expenses as necessary to expand the supply of supportive housing
for persons with disabilities. Section 811(d) of NAHA authorizes HUD to
allow for an enhanced project rental assistance contract option. This
section gives HUD the broad authority to implement project rental
assistance contracts in accordance with the goals of the Section 811
program. Under section 811(j)(1) of NAHA, HUD is authorized to provide
technical assistance grants for applicants with limited resources in
order to fully participate in the Section 811 program.
Housing and Community Development Act of 1992--Multifamily Housing
Service Coordinators
The Housing and Community Development Act of 1992 (Pub. L. 102-550,
approved October 28, 1992) in Sections 671 through 677, which establish
on their own or amend other housing program statutes, authorizes
funding for service coordinators to assist elderly individuals and
persons with disabilities, living in federally-assisted multifamily
housing to obtain needed supportive services from community agencies.
These sections were amended by section 851 of the American
Homeownership and Economic Opportunity Act of 2000 (Pub. L. 106-569,
114 Stat. 2944, approved December 27, 2000) to provide for increased
flexibility in the use of service coordinators in federally-assisted
multifamily housing (see 114 Stat. 3023-2025). The services authorized
are intended to prevent premature and inappropriate
institutionalization.
Section 811 of the American Homeownership and Economic Opportunity Act
of 2000--Prepayment of Certain Section 202 Loans
Section 811 of the American Homeownership and Economic Opportunity
Act of 2000 (AHEO) (12 U.S.C. 1701q note) authorizes the prepayment of
certain Section 202 loans. Between 1959 and 1990, HUD loaned funds to
private nonprofit developers to build housing for the elderly and
disabled families. Many of these projects are now in need of repair and
recapitalization, which is typically accomplished through the
prepayment and refinancing of the Section 202 direct loan, as
authorized under section 811 of the AHEO. HUD reviews any prepayment
requests to ensure the prepayment will benefit the project and its
residents while preserving affordability.
[[Page 60593]]
B. The Section 202 Act of 2010 and the Melville Act
Section 202 Act of 2010--Amendments to the Section 202 Program
The Section 202 Act of 2010 (Pub. L. 111-372, approved January 4,
2011) amends the Section 202 program to include in the selection
criteria for funding Section 202 supportive housing the extent to which
the applicant has ensured that a service coordinator will be employed
or otherwise retained for the housing. This service coordinator must
have managerial capacity and responsibility for carrying out supportive
services. In addition, the Section 202 Act of 2010 amends the
development cost limitations for the Section 202 program to be
reasonable. The Section 202 Act of 2010 also limits an owner's deposit
to cover operating deficits during the first 3 years of operations, and
prohibits the use of such amount to cover construction shortfalls or
inadequate initial project rental assistance amounts.
The Section 202 Act of 2010 redefines ``private nonprofit
organization'' and authorizes HUD, in the case of a nonprofit
sponsoring organization of multiple housing projects assisted under
such Act, to determine the criteria or conditions under which financial
or administrative responsibilities exercised by a single-entity private
nonprofit organization that is the owner corporation responsible for
the operation of an individual housing project may be shared or
transferred to the governing board of the sponsoring organization. The
new definition also allows the sole general partner of a for-profit
limited partnership to be a limited liability or for-profit
organization company wholly owned and controlled by one or more
organizations meeting the requirements of such definition.
The Section 202 Act of 2010 directs HUD to either operate a
national competition for the nonmetropolitan funds under the Section
202 program, or to make allocations to regional offices of HUD.
In addition, the Section 202 Act of 2010 amends section 811 of the
AHEO, making significant changes for the prepayment of certain Section
202 loans. The Section 202 Act of 2010 requires that a project owner
execute an affordability use agreement that extends at least 20 years
beyond the maturity date of the original Section 202 loan at the time
of prepayment, authorizes new flexibility in the use of proceeds from
the refinancing of a project, and creates permanent authority for the
refinancing of Section 202 projects where debt service savings is not
anticipated as a result of the refinance.
The Section 202 Act also authorizes a new form of rental
assistance, called Senior Preservation Rental Assistance Contracts
(SPRACs), to be provided in the refinancing of certain Section 202
projects where no debt service savings is anticipated and where
unassisted residents would otherwise face potential rent increases.
This is one of the most significant changes made to the Section 202
Direct Loan program.
Section 202 Act of 2010--Amendments to the Assisted Living Conversion
Program
The Section 202 Act of 2010 also amends section 202b of the Housing
Act of 1959 to enable the conversion of units to create either an
assisted living facility or service-enriched housing. Although these
amendments directly affect the Assisted Living Conversion program, they
also focus on enhancing the services provided in such facilities.
Service coordinators are necessary to coordinate the provision of
supportive services for the elderly, especially for the frail or
disabled elderly, in part to help them to continue living independently
in such housing. Service coordinators manage and provide access,
through third parties, to necessary supportive services for the elderly
living in supportive housing, assisted living facilities, or service-
enriched housing, because many residents have unmet needs for services
and assistance that the owner of the project cannot identify or provide
effectively.
Melville Act--Amendments to the Section 811 Program
The Melville Act (Pub. L. 111-374, approved January 4, 2011) makes
significant changes to the Section 811 program. The Melville Act
improves the Section 811 program by establishing new features that are
designed to facilitate community integration for persons with
significant and long-term disabilities. These new features include:
Providing stronger incentives to Section 811 program participants to
leverage other sources of capital funding; transferring Section 811
program vouchers to the Housing Choice Voucher program (also known as
HUD's Section 8 program), which serves to conform and streamline the
administrative requirements for rental assistance; adopting the HOME
Investment Partnerships (HOME) program cost limitations on funds
invested on a per-unit basis to further conform and streamline
requirements; providing for delegated processing of applications for
funding; and allowing for greater tenant protections. The Melville Act
also amends the definition of ``persons with disabilities'' to mean a
household composed of one or more persons who is 18 years of age or
older but less than 62 years of age, and who has a disability.
Most significantly, the Melville Act implements a new project
rental assistance authority (section 811(b)(3) of NAHA, as amended by
the Melville Act) that is separate from the existing project rental
assistance under the Section 811 program, which provides capital
advances and contracts for project rental assistance. The new project
rental assistance provided by the Melville Act provides funding to
state housing finance agencies and other appropriate entities to assist
them in providing rental assistance to extremely low-income, nonelderly
adults (persons 18 years of age or older and less than 62 years of age)
with disabilities. To be eligible for the project rental assistance,
the state housing finance agency or other appropriate entity must have
entered into an agreement with the state health and human services
agency and the state agency designated to administer or supervise the
administration of the state plan for medical assistance under title XIX
of the Social Security Act (the state Medicaid agency). This agreement
must: (1) Identify and target the populations to be served by the
project, (2) set forth the methods for outreach and referral, and (3)
make available appropriate services for tenants of the project. Placing
this new project rental assistance funding under the control of housing
finance agencies that have partnered with state health and human
services and Medicaid agencies, will allow states to more carefully
target resident populations that will benefit most from integrated
supportive housing units, and promote and refer these target
populations to this newly available housing.
As provided by the Melville Act, projects eligible for the new
project rental assistance can be either new or existing multifamily
housing projects. These projects' development costs are paid with
resources from other public or private sources, including projects that
have a commitment of Federal Low-Income Housing Tax Credits (LIHTC),
HOME program funds, any other Federal Government funding, or other
sources. To ensure that the goals of community integration are
achieved, the Melville Act provides that in any multifamily housing
project receiving the new project rental assistance, no more than 25
percent of the total
[[Page 60594]]
number of dwelling units in the project may be used for supportive
housing for persons with disabilities and receive the project rental
assistance, or have an occupancy preference for persons with
disabilities associated with such units. This does not prevent owners
from housing persons with disabilities in units not set aside to
receive the project rental assistance under this program. Persons with
disabilities are eligible to occupy nonassisted units. Denying
admission on the basis of disability in nonassisted units would violate
the Fair Housing Act, Section 504 of the Rehabilitation Act of 1973,
and the Americans with Disabilities Act.
The Melville Act also requires all dwelling units receiving the new
project rental assistance to operate as supportive housing for persons
with disabilities for a period of not less than 30 years and to only
serve nonelderly, extremely low-income persons with disabilities and
extremely low-income households that include at least one nonelderly
person with a disability.
In addition, the Melville Act modernizes the capital advance
portion of the Section 811 program by authorizing the use of project
rental assistance for emergency situations that are outside the control
of the owner, and the conversion of units; adopting the cost
limitations on funds invested on a per-unit basis as provided by the
HOME program, authorized by title II of NAHA, for the purpose of
further conforming and streamlining requirements; providing for
delegated processing of applications for funding; and allowing for
greater tenant protections.
The Section 202 Act of 2010 and the Melville Act provide a much-
needed foundation for practical improvements to the Section 202 program
and Section 811 program, and several of these reforms, which did not
require a regulatory foundation for implementation, have already been
implemented.\2\
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\2\ HUD issued a notice (H 2012-8) entitled ``Updated
Requirements for Prepayment and Refinance of Section 202 Direct
Loans'' on May 4, 2012. See http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/notices/hsg. HUD
also issued a Notice of Funding Availability on May 15, 2012, for
the Section 811 Project Rental Assistance Demonstration program,
authorized by the Melville Act (funding provided under the
Consolidated and Further Continuing Appropriations Act, 2012, Pub.
L. 112-55, 125 Stat. 552). See http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/grants/fundsavail/nofa12/sec811PRAdemo.
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III. This Proposed Rule--Overview
This section of the preamble provides an overview of the
regulations to be revised, removed, and added by this proposed rule.
Although the proposed rule primarily implements the new statutory
program features authorized by the Section 202 Act of 2010 and the
Melville Act, these two statutes also require conforming changes to
existing regulations at 24 CFR part 891, and this rule makes those
conforming changes. In addition, HUD is also proposing to add a new
part 892 to establish regulations for the Service Coordinator in
Multifamily Housing program and the Assisted Living Conversion program,
as provided by the Section 202 Act of 2010. The requirements for these
programs have long been addressed only through NOFAs. The enhanced
features to both programs provided by the Section 202 Act of 2010
present an optimum time to propose regulations, and solicit feedback on
whether the regulatory structure for these two programs achieves the
service-enriched housing that HUD is striving to achieve through this
proposed rule.
A. Supportive Housing for the Elderly and Persons With Disabilities
(Part 891)
General Program Requirements (Subpart A)
Purpose and Policy (Sec. 891.100--Revised)
The purpose and policy for the Section 202 program and Section 811
program would be revised to align with the changes to the Section 811
program made by the Melville Act amendments. The revision to this
section reflects the new policy for the Section 811 program, which
ensures residents are offered, but are not required to accept, any
necessary supportive services that address their individual needs. In
addition, it is clarified that supportive services are voluntary under
the Section 202 program.
Definitions (Sec. 891.105--Revised)
Section 891.105 in subpart A, which addresses the definitions for
both the Section 202 program and Section 811 program, would define
certain new terms and revise existing terms to reflect the statutory
changes.
A key term defined in this section pertains to ePRACs. HUD would
add a definition for ePRAC, which would mean the contract entered into
by the nonprofit organization and HUD setting forth the rights and
duties of the parties with respect to the project and the payments
under the ePRAC. An ePRAC is made available for nonprofit organizations
submitting new applications under section 811 of NAHA (42 U.S.C. 8013)
or section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), and who
are accessing private capital, to fund the construction or provide
permanent financing for supportive housing units for the elderly or
persons with disabilities; as well as for owners of existing properties
accessing private capital and debt service results in ongoing operating
cost savings in an amount greater than the cost of debt service. Such
contract would allow for the inclusion of debt service as an eligible
expense for the units covered by the contract and would allow for rents
to be set up to an amount determined by HUD (which may include the
provision of a service coordinator).
The definition of ``operating costs'' would be revised to include
allowances for debt service only for units covered by an ePRAC, or for
existing properties when such debt service results in ongoing operating
cost savings in an amount greater than the cost of debt service.
The definitions for ``project rental assistance contract'' and
``project rental assistance payment'' would be amended to clarify that
they do not apply to subpart G, which authorizes the new project rental
assistance as provided under the Melville Act. In addition, the
definition of ``project rental assistance contract'' would be amended
to clarify that this term does not apply to units covered by ePRAC
under Sec. 891.190 in subpart A. Lastly, the definition of ``project
rental assistance contract'' would also be amended to include payments
and the terms as provided in the ePRAC.
Development Cost Limits (Sec. 891.140--Revised)
The Melville Act revises the development cost limitations for the
Section 811 program. Accordingly, the current section on development
cost limits in Sec. 891.140 would be removed because the Section 811
program and Section 202 program now have separate development cost
limitations. However, since the development cost limits for the Section
202 program are not changed, the language under Sec. 891.140 would be
redesignated as Sec. 891.208 for applicability only to the Section 202
program.
Owner Deposit (Sec. 891.145--Removed)
The Melville Act eliminates the owner deposit requirement for the
Section 811 program, and, therefore, Sec. 891.145 is removed.
Operating Cost Standards (Sec. 891.150--Revised)
Section 891.150, which addresses operating cost standards for the
supportive housing programs for the
[[Page 60595]]
elderly and persons with disabilities, would be revised to provide that
Sec. 891.150 only applies to PRACs, as defined under Sec. 891.105.
Other Federal Requirements (Sec. 891.155--Revised)
This section's introductory paragraph would be slightly amended to
reference subpart G, the new project rental assistance. This section
would also be changed in paragraph (b) by adding language explaining
that the environmental requirements of 24 CFR part 50 and part 55 do
not apply to subpart G. As described elsewhere in this preamble under
Responsibilities of Participating Agencies (Sec. 891.882), the
environmental standards for the Project Rental Assistance for Projects
without Capital Advances program under subpart G would be under Sec.
891.882(e) of this proposed rule. In addition, paragraph (b) would
clarify that the environmental standards under Sec. 891.882(e) that
are applicable to prepayments (as provided under Sec. Sec. 891.530 and
891.700) must consider the use of a senior preservation rental
assistance contract under subpart H, regardless of whether an
application for such contract has been made at the time of review.
Under paragraph (d), it would be clarified that the labor standards
under this section do not apply to subpart H, which has separate labor
standards under Sec. 891.882(g) of this proposed rule. While the labor
standards under this section would apply to prepayments under
Sec. Sec. 891.530 and 891.700, it should be noted that the labor
standards may not be triggered by such prepayments, even where 12 or
more units may continue to be assisted under a preexisting Section 8
contract. Paragraph (d) would also correct the statutory citations to
the Davis-Bacon Act and the Contract Work Hours and Safety Standards
Act.
Audit Requirements (Sec. 891.160--Revised)
This section, which applies to both the Section 202 program and
Section 811 program, would be revised to state that nonprofits
receiving assistance under part 891 are subject to the audit
requirements in the NOFA. Currently, this section refers to 24 CFR part
45, which was removed and is no longer applicable (see 62 FR 61616
(November 18, 1997)).
Duration of Capital Advance (Sec. 891.165--Revised)
In HUD's final rule published in the Federal Register on June 20,
2013, at 78 FR 37106, entitled ``Streamlining Requirements Governing
the Use of Funding for Supportive Housing for the Elderly and Persons
with Disabilities Programs, as corrected by an amendatory rule
published on August 15, 2013, at 78 FR 49680, HUD revised Sec.
891.165(a) to provide that duration of the fund reservation for a
capital advance with construction advances is 24 months from the date
of issuance of the award letter to the date of initial closing. HUD,
however, inadvertently omitted offering a similar amendment to Sec.
891.165(b). Section 891.165(b), as currently codified, provides that
the fund reservation for projects that elect not to receive any capital
advance before construction completion is 24 months from the date of
issuance of the award letter to the start of construction, and the
duration can be extended up to 36 months, as approved by HUD on a case-
by-case basis. However to close-out a fund reservation, initial closing
must occur. A project that elects not to receive any capital advance
before construction completion does not reach initial closing until
after construction completion. Therefore, the time frame must be from
the date of issuance of the award letter to the initial closing. This
rule would make that revision.
Technical Assistance (Sec. 891.175--Revised)
Section 891.175, which addresses technical assistance for the
Section 202 program and the Section 811 program, would be amended to
provide for grant assistance for applicants without sufficient capital
to prepare a housing site in order to compete for funding under the
Section 202 program or Section 811 program. These grants will be
categorized as technical assistance because the use of this funding
serves purposes for which technical assistance grants are commonly
awarded. HUD shall continue to make available appropriate technical
assistance for both programs, and such technical assistance must ensure
that applicants having limited resources, particularly minority
applicants, are able to participate more fully in the programs.
In addition, the amendments made to this section by this proposed
rule provide that HUD may offer competitive grants to bolster an
applicant's capacity in preliminary work required in the development of
supportive housing for the elderly and persons with disabilities. This
type of technical assistance is only available if the applicant meets
the eligibility requirements under the NOFA for the Section 202 program
or Section 811 program. The applicant must have site control, and lack
access to capital to undertake initial efforts to confirm site
feasibility, pursue initial site funding, and undertake the preparatory
steps necessary to compete in the NOFA for the Section 202 program or
Section 811 program, as applicable. Such technical assistance may be
used to cover initial costs of necessary architectural and engineering
work, site control, and other activities related to the development of
supportive housing for the elderly and persons with disabilities.
Enhanced Project Rental Assistance Contracts (Sec. 891.190--New)
A new Sec. 891.190, entitled ``Enhanced Project Rental Assistance
Contracts'' (ePRACs) would be added to contain the regulations that
will govern the ePRACs under the Section 811 and Section 202 programs.
HUD proposes to place the regulations for the ePRACs under subpart A of
part 891, because these contracts are available to a nonprofit
organization under either the Section 811program or Section 202
program. Subpart A provides general requirements for both the Section
811program and Section 202 program.
As provided in the discussion of this section, an ePRAC is
available to a sponsor or owner under the Section 811 program or
Section 202 program, accessing private capital, to fund the
construction or provide permanent financing for supportive housing
units for the elderly or persons with disabilities. The ePRAC would be
available to sponsors that can provide evidence of a committed funding
source from a lender for the construction or permanent financing of the
Section 202 or Section 811 supportive housing units covered by the
ePRAC. These contracts would allow, among other things, for the
inclusion of debt service for units covered by the ePRAC as a project
expense. With the exception of the requirements provided in this
section for the ePRAC, such contracts must abide by the other
requirements set forth in the regulations in 24 CFR part 891, subparts
D and F.
New Sec. 891.190 is proposed to be structured as follows:
In General (Sec. 891.190(a))
Paragraph (a) of Sec. 891.190, entitled ``In general,'' states
that ePRACs are available to private nonprofit organizations, as
defined under Sec. Sec. 891.205, 891.305, and 891.805, with sponsors
accessing private capital, and such organizations must abide by the
requirements set out under Sec. 891.190(b).
Requirements (Sec. 891.190(b))
Paragraph (b) of Sec. 891.190 provides the requirements for
ePRACs. These
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requirements only apply to a private nonprofit organization, as defined
under Sec. Sec. 891.205, 891.305, and 891.805, with sponsors accessing
private capital for the construction or permanent financing of the
section 202 or section 811 supportive housing units covered by the
ePRAC. These contracts provide for the inclusion of debt service as an
under eligible expenses, the of debt service for housing units covered
by an ePRAC. Debt service for non-section 202 or non-section 811 units
cannot be included.
The ePRAC must set the initial rent levels, as well as the rent
levels at the beginning of each 5-year term of the multiyear contract,
based on the project's operating expenses that include debt service and
that do not exceed market rents, subject to a rent comparability study
(which may take the provision of a service coordinator into
consideration). Rents during the 5-year term of the multiyear contract
would be adjusted using the Operating Cost Adjustment Factor (OCAF).
For Section 202 projects, ePRACs must be for a term of 20 years.
The 20-year term is linked to the availability of funding. Accordingly,
the funding for the first year of the contract must be provided in
accordance with current funding procedures, and funding for subsequent
years is subject to available appropriations. If, however, funds
appropriated are inadequate to meet the financial needs of the assisted
units, HUD will not require the enforcement of the contract term. For
Section 811 projects, ePRACs must also be for a term of 20 years.
However, if the project is assisted with any low-income housing tax
credits or with any tax-exempt housing bonds, the contract term must be
for a term of 30 years. In accordance with the provisions of the
Melville Act, for all Section 811 projects utilizing an ePRAC, funding
for the first 5 years of the contract must be provided. Funding for
subsequent years is subject to available appropriations.
Vacancy payments for units under an ePRAC will be in the amount of
80 percent of the per-unit operating expenses that include debt service
for the first 60 days of vacancy if the conditions for receipt of the
vacancy payments are fulfilled under Sec. 891.445.
Section 202 Supportive Housing for the Elderly (Subpart B)
Definitions (Sec. 891.205--Revised)
Section 891.205, which provides the definitions for the Section 202
program, would be amended to revise the definition for ``activities of
daily living,'' and add a new definition for ``functional
limitations.'' The definition of ``activities of daily living,'' (ADL)
would be amended to remove references to ``home management
activities,'' and to add the activity of ``transferring.'' The
reference to ``home management activities'' was removed because it is
no longer consistent with the standard ADL definition. ``Transferring''
is included as an activity of daily living, and identifies tasks such
as going from a seated to a standing position, and getting in and out
of bed. HUD is revising the definition of ``activities of daily
living,'' to include this recognized category of ADL to identify tasks
that are essential for maintaining independent living. The amended
definition provides a comprehensive grouping of everyday activities
that are an indicator of the services necessary for independent living.
HUD is also adding a definition for the term ``functional
limitations,'' since new program requirements would allow for a set-
aside for elderly individuals with functional limitations, as explained
earlier in this preamble. This term relates to the restriction or loss
of ability to perform or complete ADL and or Instrumental Activities of
Daily Living (IADLs) tasks. An elderly person with functional
limitations requires assistance with three ADLs or one ADL and some
combination of IDALs and/or other thresholds as established by HUD. An
assessment of ADLs and IADLs is a useful tool for tailoring services to
meet the needs of elderly persons to allow for such persons to age-in-
place and live independently.
HUD is adding a definition for the term Instrumental Activities of
Daily Living (IADLs) since it is included in the definition of
functional limitations. IADLs are activities that are more complex than
those needed for the ADLs, they include but are not limited to handling
personal finances, meal preparation, shopping, traveling, doing
housework, using the telephone, and taking or managing medications.
Provisions of Services (Sec. 891.225--Revised)
Section 891.225, which applies to the provision of services for the
Section 202 program, would be amended to add a new paragraph (b)(2) to
provide that sponsors of projects may set aside a percentage of units
for elderly individuals with functional limitations or other category
of elderly persons as defined in the NOFA. HUD is allowing sponsors
this set-aside in order to better align the Section 202 program with
Federal, state, and local health care initiatives that support very
low-income elderly individuals. The exact percentage will be determined
and announced by HUD through a NOFA.
Any units set aside under this new paragraph (b)(2) must also abide
by requirements under Sec. 891.410(c)(3), as added by this proposed
rule, and discussed below.
Current paragraph (b)(2) of Sec. 891.225 will be redesignated as
paragraph (b)(3), and redesignated paragraph (b)(3) will be amended to
clarify that the limit of $15 per unit, per month, for service costs as
an eligible expense pertains only to the cost of supportive services
and not to the employment of a service coordinator. The limit of $15
may also be changed, as determined by HUD, to allow for flexibility. In
addition, HUD is removing the sentence that stated any cost associated
with the paragraph is an eligible cost under the contract because this
sentence is inconsistent with the rest of the paragraph.
Selection Preferences (Sec. 891.230--Removed)
Section 891.230, which outlines the selection preferences for the
Section 202 program, would be removed. This section no longer applies
to the Section 202 program as these Federal preferences were eliminated
by statute (see HUD final rule published on March 29, 2000, 65 FR
16692).
Owner Deposit (Sec. 891.235--New)
The Melville Act eliminates the owner deposit requirement for the
Section 811 program. Since the Section 202 program still requires an
owner deposit, the Section 202 language under Sec. 891.145 is moved to
a new Sec. 891.235 for Section 202 projects. Under Sec. 891.145, if
an owner has a National Sponsor or a National Co-Sponsor, the Minimum
Capital Investment shall be one-half of one percent (0.5 percent) of
the HUD-approved capital advance, not to exceed $25,000, and this
requirement continues in Sec. 891.235. In addition, as required by the
Section 202 Act of 2010, such amount must be used only to cover
operating deficits during the first 3 years of operation, and must not
be used to cover construction shortfalls or inadequate initial project
rental assistance amounts.
Section 811 Supportive Housing for Persons With Disabilities (Subpart
C)
Definitions (Sec. 891.305--Revised)
The Melville Act amends the definition of ``persons with
disabilities'' to mean a household composed of one or more persons who
is 18 years of age or older and less than 62 years of age, and who has
a disability. The definition of ``disabled household'' in Sec. 891.305
is amended to align with the Melville Act,
[[Page 60597]]
and would be amended to mean a household composed of one or more
persons who is 18 years of age or older and less than 62 years of age,
and who has a disability. In addition, the section would be amended to
clarify that a surviving member or members in a disabled household must
have been living in the unit as lawful tenants.
Cost Limits (Sec. 891.308--New)
A new Sec. 891.308 is added to subpart C to provide the cost
limitations as authorized by the Melville Act. Under the Melville Act,
HUD must periodically establish development cost limitations, by market
area, for group homes of supportive housing for persons with
disabilities by publishing a notice of such limitations in the Federal
Register. This language is similar to the current development cost
limits for the entire Section 811 program, but now only applies to
group homes. HUD adopts the current regulatory language for development
cost limits under Sec. 891.140 for group homes.
For group homes, HUD must use the development cost limits,
established by notice in the Federal Register and adjusted by locality,
to calculate the fund reservation amount of the capital advance to be
made available to individual owners of group homes, as defined under
section 811(k)(1) of NAHA, as amended by the Melville Act.
Other than group homes, the provisions of section 212(e) of NAHA
(42 U.S.C. 12742(e)) and the cost limits established by HUD, pursuant
to this section which authorizes the HOME program, apply on a per-unit
basis to supportive housing for persons with disabilities assisted with
a capital advance as provided under the Melville Act. HUD may provide
for the waiver of such cost limits under such cases in which the cost
limits established pursuant to section 212(e) of NAHA may be waived,
and to provide for the cost of special design features so that housing
is made accessible to persons with disabilities, so that individual
dwelling units meet the special needs of persons with disabilities, and
so that housing is established in a location that is accessible to
public transportation and community organizations that provide
supportive services to persons with disabilities. In addition,
applicants will not receive a waiver in excess of 110 percent of the
applicable HOME program cost limitations.
In accordance with the Melville Act, for supportive housing for
persons with disabilities assisted with a capital advance, HUD will use
the cost limits under the HOME program to calculate the maximum fund
reservation amount of the capital advance to be made available to
individual owners. Owners may request an amount less than the amount
determined under the cost limits if such amount still allows for the
project's financial feasibility. However, owners must not decline the
capital advance amount made available to them.
As stated in Sec. 891.140, owners that incur actual development
costs that are less than the amount of the initial fund reservation are
entitled to retain 50 percent of the savings in a Replacement Reserve
Account. Such percentage will be increased to 75 percent for owners
that add energy efficiency features. In addition, the Replacement
Reserve Account must only be used for repairs, replacements, and
capital improvements to the project.
Special Project Standards (Sec. 891.310--Revised)
In order to provide flexibility for the developers of multifamily
projects as authorized under the Melville Act, Sec. 891.310(b) would
be amended to clarify that the additional accessibility requirements
under paragraph (b) of Sec. 891.310 only apply to group homes as
defined under section 811(k)(1) of NAHA, and independent living
facilities. In addition, HUD is amending the existing accessibility
requirements under section 891.310(b). Under the Melville Act, projects
can no longer limit occupancy based on a type of disability. Instead,
projects must base eligibility on who will benefit from the services
provided. Accordingly, Sec. 891.310(b) is revised to state that all
entrances, common areas, units to be occupied by resident staff, and
amenities must be readily accessible to and usable by persons with
disabilities.
