[Federal Register Volume 80, Number 136 (Thursday, July 16, 2015)]
[Rules and Regulations]
[Pages 42271-42371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17032]



[[Page 42271]]

Vol. 80

Thursday,

No. 136

July 16, 2015

Part III





Department of Housing and Urban Development





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24 CFR Parts 5, 91, 92, et al.





Affirmatively Furthering Fair Housing; Final Rule

Federal Register / Vol. 80, No. 136 / Thursday, July 16, 2015 / Rules 
and Regulations

[[Page 42272]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

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

[Docket No. FR-5173-F-04]
RIN 2501-AD33


Affirmatively Furthering Fair Housing

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: Through this final rule, HUD provides HUD program participants 
with an approach to more effectively and efficiently incorporate into 
their planning processes the duty to affirmatively further the purposes 
and policies of the Fair Housing Act, which is title VIII of the Civil 
Rights Act of 1968. The Fair Housing Act not only prohibits 
discrimination but, in conjunction with other statutes, directs HUD's 
program participants to take significant actions to overcome historic 
patterns of segregation, achieve truly balanced and integrated living 
patterns, promote fair housing choice, and foster inclusive communities 
that are free from discrimination. The approach to affirmatively 
furthering fair housing carried out by HUD program participants prior 
to this rule, which involved an analysis of impediments to fair housing 
choice and a certification that the program participant will 
affirmatively further fair housing, has not been as effective as 
originally envisioned. This rule refines the prior approach by 
replacing the analysis of impediments with a fair housing assessment 
that should better inform program participants' planning processes with 
a view toward better aiding HUD program participants to fulfill this 
statutory obligation.
    Through this rule, HUD commits to provide states, local 
governments, public housing agencies (PHAs), the communities they 
serve, and the general public, to the fullest extent possible, with 
local and regional data on integrated and segregated living patterns, 
racially or ethnically concentrated areas of poverty, the location of 
certain publicly supported housing, access to opportunity afforded by 
key community assets, and disproportionate housing needs based on 
classes protected by the Fair Housing Act. Through the availability of 
such data and available local data and knowledge, the approach provided 
by this rule is intended to make program participants better able to 
evaluate their present environment to assess fair housing issues such 
as segregation, conditions that restrict fair housing choice, and 
disparities in access to housing and opportunity, identify the factors 
that primarily contribute to the creation or perpetuation of fair 
housing issues, and establish fair housing priorities and goals.

DATES: Effective Date: August 17, 2015.

FOR FURTHER INFORMATION CONTACT: George D. Williams, Sr., Deputy 
Assistant Secretary for Policy, Legislatives Initiatives and Outreach, 
Office of Fair Housing and Equal Opportunity, Department of Housing and 
Urban Development, 451 7th Street SW., Room 5246, Washington, DC 20410; 
telephone number 866-234-2689 (toll-free) or 202-402-1432 (local). 
Individuals who are deaf or hard of hearing and individuals with speech 
impairments may access this number via TTY by calling the toll-free 
Federal Relay Service during working hours at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

Purpose of the Regulatory Action

    From its inception, the Fair Housing Act (and subsequent laws 
reaffirming its principles) has not only prohibited discrimination in 
housing related activities and transactions but has also provided, 
through the duty to affirmatively further fair housing (AFFH), for 
meaningful actions to be taken to overcome the legacy of segregation, 
unequal treatment, and historic lack of access to opportunity in 
housing. Prior to this rule, HUD directed participants in certain HUD 
programs to affirmatively further fair housing by undertaking an 
analysis of impediments (AI) that was generally not submitted to or 
reviewed by HUD. This approach required program participants, based on 
general guidance from HUD, to identify impediments to fair housing 
choice within their jurisdiction, plan, and take appropriate actions to 
overcome the effects of any impediments, and maintain records of such 
efforts. Informed by lessons learned in localities across the country, 
and with program participants, civil rights advocates, other 
stakeholders, and the U.S. Government Accountability Office all 
commenting to HUD that the AI approach was not as effective as 
originally envisioned, in 2013 HUD initiated the rulemaking process to 
propose a new and more effective approach for program participants to 
use in assessing the fair housing issues and factors in their 
jurisdictions and regions and for establishing fair housing priorities 
and goals to address them.
    The approach proposed by HUD in 2013, and adopted in this final 
rule, with revisions made in response to public comments, strengthens 
the process for program participants' assessments of fair housing 
issues and contributing factors and for the establishment of fair 
housing goals and priorities by requiring use of an Assessment Tool, 
providing data to program participants related to certain key fair 
housing issues, and instituting a process in which HUD reviews program 
participants' assessments, prioritization, and goal setting. While the 
statutory duty to affirmatively further fair housing requires program 
participants to take actions to affirmatively further fair housing, 
this final rule (as was the case in the proposed rule) does not mandate 
specific outcomes for the planning process. Instead, recognizing the 
importance of local decisionmaking, the new approach establishes basic 
parameters to help guide public sector housing and community 
development planning and investment decisions in being better informed 
about fair housing concerns and consequently help program participants 
to be better positioned to fulfill their obligation to affirmatively 
further fair housing.

Summary of Legal Authority

    The Fair Housing Act (title VIII of the Civil Rights Act of 1968, 
42 U.S.C. 3601-3619) declares that it is ``the policy of the United 
States to provide, within constitutional limitations, for fair housing 
throughout the United States.'' See 42 U.S.C. 3601. Accordingly, the 
Fair Housing Act prohibits, among other things, discrimination in the 
sale, rental, and financing of dwellings, and in other housing-related 
transactions because of ``race, color, religion, sex, familial 
status,\1\ national origin, or handicap.'' \2\ See 42 U.S.C. 3604 and 
3605. Section 808(d) of the Fair Housing Act requires all executive 
branch departments and agencies administering housing and urban 
development programs and activities to administer these programs in a 
manner that affirmatively furthers fair housing. See 42 U.S.C. 3608.

[[Page 42273]]

Section 808(e)(5) of the Fair Housing Act (42 U.S.C. 3608(e)(5)) 
requires that HUD programs and activities be administered in a manner 
affirmatively furthering the policies of the Fair Housing Act.
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    \1\ The term ``familial status'' is defined in the Fair Housing 
Act at 42 U.S.C. 3602(k). It includes one or more children who are 
under the age of 18 years being domiciled with a parent or guardian.
    \2\ Although the Fair Housing Act was amended in 1988 to extend 
civil rights protections to persons with ``handicaps,'' the term 
``disability'' is more commonly used and accepted today to refer to 
an individual's physical or mental impairment that is protected 
under federal civil rights laws, the record of such an impairment, 
and being regarded as having such an impairment. For this reason, 
except where quoting from the Fair Housing Act, this preamble and 
final rule use the term ``disability.''
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Summary of the Major Provisions of the Rule

    The Affirmatively Furthering Fair Housing (AFFH) regulations 
promulgated by this final rule:
    a. Replace the AI with a more effective and standardized Assessment 
of Fair Housing (AFH) through which program participants identify and 
evaluate fair housing issues, and factors contributing to fair housing 
issues (contributing factors);
    b. Improve fair housing assessment, planning, and decisionmaking by 
HUD providing data that program participants must consider in their 
assessments of fair housing--designed to aid program participants in 
establishing fair housing goals to address these issues and 
contributing factors;
    c. Incorporate, explicitly, fair housing planning into existing 
planning processes, the consolidated plan and PHA Plan, which, in turn, 
incorporate fair housing priorities and goals more effectively into 
housing, and community development decisionmaking;
    d. Encourage and facilitate regional approaches to address fair 
housing issues, including collaboration across jurisdictions and PHAs; 
and
    e. Provide an opportunity for the public, including individuals 
historically excluded because of characteristics protected by the Fair 
Housing Act, to provide input about fair housing issues, goals, 
priorities, and the most appropriate uses of HUD funds and other 
investments, through a requirement to conduct community participation 
as an integral part of the new assessment of fair housing process.
    This new approach is designed to empower program participants and 
to foster the diversity and strength of communities by overcoming 
historic patterns of segregation, reducing racial or ethnic 
concentrations of poverty, and responding to identified 
disproportionate housing needs consistent with the policies and 
protections of the Fair Housing Act. The rule also seeks to assist 
program participants in reducing disparities in housing choice and 
access to housing and opportunity based on race, color, religion, sex, 
familial status, national origin, or disability, thereby expanding 
economic opportunity and enhancing the quality of life.

Summary of Benefits and Costs

    HUD believes that the rule, through its improvements to the fair 
housing planning process, has the potential for substantial benefit not 
only for program participants but also for the communities they serve 
and the United States as a whole. The new approach put in place by this 
rule is designed to improve the fair housing planning process by 
providing better data and greater clarity to the steps that program 
participants must undertake to assess fair housing issues and 
contributing factors and establish fair housing priorities and goals to 
address them. The fair housing issues, contributing factors, goals, and 
priorities identified through this process will be available to help 
inform program participants' investments and other decisionmaking, 
including their use of HUD funds and other resources. These 
improvements should yield increased compliance with fair housing and 
civil rights laws and fewer instances of litigation pertaining to the 
failure to affirmatively further fair housing. Through this rule, HUD 
commits to provide states, local governments, PHAs, the communities 
they serve, and the general public, to the fullest extent possible, 
with local and regional data on patterns of integration and 
segregation, racially or ethnically concentrated areas of poverty, 
access to housing and key community assets that afford opportunity, and 
disproportionate housing needs based on characteristics protected by 
the Fair Housing Act. From these data, program participants should be 
better able to evaluate their present environment to assess fair 
housing issues, identify the significant contributing factors that 
account for those issues, set forth fair housing priorities and goals, 
and document these activities.
    As detailed in the Regulatory Impact Analysis (found at 
www.regulations.gov under the docket number 5173-F-03-RIA), HUD does 
not expect a large aggregate change in compliance costs for program 
participants as a result of the proposed rule. Currently, HUD program 
participants are required to conduct an AI to fair housing choice, take 
appropriate actions to overcome the effects of identified impediments, 
and maintain records relating to the duty to affirmatively further fair 
housing. An increased emphasis on affirmatively furthering fair housing 
within the planning process may increase compliance costs for some 
program participants, but this final rule, as provided in Section III 
of this preamble, has strived to mitigate the increase of such costs. 
The net change in burden for specific local entities will depend on the 
extent to which they have been complying with the planning process 
already in place. The local entities that have been diligent in 
completing rigorous AIs may experience a net decrease in administrative 
burden as a result of the revised process. Program participants are 
currently required also to engage in outreach and collect data in order 
to meet the obligation to affirmatively further fair housing. As more 
fully addressed in the Regulatory Impact Analysis that accompanies this 
rule, HUD estimates compliance costs to program participants of $25 
million annually, as well as resource costs to HUD of $9 million 
annually.
    The rule covers program participants that are subject to a great 
diversity of local conditions and economic and social contexts, as well 
as differences in the demographics of populations, housing needs, and 
community investments. The rule provides for program participants to 
supplement data provided by HUD with available local data and knowledge 
and requires them to undertake the analysis of this information to 
identify barriers to fair housing. Also, the rule affords program 
participants considerable choice and flexibility in formulating goals 
and priorities to achieve fair housing outcomes and establishing the 
metrics that will be used to monitor and document progress. The precise 
outcomes of the proposed AFH planning process are uncertain, but the 
rule will enable each jurisdiction to plan meaningfully.

II. Background

A. Legal Authority

    HUD's July 2013 proposed rule fully set out the legal basis for 
HUD's authority to issue regulations implementing the obligation to 
affirmatively further fair housing, but HUD believes it is important to 
restate such authority in this final rule.
    The Fair Housing Act (title VIII of the Civil Rights Act of 1968, 
42 U.S.C. 3601-3619), enacted into law on April 11, 1968, declares that 
it is ``the policy of the United States to provide, within 
constitutional limitations, for fair housing throughout the United 
States.'' See 42 U.S.C. 3601. Accordingly, the Fair Housing Act 
prohibits discrimination in the sale, rental, and financing of 
dwellings, and in other housing-related transactions because of race, 
color, religion, sex, familial status, national origin, or handicap. 
See 42 U.S.C. 3601 et seq. In addition to prohibiting discrimination, 
the Fair Housing Act (42 U.S.C. 3608(e)(5))

[[Page 42274]]

requires that HUD programs and activities be administered in a manner 
to affirmatively further the policies of the Fair Housing Act. Section 
808(d) of the Fair Housing Act (42 U.S.C. 3608(d)) directs other 
Federal agencies ``to administer their programs . . . relating to 
housing and urban development . . . in a manner affirmatively to 
further'' the policies of the Fair Housing Act, and to ``cooperate with 
the Secretary'' in this effort.
    The Fair Housing Act's provisions related to ``affirmatively . . . 
further[ing]'' fair housing, contained in sections 3608(d) and (e) 
include more than the Act's anti-discrimination mandates. NAACP, Boston 
Chapter v. HUD, 817 F.2d 149 (1st Cir. 1987); see, e.g., Otero v. N.Y. 
City Hous. Auth., 484 F.2d 1122 (2d Cir. 1973); Shannon v. HUD, 436 
F.2d 809 (3d Cir. 1970).When the Fair Housing Act was originally 
enacted in 1968 and amended in 1988, major portions of the statute 
involved the prohibition of discriminatory activities (whether 
undertaken with a discriminatory purpose or with a discriminatory 
impact) and how private litigants and the government could enforce 
these provisions
    In section 3608(d) of the Fair Housing Act, however, Congress went 
further by mandating that ``programs and activities relating to housing 
and urban development'' be administered ``in a manner affirmatively to 
further the purposes of this subchapter.'' This is not only a mandate 
to refrain from discrimination but a mandate to take the type of 
actions that undo historic patterns of segregation and other types of 
discrimination and afford access to opportunity that has long been 
denied. Congress has repeatedly reinforced this mandate, requiring in 
the Housing and Community Development Act of 1974, the Cranston-
Gonzalez National Affordable Housing Act, and the Quality Housing and 
Work Responsibility Act of 1998, that covered HUD program participants 
certify, as a condition of receiving Federal funds, that they will 
affirmatively further fair housing. See 42 U.S.C. 5304(b)(2), 
5306(d)(7)(B), 12705(b)(15), 1437C-1(d)(16).\3\
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    \3\ Section 104(b)(2) of the Housing and Community Development 
Act (HCD Act) (42 U.S.C. 5304(b)(2)) requires that, to receive a 
grant, the state or local government must certify that it will 
affirmatively further fair housing. Section 106(d)(7)(B) of the HCD 
Act (42 U.S.C. 5306(d)(7)(B)) requires a local government that 
receives a grant from a state to certify that it will affirmatively 
further fair housing. The Cranston-Gonzalez National Affordable 
Housing Act (NAHA) (42 U.S.C. 12704 et seq.) provides in section 105 
(42 U.S.C. 12705) that states and local governments that receive 
certain grants from HUD must develop a comprehensive housing 
affordability strategy to identify their overall needs for 
affordable and supportive housing for the ensuing 5 years, including 
housing for homeless persons, and outline their strategy to address 
those needs. As part of this comprehensive planning process, section 
105(b)(15) of NAHA (42 U.S.C. 12705(b)(15)) requires that these 
program participants certify that they will affirmatively further 
fair housing. The Quality Housing and Work Responsibility Act of 
1998 (QHWRA), enacted into law on October 21, 1998, substantially 
modified the United States Housing Act of 1937 (42 U.S.C. 1437 et 
seq.) (1937 Act), and the 1937 Act was more recently amended by the 
Housing and Economic Recovery Act of 2008, Public Law 110-289 
(HERA). QHWRA introduced formal planning processes for PHAs--a 5-
Year Plan and an Annual Plan. The required contents of the Annual 
Plan included a certification by the PHA that the PHA will, among 
other things, affirmatively further fair housing.
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    In examining the legislative history of the Fair Housing Act and 
related statutes, courts have found that the purpose of the 
affirmatively furthering fair housing mandate is to ensure that 
recipients of Federal housing and urban development funds and other 
Federal funds do more than simply not discriminate: Recipients also 
must take actions to address segregation and related barriers for 
groups with characteristics protected by the Act, as often reflected in 
racially or ethnically concentrated areas of poverty. The U.S. Supreme 
Court, in one of the first Fair Housing Act cases it decided, 
referenced the Act's cosponsor, Senator Walter F. Mondale, in noting 
that ``the reach of the proposed law was to replace the ghettos `by 
truly integrated and balanced living patterns.' '' Trafficante v. 
Metro. Life Ins. Co., 409 U.S. 205, 211 (1972).\4\ The Act recognized 
that ``where a family lives, where it is allowed to live, is 
inextricably bound up with better education, better jobs, economic 
motivation, and good living conditions.'' 114 Cong. Rec. 2276-2707 
(1968). As the First Circuit has explained, section 3608(d) and the 
legislative history of the Act show that Congress intended that ``HUD 
do more than simply not discriminate itself; it reflects the desire to 
have HUD use its grant programs to assist in ending discrimination and 
segregation, to the point where the supply of genuinely open housing 
increases.'' NAACP, Boston Chapter v. HUD, 817 F.2d at 154; See also 
Otero 484 F.2d at 1134 (section 3608(d) requires that ``[a]ction must 
be taken to fulfill, as much as possible, the goal of open, integrated 
residential housing patterns and to prevent the increase of 
segregation, in ghettos, of racial groups whose lack of opportunity the 
Act was designed to combat'').
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    \4\ Reflecting the era in which it was enacted, the Fair Housing 
Act's legislative history and early court decisions refer to 
``ghettos'' when discussing racially concentrated areas of poverty.
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    The Act itself does not define the precise scope of the 
affirmatively furthering fair housing obligation for HUD's program 
participants. Over the years, courts have provided some guidance for 
this task. In the first appellate decision interpreting section 3608, 
for example, the U.S. Court of Appeals for the Third Circuit emphasized 
the importance of racial and socioeconomic data to ensure that ``the 
agency's judgment was an informed one'' based on an institutionalized 
method to assess site selection and related issues. Shannon, 436 F.2d 
at 821-22. In multiple other decisions, courts have set forth how the 
section applies to specific policies and practices of HUD program 
participants. See, e.g., Otero, 484 F.2d at 1132-37; Langlois v. 
Abington Hous. Auth., 207 F.3d 43 (1st Cir. 2000); U.S. ex rel. Anti-
Discrimination Ctr. v. Westchester Cnty., 2009 WL 455269 (S.D.N.Y. Feb. 
24, 2009).
    In addition to the statutes and court cases emphasizing the 
requirement of recipients of Federal housing and urban development 
funds and other Federal funds to affirmatively further fair housing, 
executive orders have also addressed the importance of complying with 
this requirement.\5\
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    \5\ Executive Order 12892, entitled ``Leadership and 
Coordination of Fair Housing in Federal Programs: Affirmatively 
Furthering Fair Housing,'' issued January 17, 1994, vests primary 
authority in the Secretary of HUD for all federal executive 
departments and agencies to administer their programs and activities 
relating to housing and urban development in a manner that furthers 
the purposes of the Fair Housing Act. Executive Order 12898, 
entitled ``Executive Actions to Address Environmental Justice in 
Minority Populations and Low-Income Populations,'' issued on 
February 11, 1994, declares that Federal agencies shall make it part 
of their mission to achieve environmental justice ``by identifying 
and addressing, as appropriate, disproportionately high and adverse 
human health or environmental effects of its programs, policies, and 
activities on minority populations and low-income populations.''
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B. HUD's July 19, 2013, Proposed Rule

    On July 19, 2013, at 78 FR 43710, HUD published its proposed rule 
that described the new assessment of fair housing (AFH) process that 
would replace the AI. As stated in the July 19, 2013, rule, HUD 
proposed a process that should aid program participants to more 
effectively carry out the obligation to affirmatively further fair 
housing by more directly linking the identification of fair housing 
issues, prioritization, and goal setting to housing and community 
development planning processes currently undertaken by program 
participants and that is required as a condition of their receipt of 
HUD funds.
    At the jurisdictional planning level, HUD requires program 
participants

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receiving Community Development Block Grant (CDBG), HOME Investment 
Partnerships (HOME), Emergency Solutions Grants (ESG), and Housing 
Opportunities for Persons With AIDS (HOPWA) formula funding to 
undertake an analysis to identify impediments to fair housing choice 
within the jurisdiction and take appropriate actions to overcome the 
effects of any impediments, and keep records on such efforts. See 
Sec. Sec.  91.225(a)(1), 91.325(a)(1).\6\ Similarly, PHAs must commit, 
as part of their planning process for PHA Plans and any plans 
incorporated therein, to examine their programs or proposed programs, 
identify any impediments to fair housing choice within those programs, 
address those impediments in a reasonable fashion in view of the 
resources available, work with jurisdictions to implement any of the 
jurisdiction's initiatives to affirmatively further fair housing that 
require PHA involvement, maintain records reflecting those analyses and 
actions, and operate programs in a manner that is consistent with the 
applicable jurisdiction's consolidated plan. See Sec. Sec.  903.7(o), 
903.15.
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    \6\ For these programs, the consolidated plan is intended as the 
program participant's comprehensive mechanism to gather relevant 
housing data, detail housing, homelessness, and community 
development strategies, and commit to specific actions. These are 
then updated through annual action plans.
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    Over the past several years, HUD reviewed the efficacy of these 
mechanisms to fulfill the affirmatively furthering fair housing mandate 
and concluded that the AI process could be improved to make it a more 
meaningful tool to integrate fair housing into program participants' 
planning efforts. HUD issued its Fair Housing Planning Guide (Planning 
Guide) in 1996 to provide extensive guidance on how to affirmatively 
further fair housing. However, HUD has not, in a systematic manner, 
offered to its program participants the data in HUD's possession that 
may better help them frame their fair housing analysis, and HUD 
generally did not require AIs to be submitted to HUD for review.
    These observations are reinforced by a recent report by the U.S. 
Government Accountability Office (GAO) entitled ``HUD Needs to Enhance 
Its Requirements and Oversight of Jurisdictions' Fair Housing Plans,'' 
GAO-10-905, Sept. 14, 2010. See http://www.gao.gov/new.items/d10905.pdf 
(GAO Report). In this report, the GAO found that there has been uneven 
attention paid to the AI by local communities in part because 
sufficient guidance and clarity were viewed as lacking. Specifically, 
GAO stated that it found that ``HUD's limited regulatory requirements 
and oversight'' contributed to many HUD program participants placing a 
``low priority on ensuring that their AIs serve as effective planning 
tools.'' \7\ In its recommendations, GAO emphasized that HUD could 
assist program participants by providing more effective guidance and 
technical assistance and the data necessary to prepare fair housing 
plans.
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    \7\ The GAO noted that close to 30 percent of the grantees from 
whom GAO sought documentation had outdated AIs and that almost 5 
percent of the grantees were unable to provide AIs when requested.
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    Stemming from substantial interaction with program participants and 
advocates, and in light of the GAO Report, HUD concluded that the 
current AI process was not well integrated into the planning efforts 
for expenditure of funds made by HUD program participants. HUD 
recognized that many program participants actively grapple with how 
issues involving race, national origin, disability, and other fair 
housing issues do and should influence grant decisions as part of 
housing and community development planning. HUD found that program 
participants often turned to outside consultants to collect data and 
conduct the analysis, but that program participants had little 
incentive or awareness to use this analysis as part of the investments 
and other decisions they made as part of the consolidated plan or PHA 
Plan processes. HUD further concluded that, in a time of limited 
resources, HUD could do more to support program participants in the 
process, especially through the provision of data, meaningful technical 
assistance, and additional guidance. All these findings led HUD to the 
decision to offer a new approach of linking fair housing issue 
identification, prioritization, and goal setting with program 
participants' traditional planning processes related to housing and 
community development.
    To more effectively carry out its affirmatively furthering fair 
housing obligation, in the July 19, 2013, rule, HUD proposed a new AFH 
process to replace the AI process. As provided in the proposed rule, 
the new AFH process involved the following key features: (1) A new fair 
housing assessment tool; (2) the provision of nationally uniform data 
that would be the predicate for and would help frame program 
participants' assessment activities; (3) meaningful and focused 
direction regarding the purpose of the AFH and the standards by which 
it would be evaluated; (4) a more direct link between the AFH and 
subsequent program participant planning documents--the consolidated 
plan and the PHA Plan--that would tie fair housing planning into the 
priority setting, commitment of resources, and specification of 
activities to be undertaken; and (5) a new HUD review procedure based 
on clear standards that would facilitate the provision of technical 
assistance and reinforce the value and importance of fair housing 
planning activities.
    As provided in the proposed rule, the new AFH process would be 
established in regulations in 24 CFR part 5, subpart A, with conforming 
amendments provided in the following regulations: 24 CFR part 91 
(Consolidated Submission for Community Planning and Development 
Programs); 24 CFR part 92 (HOME Investment Partnerships Program); 24 
CFR part 570 (Community Development Block Grants); 24 CFR part 574 
(Housing Opportunities for Persons With AIDS); 24 CFR part 576 
(Emergency Solutions Grants Program); and 24 CFR part 903 (Public 
Housing Agency Plans).
    A more detailed discussion of HUD's July 19, 2013, proposed rule, 
including the specific AFH regulations and conforming amendments 
proposed, can be found at 79 FR 43716 through 43723. HUD refers 
interested parties to the preamble to the proposed rule for a detailed 
discussion of the proposed AFH process and the reasons for HUD's 
proposal of the features and elements of the new AFH process.

C. Proposed Assessment Tool

    On September 26, 2014, at 79 FR 57949, HUD published in the Federal 
Register, the proposed ``Assessment Tool'' to be used by program 
participants to evaluate fair housing choice in their jurisdictions, to 
identify barriers to fair housing choice at the local and regional 
levels, and to set fair housing goals to overcome such barriers and 
advance fair housing choice. HUD published the proposed Assessment Tool 
for a period of 60 days in accordance with HUD's July 19, 2013, 
proposed rule, and in accordance with the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq.
    HUD appreciates the comments submitted on the proposed Assessment 
Tool, and will follow the September 2014 notice with a second notice 
soliciting comment for another 30-day period, as required by the 
Paperwork Reduction Act, and advise of changes made to the proposed 
Assessment Tool in response to the initial 60-day solicitation of 
comment.

[[Page 42276]]

    In addition, it is important to note that the burden imposed by the 
Assessment Tool and additional Assessment Tools issued by HUD must, in 
accordance with the Paperwork Reduction Act, be renewed for approval by 
the Office of Management and Budget (OMB) every 3 years, at which 
point, the opportunity is also presented to assess whether the 
Assessment Tool is aiding fair housing planning as intended by this 
rule.

D. Solicitation of Comment on Proposed Staggered Submission of AFH

    On January 15, 2015, at 80 FR 2062, HUD published in the Federal 
Register a document reopening the public comment period on the issue of 
providing a later submission deadline for certain entities. In this 
document, HUD advised that it was considering providing certain HUD 
program participants--States, Insular Areas, qualified PHAs, 
jurisdictions receiving a small CDBG grant--with the option of 
submitting their first AFH at a date later than would otherwise be 
required for program participants that are neither States, Insular 
Areas, qualified PHAs, nor grantees receiving a small CDBG grant, as 
proposed to be defined by the January 15, 2015, document.
    For PHAs, section 2702 of title II of the Housing and Economic 
Recovery Act (HERA) \8\ introduced a definition of ``qualified PHAs'' 
to exempt such PHAs, that is, PHAs that have a combined total of 550 or 
fewer public housing units and section 8 vouchers, are not designated 
as troubled under section 6(j)(2) of the 1937 Act, and do not have a 
failing score under the Section Eight Management Assessment Program 
(SEMAP) during the prior 12 months, from the burden of preparing and 
submitting an annual PHA Plan. Given that Congress has determined that 
qualified PHAs should have reduced administrative burdens, HUD proposed 
that it is appropriate to provide these agencies with more time to 
submit their first AFH.
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    \8\ Public Law 110-289, 122 Stat. 2654, approved July 30, 2008, 
see 122 Stat. 2863.
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    With respect to small CDBG grants, there is no statutory definition 
on which HUD can rely as is the case for qualified PHAs. However, as 
noted in the January 15, 2015, document, in HUD's Congressional 
Justifications issued in support of HUD's Fiscal Years (FYs) 2013 and 
2014 budget requests, HUD proposed to establish a minimum grant 
threshold of approximately $350,000, based on a percentage of the CDBG 
formula appropriation. Therefore, HUD proposed, similar to qualified 
PHAs, to delay the submission date of the first AFH for entitlement 
jurisdictions receiving a grant of 0.0125 percent of the CDBG formula 
appropriation or less.
    With respect to States and Insular Areas, HUD advised that it 
decided to design a separate Assessment Tool for States and Insular 
Areas. HUD agreed with commenters responding to the Assessment Tool, 
published on September 26, 2014, that a separate Assessment Tool for 
States and Insular Areas would address commenters' concerns about the 
AFH approach being better suited for entitlement jurisdictions. HUD 
also advised that the separate Assessment Tool will not be provided for 
public comment as part of the second statutorily required public 
comment period on the Assessment Tool published on September 26, 2014. 
Rather, HUD will have the Assessment Tool for States and Insular Areas 
separately undergo the full notice and comment process (a 60-day notice 
and a 30-day notice) under the Paperwork Reduction Act, and this 
decision automatically means a later first AFH submission deadline for 
States and Insular areas.
    Although not part of the January 15, 2015, document, in the 
preamble to the Assessment Tool published on September 26, 2014, HUD 
advised that the draft Assessment Tool for which public comment was 
sought is the Assessment Tool designed for use by entitlement 
jurisdictions and for joint submissions by entitlement jurisdictions 
and for PHAs where the entitlement jurisdiction is chosen as the lead 
entity. HUD clarified that the Assessment Tool is not the tool that 
will be used by regionally collaborating entitlement jurisdictions or 
PHAs that will not be making a joint submission, nor will it be used by 
States and Insular Areas. In brief, HUD committed to provide a separate 
Assessment Tool for PHAs. HUD also advised of its intention to develop 
program-specific participant Assessment Tools to be available for 
public comment at the time that HUD publishes the first Assessment Tool 
for its additional 30 days of public comment. HUD since decided to have 
the State and PHA Assessment Tools undergo the full notice and comment 
process under the Paperwork Reduction Act (a 60-day notice and a 30-day 
notice).
    In response to the January 15, 2015, document HUD received 21 
public comments. The majority of public commenters were supportive of a 
delayed submission of the first AFH for States, Insular Areas, 
qualified PHAs, and jurisdictions receiving small CDBG grants. 
Commenters, however, differed on where to draw the threshold for a 
small CDBG. Commenters suggested that the threshold should be drawn at 
$1 million. A commenter, commenting on the percentage that HUD 
proposed, suggested a percentage cutoff of 0.018 percent rather than 
HUD's suggested percentage of 0.0125. The commenter explained that this 
threshold would bring the cutoff to approximately $500,000, and at that 
level, administrative funds can be up to $100,000, an increase from 
$70,000, which is the amount that would be available to entitlement 
jurisdictions receiving $348,875--the amount under the HUD-proposed 
threshold. The public comments received in response to the January 15, 
2015, document can be found at the following Web site: http://www.regulations.gov/#!docketDetail;D=HUD-2015-0009.
    After consideration of the comments on the CDBG threshold, HUD has 
decided to set the threshold for a small CDBG grant at a FY 2015 grant 
of $500,000 or less. HUD believes that this dollar threshold is 
appropriate for providing a delayed first AFH submission for certain 
CDBG grantees. Therefore, as a result of HUD's January 15, 2015, 
proposal and in consideration of comments responding to that proposal, 
States, Insular Areas, qualified PHAs, and CDBG grantees receiving an 
FY 2015 CDBG grant of $500,000 or less will have a delayed first-AFH 
submission deadline, as will all PHAs, even those that are not 
qualified PHAs. For PHAs, the first AFH submission deadline will be 
based on when the PHA Assessment Tool has been approved by OMB--
following HUD undertaking the notice and comment process required by 
the Paperwork Reduction Act--and announced by HUD as available for use.

III. Overview of Final Rule--Key Changes Made at Final Rule Stage

    In the proposed rule, HUD solicited public comment on the new AFH 
process and included 19 issues for which HUD specifically solicited 
comment. In Section IV of this preamble, HUD provides a summary of the 
significant comments raised by the public comments and provides HUD's 
response to these issues. HUD received more than 1,000 public comments 
on the July 19, 2013, proposed rule. HUD appreciates all the questions 
raised, and suggestions and recommendations made by the public 
commenters. After review and consideration of the public comments and 
upon further consideration of issues by HUD, the following highlights 
key clarifications

[[Page 42277]]

and changes made by HUD in this final rule.
    The final rule:
     Clarifies that HUD supports a balanced approach to 
affirmatively furthering fair housing by revising the ``Purpose'' 
section of the rule and the definition of ``affirmatively furthering 
fair housing.'' Also, HUD has created a new provision listing goals and 
priorities a program participant may take to affirmatively further fair 
housing, which may include, but are not limited to, place-based 
solutions and options to increase mobility for protected classes. (See 
Sec. Sec.  5.150, 5.152, and 5.154.)
     Replaces the term ``proactive steps'' in the definition of 
``affirmatively furthering fair housing'' with the term ``meaningful 
actions'' and defines ``meaningful actions.'' (See Sec.  5.152.)
     Revises the definition of ``Assessment Tool'' to advise 
that the tool is not solely a single form or template, but refers to 
any form or template issued by HUD as an Assessment Tool for the AFH 
and includes instructions. The definition makes clear that HUD may 
issue different Assessment Tools for different types of program 
participants.
     Clarifies, through the addition of a new Sec.  5.151, that 
implementation of the new AFH process commences for a program 
participant when the Assessment Tool designated for use by the program 
participant has been approved by OMB, and the availability for use of 
such Assessment Tool is published in the Federal Register.
     Adds a definition of ``data'' to collectively refer to 
``HUD-provided data'' and ``local data,'' both of which terms are also 
defined. (See Sec.  5.152.)
     Replaces the term ``determinant'' with a more plain 
language term--``fair housing contributing factor'' or simply 
``contributing factor.'' (See Sec.  5.152.)
     Adds a definition of ``disability.'' (See Sec.  5.152.)
     Clarifies when disproportionate housing needs exist by 
revising the definition of ``disproportionate housing needs.'' (See 
Sec.  5.152.)
     Revises the definitions of ``fair housing choice'' and 
``fair housing issue'' by removing outdated terminology (i.e., 
``handicap'') and making certain additional clarifying changes. (See 
Sec.  5.152.)
     Adds a definition of ``geographic area'' which refers to 
the area of analysis of a program participant that may be a 
jurisdiction, region, state, Core-Based Statistical Area (CBSA), or 
another applicable area, depending on the area served by the program 
participant. (See Sec.  5.152.)
     Adds a definition of ``housing programs serving specified 
populations'' to clarify that participation in HUD and Federal housing 
programs serving specified populations does not present a fair housing 
issue of segregation, provided that such programs comply with the 
program regulations and applicable Federal civil rights statutes and 
regulations. (See Sec.  5.152.)
     Revises the definition of ``integration'' to provide 
greater clarity as to the meaning of this term. (See Sec.  5.152.)
     Adds a definition of ``local knowledge'' based on and 
consistent with the description of such term in the Assessment Tool. 
(See Sec.  5.152.)
     Revises the definition of ``segregation'' to provide 
greater clarity. (See Sec.  5.152.)
     Adds a definition of ``qualified PHA.'' (See Sec.  5.152.)
     Revises and clarifies how the analysis of data and the 
identification of fair housing priorities and goals should be 
undertaken, including emphasizing that the program participant is 
responsible for establishing appropriate priorities and goals. (See 
Sec.  5.154(d).)
     Clarifies that although regionally collaborating program 
participants need not be contiguous and may cross state boundaries, 
regionally collaborating program participants should be located within 
the same CBSA, as defined by OMB at the time of submission of the 
regional AFH, but HUD allows for exceptions. (See Sec.  5.156.)
     Emphasizes that ``acceptance'' of an AFH means only that, 
for purposes of administering HUD program funding, HUD has determined 
that the program participant has provided an AFH that meets the 
required elements. Acceptance does not mean that the program 
participant has complied with its obligation to affirmatively further 
fair housing under the Fair Housing Act; has complied with other 
provisions of the Fair Housing Act; or has complied with other civil 
rights laws and regulations. (See Sec.  5.162.)
     Provides a staggered submission deadline for AFHs; that 
is, the rule specifies the order of submission by which program 
participants will submit their first AFH. The rule provides that 
entitlement jurisdictions receiving an FY 2015 CDBG grant of $500,000 
or less, States, Insular Areas, and PHAs will submit their first AFH in 
the second stage of submission, or at such time as the Assessment Tool 
specifically applicable to one of these program participants has been 
approved by OMB and announced by HUD as available for use. The 
Assessment Tool specifically applicable to a program participant will 
specify the first-AFH submission deadline, and will ensure the same 
level of transition as provided for entitlement jurisdictions, which 
will be the first program participants to submit an AFH. (See Sec.  
5.160(a).)
     Allows PHAs, whether submitting an AFH as part of 
participation with their consolidated plan program participants, other 
PHAs, or on their own, to submit an AFH every 5 years, imposing on PHAs 
similar requirements to those placed on jurisdictions subject to the 
consolidated plan requirements. (See Sec. Sec.  5.160 and 903.15.)
     Provides that a program participant that undertook a 
Regional AI in connection with a grant awarded under HUD's FY 2010 or 
2011 Sustainable Communities Competition is not required to undertake 
an AFH for the first AFH submission stage. (See Sec.  5.160(a).)
     Clarifies the conditions under which HUD may not accept an 
AFH, and provides examples of an AFH that is substantially incomplete 
with respect to the fair housing assessment, and examples of an AFH 
that is inconsistent with fair housing and civil rights requirements; 
and emphasizes that HUD will work with program participants to achieve 
an AFH that is accepted. (See Sec.  5.162.)
     Provides greater flexibility to program participants in 
determining when a program participant must revise an AFH, and 
specifies conditions when HUD may intervene and require a program 
participant to revise an AFH, but also provides program participants 
with the opportunity to disagree with HUD's determination. HUD also 
expands the time frame in which to revise an AFH. (See Sec.  5.164.)
     Revises for PHAs the three options provided in the 
proposed rule by which a PHA may conduct and submit an AFH. (See Sec.  
903.15.)
     Adds a new ``certification'' provision, which clarifies 
that program participants must certify that they will affirmatively 
further fair housing when required by statutes and regulations 
governing their programs, and provides that challenges to the 
certifications will follow the procedures for consolidated plan program 
participants in 24 CFR part 91 and for PHA Plan program participants in 
24 CFR part 903, as revised in this final rule. (See Sec.  5.166.)
     Moves fair housing-related material from Sec.  903.2(d) to 
Sec.  903.15(d).
    In addition to these changes, HUD also corrected editorial and 
technical errors identified by the commenters. HUD believes that these 
changes, more fully discussed below, respond to commenters' requests 
that they be given

[[Page 42278]]

more clarity, more flexibility, and more time in fair housing planning.

IV. Public Comments and HUD's Response to Public Comments

A. The Public Comments Generally

    HUD received over 1,000 public comments, including duplicate mass 
mailings, resulting in approximately 885 unique public submissions 
covering a wide range of issues. Comments came from a wide variety of 
entities, including PHAs, other housing providers, organizations 
representative of housing providers, governmental jurisdictions and 
agencies, civil rights organizations, tenant and other housing advocacy 
organizations, and individuals. All public comments can be viewed at 
http://www.regulations.gov/#!docketDetail;D=HUD-2013-0066.
    Many commenters expressed outright support for HUD's proposal, 
without suggesting any changes and requesting that HUD proceed to 
implement as quickly as possible. Commenters who expressed general 
support for the rule stated that the rule was a step toward increased 
opportunity in housing, and that the rule would assist in attaining the 
goals of the Fair Housing Act.
    Many commenters, however, also expressed outright opposition to the 
rule, stating that HUD's proposal was without legal foundation, that it 
was an intrusion on affairs that should be handled by local 
jurisdictions for a variety of reasons, and that the proposal 
constituted social engineering.
    The majority of commenters, whether supportive of HUD's proposal or 
opposed, provided thoughtful comments for HUD's consideration, advising 
how the proposal would work better with certain changes, or advising 
why the proposal would not work and why HUD should withdraw the 
proposal completely or go back to the drawing board, so to speak. With 
respect to this latter theme, several commenters expressed support for 
the new AFH process but requested that HUD give the new approach more 
thought and reopen the public comment period on the proposed rule, 
implement the new approach as a pilot first, issue a second proposed 
rule, or issue an interim rule, which would provide the opportunity for 
another round of comments.
    While commenters raised a wide variety of issues concerning HUD's 
proposal, the following highlights comments and concerns shared by many 
commenters:
     HUD's proposal lacked a balanced approach; that is, HUD's 
proposal seemed to discourage, if not implicitly prohibit, continued 
investment of Federal resources in areas of racial or ethnic 
concentration of poverty;
     HUD's proposal lacked reference to benchmarks and outcomes 
so that HUD and the public could determine a program participant's 
progress in affirmatively furthering fair housing in accordance with 
the participant's assessment of fair housing;
     HUD's proposal was not clear on the standards of review of 
an AFH;
     HUD's proposed new AFH approach is too burdensome, 
duplicating actions already required by the consolidated plan and PHA 
Plan;
     HUD lacks the capacity to effectively carry out its 
responsibilities under the proposal;
     HUD's proposal is an intrusion on the affairs and 
responsibilities of local governments, and opens the door to the 
Federal Government determining zoning, the placement of infrastructure, 
and other local services;
     HUD's proposal does not take into consideration the unique 
status of States, which have no control over local governments, and 
consequently, the AFH should only apply to entitlement jurisdictions;
     HUD must carefully screen the accuracy of data to be 
provided by HUD because prior experience in other programs has shown 
that the data are not always reliable;
     HUD's proposal is an expansion of the Fair Housing Act, 
which does not require an assessment of such nonhousing elements as 
transportation, employment, education, and similar elements; and
     HUD needs to clarify the process it will use when a 
program participant does not have an AFH that has been accepted, as 
well as the consequences.
    Again, HUD appreciates the time that commenters took to provide 
helpful information and valuable suggestions. As can be seen by HUD's 
promulgation of this final rule, HUD decided to proceed to the final 
rule stage and put in place the new AFH approach. However, as provided 
in the overview of changes made at the final rule stage, program 
participants and other interested members of the public can see the 
many changes that HUD made in response to public comments, and how 
specific concerns were addressed in these final regulations.
    In the following section of the preamble, HUD addresses the public 
comments.

B. Specific Public Comments

1. Balanced Approach
    Comment: Proposed rule appears to prohibit program participants 
from using Federal resources in neighborhoods of concentrated poverty. 
A substantial number of commenters who expressed support for the rule 
stated that the proposed rule did not provide a balanced approach to 
investment of Federal resources. Commenters stated that the proposed 
rule appeared to solely emphasize mobility as the means to 
affirmatively further fair housing and, by such emphasis, the rule 
devalued the strategy of making investments in neighborhoods with 
racially/ethnically concentrated areas of poverty (RCAPs/ECAPs). They 
stated that the proposed rule could be read to prohibit the use of 
resources in neighborhoods with such concentrations. Commenters stated 
that the proposed rule, if implemented without change, would have the 
unintentional effect of shifting resources away from low-income 
communities of color, and threaten targeted revitalization and 
stabilization investments in such neighborhoods if jurisdictions 
misinterpreted the goals of deconcentration and reducing disparities in 
access to assets, and focused only on mobility at the expense of 
existing neighborhood assets. Commenters stated that the final rule 
must clarify that program participants are expected to employ both 
strategies--(1) to stabilize and revitalize neighborhoods that 
constitute RCAPs/ECAPs, and (2) enhance mobility and expand access to 
existing community assets. Commenters stated that these should not be 
competing priorities. Some commenters also expressed concern that the 
proposed rule language might be interpreted to only allow preservation 
of existing affordable housing if it was also part of a more intensive 
area-wide redevelopment strategy.
    Commenters stated that older people and persons with disabilities, 
in particular, may have difficulty maintaining their homes and are very 
vulnerable to being institutionalized if they are displaced. Other 
commenters stated that RCAPs/ECAPs are often near transit and therefore 
ripe for gentrification and, while gentrification can be a positive 
outcome at times, gentrification can also lead to isolation of low-
income families and a further decrease in socioeconomic opportunities. 
The commenters stated that there needs to be recognition in the rule 
that it is important to retain the character of communities while 
investing more resources in the area rather than attempting to remove 
people who have cultural, ethnic and historical connections to their 
neighborhoods.

[[Page 42279]]

    Commenters recommended that HUD should, in Sec.  5.150, which 
addresses the purpose of the rule, change the ``or'' to ``and'' in the 
last sentence. Some commenters also stated that the definition of 
``affirmatively furthering fair housing'' also needs to explicitly 
include improvement and preservation of subsidized housing. Other 
commenters stated that the rule should explicitly state development on 
public housing sites is consistent with the obligation to affirmatively 
further fair housing.
    HUD Response: The duty to affirmatively further fair housing does 
not dictate or preclude particular investments or strategies as a 
matter of law. Under HUD's rule, program participants will identify 
fair housing issues and contributing factors, prioritize contributing 
factors (giving highest priority to those factors that limit or deny 
fair housing choice or access to opportunity or negatively impact fair 
housing or civil rights compliance), and propose goals to address them. 
Program participants have latitude, if they so choose, to prioritize 
their goals and strategies in the local decisionmaking process based on 
the information, data and analysis in the AFH.
    HUD's rule recognizes the role of place-based strategies, including 
economic development to improve conditions in high poverty 
neighborhoods, as well as preservation of the existing affordable 
housing stock, including HUD-assisted housing, to help respond to the 
overwhelming need for affordable housing. Examples of such strategies 
include investments that will improve conditions and thereby reduce 
disparities in access to opportunity between impacted neighborhoods and 
the rest of the city or efforts to maintain and preserve the existing 
affordable rental housing stock, including HUD-assisted housing, to 
address a jurisdiction's fair housing issues. Preservation activities 
such as the Rental Assistance Demonstration (RAD) or the Choice 
Neighborhoods Initiative may be a part of such a strategy.
    There could be issues, however, with strategies that rely solely on 
investment in areas with high racial or ethnic concentrations of low-
income residents to the exclusion of providing access to affordable 
housing outside of those areas. For example, in areas with a history of 
segregation, if a program participant has the ability to create 
opportunities outside of the segregated, low-income areas but declines 
to do so in favor of place-based strategies, there could be a 
legitimate claim that HUD and its program participants were acting to 
preclude a choice of neighborhoods to historically segregated groups, 
as well as failing to affirmatively further fair housing as required by 
the Fair Housing Act.
    A balanced approach would include, as appropriate, the removal of 
barriers that prevent people from accessing housing in areas of 
opportunity, the development of affordable housing in such areas, 
effective housing mobility programs and/or concerted housing 
preservation and community revitalization efforts, where any such 
actions are designed to achieve fair housing outcomes such as reducing 
disproportionate housing needs, transforming RCAPs/ECAPs by addressing 
the combined effects of segregation coupled with poverty, increasing 
integration, and increasing access to opportunity, such as high-
performing schools, transportation, and jobs.
    In addition, place-based and mobility strategies need not be 
mutually exclusive; for instance, a regional AFH could conclude that 
additional affordable housing is needed in higher opportunity areas and 
thus new construction should be incentivized in those places. At the 
same time, while such efforts are being implemented, preserving the 
existing affordable rental stock can also still be a priority based on 
the fair housing issues identified in the AFH, which may include the 
disproportionate housing needs analysis in the AFH or the need to avoid 
displacement of assisted residents from areas that may be experiencing 
economic improvement. Program participants have latitude to adjust 
their goals, priorities, and strategies in the local decisionmaking 
process based on the information, data and analysis in the AFH, so long 
as the goals, priorities, strategies, and actions affirmatively further 
fair housing.
    Rule changes and clarifications. To help clarify these issues, in 
this final rule HUD revises the purpose section (Sec.  5.150) and the 
definition of ``affirmatively furthering fair housing'' (Sec.  5.152) 
to clarify that HUD supports a balanced approach to affirmatively 
furthering fair housing. In this final rule, HUD has added a new 
provision describing potential actions or strategies a program 
participant may take, which is inclusive of both place-based solutions 
and options to preserve existing affordable housing. Strategies can 
include increasing mobility for members of protected classes to provide 
greater access to opportunity. (Sec.  5.154(d)(5).)
    HUD also revises the definition of ``affirmatively furthering fair 
housing'' in this final rule by replacing the term ``proactive steps'' 
with the term ``meaningful actions.'' At the proposed rule stage, 
commenters requested that HUD ensure that ``proactive steps'' would not 
be interpreted in a manner that conflicted with the well-established 
case law under the Fair Housing Act that defines the contours of the 
affirmatively furthering fair housing mandate. Upon further review, HUD 
found that the term ``proactive'' has various meanings and does not 
have a body of case law applying the term in the civil rights context. 
For this reason, HUD replaces ``proactive steps'' with ``meaningful 
actions,'' a concept used by the Supreme Court in civil rights case law 
and used by Federal agencies in explaining civil rights 
requirements.\9\ With such case law foundation, ``meaningful actions'' 
provides greater clarity on the actions that program participants are 
expected to take in carrying out their duty to affirmatively further 
fair housing. Additionally, in contrast to ``proactive,'' which may 
convey only a future-oriented approach, the term ``meaningful actions'' 
encompasses actions to either address historic or current fair housing 
problems, or both, as well as proactively responding to anticipated 
fair housing problems. (Sec.  5.152.)
---------------------------------------------------------------------------

    \9\ See e.g., Executive Order 13166, Improving Access to 
Services for Persons with Limited English Proficiency, August 11, 
2000; Department of Justice, Guidance to Federal Financial 
Assistance Recipients Regarding Title VI Prohibition Against 
National Origin Discrimination Affecting Limited English Proficient 
Persons, 67 FR 41455-41472 (June 18, 2002); The Department of 
Housing and Urban Development, Final Guidance to Federal Financial 
Assistance Recipients Regarding Title VI Prohibition Against 
National Origin Discrimination Affecting Limited English Proficient 
Persons 72 FR 2732-2754 (January 22, 2007); Alexander v. Choate, 469 
U.S. 287, 83 L. Ed. 2d 661, 105 S. Ct. 712 (1985); Lau v. Nichols, 
414 U.S. 563 (U.S. 1974); United Air Lines, Inc. v. Air Line Pilots 
Ass'n, Int'l, 563 F.3d 257, 268 (7th Cir. 2009).
---------------------------------------------------------------------------

    To provide further clarity, HUD defines the term meaningful actions 
to mean those significant actions that are designed and can be 
reasonably expected to achieve a material positive change that 
affirmatively furthers fair housing by, for example, increasing fair 
housing choice or decreasing disparities in access to opportunity. 
(Sec.  5.152.)
    Comment: Not all segregation is equal or negative. Commenters 
stated that some housing segregation may be self-imposed, especially 
among newly arrived immigrant populations. The commenters requested 
that HUD study the dynamics of segregation besides referencing 
traditional studies and their assumptions so that policies derived from 
the new AFH process do not have unintended consequences and adversely

[[Page 42280]]

affect the protected classes that we are all trying to assist.
    HUD Response: Individuals are free to choose where they prefer to 
live. The Fair Housing Act does not prohibit individuals from choosing 
where they wish to live, but it does prohibit policies and actions by 
covered entities and individuals that deny choice or access to housing 
or opportunity through the segregation of persons protected by the Fair 
Housing Act.
    A key purpose of the Fair Housing Act is to create open residential 
communities in which individuals may choose where they prefer to live 
without regard to race, color, national origin, disability, and other 
characteristics protected by the Act. HUD is familiar with the research 
on immigrant communities and recognizes that there are complex social 
dynamics at work in different parts of the nation. The purpose of the 
AFH is to help identify potential fair housing related issues, 
including factors that limit or deny individuals or groups with a full 
range of housing options and choices on the basis of being in a 
protected class as defined by the Fair Housing Act.
    In response to these and similar comments, HUD has made several 
changes to the regulatory text.
    Rule Changes. The definition of ``affirmatively furthering fair 
housing'' in Sec.  5.152 in this final rule revises language from the 
proposed rule that included the phrase, ``to end racially or ethnically 
concentrated areas of poverty,'' to ``transforming . . . [those areas] 
into areas of opportunity.'' This final rule also makes several 
clarifications in Sec.  5.154, which addresses the ``Assessment of Fair 
Housing.'' Revised Sec.  5.154(d)(4)(ii) provides that the AFH must 
identify significant contributing factors, prioritize such factors, and 
justify the prioritization of the contributing factors that will be 
addressed in the program participant's fair housing goals. In 
prioritizing contributing factors, program participants shall give 
highest priority to those factors that limit or deny fair housing 
choice or access to opportunity, or negatively impact fair housing or 
civil rights compliance.
2. Competing with Other HUD Priorities
    Comment: The proposed rule competes with other HUD policies and 
directives. Commenters stated that HUD's proposed rule competes with 
other HUD policies and directives. Commenters stated that, in recent 
years, HUD has sought to make several policy changes that would limit 
the ability of program participants to affirmatively further fair 
housing and these policies include reducing the power of flat rents to 
incentivize mixed-income communities in public housing, proposing to 
limit CDBG eligibility for higher-income communities, and decreasing 
fair market rents that create higher rent burdens for voucher holders. 
The commenters stated that these policies lower the quality of housing 
and increase concentration of voucher-assisted households in 
developments and neighborhoods with higher concentration of poverty. 
Some commenters also expressed concern that the provisions on 
segregation may inadvertently prohibit currently authorized program 
activities that serve specific populations, including the elderly, 
persons with disabilities and the homeless, or may appear to create a 
barrier to capital reinvestment or preservation of existing affordable 
housing if it is located in an area that meets the rule's definitions 
of segregation or racially or ethnically concentrated areas of poverty.
    HUD Response: As discussed under the ``Legal Authority'' section of 
the preamble to this final rule, program participants that receive 
assistance from HUD under the programs covered by this final rule have 
statutory obligations to affirmatively further fair housing, apart from 
the obligation imposed by the Fair Housing Act itself. They also must 
comply with the authorizing statutes governing the programs in which 
they participate, as well as the regulations implementing those 
statutes. Complying with both types of obligations is a condition of 
receiving Federal financial assistance from HUD, and the obligations 
are not inconsistent with each other.
    To confirm there is no inconsistency, HUD has made key changes in 
this final rule, especially by adding a new definition of ``housing 
programs serving specified populations,'' as noted in Section III of 
this preamble. The final rule also adopts amended language in the 
``Purpose ``and ``strategies and actions'' sections (Sec. Sec.  5.150 
and 5.154) that addresses preservation of affordable housing.
    While the final rule encourages local governments to confront 
historic siting issues through public and assisted housing, the final 
rule also recognizes the critical role and inherent value in the 
existing stock of long-term affordable housing. The nation is in the 
midst of a rental housing crisis, with over 7.5 million very low-income 
families facing worst case housing needs for affordable housing, 
meaning they either pay more than half their incomes for rent or live 
in severely inadequate housing conditions. This figure that does not 
include an additional estimated 580,000 to 1.42 million persons 
experiencing homelessness or an additional millions of low-income 
homeowners also facing exorbitant often unaffordable housing costs.\10\
---------------------------------------------------------------------------

    \10\ For the worst case housing needs estimate, see: HUD, Office 
of Policy Development and Research, ``Worst Case Housing Needs: 2015 
Report to Congress--Executive Summary'' (January 2015). http://www.huduser.org/portal/publications/affhsg/wc_HsgNeeds15.html. For 
estimates on homelessness, see: HUD, ``The 2014 Annual Homeless 
Assessment Report (AHAR) to Congress (October 2014) (for Point in 
Time estimate of 578,000 people who were homeless on any given night 
in January 2014). https://www.hudexchange.info/resources/documents/2014-AHAR-Part1.pdf. and HUD, ``2013 Annual Homeless Assessment 
Report: Part 2--Estimates of Homelessness in the U.S.'' (February 
2015) (Throughout the course of the year in 2013, an estimated 1.42 
million people used a homeless shelter at some point). https://www.hudexchange.info/onecpd/assets/File/2013-AHAR-Part-2-Section-1.pdf.
---------------------------------------------------------------------------

    Rule change and clarification. HUD clarifies that participation in 
HUD and other Federal programs that serve specified populations is not 
inconsistent with the duty to affirmatively further fair housing, 
through the added definition of ``housing programs serving specified 
populations'' and in new language to the definition of ``segregation,'' 
both added in this final rule. (See Sec.  5.152.)
    Comment: The rule conflicts with HUD programs such as those 
providing designated housing for seniors and persons with disabilities. 
Commenters stated that the proposed rule's direction to PHAs to design 
their tenant selection and admission policies and development 
activities to reduce concentrations of tenants with disabilities 
conflicts with HUD programs carried out by PHAs and other program 
participants that provide transitional housing, permanent supportive 
housing, and other housing restricted to elderly persons or to 
nonelderly persons with disabilities, including those having 
experienced homelessness, which often require recipients to live in 
close proximity so that services can be provided in a coordinated and 
cost-effective manner. A commenter requested that HUD add an explicit 
statement in the final rule that participants in HUD program and other 
Federal programs that provide services to elderly persons, persons with 
disabilities, or other specified populations, are not violating their 
obligation to affirmatively further fair housing.
    HUD Response: In its recent Statement on the Role of Housing in 
Advancing the Goals of Olmstead (Olmstead Statement or Statement), HUD 
discussed at length the interaction

[[Page 42281]]

between the civil rights related duties to provide housing for persons 
with disabilities in the most integrated setting appropriate to their 
needs, as mandated by section 504 of the Rehabilitation Act and the 
Americans with Disabilities Act, and the HUD programs that are 
authorized to provide housing serving specified populations.\11\ HUD 
encourages program participants and members of the public to read this 
Statement carefully. The Statement clearly presents how the legal 
requirements of civil rights statutes requiring persons with 
disabilities to be served in integrated settings are appropriately 
addressed in the context of HUD housing programs that are permitted to 
serve populations consisting exclusively or primarily of persons with 
disabilities. These programs are authorized by program statute or 
executive order or when a different or separate setting is the only one 
that will provide persons with disabilities with housing that affords 
them an equal opportunity for the housing to be effective, consistent 
with HUD's section 504 regulations at 24 CFR 8.4(b)(1)(iv).
---------------------------------------------------------------------------

    \11\ See http://portal.hud.gov/hudportal/documents/huddoc?id=OlmsteadGuidnc060413.pdf.
---------------------------------------------------------------------------

    To address the concerns in this rule, consistent with the guidance 
provided in its Olmstead Statement, HUD has added a definition of 
``housing programs serving specified populations'' in Sec.  5.152 that 
explicitly states that participation in these programs does not present 
a fair housing issue of segregation, provided that such programs are 
administered to comply with program regulations and applicable civil 
rights requirements. Housing programs serving specified populations are 
HUD and Federal housing programs, including designation in programs, as 
applicable, such as HUD's Supportive Housing for the Elderly, 
Supportive Housing for Persons with Disabilities, homeless assistance 
programs under the McKinney-Vento Homeless Assistance Act (42 U.S.C. 
11301, et seq.), and housing designated under section 7 of the United 
States Housing Act of 1937 (42 U.S.C. 1437e) that: (1) Serve specific 
identified populations; and (2) comply with title VI of the Civil 
Rights Act of 1964 (42 U.S.C. 2000d-2000d-4) (Nondiscrimination in 
Federally Assisted Programs), the Fair Housing Act (42 U.S.C. 3601-19), 
including the duty to affirmatively further fair housing, section 504 
of the Rehabilitation Act of 1973 (29 U.S.C. 794), and the Americans 
with Disabilities Act (42 U.S.C. 12101, et seq.), and other Federal 
civil rights statutes and regulations.
    A violation would occur, however, if the programs are administered 
in a manner in which they do not comply with applicable civil rights 
laws. For example, a program participant providing housing for 
individuals with disabilities may not refuse to serve individuals who 
are deaf or hard of hearing because of the cost of interpreters. 
Because the example would provide different services based on type of 
disability, such a limitation is prohibited by civil rights statutes 
and regulations. However, as long as the program is administered and 
operated in accordance with program requirements and civil rights 
statutes and regulations, participation does not present a fair housing 
issue.
    By adding such a definition, HUD seeks to assure current and 
prospective program participants that utilize Federal housing programs, 
including HUD or other Federal agency programs (such as the housing 
programs of the U.S. Department of Veterans Affairs or the U.S. 
Department of Agriculture's Rural Housing Service housing programs) to 
serve specific populations does not violate this rule's provisions 
related to the definition of ``segregation'' or the general duty to 
affirmatively further fair housing. Participation in these Federally 
funded programs is encouraged, as is coordination of programs together 
to support housing options for specific groups, including the homeless 
and persons with disabilities.
    HUD's Olmstead Statement discusses these legal requirements and the 
resulting trend of shifting service delivery from a medical, 
institutional model designed for the efficiency of the provider to a 
model emphasizing personal choice and the provision of services in 
integrated settings where individuals with disabilities can live and 
interact with persons without disabilities to the fullest extent 
possible. As set forth in HUD's Olmstead Statement, HUD encourages 
providers of housing for persons with disabilities to explore various 
housing models and the needs of their communities. While HUD encourages 
these efforts, HUD reiterates the legal authority of providers of 
housing to persons with disabilities to develop and operate project-
based or single-site supportive housing projects both as permanent 
supportive housing for the homeless and for individuals with 
disabilities as authorized by the statutes and regulations that govern 
the housing, so long as such operation is consistent with civil rights 
laws and regulations, including section 504 of the Rehabilitation Act 
of 1973 and HUD's regulations at 24 CFR part 8.
    Rule change. This final rule adds a definition of ``Housing 
programs serving specified populations'' in Sec.  5.152, as described 
above.
3. Scope of AFFH
a. Scope of AFFH Obligation
    Comment: HUD's definition of affirmatively furthering fair housing 
should be changed. Commenters stated that what constitutes 
affirmatively fair housing has never fully been defined by Congress or 
HUD, and they supported HUD's effort to create such a definition. 
Commenters stated that although they support HUD's efforts, HUD's 
definition expands affirmatively furthering fair housing to include 
access to nonhousing elements, such as transportation, employment, 
education, and other community facilities, extends the protections of 
the Fair Housing Act to non-protected classes through a prohibition on 
racially or ethnically concentrated areas of poverty.
    Commenters stated that access to community resources is very 
important, and often has an impact on neighborhoods, their residents, 
and quality of life; however, it is not covered by the Fair Housing 
Act, and is, therefore beyond the scope of the protections of the Fair 
Housing Act.
    Other commenters stated that HUD's duty is to ensure that 
historical segregation has been remedied, and that HUD's rule which 
goes beyond this duty is unnecessary and contrary to the legislative 
intent. Commenters stated that HUD has no constitutional authority to 
practice social engineering, especially at the expense of taxpayers, 
local or state governments, and the general population.
    Commenters stated that while the rule's focus on disparities in 
access to community assets is noble, the requirement to reduce these 
disparities for the classes protected under the Fair Housing Act has 
little to do with affirmatively furthering fair housing. Commenters 
stated that they have sometimes seen public school systems willing to 
take the steps needed to help achieve stable integrated neighborhoods 
(and the public schools play a major role in perpetuating housing 
segregation), but reducing disparities without integrating the schools 
is reminiscent of the separate but equal doctrine.
    Commenters stated that even more removed from affirmatively 
furthering fair housing are such issues as recreational facilities and 
programs, social service programs, parks, roads,