As revised, Sec. 891.310(b) would provide, in paragraph (b)(2),
that all dwelling units in an independent living facility (or all
bedrooms and bathrooms in a group home) involving new construction must
be designed to be accessible or adaptable for persons with physical
disabilities. Section 891.310(b)(3) would provide that in a project for
chronically mentally ill individuals involving new construction, a
minimum of 10 percent of all dwelling units in an independent living
facility (or 10 percent of all bedrooms and bathrooms in a group home)
must be designed to be accessible or adaptable for persons with
physical disabilities. Section 891.310(b)(4) would provide that a
project involving acquisition and/or rehabilitation may provide less
than full accessibility if: (i) The project complies with the
requirements of 24 CFR 8.23; (ii) the cost of providing full
accessibility makes the project financially infeasible; (iii) fewer
than one-half of the intended occupants have mobility impairments; and
(iv) the accessibility requirement will be met through existing
properties that serve persons with disabilities.
Project Rental Assistance (Sec. 891.330--New)
As noted earlier in this preamble, one of the most significant
changes made by the Melville Act is the establishment of a new project
rental assistance authority (section 811(b)(3) of NAHA, as amended by
the Melville Act) that is separate from the existing project rental
assistance under the Section 811 program, and which provides capital
advances and contracts for project rental assistance. Under the
Melville Act, project rental assistance under the Section 811 program
may be adjusted upon renewal and may be increased in emergency
situations. A new Sec. 891.330 is added to subpart C to reflect these
changes.
Upon the expiration of each contract term, subject to the
availability of appropriations, HUD will adjust the annual contract
amount for Section 811 projects to provide for reasonable project
operating costs, including adequate reserves and service coordinators.
Any contract amounts not used by a project during a contract term will
not be available for such adjustments upon renewal.
In addition, for emergencies that are outside the control of the
owner, HUD will increase the annual contract amount, subject to HUD's
review and limitations, as may be prescribed by HUD. The Melville Act
gives HUD broad discretion to increase the annual contract amount in
emergency situations. Increases in contract amounts will be no greater
than either 10 percent above the most recently approved budget-based
rent, or 110 percent of Fair Market Rents (FMR) for market-based rents.
Such increases will be solely for repaying a loan or equity that was
used for addressing emergency repairs to the building that are beyond
normal repair and maintenance, are not attributable to deferred
maintenance, and caused by matters outside the control of the owner for
which sufficient insurance proceeds are not available.
Conversions (Sec. 891.335--New)
A new Sec. 891.335 is added to provide, as authorized by the
Melville Act, that an owner may request the conversion of supportive
housing units for very low-income persons with disabilities. Under a
new Sec. 891.335, an owner may request conversion of some or all units
from
[[Page 60598]]
supportive housing for very low-income persons with disabilities to
very low-income persons, without tenancy being conditioned on such very
low-income persons having disabilities. Under the Melville Act, HUD has
to determine that the units are no longer needed for supportive housing
for persons with disabilities. Therefore, a conversion would be
approved only if the state agency responsible for administering the
Medicaid program and/or the state health and human services agency
indicates in writing that the need for supportive housing for very low-
income persons with disabilities no longer exists or that the
affordable supportive housing for very low-income persons with
disabilities will be replicated in a more integrated setting. In
addition, the project must have had persistent vacancy, despite a
reasonable effort to lease such units, as determined by HUD; and the
project must show that a demonstrated need exists for the households
that would benefit from such conversion. In granting a conversion, HUD
may reserve the right to request a change in management or require a
conversion only for a certain period.
Limitation on Use of Funds (Sec. 891.340--New)
In accordance with section 811 of NAHA, as amended by the Melville
Act, a new Sec. 891.340 is added to subpart C that states that Section
811 funds may not be used to replace other state or local funds
previously used or designated for use for persons with disabilities.
Multifamily Projects (Sec. 891.345--New)
A new Sec. 891.345 is added to subpart C to provide the Melville
Act restriction on the total number of dwelling units in a multifamily
project that may be used for persons with disabilities. The restriction
states that in any multifamily housing project (including any
condominium or cooperative housing project) that contains any unit for
which assistance is provided under the regulations in 24 CFR part 891,
the total number of dwelling units within a multifamily housing project
that may be used for supportive housing for persons with disabilities,
or with any occupancy preference for persons with disabilities, may not
exceed 25 percent of such total; the limit set by statute. This
restriction applies only to assistance provided after the date of the
enactment of the Melville Act, and does not apply to any project that
is a group home or independent living facility.
Voluntary Supportive Services (Sec. 891.350--New)
Consistent with the Melville Act, housing funded under subpart C
must make available supportive services to persons with disabilities,
but these services do not have to be accepted. This requirement is
added as a new Sec. 891.350 to subpart C. Under this new section, and
consistent with the Melville Act, a supportive service plan for housing
for Section 811 projects must allow for voluntary participation and
permit each resident to take responsibility for choosing and acquiring
their own services, to receive any supportive services made available
directly or indirectly by the owner of such housing, or to not receive
any supportive services.
Project Management (Subpart D)
Determination of Eligibility and Selection of Tenants (Sec. 891.410--
Revised)
HUD would amend Sec. 891.410 to revise paragraph (c)(2) which
currently only provides requirements for general project management and
specific requirements for the Section 811 program, and add a new
paragraph (c)(3) that will apply to the determination of eligibility
and selection of tenants. Paragraph (c)(2) will be revised to clarify
that the owner of the housing may, with the approval of HUD, limit
occupancy within the housing to persons with disabilities who can
benefit from the supportive services offered in connection with the
housing. The Melville Act changed the tenant protections under the
Section 811 program, and owners can no longer limit occupancy within
housing to persons with disabilities who have similar disabilities and
require a similar set of supportive services in a supportive housing
environment. New paragraph (c)(3) will apply to the Section 202 program
only. New paragraph (c)(3) states that, under the Section 202 program,
in order to be eligible for admission the applicant must also meet any
project occupancy requirements approved by HUD. This standard currently
exists for the Section 811 program, and HUD has added it for the
Section 202 program for consistency.
In addition, and as provided under the discussion of Sec. 891.225,
if a sponsor has set aside units as provided under Sec. 891.225(b)(2),
this section provides the requirements by which owners must abide. New
Sec. 891.410(c)(3) provides that owners must lease units set aside
under Sec. 891.225(b)(2) to elderly individuals who have been assessed
by a qualified professional and who can provide evidence of functional
limitations. Evidence can consist of a doctor's or nurse's written
evaluation or a letter from the Area Agency on Aging (AAA) or Aging and
Disability Resource Center (ADRC) or other like social service
agencies. Examples of service providers include, but are not limited
to, Medicaid home and community-based service providers or Programs for
All-Inclusive Care for the Elderly (PACE) providers (including
colocation of PACE programs on site). Provider organizations must have
the capacity to bill Medicaid or be affiliated with AAA. HUD has
determined that such requirements are necessary for units set aside
under Sec. 891.225(b)(2), to make certain that very low-income elderly
persons who are aging in place under the Section 202 program are better
served. Such requirements will allow HUD to ensure that set-aside units
are leased only to elderly individuals with functional limitations or
other category of elderly persons as defined in the NOFA.
Additionally, owners must continue to lease units not set aside for
elderly individuals to any applicant determined to be eligible for the
project. Owners are not prohibited from housing other elderly
individuals with functional limitations or other conditions defined in
the NOFA who are on their waiting list in units not set aside by the
sponsor. Owners will make selections in a nondiscriminatory manner,
without regard to considerations of race, religion, color, sex,
national origin, familial status, or disability. Owners must also make
selections without regard to actual or perceived sexual orientation,
gender identity, or marital status, in accordance with 24 CFR 5.105(a).
These requirements will ensure that other units not set aside for
elderly individuals with functional limitations or other category of
elderly persons as defined in the NOFA can serve other eligible
applicants, and that all units are leased in a nondiscriminatory
manner.
Set-aside units, as proposed by this rule, would be distributed
throughout the project and must not be segregated to one area of a
building or the project. A specified number of units, rather than
specific units (e.g., units 101, 201, etc.), may be set aside for this
purpose, allowing the owner more flexibility in maintaining the number
of units set aside by the sponsor for elderly individuals with
functional limitations or other category of the elderly persons as
defined in the NOFA.
[[Page 60599]]
Denial of Admission, Termination of Tenancy, and Modification of Lease
(Sec. 891.430--Revised)
The Melville Act amends the termination and the modification of
lease requirements for the Section 811 program. Accordingly, Sec.
891.430 would be revised to include these changes. HUD's regulations in
24 CFR part 5, subpart I, which pertain to preventing crime in
federally assisted housing and denying admission and terminating
tenancy for criminal activity or alcohol abuse, would continue to apply
to Section 811 capital advance projects. In addition, HUD's regulations
in 24 CFR part 247, which address evictions from certain subsidized and
HUD-owned projects, would continue to apply to all decisions by an
owner to terminate the tenancy or modify the lease of a household
residing in a unit (or residential space in a group home). However, an
owner of a Section 811 project may not terminate a tenancy or refuse to
renew a lease except for serious or repeated violation of the terms and
conditions of the lease; for violation of applicable Federal, state, or
local law; or for other good cause. In addition, the tenant must
receive (in accordance with the Melville Act), no less than 30 days
before the date of such termination or refusal to renew, a written
notice specifying the grounds for such action.
Loans for Housing for the Elderly and Persons With Disabilities
(Subpart E) Replacing ``Handicapped Person'' With ``Person With
Disabilities''
Through this rule, HUD also proposes to update terminology in the
part 891, subpart E, regulations, which regulations still use the term
``handicap'' and not ``disability.'' Not only is the term
``disability'' the preferred term, it is the term used in the Melville
Act. Accordingly, this rule proposes to replace ``handicap person''
with ``person with disabilities,'' and similar terminology changes.
Prepayment Privileges (Sec. 891.530 and Sec. 891.700--Revised)
The existing regulatory sections pertaining to prepayment
privileges, both found in subpart E of part 891, would be revised to
reflect the changes made by the Section 202 Act of 2010. These sections
are Sec. 891.530, which addresses direct loan prepayment privileges
for Section 202 projects for the elderly, and Sec. 891.700, which
addresses prepayment of direct loans for housing for persons with
disabilities. Section 891.700 would be amended to reference Sec.
891.530 because both sections list the same requirements. These two
sections would be amended to expressly require an extension of
affordability for at least 20 years beyond the maturity date of the
original loan as a condition for prepayment approval, as required by
section 201 of the Section 202 Act of 2010. In addition, the revisions
to these two regulatory sections recognize that the continued operation
of the project following the prepayment must remain under terms at
least as advantageous to current and future residents as the provisions
of the Section 202 direct loan, as well as any project-based rental
assistance contract that may be in place at the property (which would
include SPRAC assistance if such assistance is made available as part
of the prepayment transaction).
Direct loans were made under the Section 202 program to private
nonprofit developers so they could build housing for elderly and
disabled families. Under section 811(a) of the American Homeownership
and Economic Opportunity Act (AHEO), as amended by the Section 202 Act
of 2010, HUD may not grant approval for the prepayment unless the
transaction will ensure the continued operation of the project, until
at least 20 years following the maturity date of the original Section
202 loan, in a manner that will provide rental housing for the elderly
and persons with disabilities on terms at least as advantageous to
existing and future tenants as the terms required by the original
Section 202 loan agreement and any project-based rental assistance
payment contract related to the project. Such a prepayment may involve
refinancing if the refinancing results in a lower interest rate on the
principal of the project and in reductions in the debt service, as
authorized under section 811(b)(2) of the AHEO, as amended by the
Section 202 Act of 2010.
In addition, the prepayment may involve refinancing of certain
``early 202'' projects. These ``early 202'' projects are properties
financed with a Section 202 Direct Loan carrying an interest rate of 6
percent or lower. Because of the low interest rate on the Direct Loan,
the refinancing may not result in a reduction in debt service. If there
is an increase in debt service, the prepayment and refinance of such a
202 project may be approved if the refinance meets certain
requirements, as authorized under section 811(b)(2) and (3) of the
AHEO, as amended by the Section 202 Act of 2010. These requirements are
that the project owner must address the physical needs of the project,
the transaction may not result in an increase in rent for unassisted
families, and the transaction must address the capital needs of the
project and ensure physical viability for the term of the new
financing. In addition, the increase in debt service must not increase
the overall costs of providing any rental assistance for the project
under section 8 of the 1937 Act, unless approved by HUD. HUD may only
approve an increase in rental assistance under this scenario if
contracts are marked-up-to-market pursuant to section 524(a)(3) of the
Multifamily Assisted Housing Reform and Affordability Act (MAHRA) (42
U.S.C. 1437f note) for properties owned by nonprofit organizations; or
marked-up-to-budget pursuant to section 524(a)(4) of MAHRA (42 U.S.C.
1437f note), for properties owned by eligible owners (as such term is
defined in section 202(k) of the Housing Act of 1959 (12 U.S.C.
1701q(k)).
If the refinancing of an ``early 202'' project would result in a
rent increase for unassisted residents, HUD may issue SPRAC assistance
to these households under the Section 202 Act of 2010. As provided
under the discussion of new subpart H, to be eligible for SPRAC
assistance, unassisted residents must meet the Section 8 income
guidelines for a low-income family, which in some cases may be lower
than income limitations imposed by the Section 202 Direct Loan project
where the families reside. At the time of closing of the Section 202
direct loan, SPRAC assistance will be provided for units occupied by
unassisted, income-eligible families. Because HUD may provide SPRAC
assistance for ``early 202'' refinances where the rent charged to
unassisted residents would otherwise be increased, and because
appropriations for SPRACs may not be available, HUD may set priorities
for the consideration of prepayment approvals that require the
provision of a SPRAC.
Section 811(c) of the AHEO was also amended by the Section 202 Act
of 2010 to authorize, subject to HUD approval, the use of loan proceeds
resulting from the refinancing of the project to ensure such proceeds
are used in a manner advantageous to the tenants of the Section 202
project. Under this new statutory authority, loan proceeds in excess of
those required to pay off the Section 202 Direct Loan must be expended
within 5 years of the closing of the refinance, except for approved
ongoing social services. Proceeds may be used for up to 15 percent of
the cost of increasing the availability or provision of supportive
services, which may include the financing of service coordinators and
congregate services.
[[Page 60600]]
The use of loan proceeds may include modernization, accessibility
modifications or retrofits for the project, construction of an addition
or another facility in the project, rent reduction of unassisted
tenants residing in the project, or the rehabilitation of the project
to ensure long-term viability. Loan proceeds may also be used to pay
the project owner, sponsor, or third- party developer a developer's fee
in an amount not to exceed or duplicate, in the case of a project
refinanced through a low-income housing tax credit (LIHTC) program, the
fee permitted by the LIHTC program; or in the case of a project
refinanced through any other source of refinancing, 15 percent of the
acceptable development cost, which includes the cost of acquisition,
rehabilitation, loan prepayment, initial reserve deposits, and
transaction costs.
In addition, HUD may approve the use of proceeds from the
refinancing of the Section 202 direct loan in a manner advantageous to
the tenants of the project or for the provision of affordable housing
and related social services for elderly persons who are tenants of
other HUD-assisted senior housing. Such housing must be owned by the
same private nonprofit organization that is the project owner, the
project sponsor, or the private developer of the Section 202 project
being refinanced. The other HUD-assisted senior housing must be
designated as senior housing serving only those residents 62 years of
age and older, and must have an active program in place to provide
social services for elderly residents. At the time of application for
the Section 202 Direct Loan prepayment, the level of affordability of
the project(s) receiving proceeds from the refinance must be at least
as affordable as the Section 202 Direct Loan project being refinanced.
All project(s) to receive proceeds from the refinance must have or put
in place a Use or Regulatory Agreement requiring operation of the
project as affordable senior housing for a period at least 10 years
beyond the date of closing of the Section 202 refinance, or the date of
termination of the existing Use or Regulatory Agreement, whichever is
later. The other HUD-assisted senior housing may include Section 202
Direct Loan and Section 202 Capital Advance properties, or may include
affordable senior projects that receive HUD assistance or financing
such as project-based rental assistance, Federal Housing Administration
(FHA) mortgage insurance, Project-Based Vouchers, HOME Investment
Partnerships (HOME), or Community Development Block Grant (CDBG)
assistance. HUD must approve the use of proceeds in other HUD-assisted
senior housing, and such use will only be approved if the proposed
refinancing will address all physical and financial needs of the
Section 202 Direct Loan project.
Term of Project Assistance Contracts (Sec. 891.710--Removed)
All of the initial PACs terms (of 20 years) have expired, and
current PACs are renewed yearly. Therefore, HUD is removing Sec.
891.710.
For-Profit Limited Partnerships and Mixed-Finance Development for
Supportive Housing for the Elderly or Persons With Disabilities
(Subpart F)
Project Rental Assistance (Sec. 891.810--Revised)
This section would be amended to clarify that ``project rental
assistance contract'' and ``project rental assistance payment'' are
defined in Sec. 891.105, rather than in this section, which is
entitled ``project rental assistance.'' In addition, this section would
be amended to clarify that ``project rental assistance payment'' is
provided for operating costs, not covered by tenant contributions,
attributable to the number of units funded by capital advances under
the Section 202 program and the Section 811 program, subject to the
provisions of Sec. 891.445.
Drawdown (Sec. 891.830--Revised)
Section 891.830(c)(5), in the currently codified regulations,
requires each drawdown to be consistent with the ratio of Section 202
or Section 811 supportive housing units to other units. This
unnecessarily requires a proration that lacks flexibility for mixed-
finance projects. Paragraph (b) of Sec. 891.830 sufficiently protects
HUD's interests by requiring approval of a drawdown schedule while
allowing the needed flexibility to permit low-income housing tax
credits to be used effectively while reducing the amount of waivers
that must be granted.
Eligible Uses of Project Rental Assistance (Sec. 891.835--Revised)
Section 891.835(b)(1) would be amended to clarify that Section 202
or Section 811 project rental assistance may not be used to pay for
debt service on construction or permanent financing for any units in
development, except for units under an ePRAC under Sec. 891.190.
Development Cost Limits (Sec. 891.853--Revised)
Section 891.853 would be amended to reflect the new development
cost limit sections for mixed-finance developments under the Section
202 and Section 811 programs.
Project Rental Assistance for Projects Without Capital Advances
(Subpart G--New)
HUD proposes to establish a new regulatory subpart G, entitled
``Project Rental Assistance for Projects without Capital Advances,'' to
reflect that the new project rental assistance would only apply to
certain properties, and not the entire Section 811 program. This new
subpart G is proposed to be structured as follows:
Applicability (Sec. 891.870)
Section 891.870, entitled ``Applicability,'' states that this new
subpart applies only to the new project rental assistance that is made
available to projects without capital advances under the Section 811
program.
Definitions (Sec. 891.872)
In addition to the definitions provided in Sec. Sec. 891.105 and
891.305, Sec. 891.872 defines certain terms applicable to the new
project rental assistance.
Admission. ``Admission'' is defined as the point in time the
applicant and owner execute the lease agreement, and where occupancy is
imminent. Project rental assistance under this subpart may only be
provided for dwelling units that are set aside for extremely low-income
persons with disabilities and extremely low-income households that
include at least one person with a disability. The person with
disabilities must be at least 18 years of age or older and less than 62
years of age at the time of admission, as defined in this section.
Eligible Applicant. ``Eligible applicant'' is defined as any state
housing agency currently allocating LIHTC, or any state housing or
state community development agency allocating and overseeing assistance
under the HOME program, section 8 of the 1937 Act, or other similar
Federal or state program, and which has a formal partnership with the
state health and human services agency and the state agency designated
to administer or supervise the administration of the state plan for
medical assistance under title XIX of the Social Security Act
(Medicaid). Such agency must be in good standing, as determined by HUD,
in its administration of assistance. An eligible applicant may also be
a state, regional, or local housing agency or agencies; or a
partnership or collaboration of state housing agencies and/or state and
local/regional housing agencies.
[[Page 60601]]
Extremely Low-Income Family. The definition of ``extremely low-
income family'' is the same definition as defined in 24 CFR 5.603.
Therefore, an extremely low-income family is a family whose annual
income does not exceed 30 percent of the median income for the area, as
determined by HUD, with adjustments for smaller and larger families.
However, HUD may establish income ceilings higher or lower than 30
percent of the median income for the area if HUD finds that such
variations are necessary because of unusually high or low family
incomes.
Housing Agency. ``Housing Agency'' is defined as a state, regional,
or local housing agency.
Interagency Partnership Agreement. ``Interagency Partnership
Agreement'' is defined as the formalized agreement entered into between
the eligible applicant and the state health and human services agency,
and the applicable state Medicaid agency, if different entities.
Project rental assistance under this subpart may only be provided for
eligible projects that conform to this agreement.
Nonelderly Adult. ``Nonelderly adult'' is defined as a person who
is 18 years of age or older and less than 62 years of age, in
accordance with the definition of ``persons with disabilities'' under
the Melville Act.
Participating Agencies. ``Participating agencies'' is defined as
the eligible applicant awarded project rental assistance funds, the
state agency responsible for health and human services programs, and
the state agency designated to administer or supervise the
administration of the state plan for medical assistance under the
Medicaid program.
Project rental assistance. ``Project rental assistance'' is defined
as funding that is made available by HUD to eligible applicants. This
funding shall be used to provide long-term rental assistance for
supportive housing for nonelderly, extremely low-income persons with
disabilities and for extremely low-income households that include at
least one nonelderly person with a disability.
Rental Assistance Contract (RAC). ``Rental assistance contract
(RAC)'' is defined as the contract between the approved housing agency
and the multifamily property owner, authorized under section 811(b)(3)
of the National Affordable Housing Act (NAHA) (42 U.S.C. 8013). Section
811(b)(3) authorizes the separate project rental assistance only for
projects without capital advances.
Allocation of Funds (Sec. 891.874)
This new section reflects that HUD may allocate funds made
available in any fiscal year for project rental assistance under this
new subpart G by competition or in accordance with the formula
allocation provided under HUD's regulations in 24 CFR part 791
(Allocations for Housing Assistance Funds). In determining the method
of allocation, HUD will take into account the amount of funds
available, the number and types of eligible applicants, the period of
funding availability, and administrative efficiency. This flexibility
will allow HUD to fund project rental assistance under this new subpart
G as necessary each fiscal year.
Eligible Projects (Sec. 891.876)
Section 891.876 provides that funding of project rental assistance
under this subpart may be provided to a new or existing multifamily
housing project subject to several requirements. First, such project's
development costs must be paid with resources from other public and/or
private sources. These other sources may be LIHTC, equity, private debt
(such as a private mortgage or financing on the property), or HOME
funds. Second, an eligible project must not otherwise be receiving
Section 811 program funds. Lastly, a commitment of funding for project
costs must be made by the LIHTC allocation agency, participating
jurisdiction receiving assistance under the HOME program, or any
Federal, state or local government.
For existing multifamily housing projects, these projects may only
receive project rental assistance under this subpart if the assisted
units have no existing contractual obligation to serve persons with
disabilities, such as a recorded use agreement. In addition, existing
units currently receiving any form of operating housing subsidy under
section 8 of the 1937 Act cannot receive project rental assistance
under this proposed rule. HUD is implementing these requirements in
order to increase, rather than maintain, the number of supportive
housing units for persons with disabilities.
Eligible Tenants (Sec. 891.878)
Section 891.878 addresses eligible persons that may reside in units
receiving project rental assistance as provided under the new subpart
G. This section provides that project rental assistance may be provided
only for dwelling units that are set aside for extremely low-income
persons with disabilities and extremely low-income households that
include at least one person with a disability. This requirement is
statutory and ensures that the project rental assistance serves those
persons with disabilities who are most in need of supportive housing.
In addition to being extremely low-income, the person with
disabilities must be at least 18 years of age or older and less than 62
years of age at the time of admission, as defined under Sec. 891.872.
The Interagency Partnership Agreement must include the target
population to be served that will benefit from the assisted units under
this subpart and the available services.
The person with disabilities must also be eligible for community-
based, long-term services and supports as provided through Medicaid
waivers, Medicaid state plan options, state-funded services, or other
appropriate services (provided by state, local, nonprofit, or other
entities) related to the target populations identified under the
Interagency Partnership Agreement. However, participation in services
is voluntary and cannot be required as a condition of tenancy.
Terms and Conditions of Project Rental Assistance Financing (Sec.
891.880)
As discussed earlier in this preamble, the project rental
assistance made available by the Melville Act provides state housing
agencies and other eligible applicants with a method of funding
supportive housing for nonelderly, extremely low-income persons with
disabilities that does not require capital advances from HUD under the
Section 811 program. Accordingly, Sec. 891.880 establishes the terms
and conditions for the use of this new project RAC. Approved housing
agencies receiving project rental assistance under this subpart must
comply with the requirements of this section, and all the terms and
conditions of the rental assistance contract.
Under Sec. 891.880(b), the housing agency administering the
project rental assistance funds must enter into a RAC with the owner of
the project. The RAC will provide the housing assistance payments to
the owner for eligible tenants, as determined under Sec. 891.878,
residing in units that have been set aside by the owner as supportive
housing for persons with disabilities, as defined in the NOFA. Section
891.880(c) provides that the initial term of the RAC between the
approved housing agency administering the project rental assistance
program and the owner of the multifamily housing project must be for a
minimum of 20 years. In addition, Sec. 891.880(c) states that RACs may
be renewed as long as all parties approve such renewal, subject to
[[Page 60602]]
the availability of project rental assistance funds.
Section 891.880(d) addresses the statutory use restrictions
required for this project rental assistance. The Melville Act requires
all dwelling units assisted with the new project rental assistance to
operate as supportive housing for extremely low-income persons with
disabilities and extremely low-income households that include at least
one person with a disability for a period of not less than 30 years.
Section 891.880(d) reflects this statutory requirement, and any unit
must be subject to a recorded 30-year minimum use agreement for
nonelderly, extremely low-income persons with disabilities. In
addition, Sec. 891.880(d) provides that if a RAC is renewed in
accordance with new subpart G, the corresponding use agreement must be
extended for the duration of the renewal.
Section 891.880(e) provides the accessibility requirements for
projects under this section. Projects must meet the accessibility
requirements of section 504 of the Rehabilitation Act of 1973 and
titles II and III of the Americans with Disabilities Act, as
applicable. Covered multifamily dwellings must also meet the design and
construction requirements of the Fair Housing Act.
Section 891.880(f), consistent with the statutory requirement,
provides that in any multifamily housing project receiving the project
rental assistance, no more than 25 percent of the total number of
dwelling units in the project may be set aside for supportive housing
for persons with disabilities, or have any occupancy preference for
persons with disabilities associated with such unit. These units must
be distributed throughout the project, must not be segregated to one
area of a building or the project (such as on a particular floor, part
of a floor in a building, or certain sections within a project), and
can consist of both accessible and non-accessible units. Owners may
designate unit types (e.g., accessible, 1-bedroom, etc.) rather than
designating specific units (e.g., units 101, 201, etc.) to be set aside
for supportive housing for persons with disabilities. This type of
designation would allow flexibility in offering the next available unit
to a person with a disability under this program as long as the unit
type was designated as being set aside for persons with disabilities
and the number of units occupied by persons with disabilities under the
set-aside had not been met.
Responsibilities of Participating Agencies (Sec. 891.882)
Section 891.882 addresses the responsibilities of the participating
agencies. New project rental assistance may only be provided for
eligible projects that conform with the Interagency Partnership
Agreement. To be eligible for the rental assistance funding, HUD must
have reviewed and approved this Interagency Partnership Agreement to
confirm that such agreement: (1) Identifies the target populations to
be served by the project, (2) sets forth methods for outreach and
referral, and (3) describes the services to be made available/offered
to the tenants of the project.
The Interagency Partnership Agreement must include the target
populations to be served that will benefit from the assisted units
under this subpart and the available services. In addition to being
extremely low-income, the person with disabilities as defined in Sec.
891.305, must have a disability appropriate to the services to be
provided in the community under such agreement. In the Interagency
Partnership Agreement, states must identify the available state-funded
services and other appropriate services (provided by state, local,
nonprofit, or other entities), and describe how such services will be
made available to the tenants.