[[Page 42282]]

street lighting, trash collection, street cleaning, crime prevention, 
and police protection activities which the commenters stated were also 
in the 1995 HUD Fair Housing Planning Guide. Commenters stated that 
recipients have largely left these peripheral issues out of their 
analyses of impediments (AIs) for good reasons because they have 
little, if nothing, to do with affirmatively furthering fair housing 
and addressing them would make the cost of conducting an AI (and AFH) 
soar.
    Commenters recommended that HUD issue a more narrowly tailored 
definition of ``affirmatively furthering fair housing'' and remove 
nonhousing subjects from the list of elements to be addressed in the 
Assessments of Fair Housing. The commenters stated that at the same 
time, they encourage HUD, outside of the rulemaking process to continue 
to work with housing authorities and other interested parties to 
increase funding for and to make available resources that will increase 
access of groups with characteristics protected by the Fair Housing Act 
as well as low-income families to transportation, employment, education 
and other community facilities.
    In contrast to these commenters, other commenters commended HUD for 
its definition of ``affirmatively furthering fair housing'' in the 
proposed rule and, as stated by the commenters, HUD's clarification 
that affirmatively furthering fair housing means expanding access to 
important community assets and resources that have an impact on the 
quality of life for residents. Commenters stated that HUD has taken a 
very important step towards achieving Congress' vision about how the 
Fair Housing Act should be a tool for creating equal opportunity. 
Commenters stated that HUD's rule is consistent with the Fair Housing 
Act, at 42 U.S.C. 3608, and as interpreted by the Federal courts in a 
series of landmark decisions. The commenters stated that the statutory 
duty to affirmatively further fair housing was recognized by the 
appellate court in N.A.A.C.P Boston Chapter v. HUD, 817 F.2d 149, 155 
(1st Cir. 1987), which held that the Fair Housing Act obligated HUD 
``[to] do more than simply not discriminate itself; it reflects the 
desire to have HUD use its grant programs to assist in ending 
discrimination and segregation, to the point where the supply of 
genuinely open housing increases.''
    HUD Response: HUD's final rule is a fair housing planning rule, 
which is designed to help program participants fulfill their statutory 
obligation to affirmatively further fair housing. HUD developed the AFH 
as a mechanism to enable program participants to more effectively 
identify and address fair housing issues and contributing factors. 
Because housing units are part of a community and do not exist in a 
vacuum, an important component of fair housing planning is to assess 
why families and individuals favor specific neighborhoods in which to 
reside and whether there is a lack of opportunity to live in such 
neighborhoods for groups of persons based on race, color, national 
origin, disability, and other characteristics protected by the Fair 
Housing Act. HUD's Assessment Tool, which includes a section on 
community assets and exposure to adverse community factors, is meant to 
aid program participants in determining if and where conditions exist 
that may restrict fair housing choice and access to opportunity. In 
order for program participants to identify such conditions, which 
constitute fair housing issues, access to opportunity warrants 
consideration in the overall analysis performed in preparing an AFH. 
The Assessment Tool guides program participants in considering access 
to public transportation, quality schools and jobs, exposure to 
poverty, environmental health hazards, and the location of deteriorated 
or abandoned properties when identifying where fair housing issues may 
exist. Following this analysis, the program participants are to set 
goals consistent with fair housing and civil rights requirements to 
overcome those issues within their respective geographic area, 
determined, by the program participant, to be priority fair housing 
issues. Such an analysis and prioritization of goals is consistent with 
the intent of the Fair Housing Act and Fair Housing Act case law. 
Courts have found that the purpose of the affirmatively furthering fair 
housing mandate is to ensure that recipients of Federal housing and 
urban development funds do more than simply not discriminate: It 
obligates them to take meaningful actions to address segregation and 
related barriers for those protected by the Act, particularly as 
reflected in racially or ethnically concentrated areas of poverty.\12\
---------------------------------------------------------------------------

    \12\ See discussion in the July 19, 2013, proposed rule at 78 FR 
43712, N.A.A.C.P. Boston Chapter v. Secretary of Housing and Urban 
Development, 817 F.2d 149 (1st Cir. 1987), Otero v. N.Y. City Hous. 
Auth., 484 F.2d 1122 (2d Cir. 1973); Shannon v. HUD, 436 F.2d 809 
(3d Cir. 1970).
---------------------------------------------------------------------------

    Comment: In the AFFH rule, HUD takes the analysis of disparate 
impact one step further. Commenters stated that HUD is inappropriately 
using the disparate impact theory as the basis for its AFFH rule. 
Commenters stated that statutes that create disparate impact liability 
use different language--such as language proscribing actions that 
``adversely affect'' an individual because of his or her membership in 
a protected group--to focus on the effect of the action on the 
individual rather than on the motivation for the action. Commenters 
stated that unlike such statutes, the text of the Fair Housing Act does 
not prohibit practices that result in a disparate impact in the absence 
of discriminatory intent. Commenters stated that by its plain terms, 
section 3604 of the Fair Housing Act prohibits only intentional 
discrimination. Commenters stated that HUD's rule contemplates an 
analysis that goes well beyond the finding of any specific intent to 
discriminate. Commenters stated that HUD's rule contemplates massive 
plans that take into account statistical analyses of race, gender, land 
use, facilities, siting and a variety of other contributing factors, 
and HUD does not require an analysis to show that any discrimination 
against a member of a protected class was intentional, but rather the 
entire contemplation of HUD's rule is that through careful planning in 
advance and carefully implemented restrictions on actions of 
participants (albeit benign actions), HUD can decide how best to avoid 
actions that might have a discriminatory impact on one or more 
protected groups.
    Commenters stated that whether HUD's extensive planning exercise, 
which commenters claim overrides local laws, rules and practices, is 
wise or should be the law of the land is perhaps a legitimate subject 
for debate, but that debate should occur within the legislative body 
that establishes the laws, not in a proposed regulation of an agency of 
the executive branch that has been created to administer the laws, not 
create them. HUD must be bound by the terms of the Fair Housing Act, 
and that act does not authorize the use of disparate impact analysis as 
the basis for a finding of discrimination.
    HUD Response: The basis for HUD's AFFH rule is the Fair Housing Act 
and certain other statutory provisions, specifically the Housing and 
Community and Development Act of 1974 and the U.S. Housing Act of 1937, 
that require HUD programs to be administered in a manner that 
affirmatively furthers fair housing. This means that HUD has the 
statutory authority to ensure that participants in HUD-funded programs 
not only refrain from discrimination, but also take meaningful actions 
to increase fair housing choice and access to opportunity and combat 
discrimination.

[[Page 42283]]

    Pursuant to its authority under the Fair Housing Act, HUD has long 
directed program participants to undertake an assessment of fair 
housing issues--previously under the AI approach, and following the 
effective date of this rule, under the new AFH approach. The intent of 
both planning processes (previously the AI and now the AFH) is to help 
program participants determine whether programs and activities restrict 
fair housing choice and access to opportunity, and, if so, develop a 
plan for addressing these restrictions.
    In response to comments asserting that the Fair Housing Act does 
not recognize disparate impact liability, the Supreme Court recently 
ruled that the Fair Housing Act prohibits discrimination caused by 
policies or practices that have an unjustified disparate impact because 
of race, color, religion, sex, familial status, national origin, or 
disability. Texas Dep't of Hous. & Cmty. Affairs v. Inclusive Cmtys 
Project, No. 13-1371, 2015 U.S. LEXIS 4249 (June 25, 2015). In that 
decision, the Supreme Court also acknowledged ``the Fair Housing Act's 
continuing role in moving the Nation toward a more integrated 
society.'' (See case cited at page 42.)
b. Scope of AFFH Coverage--Populations
    Comment: Poverty is not a protected class. Commenters stated that 
Congress has not yet extended the protections of the Fair Housing Act 
to persons based on economic circumstances; that is, poverty is not a 
protected class. Commenters stated that HUD, in its AFFH rule, 
endeavors to extend Fair Housing Act protections to certain classes of 
people who are economically disadvantaged without statutory authority 
by requiring an analysis of racially or ethnically concentrated areas 
of poverty.
    HUD Response: HUD agrees with the comment that the Fair Housing Act 
does not prohibit discrimination on the basis of income or other 
characteristics not specified in the Act, and it is not HUD's intent to 
use the AFFH rule to expand the characteristics protected by the Act. 
HUD would note that the majority of its programs are meant to assist 
low-income households to obtain decent, safe, and affordable housing 
and such actions entail an examination of income. Moreover, the Fair 
Housing Act does require HUD to administer its housing and urban 
development programs--that is, programs that target assistance to low-
income persons--in a manner to affirmatively further fair housing. 
Accordingly, it is entirely consistent with the Fair Housing Act's duty 
to affirmatively further fair housing to counteract past policies and 
decisions that account for today's racially or ethnically concentrated 
areas of poverty or housing cost burdens and housing needs that are 
disproportionately high for certain groups of persons based on 
characteristics protected by the Fair Housing Act. Preparation of an 
AFH could be an important step in reducing poverty among groups of 
persons who share characteristics protected by the Fair Housing Act. 
The focus and purpose of the AFH is to identify, and to begin the 
process of planning to overcome, the causes and contributing factors 
that deny or impede housing choice and access to opportunity based on 
race, color, religion, sex, national origin, familial status, and 
disability. In addition, a large body of research has consistently 
found that the problems associated with segregation are greatly 
exacerbated when combined with concentrated poverty. That is the legal 
basis and context for the examination of RCAPs/ECAPs, as required by 
the rule.
    Comment: Affirmatively furthering fair housing should consider 
groups beyond those based on the protected characteristics listed in 
the Fair Housing Act. In contrast to the commenters in the preceding 
comment, other commenters stated that affirmatively furthering fair 
housing should recognize and consider a wider range of classes targeted 
for discrimination. The commenters urged HUD, in the final rule, to 
recognize members of the lesbian, gay, bisexual, and transgender (LGBT) 
community, Housing Choice Voucher (HCV) holders (often subject to 
source of income discrimination as a proxy for discrimination based on 
race, familial status, and disability), victims of domestic violence, 
homeless individuals, migrant workers, and residents in rural areas, as 
groups in need of protections. The commenters stated that these 
vulnerable populations are disproportionately members of Federally-
protected classes, and HUD should encourage program participants to 
address their housing barriers as part of their efforts to 
affirmatively further fair housing. Commenters stated that the severity 
of affordable housing need is not necessarily dictated by membership in 
a protected class.
    HUD Response: While HUD recognizes that persons may experience 
housing discrimination based on their source of income, marital status, 
migrant worker status, history of domestic violence, or homelessness, 
etc., as provided in the response to the preceding comment, HUD may not 
expand, through regulation, protected bases beyond those specified in 
the Fair Housing Act. The Fair Housing Act does recognize 
discrimination against LGBT individuals when such discrimination is on 
the basis of sex, which is a protected characteristic, as stated in 
Sec.  5.152 of this final rule, which includes nonconformity with 
gender stereotypes. Such discrimination should, as appropriate, be 
considered in a program participant's AFH.
    Comment: The AFH analysis must address every protected class. 
Commenters stated that if a State or jurisdiction makes the 
determination that its AFH plan that there is no need to affirmatively 
further fair housing for a particular group or groups, then the 
jurisdiction should offer an explanation of this determination. The 
commenters stated that the baseline presumption should be that every 
AFH analysis will discuss every protected class in each analysis 
section, with an explanatory note where the AFH authors elect to only 
discuss a subset of the protected classes. The commenters stated that 
this will not only encourage jurisdictions to examine the disparate 
housing needs and level of segregation of each protected class within 
their region, but will also encourage research and planning strategies 
to account for intersectionality--i.e., the distinct experiences of 
members of one or more protected classes, and stated, as an example, 
women who are members of racial and ethnic minority groups and may have 
disproportionate housing needs in a jurisdiction based not only on 
their identity as a member of a racial or ethnic minority group, but 
also their identity as women. Some commenters suggested that the 
proposed rule appears to focus only on protected classes of race and 
ethnicity.
    A commenter suggested that, to ensure that each State, 
jurisdiction, or PHA fully accounts for every protected class within 
its region, HUD's final rule should revise Sec.  5.154(d)(2)(iii) and 
(iv) as follows with italics reflecting new language and brackets 
reflecting deleted language: ``(iii) Identify whether there are 
significant disparities in access to community assets [exist across] 
for all protected classes as compared to other groups within the same 
jurisdiction and region; and (iv) Identify whether there are 
disproportionate housing needs for each protected class as compared to 
other groups within the same jurisdiction and region.''
    HUD Response: The proposed rule provided for the analysis of data 
on the basis of race, color, religion, sex, familial status, national 
origin, and disability, and the final rule adopts this language (see 
introductory text to

[[Page 42284]]

Sec.  5.154(d)). Program participants that do not address fair housing 
issues on these bases run the risk of having their AFH determined to be 
incomplete and, consequently, not accepted. While proposed Sec.  5.154 
listed all the protected classes, HUD determined that the language of 
this section could be better stated. HUD did not adopt the exact 
language presented by the latter commenter, but made the clarification 
requested by this commenter.
    Rule clarification. In Sec.  5.154(d)(2), which pertains to the 
program participant's analysis of data, HUD clarifies that such 
analysis pertains to ``each protected class.''
    Comment: Housing options must allow elderly persons to age in 
place. Commenters stated that housing options that support successful 
aging in place are disproportionately unavailable in racially 
concentrated segregated neighborhoods. The commenters stated that such 
communities lack the supportive services and transportation options 
that are necessary to support successful aging, and that unlike one who 
lives in a community with more robust options and resources, people in 
protected classes who live in segregated communities may be forced as 
they age to make the Hobson's choice of foregoing suitable housing and 
services or breaking social ties to get access to such supports and 
services. The commenters asked HUD to provide program participants with 
adequate information and insight into housing and housing-related 
aspects of communities that will help people age in place, such as 
transportation, accessibility and walkability improvements. The 
commenters stated that the AFH process offers HUD the opportunity to 
assist program participants to plan for the future and for the needs of 
a growing population, in support of the Fair Housing Act's goal of 
integration.
    HUD Response: While noting that ``age'' is not a protected class 
under the Fair Housing Act, Title VI, or Section 504, HUD agrees that 
adequate information and insight into housing and housing-related 
aspects of communities such as transportation and physical 
accessibility, as well as other housing-related aspects of communities 
such as access to high performing schools, are important items that 
must be considered in the context of affirmatively furthering fair 
housing. HUD's proposed Assessment Tool provides for consideration of 
these factors under the heading of ``Disparities in Access to 
Opportunity,'' and an analysis of the availability of these assets on a 
nondiscriminatory basis is part of the AFH, and undertaken to help 
avoid displacement of existing residents in areas experiencing renewed 
economic growth or housing price appreciation, or disinvestment in 
existing low-income neighborhoods.
    Comment: Clarify applicability of affirmatively furthering fair 
housing to LGBT individuals. Commenters stated that it is unclear 
whether, apart from the listed protected classes, other groups are 
protected by HUD's rule. Commenters urged HUD to require program 
participants to consider the housing needs and barriers faced by LGBT 
individuals and families. Commenters stated that such inclusion would 
make the AFFH rule consistent with HUD's February 3, 2012, rule 
prohibiting discrimination against LGBT individuals and families in 
HUD-funded or Federal Housing Administration-insured housing, referred 
to as the Equal Access Rule. (See Sec.  5.105(a)(2).) Commenters 
further stated that such inclusion would align with the decisions of 
Federal courts across the country, which have recognized protections 
for LGBT individuals on the basis of sex as a protected class. 
Commenters stated that, because HUD's rule addresses steps that HUD 
program participants should take to ensure fair housing for all, LGBT 
individuals and families should be included along with the seven 
protected classes under the federal Fair Housing Act.
    Other commenters stated that, while discrimination based on sexual 
orientation and gender identity is not explicitly prohibited by the 
Fair Housing Act, HUD explained in the preamble its Equal Access Rule 
that it interprets the Fair Housing Act's prohibition against 
discrimination based on ``sex'' to include gender identity. The 
commenters stated that while this has extended crucial protections to 
transgender and gender nonconforming individuals, truly ensuring fair 
housing requires more than just investigation of claims of 
discrimination after the fact. Commenters stated that explicitly 
enumerating LGBT individuals and families among those groups whose 
needs and barriers to housing will receive particular consideration by 
program participants is especially important.
    HUD Response: It is HUD's policy to ensure equal access on the 
basis of sexual orientation, gender identity, and marital status in 
housing assisted by HUD or subject to a mortgage insured by FHA. HUD 
published its Equal Access Rule on February 3, 2012, to formally 
establish this policy. (See 77 FR 5662, codified at Sec.  5.105(a)(2).) 
HUD's Equal Access Rule did not and could not, however, expand 
statutory fair housing protection to all persons on these bases. The 
principal legal authorities for the AFFH rule are the affirmative 
provisions of the Fair Housing Act, the United States Housing Act of 
1937, the Housing and Community Development Act of 1974, and Executive 
Order 12892 (Leadership and Coordination of Fair Housing in Federal 
Programs: Affirmatively Furthering Fair Housing). HUD may not expand, 
through regulation, the range of protected characteristics specified in 
the statutes and executive order.
    Although sexual orientation and gender identity are not identified 
as protected classes in the Fair Housing Act, the Fair Housing Act's 
prohibition of discrimination on the basis of sex prohibits 
discrimination against LGBT individuals in certain circumstances, such 
as those involving nonconformity with gender stereotypes. Therefore, 
for example, a landlord's refusal to renew the lease of a HCV holder 
because he or she failed to conform to male or female gender 
stereotypes could be a violation of HUD's Equal Access Rule as well as 
the Fair Housing Act. Fair housing complaints filed on this basis as 
well as results of testing or local knowledge of these types of 
discriminatory practices should, if appropriate, be considered in a 
program participant's AFH.
    In addition, a program participant may be located in a State or 
locality that has adopted a fair housing statute or ordinance that 
extends fair housing protection on bases in addition to those specified 
in the Fair Housing Act. Therefore, the program participant may find it 
beneficial for its larger planning efforts to include such additional 
protected bases in its AFH. Even so, HUD cannot direct a program 
participant to do so or to consider AFH content that covers protected 
classes beyond those in the Fair Housing Act.
c. Scope of AFFH Coverage--Resources
    Comment: Clarify use of resources to which AFH would apply. Many 
commenters stated that the final rule should be explicit that all of a 
program participant's housing and community development resources, as 
well as its policies, practices, and procedures must be assessed, and 
that these resources would involve not only HUD funds or other Federal 
funds but non-federal resources. Commenters stated that influencing the 
allocation of HUD dollars is insufficient and that other Federal and 
State programs must also spend resources in ways that affirmatively 
further fair housing. The commenters stated that the proposed rule 
could be misunderstood to only

[[Page 42285]]

consider use of HUD funds or Federal funds, and that however large the 
Federal investment in housing may be, it is small in comparison to 
housing activity in the private market.
    Commenters stated that the final rule should make explicit what is 
already implicit and that is that the duty to affirmatively further 
fair housing applies to a program participant's activities that do not 
involve the use of HUD funds. Commenters stated that the scope of the 
duty is particularly important in two contexts. First, when a program 
participant has violated the nondiscrimination provisions of the Fair 
Housing Act through activities that do not involve HUD or other Federal 
funds, that entity cannot certify that it is in compliance with the 
duty to affirmatively furthering fair housing, and HUD should not 
accept the certification of such a program participant unless its AFH 
includes an effective remedy for the violation. Second, in many cases, 
meaningful goals designed to address fair housing contributing factors 
may require actions on the part of program participants that do not 
involve the use of HUD funds. The commenters offered as an example that 
a jurisdiction's existing zoning ordinance may be identified as one of 
the contributing factors influencing existing residential segregation, 
concentrations of poverty, disparities in access to community assets, 
and disproportionate housing needs based on protected class. Commenters 
stated that even if the ordinance does not violate the 
nondiscrimination provisions of the Fair Housing Act the jurisdiction 
may need to adopt an inclusionary zoning ordinance because such a 
policy would be the most effective means of addressing the identified 
contributing factors under the circumstances. Commenters offered as 
another example, a jurisdiction that has cited the lack of access to 
mass transit as a contributing factor which hinders the development of 
affordable units in a high opportunity area and that may need to extend 
bus service to that neighborhood.
    Commenters stated that section 3608 of the Fair Housing Act does 
not permit jurisdictions to violate fair housing standards with non-HUD 
resources and, at the same time, certify compliance with the obligation 
to affirmatively furthering fair housing by analyzing only activities 
using HUD funds. The commenters stated that if a city's zoning division 
is enforcing a zoning code (using all local funds) that has been found 
to discriminate and yet is using CDBG funds in unobjectionable ways, 
HUD should not accept a CDBG AFFH certification that fails to address a 
plan to remedy the zoning problem. Commenters concluded that this is 
well established law and should be made explicit in the final rule and 
mechanisms should be included to address this issue.
    In contrast to these commenters, other commenters stated that the 
final rule should be clear that the AFFH rule only applies to programs 
under HUD's jurisdiction. Commenters stated that imposing the AFFH rule 
on other resources, such as education, health care, and transportation, 
requires significantly more comprehensive federal authority that 
incorporates other federal departments. Commenters stated that the 
final rule should set clear parameters regarding the resources and 
programs that are governed by the rule.
    HUD Response: As HUD stated in the proposed rule, it is a statutory 
condition of the receipt of HUD funding that program participants 
certify that they will affirmatively further fair housing. The proposed 
rule provided that program participants would take meaningful actions 
to further the goals identified in an AFH conducted in accordance with 
the requirements of this rule and would take no action materially 
inconsistent with their obligation to affirmatively further fair 
housing. While the duty to affirmatively further fair housing derives 
from the receipt of HUD funds, commenters are correct in saying that 
the duty applies to all of a program participant's programs and 
activities related to housing and urban development.
    Comment: The scope of activities related to housing and urban 
development should be determined by the program participant. Commenters 
stated that the appropriate scope of activities should be left up to 
the communities to decide given the wide variety and characteristics of 
the communities that participate in this program. Commenters stated 
that a one size fits all mandate runs the real risk of further eroding 
the consolidated plan process and substantially reducing the 
consolidated plan's real value and impact in how a community conducts 
and implements its planning efforts.
    Other commenters stated that the duty to affirmatively further fair 
housing should apply to activities that make sense. The commenters 
stated that affirmatively further fair housing should apply to 
activities in which there is an opportunity for unfair housing to occur 
such as home purchase or rental.
    HUD Response: HUD agrees with the commenters that the analysis of 
fair housing issues, the identification and prioritization of 
contributing factors, and the establishment of goals to address such 
issues are to be determined by the program participant. This rule 
cannot provide grantees with authority or obligations beyond those they 
already have legal jurisdiction over. In some cases, program 
participants may be local government agencies having authority over 
some areas that other participants, such as public housing authorities, 
do not. In many cases, the analysis of local fair housing issues that 
the rule requires will include issues beyond the program participants' 
legal authority to change. For example, a PHA may be unable to change a 
zoning law. In such cases, the analysis is still useful in identifying 
those challenges that, while they may beyond the program participants' 
control, could be addressed by other state or local government agencies 
or that otherwise present a barrier or constitute a fair housing 
contributing factor, as defined in the rule.
    While HUD will review a program participant's AFH for consistency 
with fair housing and civil rights laws and determine if the AFH is 
substantially complete, the best source of information about housing 
and related issues in a geographic area will almost always be found 
with the program participant or participants undertaking Federally 
funded housing and related activities in the geographic area or areas 
that they serve. The program participants are in the better position to 
identify housing choice issues faced by residents in their areas. HUD's 
AFFH rule is intended to help program participants by providing 
additional information and data that is expected to aid the program 
participants' analysis and final decisions on investment of Federal 
funds. HUD will then review the analysis of a program participant for 
consistency with fair housing and civil rights laws, as well as 
determine if such analysis is substantially complete. HUD may determine 
that a program participant's analysis, goals, or actions are materially 
inconsistent with current Federal laws and regulations related to fair 
housing and civil rights, or that the program participant has failed to 
fulfill their obligations to conduct a complete analysis. In such 
cases, HUD will request that the program participant revise the 
associated AFH to ensure compliance. Such a request does not interfere 
with local decisionmaking powers of HUD's program participants, but 
ensures that such decisionmaking comports with a program participant's 
overall obligation to affirmatively furthering fair housing.
    However, as noted in HUD's response to an earlier comment 
pertaining to

[[Page 42286]]

community assets, fair housing choices are not limited to transactions 
relating to rental or ownership of housing. Fair housing issues may 
arise from such factors as zoning and land use; the proposed location, 
design, and construction of housing; public services that may be 
offered in connection with housing (e.g., water, sanitation), and a 
host of other issues. Accordingly, the AFH approach focuses primarily 
on how to assist program participants in being better informed about, 
and better able to set goals and priorities relating to, conditions in 
their current environments that involve fair housing concerns, such as 
patterns of integration and segregation; racially or ethnically 
concentrated areas of poverty; disproportionate housing needs, and 
housing-related barriers in access to education, employment, 
transportation, and jobs, among others, to ensure that these conditions 
are taken into consideration in making funding decisions.
    The final rule provides, as did the proposed rule, that program 
participants have flexibility in setting goals and priorities relating 
to fair housing concerns so long as those goals are designed, and are 
consistent with, the analysis of data and local knowledge and the 
obligation to affirmatively further fair housing and other fair housing 
and civil rights requirements.
d. Scope of AFFH Coverage--Activities
    Comment: Clarify scope of activities considered to be activities 
relating to housing and urban development under the Fair Housing Act 
should be Federally-funded grant programs. Commenters stated that 
activities considered related to housing and urban development under 
the Fair Housing Act should include those eligible under the CDBG 
program, ESG, the HOME program and other Federal grant programs, as 
well as PHA mandated activities. Commenters stated that this should be 
the minimum requirement, and going beyond the minimum should be at the 
discretion of each program participant. The commenters stated that 
mandating program participants to go beyond the minimum would likely 
result in an administrative burden that HUD has not contemplated.
    PHA commenters stated that, as HUD is aware, PHAs may only conduct 
activities within their areas of operation, as defined by State or 
local law, and that these geographic constraints impede PHAs' ability 
to implement activities envisioned by a multi-jurisdictional, regional 
or state AFH. The commenters stated that, for example, a PHA that 
serves a predominantly minority or high poverty area can only undertake 
activities within that specific geographic area. Commenters requested 
that the final rule recognize PHAs' geographic constraints and limit 
PHAs' liability for issues or activities outside their area of 
operation pursuant to a jointly-undertaken AFH. PHA commenters stated 
the following activities should be exempt from fair housing planning: 
Redevelopment on public housing sites owned by a PHA before the 
effective date of the rule; public housing developments operated by a 
PHA with fewer than 100 public housing units; public housing 
developments operated by a PHA which house only elderly persons or 
persons with disabilities, or both; public housing developments 
operated by a PHA which consist of only one general occupancy, family 
public housing development; public housing developments approved for 
demolition or for conversion to project-based or tenant-based 
assistance, including conversions under the Rental Assistance 
Demonstration program or any equivalent program; public housing 
developments which include public housing units operated in accordance 
with a HUD-approved mixed-finance plan; and large redevelopment efforts 
intended to revitalize neighborhoods and reduce poverty.
    Other commenters requested that the proposed rule not address 
coverage of non-housing CDBG activities, such as community projects, 
public facilities and economic development. The commenters stated that 
while these are not housing projects, HUD's rule indicated that funding 
decisions of these projects may be covered by the rule, but the rule 
was not clear on this issue.
    Other commenters stated that ``activities relating to housing and 
urban development'' is extremely broad and HUD needs to clarify or 
elaborate on what this means.
    HUD Response: HUD-funded and other Federally-funded housing and 
urban development activities are explicitly covered by the duty to 
affirmatively further fair housing. This rule does not change the scope 
of the duty to affirmatively further fair housing.
    HUD recognizes that program participants may be limited by their 
State and local enabling statutes in taking certain actions. 
Nonetheless, the inclusion of a larger regional analysis for 
participants is necessary to put the local fair housing issues into 
context required by the Fair Housing Act and case law (e.g. Thompson v. 
HUD). While a grantee may be serving a central city, the regional 
conditions of surrounding suburbs may be highly relevant to identifying 
fair housing issues, including those that are beyond the grantees' 
immediate control or legal authority to influence. Barriers to fair 
housing choice or other ``fair housing contributing factors'' (as 
defined in the rule) may still be relevant in helping to explain the 
fair housing issues facing the program participant. In some cases, this 
may help in encouraging regional solutions to shared problems, and in 
some cases may simply add needed context to program participants' 
planning processes.
    The AFH is primarily intended as a planning tool designed to 
identify the full range of fair housing issues affecting a program 
participants' geographic area, including the jurisdiction, region, and 
fair housing issues identified may not necessarily be limited to those 
under the control of the program participant or involving the use of 
HUD or other Federal assistance. Once fair housing issues and 
contributing factors have been identified, the scope of actions that 
program participants may decide to take, and are capable of taking, to 
address these fair housing issues and contributing factors may often be 
broader than the scope of the program participants' activities 
receiving the HUD or Federal assistance that trigger the obligation to 
affirmatively further fair housing. An objective of the AFH approach is 
to have program participants consider all available means to address 
fair housing issues and contributing factors that arise within their 
geographic area of analysis or impact their geographic area.
4. Benchmarks and Outcomes
    Comment: Program participants must be required to establish 
benchmarks and timeframes for each goal. Many commenters recommended 
that the final rule require program participants to establish specific 
action steps/strategies and/or benchmarks in the AFH in order to be 
able to measure a program participant's progress toward achieving fair 
housing goals. Commenters stated that GAO, in studying compliance with 
the obligation to affirmatively furthering fair housing, stressed the 
need for benchmarks and timeframes. Commenters suggested that proposed 
Sec.  5.154 clearly delineate what kinds of milestones HUD reviewers 
would use to determine that a PHA or jurisdiction has made progress 
toward its goals identified in a participant's AFH. Commenters stated 
that Sec.  5.154 must be amended to require that participants submit 
benchmarks, a timetable in which to complete those benchmarks, and 
information about the entity

[[Page 42287]]

responsible for completing them, in their AFH.
    Commenters recommended including benchmarks/timeframes for each 
goal under four general categories: Modifying local regulations and 
codes, constructing new developments, creating new amenities, and 
facilitating the movement of people. Other commenters suggested that 
not only should the AFH have benchmarks but the benchmarks should have 
deadlines. Commenters stated that HUD should provide numerical 
benchmarks for determining ``measureable difference in access.'' 
Commenters stated that if a participant fails to meet a benchmark the 
participant should file a justification noting a plan to achieve the 
benchmark or modify the benchmark within 30 days of submission of the 
justification. The commenters stated that HUD should post this 
justification on its Web site for public comment within 30 days, and 
within 30 days of receiving those comments, HUD should complete its 
review and approve/reject the plan or modification. Other commenters 
suggested that the benchmarks and timeframes should be outlined in the 
Consolidated Plan and Annual Action Plans.
    Other commenters similarly asked that HUD mandate specific outcomes 
of the AFH process. Commenters stated that without outcomes, the new 
AFH process is rendered worthless. Commenters stated that HUD's rule 
focuses on process, not outcomes and it is the latter which is 
important.
    In contrast to the above commenters, other commenters stated that 
while they are sympathetic to those who believe that enforcement of the 
duty to affirmatively furthering fair housing must be far more rigorous 
and that specific benchmarks should be laid out in the AFH, they 
believe such a shift would be unwise. Commenters stated that the new 
AFH process already brings significantly more accountability to 
communities and promises to vastly improve the fair housing process; 
and therefore more stringent applications beyond what has been set out 
in the proposed rule would be counter-productive and could stymie what 
would otherwise be productive development.
    On the subject of outcomes, commenters, in contrast to the 
commenters above, stated that they supported HUD's approach of not 
mandating certain outcomes, but welcomed HUD, through guidance, to 
provide examples of outcomes that may reasonably be achieved through 
the new AFH process.
    HUD Response: HUD agrees with the commenters that the AFH process, 
to be effective, should have benchmarks and outcomes, but HUD agrees 
with the latter commenters that the final rule should not specify the 
benchmarks or mandate certain outcomes. The final rule provides for the 
establishment of benchmarks, but established by the program participant 
and not by HUD. However, as part of the AFH review process, HUD will 
include review of benchmarks and outcomes, as reflected in a program 
participant's goals. With respect to the request for guidance, HUD 
intends to provide the guidance on benchmarks and outcomes requested by 
the commenters.
    Rule change. HUD adds Sec.  5.154(d)(4)(iii) to provide that it is 
program participants that ``identify the metrics and milestones'' for 
determining what fair housing results will be achieved.
    Comment: Require annual publically available performance reports. 
Commenters recommended that HUD require annual publically available 
performance reports that include actions carried out and results 
achieved. Commenters stated that the rule should include a performance 
report requirement to describe efforts to carry out the duty to 
affirmatively further fair housing. Commenters recommended amending 
Sec.  91.520 (Performance reports) by adding the following language: 
``The Performance report must include . . . actions taken to 
affirmatively further fair housing, including the jurisdiction's 
progress in executing its AFH plan in a timely manner, . . . .'' Other 
commenters stated that the final rule should amend Sec.  903.7(r)(1) 
(Annual Performance Reports) to require annual performance reports that 
identify actions carried out to mitigate or address each of the goals 
in the AFH, describe the results of those actions and specify which 
fair housing issues were impacted and how they were impacted.
    Commenters stated in requiring performance reports, HUD should 
spell out what information participants must report in terms of 
progress they have made toward their fair housing goals, and the 
reports should include uses for the range of HUD grants received and 
any actions taken with respect to policies, practices, and non-
financial resources.
    Other commenters recommended that performance results could be 
provided through a comprehensive 5-year review for each required 
element of the AFH.
    HUD Response: Neither the proposed rule nor this final rule 
requires new performance reporting. Instead HUD relies upon existing 
performance reporting requirements or performance assessment 
requirements already set out in regulations governing consolidated plan 
program participants and PHAs. For some existing performance review or 
reporting requirements, HUD builds upon these requirements by 
specifically referencing review of AFH performance. For example, see 
Sec.  91.105(e)(1)(i) of the consolidated plan regulations. Similarly 
the CDBG regulations at Sec.  570.441(b)(3) provide for review of 
performance in carrying out the duty to affirmatively further fair 
housing. With respect to PHAs, HUD's Public Housing Assessment System 
(PHAS) regulations provide in Sec.  902.1(b) that a PHA's compliance 
with the duty to affirmatively further fair housing and other civil 
rights requirements such as section 504 of the Rehabilitation Act of 
1973 is monitored in accordance with applicable program regulations and 
the PHA's Annual Contributions Contract. With respect to specific 
program regulations, Sec.  905.308 of HUD's Capital Fund regulations in 
24 CFR part 905 encompasses a PHA's duty to affirmatively further fair 
housing in the use of its capital funds, and Sec.  905.802 of those 
same regulations provide for HUD review of PHA performance under the 
Capital Fund regulations. In addition, HUD's Office of Fair Housing and 
Equal Opportunity has existing procedures in place to investigate 
complaints and conduct compliance reviews relating to a program 
participant that is not affirmatively furthering fair housing. Given 
these performance review and monitoring processes already in place, HUD 
did not see any need to add new review requirements.
    HUD notes that the community participation requirements of the AFH, 
which incorporate the community participation requirements of the 
consolidated plan regulations in 24 CFR part 91, and those for PHA 
Plans in 24 CFR part 903, provide an opportunity for a review by the 
public of the performance by the program participant.
5. Determinants (Contributing Factors in the Final Rule) and Goals
    As noted in Section III of this preamble, HUD is replacing 
``determinant'' with ``contributing factor.'' However, since the 
proposed rule used the word ``determinant'' and this was the term used 
in submitting public comments on this issue, HUD retains the word 
``determinant'' for this discussion of public comments.
    Comment: More than one goal needs to be established. Many 
commenters stated that the final rule should prohibit program 
participants from setting only

[[Page 42288]]

one goal. Commenters stated that each community should be required to 
set more than one goal to mitigate the impact of determinants that 
cause fair housing issues, and that those communities should be 
required to report on the impact of their activities to address these 
issues in a specified format. Commenters stated that the compliance 
with the duty to affirmatively further fair housing must recognize that 
while barriers for people of diverse racial and ethnic groups, 
disabilities, and familial status often overlap, they are not 
interchangeable and all need to be addressed comprehensively to truly 
further fair housing.
    Some commenters stated that even two goals are not sufficient to 
ensure progress toward ending segregation and increasing access to 
community assets. Commenters stated that no program participant should 
have the option to only select one goal to address or mitigate its 
identified fair housing issues. Commenters urged HUD to set a higher 
standard of performance, and to require program participants to set 
goals and identify specific milestones, and timetables. Commenters 
stated that the language in the proposed rule must be changed at the 
final rule stage to reflect all of the components of the duty to 
affirmatively further fair housing, as described in the definition for 
this term. Commenters stated that the final rule must require program 
participants to set fair housing goals based on all of the most 
significant fair housing determinants.
    Other commenters stated that while one substantive goal may be 
sufficient for some program participants, the option to address only 
one goal may set a low bar for others. Commenters stated that reference 
to ``one goal'' signals to program participants that additional 
existing fair housing issues can be ignored or somehow de-prioritized, 
undermining much of what HUD sets out to accomplish with this rule.'' 
Commenters stated that setting just one goal will not even require 
communities to address both the need to strategically enhance 
neighborhood assets (e.g., through targeted investment in neighborhood 
revitalization or stabilization) and the need to promote greater 
mobility and access to areas offering vital assets such as quality 
schools, employment, and transportation for members of protected 
classes.
    Commenters recommended that the final rule clarify that program 
participants must identify at least one goal to address and/or mitigate 
each fair housing issue identified in the analysis as a discriminatory 
barrier. Commenters stated that although resource constraints in 
jurisdictions may limit the scope of fair housing goals, it is critical 
for long-term planning and regional integration for the jurisdiction to 
identify and execute even modest goals for each fair housing issue or 
barrier identified.
    HUD Response: The regulation does not prescribe a minimum or 
maximum number of fair housing contributing factors (``determinants'' 
in the proposed rule) or goals to be set for those factors. Although, 
HUD believes it would be a rare situation in which a program 
participant has only one goal, HUD does not disregard the possibility 
that a program participant may identify a single contributing factor 
and have only one goal for addressing that contributing factor, or that 
a program participant that has more than one contributing factor may 
have the same goal for addressing each of those contributing factors. 
HUD is interested in the substance of the goals and how a program 
participant's goal or goals would address contributing factors. HUD 
will evaluate whether the goals appropriately focus on contributing 
factors, and appear achievable by the program participant. This final 
rule includes additional clarifying language on prioritizing the most 
significant contributing factors. In addition, HUD intends to provide 
greater detail on identifying contributing factors and setting goals in 
the Assessment Tool and other sub-regulatory guidance.
    Also, HUD recognizes that not all identified contributing factors 
may be obstacles to fair housing requiring an action or goal to 
eliminate them. For example, a contributing factor may be outside of a 
program participant's control, such as a neighboring jurisdiction's 
zoning policies as opposed to the zoning policies of the jurisdiction 
of the program participant.
    In this rule, despite many commenters' concerns to the contrary as 
discussed in this preamble, it is not HUD's intention to dictate to 
program participants the decisions that they make based on local 
conditions. As stated in the proposed rule, through this new AFH 
process, HUD is not mandating specific outcomes for the planning 
process. Instead, recognizing the importance of local decisionmaking, 
the new AFH process establishes basic parameters and helps guide public 
sector housing and community development planning and investment 
decisions to fulfill the obligation to affirmatively further fair 
housing. In addition, it is important to remember that the AFHs will be 
made available to communities and residents of these communities will 
have the opportunity to weigh in on whether program participants have 
accurately identified contributing factors and have established goals 
appropriate for identified contributing factors and related fair 
housing issues.
    Rule change. This final rule adds Sec.  5.154(d)(4)(iii) that 
provides that the AFH must set goals for overcoming the effect of 
contributing factors as prioritized in accordance with paragraph 
(d)(4)(ii) of the section. This new section further provides that for 
each goal, a program participant must identify one or more contributing 
factors that the goal is designed to address, describe how the goal 
relates to overcoming the identified contributing factor(s) and related 
fair housing issue(s), and identify metrics and milestones for 
determining what fair housing results will be achieved. For instance, 
where segregation in a development or geographic area is determined to 
be a fair housing issue, with at least one significant contributing 
factor, HUD would expect the AFH to include one or more goals to reduce 
the segregation. HUD believes that this added language gives program 
participants the flexibility to decide, given local factors and 
conditions, the number of contributing factors that exist and the 
number of goals to be established.
    Comment: Specify that goals must be to overcome fair housing 
contributing factors rather than mitigate and address the contributing 
factors. Several commenters stated that regulatory language related to 
the contributing factor analysis must be revised to require program 
participants not just to ``mitigate or address'' problems, but to 
overcome them. A commenter stated that while the definition of 
``affirmatively furthering fair housing'' in the rule is strong, the 
proposed requirements for what a program participant must do under the 
AFH weakens the current standard. The commenter stated that under the 
current AI process, guidance and enforcement practice all require a 
participant to ``conduct an analysis to identify impediments to fair 
housing choice within the jurisdiction, and take appropriate actions to 
overcome the effects of any impediments identified through that 
analysis. . . . (Sec.  91.225(a)(1)).'' The commenter stated that by 
requiring only that participants ``mitigate or address'' the 
determinants of fair housing issues rather than ``take appropriate 
actions to overcome the effects of impediments,'' HUD appears, perhaps 
inadvertently, to be taking a

[[Page 42289]]

step back from the current standards to which participants are to be 
held.
    HUD Response: HUD agrees with the commenter and has replaced, where 
appropriate, ``mitigate and address'' with ``overcome.'' HUD stated in 
the proposed rule that the new AFH process is needed to ``facilitate 
efforts to overcome barriers to fair housing choice.'' Mitigating and 
addressing the contributing factors are part of those efforts to 
overcome such barriers, but the commenters are correct in stating that 
the ultimate goal is to overcome.
    Rule Change. This final rule revises the first sentence of the 
proposed definition of the term ``affirmatively furthering fair 
housing'' in Sec.  5.152 to say that affirmatively furthering fair 
housing means taking meaningful actions, in addition to combating 
discrimination, that overcome patterns of segregation and foster 
inclusive communities free from barriers that restrict access to 
opportunity based on protected characteristics.
    Comment: Consider using a term other than ``determinant.'' 
Commenters stated that HUD should consider using a different term, such 
as ``drivers'' in place of the term ``determinants,'' which they stated 
better describes ``the informal nature of the process of hypothesizing 
about causes and effects [of discrimination and segregation] through 
community dialogue.'' Commenters stated that, as provided in the 
proposed rule, the point of data analysis is to take stock of current 
conditions and provide information about disparities to initiate a 
community conversation about how the drivers may have led to those 
conditions. Commenters stated using the term ``determinants'' suggests 
a more scholarly investigation between outcomes and other variables, 
and not the desired community conversation.
    HUD Response: HUD agrees with the commenters and, as noted in 
Section III, of the preamble, HUD is replacing ``determinant'' with 
``fair housing contributing factor.''
    Comment: Determinants may be difficult to identify. Commenters 
stated that while it may be easy to determine the presence of 
segregation or integration, it is not easy, or may even be impossible 
to identify ``primary determinants'' and to further refine that 
analysis to identify the ``most significant determinants.'' Commenters 
stated that the requirement to assess determinants is very complex and 
is often related to factors outside of a program participant's control. 
Another commenter stated that while it is relatively easy to identify 
fair housing issues based on some of the thresholds in the rule, 
determining their exact causes can be exceedingly complex, with many 
factors of history and geography--most of which are well outside of the 
control of the program participant. Commenters stated that because HUD 
already has data on determinants, HUD should be in charge of conducting 
the review to find the answers it seeks.
    Other commenters stated that the ``determination of the `primary 
determinants' for causal conditions is often inherently arguable, 
vulnerable to differing interpretations and prioritization'' and that 
the final rule should recognize that the identified conditions should 
be addressed by the authority and resources available to the 
jurisdictions. The commenters stated that without bright lines for 
widely varying circumstances, ``any proposed criterion for acceptance 
or rejection of an AFH alone should be on a predominantly procedural 
basis.'' Commenters stated that the final rule should place less 
emphasis on an analysis that may or may not be of any relevance, which 
would free up resources to be targeted towards developing solutions. 
Commenters stated that it is a generous assumption that all program 
participants have the capacity to perform the required determinants 
analysis. Other commenters stated that such a requirement creates legal 
and political exposure to the agencies and entities that they might 
designate as having ownership of historical determinants of segregation 
and concentrations of poverty and that this process of ``finger 
pointing and blame'' heightens the potential for adversarial 
relationships to develop among the very partners that must effectively 
work together to improve the communities served through programmatic 
resources.
    Other commenters stated that for program participants to properly 
identify determinants, additional guidance is needed from HUD. 
Commenters stated that while the assessment of determinants is central 
to the AFH process, the lack of guidance in the rule about determinants 
is a major shortcoming, as the proposed rule had a limited explanation 
of what a fair housing determinant is, how determinants should be 
identified, and how to set goals to mitigate or address determinants. 
The commenter stated that even though the proposed rule recognizes the 
need for such guidance in the summary of the rule and the assessment 
tool is identified as the means of providing such guidance, the 
``assessment tool'' is defined as something that HUD will issue in the 
future. The commenter stated that without seeing the tool, 
jurisdictions may not have the necessary information to prepare these 
central elements of an AFH. To mitigate concern about the absence of 
guidance on determinants in the rule, the commenter suggested that the 
final rule incorporate the guidance that is being developed as an 
assessment tool by including illustrative examples of determinants and 
fair housing priorities and goals for mitigating and addressing the 
determinants that should be considered in drafting the AFH. 
Alternatively, the commenter stated that the assessment tool should 
``at a minimum be published for comment before it is finalized.''
    HUD Response: HUD agrees that identifying factors contributing to 
fair housing issues may not always be easy. It is for this reason that 
HUD seeks to assist with such identification by providing to program 
participants local and regional data on patterns of integration, 
racially or ethnically concentrated areas of poverty, barriers to 
access to key community assets, and disproportionate housing needs 
based on characteristics protected by the Fair Housing Act. While HUD 
cannot guarantee that the provision of such data will always make 
evident the factors contributing to such fair housing issues, HUD 
believes that the data will help in this regard. In addition, the 
questions presented in the AFH Assessment Tool (which was published for 
comment after the proposed rule) are designed to help program 
participants determine the factors that give rise to fair housing 
issues in their respective geographic areas of analysis. The community 
participation process will also assist program participants in 
identifying contributing factors and receiving feedback on whether the 
correct contributing factors have been identified. HUD will also 
provide instructions, guidance, training, and technical assistance in 
various formats to help program participants make this identification.
    With respect to commenters' concerns about finger pointing and 
blame, the purpose of the AFH is to analyze data and local knowledge to 
identify barriers with a view toward overcoming them, not assigning 
blame. Although the rule recognizes that many obstacles to housing 
choice that exist today reflect historic patterns of segregation, the 
analysis required by the AFH is to identify contributing factors to 
fair housing issues as a means of better planning how to address the 
fair housing issues. By providing data, HUD seeks to help program 
participants in determining the cause of fair housing

[[Page 42290]]

issues, the extent of impact, and how such fair housing issues may be 
addressed.
    With respect to commenters' concerns about the resources necessary 
to achieve the desired goals, HUD recognizes that there are likely 
insufficient funds to achieve every goal for every identified 
contributing factor, which is why the final rule directs program 
participants to identify significant fair housing contributing factors 
and to prioritize such factors. HUD further recognizes that there may 
be disagreement about which contributing factors are the significant 
factors leading to a fair housing issue. The public participation 
process should be of assistance to program participants in helping to 
identify and prioritize the contributing factors that should be the 
focus of the AFH.
    Comment: Zoning and land use should be explicitly identified as a 
determinant. Commenters stated that the determinants analysis should 
include a detailed assessment of a community's zoning and land use 
regulations. Commenters stated that although the proposed rule requires 
program participants to use an assessment tool to identify the primary 
fair housing determinants, they stated that there is no clear 
indication in the rule that this assessment tool will include a 
template for analysis of zoning and land use regulations. The commenter 
stated that because zoning and land use policies are not implicitly 
listed, the rule may be signaling that a robust assessment of zoning 
and land use policies with respect to impeding or limiting fair housing 
choice is not required. Commenters requested that language be added to 
Sec.  5.154(d)(3) that would provide that based upon data identified 
under Sec.  5.154 (d)(2) and community input, the analysis will assess 
whether a participant's laws, policies, or practices limit fair housing 
choice, and that examples of such laws, policies or practices include, 
but are not limited to, zoning, land use, housing plans or policies, or 
development plans or policies.
    HUD Response: The proposed rule did not identify all the questions 
that would be included in the Assessment Tool, as the Assessment Tool 
was still under development at the time of publication of the proposed 
rule. However, as seen in the proposed Assessment Tool published on 
September 26, 2014, the Assessment Tool does provide for an analysis of 
land use and zoning laws. HUD also plans to provide program 
participants with guidance on conducting such an analysis.
    Comment: Goals should not be equated with outcomes. Commenters 
stated that goals should be measured by the extent to which they are 
achieved. Commenters stated that goals may simply be a process goal 
that, if implemented, would affirmatively further fair housing; that 
is, if the process is implemented, the goal is achieved. The commenters 
stated that goals should not be required to be outcome goals, since the 
ability to influence and reduce segregation is limited by a number of 
factors, both known and unknown, including individual preferences, 
inadequate funding to ``move the needle'' in a significant way, and the 
lack of state control over local decision making.
    HUD Response: HUD agrees with the commenters that goals should not 
be equated with outcome. A goal is what one hopes to achieve by taking 
certain action and the outcome reflects the results of taking such 
action. As stated earlier in this preamble, HUD is not mandating 
specific outcomes, and HUD gives program participants the discretion 
and flexibility to set goals, taking into consideration the nature and 
scope of fair housing issues and contributing factors in the relevant 
geographic areas of analysis and the capacity of the program 
participant to address fair housing issues. HUD agrees that some goals 
may be process goals, such as amending a local land use or zoning law 
to remove barriers to the development of affordable housing in areas of 
opportunity. Achievement of the process goal by the enactment of the 
amendment that removes the barriers is a short-term outcome. However, 
an action of this kind could also yield long-term outcomes, such as 
reducing segregation or increasing access to opportunity.
6. Integrated Settings for Persons With Disabilities
    Comment: The rule, if implemented properly, will significantly 
improve housing opportunities for persons with disabilities. Many 
commenters expressed support for the rule's recognition that 
affirmatively furthering fair housing includes affording persons with 
disabilities the opportunity to live in the most integrated setting 
appropriate to the needs of persons with disabilities. Commenters 
stated that discrimination against persons with disabilities has too 
often been ignored, and expressed support for the rule's definitions of 
``fair housing choice'' and ``segregation'' and the rule's statement 
that for individuals with disabilities, integration also means that 
such individuals are housed in the most integrated setting appropriate. 
Commenters stated that the most integrated setting is one that enables 
individuals with disabilities to interact with nondisabled persons to 
the fullest extent possible, consistent with the requirements of the 
Americans with Disabilities Act and section 504 of the Rehabilitation 
Act of 1973. Commenters requested that the final rule also include the 
following language from HUD's Olmstead Statement: ``Examples of 
integrated settings include scattered-site apartments providing 
permanent supportive housing, tenant-based rental assistance that 
enables individuals with disabilities to lease housing in integrated 
developments, and apartments for individuals with various disabilities 
scattered throughout public and multifamily housing developments.'' The 
commenters stated that including these examples will help regulated 
entities better understand their obligations.
    HUD Response: HUD appreciates the suggestion to include in the rule 
examples of integrated settings as provided in HUD's Olmstead 
Statement. However, HUD believes that guidance, not the regulatory 
text, is the better location for these examples and HUD will include 
these examples in its guidance on affirmatively furthering fair 
housing.
    Comment: Include a reference to providing integrated settings for 
persons with disabilities with respect to the steps to be taken by PHAs 
to affirmatively further fair housing. Commenters recommended that in 
Sec.  903.2, which addressed PHAs taking steps to deconcentrate poverty 
and comply with fair housing requirements, HUD include a reference to 
promoting opportunities for persons with disabilities to live in the 
most integrated setting appropriate.
    HUD Response: Section 903.15 of this final rule already captures 
this concept. Section 903.15(d)(2)(ii) provides that affirmative steps 
include PHAs engaging in ongoing coordination with state and local 
disability agencies to provide additional community-based housing 
opportunities for individuals with disabilities and connect such 
individuals with supportive services to enable an individual with a 
disability to transfer from an institutional setting into the 
community.
    Comment: Specify disability organizations that are to be consulted 
in the development of an AFH. Commenters requested that the rule 
specify that disability organizations, such as protection and advocacy 
agencies, independent living centers, and State and local affiliates of 
The Arc, Mental Health America, The National

[[Page 42291]]

Alliance on Mental Illness, and United Cerebral Palsy, be consulted in 
the preparation of the AFH and the consolidated plan, as well as the 
citizen participation plan. Commenters stated that these organizations 
typically have the best knowledge concerning persons with disabilities 
who are needlessly segregated.
    HUD Response: The final rule, at Sec.  5.158(a), requires program 
participants to undertake consultation in accordance with consolidated 
plan requirements and requirements governing PHA planning. While HUD 
mandates meaningful consultation with certain types or categories of 
organizations, HUD declines to mandate consultation with specifically 
named organizations.
    Comment: Define ``institution''. Commenters stated that the rule 
refers to ``deinstitutionalizing'' persons with disabilities, but does 
not define ``institution,'' perhaps leaving it to the courts to 
determine whether housing provided to the disabled as part of a 
supportive services program or a PHA's designated housing plan is 
sufficiently community-based to comply with the rule. Commenters stated 
that consistent with the Olmstead decision, the rule also should 
recognize that the goal of ``deinstitutionalizing'' persons with 
disabilities into community-based settings should only apply when: (1) 
Such placement is appropriate; (2) the affected person does not oppose 
such treatment; and (3) the placement can be reasonably accommodated, 
taking into account the available resources and the needs of other 
individuals with disabilities.
    HUD Response: The focus of this rule is about fair housing planning 
and how the process of fair housing planning should be undertaken. For 
each of the protected classes covered by the Fair Housing Act, and 
consequently covered by the this final rule, program participants 
should rely on rules already in place to ensure nondiscrimination for 
these protected classes, and be guided by these existing requirements 
in planning the actions they intend to undertake to promote fair 
housing choice and access to opportunity. HUD therefore declines to 
adopt commenters' suggestion to have the rule address in more detail 
the goal of deinstitutionalizing persons with disabilities. Those 
requirements are adequately addressed in the Department of Justice's 
rules and guidance implementing the Americans with Disabilities Act, in 
the Department of Health and Human Services' s Medicaid rules on Home 
and Community Based Services, and in HUD's Olmstead Statement.
    Comment: Do not hold PHAs accountable for inability to move persons 
with disabilities to integrated settings. Commenters stated that it is 
troublesome to consider that PHAs may be held accountable for the lack 
of ``disability-related services'' that may be available in a person's 
living environment. Commenters stated that PHAs are not funded for 
these special needs services and do not have the trained staff to 
handle these needs. Commenters stated that to relocate disabled persons 
from institutions into ``the most integrated setting appropriate'' is a 
noble pursuit but brings up other issues, such as what resources are 
available to up-fit units to meet the mobility requirements of the 
relocates or where they will be able to secure supportive services for 
those who need mental health services? Commenters stated that often 
even wheelchair accessible units compliant with fair housing design 
standards do not come with all the supports a person may need, such as 
lifts in the bedroom to help them into bed, power door locks, and 
cameras at the front door to enable a bed-ridden occupant to determine 
who is outside their door before opening it, etc. are expensive items 
to install and maintain.
    HUD Response: HUD recognizes that PHAs and all program participants 
may be limited in fulfilling their AFH goals based on available 
resources. What is expected of program participants, however, is to 
ensure that they are taking meaningful actions within their control and 
that their actions do not contribute to or perpetuate discrimination, 
segregation, and limitation of housing choice, including against 
persons with disabilities. This rule does not create new obligations on 
PHAs to provide housing in integrated settings for persons with 
disabilities. HUD notes that PHAs have existing obligations to provide 
housing in the most integrated setting appropriate under section 504 of 
the Rehabilitation Act and under the Americans with Disabilities Act. 
Moreover, since State Medicaid agencies have the obligation to provide 
health care services to individuals with disabilities in the most 
integrated settings appropriate to their needs, such services should be 
provided by such agencies. However, one of the biggest needs faced by 
States in Olmstead implementation is locating affordable housing where 
individuals with disabilities may live and receive State-provided 
services, and PHA's play an important role, through their public 
housing and HCV programs in making such housing available. Recent 
experience, including the Non-Elderly Disabled (NED) 2 Housing Vouchers 
and the Section 811 Project Rental Assistance program, have shown that 
closer collaboration between PHAs and State Housing Agencies with State 
Medicaid Agencies enhances the ability to fulfill their respective 
responsibilities in this area. HUD intends for its guidance to 
supplement the AFFH regulations and will provide more information about 
these collaborations.
    Comment: The rule should address PHA admission preferences. 
Commenters made several different suggestions on how the rule could 
address PHA admission preferences. Some commenters stated that the rule 
should mandate that PHAs establish preferences for persons with 
disabilities. Commenters stated that historically, persons with 
disabilities have been dramatically underrepresented on PHA waitlists 
due to the absence of outreach and the sheer isolation of nursing home 
and institutionalized residents. Commenters stated that there is an 
urgent need for the creation of a preference for persons with 
disabilities, and the AFH should mandate that PHAs establish 
preferences for persons with disabilities. Other commenters stated that 
in Sec.  903.2(d)(2)(ii), the rule lists residency preferences such as 
those designed to assist in deinstitutionalizing individuals with 
disabilities as an example of a PHA activity that will affirmatively 
further fair housing. Commenters suggested that HUD change ``residency 
preferences'' to ``admissions preferences'' because admissions 
preferences will more effectively further the goal of integrating 
persons with disabilities into housing with the non-disabled 
population. Commenters further stated that residency preferences, 
particularly in communities with high non-minority populations, have 
the potential to be used as a barrier to affirmatively furthering fair 
housing by affording a preference to persons who are very likely to be 
non-minority. Commenters stated that this may result in minority 
applicants spending a disproportionate amount of time on housing 
waitlists, frustrating the purpose of the affirmatively furthering fair 
housing mandate.
    HUD Response: The Quality Housing and Work Responsibility Act of 
1998 (QHWRA) (title V of Pub. L. 105-276, approved October 21, 1998) 
eliminated Federal admissions preferences and allows PHAs to adopt 
their own preferences pursuant to the local PHA planning, including an 
assessment of local housing needs and review by the Resident Advisory 
Board, and

[[Page 42292]]

consistent with Federal fair housing and civil rights requirements. 
Given that QHWRA eliminated imposed preferences on PHAs and determined 
that PHAs were in the best position to determine preferences, if any, 
based on local conditions, this final rule does not mandate preferences 
on PHAs.
7. Community/Citizen Participation and Engagement
    Comment: Require maximum citizen participation at every stage in 
the fair housing planning process. Commenters state that HUD should 
require that program participants maximize citizen participation in 
every stage of the assessment process. Commenters stated that the AFH 
should be developed by way of an iterative community process so that 
community members have the opportunity to respond at each stage of the 
development of the data and action plan, rather than only to a fully-
developed plan.
    Commenters stated that enhanced participation would be achieved by: 
(1) Creating an affirmative marketing plan for every event open to the 
public; (2) publishing all materials and reports in plain language, and 
in multiple languages; and (3) making all comments on the process 
available to the public. Commenters stated that, during the 
consultation phase, program participants should engage in and develop 
an affirmative marketing plan for activities related to the public 
participation process that includes an assessment and identification of 
possible stakeholders. Commenters stated that this plan should be 
submitted to HUD as evidence of the planning and action steps the 
program participant undertook to ensure that maximum community 
participation among stakeholders occurred.
    Commenters stated that all of the marketing materials and other 
materials associated with affirmatively furthering fair housing 
compliance should be published in plain language so that they can be 
understood even by those with no expertise in fair housing. In addition 
to using plain language, commenters stated that these same materials 
should be translated and published in languages that are most relevant 
to the program participant's community. Commenters stated that 
understanding fair housing needs must go beyond data analysis and 
involve input from those individuals who have first-hand knowledge of 
the existing hurdles and barriers in their communities. Commenters 
stated that an aggressive outreach campaign is necessary to ensure that 
those individuals with concerns are heard, and that no one should be 
prevented from participating in the process and from providing valuable 
insight into the fair housing barriers in a community because of a 
comprehension or language barrier.
    Other commenters also focused on marketing campaigns as being 
critical to meaningful participation. Commenters stated that 
participants should create major marketing campaigns to educate the 
public about the negative impact of housing discrimination and how to 
be proactive on the matter. The commenters stated that this should all 
be done with particular sensitivity to historically underserved 
audiences, keeping cultural and linguistic attributes in mind because 
these are the very individuals most impacted by the new rule and 
affirmatively furthering fair housing issues.
    HUD Response: HUD appreciates the commenter suggestions, but HUD 
regulations for almost all HUD programs already require HUD program 
participants to engage in affirmative fair housing marketing. HUD 
therefore declines to expand upon existing affirmative fair housing 
marketing requirements at this time, but the final rule does strengthen 
the proposed rule's community participation requirements.
    This final rule strengthens the provisions of proposed Sec.  5.158 
pertaining to community participation in the AFH by directing program 
participants to employ communications means designed to reach the 
broadest audience. The final rule provides that such communications may 
be met by publishing a summary of each document in one or more 
newspapers of general circulation, and by making copies of each 
document available on the Internet, on the program participant's 
official government Web site, as well as at libraries, government 
offices, and public places. Also, program participants are required to 
ensure that all aspects of community participation are conducted in 
accordance with applicable fair housing and civil rights laws that, 
among other things, assure access to communications for persons with 
limited English proficiency (LEP) and access to meetings and materials 
for persons with disabilities.
    With respect to the comment regarding relevant languages, HUD 
funding recipients are already required to take reasonable steps to 
ensure meaningful access to their programs and activities by LEP 
persons by existing law, including title VI of the Civil Rights Act. 
HUD's guidance on LEP can be found at 72 FR 2732 (January 22, 2007). 
Sections 91.105, 91.115, and 570.441 of this final rule direct that the 
citizen participation plan required by the consolidated plan 
regulations shall require that the jurisdiction take reasonable steps 
to provide language assistance to ensure meaningful access to citizen 
participation by persons with limited English proficiency.
    Rule change. This final rule revises Sec.  5.158(a) to include 
language that strives to ensure that the AFH, the consolidated plan, 
and the PHA Plan and any plan incorporated therein are informed by 
meaningful community participation, and to achieve this objective, 
program participants should employ communications means designed to 
reach the broadest audience. The revised section provides that such 
communications may be met, as appropriate, by publishing a summary of 
each document in one or more newspapers of general circulation, and by 
making copies of each document available on the Internet, on the 
program participant's official government Web site, as well as at 
libraries, government offices, and public places.''
    Comment: Utilize public participation tools that will reach 
residents in isolated areas. Commenters stated that HUD must ensure 
that the approved plans demonstrate effective methods for maximum 
engagement, particularly for isolated rural jurisdictions and their 
residents to participate in this process. Commenters stated that those 
who fall under any of the protected classes and live in isolated 
communities may encounter obstacles to participate in an AFH process, 
such as limited public meetings that are located far from their local 
community. Commenters stated that methods for maximizing public 
participation need not be sophisticated, merely effective and 
efficient, and that remote real-time access to video links, or 
'electronic clickers' that allow for anonymous and active participation 
are used in certain circumstances and should be identified in the 
planning process so that this engagement process is presented to and 
approved by HUD.
    In a similar vein, commenters stated persons with disabilities in 
nursing homes and institutions are isolated from the general public. 
Commenters stated that often, access to persons with disabilities in 
these settings is monitored or controlled by gatekeepers such as 
facility staff, medical personnel, or guardians. Commenters recommended 
that a program participant's citizen participation plan include special 
notification to nursing homes and other institutions for persons with 
disabilities, as well as follow up visits and phone calls. Commenters 
stated that although HUD's proposal