To comply with this statutory requirement for state agency
involvement, this section requires participating agencies to develop a
formalized collaboration, herein referred to as Interagency Partnership
Agreement that will result in long-term strategies to increase
affordable permanent supportive housing units, new and/or existing
units, with structured access to appropriate services. This Interagency
Partnership Agreement must include the eligible applicant, and the
state health and human services agency, and the applicable state
Medicaid agency, if different entities. This formalized agreement must
be evidenced by a memorandum of understanding (MOU), joint letter, or
other binding document. In states where health and human service
functions have been separated, both agencies' participation should be
evidenced.
Section 891.882 further provides that participating agencies must
provide a plan detailing the process by which the availability of units
for project rental assistance and waiting lists will be managed. This
plan must include the costs and authority and/or sources for paying for
those costs for establishing the infrastructure and the process to
implement this plan if no such process currently exists, as well as a
consideration of training. This process is essential in order to
provide expeditious and efficient service to nonelderly, extremely low-
income persons with disabilities and extremely low-income households
that include at least one nonelderly person with a disability.
Section 891.882 also requires participating agencies to describe
how the process of referring eligible persons with disabilities to the
assisted multifamily housing projects will be carried out, describe how
households will be tracked, and to provide a list of people who
property owners can contact if there are any problems. These details
will also provide for an efficient process that will serve the greatest
number of needy, nonelderly, extremely low-income persons with
disabilities. In addition, this section provides that the plan and
process must be incorporated into the Interagency Partnership Agreement
between participating agencies.
Section 891.882 further provides that a percentage, as defined by
HUD in the NOFA, of the total project rental assistance award may be
used for initial and administrative costs relating to the
administration of the project rental assistance program under this new
subpart G. This section provides that such costs may include costs of
hiring ongoing staff, contract assistance, infrastructure costs, and
information technology. No charges relating to the administration of
the program may be charged to the tenants.
Section 891.882 also provides fair housing and equal opportunity
requirements. Participating agencies must ensure that all applicable
fair housing and equal opportunity requirements are met. First,
participating agencies must adopt affirmative marketing procedures for
their project rental assistance program funded under this subpart.
Affirmative marketing procedures consist of actions to provide
information and otherwise attract eligible persons to the program
regardless of race, color, national origin, religion, sex, disability,
or familial status, who are not likely to apply to the program without
special outreach. Participating agencies must annually assess the
success of their affirmative marketing activities and make any
necessary changes to their affirmative marketing procedures as a result
of the evaluation. Participating agencies must keep records describing
actions taken to affirmatively market the program and records to assess
the results of these actions. Eligible applicants must
[[Page 60603]]
describe their methods of outreach and referral and waiting list
policies in their applications, as prescribed in the NOFA. All methods
of outreach and referral and management of the waiting list must be
consistent with fair housing and civil rights laws and regulations and
affirmative marketing requirements.
Second, participating agencies must adopt a process for providing
full disclosure to each applicant of any option available to the
applicant in the selection of the development in which to reside,
including basic information about available sites and an estimate of
the period of time the applicant would likely have to wait to be
admitted to units of different sizes and types at each site. Third,
participating agencies must require projects receiving project rental
assistance under this subpart to maintain records on the race,
ethnicity, sex, and place of previous residency for applicants and
approved eligible households. The owner must submit such reports to the
housing agency to demonstrate compliance with applicable civil rights
and equal opportunity requirements.
Section 891.882 also provides specific environmental requirements
for the administration of this program under the new subpart G. As HUD
does not approve funding for specific activities or projects of the
selected housing agencies under this program, HUD will not perform
environmental reviews on such activities or projects. However, to
ensure that the tenets of HUD environmental policy and the requirements
of applicable statutes and authorities are met, housing agencies
selected for funding will be required to implement the special
environmental analyses and determinations for specific program
activities and projects that are detailed in this section. The approved
housing agency's signature on the RAC would constitute an assurance
that all environmental requirements under this section will be met. In
addition, to the extent that property standards or restrictions on the
use of properties stated in this section are more stringent than
provisions of the authorities cited, the requirements in this section
shall control.
Section 891.882 also provides for compliance with the lead-based
paint requirements. Approved housing agencies must abide by the Lead-
Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the
Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C.
4851-4856), and implementing regulations at part 35, subparts A, B, H,
J, and R of this title.
Senior Preservation Rental Assistance (Subpart H--New)
As noted earlier in this preamble, this proposed rule would
introduce the authority for senior preservation rental assistance, as
authorized under title II of the Section 202 Act of 2010. HUD has
decided to place the regulations applicable to such assistance in a new
subpart H entitled ``Senior Preservation Rental Assistance'' because
this type of assistance is only available for certain Section 202
projects, and does not apply to the entire Section 202 program. In
addition, in certain sections, HUD has retained current regulatory
requirements for SPRAC for consistency and administrative ease.
New subpart H is proposed to be structured as follows:
Applicability (Sec. 891.900)
The requirements set forth in this subpart H apply only in
connection with a prepayment plan for a project approved by HUD to
prevent displacement of elderly residents of a Section 202 project in
the case of refinancing or recapitalization, and the project is
provided project-based rental assistance under a senior preservation
rental assistance contract, as defined under Sec. 891.902.
Definitions (Sec. 891.902)
In addition to the definitions provided in Sec. Sec. 891.105,
891.205, and 891.505, Sec. 891.902 defines certain terms applicable to
senior preservation rental assistance.
Family(ies) means an Elderly Family as defined by 24 CFR 891.505,
and may include a ``Disabled Family,'' as defined in 24 CFR 891.505,
pursuant to the terms and conditions of an applicant's original Section
202 Loan. As noted earlier in this preamble, HUD is replacing
``handicap'' terminology with ``disability'' terminology, in the
subpart E regulations.
Low-Income Family and Very Low-Income Family. The definitions of
``low-income family'' and ``very low-income family'' are the same
definitions as defined in 24 CFR 5.603. Therefore, a low-income family
is a family whose annual income does not exceed 80 percent of the
median income for the area and a very low-income family is a family
whose annual income does not exceed 50 percent of the median income for
the area, as determined by HUD, with adjustments for smaller and larger
families, except that HUD may establish income ceilings higher or lower
than 80 or 50 percent of the median income for the area on the basis of
HUD's findings that such variations are necessary because of unusually
high or low family incomes.
Senior Preservation Rental Assistance Contract (SPRAC). SPRACs are
project-based rental assistance made available to a private nonprofit
organization owner for a term of at least 20 years, subject to annual
appropriations with the ability to renew the contract upon expiration
of the initial 20-year term, and governed by the regulations of this
subpart. Such contract is subject to a use agreement having a term of
the SPRAC or such term as is required by the prepayment of the Section
202 Direct Loan, whichever is longer. The Section 202 Direct Loan use
agreement requires compliance with the SPRAC requirements, which
includes the renewal of SPRAC for the life of the use agreement.
Contract Execution (Sec. 891.904)
A SPRAC sets forth the rights and duties of the owner and HUD with
respect to the project and the senior preservation rental assistance
payments. Upon the closing of the refinancing for the project, and
following the approval of the prepayment of the Section 202 direct
loan, the owner and HUD must execute a SPRAC on a form prescribed by
HUD. The effective date of such SPRAC will be the date of the closing
of the refinancing.
Under the SPRAC, payments may be made to assist eligible families
leasing assisted units under part 891. The amount of such payment is
equal to the difference between the contract rent for the unit and the
tenant rent payable by the family. Payments under the SPRAC may also be
made to owners for vacant assisted units. The amount of and conditions
for vacancy payments are described in Sec. 891.912(k). Vacancy
payments only apply to units that were initially occupied at the time
the SPRAC was executed, in the case that those units are later
unoccupied during the term of the contract. In addition, SPRAC payments
are made monthly by HUD upon proper requisition by the owner. If a
SPRAC Unit remains vacant for more than 60 consecutive days upon tenant
turnover, the owner shall not be eligible to receive further SPRAC
payments for that SPRAC Unit. The unit must have been in decent, safe,
and sanitary condition during the vacancy period for which payment is
claimed.
Under a SPRAC, as applicable, a utility reimbursement will be paid
to a family occupying an assisted unit as an additional housing
assistance payment. The SPRAC will provide that the owner must make
this payment on behalf of HUD, and funds will be paid to the owner in
trust solely for the purpose of
[[Page 60604]]
making the additional payment. The owner may pay the utility
reimbursement jointly to the family and the utility company, or if the
family and utility company consent, directly to the utility company.
Contract Term (Sec. 891.906)
This section provides that the minimum term of the SPRAC for
assisted units under this subpart shall be 20 years.
Pursuant to title II of the Section 202 Act of 2010, any projects
for which a SPRAC is provided shall be subject to a use agreement to
ensure continued project affordability having a term of the longer of
(A) the term of the SPRAC, or (B) such term as is required by the new
financing.
Leasing to Eligible Families (Sec. 891.910)
Under the regulations for the SPRAC, as proposed by this rule,
eligible families that may occupy assisted units under this part must
meet the income guidelines for a low-income family under section 8 of
the 1937 Act. During the term of the SPRAC, an owner shall make
available for occupancy by eligible families, the total number of units
for which assistance is committed under the SPRAC. This means that the
owner is conducting marketing in accordance with Sec. 891.912(c); has
leased or is making good-faith efforts to lease the units to eligible
families, including taking all feasible actions to fill vacancies by
renting to such families; and has not rejected any eligible applicant
family, except for reasons acceptable to HUD.
If the owner is temporarily unable to lease all units for which
assistance is committed under the SPRAC to eligible families, one or
more units may, with the prior approval of HUD, be leased to otherwise
eligible families that do not meet the income eligibility requirements.
Those over-income families must pay 30 percent of their income towards
rent, up to the contract rent level. Failure on the part of the owner
to comply with the requirements under this section is a violation of
the SPRAC and grounds for all available legal remedies, including an
action for specific performance of the SPRAC, suspension or debarment
from HUD programs, and reduction of the number of units under the
SPRAC.
HUD may reduce the number of units covered by the SPRAC to the
number of units available for occupancy by eligible families if the
owner fails to comply with the applicable requirements. Notwithstanding
any prior approval by HUD, HUD may reduce the number of units if HUD
determines that the inability to lease units to eligible families is
not a temporary issue. An amendment to the SPRAC will be authorized by
HUD to provide for the subsequent restoration of the reduction of units
if HUD determines that the restoration is justified by demand; the
owner has a record of compliance with the owner's obligations under the
SPRAC; and contract and budget authority is available.
HUD may permit SPRAC units in the project to be leased to
nonelderly families if the owner has made reasonable efforts to lease
assisted and unassisted units to eligible families, the owner has been
granted HUD approval, and the owner is temporarily unable to achieve or
maintain a level of occupancy sufficient to prevent financial default
and foreclosure. HUD approval for this situation would be of limited
duration. If there is an FHA-insured mortgage on the project, HUD may
also impose terms and conditions applicable to FHA-insured mortgages
for this approval that are consistent with the program objectives, and
necessary to protect its interest under the FHA-insured loan.
HUD's regulations in subpart L of 24 CFR part 5, which applies to
the admission and occupancy of eligible families in cases where there
is or there is claimed to be incidents of, or there is criminal
activity related to, domestic violence, dating violence, or stalking,
would also apply to the SPRAC.
Applicability of Other Part 891 Regulations (Sec. 891.912)
This section contains all of the requirements for subpart H that
are from other sections of part 891. HUD has put these requirements
under this section for consistency and ease of administration.
SPRAC Administration (Sec. 891.912(a))
Section 891.912(a) provides that HUD is responsible for the
administration of the SPRAC.
Notice Upon SPRAC Expiration (Sec. 891.912(b))
Section 891.912(b) provides that the owner of any projects assisted
by a SPRAC must follow the notice requirements under Sec. 891.590 for
contract expirations. Under Sec. 891.590, the SPRAC must provide that
the owner will notify each family leasing an assisted unit of any
increase in the amount the family must pay as rent as a result of the
expiration. The owner must notify the assisted family at least 1 year
before the end of the SPRAC. Such notice must be sent by a first-class
letter, be properly stamped, and be addressed to the family at its
address at the project, with a proper return address. A copy of the
notice must be served on any adult person answering the door at the
leased dwelling unit, or if no adult responds, by placing the notice
under or through the door, if possible, or else by affixing the notice
to the door. Service will be considered effective when the notice is
mailed and served properly. The date on which the notice will be
considered to be received by the family will be the date on which the
owner mails the first-class letter, or the date on which the notice is
properly served, whichever is later.
Under Sec. 891.590, the notice must advise each affected family
that, after the expiration date of the SPRAC, the family will be
required to bear the entire cost of the rent and that the owner may,
subject to requirements and restrictions contained in the regulatory
agreement, the lease, and state or local law, change the rent. The
notice must also state the actual (if known) or the estimated rent that
will be charged following the expiration of the SPRAC, the difference
between the new rent and the total tenant payment toward rent under the
SPRAC, and the date the SPRAC will expire.
In addition, the owner must give HUD a certification that families
have been notified properly and in accordance with Sec. 891.590, and
must attach to the certification an example of the text of the notice.
Section 891.590 applies to all SPRACs.
Responsibilities of the Owner (Sec. 891.912(c))
Section 891.912(c), the owner is responsible for all requirements
under Sec. 891.600, except for Sec. 891.600(a)(1) and (a)(3).
Therefore, for owners, marketing must be done in accordance with the
HUD-approved affirmative fair housing marketing plan and all Federal,
state, or local fair housing and equal opportunity requirements. See 24
CFR 5.105(a). The purpose of the plan and requirements is to achieve a
condition in which eligible families of similar income levels in the
same housing market have a like range of housing choices available to
them regardless of discriminatory considerations, such as their race,
color, religion, familial status, disability, sex or national origin.
Marketing must also be done in accordance with the communication and
notice requirements of HUD's Section 504 regulations at 24 CFR 8.6 and
24 CFR 8.54.
Under Sec. 891.600, the owner is responsible for all management
functions. These functions include selection and admission of tenants,
required reexaminations of incomes for
[[Page 60605]]
families occupying assisted units, collection of rents, termination of
tenancy and eviction, and all repair and maintenance functions
(including ordinary and extraordinary maintenance and replacement of
capital items). All functions must be performed in compliance with fair
housing and equal opportunity requirements.
With HUD approval, the owner may contract with a private or public
entity for performance of the services or duties required under Sec.
891.600. However, such an arrangement does not relieve the owner of
responsibility for these services and duties. All such contracts are
subject to the restrictions governing prohibited contractual
relationships described in Sec. Sec. 891.130 and 891.505, if
applicable. (These prohibitions do not extend to management contracts
entered into by the owner with the sponsor or its nonprofit affiliate).
The owner must promote awareness and participation of minority and
women's business enterprises in contracting and procurement activities
consistent with the objectives of Executive Order No. 11625 (36 FR
19967, 3 CFR, 1971-1975 Comp., p. 616; as amended by Executive Order
No. 12007 (42 FR 42839, 3 CFR, 1977 Comp., p. 139; unless otherwise
noted); Executive Order No. 12432 (48 FR 32551, 3 CFR, 1983 Comp., p.
198; unless otherwise noted); and Executive Order No. 12138 (44 FR
29637, 3 CFR, 1979 Comp., p. 393; unless otherwise noted.
The owner must submit to HUD within 60 days after the end of each
fiscal year of project operations, financial statements for the project
audited by an independent public accountant and in the form required by
HUD; and other statements regarding project operation, financial
conditions and occupancy as HUD may require to administer the SPRAC and
to monitor project operations.
The owner must also maintain a separate project fund account in a
depository or depositories that are members of the Federal Deposit
Insurance Corporation or National Credit Union Share Insurance Fund,
and must deposit all rents, charges, income, and revenues arising from
project operation or ownership to this account. All project funds are
to be deposited in Federally-insured accounts. All balances must be
fully insured at all times, to the maximum extent possible. Project
funds must be used for the operation of the project (including required
insurance coverage), to make required principal and interest payments
on the project mortgage, and to make required deposits to the
replacement reserve under Sec. Sec. 891.605 and 891.745 (as
applicable), in accordance with a HUD-approved budget. Any project
funds in the project funds account (including earned interest)
following the expiration of the fiscal year must be deposited in a
federally insured residual receipts account within 60 days following
the end of the fiscal year. Withdrawals from this account may be made
only for project purposes and with the approval of HUD. If there are
funds remaining in the residual receipts account when the mortgage is
satisfied, such funds must be returned to HUD.
Lastly, the owner must submit such reports as HUD may prescribe to
demonstrate compliance with applicable civil rights and equal
opportunity requirements.
Replacement Reserve (Sec. 891.912(d))
Section 891.912(d) provides the owner must comply with all
requirements under Sec. 891.605. Therefore, the owner must establish
and maintain a replacement reserve to aid in funding extraordinary
maintenance, and repair and replacement of capital items. The owner
must make monthly deposits to the replacement reserve in an amount
determined by HUD. The reserve must be built up to and maintained at a
level determined by HUD to be sufficient to meet projected
requirements, and if the reserve reaches that level, the amount of the
deposit to the reserve may be reduced with the approval of HUD.
Replacement reserve funds must be deposited with HUD or in a
federally insured depository in an interest-bearing account(s) whose
balances are fully insured at all times. All earnings including
interest on the reserve must be added to the reserve. Funds may be
drawn from the reserve and used only in accordance with HUD guidelines
and with the approval of, or as directed by, HUD.
Selection and Admission of Tenants (Sec. 891.912(e))
Section 891.912(e) provides that the owner must comply with the
requirements under Sec. 891.610, except for Sec. 891.610(c). However,
an applicant must meet the low-income eligibility guidelines for a low-
income family under section 8 of the 1937 Act in order to be eligible
under this subpart.
The owner must adopt written tenant selection procedures that
ensure nondiscrimination in the selection of tenants, that are
consistent with the purpose of improving housing opportunities for low-
income elderly families or persons with disabilities; and reasonably
related to program eligibility and an applicant's ability to perform
the obligations of the lease.
Owners must promptly notify in writing any rejected applicant of
the grounds for the rejection. Owners must maintain a written,
chronological waiting list showing the name, race, gender, ethnicity,
and the date of application for each person applying for the program.
For applications, the owner must accept applications for admission to
the project in the form prescribed by HUD. In addition, applicant
families must sign a release of information consent for verification of
information, and complete a certification of eligibility as part of the
application for admission. Applicant families must meet the disclosure
and verification requirements for Social Security numbers, and sign and
submit consent forms for the obtaining of wage and claim information
from State Wage Information Collection Agencies, as provided in HUD's
regulations in 24 CFR part 5, subpart B, which address the disclosure
and verification of Social Security numbers and employer identification
numbers and the procedures for obtaining income information. The owner
and the applicant must complete and sign the application for admission.
On request, the owner must furnish copies of all applications for
admission to HUD.
If the owner determines that the family is eligible and units are
available, the owner will assign the family a unit of appropriate size
in accordance with HUD's general occupancy guidelines. If no suitable
unit is available, the owner will place the family on a waiting list
for the project and notify the family of when a suitable unit may
become available. If the waiting list is so long that the applicant
would not be admitted within the next 12 months, the owner may advise
the applicant that no additional applications for admission are being
considered for that reason, except that the owner may not refuse to
place an applicant on the waiting list if the applicant is otherwise
eligible for assistance.
If the owner determines that an applicant is ineligible for
admission, or the owner is not selecting the applicant for other
reasons, the owner must promptly notify the applicant in writing of the
determination, the reasons for the determination, and that the
applicant has a right to request a meeting with the owner or managing
agent to review the rejection, in accordance with HUD requirements. If
a review is requested, the review may not be conducted by a member of
the owner's staff who made the initial decision to reject the
applicant. The applicant may also
[[Page 60606]]
exercise other rights (e.g., rights granted under Federal, state, or
local civil rights laws), if the applicant believes he or she is being
discriminated against on a prohibited basis.
In addition, records on applicants and approved eligible families,
which provide racial, ethnic, sex, disability status, and place of
previous residency data required by HUD, must be retained for 3 years.
Also, the owner must reexamine the income and composition of the
family at least every 12 months. Upon the verification of the
information, the owner must make appropriate adjustments in the total
tenant payment in accordance with 24 CFR 5.628 and determine whether
the family's unit size is still appropriate. The owner must adjust
tenant rent and the housing assistance payment, and must carry out any
unit transfer in accordance with the administrative instructions issued
by HUD. At the time of the reexamination, the owner must require the
family to meet the disclosure and verification requirements for Social
Security numbers, as provided under 24 CFR part 5, subpart B.
In addition, the family must comply with the provisions in their
lease regarding interim reporting of changes in income. If the owner
receives information concerning a change in the family's income or
other circumstances between regularly scheduled reexaminations, the
owner must consult with the family and make any adjustments determined
to be appropriate. Any change in the family's income or other
circumstances that results in an adjustment in the total tenant
payment, tenant rent, and housing assistance payment must be verified.
A family must remain eligible for senior preservation rental assistance
payments until the total tenant payment equals or exceeds the gross
rent. The termination of subsidy eligibility will not affect the
family's other rights under its lease.
SPRAC payments may be resumed if, as a result of changes in income,
rent, or other relevant circumstances during the term of the SPRAC, the
family meets the income eligibility requirements and housing assistance
is available for the unit under the terms of the contract.
A family's eligibility for senior preservation rental assistance
payments may be terminated in accordance with HUD requirements, for
such reasons as failure to submit requested verification information,
including information related to disclosure and verification of Social
Security numbers, or failure to sign and submit consent forms for the
obtaining of wage and claim information from State Wage Information
Collection Agencies, as provided by 24 CFR part 5, subpart B.
Obligations of the Family (Sec. 891.912(f))
The obligations of the family are applicable to both the Section
202 and Section 811 programs, as provided under Sec. 891.415. Under
Sec. 891.415, the assisted household or family must pay amounts due
under the lease directly to the owner. The assisted household or family
must supply such certification, release of information, consent,
completed forms or documentation as the owner or HUD determines
necessary. In addition, the assisted household or family must allow the
owner to inspect the dwelling unit or residential space at reasonable
times and after reasonable notice. The assisted household family must
notify the owner before vacating the dwelling unit or residential
space, and use the dwelling unit or residential space solely for
residency by the household or family and as the principal place of
residence.
The assisted household or family must not assign the lease or
transfer the unit or residential space; or occupy, or receive
assistance for the occupancy of, a unit or residential space governed
under this part while occupying, or receiving assistance for the
occupancy of, another unit assisted under any Federal housing
assistance program, including any Section 8 programs.
Overcrowded and Under Occupied Units (Sec. 891.912(g))
Under this proposed rule, the owner must comply with the
requirements under Sec. 891.620. Therefore, if the owner determines
that because of a change in family size, an assisted unit is smaller or
larger than appropriate for the eligible family to which it is leased;
SPRAC payments with respect to the unit will not be reduced or
terminated until the eligible family has been relocated to an
appropriate alternate unit. If possible, the owner will, as promptly as
possible, offer the family an appropriate alternate unit. The owner may
receive vacancy payments for the vacated unit if the owner complies
with the requirements of Sec. 891.650, except Sec. 891.650(b) does
not apply.
Lease Requirements (Sec. 891.912(h))
The lease requirements are provided in Sec. 891.425. Section
891.425 applies to capital advances under the Section 202 program and
the Section 811 program, as well as loans financed under subpart E of
part 891. Under Sec. 891.425, the term of the lease may not be less
than one year. Unless the lease has been terminated by appropriate
action, upon expiration of the lease term, the household and owner may
execute a new lease for a term not less than 1 year, or may take no
action. If no action is taken, the lease will automatically be renewed
for successive terms of 1 month.
In addition, all leases may contain a provision that permits the
household to terminate the lease upon 30-day advance notice. A lease
for a term that exceeds 1 year must contain such provision.
Section 891.425 requires the owner to use the lease form as
prescribed by HUD. In addition to required provisions of the lease
form, the owner may include a provision in the lease permitting the
owner to enter the leased premises at any time without advance notice
when there is reasonable cause to believe that an emergency exists or
that health or safety of a family member is endangered.
Adjustment of Rents (Sec. 891.912(i))
The initial project rents shall not exceed the lesser of either
comparable market rents for the market area as specified under the
recipient's rent comparability study (RCS), and approved by HUD.
After initial rent setting, rents shall be adjusted by an OCAF on
the anniversary of each executed SPRAC. Section 514(e)(2) of MAHRA (42
U.S.C. 1437f note) requires HUD to establish guidelines for rent
adjustments based on an OCAF. HUD has therefore developed a single
factor to be applied uniformly to all projects utilizing OCAFs as the
method by which renewal rents are established or adjusted. Under this
subpart, the contract administrator shall conduct annual project rent
adjustments according to the OCAF methodology prescribed under this
notice.
At the expiration of each 5-year period of the SPRAC, the contract
administrator shall compare existing contract rents with comparable
market rents for the market area. At such contract anniversary, the
contract administrator will make any adjustment necessary in the
monthly contract rents necessary to set the contract rents for all unit
sizes at comparable market rents. Such adjustments may result in a
negative adjustment (decrease) or positive adjustment (increase) of the
contract rents for one or more unit sizes.
To assist in the redetermination of contract rents, the contract
administrator may require that the owner submit to the contract
administrator a rent comparability study prepared at the owner's
expense.
The rent payable by families occupying units that are not assisted
[[Page 60607]]
under the SPRAC will be equal to the contract rent.
Adjustment of Utility Allowances (Sec. 891.912(j))
In connection with adjustments of contract rents, as provided in
Sec. 891.905(b), the requirements for the adjustment of utility
allowances, provided in Sec. 891.440, apply.
Conditions for Receipt of Vacancy Payments for Assisted Units (Sec.
891.912(k))
Section 891.912(k) provides that the owner must comply with the
requirements under Sec. 891.650, except Sec. 891.650(b) does not
apply. Therefore, vacancy payments under the SPRAC will not be made
unless the conditions for receipt of these senior preservation rental
assistance payments set forth in this section are fulfilled.
If an eligible family vacates a unit, the owner is entitled to
vacancy payments in the amount of 80 percent of the contract rent for
the first 60 days of vacancy if the owner certifies that it did not
cause the vacancy by violating the lease, the SPRAC, or any applicable
law; and the owner notified HUD of the vacancy or prospective vacancy
and the reasons for the vacancy immediately upon learning of the
vacancy or prospective vacancy. The owner must have fulfilled and
continued to fulfill the requirements specified in Sec. 891.600(a)(2)
and (3), and in this section; and for any vacancy resulting from the
owner's eviction of an eligible family, certify that it has complied
with Sec. 891.630.
If a SPRAC unit remains vacant for more than 60 consecutive days
upon tenant turnover, the owner shall not be eligible to receive
further SPRAC payments for that SPRAC unit.
The unit must have been in decent, safe, and sanitary condition
during the vacancy period for which payment is claimed. The owner must
have fulfilled and continues to fulfill the requirements specified in
this section, as appropriate. The owner must demonstrate to the
satisfaction of HUD that, for the period of vacancy, the project is not
providing the owner with revenues at least equal to project expenses
(exclusive of depreciation) and the amount of payments requested is not
more than the portion of the deficiency attributable to the vacant
unit; and that the project can achieve financial soundness within a
reasonable time.
If the owner collects payments for vacancies from other sources
(tenant rent, security deposits, payments under Sec. 891.435(c), or
governmental payments under other programs), the owner is not entitled
to collect vacancy payments to the extent these collections from other
sources plus the vacancy payment exceed contract rent.
Default by Owner (Sec. 891.914)
If HUD determines that the owner is in default under the SPRAC,
this section provides that HUD will notify the owner in writing of the
actions required to cure the default and of the remedies that must be
satisfied, including specific performance under the SPRAC, and a
reduction or suspension of senior preservation rental assistance
payments and recovery of overpayments or inappropriate payments, where
appropriate.
If HUD determines that the owner is in default of any of the terms
and requirements of the SPRAC, HUD will notify the owner in writing of
the nature of the default, the actions required to cure the default,
and the time within which the default must be cured. The notice will
also identify the remedies that HUD may impose if the default is not
cured within the applicable time. These may include termination of the
SPRAC, reduction or suspension of payments under the SPRAC, and
recovery of overpayments or inappropriate payments, where appropriate.
SPRAC Extension or Renewal (Sec. 891.916)
A Section 202 owner shall agree in writing that upon expiration of
each annual increment of a given SPRAC, the owner shall accept each
offer of annual increment renewal during the period of the use
agreement. Each such offer of a renewal and the renewals themselves are
subject to the availability of appropriations and further subject to
the requirements of this part. The number of assisted units under the
renewed SPRAC must equal the number of assisted units under the
original SPRAC, subject to the availability of appropriations, except
that HUD and the owner may agree to reduce the number of assisted units
by the number of assisted units that are not occupied by eligible
families at the time of the renewal.
With respect to Section 202 Direct Loan prepayments with approved
SPRAC units, each owner shall agree to enter into a Section 202 Direct
Loan use agreement, which will expire at either 20 years beyond the
maturity date of the original Section 202 Direct Loan, or the term of
new financing, whichever is longer. Upon expiration of the term of the
SPRAC and at HUD's sole discretion, the term of the SPRAC may be
renewed or extended (subject to available funds) pursuant to the terms
and conditions of the SPRAC and the use agreement.
Each owner shall agree in writing to operate the assisted Section
202 project for the full term specified under the executed SPRAC and
for each renewal term in accordance with all statutory, regulatory, and
administrative requirements of the SPRAC program.
The number of assisted units under the extended or renewed SPRAC
must equal the number of assisted units under the original SPRAC,
subject to the availability of appropriations, except that HUD and the
owner may agree to reduce the number of assisted units by the number of
assisted units that are not occupied by eligible families at the time
of the extension or renewal.
Denial of Admission, Termination of Tenancy, and Modification of the
Lease (Sec. 891.918)
The regulations of 24 CFR part 5, subpart I, apply to projects
previously financed with Section 202 direct loans under this subpart.
The provisions of 24 CFR part 247 apply to all decisions by an owner to
terminate the tenancy or modify the lease of a family residing in a
unit.
In actions or potential actions to terminate tenancy, the owner
must follow 24 CFR part 5, subpart L, in all cases where domestic
violence, dating violence, stalking, or criminal activity directly
related to domestic violence, dating violence, or stalking is involved
or claimed to be involved.
Security Deposits (Sec. 891.920)
The general requirements for security deposits on assisted units
are provided under Sec. 891.435, with additional requirements under
Sec. 891.635 applying to properties with direct loans. The owner must
maintain a record of the amount in the segregated interest-bearing
account that is attributable to each family in residence in the
project. Annually for all families, and when computing the amount
available for disbursement under Sec. 891.435(b)(3), the owner must
allocate to the family's balance the interest accrued on the balance
during the year.
Unless prohibited by state or local law, the owner may deduct for
the family, from the accrued interest for the year, the administrative
cost of computing the allocation to the family's balance. The amount of
the administrative cost adjustment must not exceed the accrued interest
allocated to the family's balance for the year.
[[Page 60608]]
Labor Standards (Sec. 891.922)
Section 891.922 consists of the labor standards applicable to
assisted units under this subpart. All laborers and mechanics employed
by contractors and subcontractors in the construction, rehabilitation,
or repair performed in connection with the provision of assistance
under this subpart to nine or more units of housing in a project, where
the total cost of such repair, replacement, or capital improvement is
in excess of $500,000, shall be paid wages at rates not less than those
prevailing in the locality, as determined by the Secretary of Labor in
accordance with the Davis-Bacon Act (40 U.S.C. 3141 et seq.). These
standards are consistent with other labor standards under this part,
adjusted for this program.
In addition, contracts involving employment of laborers and
mechanics shall be subject to the provisions of the Contract Work Hours
and Safety Standards Act (40 U.S.C. 3701 et seq.). Sponsors, owners,
contractors, and subcontractors must comply with related rules,
regulations, and requirements as directed by HUD.
B. Service Coordinator in Multifamily Housing and Assisted Living
Conversion Programs (Part 892--New)
General Program Requirements (Subpart A)
Applicability and Scope (Sec. 892.100)
The requirements set forth in this subpart A apply to the Service
Coordinator in Multifamily Housing program, as authorized under
sections 671, 672, 674, 676, and 677 of the Housing and Community
Development Act of 1992 (Pub. L. 102-550, approved October 28, 1992),
as amended by section 851 of the AHEO (Pub. L. 106-569, approved
January 24, 2000); and to the Assisted Living Conversion program, as
authorized under section 202b of the Housing Act of 1959 (12 U.S.C.
1701q-2).
Definitions (Sec. 892.105)
This section defines certain terms applicable to part 892. Certain
terms with definitions unique to the Service Coordinator in Multifamily
Housing and Assisted Living Conversion programs are defined in
Sec. Sec. 892.205 and 892.305, as applicable.
Activities of daily living (ADLs). Under this part, the definition
of ``activities of daily living'' will have the same meaning as Sec.
891.205. HUD has determined that the definition under Sec. 891.205,
which is applicable to the Section 202 program, is also applicable to
the Service Coordinator in Multifamily Housing and Assisted Living
Conversion programs. These programs serve the same populations.
Elderly person. Under this part, an ``elderly person'' means a
person who is at least 62 years of age. This definition is consistent
with the definition of an ``elderly person'' under section 202 of the
Housing Act of 1959.
Eligible housing project. In order to receive assistance under this
part, a project must be an ``eligible housing project,'' which can fall
under one of seven categories as defined under section 202b(b) of the
Housing Act of 1959 (12 U.S.C. 1701q-2). An eligible housing project
can be housing that:
--Receives project-based assistance under section 8 of the 1937 Act (42
U.S.C. 1437f);
--Is assisted under section 202 of the Housing Act of 1959 (12 U.S.C.
1701q);
--Is assisted under section 202 of the Housing Act of 1959, as such
section existed before the enactment of the NAHA;
--Is financed by a loan or mortgage insured under section 221(d)(3) of
the National Housing Act (12 U.S.C. 1715) that bears interest at a rate
determined under section 221(d)(5) of such Act;
--Is assisted under section 515 of the Housing Act of 1949 (42 U.S.C.
1485), which authorizes assistance for rural housing projects and such
projects are also receiving rental assistance under the 1937 Act;
--Is insured, assisted, or held by the Secretary, a state, or a state
agency under section 236 of the National Housing Act (12 U.S.C. 1715z-
1);
--Is constructed or substantially rehabilitated pursuant to assistance
provided under section 8(b)(2) of the 1937Act (42 U.S.C. 1437f), as in
effect before October 1, 1983, and that is assisted under a contract
for assistance under such section.
Each of these categories may provide for assisted living facilities
or service-enriched housing, as authorized under this part.
Frail elderly person. A ``frail elderly person'' is an elderly
person who is unable to perform at least three of the activities of
daily living. This definition is similar to Sec. 891.205. HUD has
determined that the definition under Sec. 891.205, which is applicable
to the Section 202 program, is also applicable to the Service
Coordinator in Multifamily Housing and Assisted Living Conversion
programs. These programs serve the same populations.
Functional limitations. The definition of ``functional
limitations'' will be the same as Sec. 891.205.
Housing assistance. The definition of ``housing assistance'' will
apply only to federally assisted housing as provided under this part.
``Housing assistance'' is defined to mean the grant, contribution,
capital advance, loan, mortgage insurance, or other assistance provided
for an eligible housing project, as defined under this section. This
term also includes any assistance provided for the housing by HUD,
including any rental assistance for low-income occupants.
Instrumental activities of daily living (IADLs). Under this part,
the definition of instrumental activities of daily living has the same
meaning as in Sec. 891.205
Low-income and very low-income family. Under this part, the
definitions for ``low-income family'' and ``very low-income family''
will have the same meanings as provided under section 3(b)(2) of the
1937 Act.
Owner. The definition of ``owner'' will have the same meaning as
provided under Sec. 891.205. HUD has determined that the definition
under Sec. 891.205, which is applicable to the Section 202 program, is
also applicable to the Service Coordinator in Multifamily Housing and
Assisted Living Conversion programs. These programs serve the same
populations.
Person with disabilities. Under this part, a ``person with
disabilities'' will have the same meaning as provided under Sec.
891.305. HUD has determined that the definition under Sec. 891.305,
which is applicable to the Section 811 program, is also applicable to
the Service Coordinator in Multifamily Housing and Assisted Living
Conversion programs. These programs serve the same populations.
Private nonprofit organization. The definition of ``private
nonprofit organization'' will have the same meaning as provided under
Sec. 891.205. HUD has determined that the definition under Sec.
891.205, which is applicable to the Section 202 program, is also
applicable to the Service Coordinator in Multifamily Housing and
Assisted Living Conversion programs. These programs serve the same
populations.
Retain. The definition of ``retain'' means service coordination
performed by a partnering agency that results in a reduction to the
project's cost to hire or contract a service coordinator.
Service coordinator. The definition of ``service coordinator''
means a social service person hired, contracted, or retained by the
assisted housing owner or its management company, who assists residents
in identifying, locating, and acquiring supportive services necessary
for elderly persons and
[[Page 60609]]
nonelderly persons with disabilities to live independently and age in
place.
Supportive services. Under this part, ``supportive services'' mean
health-related services, mental health services, services for
nonmedical counseling, meals, transportation, personal care, bathing,
toileting, housekeeping, chore assistance, safety, group and
socialization activities, assistance with medications (in accordance
with any applicable state laws), case management, personal emergency
response, and other appropriate services that are designed to prevent
hospitalization or institutionalization and permit elderly residents to
age in place and live independently in a residential setting. The
services may be provided through any agency of the Federal, state, or
local government or other public or private department, agency, or
organization.
Service expenses. Under this part, the definition of ``service
expenses'' means those costs of providing supportive services necessary
to permit residents to live independently, age in place, and prevent
hospitalization or institutionalization.
Vicinity of the housing project. The definition of ``vicinity of
the housing project'' means the area close enough to the eligible
housing project to allow for easy access by individuals to the service
coordinator's office space, and by service coordinators to individuals'
residences.
Eligible Funding Recipients (Sec. 892.110)
This section provides that recipients who receive assistance under
the Service Coordinator in Multifamily Housing and Assisted Living
programs must own an eligible housing project, as defined in Sec.
892.105, and comply with any regulatory agreement, housing assistance
payment (HAP) contract, or any other HUD grant or contract, where
applicable. In addition, recipients must be current in mortgage
payments for any FHA-insured loan or Section 202 direct loan, unless
the entity has signed a work-out agreement for the delinquent loan, and
is current on and in compliance with the workout agreement, as
applicable. Recipient must also meet the Physical Condition Standards
in 24 CFR part 5, subpart G, as evidenced by a satisfactory score in
the most recent final physical inspection report or by an approved
work-out plan for housing projects that received a failing score.
Nondiscrimination and Equal Opportunity Requirements (Sec. 892.115)
This section provides the nondiscrimination and equal opportunity
requirements for recipients who receive assistance under the Service
Coordinator in Multifamily Housing and Assisted Living programs.
Recipients must comply with all applicable nondiscrimination and equal
opportunity requirements, including HUD's generally applicable
nondiscrimination and equal opportunity requirements at 24 CFR
5.105(a). This includes, but is not limited to, the Fair Housing Act
and its implementing regulations at 24 CFR part 100; title VI of the
Civil Rights Act of 1964 and its implementing regulations at 24 CFR
part 1; section 504 of the Rehabilitation Act of 1973 and its
implementing regulations at 24 CFR part 8; and titles II and III of the
Americans with Disabilities Act and their implementing regulations at
28 CFR parts 35 and 36.
In addition, recipients must affirmatively further fair housing in
their use of funds for the programs under this part. Specific
activities will be detailed in the individual program NOFAs.
Lastly, recipients must ensure that programs or activities are
administered in the most integrated setting appropriate to the needs of
qualified individuals with disabilities. The ``most integrated
setting'' is defined as a setting that enables individuals with
disabilities to interact with nondisabled persons to the fullest extent
possible.\3\
---------------------------------------------------------------------------
\3\ This direction is consistent with HUD's guidance on the U.S.
Supreme Court landmark decision in Olmstead v. L.C., 527 U.S. 581
(1999), affirming that unjustified segregation of individuals with
disabilities is a form of discrimination prohibited by title II of
the Americans with Disabilities Act (ADA). See http://portal.hud.gov/hudportal/documents/huddoc?id=OlmsteadGuidnc060413.pdf. This guidance is consistent with
efforts across Federal agencies and in many states to provide health
care and related support and services for individuals with
disabilities in the most integrated setting appropriate to their
needs.
---------------------------------------------------------------------------
Environmental Requirements (Sec. 892.120)
This section provides the environmental requirements that apply to
the Service Coordinator in Multifamily Housing and Assisted Living
programs. The National Environmental Policy Act of 1969, and HUD's
implementing regulations at 24 CFR part 50, including the related
authorities described in 24 CFR 50.4, apply to this part. In addition,
if funding under subpart B will be used to cover the cost of any
activities that are not exempt from environmental review requirements,
such as acquisition, leasing, construction, or building rehabilitation,
HUD must perform an environmental review to the extent required by 24
CFR part 50. Such environmental review must be performed before the
grant award.
Service Coordinator in Multifamily Housing Program (Subpart B)
Purpose and Applicability (Sec. 892.200)
As explained in this section, the Service Coordinator in
Multifamily Housing program allows owners of eligible projects to
assist elderly persons and nonelderly persons with disabilities living
in HUD-assisted housing and in the vicinity of the housing project to
obtain needed supportive services from the community that enable
independent living and aging in place. HUD makes funds available to
employ and support a service coordinator by awarding grants and by
approving owners' requests to use certain classes of project funds.
Thus, the requirements set forth in this subpart B apply only to the
Service Coordinator in Multifamily Housing program, as authorized under
sections 671, 672, 674, 676, and 677 of the Housing and Community
Development Act of 1992.
Definitions (Sec. 892.205)
This section defines certain terms applicable to the Service
Coordinator in Multifamily Housing program (subpart B). The definitions
under Sec. 892.105 also apply.
At-risk elderly person. The definition of ``at-risk elderly
person'' means an elderly person who is unable to perform one or two of
the ADLs, as defined under Sec. 892.105. Defining this category of
elderly will help to determine the various levels of ADL needed, as
well as ensure that the services provided by service coordinators are
not limited to only those residents defined as ``frail elderly.'' The
definition will also serve as a means for owners to identify those
residents who may have higher ADL needs in the future. Estimating
future supportive service needs supports HUD's efforts to ensure
elderly residents age in place.
Available funds. Under this subpart, ``available funds'' means
funds for supportive services, as approved by HUD, and must not be used
to address critical property needs.
Eligible project. Under this subpart, an ``eligible project'' is
defined to include an eligible housing project as defined in Sec.
892.105. ``Eligible project'' also includes a project that has no
``project funds,'' as defined under Sec. 892.105, available to pay for
a service coordinator, and that is designed or designated for the
elderly or persons with disabilities and continues to
[[Page 60610]]
operate as such. This latter project includes any building within a
mixed-use development that was designed for occupancy by elderly
persons or persons with disabilities at its inception and continues to
operate as such, or consistent with title VI, subtitle D, of the
Housing and Community Development Act of 1992 (Pub. L. 102-550). If a
project was not designed at its inception for occupancy by elderly
persons or persons with disabilities, an eligible project includes a
property in which the owner gives preferences in tenant selection (with
HUD approval) to eligible elderly persons or nonelderly persons with
disabilities for all units in that property.
Sources of Funding (Sec. 892.210)
This section provides that owners of eligible housing projects may
request the use of or apply for different types of funding to cover
Service Coordinator in Multifamily Housing program expenses. Service
coordinator expenses will be considered an eligible project expense, in
accordance with Sec. 891.250(b). Amounts available for such costs
include funding provided through section 8 of the 1937 Act (42 U.S.C.
1437f), and PRACs, pursuant to section 802 of NAHA (42 U.S.C. 8011);
income generated from these programs or from tenant rental payments
that exceed operating expenses and that may be used only upon approval
from HUD; and multifamily service coordinator grants, subject to and
consistent with the availability of appropriations.
Application and Selection (Sec. 892.215)
HUD will provide through a NOFA the form and manner of applications
for grants under this subpart and for selection of applicants to
receive such grants.
Duties (Sec. 892.220)
This section outlines the duties of service coordinators, as
required under section 671 of the Housing and Community Development Act
of 1992 (42 U.S.C. 13631). Service coordinators must perform an
initial-needs screening, and subsequent annual reviews, to identify
service needs. If a comprehensive assessment is required, the service
coordinator must refer the tenant to a qualified professional. For
residents identified through such screening, service coordinators must
refer and link residents to an agency in the community that provides
supportive service; monitor the ongoing provision of services from
community agencies; and manage the provision of supportive services
where appropriate. Service coordinators may provide case management
when such service is not available through the general community.
Service coordinators must also educate residents on matters such as
service availability, application procedures, and client rights, and
provide advocacy as appropriate; maintain detailed case files on each
resident served; help the residents build informal support networks
with other residents, family and friends; establish linkages with
agencies such as, but not limited to, local Area Agencies on Aging
(AAA)/Aging and Disability Resource Centers (ADRC), and home and
community-based service providers, to enhance service provision; and
create a directory of providers for use by both housing staff and
residents. Service coordinators must affirmatively market the service
coordinator's services to residents of the property and surrounding
community who are least likely to inquire, and find counselors to help
tenants with counseling for mobility and fair housing choice. Service
coordinators may work and consult with tenant organizations and
resident management corporations; provide training to residents of the
project in the obligations of tenancy or coordinate such training; and
may carry out other appropriate activities for residents of the
eligible housing project or for low-income elderly and persons with
disabilities living in the vicinity of the eligible housing project.
However, there are also activities that service coordinators must
not perform. Service coordinators must not act as a recreational or
activities director, or provide supportive services directly.
Qualifications (Sec. 892.225)
This section provides the qualification requirements that
individuals must meet to participate in the Service Coordinator in
Multifamily Housing program as service coordinators. As set forth in
this section, service coordinators must possess a bachelor's degree and
have experience in social service delivery for the elderly and persons
with disabilities. In addition, service coordinators must demonstrate a
working knowledge of supportive services and other resources available
for the elderly and persons with disabilities in the area served by the
eligible housing project, and the ability to advocate, organize,
problem-solve, and provide results for the elderly and persons with
disabilities. However, this section provides for HUD to substitute a
bachelor's degree based on the extent of qualifications, as set forth
in paragraphs (b) through (d) of this section, and/or other
qualifications that the service coordinator may present. The extent of
qualifications will be determined by HUD through a NOFA.
Form of Employment or Retention (Sec. 892.230)
This section states that an owner may directly employ a service
coordinator or may procure by contract the services of a service
coordinator. Owners may also utilize a service coordinator whose
expenses are supported by external sources of funding.
Training (Sec. 892.235)
As required under section 672 of the Housing and Community
Development Act of 1992 (42 U.S.C. 8011(d)(4)), this section provides
that service coordinators must receive and document training, at
minimum, in the following subject areas: The aging process; elderly and
disability services; eligibility for and procedures of Federal and
applicable state entitlement programs; legal liability issues relating
to providing service coordination; drug and alcohol use and abuse by
the elderly; and mental health issues.
Administrative Requirements (Sec. 892.240)
This section describes the administrative requirements for the
Service Coordinator in the Multifamily Housing program. Owners must
provide on-site private office space for the service coordinator to
allow for confidential meetings with residents. Such office space must
be accessible to persons with disabilities and meet all Federal
accessibility standards, including section 504 of the Rehabilitation
Act of 1973, 24 CFR part 8, and titles II and III of the Americans with
Disabilities Act of 1990, as applicable. In addition, resident files
must be kept in a secured location and only be accessible to the
service coordinator as required under Sec. 892.245, unless the
residents provide signed consent otherwise. Resident files must include
documentation that demonstrates the resident's supportive service
needs, referrals for needed supportive services (both short- and long-
term) and follow-up from the service coordinator on the types and
amounts of services residents receive, and any aging-in-place
statistics or information. As directed, performance reports completed
by the service coordinator and financial reports detailing program
expenses must be submitted by the owner to HUD.
Confidentiality (Sec. 892.245)
Under the Service Coordinator in Multifamily Housing program,
service
[[Page 60611]]
coordinators must store, in a secure manner, all files containing
information related to the provision of supportive services for
residents. Files must be accessible only to the service coordinator. A
service coordinator may not disclose to any person any individually
identifiable information that relates to the provision of supportive
services to a resident, unless the resident has knowingly consented.
Any such consent must be in writing and be signed by the resident, and
must clearly identify the parties to whom the information may be
disclosed, as well as the scope and purpose of the disclosure. If there
is no applicable consent to disclosure, service coordinators may
disclose individually identifiable information that relates to the
provision of supportive services to a resident, to the extent necessary
to protect the safety or security of a resident, housing project staff,
or the housing project. However, confidentiality policies must be
consistent with maintaining confidentiality of information related to
any individual as required by the Privacy Act of 1974 (5 U.S.C. 552a).
Program Costs (Sec. 892.250)
This section provides the eligible and ineligible program costs for
the Service Coordinator in Multifamily Housing program. Funds may be
used to cover the costs of employing or otherwise retaining the
services of one or more service coordinators. Eligible program expenses
include salary and fringe benefits; training; creating private office
space; purchase of office furniture and equipment, supplies and
materials, computer hardware, software, and Internet service; and other
related administrative expenses approved by HUD.
Eligible costs must be reasonable, necessary, and recognized as
expenditures in compliance with the uniform government-wide cost
principles and other grant requirements found in HUD's regulations at
24 CFR part 84 (for private nonprofit organizations) and part 85 (for
governments). Grant recipients must additionally be subject to
allowable cost provisions in NOFAs and grant agreements. Owners of
eligible housing projects who use a class or classes of project funds
under this program must comply with the requirements that are
applicable to approved withdrawals or uses of the class or classes of
project funds under their governing agreements with HUD.
Ineligible program expenses are any costs that are not directly
related to employing the service coordinator. Examples of ineligible
program expenses are expenses associated with holiday parties, purchase
of televisions or exercise equipment, and recreational activities for
residents.
Services for Low-Income Elderly or Persons With Disabilities (Sec.
892.255)
This section provides that a service coordinator funded under Sec.
892.210 may provide services to low-income elderly individuals or
nonelderly persons with disabilities living in the vicinity of an
eligible housing project. Community residents choosing to seek
assistance from a service coordinator must come to the eligible housing
project to meet with and receive assistance from the service
coordinator. Service coordinators must make reasonable accommodations
for those persons with disabilities unable to travel to the housing
project, and have the option to make accommodations for other community
residents.
Sanctions (Sec. 892.260)
This section provides the sanctions for noncompliance with the
requirements of the Service Coordinator in Multifamily Housing program.
If HUD determines that an owner has not complied with the requirements
of this subpart, then HUD may impose any or a combination of sanctions
as listed in this section. HUD may temporarily withhold reimbursements,
approvals, extensions, or renewals until the owner adequately remedies
the deficiency. HUD may disallow all or part of the cost attributable
to activities undertaken not in compliance with applicable
requirements, and if applicable, require the owner to remit to HUD, or
to redeposit in the source, account funds in the amount that has been
disallowed. HUD may suspend or terminate, in part or in whole, the
grant or approval to use project funds. HUD may place conditions on the
awards of grants or approvals of one or more classes of project funds
so that the deficiency be remedied and that adequate steps be taken to
prevent future deficiencies. Lastly, HUD may impose other sanctions
authorized by law or regulation.
Assisted Living Conversion Program (Subpart C)
Purpose and Applicability (Sec. 892.300)
This section describes the purpose of the Assisted Living
Conversion program. This program provides grants for the physical
conversion of eligible multifamily assisted housing developments to
assisted living facilities or service-enriched housing for the elderly.
Grants provided under this program must be used for the purposes
described in section 202b of the Housing Act of 1959 (12 U.S.C. 1701q-
2). In addition, the requirements set forth in this subpart C apply
only to eligible projects under the Assisted Living Conversion program,
as authorized under section 202b(b)(1) of the Housing Act of 1959 (12
U.S.C. 1701q-2).
Definitions (Sec. 892.305)
This section defines certain terms applicable to the Assisted
Living Conversion program (subpart C). The definitions under Sec.
892.105 also apply.
Assisted living facility (ALF). Under this subpart, an ``assisted
living facility'' will have the same meaning as provided under section
232(b) of the National Housing Act (12 U.S.C. 1715w(b)). Under this
statute, an ``assisted living facility'' means a public facility,
proprietary facility, or facility of a private nonprofit corporation.
Each of these facilities must be licensed and regulated by the state
(or if there is no state law providing for such licensing and
regulation by the state, by the municipality or other political
subdivision in which the facility is located). Such facility must make
available to residents supportive services to assist the residents in
carrying out activities of daily living (as defined under Sec.
891.205). Lastly, such facility must provide separate dwelling units
for residents, each of which contain a full bathroom and may contain a
full kitchen, and include common rooms and other facilities appropriate
for the provision of supportive services to the residents of the
facility.
Congregate space. ``Congregate space,'' otherwise known as
community space, shall have the same meaning as provided under section
202(h)(1) of the Housing Act of 1959 (12 U.S.C. 1701q(h)(1)). This term
excludes halls, mechanical rooms, laundry rooms, parking areas,
dwelling units, and lobbies. Community space does not include
commercial areas.
Conversion. The definition of ``conversion'' means activities in an
eligible project designed to convert dwelling units into assisted
living facilities. Conversion can include unit configuration and
related common and service space, and any necessary remodeling,
consistent with the Uniform Federal Accessibility Standards, section
504 of the Rehabilitation Act of 1973, and HUD's implementing
regulations at 24 CFR part 8, as well as any applicable provisions of
the Americans with Disabilities Act of 1990 and applicable Fair Housing
Act design and construction requirements
[[Page 60612]]
for all portions of the development physically affected by such
conversion. Where conversion may involve Medicaid reimbursement,
conversion should be undertaken in accordance with the Home and
Community-Based Services regulations of the U.S. Department of Health
and Human Services (see 42 U.S.C. part 441.)
Eligible project. An ``eligible project'' under this subpart means
eligible housing projects as defined under Sec. 892.105; eligible
projects as described in section 638(2) of the Housing and Community
Development Act; and section 202 properties, as defined under Sec.
891.105, with a PRAC.
Emergency capital repairs. ``Emergency capital repairs'' are
repairs to a project that correct a situation that presents an
immediate threat to the life, health, and safety of the project
tenants, and if left untreated, would result in an evacuation of the
tenants or long-term tenant displacement.
Repairs. Under the Assisted Living Conversion, ``repairs'' mean
substantial and emergency capital repairs to a project that are needed
to rehabilitate, modernize, or retrofit aging structures, common areas,
or individual dwelling units.
Service-enriched activities. This section defines ``service-
enriched activities'' as activities designed to convert dwelling units
in the eligible project to service-enriched housing for elderly
persons, as applicable under the Assisted Living Conversion program.
Service-enriched housing. This section defines ``service-enriched
housing'' as housing that makes available, through licensed or
certified third party service providers, supportive services to assist
the residents in carrying out activities of daily living. Under this
definition, ``activities of daily living'' means the definition under
Sec. 891.205. ``Service-enriched housing'' is housing that has a
service coordinator, which may be funded as an operating expense of the
property; provides separate dwelling units for residents, each of which
contain a full bathroom and may contain a full kitchen; includes common
rooms and other facilities appropriate for the provision of supportive
services to the residents of the housing; and provides residents with
control over health care and supportive services decisions, including
the right to accept, decline, or choose such services and to have the
choice of a provider.
Other Federal Requirements (Sec. 892.310)
This section is similar to section 891.155 (Other Federal
requirements) that is being revised by this proposed rule; however, the
contents of this section are tailored to the program in this subpart.
In addition to the requirements set forth in 24 CFR part 5, the
requirements in this section apply to the Assisted Living Conversion
program under this subpart.