[[Page 42293]]

includes a requirement that the AFH and related documents be accessible 
to persons with disabilities, there is no similar requirement relating 
to the materials and documents relied upon by program participants in 
deliberating upon and drafting the AFH must be accessible. Commenters 
recommended that HUD require that such materials be accessible and that 
Web site information be Section 508 compliant.
    HUD Response: HUD agrees that the community participation processes 
must consider the populations served, and where they are located, and 
they must choose public participation approaches that will reach the 
populations served. These approaches must be reflected in the program 
participant's citizen participation plan, and HUD emphasizes this point 
in language added to Sec.  5.158(a). In addition, HUD encourages its 
program participants to consult the section 508 Web site and that of 
the U.S. Access Board, both of which provide guidance on making Web 
sites accessible to persons with disabilities. See www.section508.gov 
and www.access-board.gov.
    Rule change. This final rule revises Sec.  5.158(a) to include 
language that provides that program participants shall ensure that all 
aspects of community participation are conducted in accordance with 
fair housing and civil rights laws, including title VI of the Civil 
Rights Act of 1964 and the regulations at 24 CFR part 1; section 504 of 
the Rehabilitation Act of 1973 and the regulations at 24 CFR part 8; 
and the Americans with Disabilities Act and the regulations at 28 CFR 
parts 35 and 36, as applicable.
    Comment: Modify or replace citizen participation requirements for 
States. Commenters stated that generating citizen participation at the 
state level is costly and, in most cases, fruitless. Commenters stated 
that meaningful and widespread citizen participation for States is 
expensive and likely require the employment of a consultant. Commenters 
stated that States are huge geographic areas in which to undertake 
meaningful citizen participation. Commenters stated that consultation 
with interest groups is generally more productive because interest 
groups have a more immediate interest in providing input to the 
planning process. The commenters stated that interest groups respond to 
public participation because of their potential for gain, while 
citizens whose communities may or may not receive a CDBG grant or other 
CPD assistance, have less interest in providing their input and less of 
an expectation that they will benefit from a program.
    Commenters asked that to minimize costs and in acknowledgement that 
typical citizens have little or no interest in a statewide consolidated 
plan or AFH, encourage, but do not require, State citizen participation 
plans to provide for citizen and resident participation, and permit 
States to rely almost exclusively on participation of the organizations 
described in Sec.  91.115(a)(2)(ii).
    In a similar vein, other commenters stated that the public 
participation requirements in Sec.  91.115 should reflect differences 
between State and local governments. The commenters stated that the 
best methods for effective and meaningful interaction vary tremendously 
based on the size of a jurisdiction's service area.
    HUD Response: The community participation requirements for States 
have long been required under the Consolidated Plan regulations, and 
HUD believes they have worked well. This final rule applies the same 
community participation process that States now use under the 
consolidated plan.
    Comment: Clarify that States only need to consult with agencies and 
organizations that fall under State Consolidated Plan. Commenters 
stated that the language in the rule pertaining to State consultation 
for the AFH should make it clear that a State only needs to consult 
with agencies and organizations that fall under the State consolidated 
plan.
    HUD Response: Similar to HUD's response to the preceding comment, 
the AFH regulations in Sec.  91.110(a) (introductory paragraph) do not 
delineate that only State public or private agencies must be consulted. 
Such delineation is not currently there in the Consolidated Plan 
regulations and therefore is not delineated in this final rule. However 
in adding a new paragraph (a)(1) to Sec.  91.110, which pertains to 
HUD's public housing program or HCV, HUD has clarified that 
consultation is only required of PHAs administering public housing or 
HCV programs on a statewide basis or that certify consistency with a 
State's consolidated plan.
    Rule change. In Sec.  91.110, paragraph (a)(1) is revised from the 
proposed rule to clarify that, with respect to public housing or HCV 
programs, the State shall consult with any PHA administering public 
housing or section 8 programs on a state-wide basis as well as with 
PHAs that certify consistency with a State's consolidated plan.
    Comment: Clarify that States do not need to analyze a PHA's 
geographic area if the PHA adopts the State's AFH. Commenters expressed 
concern that if local PHAs adopt the State's AFH, there will be a 
requirement for the State to analyze units that are much smaller than 
would otherwise be expected for a statewide analysis because a local 
PHA is tied to a small jurisdiction (city or county), and the AFH would 
need to use block group or census tract data and information about the 
local housing market, trends and stakeholders to be helpful in planning 
a course of action to address fair housing issues. The commenters 
stated that this level of analysis is not a reasonable expectation to 
place on the State for its AFH. Commenters stated that a State needs 
assurance that its AFH would not need to change course based on the 
make-up of local PHAs opting to use the State AFH in lieu of their own.
    HUD Response: All jurisdictions and insular entities will be 
required to consult with PHAs on PHA programs. To clarify, States must 
conduct outreach to PHAs that administer public housing or Section 8 
programs on a statewide basis or that certify consistency with the 
State's consolidated plan. PHAs, however, cannot adopt a State's AFH, 
but they may work in collaboration with a State pursuant to Sec.  5.156 
and Sec.  903.15(a)(1). In addition, as provided in Sec.  5.156(a)(3), 
all collaborating program participants are accountable for the analysis 
and any joint goals and priorities to be included in the collaborative 
AFH, and collaborating program participants are also accountable for 
their individual analysis, goals, and priorities to be included in the 
collaborative AFH.
    Comment: Public hearings are not the best vehicles to ensure public 
participation of the targeted populations. Commenters stated that 
public hearings, which they described as the primary vehicles for 
soliciting community feedback on the AFH, are hardly a sufficient 
mechanism to ensure the participation of the target population. 
Commenters stated that, recognizing that such public hearings may not 
be sufficiently proactive, Sec.  91.115(a)(2)(iii) provides that a 
State should also explore alternative public involvement techniques 
including the use of focus groups. Commenters asked that the rule be 
altered so that all program participants must consider and ultimately 
employ such techniques, and public hearings would be optional. 
Commenters stated that program participants and PHAs must be required 
to pursue outreach strategies that actively engage the community in a 
dialogue to ensure that their vision of

[[Page 42294]]

change for their community is also brought to bear.
    HUD Response: Public hearings should not be the only vehicle to 
solicit public participation but HUD believes they can be an effective 
vehicle based on experience under current regulations. As HUD stated in 
response to earlier comments, the program participant's public 
participation processes must consider the populations served, and where 
they are located, and they must choose public participation approaches 
that will reach the populations served and these approaches must be 
reflected in the program participant's community participation plan. 
Please note earlier discussion of changes to Sec.  5.158 to strengthen 
community participation.
    Comment: A public hearing should not be required until the AFH is 
completed. Commenter stated that the proposed amendment to Sec.  91.105 
would require at least one public hearing on the AFH before it is 
published for comment. The commenters stated that this requirement 
confuses the planning principle of citizen participation for plans with 
research studies like the AFH (which is not a plan). The commenters 
stated that under sound planning principles, the appropriate time for a 
public hearing on a research study like an AFH, would be when the AFH 
is completed and made available for public comment. Commenters stated 
that there is no need for a public hearing before the AFH is completed, 
and the comment period should be conterminous with the notice period 
for a public hearing on the AFH. Commenters stated that HUD has not 
shown any factual basis for a need for a public hearing prior to the 
AFH being issued for comment and public hearing. This additional public 
hearing requirement will only delay completion of the AFH an extra 
month--and given the realities of how recipients have handled AIs, this 
is time that cannot be lost.
    Commenters urged HUD to eliminate the requirement of a public 
hearing before the AFH is published for comment and urged that the 
comment period start when the public notice of the public hearing on 
the draft AFH is published. Commenters stated that the time period 
should be no less than 30 days.
    HUD Response: As stated in response to the preceding comment, HUD 
believes that a public hearing can be a useful vehicle for involvement 
of the public on a program participant's AFH. HUD also believes that 
the final rule's scheduling of the public hearing is at the appropriate 
time--that is, while the AFH is in development so that a program 
participant may take into consideration the views and recommendations 
of the affected community. This is the approach taken for the 
consolidated plan. A public hearing is held during the development of 
the consolidated plan, not after the consolidated plan is completed. 
HUD is taking this same approach for the AFH because, in HUD's 
experience, it will yield valuable information from the community to 
inform the program participant regarding the identification of fair 
housing issues, contributing factors, goals, and priorities.
    Comment: Separate public hearings must be required for AFH 
performance reports. Commenters stated that there must be a separate 
public hearing for the performance reports pertaining to the AFH and 
consolidated plan. The commenters stated that the CDBG statute, the 
basis for the Consolidated Plan regulations, calls for ``public 
hearings to obtain citizen views and to respond to proposals and 
questions at all stages of the community development program, including 
at least the development of needs, the review of proposed activities, 
and review of program performance'' [42 U.S.C. 5304 (a)(3)(D)]. 
Commenters stated that the same must be required of AFH performance 
reports.
    HUD Response: HUD encourages transparency, but will not require a 
separate public hearing for the performance reports related to the 
consolidated plan. HUD's regulations already provide for public input 
on performance reports for participating jurisdictions; e.g., Sec.  
91.105(e)(1).
    Comment: Meaningful public participation of targeted populations 
will require technical assistance. Commenters stated that public 
participation by members of protected classes should be more strongly 
emphasized. Commenters stated that, in those places that have a 
disproportionately low share of protected class members as compared to 
surrounding cities or counties, the final rule should incorporate a 
requirement to conduct outreach to protected class members who live in 
those other places (e.g., those who commute to jobs from those other 
places).
    Other commenters stated that while the citizen participation plan 
of the consolidated plan is ``designed especially to encourage 
participation by low- and moderate-income persons, particularly those 
living in slum and blighted areas and in areas where CDBG funds are 
proposed to be used,'' the consultation requirements in Sec.  
91.105(a)(2) limit participation to organizations ``that have the 
capacity to engage with data informing the AFH.'' (See also Sec.  
91.100(e).) Commenters stated that the rule provides no guidance about 
what is meant by these qualifications. Commenters expressed concern 
that these qualifiers may be used by some participants to exclude from 
the AFH process organizations that have meaningful experience to share 
but lack sophisticated data analysis expertise. The commenters stated 
that rule should not imply that groups that lack the ability to conduct 
data analysis themselves cannot participate meaningfully in a 
discussion about the implications of such analysis or the steps that 
should be taken to overcome problems identified through such analysis.
    Other commenters stated that with respect to the consultation 
requirements in Sec.  91.105(a)(2), two factors must be considered: (i) 
That the low- and moderate-income persons contemplated in the citizen 
participation plan are more than likely to participate in the 
development of the AFH and other policies through the structure and 
mobilization of community-based organizations, and (ii) that such 
community-based organizations generally lack the capacity to engage 
with technical data. The commenters stated that jurisdictions will 
achieve meaningful community participation through pro-active 
implementation of capacity-building strategies, including allocation of 
funds, as part of their duty to ``take appropriate actions to encourage 
the participation by low- and-moderate-income persons.'' The commenters 
stated that the CDBG program calls on insular area jurisdictions to 
include in their citizen participation plans a policy regarding 
provision of technical assistance to groups that are representative of 
persons of low- and moderate-income. (See Sec.  570.441(b)(2).) The 
commenters stated that AFFH rule should include similar requirements.
    Other commenters also emphasized the importance of involving 
community-based organizations. The commenters stated that community-
based organizations communicate quickly to families--much faster than 
any national entity, and that their materials for the public are highly 
culturally competent and in the community's preferred language. 
Commenters stated that these local groups have made the difference 
between a family losing or preserving their home. Commenters stated 
that these organizations stay in touch with families and maintain 
relationships that have been unmanageable by vast national programs.

[[Page 42295]]

    Additional commenters similarly stated there are very positive 
provisions for community involvement in the planning process but no 
support for capacity building is identified in the rule itself. 
Commenters stated that the effectiveness of community engagement will 
depend on existing community capacity, unless additional support is 
included in 2015 budget.
    HUD Response: The commenters raise very important issues that need 
to be taken into consideration when program participants are planning 
outreach efforts. The issues raised by commenters also underscore the 
importance of allowing program participants to tailor outreach efforts 
to ensure effectiveness given the populations in their areas, and that 
HUD should not prescribe a list of outreach actions that a program 
participant must undertake. The program participants are in a good 
position to tailor outreach methods that will provide for meaningful 
actions.
    However, as stated in responses to prior similar public comments, 
HUD has revised Sec.  5.158 in this final rule to strengthen the 
community participation requirements by directing program participants 
to employ communications methods that are designed to reach the 
broadest audience, and that are conducted in accordance with fair 
housing and civil rights laws, including title VI of the Civil Rights 
Act of 1964 and the regulations at 24 CFR part 1; section 504 of the 
Rehabilitation Act of 1973 and the regulations at 24 CFR part 8; and 
the Americans with Disabilities Act and the regulations at 28 CFR parts 
35 and 36, as applicable. In addition, HUD will be providing technical 
assistance on techniques to encourage participation by the groups that 
otherwise may not participate. HUD will also review the results of the 
program participants' community participation process as part of its 
review of the AFH.
    Comment: Program participants should be required to document 
activities targeted to obtain input from protected classes, and 
identify the organizations with whom they consulted. Commenters stated 
that program participants should be required to document how their 
community engagement activities will target protected classes. Other 
commenters suggested that the rule require program participants to 
identify the organizations with whom they consulted.
    HUD Response: The AFFH final rule at Sec.  5.158 requires program 
participants to consult with the agencies they identify in their PHA 
Plan or consolidated plan. Program participants are also required to 
retain records of their community participation efforts, which would be 
available if HUD investigates a complaint or conducts a compliance 
review relating to a program participant's duty to affirmatively 
further fair housing. (See Sec.  5.168.)
    Comment: Include real estate and housing professionals in the AFH 
planning process. Commenters stated that the real estate profession is 
a diverse profession today and has first-hand experience in addressing 
housing issues in a community, and that the inter-related issues of 
housing, education, transportation and economic development are front 
and center issues for real estate. Commenters stated that each 
individual REALTOR[supreg] and other real estate professionals are 
intimately familiar with their community and the issues impacting 
housing choices, and they provide an invaluable resource, particularly 
the real estate professional serving, and part of, today's multi-ethnic 
and diverse communities, needs to be invited to participate in the 
planning process. Commenters stated that similarly, property owners, 
landlords and business owners all have a personal stake in the 
decisions flowing from the AFH process. Commenters further stated that 
while not directly impacted by the rule, the interactions of these 
individuals with covered program participants, be they local PHAs or 
municipal governments, can be seriously affected by decisions flowing 
from the AFH process, and that these important providers of jobs, 
housing opportunities and local economic activity--strongly committed 
to fair housing principles--must be assured a maximum voice in the 
community participation process. The commenters stated that 
consultation with state housing finance agencies and the National 
Council of State Housing Agencies would be helpful in ensuring that 
State level concerns are appropriately addressed in the final rule.
    HUD Response: The commenters identify important groups and 
organizations that would lend valuable perspectives during the AFH 
planning process. Identification of these groups underscores the 
importance of designing a meaningful participation process to ensure 
that all interested parties have the opportunity to have a voice in the 
development of the AFH.
    Comment: Require each program participant to identify a 
coordinating entity to oversee the public participation process. 
Commenters stated that community participation is a critical component 
of the process, and how participants engage members of their community, 
as well as how those views are eventually represented or reported in 
the AFH, will substantially impact the success of the AFH process. 
Commenters stated that in order to realize the goals embedded in the 
rule, the community participation component must be significantly 
strengthened in a number of ways, one of which would be to have each 
AFH identify a coordinating entity that will oversee the process. 
Commenters stated that this coordinating entity (CE) would be comprised 
of all elements of stakeholders, including public, private, academic, 
and community-based representatives, and the coordinating entity would 
develop a comprehensive community-organizing plan that encompasses all 
parts of the community in the process. The commenters stated that both 
public and private funds should support the establishment and 
implementation of this CE, which will act as an organizing and 
monitoring entity.
    HUD Response: The commenters have provided an innovative approach 
to the AFH community participation process, and program participants 
are free to adopt such approach but it is not one that HUD will mandate 
by regulation. (See Sec.  5.156(d).) The entity that is ultimately 
accountable for the community participation process is the program 
participant.
    Comment: The AFH consultation process requires program participants 
to seek input from fair housing stakeholders, but this requirement is 
not in the citizen participation provisions. Commenters stated that 
while the description of the AFH consultation process requires 
participants to seek input from fair housing stakeholders, this 
requirement does not carry through to the citizen participation 
provisions. Commenters stated that the citizen participation 
requirements are much more general, and only require that citizen 
participation plans ``provide for and encourage citizens, residents and 
other interested parties to participate in the development of the AFH, 
any significant revisions to the AFH, the consolidated plan, any 
substantial amendments to the consolidated plan, and the performance 
report. Commenters stated that to ensure a strong linkage between the 
AFH and the consolidated plan and public housing plan, the consultation 
provisions of the AFH should also be applied to the citizen 
participation plans for the applicable programs.
    HUD Response: Through the consultation process, HUD directs program 
participants to consult with organizations that administer housing, 
organizations experienced in housing

[[Page 42296]]

issues, and organizations experienced in fair housing issues. The AFH's 
community participation process is designed to reach out to the 
residents of the community or geographic area in which the program 
participant operates, and there is no requirement that the citizens be 
experienced in housing issues or fair housing issues. However, the 
rule's provision on community participation is flexible enough so as to 
permit fair housing groups to be among the ``interested parties'' that 
may participate in hearings alongside other members of the public.
    Comment: The mandate to ensure meaningful access to citizen 
participation by persons with Limited English Proficiency is too broad. 
Commenters stated that the citizen participation requirement, which 
states that, ``at a minimum, the citizen participation plan shall 
require that the local government take reasonable steps to provide 
language assistance to ensure meaningful access to citizen 
participation by persons with limited English proficiency'' is too 
broad and, given the multitude of the various languages spoken in a 
given area could constitute a substantial level of expense to provide 
language assistance.
    HUD Response: The ``mandate'' is one of taking ``reasonable 
steps.'' HUD recognizes that it may not be reasonable for local 
governments to assist all LEP persons because of the wide variations of 
languages that may be spoken in a given area. However, HUD further 
notes that it is a violation of title VI of the Civil Rights Act to 
deny meaningful access to programs and activities based on a person's 
national origin. Program participants should be aware of the languages 
spoken by LEP persons in their jurisdiction and take the steps set out 
in HUD guidance to assure access under title VI.
    Comment: HUD should require LEP translation, not simply require 
reasonable steps to assist LEP individuals. Commenters stated that the 
final rule should require jurisdictions to provide and implement a 
citizen participation plan that accounts for people with limited 
English proficiency and persons with disabilities, and not simply 
require that reasonable steps be taken to assist LEP individuals. 
Commenters stated that, in the alternative, HUD should adopt, in the 
regulatory text, certain preamble language. Commenters stated that the 
preamble to the proposed rule stated that the requirement in proposed 
Sec.  91.105(a)(4) to provide meaningful access within the public 
participation process to LEP persons ``strives to have local 
governments involve these individuals to the maximum extent possible.'' 
The commenters recommended that the preamble language be included in 
the regulatory text but revised to read, ``. . . the maximum extent 
possible, and in compliance with title VI and other laws requiring 
meaningful access to LEP persons.'' The commenters stated that this 
strengthened language highlights the importance of language access, and 
serves as a reminder that in certain cases, jurisdictions may have 
obligations beyond voluntary compliance with respect to ensuring 
meaningful access to LEP persons.
    Commenters stated that while HUD's rule proposed to amend the 
Consolidated Plan regulations to require that the citizen participation 
plan include an assessment of language needs, no such provisions are 
included in the proposed amendments to regulations concerning the PHA 
Plan process at 24 CFR part 903. Commenters ask that Sec.  903.17(c) be 
amended to require that PHAs: (1) Include outreach to LEP populations 
in its outreach activities within the jurisdiction, and (2) identify 
the need for translation of notices and vital documents with respect to 
the PHA Plan process. The commenters also asked that HUD require PHAs 
conducting public hearings pursuant to Sec.  903.17(a) to describe how 
they will identify and address the needs of LEP attendees.
    HUD Response: Requirements related to LEP derive from title VI of 
the Civil Rights Act of 1964 and Executive Order 13166, and HUD's LEP 
guidance at 72 FR 2732 (January 22, 2007). Under HUD's guidance, 
funding recipients are required to take reasonable steps to ensure 
meaningful access to their programs and activities by LEP persons. The 
HUD LEP guidance discusses title VI's requirements for document 
translation and the provision of language assistance. For this reason, 
HUD declines to mandate the specific measure that the commenters 
suggest; rather, the requirement to take ``reasonable steps'' applies 
to all program participants and all program participants' programs and 
activities. As noted earlier in this preamble, this final rule, in 
Sec.  5.158, states that program participants should employ 
communications methods designed to reach the ``broadest audience.'' 
This language includes involving LEP persons to the maximum extent 
possible. On the issue of public hearings, HUD believes that the 
inclusion of measures to include LEP persons in the community 
participation process that is part of the PHA planning process is 
sufficient.
    Comment: HUD's communication mandates to program participants must 
go beyond assisting LEP individuals; it must include persons with 
disabilities. Commenters stated that reasonable accommodations for 
persons with disabilities are essential to ensuring that all residents 
of a jurisdiction may access the proposed AFH plan, and provide 
meaningful input into its development. The commenters stated that in 
order to ensure that residents with disabilities can participate in 
each step of the AFH plan, it will be necessary for the jurisdiction's 
proposed plan and materials to be available in formats accessible to 
people with communications disabilities, for any public hearings or 
meetings to make available sign language interpreters or other 
appropriate auxiliary aids and services, and for the physical buildings 
hosting the public hearings or meetings to be accessible to persons 
with disabilities.
    HUD Response: HUD has modified the final rule to make clear to 
program participants that community participation (like all other 
programs, services, and activities) must be accessible to persons with 
disabilities. The access issues discussed by the commenter all fall 
within existing requirements of section 504 of the Rehabilitation Act 
and the Americans with Disabilities Act that are applicable to program 
participants.
    Comment: HUD must define ``vital document.'' Commenters stated that 
it is imperative that the final rule define what is meant by ``vital 
documents'' as used in Consolidated Plan regulations at Sec.  
91.105(a)(4) (Local governments) and Sec.  91.115(a)(4) (States). The 
commenters stated that while the term appears throughout HUD's ``Final 
Guidance to Federal Financial Assistance Recipients Regarding Title VI 
Prohibition Against National Origin Discrimination Affecting Limited 
English Proficient Persons'' (HUD LEP Guidance), the term should be 
defined specifically in the context of the citizen participation 
process with respect to an AFH. The commenters stated that ``vital 
documents'' in the HUD LEP Guidance describe those documents that are 
``critical for ensuring meaningful access.'' The commenters stated 
that, borrowing language from that definition, they propose that the 
final rule include a definition of ``vital document'' as describing 
``those documents and other materials that are critical for ensuring 
meaningful access to the community participation process.''
    HUD Response: HUD appreciates the recommendations, but declines to 
define this term for the AFH process.

[[Page 42297]]

This term has been defined for quite some time in HUD's LEP Guidance. 
HUD therefore does not see the need to define this term in regulation 
but will continue to provide support through guidance. HUD notes that, 
in general, documents related to public participation would be 
considered vital based on HUD's LEP Guidance.
    Comment: Require program participants conducting public meetings to 
track the languages spoken at the meeting. Commenters stated that 
program participants conducting public meetings/hearings regarding the 
AFH should be required to track the languages spoken by meeting 
attendees. The commenters stated that this information will inform 
program participants' subsequent assessments of language needs, and 
that if a program participant finds that LEP persons are continually 
underrepresented at public meetings/hearings, it must take steps, 
outlined in its assessment of language needs, to improve attendance by 
LEP residents.
    The commenters stated that the final rule should note that 
jurisdictions needing guidance in determining which language groups 
require translated vital documents and notices should consult with the 
four factor analysis detailed in the HUD LEP Guidance, which is a 
balancing test that considers the following: (1) The number of LEP 
persons served or likely to be served or encountered; (2) frequency of 
contact with LEP persons; (3) importance of the activity or program at 
issue; and (4) available resources. The commenters stated that this 
test can provide jurisdictions with an initial snapshot of the language 
access needs for the purposes of ensuring effective citizen 
participation, including what languages should be covered.
    HUD Response: HUD appreciates the suggestion and commends any 
program participant that undertakes the effort to track languages 
spoken at meetings, since this information would be evidence of 
effective outreach to persons with LEP, as required by title VI of the 
Civil Rights Act, in the event HUD receives a complaint or conducts a 
compliance review on this issue. However, HUD declines to mandate such 
tracking.
8. Collaboration, Consultation, and Other Planning Efforts
    Comment: The consultation requirement does not appear to apply to 
PHAs. Commenters stated that while it is clear that the consultation 
requirement applies to States and local jurisdictions that are required 
to produce consolidated plans (see Sec. Sec.  91.110(a)(2) and 
91.100(e), respectively), this consultation requirement does not appear 
to apply to PHAs and it should.
    HUD Response: HUD disagrees with the commenters. Consultation 
requirements for PHAs are fundamentally different as direct 
consultation is focused upon the residents served. This takes place 
through specific consultation of the Resident Advisory Board (see Sec.  
903.13), as well as residents in the HCV program. Public participation 
requirements for PHAs also require that PHAs ``conduct reasonable 
outreach activities to encourage broad public participation'' and take 
a number of actions to ensure such participation occurs (see Sec.  
903.17). HUD Guidance also directly specifies interaction with 
difficult to reach groups such as those with LEP (PIH Notice 2011-
31\13\).
---------------------------------------------------------------------------

    \13\ See http://portal.hud.gov/hudportal/documents/huddoc?id=PIH2011-31.PDF.
---------------------------------------------------------------------------

    Comment: Require jurisdictions to consult with financial 
institutions. Commenters stated that HUD should require jurisdictions 
to consult with local financial institutions about issues related to 
access to credit and mortgage lending as part of the development of the 
AFH. Commenters also stated that HUD should require jurisdictions to 
consult with community development financial institutions (CDFIs) and 
to review local financial institutions' Community Reinvestment Act 
(CRA) public performance reports as part of preparing the AFH.
    HUD Response: HUD encourages jurisdictions to consult with 
financial institutions as suggested by the commenters, and encourages 
financial institutions to participate in community participation 
processes, but HUD declines to require jurisdictions to undertake 
consultation with financial institutions.
    Comment: Provide guidance on what is meant by ``sufficiently 
independent and representative.'' Commenters stated that HUD should 
provide clarification regarding the rule's consultation requirements at 
Sec.  91.100, specifically, the requirement that organizations be 
``sufficiently independent and representative.'' Commenters stated that 
many community organizations with valuable input are also CDBG 
subgrantees. Commenters requested that HUD should ensure the rule's 
more clear linkage of the AFH to the consolidated plan process does not 
exclude those subgrantees representing protected classes from the AFH 
consultation process.
    HUD Response: The broad citizen participation requirements under 
Sec.  91.100 are intended to include consultation with a wide variety 
of public and private agencies, local governments, and PHAs. The 
proposed rule provided additional language that emphasizes that 
``sufficiently independent and representative'' organizations must be 
consulted on the obligation to affirmatively further fair housing, but 
such language is not intended to exclude subgrantees or other 
interested organizations from the consultation process.
    Comment: Other planning efforts must include Qualified Allocation 
Plan and Metropolitan Transportation Plan. Commenters stated that there 
are two other sets of plans and programs that should be coordinated 
with the AFH fair housing planning effort--the Low Income Housing Tax 
Credit (LIHTC),\14\ Qualified Allocation Plan, and the Department of 
Transportation's (DOT's) Metropolitan Transportation Plan (MTP) and/or 
Transportation Improvement Plan (TIP). Commenters stated that given the 
volume of the LIHTCs and studies indicating LIHTC-financed projects are 
often located in areas of concentrated racial or ethnic poverty, the 
availability of LIHTCs and the Qualified Allocation Plan (QAP) process 
should be included in the AFH analysis and AFFH certification 
consideration. The statute requires QAP selection criteria to include, 
among other factors, the location of proposed projects and the needs of 
two protected classes, special needs populations and families with 
children. The MTP is a planning document that considers goals, 
strategies, and projects with a 20-year time horizon; and this plan is 
updated every 5 years. The commenters stated that the TIP is a 
statement of proposed transportation investments that is updated every 
4 years. The commenters stated that Metropolitan Planning Organizations 
(MPOs), which have a comprehensive public participation process, are 
responsible for these planning endeavors. The commenters also stated 
that there is also a parallel statewide process, and that is Transit-
Oriented Development, which is the siting of transit lines and transit 
stops, bus routes and frequency. The commenters stated that these 
planning efforts work to prevent segregation and are important 
informing fair housing planning. Commenters requested that

[[Page 42298]]

QAP, MTP, TIP be included in required planning efforts.
---------------------------------------------------------------------------

    \14\ Although the popular terminology is low-income housing tax 
credit or LIHTC, the correct legal name is Low-Income Housing 
Credit. The word ``tax'' is not in the legal name.
---------------------------------------------------------------------------