In particular, this section incorporates requirements applicable
for the rehabilitation, other construction, and related activities to
be undertaken for the conversions to be conducted under this subpart.
The introductory paragraph of this section is more focused than its
counterpart in Sec. 891.155, because the scope of this subpart is
narrower. Similarly, Sec. 891.155(e)(3), on acquisition, is not
incorporated into this subpart based on the presumption that
acquisitions will not be assisted under this program. Acquisitions may
be assisted under one or more other HUD programs, and their regulations
would apply to the acquisition.
In addition, all laborers and mechanics (other than volunteers
under the conditions set out in 24 CFR part 70) employed by contractors
and subcontractors in the construction (including rehabilitation) of
housing with 12 or more units assisted under this program must be paid
wages at rates not less than those prevailing in the locality, as
determined by the Secretary of Labor in accordance with the Davis-Bacon
Act (40 U.S.C. 276a-276a-5). A group home for persons with disabilities
is not covered by the labor standards under this paragraph. Contracts
involving employment of laborers and mechanics under this subpart shall
be subject to the provisions of the Contract Work Hours and Safety
Standards Act (40 U.S.C. 327-333). Sponsors, owners, contractors, and
subcontractors must comply with all rules, regulations, and
requirements related to the Davis-Bacon Act (40 U.S.C. 276a-276a-5).
The Lead Safe Housing regulations (LSHR) (24 CFR 35, subparts B-R)
is incorporated in the proposed Sec. 892.310(h) because children under
age 6 are not prohibited from residing in pre-1978 supportive housing
for the elderly under this new subpart. When children under age 6
reside in or are expected to reside in supportive housing for the
elderly under this subpart, such housing must abide by the requirements
under the LSHR. When children under age 6 do not reside in nor are
expected to reside in supportive housing for the elderly under this
subpart, such housing is not required to abide by the requirements
under the LSHR. HUD will determine, on a case-by-case basis, whether
supportive housing for the elderly under this subpart must abide by the
requirements under the LSHR.
Additional Project Eligibility (Sec. 892.315)
This section provides that, in addition to the criteria for
eligible housing projects as defined under Sec. 892.105, projects
receiving Assisted Living Conversion Program (ALCP) funds must also
meet certain criteria as provided under section 202b(b) of the Housing
Act of 1959 (12 U.S.C. 1701q-2(b)). The project must be owned by a
private nonprofit organization, as defined under section 202 of the
Housing Act of 1959 (12 U.S.C. 1701q). The project must be designated
primarily for occupancy by elderly persons, and the project may be
unused or underutilized commercial property, except that HUD may not
provide grants under this section for more than three such properties.
Notice of Funding Availability (Sec. 892.320)
This section provides that HUD will issue a separate notice of
funding availability (NOFA) for the Assisted Living Conversion program.
The NOFA will contain specific information on how and when to apply for
the grant authority, the contents of the application, and the selection
process.
As authorized under section 202b(c) of the Housing Act of 1959 (12
U.S.C. 1701q-2(c)), HUD has broad discretion to set the requirements
for applications for assistance under this subpart. This section
provides that an application for assistance under this subpart must
contain certain requirements, in addition to the requirements outlined
in the NOFA. The application must contain a description of the
substantial capital repairs or the proposed conversion activities for
either an assisted living facility or service-enriched housing for
which a grant under this subpart is requested. The application must
contain the amount of the grant requested to complete the substantial
capital repairs or conversion activities, and a description of the
resources that are expected to be made available, if any, in
conjunction with the requested funding.
Requirements for Services (Sec. 892.325)
HUD will ensure that assistance under this subpart provides firm
commitments for the funding of services to be provided in the assisted
living facility or service-enriched housing as described in section
202b(d)(1) of the Housing Act of 1959 (12 U.S.C. 1701q-2(d)(1)). In
addition, HUD will require evidence that each recipient of a grant for
service-enriched housing provide relevant and timely disclosure of
information to
[[Page 60613]]
residents or potential residents as described in section 202b(d)(2) of
the Housing Act of 1959 (12 U.S.C. 1701q-2(d)(2)).
Section 8 Project-Based Assistance (Sec. 892.330)
This section provides that multifamily projects, which include one
or more dwelling units that have been converted to assisted living
facilities or service-enriched housing using funding made under this
subpart, are eligible for project-based assistance under section 8 of
the United States Housing Act of 1937 (42 U.S.C. 1437f). Such project-
based assistance is provided in the same manner in which the project
would be eligible for such assistance, but for the assisted living
facilities or service-enriched housing in the project. The maximum
monthly rent of a dwelling unit that is an assisted living facility or
service-enriched housing that receives section 8 assistance under this
section(Sec. 892.330) must not include charges attributable to
services relating to assisted living.
Vacancy Payment (Sec. 892.335)
A vacancy payment, under the Assisted Living Conversion program, is
limited to 30 days after a conversion to an assisted living facility.
IV. Findings and Certifications
Regulatory Review--Executive Orders 12866 and 13563
Under Executive Order 12866 (Regulatory Planning and Review), a
determination must be made whether a regulatory action is significant
and, therefore, subject to review by the Office of Management and
Budget (OMB) in accordance with the requirements of the order.
Executive Order 13563 (Improving Regulations and Regulatory Review)
directs executive agencies to analyze regulations that are outmoded,
ineffective, insufficient, or excessively burdensome, and to modify,
streamline, expand, or repeal them in accordance with what has been
learned. Executive Order 13563 also directs that, where relevant,
feasible, and consistent with regulatory objectives, and to the extent
permitted by law, agencies are to identify and consider regulatory
approaches that reduce burdens and maintain flexibility and freedom of
choice for the public. This rule was determined to be a ``significant
regulatory action'' as defined in section 3(f) of the order (although
not an economically significant regulatory action under the order).
Consistent with Executive Order 13563, this rule revises the existing
part 891 regulations for the supportive housing programs for the
elderly and persons with disabilities to implement not only new
flexible provisions required by the legislation signed into law on
January 4, 2011, but from HUD's own review of the existing regulations
and where improvements could be made based on experience.
The costs and benefits of this rule are discussed in detail in the
regulatory impact analysis (RIA) and a summary of the costs and
benefits are found in the executive summary in this preamble.
The rule and the RIA are available for public inspection on
www.regulations.gov. These documents are also available for public
inspection in the Regulations Division, Office of the General Counsel,
Room 10276, 451 7th Street SW., Washington, DC 20410-0500. Due to
security measures at the HUD Headquarters building, please schedule an
appointment to review the docket file by calling the Regulations
Division at 202-402-3055 (this is not a toll-free number). Individuals
with speech or hearing impairments may access this number via TTY by
calling the Federal Relay Service, at toll-free, 800-877-8339.
Information Collection Requirements
The information collection requirements contained in this proposed
rule have been submitted to the OMB under the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3520). In accordance with the Paperwork
Reduction Act, an agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information, unless the
collection displays a currently valid OMB control number.
The burden of the information collections in this proposed rule is
estimated as follows:
Reporting and Recordkeeping Burden for Parts 891 and 892
----------------------------------------------------------------------------------------------------------------
Response
Section reference Number of frequency Total annual Burden hours Total annual
respondents (average) responses per response hours
----------------------------------------------------------------------------------------------------------------
Sec. 891.190--documentation to 100 1 100 20 2,000
support approval of ePRAC......
Sec. 891.308(b)(2)(ii)-- 20 1 20 0.5 10
application for waiver.........
Sec. 891.335--documentation to 10 1 10 16 160
support conversion.............
Sec. 891.410--documentation of 30 1 30 2 60
elderly individuals who can
support having functional
limitations....................
Sec. 891.430--notification to 300 1 300 1 300
tenant of termination of
tenancy........................
Sec. 891.530--documentation 280 1 280 2 560
necessary to approve prepayment
Sec. 891.700--documentation 280 1 280 2 560
necessary to approve prepayment
Sec. 891.800--information to 15 1 15 20 300
be included in RAC.............
Sec. 891.882--information 15 1 15 1 15
required by agreement; MOU,
plan of participating agencies.
Sec. 892.210(a)--information 50 1 50 2 100
required for project income use
Sec. 892.210(b)--information 1700 1 1700 2 3,400
required for renewals..........
Sec. 892.210(b)--information 200 1 200 40 8,000
required for grant funding.....
Sec. 892.315--information 50 1 50 40 2,000
required for funding...........
-------------------------------------------------------------------------------
Total:...................... .............. .............. .............. 148.5 17,465
----------------------------------------------------------------------------------------------------------------
In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments
from members of the public and affected agencies concerning this
collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the
[[Page 60614]]
functions of the agency, including whether the information will have
practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize 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. Comments must refer
to the proposal by name and docket number (FR-5576-P-01) 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
Reports Liaison Officer
Office of Housing
Department of Housing and Urban Development
451 Seventh Street SW. Room 9116
Washington, DC 20410-8000
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 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.
Environmental Impact
A Finding of No Significant Impact (FONSI) with respect to the
environment has been made for this proposed rule in accordance with HUD
regulations at 24 CFR part 50, which implement section 102(2)(C) of the
National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The
FONSI is available for public inspection between 8 a.m. and 5 p.m.,
weekdays, in the Regulations Division, Office of General Counsel,
Department of Housing and Urban Development, 451 7th Street SW., Room
10276, Washington DC 20410-0500. Due to security measures at the HUD
Headquarters Building, an advance appointment to review the FONSI must
be scheduled by calling the Regulations Division at 202-708-3055 (not a
toll free number).
Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
(UMRA) establishes requirements for Federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments and on the private sector. This proposed rule does not
impose a Federal mandate on any state, local, or tribal government, or
on the private sector, within the meaning of UMRA.
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.
As has been discussed in this preamble, this proposed rule is
largely directed to: Establishing the requirements and procedures for
the use of new project rental assistance for supportive housing for
persons with disabilities; implementing an enhanced project rental
assistance contract; providing for an allowance of a set-aside for a
number of units for elderly individuals with functional limitations or
other category of elderly individuals as defined in the NOFA; revising
the requirements for the prepayment of certain loans for supportive
housing for the elderly; implementing a new form of rental assistance
called senior preservation rental assistance contracts (SPRACs);
modernizing the capital advance for supportive housing for persons with
disabilities; and establishing the requirements that will be applicable
to grant assistance for applicants without sufficient capital to
prepare a site for a funding competition.
This rule also proposes to establish the regulations for the
Service Coordinator in Multifamily Housing program and Assisted Living
Conversion program, long-term grant programs for which there have not
been regulations promulgated to date.
The statutory changes to the Section 202 program and Section 811
program, for which this rule proposes regulations, increase flexibility
with respect to use of funds and administration of these programs. This
flexibility benefits all participants in these programs, small and
large entities. In addition to the statutory changes that increase
flexibility to these programs, HUD proposes, administratively,
regulatory changes to the Section 202 program and Section 811 program
that would further increase administrative flexibility.
Given the proposed rule's goal to reduce burden and increase
flexibility in the programs covered by this rule, HUD has determined
that it would 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 effect on a substantial number of
small entities, HUD specifically invites comments regarding any less
burdensome alternatives to this rule that will meet HUD's objectives as
described in this preamble.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has Federalism implications if the rule
either (1) imposes substantial direct compliance costs on state and
local governments and is not required by statute, or (2) preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive order. This proposed rule does not have
Federalism implications and does not impose substantial direct
compliance costs on state and local governments nor preempt state law
within the meaning of the Executive order.
List of Subjects in
24 CFR Part 891
Capital advances, Persons with disabilities, Project rental
assistance, Supportive housing for persons with disabilities,
Supportive services.
24 CFR Part 892
Service Coordinator, Assisted Living Conversion, Elderly Persons,
Persons with Disabilities, and Supportive Services.
Accordingly, for the reasons described in the preamble, HUD
proposes to amend 24 CFR part 891 and add a new part 892 to read as
follows:
PART 891--SUPPORTIVE HOUSING FOR THE ELDERLY AND PERSONS WITH
DISABILITIES
0
1. The authority citation for 24 CFR part 891 continues to read as
follows:
Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437f, 3535(d), and 8013.
[[Page 60615]]
0
2. In Sec. 891.100, revise paragraph (a) to read as follows:
Sec. 891.100 Purpose and policy.
(a) Purpose. The Section 202 Program of Supportive Housing for the
Elderly and the Section 811 Program of Supportive Housing for Persons
with Disabilities provide Federal capital advances and project rental
assistance under section 202 of the Housing Act of 1959 (12 U.S.C.
1701q) (section 202) and section 811 of the National Affordable Housing
Act (42 U.S.C. 8013) (section 811), respectively, for housing projects
serving elderly households and persons with disabilities. Section 202
projects shall provide a range of voluntary services that are tailored
to the needs of the residents. Owners of Section 811 projects shall
ensure that the residents are offered, but are not required to accept,
any necessary supportive services that address their individual needs.
* * * * *
0
3. Section 891.105 is revised by amending the introductory paragraph;
revising the definitions of ``family,'' ``operating costs,'' ``project
rental assistance contract,'' and ``project rental assistance
payment''; and adding, in alphabetical order, the definition of
``enhanced project rental assistance contract;'' to read as follows:
Sec. 891.105 Definitions.
The following definitions apply, as appropriate, throughout this
part. Other terms with definitions unique to the particular program are
defined in Sec. Sec. 891.205, 891.305, 891.505, 891.805, 891.872, and
891.892, as applicable.
* * * * *
Enhanced project rental assistance contract (ePRAC) means the
contract entered into by the nonprofit organization and HUD setting
forth the rights and duties of the parties with respect to the project
and the payments under the ePRAC. An enhanced project rental assistance
contract is made available for:
(1) Sponsors submitting a new application under section 811 of the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013) or
under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) and who
are accessing private capital, to fund the construction or provide
permanent financing for supportive housing units for the elderly or
persons with disabilities:
(2) Owners of existing 202 and 811 capital advance properties. Such
contract would allow for the inclusion of debt service as an eligible
expense for the units covered by the contract.
* * * * *
Family(ies) means an Elderly Family as defined in Sec. 891.505,
and may include a ``Disabled Family,'' as defined in Sec. 891.505,
pursuant to the terms and conditions of an applicant's original Section
202 loan.
* * * * *
Operating costs means HUD-approved expenses related to the
provision of housing and includes:
(1) Administrative expenses, including salary and management
expenses related to the provision of shelter and, in the case of the
Section 202 Program, the coordination of services;
(2) Maintenance expenses, including routine and minor repairs and
groundskeeping;
(3) Security expenses;
(4) Utilities expenses, including gas, oil, electricity, water,
sewer, trash removal, and extermination services;
(5) Taxes and insurance;
(6) Allowances for reserves;
(7) Allowances for services (in the Section 202 Program only); and
(8) Allowances for debt service only for units in new or existing
202 and 811 capital advance properties covered by an ePRAC in
accordance with the requirements in Sec. 891.190.
Project rental assistance contract (PRAC) means the contract
entered into by the Owner and HUD setting forth the rights and duties
of the parties with respect to the project and the payments under the
PRAC, except for project rental assistance provided under subpart G and
units covered by ePRACs under Sec. 891.190 in subpart A.
Project rental assistance payment means the payment made by HUD to
the Owner for assisted units as provided in the PRAC or ePRAC, except
for project rental assistance provided under subpart G. The payment is
the difference between the total tenant payment and the HUD-approved
per-unit operating expenses except for expenses related to items not
eligible under design and cost provisions. An additional payment is
made to a household occupying an assisted unit when the utility
allowance is greater than the total tenant payment. A project rental
assistance payment, known as a ``vacancy payment,'' may be made to the
Owner when an assisted unit is vacant, in accordance with the terms of
the PRAC or ePRAC.
* * * * *
0
4. Redesignate Sec. 891.140 as Sec. 891.208.
0
5. Remove Sec. 891.145.
0
6. Sec. 891.150 is revised to read as follows:
Sec. 891.150 Operating cost standards.
(a) Applicability. The requirements under this section apply only
to PRACs, as defined under Sec. 891.105.
(b) Standard. HUD shall establish operating cost standards based on
the average annual operating cost of comparable housing for the elderly
or for persons with disabilities in each field office, and shall adjust
the standard annually based on appropriate indices of increases in
housing costs, such as the Consumer Price Index. The operating cost
standards shall be developed based on the number of units. However, for
the Section 811 Program and for projects funded under Sec. Sec.
891.655 through 891.790, the operating cost standard for group homes
shall be based on the number of residents. HUD may adjust the operating
cost standard applicable to an approved project to reflect such factors
as differences in costs based on location within the field office
jurisdiction. The operating cost standard will be used to determine the
amount of the project assistance initially reserved for a project.
0
7. In Sec. 891.155, the introductory text, paragraph (b), paragraphs
(d)(1) and (2) are revised to read as follows:
Sec. 891.155 Other Federal requirements.
In addition to the requirements set forth in 24 CFR part 5, the
following requirements in this Sec. 891.155 apply to the Section 202
and Section 811 Programs, projects funded under Sec. Sec. 891.655
through 891.790, and prepayments under Sec. Sec. 891.530 and 891.700.
Other requirements unique to a particular program are described in
subparts B, C, G, and H of this part, as applicable.
* * * * *
(b) Environmental requirements. Except for the program under
subpart G, the National Environmental Policy Act of 1969, and HUD's
implementing regulations at 24 CFR part 50, including the related
authorities described in 24 CFR 50.4, apply. Environmental reviews
under Sec. 891.530 and 891.700 shall consider the use of a senior
preservation rental assistance contract under subpart H of this part,
regardless of whether an application for such contract has been made at
the time of review. For the environmental requirements for the program
under subpart G (see Sec. Sec. 891.882(e) and (f)). For the purposes
of Executive Order No. 11988, Floodplain Management (42 FR 26951, 3
CFR, 1977 Comp., p. 117); as amended by Executive Order 12148 (44 FR
43239, 3 CFR, 1979 Comp., p. 412), and implementing regulations in 24
CFR part 55, all applications for intermediate
[[Page 60616]]
care facilities for persons with developmental disabilities shall be
treated as critical actions requiring consideration of the 500-year
floodplain.
* * * * *
(d) Labor standards. (1) All laborers and mechanics (other than
volunteers under the conditions set out in 24 CFR part 70) employed by
contractors and subcontractors in the construction (including
rehabilitation) of housing with 12 or more units assisted under this
part (other than under subpart H) shall be paid wages at rates not less
than those prevailing in the locality, as determined by the Secretary
of Labor in accordance with the Davis-Bacon Act (40 U.S.C. 3141 et
seq.). A group home for persons with disabilities is not covered by the
labor standards.
(2) Contracts involving employment of laborers and mechanics shall
be subject to the provisions of the Contract Work Hours and Safety
Standards Act (40 U.S.C. 3701 et seq.).
* * * * *
0
8. Sec. 891.160 is revised to read as follows:
Sec. 891.160 Audit requirements.
Nonprofits receiving assistance under this part are subject to the
audit requirements in the notice of funding availability (NOFA).
0
9. In Sec. 891.165, paragraph (b) is revised to read as follows:
Sec. 891.165 Duration of capital advance.
* * * * *
(b) The duration of the fund reservation for projects that elect
not to receive any capital advance before construction completion is 24
months from the date of initial closing to the start of construction.
This duration can be up to 36 months, as approved by HUD on a case-by-
case basis.
0
10. Revise Sec. 891.175 to read as follows:
Sec. 891.175 Technical assistance.
For purposes of the Section 202 Program and the Section 811
Program, HUD shall make available appropriate technical assistance.
(a) Assistance under this section must ensure that applicants
having limited resources, particularly minority applicants, are able to
participate more fully in the programs.
(b) HUD may offer competitive grants under this section in order to
bolster an applicant's capacity to engage in preliminary work required
in the development of supportive housing under the Section 202 Program
or the Section 811 program.
(1) Assistance under paragraph (b) of this section is available
only if:
(i) The applicant is eligible under the NOFA for the Section 202
Program or the Section 811 Program;
(ii) The applicant has site control; and
(iii) The applicant lacks access to capital to undertake initial
efforts to confirm site feasibility, pursue initial site funding, and
undertake the preparatory steps necessary to compete in the NOFA for
the Section 202 Program or the Section 811 Program, as applicable.
(2) Competitive grants provided under paragraph (b) of this section
may be used to cover initial costs of necessary architectural and
engineering work, site control, and other activities related to the
development of supportive housing for the elderly and persons with
disabilities.
0
11. Section 891.190 is added to read as follows:
Sec. 891.190 Enhanced project rental assistance contracts (ePRACs).
(a) In general. The ePRACs are available to applicants under this
section in accordance with paragraph (b) of this section.
(b) Requirements. The following requirements apply to ePRACs:
(1) Eligible applicants. Applicants eligible for ePRACs are only
nonprofit organizations, as defined under Sec. Sec. 891.205, 891.305,
and 891.805, with:
(i) Sponsors accessing private capital to fund the construction or
provide permanent financing for supportive new housing units; or
(ii) Owners of existing properties accessing private capital and
where debt service results in ongoing operating cost savings in an
amount greater than the cost of debt service.
(2) Eligible expenses. Eligible expenses must include debt service
covering the private financing obtained for the supportive housing
units covered by the contract. Debt service for non-section 202 or non-
section 811 units must not be included.
(3) Rent setting. (i) Initial rent levels, as well as the rent
levels at the beginning of each 5-year term of the multiyear contract,
must be based on the project's operating expenses that include private
long-term debt service and must not exceed market rents (which may take
the provision of a service coordinator into consideration); or
(ii) Rents during the 5-year term of the multiyear contract will be
adjusted using the operating cost adjustment factor (OCAF).
(4) Vacancy payments for assisted units. Vacancy payments for units
under the ePRAC will be in the amount of 80 percent of the per-unit
operating expenses that include debt service for the first 60 days of
vacancy if the conditions for receipt of these project rental
assistance payments under Sec. 891.445 are fulfilled.
(5) Operating cost savings. HUD may retain a percentage of the
ongoing operating cost savings. HUD will advise of the percentage of
savings to be retained through notice.
(6) Other requirements. Except as provided under this section,
ePRACs must follow the requirements provided under this subpart as well
as under subparts D and F of part 891.
0
12. In Sec. 891.205, the definition for ``activities of daily living''
is revised, and definitions for ``functional limitations'' and
``instrumental activities of daily living'' are added in alphabetical
order to read as follows:
Sec. 891.205 Definitions.
Activities of daily living (ADL) means eating, dressing, bathing,
grooming, and transferring, as further described below:
(1) Eating--May need assistance with cooking, preparing, or serving
food, but must be able to feed self;
(2) Bathing--May need assistance in getting in and out of the
shower or tub, but must be able to wash self;
(3) Grooming--May need assistance in washing hair, but must be able
to take care of personal appearance;
(4) Dressing--Must be able to dress self, but may need occasional
assistance;
(5) Transferring--Actions such as going from a seated to standing
position and getting in and out of bed; and
(6) Other such activities as HUD deems essential for maintaining
independent living.
* * * * *
Functional limitations means the restriction or loss of ability to
perform or complete ADL/IADL tasks. An elderly person with functional
limitations requires assistance with three ADLs or one ADL and some
combination of Instrumental Activities of Daily Living (IADLs) and/or
other thresholds as established by HUD through publication of notice.
An assessment of ADL/IADLs is a useful tool for tailoring services to
meet the needs of elderly persons to allow for such persons to age in
place and live independently. Assessment of functional limitations must
be performed by a qualified professional and is generally documented by
an individual's service provider or health care provider.
* * * * *
Instrumental Activities of Daily Living (IADLs) means activities
that are more
[[Page 60617]]
complex than those needed for the ADLs, they include but are not
limited to handling personal finances, meal preparation, shopping,
traveling, doing housework, using the telephone, taking or managing
medications, or other such activities as HUD deems essential for
maintaining independent living.
* * * * *
0
13. In Sec. 891.225, paragraph (b) is revised to read as follows:
Sec. 891.225 Provision of services.
* * * * *
(b)(1) HUD shall ensure that Owners have the managerial capacity to
perform the coordination of services described in section 202(g)(2) of
the Housing Act of 1959 (12 U.S.C. 1701q(g)(2)).
(2) Sponsors of projects may set aside a percentage, as determined
by HUD in a NOFA, of units for elderly individuals with functional
limitations or other category of elderly individuals as defined in the
NOFA. Tenants of these set-aside units must be eligible for long-term
services and support from home and community-based service providers.
Such set-aside units must abide by the requirements under Sec.
891.410(c)(3).
(3) Any cost associated with the employment of a service
coordinator shall also be an eligible cost, except if the project is
receiving congregate housing services assistance under section 802 of
the National Affordable Housing Act (42 U.S.C. 8011). The HUD-approved
service costs will be an eligible expense to be paid from project
rental assistance, not to exceed $15 per unit per month; or such other
amount as determined by HUD. The balance of service costs shall be
provided from other sources, which may include co-payment by the tenant
receiving the service. Such co-payment shall not be included in the
Total Tenant Payment. The limit of $15 per unit, per month, or such
other amount as determined by HUD, pertains only to the cost of
supportive services and not to costs associated with the employment of
a service coordinator.
0
14. Remove Sec. 891.230.
0
15. Section Sec. 891.235 is added to read as follows:
Sec. 891.235 Owner deposit (minimum capital investment).
Under the Section 202 Program, if an Owner has a National Sponsor
or a National Co-Sponsor, the Minimum Capital Investment shall be one-
half of one percent (0.5 percent) of the HUD-approved capital advance,
not to exceed $25,000. Such amount must be used only to cover operating
deficits during the first 3 years of operations, and must not be used
to cover construction shortfalls or inadequate initial project rental
assistance amounts.
0
16. In Sec. 891.305, the definition of ``disabled household'' is
revised to read as follows:
Sec. 891.305 Definitions.
* * * * *
Disabled household means a household composed of:
(1) One or more persons at least one of whom is an adult (18 years
of age or older and less than 62 years of age), and who has a
disability;
(2) Two or more persons with disabilities living together, or one
or more such persons living with another person who is determined by
HUD, based upon a certification from an appropriate professional (e.g.,
a rehabilitation counselor, social worker, or licensed physician) to be
important to their care or well being; or
(3) The surviving member or members of any household, described in
paragraph (1) of this definition, who were living in a unit as a lawful
tenant assisted under this part, with the deceased member of the
household at the time of his or her death.
* * * * *
0
17. Section Sec. 891.308 is added to read as follows:
Sec. 891.308 Cost limits.
(a) Group homes. (1) HUD shall use the development cost limits,
established by notice in the Federal Register and adjusted by locality,
to calculate the fund reservation amount of the capital advance to be
made available to individual owners of group homes, as defined under
section 811(k)(1) of the National Affordable Housing Act (42 U.S.C.
8013(k)). Owners that incur actual development costs that are less than
the amount of the initial fund reservation shall be entitled to retain
50 percent of the savings in a Replacement Reserve Account. Such
percentage shall be increased to 75 percent for owners that add energy
efficiency features.
(2) The Replacement Reserve Account established under paragraph
(a)(1) of this section must only be used for repairs, replacements, and
capital improvements to the project.
(b) HOME program cost limitations. (1) In general. Except for the
cost limitations under paragraph (a) of this section, the provisions of
section 212(e) of the National Affordable Housing Act (42 U.S.C.
12742(e)) and the cost limits established by HUD pursuant to section
212(e) for the HOME Investment Partnerships program under subtitle A of
title II of such Act, apply on a per-unit basis to supportive housing
for persons with disabilities assisted with a capital advance.
(2) Waivers. (i) HUD may provide for the waiver of the cost limits
under paragraph (b)(1) of this section. HUD may provide a waiver in
such cases in which the cost limits established pursuant to section
212(e) of the National Affordable Housing Act may be waived under the
HOME Investment Partnerships program, and to provide for:
(A) The cost of special design features to make the housing
accessible to persons with disabilities;
(B) The cost of special design features necessary to make
individual dwelling units meet the special needs of persons with
disabilities; and
(C) The cost of providing the housing in a location that is
accessible to public transportation and community organizations that
provide supportive services to persons with disabilities.
(ii) The applicant will not receive a waiver in excess of 110
percent of the applicable HOME Investment Partnerships program cost
limitations under paragraph (b)(1) of this section.
(3) Reserve account. HUD shall use the cost limits as established
by paragraph (b)(1) of this section to calculate the maximum fund
reservation amount of the capital advance to be made available to
individual owners.
(i) Owners may elect to request an amount less than the amount
determined under the development cost limits if such amount still
allows for the project's financial feasibility.
(ii) Owners must not decline a capital advance amount.
0
18. In Sec. 891.310, the introductory text of paragraph (b),
paragraphs (b)(1), (b)(2), and (b)(3) are revised, paragraph (b)(4) is
redesignated as paragraph (b)(5) and a new paragraph (b)(4) is added,
to read as follows:
Sec. 891.310 Special project standards.
* * * * *
(b) Additional accessibility requirements. In addition to the
accessibility requirements in Sec. 891.120(b), the following
requirements apply to group homes as defined under section 811(k)(1) of
the National Affordable Housing Act, independent living facilities, and
to projects funded under Sec. Sec. 891.655 through 891.790:
(1) All entrances, common areas, units to be occupied by resident
staff, and amenities must be readily accessible to and usable by
persons with disabilities.
(2) All dwelling units in an independent living facility (or all
bedrooms and bathrooms in a group home) involving new construction must
be designed to be accessible or
[[Page 60618]]
adaptable for persons with physical disabilities.
(3) In a project for chronically mentally ill individuals,
involving new construction, a minimum of 10 percent of all dwelling
units in an independent living facility (or 10 percent of all bedrooms
and bathrooms in a group home) must be designed to be accessible or
adaptable for persons with physical disabilities.
(4) A project involving acquisition and/or rehabilitation may
provide less than full accessibility if:
(i) The project complies with the requirements of 24 CFR 8.23;
(ii) The cost of providing full accessibility makes the project
financially infeasible;
(iii) Fewer than one-half of the intended occupants have mobility
impairments; and
(iv) The accessibility requirement will be met through existing
properties that serve persons with disabilities.
* * * * *
0
19. In subpart C, new Sec. Sec. 891.330, 891.335, 891.340, 891.345,
and 891.350 are added to read as follows:
Sec. 891.330 Project rental assistance.
(a) Renewals and increases in contract amounts. (1) Upon the
expiration of each contract term, subject to the availability of
appropriations, HUD will adjust the annual contract amount to provide
for reasonable project operating costs, including adequate reserves and
service coordinators.
(2) Any contract amounts not used by a project during a contract
term will not be available for such adjustments upon renewal.
(b) Emergency situations. For emergencies that are outside the
control of the owner, HUD will increase the annual contract amount,
subject to HUD's review and restrictions, as may be prescribed by HUD.
(1) Increases in contract amounts will be no greater than either 10
percent above the most recently approved budget-based rent, or 110
percent of FMR for market-based rents.
(2) Such increases will be solely for repaying loans or equity that
was used for addressing emergency repairs to the building that are:
(i) Beyond normal repair and maintenance;
(ii) Are not attributable to deferred maintenance; and
(iii) Caused by matters outside the control of the owner for which
sufficient insurance proceeds are not available.
Sec. 891.335 Conversions.
(a) In general. An owner may request to convert some or all units
from supportive housing for very low-income persons with disabilities
to very low-income persons if:
(1) The state agency responsible for administering the Medicaid
program and/or the state health and human services agency indicates in
writing that the need for supportive housing for very low-income
persons with disabilities no longer exists or that the affordable
supportive housing for very low-income persons with disabilities will
be replicated in a more integrated setting;
(2) The project has had persistent vacancy, despite a reasonable
effort to lease such units as determined by HUD; and
(3) A demonstrated need exists for the households that would
benefit from such conversion.
(b) Reservation. In granting a conversion, HUD may reserve the
right to request a change in management or require a conversion only
for a certain period.
Sec. 891.340 Limitation on use of funds.
Section 811 funds may not be used to replace other state or local
funds previously used or designated for use for persons with
disabilities.
Sec. 891.345 Multifamily housing projects.
(a) Restriction. The total number of dwelling units in any
multifamily housing project (including any condominium or cooperative
housing project) containing any unit for which assistance is provided
under this part for supportive housing for persons with disabilities,
or with any occupancy preference for persons with disabilities, may not
exceed 25 percent of such total.
(b) Exception. The restriction under paragraph (a) of this section
shall not apply to any project that is a group home or independent
living facility.
Sec. 891.350 Voluntary supportive services.
(a) In general. For Section 811 projects funded under this subpart,
supportive services must be offered to, but are not required to be
accepted, by persons with disabilities.
(b) Supportive service plan. A supportive service plan for housing
for Section 811 projects must permit each resident to choose and
acquire services, to receive any supportive services made available
directly or indirectly by the owner of such housing or by others, or to
not receive any supportive services.
0
20. In Sec. 891.410, paragraph (c)(2)(ii) is revised and paragraph
(c)(3) is added to read as follows:
Sec. 891.410 Determination of eligibility and selection of tenants.
* * * * *
(c) * * *
(2) * * *
(ii) Owners shall make selections in a nondiscriminatory manner
without regard to considerations such as race, religion, color, sex,
national origin, familial status, or disability. An owner may, with the
approval of HUD, limit occupancy within the housing to persons with
disabilities who can benefit from the supportive services, including
the accessibility features, offered in connection with the housing.
(3) Under the Section 202 Program:
(i) In order to be eligible for admission, the applicant must also
meet any project occupancy requirements approved by HUD.
(ii) Owners must lease units set aside under Sec. 891.225(b)(2) to
elderly individuals who can provide evidence of functional limitations
or other category as defined in the NOFA. Evidence can consist of a
doctor's or nurse's written evaluation or a letter from the AAA or
Aging and Disability Resource Center (ADRC) or other like social
service agencies. Examples of service providers include, but are not
limited to, Medicaid home and community-based service providers or
Programs for All-Inclusive Care for the Elderly (PACE) providers
(including co-location of PACE programs on site). Provider
organizations must have the capacity to bill Medicaid or be affiliated
with AAA.
(iii) Owners will continue to lease units not set aside for elderly
individuals with functional limitations or other category of elderly
persons as defined in the NOFA to any applicant determined to be
eligible for the project. Owners will make selections in a
nondiscriminatory manner without regard to considerations of race,
religion, color, sex, national origin, familial status, or disability.
Owners must also make selections without regard to actual or perceived
sexual orientation, gender identity, or marital status, in accordance
with 24 CFR 5.105(a).
(iv) Set aside units must be distributed throughout the project and
must not be segregated to one area of a building or the project. A
specified number of units, rather than specific units (e.g., units 101,
201, etc.), may be set aside for this purpose.
* * * * *
0
21. Revise Sec. 891.430 to read as follows:
Sec. 891.430 Denial of admission, termination of tenancy, and
modification of lease.
(a) In general. (1) The provisions of 24 CFR part 5, subpart I,
apply to Section 202 and Section 811 capital advance projects.
[[Page 60619]]
(2) The provisions of 24 CFR part 247 apply to all decisions by an
owner to terminate the tenancy or modify the lease of a household
residing in a unit (or residential space in a group home), except as
provided under paragraph (b) of this section.
(b) Section 811 projects. An owner may not terminate the tenancy or
refuse to renew the lease of a tenant of a rental dwelling unit
assisted with funds under Section 811 except:
(1) For serious or repeated violation of the terms and conditions
of the lease, for violation of applicable Federal, State, or local law,
or for other good cause; and
(2) The tenant must receive, no less than 30 days before such
termination or refusal to renew, a written notice specifying the
grounds for such action.
Subpart E--Loans for Housing for the Elderly and Persons With
Disabilities
0
22. In Subpart E:
0
a. Revise the undesignated heading, ``Section 202 Projects for the
Elderly or Handicapped--Section 8 Assistance,'' to read ``Section 202
Projects for the Elderly or Persons with Disabilities--Section 8
Assistance.''
0
b. Revise the undesignated heading, ``Section for the Nonelderly
Handicapped Families and Individuals--Section 162 Assistance'' to read
``Section for the Nonelderly Disabled Families and Individuals--Section
162 Assistance.''
Sec. 891.500 [Amended].
0
23. In Sec. 891.500, replace the term ``handicapped'' with the term
``disabled'' every place the term ``handicapped'' appears in this
section.
Sec. 891.505 [Amended].
0
24. In Sec. 891.505, the definitions of ``borrower'' is amended by
replacing the term ``handicapped'' with the term ``disabled''; the
definition of ``handicapped family'' is amended by replacing the term
``handicapped'' with ``disabled'' wherever the term ``handicapped''
appears in the definition; the definition of ``handicapped person or
individual'' is amended by replacing the defined term with the words
``person with disabilities''; and the definitions of ``housing and
related facilities'' and ``nonelderly handicapped family'' are amended
by replacing the term ``handicapped'' with the term ``disabled''
wherever the term ``handicapped'' appears in these two definitions.
Sec. 891.510 [Amended].
0
25. In Sec. 891.510(e), remove the term ``handicap'' in the last
sentence of paragraph (e) and replace with the term ``disability.''
Sec. 891.520 [Amended].
0
26. In Sec. 891.520, replace the term ``handicapped'' with the term
``disabled'' every place the term ``handicapped'' appears in this
section.
0
27. Revise Sec. 891.530 to read as follows:
Sec. 891.530 Prepayment privileges.
(a) Prepayment prohibition. The prepayment (whether in whole or in
part) or the assignment or transfer of physical and financial assets of
any Section 202 project is prohibited, unless HUD gives prior written
approval.
(b) HUD-approved prepayment. HUD may not grant approval unless HUD
has determined that the prepayment or transfer of the loan is part of a
transaction that will ensure the continued operation of the project,
until at least 20 years following the maturity date of the original
Section 202 loan, in a manner that will provide rental housing for the
elderly and persons with disabilities on terms at least as advantageous
to existing and future tenants as the terms required by the original
Section 202 loan agreement and any project-based rental assistance
payment contract related to the project.
(c) Refinancing. The prepayment may involve refinancing of the loan
if such refinancing results in:
(1) A lower interest rate on the principal of the Section 202 loan
for the project and in reductions in debt service related to such loan;
or
(2) An increase in debt service for a project requesting prepayment
of a Section 202 loan carrying an interest rate of 6 percent or lower,
which must abide by the following:
(i) The project owner proposing the refinance must address the
physical needs of the project;
(ii) The transaction may not result in an increase in rents for
unassisted families residing in the project;
(iii) The transaction must address the capital needs of the project
and ensure its physical viability for the term of the new financing;
(iv) The overall cost for providing any rental assistance under
section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f)
for the project must not increase, except upon approval by HUD to:
(A) Mark-up-to-market contracts pursuant to section 524(a)(3) of
the Multifamily Assisted Housing Reform and Affordability Act (42
U.S.C. 1437f note) for properties owned by nonprofit organizations; or
(B) Mark-up-to-budget contracts pursuant to section 524(a)(4) of
the Multifamily Assisted Housing Reform and Affordability Act (42
U.S.C. 1437f note), for properties owned by eligible owners (as such
term is defined in section 202(k) of the Housing Act of 1959 (12 U.S.C.
1701q(k)); and
(v) If HUD determines that the transaction would not be feasible
without a rent increase for unassisted families, such unassisted
families may be eligible to receive assistance under a senior
preservation rental assistance contract (SPRAC) pursuant to part 891,
subpart H;
(A) HUD may make rental assistance available to unassisted
households in other forms as authorized under section 8 of the United
States Housing Act of 1937 to meet the requirement under this paragraph
(c)(2)(v) of this section;
(B) Subject to the availability of appropriations for such
assistance, HUD may set priorities for the consideration of prepayment
approvals that require the provision of a SPRAC; and
(C) SPRACs shall only be provided for units occupied by unassisted,
income-eligible families at the time of closing of the refinance of the
Section 202 Direct Loan. Such families must meet the low-income
eligibility guidelines under section 8 of the United States Housing Act
of 1937.
(d) HUD must approve the use of loan proceeds resulting from the
refinance of the project to ensure such proceeds are used in a manner
advantageous to the tenants of the Section 202 Direct Loan project.
(e) Loan proceeds must be expended within 5 years of the closing of
the Direct Loan refinance, except for approved ongoing social service
programs. Use of proceeds may include, but are not limited to:
(1) No more than 15 percent of the cost for increasing the
availability or provision of supportive services, which may include the
financing of service coordinators and congregate services;
(2) Rehabilitation, modernization, accessibility modifications or
retrofits of the project, including reducing the number of units by
reconfiguring units that are functionally obsolete, unmarketable, or
not economically viable;
(3) Construction of an addition or another facility in the project,
including assisted living facilities;
(4) Rent reduction of unassisted tenants residing in the project;
(5) Rehabilitation of the project to ensure long-term viability; or
[[Page 60620]]
(6) The payment to the project owner, sponsor, or third party
developer of a developer's fee in an amount not to exceed or duplicate:
(i) In the case of a project refinanced through a low-income
housing tax credit program, the fee permitted by the low-income housing
tax credit program; or
(ii) In the case of a project refinanced through any other source
of refinancing, 15 percent of the acceptable development cost, which
includes the cost of acquisition, rehabilitation, loan prepayment,
initial reserve deposits, and transaction costs.
(f) HUD may approve the use of proceeds from the refinancing of the
Section 202 Direct Loan for the provision of affordable housing and
related social services for elderly persons who are tenants of other
HUD-assisted senior housing.
(1) Such housing must be owned by the same private nonprofit
organization that is the project owner, the project sponsor, or the
private developer as the Section 202 project being refinanced. This
includes limited partnerships for which the general partner is a
private nonprofit organization, a corporation wholly owned and
controlled by one or more nonprofit organizations, or a limited
liability company wholly owned and controlled by one or more nonprofit
organizations.
(2) The use of proceeds in other HUD-assisted senior housing must
be approved by HUD.
(3) The use of proceeds in other HUD-assisted housing projects will
be approved only if the proposed Section 202 Direct Loan refinancing
will address all physical and financial needs of the project.
(4) The other HUD-assisted senior housing must be designated as
senior housing serving only those residents 62 years of age and older,
and must have an active program in place to provide social services for
elderly residents.
(5) At the time of the application for prepayment of the 202 Direct
Loan, the level of affordability of the project(s) receiving proceeds
from the refinance must be at least as affordable as the Section 202
Direct Loan project being refinanced.
(6) All project(s) to receive proceeds from the refinance must have
or put in place a Use or Regulatory Agreement requiring operation of
the project as affordable senior housing for a period at least 10 years
beyond the date of closing of the Section 202 refinance, or the date of
termination of the existing Use or Regulatory Agreement, whichever is
later.
(7) The other HUD-assisted senior housing may include Section 202
Direct Loan and Section 202 Capital Advance properties, or may include
affordable senior projects that receive HUD assistance including but
not limited to project-based rental assistance, FHA mortgage insurance,
Project-Based Vouchers, HOME Investment Partnerships (HOME), or
Community Development Block Grant (CDBG) assistance.
Sec. 891.575 [Amended].
0
28. In Sec. 891.575, replace the term ``handicapped'' with the term
``disabled'' every place the term ``handicapped'' appears in this
section.
Sec. 891.610 Selection and admission of tenants.
0
29. In Sec. 891.610:
0
a. In paragraph (a), replace the term ``handicapped persons'' with
``persons with disabilities.''
0
b. In paragraph (b), replace the term ``handicapped family'' with
``disabled family.''
0
c. In paragraph (f), replace the term ``handicap status'' with
``disability status.''
Sec. 891.655 [Amended].
0
30. In Sec. 891.655:
0
a. In the definition of ``family (eligible family),'' replace the term
``handicapped family'' with ``disabled family''.
0
b. In the definition of ``group home,'' replace the term ``handicapped
individuals'' with ``persons with disabilities.''
0
c. In the definition of ``housing for handicapped families'' replace
the term ``handicapped families'' with ``disabled families'' every
place the term ``handicapped families'' appears in this definition.
0
d. In the definition of ``independent living complex,'' replace the
term ``nonelderly handicapped families'' with the term ``nonelderly
disabled families.''
Sec. 891.665 [Amended].
0
31. In Sec. 891.665, in the definition of ``independent living
complexes for handicapped families'' replace the term ``handicapped
families'' with ``disabled families'' every place the term
``handicapped families'' appears in the definition; replace the term
``physically handicapped'' with the term ``physically disabled'' every
place the term ``physically handicapped'' appears in the definition;
replace the term ``handicap family'' with the term ``disabled family;''
replace the term ``handicapped individuals'' with the term ``persons
with disabilities;'' replace the term ``handicapped person'' with the
term ``person with disabilities;'' and replace the term ``handicapped
person's well being'' with the term ``person with disabilities' well
being''.
Sec. 891.680 [Amended].
0
32. In Sec. 891.680(b), replace the term ``handicapped persons'' with
``persons with disabilities'' every place the term ``handicapped
persons'' appears in paragraph (b).
0
33. Revise Sec. 891.700 to read as follows:
Sec. 891.700 Prepayment of loans.
The requirements of Sec. 891.530 apply to all prepayments for 202/
162 projects.
0
34. Remove Sec. 891.710.
Sec. 891.720 [Amended].
0
35. In Sec. 891.720(d), replace the term ``handicapped'' with
``disabled.''
Sec. 891.750 [Amended].
0
36. In Sec. 891.750:
0
a. In paragraph (b), replace the term ``handicapped family'' with the
term ``disabled family.''
0
b. In paragraph (b)(3), replace the term ``handicap'' with
``disability.''
0
37. Sec. 891.810 is revised to read as follows:
Sec. 891.810 Project rental assistance.
(a) Project rental assistance contract and Project rental
assistance payment are defined in Sec. 891.105. Project rental
assistance payment is provided for operating costs, not covered by
tenant contributions, attributable to the number of units funded by
capital advances under the Section 202 Program and the Section 811
Program, subject to the provisions of Sec. 891.445.
(b) The sponsor of a mixed-finance development must obtain the
necessary funds from a source other than project rental assistance
funds for operating costs related to non-Section 202 or non-Section 811
units.
Sec. 891.830 [Amended].
0
38. In Sec. 891.830, paragraph (c)(5) is removed, and, at the end of
paragraph (c)(4), the semicolon and the word ``and'' are removed and a
period is inserted.
0
39. In Sec. 891.835 paragraph (b)(1) is revised to read as follows:
Sec. 891.835 Eligible uses of project rental assistance.
* * * * *
(b) * * *
(1) Debt service on construction or permanent financing, or any
refinancing thereof, for any units in the development, including the
Section 202 or Section 811 supportive housing units, except for units
under an ePRAC whereby debt service may be included as an eligible
expense under Sec. 891.190;
* * * * *
[[Page 60621]]
0
40. Revise Sec. 891.853 to read as follows:
Sec. 891.853 Development cost limits.
The Development Cost Limits for development activities, as
established at Sec. 891.208 for Section 202 supportive housing units
and at Sec. 891.308 for Section 811 supportive housing units, apply in
mixed-finance developments under this subpart.
0
41. Subparts G and H are added to read as follows:
Subpart G--Section 811 Project Rental Assistance Program
Sec.
891.870 Applicability.
891.872 Definitions.
891.874 Allocation of funds.
891.876 Eligible projects.
891.878 Eligible tenants.
891.880 Terms and conditions of project rental assistance financing.
891.882 Responsibilities of participating agencies.
Sec. 891.870 Applicability.
The requirements in this subpart G apply only to project rental
assistance provided to projects without capital advances under the
Section 811 Program.
Sec. 891.872 Definitions.
In addition to the applicable definitions in Sec. Sec. 891.105 and
891.305, the following definitions are applicable to the use of project
rental assistance in the Section 811 program, as provided in this
subpart:
Admission means the point-in-time the applicant and owner execute
the lease agreement, and where occupancy is imminent.
Eligible applicant means any state housing agency currently
allocating low-income housing tax credits under section 42 of the
Internal Revenue Code of 1986 (26 U.S.C. 42), or any state housing or
state community development agency that is currently allocating and
overseeing assistance under the HOME Investment Partnerships (HOME)
program as authorized by title II of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12701 et seq.), or under section 8 of
the United States Housing Act of 1937 (42 U.S.C. 1437f), or other
similar Federal or state program, and the agency is determined to be in
good standing by HUD in its administration of assistance. An eligible
applicant may also be a state, regional, or local housing agency or
agencies; or a partnership or collaboration of state housing agencies
and/or state and local/regional housing agencies. To be eligible, the
agency must have a formal partnership with the state health and human
services agency and the state agency designated to administer or
supervise the administration of the State plan for medical assistance
under title XIX of the Social Security Act.
Extremely low-income family has the same meaning as defined in 24
CFR 5.603.
Housing agency means a state, regional, or local housing agency.
Inter-agency Partnership Agreement means the agreement entered into
between the eligible applicant and the state health and human services
agency, and the applicable state Medicaid agency, if different
entities. An eligible project must abide by such agreement in order to
provide new project rental assistance under this subpart.
Nonelderly adult means a person who is 18 years of age or older and
less than 62 years of age.
Participating agencies means the eligible applicant awarded project
rental assistance funds, the state agency responsible for health and
human services programs, and the state agency designated to administer
or supervise the administration of the state plan for medical
assistance under the Medicaid program.
Project rental assistance means funding made available by HUD to
eligible applicants for purposes of providing long-term rental
assistance for supportive housing for nonelderly, extremely low-income
persons with disabilities and for extremely low-income households that
include at least one nonelderly person with a disability.
Rental assistance contract (RAC) means contracts authorized under
section 811(b)(3) of the National Affordable Housing Act (42 U.S.C.
8013(b)(3)) between the approved housing agency, as defined under this
subpart, and the multifamily property owner to provide project rental
assistance under this subpart.
Sec. 891.874 Allocation of funds.
HUD may allocate funds made available in any fiscal year for
project rental assistance under this subpart by competition or in
accordance with the formula allocation provided under 24 CFR part 791.
In determining the method of allocation, HUD shall take into account
such factors as the amount of funds available, the number and types of
eligible applicants, the period of funding availability, and
administrative efficiency.
Sec. 891.876 Eligible projects.
(a) In general. Any new or existing multifamily project is eligible
for project rental assistance under this section if:
(1) Such project's development costs are paid with resources from
other public and/or private sources, such as low-income housing tax
credits as authorized under section 42 of the Internal Revenue Code (26
U.S.C. 42), equity, private debt, or HOME program funds as authorized
under title II of the National Affordable Housing Act (42 U.S.C. 12701
et seq.);
(2) The project is not otherwise receiving assistance under the
Section 811 program; and
(3) A commitment must be made by a Federal, state or local
government agency.
(b) Existing projects. (1) Existing multifamily housing projects
may only receive project rental assistance under this section if the
assisted units have no existing contractual obligation to serve persons
with disabilities, such as a recorded use agreement.
(2) Existing units receiving any form of operating housing subsidy,
such as assistance under section 8 of the United States Housing Act of
1937 (42 U.S.C. 1437f), are ineligible to receive project rental
assistance under this section.
Sec. 891.878 Eligible tenants.
(a) Project rental assistance provided under this section may only
be provided for dwelling units that are set aside for extremely low-
income disabled households. The person with the disability must be 18
years of age or older and less than 62 years of age at the time of
admission.
(b) A person with a disability assisted under this subpart must be
eligible for community-based, long-term services and supports as
provided through Medicaid waivers, Medicaid state plan options, state
funded services, or other appropriate services (provided by state,
local, nonprofit, or other entities) related to the target populations
identified under the Interagency Partnership Agreement.
(c) The Interagency Partnership Agreement must include the target
population to be served that shall benefit from the assisted units
under this subpart and available services.
(d) Participation in community-based, long-term services and
supports is voluntary and shall not be required as a condition of
tenancy.
Sec. 891.880 Terms and conditions of project rental assistance
financing.
(a) In general. Approved housing agencies receiving project rental
assistance under this subpart must comply with the requirements of this
section, and all the terms and conditions of the rental assistance
contract.
[[Page 60622]]
(b) Rental assistance contract (RAC). (1) The RAC will provide the
housing assistance payments to the owner for eligible tenants, as
determined under Sec. 891.878, residing in units that have been set
aside by the owner as supportive housing for persons with disabilities.
(2) The approved housing agency administering the project rental
assistance under this subpart must enter into a RAC with the owner of
the project, as defined in the NOFA.
(c) Term. (1) The initial term of RACs under this section between
the approved housing agency administering the project rental assistance
under this subpart and the owner of the multifamily housing project
must be for a minimum of 20 years.
(2) RACs under this section may be renewed if all parties agree to
such renewal, subject to the availability of project rental assistance
funds.
(d) Use restrictions. (1) Any unit assisted with project rental
assistance under this subpart must be subject to a recorded 30-year
minimum use agreement for nonelderly, extremely low-income persons with
disabilities.
(2) If a RAC is renewed under this subpart, the corresponding use
agreement must be extended for the duration of the renewal.
(e) Projects must meet the accessibility requirements of section
504 of the Rehabilitation Act of 1973 and titles II and III of the
Americans with Disabilities Act, as applicable. Covered multifamily
dwellings must also meet the design and construction requirements of
the Fair Housing Act.
(f) Limitation on units assisted. (1) In any multifamily housing
project receiving project rental assistance under this section, no more
than 25 percent of the total number of dwelling units in the project
may be set aside for supportive housing for persons with disabilities
or apply any occupancy preference for persons with disabilities, and no
unit may have any preexisting occupancy preference requirement for
persons with disabilities associated with such unit.
(2) These units must be distributed throughout the project, must
not be segregated to one area of a building or the project (such as on
a particular floor, part of a floor in a building, or certain sections
within a project), and can consist of both accessible and nonaccessible
units. Owners may designate unit types (e.g., accessible, one-bedroom,
etc.) rather than designating specific units (e.g., units 101, 201,
etc.) to be set aside for supportive housing for persons with
disabilities.
Sec. 891.882 Responsibilities of participating agencies.
(a) Required agreement. (1) Participating agencies must develop an
Interagency Partnership Agreement, which is a formalized agreement for
collaboration (such as a memorandum of understanding (MOU), joint
letter, or other document) that includes the eligible applicant and the
state health and human services agency, and the applicable state
Medicaid agency, if different entities.
(i) In states where health and human service functions have been
separated, both agencies' participation must be evidenced in the
collaboration.
(ii) Project rental assistance under this subpart may only be
provided for eligible projects that conform to the Interagency
Partnership Agreement.
(2) Such agreement must:
(i) Identify the target populations to be served by the project;
(ii) Set forth methods for outreach and referral; and
(iii) Describe the services to be made available to the tenants of
the project.
(3) Target populations. The Interagency Partnership Agreement must
include the target populations to be served that will benefit from the
assisted units under this subpart and available services. In addition
to being extremely low-income, the person with disabilities as defined
in Sec. 891.305, must have a disability appropriate to the services to
be provided in the community under such agreement. In the Interagency
Partnership Agreement, states must identify the available state-funded
services and other appropriate services (provided by state, local,
nonprofit, or other entities), and describe how such services will be
made available to the tenants.
(b) Program requirements. (1) Participating agencies must provide a
plan detailing the process by which the availability of units receiving
project rental assistance under this subpart and waiting lists will be
managed, including:
(i) A consideration of training; and
(ii) Costs, authority, and/or sources for establishing the
infrastructure and process for establishing such a system if no process
or system currently exists.
(2) Participating agencies must describe how the process of
referring eligible persons with disabilities to the assisted
multifamily housing projects will be carried out, describe how
households will be tracked, and provide a list of people who property
owners can contact if there are any problems.
(3) This system and framework must be incorporated into the
Interagency Partnership Agreement between the participating agencies as
required under this section.
(c) Administrative cost. Participating agencies may use a
percentage, as defined by HUD in a NOFA, of their total project rental
assistance award under this section for initial and administrative
costs relating to the administration of the project rental assistance
program under this subpart. Such costs may include costs of hiring
ongoing staff, training, contract assistance, infrastructure costs, and
information technology. No charges relating to the administration of
the program may be charged to the tenants.