    Other commenters stated that as the largest producer of affordable 
housing in this country, the LIHTCs must be a part of the AFH planning 
process. Commenters stated that inclusion of LIHTC is especially 
important since, according to the commenters, LIHTC funding is limited 
to Qualified Census Tracts, which bear a strong resemblance to 
concentrated areas of poverty.\15\ Commenters stated that LIHTC is also 
one of the funding vehicles for rehabilitating or producing HUD-
supported housing, such as mixed-finance public housing developments, 
rehabilitated project-based Section 8 developments, Sections 202 and 
811 properties, and supportive housing under the McKinney-Vento 
program. Commenters stated that HUD should be coordinating its 
enforcement of the duty to affirmatively further fair housing with the 
Department of Treasury and making all efforts to have Treasury 
incorporate the principles of affirmatively furthering fair housing 
into its administration of the LIHTCs.
---------------------------------------------------------------------------

    \15\ Contrary to the commenters' statement, tax law does not 
limit LIHTCs to buildings located in Qualified Census Tracts. Rather 
one of the three types of proposed projects to which allocating 
agencies must give preference is ``projects which are located in 
qualified census tracts . . . and the development of which 
contributes to a concerted community revitalization plan'' (emphasis 
added; citation omitted). Many LIHTC projects are appropriately 
located in locales that are not Qualified Census Tracts.
---------------------------------------------------------------------------

    In contrast to these commenters, other commenters stated that 
requiring AFH planning to be coordinated with other plans by other 
agencies is a legal stretch and is problematic in implementation. These 
commenters stated that HUD should not mandate coordination with any 
plan or programs that are beyond the control of the program participant 
and over which HUD does not have jurisdiction. Commenters stated that 
coordination with other Federal agencies should not be required because 
just getting all HUD entitlements to cooperate and line up consolidated 
planning processes would be a monumental task. They stated that asking 
jurisdictions also to line up with additional Federal agencies is not 
feasible.
    Commenters stated that it is unclear how the AFH and the QAP for 
LIHTC would successfully meld together given these conflicting goals. 
The commenters stated that the goals of LIHTC do not match the goals of 
the AFFH rule. Commenters stated that LIHTC, New Market Tax Credit 
(NMTC), and Enterprise Zones actually encourage or prioritize 
development of projects in areas of low-income households. The 
commenters stated that for the LIHTCs there is, in fact, a basis boost 
for locating projects in Qualified Census Tracts (areas of low-income 
concentration) specifically to encourage the construction of 
multifamily projects in these areas/communities.
    HUD Response: Commenters have identified some planning processes 
being undertaken by other Federal agencies. If HUD program participants 
are involved in any of these planning efforts, these should be 
addressed in their AFH, and the Assessment Tool provides for such 
inclusion. HUD agrees that coordination with these other planning 
efforts will enhance a program participant's assessment of fair 
housing. HUD declines, however, to mandate in the regulation 
coordination with these other planning processes.
    In response to the specific comments on the use of Federal programs 
that encourage redevelopment of or investment in low-income 
neighborhoods, the use of various strategies including redevelopment or 
preservation of existing affordable housing is not necessarily at odds 
with the planning requirements in this regulation.
    Comment: Clarify the composition of a Fair Housing Advisory 
Council. Commenters stated that the term Fair Housing Advisory Council 
could be interpreted to allow a jurisdiction to meet the consultation 
requirement by only engaging a hand-picked advisory council while 
avoiding consultation with any of the fair housing organizations listed 
at the beginning of the entire section (such as Fair Housing Initiative 
programs (FHIPs)) and other public and private fair housing service 
agencies). Commenters requested that HUD clarify the composition of 
such councils.
    HUD Response: HUD agrees with commenters' concerns and did not 
intend to allow for a Fair Housing Advisory Council to be considered a 
replacement for the broader consultation requirements in part 91.
    Rule change. HUD has removed the language regarding Fair Housing 
Advisory Councils in proposed Sec. Sec.  91.100(e) and 91.110(a)(2). In 
lieu of rule language, HUD intends to provide guidance on models for 
meeting the consultation requirements, which may include Fair Housing 
Advisory Councils.
    Comment: Convene a Partnership on Sustainable Communities or 
Reconvene the President's Council on Fair Housing. Commenters stated 
that there is more that HUD could do, through its own planning efforts, 
and these include convening a Partnership on Sustainable Communities 
along with other Federal agencies and offices that are responsible for 
housing, fair housing, civil rights, or equal opportunity outcomes, to 
develop a strategic plan to address cross-agency action towards 
regional fair housing and civil rights goals that support both mobility 
and investment goals. The commenters also stated that the President's 
Council on Fair Housing, originally established under President 
Clinton's Executive Order 12892 to foster access to opportunity and 
integration strategies across Federal agencies should be reconvened.
    HUD Response: HUD appreciates these suggestions from the commenters 
and will take these under consideration as ways in which HUD and other 
Federal agencies may be helpful to jurisdictions and other program 
participants in carrying out their obligation to affirmatively further 
fair housing.
    Comment: HUD must work closely with the U.S. Department of 
Transportation (DOT) in assisting program participants to affirmatively 
further fair housing. Commenters stated that HUD must work with DOT 
staff to share AFH data on segregation, concentrated poverty, and 
access to opportunity trends--and identify ways that MPOs and transit 
agencies can align AFH with the DOT's equity and environmental justice 
analyses per their title VI obligations. Commenters stated that the two 
agencies should provide guidance for regions and jurisdictions that 
assist in aligning AFH-Consolidated Plans-Public Housing Plans-and 
Regional Transportation Plan timelines and goals so that they can 
achieve integrated, coherent use of their HUD and DOT resources.
    HUD Response: HUD appreciates these suggestions and is working with 
DOT to share data that enhances the planning processes of both 
agencies.
    Comment: Consultation requirements for States exceed those required 
by statute. Commenters stated that the ``consultation'' requirements 
for States appear to greatly expand the requirements under QHWRA, in a 
way that does not appear to have a legal basis under either QHWRA or 
Title VIII of the Civil Rights Act of 1968, as amended (Fair Housing 
Act). Commenters stated that the ``consultation'' requirements go far 
beyond consultation and actually require the State to help the PHA 
remedy its fair housing violations. Commenters stated that the only 
requirement under QHWRA is that States discuss how they will help 
``troubled'' PHAs with financial or

[[Page 42299]]

technical assistance, as set forth in their comprehensive housing 
affordability strategy (CHAS) or consolidated plan (Consolidated Plan). 
Commenters further stated that QHWRA specifically defines a troubled 
PHA as one whose physical units do not meet ``acceptable housing 
conditions,'' and the statute states that if public housing is 
distressed, the solution is for the PHA to ``voucher out'' the PHAs 
residents.
    Commenters stated that Sec.  91.110 of the proposed rule states 
that ``If a PHA is required to implement remedies under a Voluntary 
Compliance Agreement, the State should consult with the PHA and 
identify the actions it may take, if any, to assist the PHA in 
implementing the required remedies.'' The commenters stated that this 
provision goes far beyond QHWRA, which only speaks to assisting 
troubled PHAs with financial or technical assistance, and that by 
stating that the State has an obligation to help a PHA, the rule shifts 
the burden from the PHA to the state to address problems created by the 
PHA or other non-state entity.
    Commenters stated that this same regulatory section states that: 
``The State shall consult with any state housing agency administering 
public housing concerning consideration of public housing needs, 
planned programs and activities for the AFH, strategies for 
affirmatively furthering fair housing, and proposed actions to 
affirmatively further fair housing, and proposed actions to 
affirmatively further fair housing.'' Commenters stated that while 
``all state agencies administering public housing'' could refer to 
State agencies only, it could also be interpreted to mean any PHA 
operating in the State, including those in entitlement jurisdictions.
    Commenters concluded by stating that HUD needs to clearly say that 
the State consultation only applies to PHAs located in non-entitlement 
jurisdictions, and that the language in the proposed rule that says the 
State should identify what actions the State should take to assist the 
PHA when the PHA is implementing the required remedies should be 
removed as it has no legal basis under the QWHRA or other legislation 
that of which the commenters are aware.
    Other commenters similarly stated that under the State Consultation 
Requirements in Sec.  91.110(a)(2), which provides that the ``State 
shall consult with state and regionally-based organizations that 
represent protected class members . . . and other public and private 
fair housing service agencies, to the extent such agencies operate in 
the State,'' HUD needs to be clear that this applies to such entities 
and regional organizations that operate in the State's non-entitlement 
jurisdictions, and that the focus should be on the non-entitlement 
areas in these consultations.
    HUD Response: HUD disagrees that the consultation requirements 
imposed on States exceed statutory authority. With respect to a PHA 
under a voluntary compliance agreement (VCA), the language in Sec.  
91.110(a)(1) encourages States to consult with such PHA. There is no 
mandate to provide funding for those PHAs under a VCA.
    In response to comments that the States have a very different role 
from entitlement jurisdictions, HUD is developing an Assessment Tool 
especially for States that will take into consideration the different 
role of States.
9. Consolidated Plan
    Comment: Standards by which HUD will measure strategies and actions 
in Consolidated Plan are unclear. Commenters stated that the standards 
by which HUD will measure the strategies and actions in the 
consolidated plan and Annual Action Plan are unclear. Commenters stated 
that the proposed rule and guidance reiterate that jurisdictions will 
be able to choose the strategies in the consolidated plan and the 
actions in the Annual Action Plan that will be used to support the 
goals in the AFH, but that detailed guidance is needed for 
jurisdictions to understand the standards by which HUD will review the 
strategies and actions supporting AFH goals in the consolidated plan 
and Annual Action Plan. Commenters stated that these changes to the 
Annual Action Plan regulations do not include information about 
consequences, like withholding of grant funds, if HUD does not approve 
the strategies or actions listed in the consolidated plan or Action 
Plan. Commenters stated that although there is a clear relationship 
between the AFH and consolidated plan and Annual Action Plan, the final 
rule should clearly state the expectations of how each document should 
relate. Commenters stated that, for instance, it is unclear whether all 
priorities and goals identified in the AFH must be addressed in 
strategies in the consolidated plan and whether each Annual Action Plan 
must include actions to address all priorities and goals in the AFH. 
Commenters stated that no changes were made to the Consolidated Annual 
Performance and Evaluation Report (CAPER) regulations, and that it is 
unclear whether HUD's review of actions carried out in support of AFH 
goals will be altered when reviewing the CAPER after the final rule is 
in effect. Commenters stated that clarity on HUD's expectations 
regarding reporting requirements is needed.
    HUD Response: The standard of review of the consolidated plan at 
Sec.  91.500(b) is unchanged by this rule. A plan will only be 
disapproved if it is inconsistent with the consolidated plan statute 
(Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12703 et 
seq.)) or the plan is substantially incomplete. With respect to the 
latter, based on this rule's requirements at Sec. Sec.  91.215, 91.315, 
and 91.415, a strategic plan must include how its priorities and 
objectives will affirmatively further fair housing consistent with the 
goals and other elements in the assessment, and will identify 
additional objectives for any goals that are not addressed. Therefore, 
for a strategic plan to be complete and meet HUD review standards, a 
jurisdiction must at a minimum identify strategies and actions to 
overcome the contributing factors and show how it plans to address each 
of the goals identified in the AFH (although it is not necessary to be 
a one-for-one match up as a single strategy may address multiple goals 
or a combination of strategies may address a single goal). In turn, the 
annual action plan will require the jurisdiction to describe the 
actions it plans to take in a particular year that address goals 
identified in the AFH (see Sec. Sec.  91.220, 91.320, 91.420). If the 
substantive elements of the consolidated plan or annual action plan are 
not included in a consolidated plan, the plan may be disapproved as 
substantially incomplete. See Sec.  91.500(b) of the Consolidated Plan 
regulations, which provide examples of actions that may result in a 
determination by HUD that the plan cannot be accepted or is 
substantially incomplete.
    In this regard, a consolidated plan or annual action plan may also 
be disapproved as substantially incomplete if the AFFH certification is 
rejected by HUD, after HUD has determined the certification to be 
inaccurate based on inspection of evidence and provided the program 
participant an opportunity for notice and comment. New AFFH 
certification language at Sec. Sec.  91.225, 91.325, 91.425, and 
903.15(d)(3) provides the standard under which HUD will review the 
validity of AFFH certifications.
    HUD further notes that, under the Fair Housing Act and program 
statutes, program participants are ultimately responsible for 
affirmatively furthering fair housing, not just developing an

[[Page 42300]]

AFH with goals and priorities and planning documents with strategies 
and actions. It is the program participants' responsibility to 
affirmatively further fair housing and to set, evaluate, and readjust 
goals, priorities, strategies, and actions to fulfill that legal duty.
    Comment: Additional attention needs to be paid to impact on HOME 
consortium. Commenters stated there is insufficient guidance on the 
changes that will be necessary to the HOME consortium grant agreement 
for HOME Consortia, and reference to their re-certification process 
under the State's Consolidated Plan, regardless of renewal clauses 
contained in their current Consortia Agreements.
    HUD Response: HUD will provide additional guidance as needed, as 
well as technical assistance on a case-by-case basis.
    Comment: Require States to include language in their Consolidated 
Plans on how they will use their resources to assist with achievement 
of fair housing goals. Commenters stated that regional collaboration 
should be encouraged, and the new AFH regulations should require that 
States include language in their consolidated plans on how they will 
use resources to assist the regions with their fair housing goals. 
Commenters stated that an AFH is not intended for States and should not 
be forced on States merely for ease of administration. States are 
diverse and should be given the flexibility to assist regional 
collaborations without having to fit into their mold.
    HUD Response: The AFH includes States, but HUD recognizes that fair 
housing planning assessments by States will be different in scope and 
emphasis than entitlement jurisdiction. Therefore, as noted earlier in 
this preamble, and in the publication of the AFH Assessment Tool, HUD 
is developing a separate Assessment Tool for States.
    Comment: The Consolidated Annual Performance and Evaluation Report 
(CAPER) can measure AFFH performance; program participants should 
continue to be allowed self-evaluation. Commenters stated that 
performance review by HUD of the Consolidated Plan regulations should 
be the same one used to assess how program participants have acted with 
respect to the goals they set out for affirmatively furthering fair 
housing. Commenters stated that feedback on progress of affirmatively 
furthering fair housing is included within CAPER, and this should 
continue to be a self-evaluation that is then reviewed by HUD. 
Commenters stated that HUD does not review CAPERs with any consistency, 
and that, for some years, a review letter comes within six months of 
the CAPER submission; other years there has been no letter at all. 
Commenters stated that jurisdictions across the country report 
similarly mixed responses from the various HUD field offices, and they 
asked why HUD would not hold all jurisdictions to the same level of 
review.
    HUD Response: The annual performance reporting requirements at 
Sec.  91.520, including the requirement to report on actions taken to 
affirmatively further fair housing, and HUD review requirements at 
Sec.  91.525 are unchanged in this rule. Levels of review may vary 
based on priorities and resources. HUD takes note of the commenters' 
concerns about consistency in review.
    Comment: Allow jurisdictions to match up planning cycle to next 
available cycle. Commenters recommended that jurisdictions be given the 
ability to match up planning cycles in the next available cycle. 
Commenters stated that this may require the PHA and or the consolidated 
plan length (3 to 5 years) to be shorter or lengthen to match up, but 
should be decided at the local level and approved by HUD. Commenters 
stated that matching up FYs is less important if the AFH is planned for 
and produced before the PHA/consolidated plan are due. Commenters 
stated that if a region wants to align their 5-year consolidated plan 
cycles to facilitate a regional AFH, according to, the commenters 
stated their understanding of existing rules, many jurisdictions would 
need to prepare a shorter consolidated plan--perhaps even just one or 
two years, further increasing costs and demands on scarce staff time in 
an upcoming 5-year period.
    HUD Response: Jurisdictions already have the flexibility--and HUD 
intends to accommodate such flexibility--to change the submission date 
of its consolidated plan under Sec.  91.10. This section explicitly 
allows changes, with HUD's agreement, to allow for strategic plans to 
stretch beyond 5 years for the purpose of aligning plans.
    Comment: No additional public comment period is required for AFH, 
public comment period for CAPER and Consolidated Plan is sufficient. 
Commenters stated that the public comment periods for the CAPER and 
consolidated plan (15 and 30 days, respectively) are sufficient. 
Commenters stated that it seems that the AFH requirements of holding 
one public hearing, as well as consultation with various fair housing 
and similar groups, will fit into the current planning and reporting 
citizen participation process.
    HUD Response: The AFH is a distinct document with data, analysis, 
and priority and goal setting that feeds into the consolidated plan. 
Further, public input is a fundamental and necessary component in the 
AFH process. Jurisdictions may be able to appropriately conduct some 
outreach or hearings on both, but must be aware that submission 
timelines require that the AFH must be submitted 270 calendar days (for 
first AFHs) or 195 calendar days (for subsequent AFHs) before the start 
of the first program year to which the new housing and homeless needs 
assessment, market analysis, and strategic plan, as required by 24 CFR 
91.15(b)(2), and referred to in the regulatory text as the ``new 
consolidated plan'' applies. It may be more likely that there be shared 
outreach efforts on a prior year action plan or performance report, but 
in any such case the AFH should be a distinct agenda item for any 
public hearing.
    Comment: Recommendations for comment period for AFH. Commenters 
stated that the AFH review for public comment on consolidated plan 
participants should be a minimum of 45 days. Other commenters stated 
that HUD's rule should allow up to 30 days for public comment, allowing 
the program participant to decide on an appropriate comment period 
within these parameters. Yet other commenters stated that 15 days is 
insufficient time for public comment.
    HUD Response: This rule sets the minimum public comment period for 
a jurisdiction at 30 days, the same period required for the 
consolidated plan. The minimum public comment period for a PHA remains 
45 days under existing PHA Plan public comment requirements. 
Jurisdictions may choose to follow a longer public comment period, if 
desired.
    Comment: Placing AFH community participation and consultation 
requirements in 24 CFR 91.110 and 91.115 creates certain issues for 
State grantees. Commenters stated that placing the community 
participation and consultation requirements applicable to the AFH in 
Sec. Sec.  91.110 and 91.115 has the virtue of giving formal 
recognition to the distinctive character of State-level undertakings in 
connection with the two processes. Commenters stated that additional 
clarification may be needed to limit consultation obligations to 
entities that fall under the coverage of the two processes--i.e., 
making consultation with entitlement localities or PHAs, for example, 
optional rather than mandatory where there is no state program 
coverage.

[[Page 42301]]

    HUD Response: HUD has not changed the requirement in this rule, but 
only extended such requirements to the AFH process. As provided in the 
rule, the requirement for States is to consult with ``any housing 
agency administering public housing or section 8 on a State-wide basis 
as well as all public housing agencies that certify consistency with 
the State's consolidated plan.'' (See Sec.  91.110(a)(1).) HUD 
understands this requirement to limit required consultation to State 
level public housing agencies or those that certify consistency with 
the State's consolidated plan.
    Comment: Consolidated Plan public participation requirements can be 
improved to achieve more meaningful public comment. Commenters stated 
that the consolidated plan public participation requirements could be 
improved to foster more genuine and complete public participation. 
Commenters stated that given the amount of information in a draft AFH 
or draft consolidated plan, a 60-day (60 calendar days) public review 
and comment period is warranted. Commenters stated that not only is 
there much to read and assess, community-based organizations need time 
for their members to process comments before presenting them at a 
hearing or later in writing (see Sec.  91.105(b)(4)). Commenters stated 
that there must be an adequate amount of time between the availability 
of a draft AFH or draft consolidated plan and a public hearing to 
obtain public comments about it, perhaps 30 days. Commenters stated 
that advocates have experienced public hearings about draft 
consolidated plans within the current 30-day review and comment period, 
affording the public only one or two weeks to review the draft and 
prepare testimony (see Sec.  91.105(b)(3)). Commenters stated that 
there must be a reasonable amount of time between the hearing about the 
draft AFH or consolidated plan and submission to HUD for review, 
perhaps one to two weeks. Commenters further stated that advocates have 
experienced consolidated plans or PHA Plans submitted to HUD a day or 
two after a public hearing, not a sufficient amount of time for the 
jurisdiction or the PHA to have considered public or resident comment 
(see Sec.  91.105(b)(5)). Commenters stated that in 1994 advocates 
called for a period of 60 days to review consolidated plan performance, 
and that given the importance of AFFH performance, there must be more 
than a 15-day review period. At a minimum 60 days is suggested in light 
of the next point--the need for a performance report hearing.
    HUD Response: As stated previously in this preamble, the AFH 
regulations state the minimum public comment period. Program 
participants may set higher public comment periods. Citizen 
participation plans are also subject to citizen input. Participants are 
required to demonstrate in the AFH that they have considered community 
comments and how they have dealt with those comments. Just setting a 
minimum time period for consideration does not guarantee that the time 
will be used for the purpose of review, which is why HUD will instead 
look to the summary of citizen input and responses as demonstration 
that public input was considered. Further, it is up to jurisdictions to 
decide how to appropriately schedule public hearings, so long as the 
scheduling is done in a manner that makes the hearing accessible to all 
and promotes public participation. While HUD will not require all 
participants to hold separate hearings on performance reports, 
jurisdictions may choose to do so.
    Comment: Make all comment periods for all reports the same. 
Commenters stated that comment periods for all reports should be the 
same to create a reliable schedule community members can depend on.
    HUD Response: It is HUD's position that not all reports warrant the 
same period of public comment. HUD has set public comment period for 
the AFH in line with the consolidated plan and annual action plan 
requirements (e.g., 30 days). The performance report comment period of 
15 days is unchanged by this rule and reflects the nature of the 
document as reporting out of actions taken rather than a proposal for 
future action that may be subject to more public debate.
    Comment: The new certifications at Sec.  91.225 and in part 903 are 
too broad. Commenters stated that requiring a program participant, at 
Sec.  91.225, to certify that ``it will take no action that is 
materially inconsistent with its obligation to affirmatively further 
fair housing'' is too broad of a legal standard, and may result in 
increased litigation spurred by individual instances, or decisions of 
the State or a State recipient that one or more parties may feel is 
inconsistent with an AFH, even though a State's actions, on the whole, 
affirmatively further fair housing as set forth under the AFH and other 
related program requirements. The commenters stated that these 
decisions may be related to non-housing community assets over which 
State housing program administrators have no knowledge or control, or 
may relate to actions of individual state recipients over which the 
state has no legal authority.
    PHA commenters stated that the proposed certification sets forth an 
unreasonable expectation. The commenters stated that under this 
standard, a PHA would be hard-pressed to justify capital improvements 
on a property that exists in a neighborhood lacking community assets, 
and that similarly, a PHA would struggle to explain how lowering their 
voucher payment standard in order to be able to stretch their budget 
and continue to serve the same number of families meets the definition 
of ``affirmatively furthering fair housing.''
    Other commenters stated that the program participants do not know 
what ``materially inconsistent'' means in the certification; that HUD 
offered no explanation of its meaning. The commenters asked who decides 
what is ``material'' and what are the criteria for being deemed 
``materially inconsistent.'' The commenters stated if HUD does not 
define this term and does not identify criteria that it will use to 
review and approve AFHs, then HUD must exercise flexibility in 
interpreting this provision. Commenters stated that under the proposed 
rule's definition of affirmatively furthering fair housing, which can 
be read to discourage investments in existing low-income neighborhoods, 
the certification can be challenged on the basis that investments in 
poverty/minority concentrated neighborhoods are a violation of 
affirmatively furthering fair housing, because the effect of such 
investment does not ``expand access to high opportunity neighborhoods'' 
and develop ``investment possibilities in underserved communities.''
    Commenters stated that HUD must provide certification that has 
clear standards for meeting compliance standards; that program 
participants should not bear the burden of providing that they have 
complied with ill-defined and changeable standards.
    Commenters recommended that HUD should add language to the AFFH 
certification to more clearly state its meaning of the certification--
that HUD should adopt the language from the Westchester consent decree, 
requiring that in certifying compliance with the obligation to 
affirmatively further fair housing, the jurisdiction or PHA 
acknowledges that ``the location of affordable housing is central to 
the fulfilling the commitment to affirmatively further fair housing 
because it determines whether such housing will reduce or perpetuate

[[Page 42302]]

residential segregation.'' Other commenters recommended the final 
sentence of the certification state preservation of affordable housing 
and investment in areas of racial or ethnic concentrations of poverty 
are not actions necessarily materially inconsistent with the obligation 
to affirmatively further fair housing.
    HUD Response: The commenters concerns about the certification 
provisions largely arise from concerns that HUD's rule did not assure a 
balanced approach and that participation in HUD or other Federal 
housing programs serving specified populations may be viewed as a 
violation of the duty to affirmatively further fair housing. HUD has 
already addressed both of these concerns in this preamble by advising 
of revisions in this final rule to the ``purpose'' section of the 
regulation and to the definition of ``affirmatively furthering fair 
housing,'' and by inclusion of a definition of ``housing programs 
serving specified populations.''
    HUD does not believe the standard of material inconsistency is 
overly broad. The obligation to affirmatively further fair housing is a 
statutory obligation, and the certification provisions simply restate 
the fact that a participant cannot act in a way that is inconsistent 
with its legal obligation. Unrelated types of actions would not be 
materially inconsistent; there would have to be some relationship 
between the action and the obligation to affirmatively further fair 
housing. HUD would review the AFH and certification and determine if 
the actions planned to address the goals in the AFH, or the actions 
that are taken by the program participant, including those based on the 
AFH, are materially inconsistent with the obligation to affirmatively 
further fair housing. If they are, HUD would review the certification 
under existing procedures in 24 CFR part 91 or the procedures in Sec.  
903.15(d)(3) to determine whether the statutory duty is violated.
    HUD believes that the certification language is appropriate and 
consistent with statutory requirements and, therefore, makes no change 
in this final rule.
    Comment: Certification should clarify the duty to affirmatively 
further fair housing with respect to non-federal funds. Commenters 
asked that the certification at Sec.  91.225 provide that a program 
participant will take no action, ``whether using federal funds or 
not,'' that is materially inconsistent with its obligation to 
affirmatively further fair housing. The commenters stated that this 
same phrase should be added to the certification language at Sec.  
91.325 and Sec.  91.425. Commenters further stated that the 
applicability of the duty to affirmatively further fair housing to all 
housing and community development resources could be strengthened by 
including language similar to that used by the Federal Transit 
Administration in its update of guidance on title VI of the Civil 
Rights Act. The commenters stated that the guidance includes the 
following language: ``Title VI prohibits recipients of Federal 
financial assistance (e.g., states, local governments, and transit 
providers) from discriminating on the basis of race, color, or national 
origin in their programs or activities, and it obligates Federal 
funding agencies to enforce compliance.''
    Other commenters, however, stated that the certification should not 
pertain to activities that do not involve HUD or other Federal funds.
    HUD Response: HUD believes the existing certification appropriately 
reflects the scope of actions to which the program participant must 
certify.
    Comment: Certification should be both prospective and 
retrospective. Commenters stated that any jurisdiction other than one 
that is submitting a certification for the first time should be obliged 
to make a retrospective representation about AFFH compliance. The 
commenters stated that a jurisdiction should be required to make 
explicit the fact that it is making a certification with the intention 
that HUD rely on it without conducting an independent investigation. 
The commenters recommended that the certification requirement in the 
final rule read as follows: ``Each jurisdiction is required to submit a 
certification that it has and will affirmatively further fair housing, 
which means that: (a) It has and will take all meaningful steps 
possible to overcome barriers to fair housing choice that exist in or 
are contributed to by the jurisdiction; (b) it has not and will not 
take any action inconsistent with its obligation to affirmatively 
further fair housing; and (c) it has not and will not fail to act where 
such failure to act has been or would be inconsistent with its 
obligation to affirmatively further fair housing. The certification 
shall include a statement from the jurisdiction that it is representing 
that the certification is true, complete, and based on supporting 
evidence, and that it understands that HUD is entitled to rely upon 
such certification without conducting an independent investigation.''
    HUD Response: HUD disagrees with the recommendation to change the 
language of the certification. Program participants are subject to 
certifications to AFFH for all periods of time during which funds are 
received from HUD. Therefore, if a program participant did not 
affirmatively further fair housing in a prior time period when HUD 
funds were received, it was in violation of a prior AFFH certification. 
HUD notes that the commenter is correct that HUD relies on 
certifications for purposes of extending funding to program 
participants. However, HUD sees no need to include this language in the 
regulation, since funding is conditioned on the certification and, if 
the certification is inaccurate, HUD has existing processes to 
investigate or challenge it.
10. Definitions
    Comment: The definition of ``affirmatively furthering fair 
housing'' is improved but can be read as discouraging investments in 
existing low-income neighborhoods. Many commenters stated that the 
regulation's proposed definition of affirmatively furthering fair 
housing is more straight forward than the previous definition and that 
increased clarity will promote greater compliance by participants in 
Federal programs. Commenters specifically pointed to phrasing in the 
definition which states that affirmatively furthering fair housing 
means taking proactive steps beyond combating discrimination.
    However, other commenters stated that HUD's definition can be read 
as discouraging investments in existing low income neighborhoods. The 
commenters stated that HUD's definition makes no mention of the kinds 
of investments in underserved communities that have been shown to 
improve those neighborhoods, such as quality affordable housing, and 
can be read as explicitly excluding affordable housing investments in 
low-income minority communities. Commenters stated that under this 
definition, virtually any investment in poverty/minority concentrated 
neighborhoods can be attacked under this provision.
    HUD Response: As noted earlier in this preamble, HUD did not intend 
to indicate that an investment in a neighborhood of racial or ethnic 
concentration of poverty is not an acceptable means of affirmatively 
furthering fair housing. Such investments may be an acceptable means of 
affirmatively furthering fair housing when designed to achieve fair 
housing outcomes such as reducing disproportionate housing needs, 
eliminating RCAPs/ECAPs, increasing integration, and increasing access 
to opportunity, such as high performing schools, transportation, and 
jobs. HUD