(d) Fair housing and equal opportunity requirements. Approved
housing agencies must ensure that the following fair housing and equal
opportunity requirements are met.
(1)(i) Affirmative fair housing marketing. Participating agencies
must adopt affirmative marketing procedures for their project rental
assistance program funded under this subpart. Affirmative marketing
procedures consist of actions to provide information and otherwise
attract eligible persons to the program regardless of race, color,
national origin, religion, sex, disability, or familial status, who are
not likely to apply to the program without special outreach.
Participating agencies must annually assess the success of their
affirmative marketing activities and make any necessary changes to
their affirmative marketing procedures as a result of the evaluation.
Participating agencies must keep records describing actions taken to
affirmatively market the program and records to assess the results of
these actions. Eligible applicants must describe their methods of
outreach and referral and waiting list policies in their applications,
as prescribed in the NOFA. All methods of outreach and referral and
management of the waiting list must be consistent with fair housing and
civil rights laws and regulations and affirmative marketing
requirements.
(ii) Full disclosure of available housing. Participating agencies
must adopt a process for providing full disclosure to each applicant of
any option available to the applicant in the selection of the
development in which to reside, including basic information about
available sites (e.g., location, number and size of accessible units,
access to transportation and commercial facilities) and an estimate of
the period of time the applicant would likely have to wait to be
admitted to units of different sizes and types (e.g., regular or
accessible) at each site.
(2) Civil rights recordkeeping. Participating agencies must require
[[Page 60623]]
projects receiving project rental assistance under this subpart to
maintain records on the race, ethnicity, sex, and place of previous
residency for applicants and approved eligible households. The owner
must submit such reports to the housing agency to demonstrate
compliance with applicable civil rights and equal opportunity
requirements.
(e) Environmental requirements and environmental assurance. (1)
General. As HUD does not approve program funding for specific
activities or projects of the eligible applicants, HUD will not perform
environmental reviews on such activities or projects. However, to
ensure that the tenets of HUD environmental policy and the requirements
of applicable statutes and authorities are met, eligible applicants
selected for funding will be required to implement the analyses and
determinations as set forth in this paragraph (e), for specific program
activities and projects. The eligible applicant's signature on the
application shall constitute an assurance that the applicant, if
selected, will perform such implementation.
(i) The environmental tenets apply to both existing and new
projects per the requirements below. Existing properties that are
currently HUD-assisted or HUD-insured and that will not engage in
activities with physical impacts or changes beyond routine maintenance
activities or minimal repairs are not required to comply with the
environmental tenets.
(ii) If, at the time that a project applies for Project Rental
Assistance (PRA), the project is under construction or being
rehabilitated, the project shall be subject to the environmental review
requirements applicable to new construction or rehabilitation if the
work has not progressed beyond a stage of construction where
modifications can be undertaken to avoid the adverse environmental
impacts addressed by the requirement.
(iii) Citations to authorities in the following paragraphs of this
paragraph (3) are for reference only; to the extent that property
standards or restrictions on the use of properties stated in the
following paragraphs are more stringent than provisions of the
authorities cited, the requirements stated in the following paragraphs
shall control:
(2) Site Contamination (24 CFR 50.3(i)). It is HUD policy that all
properties for use in HUD-assisted housing be free of hazardous
materials, contamination, toxic chemicals and gases, and radioactive
substances, where a hazard could affect the health and safety of
occupants or conflict with the intended utilization of the property (24
CFR 50.3(i)(1)). Therefore, projects applying for assistance must:
(i) Assess whether the site:
(A) Is listed on an Environmental Protection Agency (EPA) Superfund
National Priorities or Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) list or equivalent State list;
(B) Is located within 3,000 feet of a toxic or solid waste landfill
site;
(C) Has an underground storage tank other than a residential fuel
tank; or
(D) Is known or suspected to be contaminated by toxic chemicals or
radioactive materials. If none of these conditions exist, a letter of
finding certifying these findings must be submitted and maintained in
the site's environmental record. If any of these conditions exist, an
American National Standards Institute (ASTM) Phase I Environmental Site
Assessment (ESA), in accordance with ASTM E 1527-013 (or the most
recent edition), must be provided; OR
(ii) Provide a Phase I ESA in accordance with ASTM E 1527-13 (or
the most recent edition).
(A) An ASTM Phase I ESA that was prepared within the Phase I ESA
continuing viability timeframe for the acquisition of the property or a
real estate transaction (construction, rehabilitation, or refinancing)
for the property and complies with ASTM E1527-05 or a more recent
edition shall be deemed acceptable.
(B) If a Phase I ESA is conducted and the Phase I ESA identifies
Recognized Environmental Conditions, a Phase II ESA in accordance with
ASTM E 1903-11 (or the most recent edition) shall be performed. Any
hazardous substances and/or petroleum products that are identified at
levels that would require clean-up under state policy shall be so
cleaned up in accordance with the state's clean-up policy. Risk-Based
Corrective Actions are permitted if allowed for under a state's clean-
up policy.
(3) Historic Preservation (16 U.S.C. 470 et seq.). (i) As the
various states, territories, tribes, and municipalities have
established historic preservation programs to protect historic
properties within their jurisdiction, all work on properties identified
as historic by the State, territory, tribe, or municipality, as
applicable, must comply with all applicable state, territorial, and
tribal historic preservation laws and requirements, and, for projects
affecting locally designated historic landmarks or districts, local
historic preservation ordinance and permit conditions.
(ii) In addition, all work on properties listed on the National
Register of Historic Places, or which the eligible applicant knows are
eligible for such listing, must comply with ``The Secretary of the
Interior's Standards for Rehabilitation.'' Complete demolition of such
properties would not meet the standards and is prohibited.
(iii) On-site discoveries. If archaeological resources and/or human
remains are discovered on the project site during construction, the
recipient must comply with applicable state, tribal, or territory law,
and/or local ordinance (e.g., state unmarked burial law).
(4) Noise (24 CFR part 51, subpart B--Noise Abatement and Control).
All activities and projects involving new construction shall be
developed to ensure an interior noise level of 45 decibels (dB) or
less. In this regard, and using the day-night average sound level
(Ldn), sites not exceeding 65 dB of environmental noise are deemed to
be acceptable; sites above 65 dB require sound attenuation in the
building shell to 45 dB; and sites above 75 dB shall not have noise
sensitive outdoor uses (e.g., picnic areas, tot lots, balconies, or
patios) situated in areas exposed to such noise levels.
(5) Airport Clear Zones (24 CFR part 51, subpart D--Siting of HUD
Assisted Projects in Runway Clear Zones at Civil Airports and Clear
Zones and Accident Potential Zones at Military Airfields). No
activities or projects shall be permitted within the ``clear zones'' or
the ``accident potential zones'' of military airfields or the ``runway
protection zones'' of civilian airports.
(6) Coastal Barrier Zone Management Act (16 U.S.C. 1451 et seq.).
Activities and projects shall be consistent with the appropriate state
coastal zone management plan. Plans are available from the local
coastal zone management agency.
(7) Floodplains (Executive Order 11988; Flood Disaster Protection
Act(42 U.S.C. 4001-4128). No new construction activities or projects
shall be located in the mapped 500 year floodplain or in the 100-year
floodplain according to the best available data of the Federal
Emergency Management Agency (FEMA), which may be Advisory Base Flood
Elevations (ABFEs), Preliminary Flood Insurance Rate Maps (P-FIRMs), or
Flood Insurance Rate Maps (FIRM). Existing structures may be assisted
in these areas, except for sites located in coastal high hazard areas
(V Zones) or regulatory floodways, but must meet the following
requirements:
(i) The existing structures must be flood-proofed or must have the
lowest
[[Page 60624]]
habitable floor and utilities elevated above both the 500-year
floodplain and the 100-year floodplain according to FEMA's best
available data.
(ii) The project must have an early warning system and evacuation
plan that includes evacuation routing to areas outside of the
applicable floodplains.
(iii) Project structures in the 100-year floodplain must obtain
flood insurance under the National Flood Insurance Program.
(8) Wetlands (Executive Order 11990). No new construction shall be
performed in wetlands. No rehabilitation of existing properties shall
be allowed that expands the footprint such that additional wetlands are
destroyed. New construction includes draining, dredging, channelizing,
filling, diking, impounding, and related grading activities. The term
wetland is intended to be consistent with the definition used by the
U.S. Fish and Wildlife Service in Classification of Wetlands and Deep
Water Habitats of the United States (Cowardin, et al., 1977). This
definition includes those wetland areas separated from their natural
supply of water as a result of activities such as the construction of
structural flood protection methods or solid-fill road beds and
activities such as mineral extraction and navigation improvements.
(9) Siting of Projects and Activities Near Hazardous Operations
Handling Conventional Fuels or Chemicals of an Explosive or Flammable
Nature (24 CFR part 51, subpart C). Unshielded or unprotected new
construction sites shall be allowed only if they meet the standards of
blast overpressure (0.5psi-buildings and outdoor unprotected
facilities) and thermal radiation (450 BTU/ft\2\--hr--people, 10,000
BTU/ft\2\--hr--buildings) from facilities that store, handle, or
process substances of an explosive or fire-prone nature in stationary,
above ground tanks/containers.
(10) Endangered Species Act of 1973 (16 U.S.C. 1531 et seq). New
construction shall not be permitted if it would result in a taking of
endangered plant or animal species as listed under the Endangered
Species Act of 1973. Taking includes not only direct harm and killing
but also modification of habitat.
(11) Farmland Protection (7 USC 4201 et seq). New construction
shall not result in the conversion of unique, prime, or otherwise
productive agricultural properties to urban uses.
(12) Sole Source Aquifers (Section 1424(e) of the Safe Drinking
Water Act of 1974 (42 U.S.C. 201, 300 et seq., and 21 U.S.C. 349)). Any
new construction activities and projects located in federally
designated sole source aquifer areas (SSAs) shall require consultation
and review with the U.S. Environmental Protection Agency (EPA).
(13) The Coastal Barrier Resources Act of 1982 (16 U.S.C. 3501).
Eligible applicants must comply with the Coastal Barrier Resources Act,
which prohibits activities or projects in Coastal Barrier Resource
System (CBRS) units.
(f) Flood Insurance (Flood Disaster Protection Act of 1973 (42
U.S.C. 4106)). Project structures in the 100-year floodplain must
obtain flood insurance under the National Flood Insurance Program. No
activities or projects located within the 100-year floodplain may be
assisted in a community that is not participating in or that has been
suspended from the National Flood Insurance Program.
Subpart H--Senior Preservation Rental Assistance
Sec.
891.900 Applicability.
891.902 Definitions.
891.904 Contract execution.
891.905 Project rents.
891.906 Contract term.
891.908 Distributions and replacement reserves.
891.910 Leasing to eligible families.
891.912 Applicability of other part 891 regulations.
891.914 Default by owner.
891.916 SPRAC extension or renewal.
891.918 Denial of admission, termination of tenancy, and
modification of the lease.
891.920 Security deposits.
891.922 Labor standards.
Sec. 891.900 Applicability.
The requirements set forth in this subpart H apply only in
connection with a prepayment plan for a project approved by HUD under
Sec. Sec. 891.530 or 891.700 to prevent displacement of elderly
residents of the project in the case of refinancing or
recapitalization, and the project is provided project-based rental
assistance under a senior preservation rental assistance contract, as
defined under Sec. 891.902.
Sec. 891.902 Definitions.
In addition to the applicable definitions in Sec. Sec. 891.105,
891.205, and 891.505, the following definitions are applicable to
senior preservation rental assistance contracts as provided in this
subpart:
Family(ies) means an Elderly Family as defined by 24 CFR 891.505,
and may include a ``Disabled Family,'' as defined in 24 CFR 891.505,
pursuant to the terms and conditions of an applicant's original Section
202 loan.
Low-income family has the same meaning as defined in 24 CFR 5.603.
Operational Cost Adjustment Factor (OCAF) has the same meaning as
defined in 24 CFR 402.2(c), and as otherwise prescribed by HUD.
Senior preservation rental assistance contract (SPRAC) means a
contract for project-based rental assistance made available to a
private nonprofit organization owner for a term of at least 20 years,
subject to annual appropriations, and governed by the regulations of
this subpart. Such contract is subject to a use agreement having a term
of the SPRAC or such term as is required by the new financing,
whichever is longer.
Very low-income family has the same meaning as defined in 24 CFR
5.603.
Utility Allowance has the same meaning as defined in 24 CFR 5.603.
Sec. 891.904 Contract execution.
(a) In general. A SPRAC sets forth the rights and duties of the
owner and HUD with respect to the project and the senior preservation
rental assistance payments.
(b) SPRAC execution. (1) Upon the closing of the refinancing for
the project, and following the approval of the prepayment of the
Section 202 Direct Loan, the owner and HUD must execute a SPRAC on a
form prescribed by HUD.
(2) The effective date of the SPRAC is the date of closing of the
refinancing.
(c) Payments to owners. The eligible SPRAC payments consist of the
following:
(1) Assistance to eligible families leasing assisted units. The
amount of the housing assistance payment (HAP) made to the owner for an
assisted unit leased to an eligible family is equal to the difference
between the contract rent for the unit and the tenant rent payable by
the family.
(2) Vacancy payments. SPRAC payments can be made to owners for
vacant assisted units. The amount of and conditions for vacancy
payments are described in Sec. 891.912(k).
(i) Vacancy payments only apply to units that were initially
occupied at the time the SPRAC was executed, in the case that those
units are later unoccupied during the term of the contract. The unit
must be in a decent, safe, and sanitary condition during the vacancy
period for which payment is claimed.
(ii) SPRAC payments are made monthly by HUD upon proper requisition
by the owner. If a SPRAC unit remains vacant for more than 60
consecutive days upon tenant turnover, the owner shall not be eligible
to receive further SPRAC payments for that SPRAC Unit.
[[Page 60625]]
(d) Utility reimbursement. As applicable, a utility reimbursement
will be paid to a family occupying an assisted unit if the utility
allowance (for tenant-paid utilities) exceeds the amount of the total
tenant payment (see 24 CFR 5.628):
(1) The SPRAC will provide that the owner must make this payment on
behalf of HUD. Funds will be paid to the owner in trust solely for the
purpose of making the additional payment.
(2) The owner may pay the utility reimbursement jointly to the
family and the utility company, or if the family and utility company
consent, directly to the utility company.
Sec. 891.905 Project rents.
(a) The initial project rents shall not exceed the lesser of
either:
(1) Comparable market rents for the market area as specified under
the recipient's rent comparability study (RCS), and approved by HUD; or
(2) A reasonable percentage of the fair market rents, as defined by
HUD.
(b) After initial rent setting, existing rents shall be adjusted by
an Operating Cost Adjustment Factor (OCAF), as defined in Sec.
402.2(c), on the anniversary of each executed SPRAC. Section 514(e)(2)
of Multifamily Assisted Housing Reform and Affordability Act (MAHRA)
(42 U.S.C. 1437f note) requires HUD to establish guidelines for rent
adjustments based on an OCAF. HUD has therefore developed a single
factor to be applied uniformly to all projects utilizing OCAFs as the
method by which renewal rents are established or adjusted. Under this
subpart, the contract administrator shall conduct annual project rent
adjustments according to the OCAF methodology prescribed under this
notice.
(c) Comparability adjustments. (1) At the expiration of each 5-year
period of the SPRAC, the contract administrator shall compare existing
contract rents with comparable market rents for the market area. At
such contract anniversary, the contract administrator will make any
adjustment necessary in the monthly contract rents necessary to set the
contract rents for all unit sizes at comparable market rents. Such
adjustments may result in a negative adjustment (decrease) or positive
adjustment (increase) of the contract rents for one or more unit sizes.
(2) To assist in the redetermination of contract rents, the
contract administrator may require that the owner submit to the
contract administrator a rent comparability study prepared at the
owner's expense.
Sec. 891.906 Contract term.
(a) The minimum term of the SPRAC for assisted units under this
subpart shall be 20 years.
(b) Any projects for which a SPRAC is provided shall be subject to
a use agreement to ensure continued project affordability having a term
of the longer of the term of the SPRAC, or such term as is required by
the new financing.
Sec. 891.908 Distributions and replacement reserves.
(a) Limitations on distributions. (1) Nonprofit owners are not
entitled to distributions of project funds.
(2) For the life of the SPRAC, project funds may only be
distributed to profit-motivated owners at the end of each fiscal year
of project operation following the effective date of the SPRAC after
all project expenses have been paid, or funds have been set aside for
payment, and all reserve requirements have been met. The first year's
distribution may not be made until cost certification, where
applicable, is completed. Distributions may not exceed the following
maximum returns:
(i) For projects receiving SPRAC assistance, the first year's
distribution will be limited to 6 percent on equity resulting from the
refinance of the property's mortgage for purposes of Section 202
prepayment and recapitalization. HUD may provide for increases in
subsequent years' distributions on an annual or other basis, and in
accordance with all HUD and other Federal regulations and requirements.
Any such adjustment will be made by notice in the Federal Register.
(ii) If the Section 202 project is/will be owned by a for-profit
limited partnership (meeting the statutory requirements in AHEO, as
amended) and the Section 202 project has a Section 8 HAP contract that
imposes no percentage cap on distributions, then, upon refinance/
prepayment, the for-profit limited partnership may continue receiving
the benefit of not having a percentage cap on distributions.
(3) Any short-fall in return may be made up from surplus project
funds in future years.
(4) If HUD determines at any time throughout the term of the SPRAC
that project funds exceed the amount needed for project operations,
reserve requirements, and distributions permitted under this subpart,
HUD may require the owner to deposit these residual receipts in an
account to be used to reduce SPRAC payments or for other project
purposes. Upon termination of the SPRAC, any excess funds that remain
in this residual receipts account must be remitted to HUD.
(5) In the case of HUD-insured projects, the provisions of this
section will apply instead of the otherwise applicable mortgage
insurance program regulations, except in the case of small, partially
assisted, or previously HUD-owned, insured projects that are and shall
remain subject to the applicable mortgage insurance regulations.
(b) Replacement reserves account. (1) A replacement reserve must be
established and maintained in an interest-bearing account to aid in
funding extraordinary maintenance and repair and replacement of capital
items.
(i) Under this subpart project owners will deposit an amount
equivalent to 0.006 of the cost of total structures, including main
buildings, accessory buildings, garages, and other buildings, or any
higher rate as required by HUD from time to time, in the replacement
reserve, annually. This amount will be adjusted each year by the amount
of the applicable OCAF, as determined by HUD.
(ii) The reserve must be built up to and maintained at a level
determined by HUD to be sufficient to meet projected requirements.
Should the reserve achieve that level, the rate of deposit to the
reserve may be reduced with the approval of HUD.
(iii) All earnings including interest on the reserve must be added
to the reserve.
(iv) Funds will be held by the mortgagee, and may be drawn from the
reserve and used only in accordance with HUD guidelines and with the
approval of, or as directed by, HUD.
(2) In the case of HUD-insured projects, the provisions of this
section will apply instead of the otherwise applicable mortgage
insurance provisions.
Sec. 891.910 Leasing to eligible families.
(a) Availability of assisted units for occupancy by eligible
families. (1) Eligible families must meet the income guidelines
established for a low-income family in accordance with title II of the
Section 202 Act of 2010. In the renting of the SPRAC units, the owner
must comply with the income eligibility requirements of the SPRAC
program. See Sec. 891.903 for definitions of Low-Income and Very Low-
Income.
(2) During the term of the SPRAC, an owner shall make available for
occupancy by eligible families the total number of units for which
assistance is committed under the SPRAC. For purposes of this section,
making units available for occupancy by eligible families means that
the owner:
[[Page 60626]]
(i) Is conducting marketing in accordance with Sec. 891.912(c);
(ii) Has leased or is making good faith efforts to lease the units
to eligible families, including taking all feasible actions to fill
vacancies by renting to such families; and
(iii) Has not rejected any eligible applicant family, except for
reasons acceptable to HUD.
(3) If the owner is temporarily unable to lease to eligible
families all units for which assistance is committed under the SPRAC,
one or more units may, with the prior approval of HUD, be leased to
otherwise eligible families that do not meet the income eligibility
requirements under paragraph (a)(1) of this section. Those over-income
families must pay 30 percent of their income towards rent, up to the
contract rent level.
(4) Failure on the part of the owner to comply with the
requirements under this section is a violation of the SPRAC and grounds
for all available legal remedies, including specific performance of the
SPRAC, suspension or debarment from HUD programs, and reduction of the
number of units under the SPRAC as set forth in paragraph (b) of this
section.
(b) Reduction of number of units covered by the SPRAC. HUD may
reduce the number of units covered by the SPRAC to the number of units
available for occupancy by eligible families if:
(1) The owner fails to comply with the requirements of paragraph
(a) of this section; or
(2) Notwithstanding any prior approval by HUD, HUD determines that
the inability to lease units to eligible families is not a temporary
issue.
(c) Restoration. An amendment to the SPRAC will be authorized by
HUD to provide for the subsequent restoration of the reduction made
under paragraph (b) of this section if:
(1) HUD determines that the restoration is justified by demand;
(2) The owner has a record of compliance with the owner's
obligations under the SPRAC; and
(3) Contract and budget authority is available.
(d) Occupancy by nonelderly or nondisabled families. (1) HUD may
permit SPRAC units in the project to be leased to nonelderly or
nondisabled families if:
(i) The owner has made reasonable efforts to lease assisted and
unassisted units to eligible families;
(ii) The owner has been granted HUD approval under paragraph (a) of
this section; and
(iii) The owner is temporarily unable to achieve or maintain a
level of occupancy sufficient to prevent financial default and
foreclosure.
(2) HUD approval under paragraph (d)(1) of this section will be of
limited duration. If there is a HUD-insured mortgage on the project,
HUD may impose terms and conditions for this approval that are
consistent with the program objectives, and necessary to protect its
interest under the FHA-insured loan.
(e) HUD's regulations in 24 CFR part 5, subpart L, apply to the
admission and occupancy of eligible families in cases where there is
incident of, or claimed to be incident of, or criminal activity related
to, domestic violence, dating violence, or stalking.
Sec. 891.912 Applicability of other Part 891 regulations.
(a) SPRAC administration. HUD is responsible for the administration
of the SPRAC.
(b) Notice upon SPRAC expiration. The owner is responsible for all
of the HAP notice requirements under Sec. 891.590.
(c) Responsibilities of the owner. The owner is responsible for all
requirements that pertain to responsibilities of the borrower under
Sec. 891.600, except for Sec. 891.600(a)(1) and (a)(3).
(d) Selection and admission of tenants. The owner must comply with
the requirements under Sec. 891.610, which pertain to selection and
admission of tenants, with the exception of Sec. 891.610(c). The
applicant must meet the low-income guidelines under section 8 of the
United States Housing Act of 1937 in order to be eligible under this
subpart.
(e) Obligations of the family. The obligations of the family are
provided under Sec. 891.415.
(f) Overcrowded and underoccupied units. The owner must comply with
the requirements under Sec. 891.650, except Sec. 891.650(b) does not
apply.
(g) Lease requirements. The lease requirements are provided in
Sec. 891.425.
(h) Adjustment of rents. The owner must comply with the
requirements under Sec. 891.6.905(b).
(i) Adjustment of utility allowances. In connection with
adjustments of contract rents as provided in Sec. 891.640(a), the
requirements for the adjustment of utility allowances provided in Sec.
891.440 apply.
(j) Conditions for receipt of vacancy payments for assisted units.
The owner must comply with the requirements under Sec. 891.650, except
Sec. 891.650(b) does not apply.
Sec. 891.914 Default by owner.
(a) If HUD determines that the owner is in default under the SPRAC,
HUD will notify the owner in writing of the actions required to cure
the default and of the remedies that must be satisfied, including an
action for specific performance under the SPRAC, and a reduction or
suspension of senior preservation rental assistance payments and
recovery of overpayments or inappropriate payments, where appropriate;
and
(b) If HUD determines that the owner is in default of any of the
terms and requirements of the SPRAC, HUD will notify the owner in
writing of the nature of the default, the actions required to cure the
default, and the time within which the default must be cured. The
notice will also identify the remedies that HUD may impose if the
default is not cured within the applicable time. These may include
termination of the SPRAC, reduction or suspension of payments under the
SPRAC, and recovery of overpayments or inappropriate payments, where
appropriate.
Sec. 891.916 SPRAC extension or renewal.
(a) A Section 202 owner shall agree in writing that upon expiration
of each annual increment of a given SPRAC, the owner shall accept each
offer of annual increment renewal during the period of the Use
Agreement.
(1) Each such offer of a renewal and the renewals themselves are
subject to the availability of appropriations and further subject to
the requirements of this part.
(2) The number of assisted units under the renewed SPRAC must equal
the number of assisted units under the original SPRAC, subject to the
availability of appropriations, except that HUD and the owner may agree
to reduce the number of assisted units by the number of assisted units
that are not occupied by eligible families at the time of the renewal.
(3) With respect to Section 202 Direct Loan prepayments with
approved SPRAC units, each owner shall agree to enter into a Section
202 Use Agreement, which will expire at either 20 years beyond the
maturity date of the original Section 202 Direct Loan or, the term of
new financing, whichever is longer.
(4) Upon expiration of the term of the SPRAC and at HUD's sole
discretion, the term of the SPRAC may be renewed or extended (subject
to available funds) pursuant to the terms and conditions of the SPRAC
and the Use Agreement.
(5) Each owner shall agree in writing to operate the assisted
Section 202 project for the full term specified under
[[Page 60627]]
the executed SPRAC and for each renewal term in accordance with all
statutory, regulatory, and administrative requirements of the SPRAC
program.
(b) The number of assisted units under the extended or renewed
SPRAC must equal the number of assisted units under the original SPRAC,
subject to the availability of appropriations, except that HUD and the
owner may agree to reduce the number of assisted units by the number of
assisted units that are not occupied by eligible families at the time
of the extension or renewal.
Sec. 891.918 Denial of admission, termination of tenancy, and
modification of the lease.
(a) HUD's regulations in 24 CFR part 5, subpart I, apply to
projects previously financed with Section 202 direct loans.
(b) HUD's regulations in 24 CFR part 247 apply to all decisions by
an owner to terminate the tenancy or modify the lease of a family
residing in a unit.
(c) In actions or potential actions to terminate tenancy, the owner
must follow HUD's regulations in 24 CFR part 5, subpart L, in all cases
where domestic violence, dating violence, stalking, or criminal
activity directly related to domestic violence, dating violence, or
stalking is involved or claimed to be involved.
Sec. 891.920 Security deposits.
(a) The general requirements for security deposits on assisted
units are provided under Sec. 891.435, with additional requirements
under Sec. 891.635.
(b) For purposes of this subpart, additional requirements apply:
(1) The owner must maintain a record of the amount in the
segregated interest-bearing account that is attributable to each family
in residence in the project.
(2) Annually for all families, and when computing the amount
available for disbursement under Sec. 891.435(b)(3), the owner must
allocate to the family's balance the interest accrued on the balance
during the year.
(3) Unless prohibited by state or local law, the owner may deduct
for the family, from the accrued interest for the year, the
administrative cost of computing the allocation to the family's
balance. The amount of the administrative cost adjustment must not
exceed the accrued interest allocated to the family's balance for the
year.
Sec. 891.922 Labor standards.
(a) All laborers and mechanics (other than volunteers under the
conditions set out in 24 CFR part 70) employed by contractors and
subcontractors in construction, rehabilitation, or repair performed in
connection with the provision of assistance under this subpart to nine
or more units of housing in a project where the total cost of such
repair, replacement, or capital improvement is in excess of $500,000
shall be paid wages at rates not less than those prevailing in the
locality, as determined by the Secretary of Labor in accordance with
the Davis-Bacon Act (40 U.S.C. 3141 et seq.).
(b) Contracts involving employment of laborers and mechanics shall
be subject to the provisions of the Contract Work Hours and Safety
Standards Act (40 U.S.C. 3701 et seq.).
(c) Sponsors, owners, contractors, and subcontractors must comply
with related rules, regulations, and requirements as directed by HUD.