[[Page 42303]]

believes that the clarifications and changes made to the purpose 
section and the definition of ``affirmatively furthering fair housing'' 
demonstrate that the final rule supports a balanced approach.
    Rule change and clarification. In Sec.  5.150, HUD revises the 
purpose and in Sec.  5.154(d)(5) HUD adds strategies and actions, to 
clarify HUD's support for a balanced approach to affirmatively 
furthering fair housing. Additionally, as noted earlier in this 
preamble, HUD has replaced the term ``proactive steps'' with 
``meaningful actions'' in the definition of ``affirmatively furthering 
fair housing'' to clarify the types of actions grantees are expected to 
take to affirmatively further fair housing.
    Comment: The term ``community assets'' is not clearly defined in 
the rule; the term ``neighborhood asset'' is not defined. Commenters 
stated that the term ``community assets,'' which is defined as part of 
the definition of ``significant disparities in access to community 
assets'' is not clearly defined in the rule compared to the data sets 
HUD is providing. Commenters stated that different measures for 
community assets are included in different parts of the rule. Other 
commenters stated that any definition of ``community assets'' should 
include affordable housing itself as an example of a community asset. 
In fact, ``community assets'' should be broadly defined to include 
factors such as affordable housing, access to healthy food, quality 
schools, social services, transportation, and other factors that foster 
a healthful, secure, and opportunity-centered quality of life.
    Other commenters stated that the term ``neighborhood asset'' was 
used but not defined and that any use of the term ``neighborhood 
asset'' should include a social/family network of support, stating that 
such networks increase individuals' access to opportunities and 
resources.
    HUD Response: HUD appreciates the concerns and suggestions made by 
the commenters. HUD's Assessment Tool, published on September 26, 2014, 
addresses more thoroughly certain community assets that are key to 
access to opportunity, and HUD believes the Assessment Tool is more 
appropriate for addressing and clarifying what is meant by community 
assets. HUD further notes, however, that many communities have unique 
assets and the use of a broad definition is intended to capture not 
only the most common assets that afford access to opportunity, but also 
those that are less common, but nonetheless very important in 
communities across the nation. In this final rule, HUD does not use the 
term ``neighborhood asset.''
    Comment: Strengthen the definition of ``community participation.'' 
Commenters stated that the proposed definition of ``community 
participation'' should provide detailed, result orientated steps that 
will aid states, local governments, and public housing agencies in 
understanding the rigor and importance of the requirement that funding 
recipients proactively involve the community in furthering fair 
housing. Commenters stated that the proposed definition of ``community 
participation'' should provide specific examples of acceptable 
community participation plans to clearly illustrate the importance of 
community participation and provide guidance to funding recipients. 
Commenters additionally stated that the proposed definition of 
``community participation'' should require recipients of funding not 
just to ``consider the views and recommendations received'' and have a 
``process for incorporating such [community] views in decisions and 
outcomes,'' but should also have a requirement that recipients of 
funding demonstrate that such views have, indeed, been incorporated 
into decisions and outcomes.
    HUD Response: HUD declines to revise the definition of ``community 
participation'' in the manner the commenters suggest. The additional 
detail that commenters are seeking about community participation can be 
found in Sec.  5.158, entitled ``Community participation, consultation, 
and coordination.''
    Comment: HUD's definition of ``concentration'' is without 
appropriate basis. Commenters expressed disagreement with HUD's 
definition of a concentration of minorities as provided in the proposed 
rule, which commenters stated automatically defines an area of 
concentration as any area that has a non-white population of 50 percent 
of more. The commenters stated that, as HUD has noted, the U.S. is 
moving to majority minority status, and therefore to use the automatic 
50 percent standard is a false measure that does not accurately reflect 
local community demographics or take into account the changing 
demographics of the United States as a whole. The commenters stated 
that HUD's definition makes an assumption that an area that is 
``majority minority'' is, in itself, an inherently bad thing--an 
assessment that many would disagree with, and that the ``solution'' 
called for by this ``problem,'' following the logic that commenters 
stated HUD is using, would require program participants to adopt a 
strategy encouraging minorities to move out of the suburbs and into the 
central city.
    Commenters stated that HUD's definition of concentration in the 
proposed rule is the one that has been used by HUD's Office of Fair 
Housing and Equal Opportunity (FHEO) for competitive programs such as 
Choice Neighborhoods and Sustainable Communities, but given that the 
basis for conducting the AFH (and previously the AI) has been based on 
CDBG statute, as well as the other formula programs in the Office of 
Community Planning and Development (CPD), the commenters recommend that 
HUD use the CPD definition instead. Commenters stated that the CPD 
definition provides that a concentration exists if the minority 
population is ten percent higher than the jurisdiction as a whole, and 
provided the following example--if a jurisdiction was 10 percent 
minority, then any census tract over 20 percent would constitute a 
concentration, and if a jurisdiction was 60 percent minority, a 
concentration would exist if the census tract was more than 70 percent 
minority. Commenters stated that this is a fairer and more reasonable 
method of measuring concentrations (particularly at a State level where 
vast areas of geography is involved) as well as reasonably addressing 
minority majority jurisdictions, both urban and suburban.
    HUD Response: First, HUD would clarify that neither the proposed 
rule nor the final rule includes a numeric threshold in the definition 
of the term, ``racially or ethnically concentrated area of poverty.'' 
The commenters referring to a 50 percent threshold for minority 
population are instead commenting on the AFFH Data Documentation paper 
that HUD released concurrently with the proposed rule, and which HUD 
also requested comment on. The comments on those thresholds will be 
addressed through the development of the Assessment Tool, including 
consideration of the correct threshold that may be applicable to 
different geographic areas, for instance rural versus central city 
areas.
    In addition, the comments on the use of a 10 percent threshold used 
in HUD's consolidated planning regulations appear to refer to those 
regulations' provisions on disproportionate housing needs analysis and 
not to a threshold for defining an area as having a high minority 
population. HUD notes that the term ``concentration'' appears in other 
HUD regulations, including in the requirements on site and neighborhood 
standards, without the specific threshold provided in the regulatory 
text itself. See, for example, Sec. Sec.  91.220,

[[Page 42304]]

92.353, 570.208, 891.125(c), 891.680, 905.602, 972.218, 982.54, and 
983.57.
    Comment: Revise the definition of ``fair housing choice'' with 
respect to persons with disabilities. Commenters asked that the final 
rule clarify that fair housing choice means that housing is not 
conditioned on acceptance of disability-related services (unless that 
is one of the rare instances in which it is specifically required by a 
Federal statute).
    Other commenters stated that the definition of fair housing choice 
must clearly indicate that ``choice'' includes residents' ability to 
choose to remain in homes and communities where they have long lived 
and where they have deep and important social, community, and economic 
ties, even if those communities are racially or ethnically concentrated 
areas of poverty. Commenters recommended the following revised 
definition of ``fair housing choice'' with respect to persons with 
disabilities: ``For persons with disabilities, fair housing choice is 
the ability to live where they choose. This includes access to 
accessible housing, and, for disabled persons in institutional or other 
residential environment, housing in the most integrated setting 
appropriate as required under law, if they so desire, including 
disability-related services that an individual needs to live in such 
housing. Fair Housing Choice also means recognizing that not all 
persons with disabilities desire to live in an integrated setting and 
that those people have the right to choose to reside with others with 
the same disability in housing built to meet their needs that includes 
services focusing on that specific disability.''
    Other commenters stated that HUD's definition of fair housing 
choice includes housing choices not constrained by barriers ``related 
to'' protections contained in the Fair Housing Act and the commenters 
stated that they object to HUD's apparent inclusion of matters 
correlated with protected classes but not related causally to those 
characteristics.
    HUD Response: HUD appreciates the commenters' suggestions and, as 
noted earlier in this preamble has revised the definition of ``fair 
housing choice.'' Although HUD's definition of fair housing choice does 
not address the involuntary receipt of services, HUD interprets its 
regulations under section 504 of the Rehabilitation Act to require 
disability-related services to be voluntary.
    Rule change. HUD has revised the definition of ``fair housing 
choice'' in Sec.  5.152 to mean that individuals and families have the 
opportunity, as well as the information and options to live where they 
choose free of discrimination or other barriers, and that persons with 
disabilities have the option to reside in accessible housing and in the 
most integrated setting appropriate to an individual's needs, as 
required under Federal civil rights law. This choice also includes 
disability-related services an individual may require in order to live 
in such housing.
    Comment: The definition of ``fair housing issue'' is meaningless. 
Commenters stated that the definition of ``fair housing issue'' 
includes, ``any other condition that impedes or fails to advance fair 
housing choice.'' The commenters stated that by including anything and 
everything, the definition means nothing. The commenters stated that 
HUD must provide a definition of ``fair housing choice'' that program 
participants can understand. The commenters stated that the definition 
of ``fair housing issue'' in the proposed rule can lead to the 
conclusion that, since men and women with disabilities have lower 
incomes than unprotected classes, and since lower incomes impede 
housing choice, the lower incomes of persons with disabilities is a 
matter subject to requirements and mitigation under the Fair Housing 
Act. Commenters recommended that HUD adopt the following definition: 
``Fair housing issue means unequal housing opportunities for persons in 
a protected class under federal law and evidence of illegal 
discrimination or violation of existing civil rights law, regulations, 
or guidance, as well as any other condition that impedes or fails to 
advance fair housing choice.''
    Other commenters stated that the definition of ``fair housing 
issue'' must omit reference to ongoing local or regional segregation. 
Commenters stated that because fair housing issues do not stop at the 
borders between jurisdictions, it is important that the definition of 
fair housing issue use ``and'' instead of ``or.''
    HUD Response: HUD disagrees with the commenters, but does agree 
that a clarification would be helpful. The definition of ``fair housing 
issue'' is intentionally broad because the factors and conditions that 
may impede fair housing choice or access to opportunity are wide and 
varied.
    Rule change. As noted earlier in this preamble, HUD has made 
certain clarifying changes to the definition of ``fair housing issue.'' 
(See Sec.  5.152.) Specifically, a fair housing issue is a condition in 
a program participant's geographic area of analysis that restricts fair 
housing choice or access to opportunity.
    Comment: The definition of ``integration'' does not clearly define 
the geographic area under review. Commenters stated that the definition 
of ``integration'' does not clearly define the geographic area under 
review, but includes, ``jurisdiction or Metropolitan Statistical Area 
(MSA).'' The commenters stated that those geographic designations may 
represent vastly different areas with vastly different demographic 
characteristics. The commenters stated that a community may be 
integrated in a jurisdiction but segregated in an MSA or vice versa. 
Commenters stated that reference to ``Metropolitan Statistical Area as 
a whole'' should be removed in the definition of ``integration.'' 
Commenters stated that MSAs cover broad areas that a single 
jurisdiction cannot influence, as multiple jurisdictions are often 
captured in a single MSA. Commenters stated that another concern with 
the definition is the standard presented for persons with disabilities, 
which is that they live, ``in the most integrated setting 
appropriate.'' Commenters asked whom does HUD believe is competent to 
determine what is appropriate. Commenters stated that the better 
terminology is to state the most integrated setting chosen by the 
household.
    Other commenters asked that in the definition of ``integration,'' 
HUD replace the word ``handicap'' with ``persons with disabilities.''
    HUD Response: The geographic area under review will differ 
depending upon who is the program participant. In this regard, HUD has 
included a definition of ``geographic area'' that is intended to 
acknowledge that different program participants have different 
geographic areas in which they will undertake their assessment of fair 
housing. With respect to integration, as noted earlier in this 
preamble, HUD has revised the definition of ``integration,'' which HUD 
believes addresses the commenters concerns.
    Rule change. The definition of ``integration'' in Sec.  5.152 is 
revised. HUD has replaced the word ``handicap'' with ``disability'' and 
has better identified the particular geographic areas at issue, by 
providing a definition of geographic area in Sec.  5.152, which program 
participants will analyze using the Assessment Tool.
    Comment: HUD needs to define ``region.'' Commenters stated that if 
HUD is requiring a regional analysis for every entity submitting an 
AFH, then HUD must define what is meant by a ``region.'' Commenters 
asked whether a

[[Page 42305]]

region for State AFH planning purposes is the State and surrounding 
States, or all the regions within a State, however those are defined.
    HUD Response: The duty to affirmatively further fair housing 
requires a regional analysis. The court in HUD v. Thompson placed a 
strong emphasis on the need for regional solutions to decrease 
segregation and racial isolation. For these reasons, a PHA would need 
to consider fair housing effects outside its jurisdictional border, as 
would an entitlement jurisdiction, in order to meet the requirements 
under the Fair Housing Act and fair housing case law. A PHA may conduct 
its own AFH with geographic scope and proposed actions scaled to the 
PHA's operations and region. PHAs choosing to conduct and submit an 
independent AFH, must include an analysis for the PHA service area and 
region, in a form prescribed by HUD, in accordance with Sec.  
5.154(d)(2). Program participants' regions will ultimately be defined 
by the AFH Assessment Tool provided by HUD.
    Comment: The definition of ``segregation'' needs further 
clarification. Commenters stated that the definition of ``segregation'' 
is unclear as to whether HUD is defining segregation in terms of a 
jurisdiction, some other ``geographic area,'' or a particular 
development--the same concern expressed about geographic area that 
commenters expressed about the definition of ``integration.'' 
Commenters stated that the definition is confusing when it references 
``particular housing developments''--that the definition seems to say 
that segregation occurs when there is a high concentration of persons 
with disabilities ``in a particular housing development,'' though, the 
commenters stated that it is unclear whether concentrations in a 
development apply only to persons with disabilities or other protected 
groups as well.
    Other commenters stated that HUD should strike the phrase ``a 
particular housing development'' or else this would lead to individual 
projects having to deny eligible applicants housing if they do not meet 
particular characteristics. Commenters also stated that HUD should 
strike the clause ``or other clauses'' because this phrase is simply 
too vague.
    Commenters stated that HUD must define ``segregation'' to be the 
result of government or private sector actions and not the actions of 
individuals making their own location decisions. Commenters stated that 
the term ``segregation'' is a politically and emotionally loaded term 
and its use may create obstacles to rational discussion of the reasons 
why certain racial/ethnic groups are clustered in particular locations. 
Commenters stated that the use of more neutral terms such as 
``dissimilarity index'' and ``isolation index'' would enable 
communities to explore these questions without the value-laden judgment 
implicit in the use of the term ``segregation.''
    HUD Response: HUD understands that the term ``segregation'' may be 
an emotionally charged term, but the Fair Housing Act was enacted to 
overcome historic patterns of segregation, including the exclusion of 
people because of their characteristics protected by the Fair Housing 
Act. HUD declines the commenters' suggestion to define ``segregation'' 
as a result of government or private sector actions. Instead, the final 
rule generally defines ``segregation'' as a high concentration of 
persons according to protected class status regardless of the cause. 
The rule also provides more specificity regarding segregation of 
persons with disabilities. Thus, identifying a pattern of 
``segregation'' is only the first step in the analysis. Program 
participants will then assess the related contributing factors to 
determine whether addressing them should be a high priority (e.g., 
where the contributing factor represents a limitation or denial of fair 
housing choice or access to opportunity, or negatively impact fair 
housing or civil rights compliance). HUD agrees with commenters that 
segregation at the development or building level can include not only 
persons with disabilities but also persons with other protected 
characteristics. HUD has addressed the issue of the size of geographic 
area at issue in segregation by providing a definition of geographic 
area.
    Rule change. Similar to the change made to the definition of 
``integration'' HUD has revised the definition of ``segregation'' and 
has added a new defined term of ``housing programs serving specified 
populations'' to clarify that developments that may contain a high 
proportion of persons with disabilities do not constitute a ``fair 
housing issue of segregation'' provided the program or program activity 
serving those residents is not otherwise violating applicable Federal 
civil rights requirements, including the duty to affirmatively further 
fair housing. (See Sec.  5.152.)
    Comment: The definitions of racially or ethnically concentrated 
areas of poverty are defined by census tract, which can be problematic. 
Commenters stated that the definition of racially or ethnically 
concentrated areas of poverty is defined by census tract boundaries, 
and the commenters expressed concern that this will not allow for any 
analysis of areas that may be smaller than census tracts but still are 
racially or ethnically concentrated areas of poverty. The commenters 
recommended that HUD clarify that program participants should consider 
smaller such concentrated areas of poverty as part of their analysis.
    HUD Response: Neither the proposed rule nor the final rule include 
a limitation that the definition of an RCAP/ECAP is based only on a 
census tract. The final rule states that an RCAP/ECAP ``means a 
geographic area with significant concentrations of poverty and minority 
populations.'' The term ``geographic area'' is further defined as, ``a 
jurisdiction, region, State, Core-Based Statistical Area (CBSA), or 
another applicable area (e.g., census tract, neighborhood, Zip code, 
block group, housing development, or a portion thereof) relevant to the 
analysis required to complete the assessment of fair housing, as 
specified in the Assessment Tool.'' As such, the Assessment Tool will 
propose the appropriate level of geography for determining various 
elements of the AFH, including RCAPs/ECAPs. In general, RCAPs/ECAPs 
will likely be based on census tracts, at least for many program 
participants, including entitlement jurisdictions as well as PHAs in 
urban areas. However, other levels of geography may be relevant for 
different elements, for example HUD's Small Area Fair Market Rents use 
zip codes, which may be useful for some types of analyses in a 
participant's AFH.
    Rule Change. This final rule adds a definition of the term 
``geographic area.''
    Comment: The definition of significant disparities in access to 
community assets is too broad. Commenters stated that HUD's definition 
of this term is too open-ended to be useful and open to many different 
interpretations and uses. Commenters stated that, for example, based on 
the literal meaning of the words, it is hard to understand how a 
disparity in access to educational assets could exist with regard to 
any household within a local school's attendance area since all school-
aged children are eligible to attend and the schools typically provide 
transportation. Commenters also asked about the meaning of 
``differences in access to transportation.'' Commenters asked if low-
income areas with a high percentage of a particular race have more 
access to public transportation, or if more affluent communities have 
little access to public transportation, is that a disparity in access 
that should be addressed. Other commenters stated

[[Page 42306]]

that the definition of ``significant disparities in access to community 
assets'' should be more precise. Commenters stated that the definition 
should include a ``measurable difference in access.'' The commenters 
stated that because even minute differences may be measurable, this 
language should include a qualifier such as a ``significant or 
material'' measurable difference. Commenters also stated that the Fair 
Housing Act does not cover significant disparities in community assets 
and such inclusion is beyond the scope of the statute.
    HUD Response: As stated in HUD's proposed rule, research indicates 
that disparities in access to community assets negatively impact 
educational and economic outcomes. Sustained exposure to highly 
distressed neighborhoods is associated with a reduction in children's 
odds of high school graduation by at least 60 percent, while low-income 
students who have access to asset-rich neighborhoods with good schools 
may realize math and reading gains that help close the achievement gap. 
(See 78 FR 43714.) Given this research, one of HUD's objectives through 
the new AFH process is to reduce disparities in access to community 
assets (that is access to opportunity) based on race, color, religion, 
sex, familial status, national origin, or disability.
    HUD declines to set out a measureable standard for determining 
significant disparities in community assets, as program participants 
and communities should have flexibility in making such a determination 
since these disparities will vary across communities. HUD believes the 
Assessment Tool will help program participants to identify such 
significant disparities through the provision of data.
    Comment: Other terms need to be defined. Commenters suggested 
definitions for such terms as ``affirmative move,'' ``complaint,'' 
``discrimination,'' ``exclusionary practices,'' ``fair'' ``fair 
housing,'' ``family,'' ``homelessness,'' ``inclusive communities,'' 
``jurisdiction,'' ``local data,'' ``material inconsistency with data,'' 
and ``neighborhood.''
    HUD Response: As noted in Section III of this preamble, HUD has 
included a definition on ``local data'' but declines to define these 
additional terms. For some of the terms, such as ``fair'' and 
``complaint,'' the rule uses these terms based on the common dictionary 
definition of such terms. The term ``fair housing'' reflects the 
meaning as used in the Fair Housing Act. For terms such as ``family'' 
and ``homeless,'' these terms are already defined in HUD regulations, 
and the final rule does not need to further define these terms. The 
term ``jurisdiction'' is defined in HUD's regulations in 24 CFR part 
91, as noted by HUD in the introductory language to the definition 
section, Sec.  5.152. Commenters asked that HUD define ``inclusive 
communities'' to emphasize that the rule is speaking of such term in 
the context of protected classes. HUD believes such qualification is 
unnecessary since this rule is about providing an approach for program 
participants to more effectively affirmatively further fair housing for 
persons with characteristics protected by the Fair Housing Act. The 
term ``material inconsistency with data'' is addressed in the data 
document.
    New terms defined. As noted in Section III of this preamble, HUD 
has added, in this final rule, definitions for ``data,'' which includes 
a definition for ``HUD-provided data'' and ``local data.'' HUD defines 
``local data'' as metrics, statistics, and other quantified 
information, that are subject to a determination of statistical 
validity by HUD, relevant to the program participant's geographic areas 
of analysis, that can be found through a reasonable amount of search, 
are readily available at little or no cost, and are necessary for the 
completion of the AFH using the Assessment Tool. The phrase ``subject 
to a determination of statistical validity by HUD'' is included to 
clarify that HUD may decline to accept local data that HUD has 
determined is not valid but not that HUD will apply a rigorous 
statistical validity test for all local data. HUD also provides a 
definition for ``local knowledge.'' As also noted in Section III and 
discussed in response to several comments, HUD has included in this 
final rule definitions for ``geographic area,'' ``housing programs 
serving specified populations'' and ``qualified PHA.'' In this final 
rule, HUD has also added a definition of ``joint participation'' to 
refer to the collaboration of two or more program participants 
conducting an AFH, but which is distinguished from regional 
collaborating program participants, which must include in such 
collaboration at least two consolidated plan program participants. (See 
Sec.  5.152.)
11. Disproportionate Housing Needs
    Comment: HUD's definition of disproportionate housing needs is 
overly complicated. Commenters stated that the approach HUD took in 
defining disproportionate housing needs seems overly complicated and 
that HUD has failed to demonstrate that the ``measures and indices are 
valid, robust, and stable.'' Other commenters stated that HUD's 
apparent treatment of disproportionate need appears to conflate 
potential disparate impact on protected classes with the effects of 
real estate markets. Commenters stated that HUD should consider whether 
members of protected classes have disproportionate housing needs 
compared to similarly situated members of unprotected classes (e.g., 
households in protected classes living near transportation hubs or near 
high performing schools compared to households living near these 
community assets who are not in protected classes).
    Other commenters stated that the proposed definition of 
disproportionate housing needs seems to indicate that affordable 
housing projects should only house families in protected classes with 
disproportionate housing needs and exclude other low-income individuals 
who qualify for such housing. Commenters asked whether this means that 
Federal funds should be devoted only to helping those in a protected 
class and not others with the same economic challenges. Commenters 
stated that moving households from an area of poverty as currently 
defined and putting them in one that is not an area of poverty may 
cause the second area to become an area of poverty or otherwise ``flip 
the communities.'' Other commenters stated that the categories of 
housing need included in the definition of ``disproportionate housing 
need'' (cost burden, severe cost burden, overcrowding, and substandard 
housing) and their accompanying analyses are too expansive and 
recommended conducting an analysis solely on income, as income directly 
correlates to other identified factors.
    Commenters stated that it is crucial that the disproportionate 
housing need analysis be regional in scope, to encompass the entire 
housing market, so that the solutions developed are not primarily 
focused on providing housing where the majority of low-income families 
already live. Other commenters stated that a final rule should ensure 
that the definition of ``disproportionate housing needs'' is more 
clearly focused on regional housing needs rather than conditions 
``within the jurisdiction.''
    Lastly, commenters questioned the basis for the threshold of 10 
percent. Commenters recommended changing the percentage from 10 percent 
to at least 20 percent. Commenters stated that the American Community 
Survey (ACS), which HUD proposes to use, has high margins of error, 
often over 20 percent in a given census tract and occasionally 
approaching 30 percent.

[[Page 42307]]

Commenters stated that because the margins of error are so high, the 
percentage should be changed from 10 percent to 20 percent or higher, 
especially for more rural states and rural areas within all states.
    HUD Response: HUD agrees with the commenters that the definition of 
``disproportionate housing needs'' in the proposed rule was not as 
clear as intended. As noted in the overview of changes made at the 
final rule stage (Section III of this preamble), HUD has revised the 
definition of ``disproportionate housing needs'' and removed the 10 
percent threshold.
    HUD agrees with the commenters that a single numeric threshold for 
determining disproportionate housing needs would be unsuccessful in 
accurately identifying disproportionality across different population 
sizes, demographic characteristics, and relative to other protected 
classes or subsets of the same protected class within a category of 
housing need, as well as relative to the total population. As 
commenters pointed out, the same threshold also may not accurately 
depict disproportionate housing need in both low- and high-density 
areas, or among both homogenous and heterogeneous populations. HUD's 
intention is to identify disproportionate housing need in an inclusive 
and relative way, and to do so fairly in every set of circumstances. 
Therefore, HUD revises the definition of disproportionate housing need 
to remove the numeric threshold and provide more clarity to the meaning 
of disproportionate housing needs.
    An example of disproportionate housing needs would be found when, 
according to U.S. Census Bureau data, a significantly higher proportion 
of the jurisdiction's black residents experience a severe cost burden 
when compared to the proportion of the jurisdiction's white residents 
experiencing a severe cost burden. Another example of disproportionate 
housing need can be found when a higher proportion of Hispanic 
individuals with limited English proficiency experience substandard 
housing conditions than the proportion of the state's population that 
experiences substandard housing conditions.
    Rule change. HUD has revised the definition of ``disproportionate 
housing needs'' in Sec.  5.152. HUD`s revised definition uses the term 
``significant disparities,'' but this term does not mean 
``statistically significant,'' but rather is included to note the 
possibility of existence of substantial disparities, which should be 
interpreted as ``significant'' in terms of their impact on affected 
persons rather than merely ``statistically significant.''
12. Housing Choice Vouchers
    Comment: Fund the Housing Choice Voucher program in order to 
affirmatively further fair housing. Commenter stated that the best way 
to deconcentrate poverty is to double funding to increase the payment 
standard for the HCV program so that more households can live in 
higher-income resource-rich communities. Commenters stated that the HCV 
program has traditionally been a tool to help minorities and lower 
income families move into housing areas not as concentrated with 
poverty, but with the funding cuts, barely perceptible increases in 
fair market rents (FMRs), and increased utility costs, rental units in 
deconcentrated areas are not even available or eligible because the 
rents are too high. The commenters stated that therefore the only areas 
in which a voucher holder can find housing are in the traditional areas 
in which they have always lived in. Commenters stated that, unless 
funding is restored and payment standards and FMRs are adjusted 
upwards, the HCV program cannot realistically be a vehicle for 
affirmatively furthering fair housing.
    HUD Response: HUD is cognizant of the constraints within which 
program participants must operate, in particular given the current 
budgetary environment.
    Comment: HCV ``hard units'' should not be the sole consideration in 
an assessment of fair housing. Commenters stated that given the growing 
predominance of HCV, ``hard units'' should not be the sole 
consideration for the AFH; rather consideration must include the full 
portfolio of a PHA's Federally-assisted units, vouchers, project-based 
vouchers (PBV), and RAD converted units (PBV or project-based rental 
assistance (PBRA)). Commenters stated that it is unclear if ``hard 
units'' means only public housing units, or if the term also covers 
PHA-owned units that have PBVs or PBRA (important after RAD 
conversions), or other PBV units in properties that the PHA does not 
own. Commenters stated that HUD should define ``hard units'' to include 
all PHA-owned units that have HUD-funded rental assistance, and all 
units, regardless of ownership, that have PHA-administered PBVs.
    HUD Response: HUD agrees that ``hard'' units, such as public 
housing units, PBVs, and PHA-administered PBRA are not the sole 
consideration of an AFH, and notes that Section 8 HCVs will also be 
addressed in a program participant's AFH. Greater specificity on 
different program types will be addressed in the Assessment Tool, 
rather than in the regulatory text.
    Comment: HCV program conflicts with duty to affirmatively further 
fair housing as presented in HUD's rule. Commenters asked, given that 
the HCV program presents a choice of housing location to voucher 
holders, whether HUD expects PHAs to impose restrictions that limit 
locational choice in order to affirmatively further fair housing. 
Commenters stated that, while PHAs can and do make efforts to recruit 
participating landlords in diverse areas and inform voucher holders 
about housing opportunities in low-minority areas, ultimately, voucher 
holders may make their own housing choices based on a number of 
different considerations, including proximity to existing family and 
social networks, employment opportunities, and religious institutions; 
access to public services, including public transit; and landlord 
willingness to participate in the program. Commenters stated that 
families may choose to live in areas of concentrated poverty even when 
other choices exist.
    Commenters stated that one of the goals of AFH is not to steer 
applicants to low-income areas, but that, given that funding resources 
are at a historical low and trends are still set for that to continue, 
a PHA would be in direct conflict with that intent. Commenters stated 
that increasingly public housing programs are developing new housing 
units in low-income areas due to lower costs associated with 
construction there, and PHAs that have difficulty meeting housing 
assistance payment obligations for the HCV program are being instructed 
by HUD to discontinue allowing their participants to move to higher 
cost areas to mitigate their shortfall. Commenters stated that given 
the continued downward trend of funding for PHAs, this instruction 
places PHAs in direct conflict with the duty to affirmatively further 
fair housing as provided in HUD's rule.
    Other commenters stated that not all cities have high poverty, high 
minority, and poor performing schools located in the same areas, and 
that, in many communities, some of the best schools are in low-income 
areas, and this occurs as a result of magnet and charter schools 
choosing to locate in these areas. The commenters stated that PHAs can 
encourage voucher holders to consider non-minority areas of the city 
but cannot force or steer them to these areas. Commenters further 
stated that it is problematic to pay higher rents only in non-minority 
neighborhoods as a means of encouraging minorities to live in non-

[[Page 42308]]

minority areas, and, to do so, brings up the concern that minority 
landlords that own units in minority areas would believe they were 
being discriminated against by lower rent payments.
    HUD Response: HUD disagrees with the commenters' statement that the 
HCV program conflicts with the duty to affirmatively further fair 
housing. HCV participants can choose any housing that meets the 
requirements of decent, safe, and affordable housing in the private 
market. Most HCV programs are administered locally by PHAs, which must 
comply with fair housing and civil rights laws. This rule does not 
impose restrictions that limit participant choice in the HCV program. 
The question is whether there are impediments in the locality that 
limit housing choice; for example, the lack of affordable housing in 
diverse neighborhoods, the lack of information about housing 
opportunities in more affluent or diverse neighborhoods, racial 
steering, and misconceptions about the type of housing appropriate to 
persons with disabilities. The HCV program already operates under 
requirements that reinforce housing choice. For example, during a 
voucher recipient's briefing, if the client is living in a high-poverty 
census tract in the PHA's jurisdiction, the briefing already must 
explain the advantages of moving to an area that does not have a high 
concentration of poor families. In addition, under the SEMAP, the PHA 
is scored on the following factors if it is in a metropolitan fair 
market rent area: whether the PHA has adopted and implemented a written 
policy to encourage participation by owners of units located outside 
areas of poverty or minority concentration; whether it informs voucher 
holders of the full range of areas where they may lease units both 
inside and outside the PHA's jurisdiction; and whether it supplies a 
list of landlords or other parties who are willing to lease units 
including units outside areas of poverty or minority concentration.
    Comment: Require PHAs to demonstrate efforts to enable families to 
move to new jurisdictions who seek to move. Commenters stated that it 
is especially critical that PHAs and other entities that administer 
HCVs be required to demonstrate that they are making efforts to assist 
those voucher holders who seek to move to communities of higher 
opportunity and to remove barriers, such as onerous portability 
requirements, that impede use of vouchers to obtain housing 
opportunities outside of the jurisdictional boundaries of the PHA. 
Commenters stated that unless such demonstration is required of PHAs, 
the HCV program will not live up to its objective of promoting 
integration and mobility and, instead, will reinforce prevailing 
patterns of racial segregation.
    Other commenters recommended that HUD designate regional housing 
choice voucher initiatives as a recognized activity for fair housing 
opportunity. Commenters recommended HUD could improve the HCV program 
to better facilitate movement of people by supporting mobility programs 
and by changing FMRs and payment standards to improve access to areas 
that are not RCAPs and are already high in community assets such as 
quality schools.
    HUD Response: As stated in response to the preceding comment, PHAs 
administering HCVs will continue to be subject to fair housing and 
civil rights laws. In addition, PHAs may consider implementing success 
rate payment standards if less than 75 percent of voucher recipients 
can find housing within the term of their voucher. PHAs can also 
consider exception payment standards for a portion of the fair market 
rent area to increase housing opportunities. More generally, this final 
rule aligns the PHA Plan and consolidated plan development process for 
the furtherance of goals specified in the AFH. This final rule creates 
a structure for PHAs to cooperate fully with their local jurisdiction 
toward this purpose.
    In addition, this rule provides PHAs the option to cooperate with 
each other in the creation of an AFH, allowing PHAs to develop a 
coordinated approach to address fair housing issues. Such an approach 
could help to expand mobility through the creation of cooperation, 
agreements, memorandums of understanding (MOUs), consortia, or other 
tools to take regional approaches to HCV mobility policies.
    Comment: It is not clear how the rule applies to voucher-only PHAs 
and small PHAs. Commenters stated that the rule is too vague regarding 
what requirements will be made for voucher-only PHAs, and also of small 
PHAs. Commenters stated that Sec.  903.2 (now Sec.  903.15) of the 
proposed rule describes a PHA's burden to affirmatively further fair 
housing through its ``development related activities,'' but it is 
unclear whether or how the rule applies to voucher-only PHAs. 
Commenters stated that, considering the constrained fiscal environment 
in which PHAs are operating and the lack of fee income generated by 
voucher only PHAs, HUD should consider limiting the rule's 
applicability to PHAs with development programs. Commenters asked how 
HUD expects voucher only PHAs to have their tenants de-concentrate when 
tenants choose where to live.
    Other commenters stated that in Sec.  91.110 HUD omits references 
to the HCV program in several places without any apparent reason. 
Commenters stated that they assume this was a mistake. Commenters 
stated that HUD should: insert ``or the Housing Choice Voucher 
program'' at the end of the first parenthetical in paragraph (a); 
insert ``or the Housing Choice Voucher program'' after the first 
reference to ``public housing'' in paragraph (a)(1); and change ``PHA's 
program'' to ``PHA's programs'' in paragraph (a)(1) near the bottom of 
78 FR 43736.
    Other commenters stated that it is important for HUD to clarify in 
the final rule that the affirmatively furthering fair housing 
obligations and certifications apply to the HCV Administrative Plan and 
all PHA planning documents, including the Moving to Work Plans for 
those PHAs that have been selected for the Moving to Work program. 
Commenters stated that these documents specify key PHA policies that 
affect efforts to expand housing choice within their jurisdiction and 
throughout the regional housing market in which they are located.
    Commenters stated that past actions, such as setting higher payment 
standards in higher cost suburban locations are no longer feasible. 
Commenters stated that, in the event that HUD deems the rule is 
applicable to voucher-only PHAs, the commenters requested guidance 
regarding what steps such PHAs can take to affirmatively expand housing 
opportunities. Other commenters requested that HUD add an explicit 
statement in the final rule that defines a PHA's undertaking of 
recruitment activities to encourage participation by landlords in low-
poverty, low-minority areas within the PHA's jurisdiction as meeting 
its duty to affirmatively further fair housing.
    HUD Response: HUD appreciates the recommendations made by the 
commenters but specifying which HUD programs in which PHAs are covered 
by the duty to affirmatively further fair housing is unnecessary. The 
duty to affirmatively further fair housing and the requirement to 
conduct an AFH applies to all PHAs, regardless of the HUD program or 
initiative in which they are participating. Therefore HCV-only PHAs 
must submit an accepted AFH and include goals to affirmatively further 
fair housing in their planning processes. With respect to the 
commenter's reference to development activities in Sec.  903.2 of the 
proposed rule and HCV-only PHAs, HUD notes that