0
42. A new part 892 is added to read as follows:
PART 892--SERVICE COORDINATOR IN MULTIFAMILY HOUSING AND ASSISTED
LIVING CONVERSION PROGRAMS
Subpart A--General Program Requirements
Sec.
892.100 Applicability and scope.
892.105 Definitions.
892.110 Eligible funding recipients.
892.115 Nondiscrimination and equal opportunity requirements.
892.120 Environmental requirements.
Subpart B--Service Coordinator in Multifamily Housing Program
892.200 Purpose and applicability.
892.205 Definitions.
892.210 Sources of funding.
892.215 Application and selection.
892.220 Duties.
892.225 Qualifications.
892.230 Form of employment or retention.
892.235 Training.
892.240 Administrative requirements.
892.245 Confidentiality.
892.250 Program costs.
892.255 Services for low-income elderly or persons with
disabilities.
892.260 Limitations.
892.265 Sanctions.
Subpart C--Assisted Living Conversion Program
892.300 Purpose and applicability.
892.305 Definitions.
892.310 Other Federal requirements.
892.315 Additional project eligibility.
892.320 Notice of funding availability.
892.325 Requirements for services.
892.330 Section 8 project-based assistance.
892.335 Vacancy payment.
Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437f, and 3535(d).
Subpart A--General Program Requirements
Sec. 892.100 Applicability and scope.
The requirements set forth in this subpart A apply to the Service
Coordinator in Multifamily Housing program, as authorized under
sections 671, 672, 674, 676, and 677 of the Housing and Community
Development Act of 1992 (Pub. L. 102-550), as amended by section 851 of
the AHEO (Pub. L. 106-569); and to the Assisted Living Conversion
program, as authorized under section 202b of the Housing Act of 1959
(12 U.S.C. 1701q-2).
Sec. 892.105 Definitions.
The following definitions apply, as appropriate, throughout this
part. Other terms with definitions unique to the Service Coordinator in
Multifamily Housing and Assisted Living Conversion programs are defined
in Sec. Sec. 892.205 and 892.305, as applicable.
Activities of daily living (ADLs) shall have the same meaning as
provided under Sec. 891.205.
Elderly person means a person who is at least 62 years of age.
Eligible housing project means:
(1) Housing for which project-based assistance is provided under
section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f);
(2) Housing that is assisted under section 202 of the Housing Act
of 1959 (12 U.S.C. 1701q);
(3) Housing that is assisted under section 202 of the Housing Act
of 1959, as such section existed before the enactment of the National
Affordable Housing Act (Public Law 101-625);
(4) Housing financed by a loan or mortgage insured under section
221(d)(3) of the National Housing Act (12 U.S.C. 1715) that bears
interest at a rate determined under section 221(d)(5) of such Act;
(5) Section 515 rural housing projects, as authorized under section
515 of the Housing Act of 1949 (42 U.S.C. 1485), receiving Section 8
rental assistance;
(6) Housing insured, assisted, or held by the Secretary, a state,
or a state agency under section 236 of the National Housing Act (12
U.S.C. 1715z-1); or
(7) Housing constructed or substantially rehabilitated pursuant to
assistance provided under section 8(b)(2) of the United States Housing
Act of 1937 (42 U.S.C. 1437f), as in effect before October 1, 1983,
that is assisted under a contract for assistance under such section.
Frail elderly person means an elderly person who is unable to
perform at least three of the activities of daily living described in
this subpart.
Functional limitations shall have the same meaning as provided
under Sec. 891.205.
Housing assistance means, with respect to federally assisted
housing as
[[Page 60628]]
provided under this part, the grant, contribution, capital advance,
loan, mortgage insurance, or other assistance provided for an eligible
housing project, as defined under this section. This term also includes
any assistance provided for the housing by HUD, including any rental
assistance for low-income occupants.
Instrumental activities of daily living (IADLs). Under this part,
the definition of instrumental activities of daily living has the same
meaning as in Sec. 891.205.
Low-income and very low-income family shall have the same meanings
as provided in section 3(b)(2) of the United States Housing Act of 1937
(42 U.S.C. 1437a).
Owner shall have the same meaning as provided under Sec. 891.205.
Person with disabilities shall have the same meaning as provided
under Sec. 891.305.
Private nonprofit organization shall have the same meaning as
provided under Sec. 891.205.
Retain means service coordination performed by a partnering agency
that results in a reduction to the project's cost to hire or contract a
service coordinator.
Service coordinator means a social service staff person hired,
contracted, or retained by the assisted housing owner or its management
company, who assists residents in identifying, locating, and acquiring
supportive services necessary for elderly persons and nonelderly
persons with disabilities to live independently and age in place.
Supportive services mean health-related services, mental health
services, services for nonmedical counseling, meals, transportation,
ADL services, (eating, bathing, grooming, dressing, transferring, and
other such activities as HUD deems essential for maintaining
independent living), housekeeping, chore assistance, safety, group and
socialization activities, assistance with medications (in accordance
with any applicable state laws), case management, personal emergency
response, and other appropriate services that are designed to prevent
hospitalization or institutionalization and permit elderly residents to
age in place and live independently in a residential setting. The
supportive services may be provided through any agency of the Federal,
State or Local Government, or other public or private department,
agency or organization.
Service expenses means those costs of providing supportive services
necessary to permit residents to live independently, age in place, and
to prevent hospitalization or institutionalization.
Vicinity of the housing project means the area close enough to the
eligible housing project to allow for easy access by individuals to the
service coordinator's office space, and by service coordinators to
individuals' residences.
Sec. 892.110 Eligible funding recipients.
Recipients who receive assistance under the Service Coordinator in
Multifamily Housing and Assisted Living programs must:
(a) Own an eligible housing project, as defined in Sec. 892.105;
(b) Comply with any regulatory agreement, HAP contract, or any
other HUD grant or contract, where applicable;
(c) Be current in mortgage payments for any FHA-insured loan or
Section 202 direct loan, unless the entity has signed a work-out
agreement for the delinquent loan and is current on and in compliance
with the workout agreement, as applicable; and
(d) Meet the Physical Condition Standards in 24 CFR part 5, subpart
G, as evidenced by a satisfactory score in the most recent final
physical inspection report or by an approved work-out plan for housing
projects that received a failing score.
Sec. 892.115 Nondiscrimination and equal opportunity requirements.
(a) In general. Recipients under this part shall comply with all
applicable nondiscrimination and equal opportunity requirements,
including HUD's generally applicable nondiscrimination and equal
opportunity requirements at 24 CFR 5.105(a). This includes, but is not
limited to, the Fair Housing Act and its implementing regulations at 24
CFR part 100; title VI of the Civil Rights Act of 1964 and its
implementing regulations at 24 CFR part 1; section 504 of the
Rehabilitation Act of 1973 and its implementing regulations at 24 CFR
part 8; and titles II and III of the Americans with Disabilities Act
and their implementing regulations at 28 CFR parts 35 and 36.
(b) Affirmatively furthering fair housing. Recipients under this
part shall affirmatively further fair housing in their use of funds
under this part. Specific activities will be detailed in the individual
program NOFAs.
(c) Most integrated setting appropriate. Recipients under this part
shall ensure that programs or activities under this part are
administered in the most integrated setting appropriate to the needs of
qualified individuals with disabilities. The most integrated setting is
defined as a setting that enables individuals with disabilities to
interact with nondisabled persons to the fullest extent possible. See
the Home and Community-Based Services regulations of the U.S.
Department of Health and Human Services at 42 U.S.C. part 441, the
regulations pertaining to nondiscrimination on the basis of disability
in HUD programs and activities at 24 CFR 8(d), and the regulations of
the U.S. Department of Justice pertaining to nondiscrimination on the
basis of disability in state and local government services at 28 CFR
35.130(d).
Sec. 892.120 Environmental requirements.
(a) The National Environmental Policy Act of 1969, and HUD's
implementing regulations at 24 CFR part 50, including the related
authorities described in 24 CFR 50.4, apply to this part.
(b) If funding under subpart B will be used to cover the cost of
any activities that are not exempt from environmental review
requirements, such as acquisition, leasing, construction, or building
rehabilitation, HUD must perform an environmental review to the extent
required by 24 CFR part 50, prior to grant award.
Subpart B--Service Coordinator in Multifamily Housing Program
Sec. 892.200 Purpose and applicability.
(a) Purpose. The Service Coordinator in Multifamily Housing program
allows owners of eligible projects to assist elderly persons and
nonelderly persons with disabilities living in HUD-assisted housing and
in the vicinity of the housing project to obtain needed supportive
services from the community and to continue living as independently as
possible in their homes. HUD makes funds available to employ and
support a service coordinator, by awarding grants and by approving
owners' requests to use certain classes of project funds to pay for the
costs of providing a service coordinator.
(b) Applicability. The requirements set forth in this subpart B
apply only to the Service Coordinator in Multifamily Housing program,
as authorized under sections 671, 672, 674, 676, and 677 of the Housing
and Community Development Act of 1992 (Pub. L. 102-550).
Sec. 892.205 Definitions.
In addition to the definitions under Sec. 892.105, the following
definitions apply to this subpart:
At-risk elderly person means an elderly person who is unable to
perform one or two of the ADLs, as defined under Sec. 892.105.
[[Page 60629]]
Available funds means funds for supportive services, as approved by
HUD, and which must not be used to address critical property needs.
Eligible project includes eligible housing projects as defined
under Sec. 892.105 and means a project that:
(1) Has no available project funds as defined under Sec. 892.105
to pay for a service coordinator; and
(2) Is designed or designated for the elderly or persons with
disabilities and continues to operate as such. This includes any
building within a mixed-use development that was designed for occupancy
by elderly persons or persons with disabilities at its inception and
continues to operate as such, or consistent with title VI, subtitle D,
of the Housing and Community Development Act of 1992 (Public Law 102-
550). If a project was not so designed at its inception for occupancy
by elderly persons or persons with disabilities, an eligible project
includes a property in which the owner gives preferences in tenant
selection (with HUD approval) to eligible elderly persons or nonelderly
persons with disabilities for all units in that property.
Sec. 892.210 Sources of funding.
Owners of eligible housing projects may request the use of or apply
for the following types of funding to cover service coordinator program
expenses:
(a) Project rent and other income. Service coordinator expenses, in
accordance with Sec. 891.250(b), is an eligible project expense. This
includes funding provided through:
(1) Section 8 of the United States Housing Act of 1937 (42 U.S.C.
1437f);
(2) PRACs, pursuant to section 802 of the National Affordable
Housing Act (42 U.S.C. 8011); and
(3) Income generated from programs in paragraphs (a)(1) and (2) of
this section or from tenant rental payments that exceed operating
expenses and that may be used only upon approval from HUD.
(b) Multifamily service coordinator grants, subject to
appropriations.
Sec. 892.215 Application and selection.
HUD will provide through a NOFA the form and manner of applications
for grants under this subpart and for selection of applicants to
receive such grants.
Sec. 892.220 Duties.
(a) In general. Service coordinators must perform the following
duties:
(1) Perform an initial needs screening, with subsequent annual
reviews, to identify service needs. If a comprehensive needs assessment
is required, service coordinators must refer tenant to a qualified
professional;
(2) Maintain detailed case files on each resident served;
(3) Refer and link the residents to supportive services available
in and provided by trusted partners/resources in the general community.
Such services may include, but are not limited to, case management,
personal assistance, homemaker services, meals-on-wheels/congregate
meal provision, transportation, counseling, visiting nurse, preventive
health screening/wellness training, and legal advocacy;
(4) Educate residents on matters such as, but not limited to,
service availability, application procedures, client rights, etc.;
(5) Establish linkages with agencies such as, but not limited to, a
local area agency on aging (AAA)/Aging and Disability Resource Center
(ADRC) and home and community-based service providers. Perform market
analysis to determine/develop the best ``deals'' in service pricing, to
assure individualized, flexible, and creative services for the involved
resident. Provide advocacy as appropriate;
(6) Provide case management when such service is not available
through the general community. This might include evaluation of health,
psychological and social needs, development of an individually tailored
case plan for services, periodic reassessment of the residents'
situations and needs, and assistance identifying, obtaining, and
completing appropriate documentation in order to secure needed
services;
(7) Monitor the ongoing provision of services from community
agencies. Manage the provision of supportive services where
appropriate;
(8) Help the residents build informal support networks with other
residents, family, and friends;
(9) Work and consult with tenant organizations and resident
management corporations. Provide training to the property's residents
in the obligations of tenancy or coordinate such training;
(10) Create a directory of service providers for use by both
housing staff and residents;
(11) Educate and train other staff of the management team on issues
related to aging-in-place and service coordination, to help them to
better work with and assist the residents;
(12) Provide service coordination to low-income elderly individuals
or nonelderly persons with disabilities living in the vicinity of an
eligible property. Community residents should come to your housing site
to meet with and receive service from the service coordinator, but you
must make reasonable accommodations for those individuals with
disabilities unable to travel to the housing site, and have the option
to make accommodations for other community residents;
(13) Affirmatively market the service coordinator's services to
residents of the property and surrounding community who are least
likely to inquire; find counselors to help tenants with counseling for
mobility and fair housing choice.
(b) Prohibited duties. Service coordinators must not perform the
following activities:
(1) Act as a recreational or activities director; or
(2) Provide supportive services directly.
Sec. 892.225 Qualifications.
Service coordinators must possess the following qualifications:
(a) A bachelor's degree;
(b) Experience in social service delivery for the elderly and
persons with disabilities;
(c) Demonstrated working knowledge of supportive services and other
resources available for the elderly and persons with disabilities in
the area served by the eligible housing project; and
(d) Demonstrated ability to advocate, organize, problem-solve, and
provide results for the elderly and persons with disabilities.
(e) HUD may allow for the substituting of a bachelor's degree based
on the extent of qualifications in paragraphs (b) through (d) of this
section and/or other qualifications. The extent of qualifications will
be determined by HUD through a NOFA.
Sec. 892.230 Form of employment or retention.
An owner may directly employ a service coordinator or may procure
by contract the services of a service coordinator. Owners may also
utilize a service coordinator whose expenses are supported by external
sources of funding.
Sec. 892.235 Training.
Service coordinators must receive and document training, at
minimum, in the following subject areas:
(a) The aging process;
(b) Elder and disability services;
(c) Eligibility for and procedures of Federal and applicable state
entitlement programs;
(d) Legal liability issues relating to providing service
coordination;
(e) Drug and alcohol use and abuse by the elderly; and
(f) Mental health issues.
[[Page 60630]]
Sec. 892.240 Administrative requirements.
(a) Owners must provide on-site private office space for the
service coordinator to allow for confidential meetings with residents.
Office space must be accessible to persons with disabilities and meet
all Federal accessibility standards, including section 504 of the
Rehabilitation Act of 1973, 24 CFR part 8, and titles II and III of the
Americans with Disabilities Act of 1990, as applicable.
(b) Resident files must be kept in a secured location and only be
accessible to the service coordinator as required under Sec. 892.245,
unless the residents provide signed consent otherwise. Resident files
must include documentation that demonstrates the resident's supportive
service needs, referrals for needed supportive services (both short-
and long-term) and follow-up from the service coordinator on the types
and amounts of services residents receive, and any aging-in-place
statistics or information.
(c) As directed, owners must submit to HUD performance reports
completed by the service coordinator and financial reports detailing
program expenses.
Sec. 892.245 Confidentiality.
(a) Service coordinators must store in a secure manner all files
containing information related to the provision of supportive services
to residents served by the service coordinator. Files must be
accessible only to the service coordinator.
(1) A service coordinator may not disclose to any person any
individually identifiable information that relates to the provision of
supportive services to a resident, unless and only to the extent the
resident to whom the information relates has knowingly consented. Any
such consent must be in writing and be signed by the resident, and must
clearly identify the parties to whom the information may be disclosed,
as well as the scope and purpose of the disclosure.
(2) In the absence of an applicable consent to disclosure in
accordance with this section, service coordinators may nonetheless
disclose individually identifiable information that relates to the
provision of supportive services to a resident, to the extent necessary
to protect the safety or security of a resident, housing project staff,
or the housing project.
(b) These policies must be consistent with maintaining
confidentiality of information related to any individual as required by
the Privacy Act of 1974 (5 U.S.C. 552a).
Sec. 892.250 Program costs.
(a) In general. Funds provided under Sec. 892.210 may be used to
cover the costs of employing or otherwise retaining the services of one
or more service coordinators.
(b) Eligible costs. (1) Eligible program expenses include:
(i) Salary and fringe benefits;
(ii) Training;
(iii) Creating private office space;
(iv) Purchase of office furniture and equipment; supplies and
materials; and computer hardware, software, and Internet service; and
(v) Other related administrative expenses (both direct and indirect
costs) approved by HUD.
(2) Eligible costs must be reasonable, necessary, and recognized as
expenditures in compliance with the uniform government-wide cost
principles and other grant requirements found in 24 CFR parts 84 and
85.
(i) Grant recipients must additionally be subject to allowable cost
provisions in NOFAs and grant agreements.
(ii) Owners of eligible housing projects who use a class or classes
of project funds under this subpart must comply with the requirements
that are applicable to approved withdrawals or uses of the class or
classes of project funds under their governing agreements with HUD.
(c) Ineligible costs. Ineligible program expenses are any costs
that are not directly related to employing the service coordinator.
Examples are expenses associated with holiday parties, purchase of
televisions or exercise equipment, and recreational activities for
residents.
Sec. 892.255 Services for low-income elderly or persons with
disabilities.
A service coordinator funded under Sec. 892.210 may provide
services to low-income elderly individuals or nonelderly persons with
disabilities living in the vicinity of an eligible housing project.
Community residents choosing to seek assistance from a service
coordinator must come to the eligible housing project to meet with and
receive assistance from the service coordinator. Service coordinators
must make reasonable accommodations for those persons with disabilities
unable to travel to the housing project, and have the option to make
accommodations for other community residents.
Sec. 892.260 Sanctions.
(a) If HUD determines that an owner has not complied with the
requirements in this subpart, then HUD may impose any or a combination
of the following sanctions:
(1) Temporarily withhold reimbursements, approvals, extensions, or
renewals until the owner adequately remedies the deficiency;
(2) Disallow all or part of the cost attributable to activities
undertaken not in compliance with applicable requirements, and if
applicable, require the owner to remit to HUD or to redeposit in the
source account funds in the amount that has been disallowed;
(3) Suspend or terminate, in part or in whole, the grant or
approval to use project funds;
(4) Place conditions on the awards of grants or approvals of one or
more classes of project funds so that the deficiency be remedied and
that adequate steps be taken to prevent future deficiencies; or
(5) Other sanctions authorized by law or regulation.
b) Reserved.
Subpart C--Assisted Living Conversion Program
Sec. 892.300 Purpose and applicability.
(a) Purpose. The Assisted Living Conversion program provides grants
for the conversion of elderly housing to assisted living facilities and
other purposes. Grants provided under this program must be used for the
purposes described in section 202b of the Housing Act of 1959 (12
U.S.C. 1701q-2).
(b) Applicability. The requirements set forth in this subpart C
apply only to eligible projects under the Assisted Living Conversion
program, as authorized under section 202b(b)(1) of the Housing Act of
1959 (12 U.S.C. 1701q-2).
Sec. 892.305 Definitions.
In addition to the applicable definitions in Sec. 892.105, the
following definitions are applicable to the Assisted Living Conversion
program, as provided in this subpart:
Assisted living facility (ALF) shall have the same meaning as
provided under section 232(b) of the National Housing Act (12 U.S.C.
1715w(b)), which states that an ``assisted living facility'' means a
public facility, proprietary facility, or facility of a private
nonprofit corporation that:
(1) Is licensed and regulated by the state (or if there is no state
law providing for such licensing and regulation by the state, by the
municipality or other political subdivision in which the facility is
located);
(2) Makes available to residents supportive services to assist the
residents in carrying out activities of
[[Page 60631]]
daily living, as defined under Sec. 891.205; and
(3) Provides separate dwelling units for residents, each of which
contain a full bathroom and may contain a full kitchen, and
(4) Includes common rooms and other facilities appropriate for the
provision of supportive services to the residents of the facility.
Congregate space (hereinafter referred to as community space) shall
have the same meaning as the definition provided under section
202(h)(1) of the Housing Act of 1959 (12 U.S.C. 1701q(h)(1)). The term
``congregate space'' (also referred to as community space) excludes
halls, mechanical rooms, laundry rooms, parking areas, dwelling units,
and lobbies. Community space does not include commercial areas.
Conversion means activities in an eligible project designed to
convert dwelling units into assisted living facilities. Conversion can
include unit configuration and related common and service space, and
any necessary remodeling, consistent with the Uniform Federal
Accessibility Standards, section 504 of the Rehabilitation Act of 1973,
and HUD's implementing regulations at 24 CFR part 8, as well as any
applicable provisions of the Americans with Disabilities Act of 1990
and applicable Fair Housing Act design and construction requirements
for all portions of the development physically affected by such
conversion. Where conversion may involve Medicaid reimbursement,
conversion should be undertaken in accordance with the Home and
Community-Based Services regulations of the U.S. Department of Health
and Human Services (see 42 U.S.C. part 441).
Eligible project means eligible housing projects as defined under
Sec. 892.105; eligible projects as described in section 638(2) of the
Housing and Community Development Act; and section 202 properties, as
defined under Sec. 891.105; with a PRAC.
Emergency capital repairs are repairs to a project that correct a
situation that presents an immediate threat to the life, health, and
safety of the project tenants and which if left untreated, would result
in an evacuation of the tenants or long-term tenant displacement.
Repairs mean substantial and emergency capital repairs to a project
that are needed to rehabilitate, modernize, or retrofit aging
structures, common areas, or individual dwelling units.
Service-enriched activities means activities designed to convert
dwelling units in the eligible project to service-enriched housing for
elderly persons.
Service-enriched housing means housing that:
(1) Makes available, through licensed or certified third party
service providers, supportive services to assist the residents in
carrying out activities of daily living, as defined under Sec.
891.205;
(2) Includes the position of a service coordinator;
(3) Provides separate dwelling units for residents, each of which
contains a full kitchen and bathroom;
(4) Includes common rooms and other facilities appropriate for the
provision of supportive services to the residents of the housing; and
(5) Provides residents with control over health care and supportive
services decisions, including the right to accept, decline, or choose
such services, and to have the choice of a provider.
Sec. 892.310 Other Federal requirements.
In addition to the requirements set forth in 24 CFR part 5, the
following requirements in this section apply to the Assisted Living
Conversion program under this subpart.
(a) Affirmative fair housing marketing.
(1) The affirmative fair housing marketing requirements of 24 CFR
part 200, subpart M, and the implementing regulations at 24 CFR part
108; and
(2) The fair housing advertising and poster guidelines at 24 CFR
parts 109 and 110.
(b) Environmental requirements. The National Environmental Policy
Act of 1969; HUD's implementing regulations at 24 CFR part 50,
including compliance with 24 CFR 50.3(i) and the related authorities
described in 24 CFR 50.4. For the purposes of Executive Order 11988,
Floodplain Management (42 FR 26951, 3 CFR, 1977 Comp., p. 117), as
amended by Executive Order 12148 (44 FR 43239, 3 CFR, 1979 Comp., p.
412), and implementing regulations in 24 CFR part 55, all actions shall
be treated as critical actions requiring consideration of the 500-year
floodplain.
(c) Flood insurance. The Flood Disaster Protection Act of 1973 (42
U.S.C. 4001).
(d) Coastal Barrier Resource Units. The Coastal Barrier Resources
Act (16 U.S.C. 3501).
(e) Labor standards. (1) All laborers and mechanics (other than
volunteers under the conditions set out in 24 CFR part 70) employed by
contractors and subcontractors in the construction (including
rehabilitation) of housing with 12 or more units assisted under this
subpart shall be paid wages at rates not less than those prevailing in
the locality, as determined by the Secretary of Labor in accordance
with the Davis-Bacon Act (40 U.S.C. 276a-276a-5). A group home for
persons with disabilities is not covered by the labor standards under
this paragraph.
(2) Contracts involving employment of laborers and mechanics under
this subpart shall be subject to the provisions of the Contract Work
Hours and Safety Standards Act (40 U.S.C. 327-333).
(3) Sponsors, owners, contractors, and subcontractors must comply
with all rules, regulations, and requirements related to the Davis-
Bacon Act (40 U.S.C. 276a-276a-5).
(f) Displacement and relocation. (1) Minimizing displacement.
Consistent with the other goals and objectives of this subpart,
sponsors and owners (or borrowers, if applicable) shall assure that
they have taken all reasonable steps to minimize the displacement of
persons (families, individuals, businesses, nonprofit organizations, or
farms) as a result of a project assisted under this subpart.
(2) Relocation assistance for displaced persons. A displaced person
must be provided relocation assistance at the levels described in, and
in accordance with the requirements of, the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, as
amended (42 U.S.C. 4201-4655), as implemented by 49 CFR part 24.
(g) Intergovernmental review. The requirements for
intergovernmental review in Executive Order 12372 (47 FR 30959, 3 CFR,
1982 Comp., p. 197), as amended by Executive Order 12416 (48 FR 15587,
3 CFR, 1983 Comp., p. 186), and the implementing regulations at 24 CFR
part 52 are applicable to this program.
(h) Lead-based paint. The requirements of the Lead-Based Paint
Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-
Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and
implementing regulations at part 35, subparts A, B, H, J, and R of this
title apply to these programs.
Sec. 892.315 Additional project eligibility.
In addition to the criteria for eligible housing projects as
defined under Sec. 892.105, projects receiving Assisted Living
Conversion Programs (ALCP) funds must also meet the following criteria:
(a) The project must be owned by a private nonprofit organization,
as defined under section 202 of the Housing Act of 1959 (12 U.S.C.
1701q);
(b) The project must be designated primarily for occupancy by
elderly persons; and
[[Page 60632]]
(c) The project may be unused or underutilized commercial property,
except that the Secretary may not provide grants under this section for
more than three such properties.
Sec. 892.320 Notice of funding availability.
(a) In general. HUD will issue a separate notice of funding
availability (NOFA) for the Assisted Living Conversion program. The
NOFA will contain specific information on how and when to apply for the
grant authority, the contents of the application, and the selection
process.
(b) Application. An application for assistance under this subpart
must contain the requirements under this section, in addition to the
requirements outlined in the NOFA:
(1) A description of the substantial capital repairs or the
proposed conversion activities for either an assisted living facility
or service-enriched housing for which a grant under this subpart is
requested;
(2) The amount of the grant requested to complete the substantial
capital repairs or conversion activities; and
(3) A description of the resources that are expected to be made
available, if any, in conjunction with the requested funding.
Sec. 892.325 Requirements for services.
(a) HUD will ensure that assistance under this subpart provides
firm commitments for the funding of services to be provided in the
assisted living facility or service-enriched housing as described in
section 202b(d)(1) of the Housing Act of 1959 (12 U.S.C. 1701q-
2(d)(1)).
(2) HUD will require evidence that each recipient of a grant for
service-enriched housing provide relevant and timely disclosure of
information to residents or potential residents as described in section
202b(d)(2) of the Housing Act of 1959 (12 U.S.C. 1701q-2(d)(2)).
(b) Reserved.
Sec. 892.330 Section 8 project-based assistance.
(a) Eligibility. Multifamily projects, which include one or more
dwelling units that have been converted to assisted living facilities
or service-enriched housing using funding made under this subpart, are
eligible for project-based assistance under section 8 of the United
State Housing Act of 1937 (42 U.S.C. 1437f). Such project-based
assistance is provided in the same manner in which the project would be
eligible for such assistance, but for the assisted living facilities or
service-enriched housing in the project.
(b) Calculation of rent. The maximum monthly rent of a dwelling
unit that is an assisted living facility or service-enriched housing
with respect to which assistance payments are made under this section
must not include charges attributable to services relating to assisted
living.
Sec. 892.335 Vacancy payment.
A vacancy payment, as related to assistance provided under this
subpart, is limited to 30 days after a conversion to an assisted living
facility.
Dated: September 24, 2014.
Carol J. Galante,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2014-23276 Filed 10-6-14; 8:45 am]
BILLING CODE 4210-67-P