[[Page 42309]]

the section under the proposed rule and Sec.  903.15 of this final rule 
makes reference to both operational and development activities. 
However, HUD has also clarified strategies and actions that a PHA may 
take in Sec.  5.154 of this rule, and those include both mobility-based 
options that may be more applicable to HCV-only agencies, as well as 
place-based solutions that may have more applicability to public 
housing only agencies.
13. Local Control and Zoning
    Comment: HUD's rule is an effort to impede local control on zoning. 
Commenters stated that HUD's rule opens the door for the Federal 
government to determine zoning, rents, placement of infrastructure and 
other services over the local government, and that the Federal 
government is ill-suited to determine best practices for the thousands 
of diverse localities across the nation. Commenters stated that HUD's 
rule will subvert private property laws and limit if not eliminate any 
or all future suburban development. Commenters stated that land use 
control belongs with local governments, not the Federal government, and 
that housing and development actions cannot be accommodated through 
Federal mandates.
    Commenters stated that through this rule HUD is furthering the idea 
that there is housing discrimination and unfairness toward those who 
are not financially able to afford living in a more affluent 
neighborhood and that a Federal agency can now impose a rule on local 
municipalities and counties that they must not only zone for and build 
affordable housing, but that HUD actually has the authority to make 
land use decisions on behalf of the municipality. Commenters stated 
that great care must be used to avoid unintended negative consequences, 
and that the worthy objective of HUD's rule could be upset by the costs 
of compliance especially by medium-sized and smaller municipalities and 
by the potential fear of having HUD personnel in Washington supplant 
their knowledge in thousands of jurisdictions around the country.
    Commenters stated that while HUD advises that it is not prescribing 
specific actions or solutions, the rule has the potential to greatly 
influence local decisions by issuing guidance that becomes akin to 
regulations. Commenters stated that clearly, one-size-fits-all 
solutions should not be suggested or imposed by HUD, and any guidance 
must clearly present pros and cons for different types of situations. 
Commenters stated that land use planning should be primarily the 
province of local units of government, and that housing activity is 
uniquely local and reflects the desire and aspirations of specific 
communities and the complex interaction of market forces at the local 
level. The commenters stated that a Federal regulation that potentially 
dictates the use of particular local planning tools and the location, 
place and form of development does not reflect local community or 
market circumstances and is not appropriate. The commenters stated that 
policies that work in one region may have serious unintended negative 
consequences in another, and that the United States is far too diverse 
demographically, historically, geographically and economically to 
successfully implement a ``one-size-fits-all'' program.
    HUD Response: HUD agrees that determinations about the goals, 
priorities, strategies, and actions that a community will take to 
affirmatively further fair housing should be made at the local level. 
This rule does not impose any land use decisions or zoning laws on any 
local government. Rather, the rule requires HUD program participants to 
perform an assessment of land use decisions and zoning to evaluate 
their possible impact on fair housing choice. This assessment must be 
consistent with fair housing and civil rights requirements, which do 
apply nondiscrimination requirements to the land use and zoning 
process. However, this rule does not change those existing requirements 
under fair housing and civil rights law. Instead, the purpose of this 
assessment is to enable HUD program participants to better fulfill 
their existing legal obligation to affirmatively further fair housing, 
in accordance with the Fair Housing Act and other civil rights laws.
    It is important to note, however, that, while zoning and land use 
are generally local matters as stated by the commenters, when local 
zoning or land use practices violate the Fair Housing Act or other 
Federal civil rights laws such as title VI of the Civil Rights Act, 
section 504 of the Rehabilitation Act, or the Americans with 
Disabilities Act, they become a Federal concern, as with any violation 
of Federal law that occurs at a local level. See, e.g., U.S. v. City of 
Black Jack, Missouri, 508 F.2d 1179, 1187-1188 (8th Cir. 1974), cert. 
denied, 422 U.S. 1042 (1975); U.S. v. Yonkers Board of Education, et 
al., 837 F.2d 1181 (2d. Cir. 1987), cert. denied, 486 U.S. 1055 (1988).
    Inclusion of zoning and land use is not intended to assume these 
issues will have such implications for most or many program 
participants. However, including zoning and land use for consideration 
is needed to gain an accurate overall picture of local housing and 
neighborhood issues, such as the availability of affordable rental 
housing in a diverse set of communities.
    HUD also agrees that ``one size fits all'' solutions should not be 
mandated by Federal regulation. HUD is not prescribing any ``one size 
fits all'' or specific solutions to fair housing issues that may exist 
in a given locality; rather, HUD requires that planning documents such 
as the consolidated plan--which, again, affects Federal funding--
consider the findings of the AFH. The manner in which this 
consideration is implemented, however, will, absent violations of 
Federal law and regulation, be up to the jurisdiction. Thus, the goals, 
priorities, strategies and actions that a community will take to 
fulfill its obligation to affirmatively further fair housing will be 
decided at the local level based on data and analysis from the AFH.
    It is true that the United States is demographically, historically, 
geographically, and economically diverse. This final rule takes this 
variation into account and provides flexibility for the broad diversity 
of types of HUD program participants. Further guidance will help 
program participants apply the rule to meet their specific needs and 
characteristics. There is also flexibility provided in how best to 
craft strategies and actions to meet local needs and challenges. 
Program participants still are required to follow applicable Federal 
laws, and in the case of Federal programs that provide funding for 
affordable housing and economic development, these include the legal 
obligation to affirmatively further fair housing under the Fair Housing 
Act.
    Rule change. HUD has added a ``strategies and actions'' provision 
in Sec.  5.154(d)(5).
    Comment: HUD's rule is based on the mistaken belief that zoning and 
discrimination are the same. Commenters stated that equating zoning 
with discrimination is wrong. Commenters stated that zoning laws 
restrict what can be built, not who lives there, and that just because 
a community uses zoning to limit high density housing does not make the 
community racist. Commenters stated that it has been proven over and 
over again in cities that high density housing stretches municipalities 
and school systems beyond their limited resources. Commenters stated 
that zoning laws are geared to provide for the safety, security, peace, 
tranquility, enjoyment, and preservation of the property values

[[Page 42310]]

of both existing and future individual and commercial property owners, 
the latter of which also includes an investor's ability to generate an 
acceptable rate of return or cost of capital.
    Commenters stated that developers choose where they will purchase, 
develop, and build based upon the existing zoning laws that have been 
put in place, in most cases years in advance of any development, as 
part of that community's long term planning and development process, 
and that amendments and modifications to such zoning laws are reviewed 
and approved by a city planning commission or zoning review board 
including public comment, and they are ultimately ratified by the local 
city council.
    Commenters stated that data can be manipulated and interpreted 
improperly to further social engineering motives, and that HUD's data 
does not show and cannot prove that zoning laws are solely responsible 
for any perceived racism.
    In contrast to these commenters, other commenters stated that HUD's 
rule should assure that State, regional, and local government entities 
are focused on strengthening their local land use and zoning policies 
so that they encourage affordable housing development in areas of 
opportunity and that they increase the availability of land for the 
development of low and moderate income housing. Commenters stated that, 
in addition to zoning, there are many local policies that often create 
significant impediments, including stringent design, parking and 
setback requirements and excessive fees for utilities, parks, storm 
water, etc. Commenters stated that to counteract these types of local 
barriers, broader regional policies should be implemented and enforced, 
and that communities should also reduce or waive these fees for 
affordable units as a means of addressing impediments.
    Other commenters stated that there can be affordable housing and 
good zoning, and urged HUD to not adopt regulations that can be used 
against communities that are equally concerned about the environment, 
loss of green space, flooding, clean water, wetlands and natural 
beauty, which are things that all people, including those in lower 
income brackets, need.
    HUD Response: The issue of including zoning and land use as factors 
for consideration in the AFH was addressed in response to the preceding 
comment. As to the comment that data can be manipulated to further 
social engineering, it is the program participants themselves, which 
include State and local governments, that will analyze the data and 
produce the AFH, and program participants may include any statistically 
valid local data that they can obtain and believe relevant to the AFH. 
The AFH will help inform future planning related to the use of Federal 
funding and other funding for housing and economic development. This 
final rule, and Assessment Tools and guidance to be issued, will assist 
recipients of Federal funding to use that funding and, if necessary, 
adjust their land use and zoning laws in accordance with their existing 
legal obligation to affirmatively further fair housing. The approaches 
that can be taken to accomplish this are varied and not specifically 
prescribed by this rule. This rule, in accordance with existing law, 
simply requires an assessment, based on data, of effects on the 
availability of affordable housing, and does not overturn any local 
decisionmaking process.
    Comment: Provide examples of zoning laws that are barriers to fair 
housing. Commenters stated that it would be helpful if HUD would give 
specific examples of codes or regulations and specific standards that 
HUD considers to further fair housing or that HUD considers to present 
barriers to fair housing. Commenters stated that some may see a zoning 
law as a barrier to affordable housing and others as an affirmative act 
to prevent displacement of low-income and minority households.
    HUD Response: Zoning and land use laws that are barriers to fair 
housing choice and access to opportunity can be quite varied and often 
depend on the factual circumstances in specific cases, including zoning 
and land use laws that were intended to limit affordable housing in 
certain areas in order to restrict access by low-income minorities or 
persons with disabilities. Examples of egregious zoning actions that 
were found to violate the Fair Housing Act can be found going back to 
the zoning ordinance at issue in U.S. v. City of Black Jack, 508 F.2d 
1179 (1974). An example of a positive zoning action that would further 
fair housing would be the removal of such an ordinance. HUD will 
include additional examples in its guidance for its affirmatively 
furthering fair housing regulations.
14. Standards for Review
    Comment: Final rule should designate HUD offices with 
responsibility of review of AFHs. Many commenters requested that the 
final rule designate HUD's Office of Fair Housing and Equal Opportunity 
(FHEO) as the lead authority regarding AFH review and acceptance, and 
certification that a participant is affirmatively furthering fair 
housing and that FHEO be provided sufficient resources to carry out 
this new responsibility. The commenters stated that designation of FHEO 
as the lead reviewing office would maintain consistency and preserve 
institutional knowledge among reviewers even as administrations change.
    Other commenters recommended that the rule designate HUD's Office 
of Community Planning and Development (CPD) as HUD to review and 
approve the AFH for participants in HUD's CDBG, HOME, ESG, and HOPWA 
programs because these programs fall under CPD's jurisdiction.
    Other commenters recommended that the final rule explicitly state 
that HUD's Office of Public and Indian Housing (PIH), CPD, and FHEO all 
be designated with equal authority to review AFHs.
    Other commenters recommended that HUD regional and field offices be 
required to review the AFHs of program participants in their 
jurisdictions to alleviate any problem of inadequate HUD staffing at 
HUD Headquarters.
    Other commenters recommended that HUD establish ``Fair Housing 
Review Councils'' to review AFHs, review complaints, and recommend 
remedies to HUD, with a cross-section of HUD agency officials providing 
consistent guidance, based on the model that HUD's Office of 
Sustainable Housing and Communities (now HUD's Office of Economic 
Resilience) undertook in reviewing applications for grants under HUD's 
Sustainable Communities Initiative (SCI). Commenters stated that, under 
this model, the following HUD offices, OSHC, CPD, FHEO, and PIH, along 
with Federal colleagues from the Federal Highway Administration of the 
U.S. Department of Transportation, and the Environmental Justice 
Division of the Environmental Protection Agency all jointly reviewed 
applications, alongside of experts from the field. Commenters stated 
that, alternatively the council could be comprised of candidates who 
apply for membership on the council and who have qualifying credentials 
that include demonstrated experience in housing law, policy, and/or 
finance; affordable housing development; asset-building, transportation 
equity, housing, community and economic development; civil rights, fair 
housing, educational equity, youth development; urban planning, public 
health/health equity, environmental justice, criminal justice reform 
with a representative mix from philanthropy, public sector, and the 
private sector.
    Another commenter stated that no matter who reviews AFHs that HUD

[[Page 42311]]

should ensure that AFHs are reviewed in a consistent and objective 
manner so that the outcome of the review is not dependent on the 
perspective of the individual reviewer or HUD office. Similar to this 
comment, another commenter recommended that the same set of HUD 
employees review all AFHs using clear and detailed standards of review.
    HUD Response: HUD appreciates the recommendations regarding who, 
within HUD or outside of HUD, should review AFHs. There is no need for 
HUD to specify in the final rule which offices will review AFHs and HUD 
emphasizes that HUD's review of an AFH under Sec.  5.162 is a ``HUD'' 
review. However, since this rule provides that an AFH is a necessary 
and important component of the consolidated plan and PHA planning 
processes, HUD can assure program participants that the review of AFHs 
will be a collaborative process among FHEO, CPD, PIH, the Office of 
General Counsel, and their respective staff in their regional and field 
offices, and other HUD staff that HUD may determine should be involved 
in review of AFHs.
    HUD also understands concerns about variations in outcomes of 
review of AFHs as a result of different reviewers, but HUD also assures 
that all reviewers of AFHs will perform their reviews under clear and 
consistent evaluation standards. HUD also believes that program 
participants' use of an Assessment Tool to create their AFH will help 
to ensure that AFHs are developed consistently and will facilitate 
objective, consistent reviews.
    Comment: Review of an AFH should not precede review of the 
consolidated plan or PHA Plan, but should occur simultaneously. 
Commenters stated that review of AFH should not precede review of the 
consolidated Plan but should occur at the same time. Commenters 
expressed that this approach would only delay funding to program 
participants.
    HUD Response: The responsibility to affirmatively further fair 
housing is such an important responsibility placed on HUD and its 
program participants by the Fair Housing Act that HUD concluded, 
particularly in light of the criticism of the former AI process, that 
to fulfill this statutory obligation as intended, the AFH should 
commence prior to submission of a program participant's consolidated 
plan or PHA Plan, as applicable. As HUD stated in its proposed rule, it 
is also important that the AFH be informed by meaningful community 
participation. The community participation and consultation 
requirements that HUD has established in Sec.  5.158 provide for 
reasonable opportunities for the public to be involved in the 
development of the AFH prior to its incorporation into the consolidated 
plan or PHA Plan. This prior involvement should facilitate HUD's review 
of the AFH. The involvement should also facilitate review of the 
consolidated plan and/or PHA Plan, or any plan incorporated therein, 
since the affected communities would have already had the opportunity 
to review and comment on the AFH, HUD will have the opportunity to 
identify any deficiencies in the AFH, and the program participant will 
have the opportunity to correct any deficiencies, prior to 
incorporation of the AFH into the consolidated plan or PHA Plan, such 
that funding to program participants will not be delayed.
    Comment: HUD's review and acceptance of AFH is vague and does not 
specify how HUD will evaluate the AFH. Commenters stated that the rule 
lacked necessary details on how an AFH is to be reviewed and accepted 
or not accepted by HUD. Commenters stated that the rule suffers from 
overwhelming vagueness in terms of expected actions and outcomes that 
leaves program participants exposed to extreme risks and litigation 
challenges. Commenters stated that the proposed rule does not provide 
specific details on how HUD will evaluate the effects of the AFH, which 
was one of GAO's primary criticisms of the AI process. Commenters 
stated that the rule is particularly not clear with respect to HUD's 
non-acceptance of an AFH that is ``materially inconsistent with the 
data and other evidence available to the jurisdiction'' or 
``substantially incomplete,'' and without clarity as to the meaning of 
these terms, the AFHs of program participants are subject to rejection 
and program participants are vulnerable to litigation. Commenters 
stated that ``materially inconsistent'' in particular would subject 
program participants to arbitrary decisions by HUD or to litigation by 
third parties. Commenters stated that HUD should define these terms or 
eliminate them from the regulatory text. Other commenters stated that 
the rule should provide more examples of what these terms mean. Other 
commenters stated that only substantial incompleteness should be a 
basis for rejection of an AFH and not inconsistency with fair housing 
and civil rights laws.
    Other commenters asked for the rule to be clear on the impact if a 
portion of an AFH is not acceptable.
    HUD Response: HUD understands commenters' concerns about the 
standards of review provision in the rule. It was not HUD's intention 
to be vague, but it was also not HUD's intention to be overly 
prescriptive as to the standards by which HUD will evaluate and 
determine whether to accept an AFH. HUD recognizes that the content of 
a program participant's AFH depends on local conditions and local laws, 
and very prescriptive standards may interfere with the local assessment 
and planning that a program participant must undertake.
    As HUD stated in the proposed rule, this final rule will be 
supported by HUD with technical assistance and examples that will help 
guide program participants as to what it means to have an AFH that is 
substantially incomplete or one that is inconsistent with fair housing 
or civil rights laws. However, in the regulatory text, HUD has included 
two examples for each of these categories.
    The reference to acceptance or nonacceptance of a portion of an AFH 
in the proposed rule was directed to program participants submitting 
collaborative AFHs; that is, a joint AFH or Regional AFH. HUD has 
revised the language in Sec.  5.162 to clarify how nonacceptance of a 
joint or regional AFH may occur. An AFH as a whole will either be 
accepted, or not accepted with respect to an individual program 
participant. This means that if a portion of a program participant's 
AFH, such as the analysis of a key issue, not accepted then the entire 
AFH for that program participant is not accepted. In addition, HUD's 
determination not to accept an AFH with respect to one program 
participant does not necessarily affect the acceptance of the AFH with 
respect to another program participant in the case of a joint or 
regional AFH.
    Rule change. In this final rule, HUD revises Sec.  5.162 to state 
that HUD will provide written notification to the program participant 
or participants (where a regional AFH is submitted) of HUD's 
nonacceptance of the AFH (either to one or more program participants or 
all when a regional AFH is submitted) and the written notification will 
specify the reasons why the AFH was not accepted and will provide 
guidance on how the AFH should be revised in order to be accepted.
    Comment: HUD should review an AFH holistically and not reject an 
AFH for a single concern or withhold funds. Commenters stated that HUD 
should review an AFH holistically and that a single deficiency should 
not be the basis for a negative determination. Commenters recommended 
that the final rule should provide that: (1) An unsatisfactory ``AFH 
plan'' will not be

[[Page 42312]]

the sole cause for suspension of funds, but there must also be a 
problem in AFH implementation such as a sustained pattern of fair 
housing violations; (2) only funds directly involved in the fair 
housing violation may be suspended (e.g., distinguish effect on HOME, 
ESG, CDBG funds); and (3) HUD will offer an appeal process if HUD finds 
the AFH or its implementation unacceptable. Other comments asked that 
the rule provide information about the consequences and remedies if HUD 
finds an AFH substantially incomplete and that HUD clarify the 
consequences of submitting an unacceptable AFH after the initial 
resubmission.
    Commenters recommended that a program participant's funds be 
partially or wholly suspended when a resubmitted AFH is rejected and 
until an acceptable AFH is submitted. Other commenters recommended that 
HUD consider sanctions other than withholding a program participant's 
HUD funds if the participant is unwilling or unable to submit an 
acceptable AFH. The commenters stated that HUD funds properly spent 
create housing opportunities and that it is hard to see how withholding 
the resource necessary to create affordable housing improves the 
situation for a program participant that is not willing to create 
affordable housing choices for its residents. Commenters stated that, 
if local opposition to fair housing makes it difficult for local 
officials to submit an AFH that would be accepted by HUD, HUD should 
carefully consider remedies other than withholding HUD funds and thus 
rewarding those in the community opposed to affordable housing.
    HUD Response: HUD appreciates the recommendations made by the 
commenters but believes that the rule contains the right approach. With 
respect to concerns about violations of Fair Housing Act requirements, 
it is important to point out that the rule addresses the fair housing 
planning process, and the assessment of fair housing planning. This 
rule does not focus on actions taken by a program participant that may 
result in a violation of the Fair Housing Act, including a failure to 
affirmatively further fair housing, or other civil rights laws.
    With respect to funding, the current process for distribution of 
funding under the programs covered by this rule is that a program 
participant does not receive funding until its consolidated plan or PHA 
Plan, as applicable, is accepted by HUD. This final rule does not alter 
that process. The rule, however, does make an accepted AFH a required 
element of a consolidated plan or PHA Plan.
    As provided in the proposed rule and adopted in this final rule, if 
HUD identifies a deficiency in a program participant's AFH, HUD will 
notify the program participant and advise of the deficiency and how the 
program participant may address the deficiency so that HUD can accept 
the AFH. Because HUD will work with a program participant to produce an 
AFH that HUD will accept, HUD believes it is unlikely that a program 
participant will not produce an AFH that will be accepted by HUD. One 
of the significant changes that HUD committed to make under this AFH 
process is greater engagement by HUD and better guidance to program 
participants on how to fulfill their duty to affirmatively further fair 
housing.
    Comment: HUD should contact a program participant for discussion 
about any AFH deficiencies rather than reject the AFH. Commenters 
recommend that HUD should contact a program participant for discussion 
about deficiencies with an AFH rather than reject the AFH if it finds 
priorities or goals are materially inconsistent with evidence available 
to the program participant. Another commenter stated that HUD set forth 
potential reasons for rejecting an AFH and not pre-determine expected 
results of participants' assessments.
    HUD Response: The rule already provides for the practices that the 
commenters are requesting. HUD's initial nonacceptance of an AFH is not 
the end of the AFH review process. HUD will not only advise a program 
participant of deficiencies identified in the AFH but how these 
deficiencies may be overcome. HUD's review is not based on any 
predetermined expected results. Moreover, the rule does not restrict 
HUD from contacting a program participant to obtain information about 
an AFH if HUD believes it does not have adequate information to decide 
whether or not to accept an AFH.
15. Enforcement and Oversight
    Comment: HUD only needed to enforce the existing AI requirement. 
Commenters stated that HUD cites to the GAO report as one justification 
for its proposed rule, but stated that GAO recommended modest, 
incremental changes to HUD's oversight processes to address the 
substantial, systemic weaknesses identified by GAO. Commenters stated 
that HUD, rather than elect to address its own deficiencies and 
implement an effective means to oversee compliance of program 
participants with the duty to affirmatively further fair housing, 
proposed a radical revision to the definitions underpinning the duty to 
affirmatively further fair housing, and the processes used by some HUD 
program participants to determine methods for overcoming identified 
fair housing issues and their contributing factors. The commenters 
urged HUD to reconsider its approach to and attend to its own 
performance with regard to the duty to affirmatively furthering fair 
housing before expanding the policy reach of the Fair Housing Act. The 
commenters stated that an alternative approach would be to strengthen 
HUD's support for and oversight of effective implementation of the duty 
to affirmatively further fair housing, consistent with HUD's existing 
Fair Housing Planning Guide. Commenters stated that rather than going 
forward with a new approach, HUD could make sure program participants 
prepare current AIs that meet standards laid out in guidance such as 
HUD's Fair Housing Planning Guide.
    HUD Response: HUD considered various options for how to improve the 
affirmatively furthering fair housing process and determined that a 
comprehensive improvement of the AI process and clarification of 
requirements for both program participants as well as HUD is likely to 
lead to a more effective fair housing planning process. HUD believes 
that its provision of data to its program participants is an important 
component of improving fair housing planning, as is the community 
participation requirement, the Assessment Tool, and greater integration 
to the extent possible with the PHA planning and consolidated planning 
processes.
    Comment: HUD needs to specify the range of sanctions to be imposed 
on program participants for failure to affirmatively further fair 
housing. Commenters stated that the proposed rule was deficient 
regarding how HUD would enforce the rule's requirements. Commenters 
stated that the most significant areas needed for improvement of HUD's 
proposed rule relate to oversight and accountability. The commenters 
stated specifically that the proposed rule (1) fails to provide an 
effective mechanism for HUD to assess initial and ongoing compliance 
with the obligation, and (2) lacks a mechanism for individuals and 
communities aggrieved by violations of the rule to challenge those 
practices administratively. Commenters stated that while HUD has the 
power to withhold funds for lack of compliance, HUD needs to establish 
a process of ``progressive discipline'' to bring about

[[Page 42313]]

compliance before going to the extreme of withholding funds.
    Commenters stated that HUD needs to specify that it has a range of 
sanctions available to use for failure to affirmatively further fair 
housing, including something HUD has still not done (or at least not 
persuaded the Department of Justice to do), which is to bring a False 
Claims Act claim against jurisdictions that make false or fraudulent 
representations. The commenters stated that taking such action would 
hardly be unprecedented in the context of protecting the Federal 
government from fraud, stating that the Department of Health and Human 
Services, for example, has no problem bringing False Claims Act claims 
against those who defraud the Federal Government in connection with 
Medicaid. The commenters stated that it is equally important for HUD to 
build in a real auditing function, not unlike the Internal Revenue 
Service (IRS). The commenters stated that the effectiveness of the IRS 
has obviously varied greatly over time, but the underlying problem 
faced by the IRS is one well worth thinking about. Commenters stated 
that some taxpayers will meet their obligations because it would never 
occur to them not to, while others are committed to evading their 
obligations unless and until caught.
    Other commenters expressed concern that HUD did not propose to 
amend its existing regulations at Sec.  570.912 (nondiscrimination 
noncompliance) and Sec.  570.913 (other remedies noncompliance). These 
commenters stated that these regulations provide for a wide range of 
sanctions, including referral to the Attorney General for the 
commencement of an appropriate civil action, and while HUD's proposed 
rule references Sec.  570.601 (affirmatively furthering fair housing) 
Sec. Sec.  570.912 and 570.913 need to be amended to reference Sec.  
570.601 to reflect the applicability of these sanctions to the duty to 
affirmatively further fair housing.
    HUD Response: HUD understands the commenters' concerns regarding 
the absence of an enforcement provision in this final rule with respect 
to the duty to affirmatively further fair housing. This final rule, 
however, is a planning rule, not a rule directed to the enforcement of 
the duty to affirmatively further fair housing. As a planning 
mechanism, this rule provides for a review by HUD of the AFH to 
determine compliance with the standards set forth in Sec.  5.154, and 
for acceptance, or nonacceptance and resubmission (in the case of 
nonacceptance) of an AFH if the AFH fails to meet these standards. 
While HUD declines to include a provision in this planning rule that 
would specifically set out the process for enforcing the duty to 
affirmatively further fair housing, HUD notes that it already has the 
authority to enforce this statutory obligation and that HUD uses its 
existing Fair Housing Act, title VI of the Civil Rights Act, section 
504 of the Rehabilitation Act, and the Americans with Disabilities Act 
regulations and processes to accept complaints and conduct compliance 
reviews regarding the duty to affirmatively further fair housing. As 
provided in this final rule, HUD also may follow procedures set out in 
24 CFR parts 91 and 903 when it has information that a program 
participant's certification to affirmatively further fair housing may 
be invalid. HUD believes that it is unnecessary for the rule to reflect 
additional complaint receipt, investigation, compliance review, and 
enforcement procedures when such processes and authorities are already 
in existence under other regulations.
    Comment: HUD's rule needs to clearly address oversight and 
accountability following acceptance of an AFH. Commenters stated that 
once an AFH is accepted, there remains the need for oversight and 
meaningful enforcement. The commenters recommended that HUD require 
annual performance reports to document actions taken to address or 
mitigate each of the goals identified in the AFH, describe the results 
of those actions, and specify which fair housing issues were impacted 
and how they were impacted. Commenters stated that, in addition to the 
standard review process, and to ensure in-depth evaluation of AFHs, the 
final rule should provide for periodic audits by HUD of selected AFHs, 
and that, in the event that program participants have not met their 
substantive benchmarks, HUD require that these participants provide 
specific reasons for why these goals have not met and disclose how the 
participant is working to overcome any barriers to completion. 
Commenters stated that a formal complaint process for community 
stakeholders to object to the program participant's actions or 
certification that they are affirmatively furthering fair housing is 
critically important, and must be added.
    Other commenters stated that critical to effective enforcement of 
the AFH process is for HUD to: (1) Permit residents and the public to 
file complaints with HUD objecting to the AFH or to the failure to meet 
the duty to affirmatively further fair housing; and (2) establish an 
enforcement mechanism setting forth how complaints will be processed 
and what potential sanctions may result from violations. Commenters 
stated that, while the rule places great emphasis on, and significantly 
strengthens, public and community participation in the AFH process, the 
rule inexplicably includes no provisions that set forth the right of 
community members to complain about compliance with the duty to 
affirmatively further fair housing or the enforcement mechanism to be 
used in processing such a complaint. The commenters stated that this 
was especially disappointing because in recent years HUD has developed 
an internal process for accepting third party complaints alleging 
violations of the duty to affirmatively further fair housing that 
details how to handle and investigate such complaints. The commenters 
stated that, through the process developed for these matters, HUD 
accepted and investigated complaints of non-compliance with the 
affirmatively furthering fair housing requirement and established a 
uniform enforcement mechanism for ensuring compliance with the duty to 
affirmatively further fair housing.
    Commenters stated that, based on the proposed rule, program 
participants are their own monitors, and that is the case under the 
current AI system--program participants essentially operate in a system 
of voluntary compliance with their duty to affirmatively further fair 
housing and that HUD's rule does nothing to change this system by not 
including concrete enforcement mechanisms in the rule. The commenters 
stated that transparent enforcement and true accountability is 
paramount to successful rules and regulations.
    HUD Response: In response to earlier comments, HUD has already 
advised that it declines to add to performance review and monitoring 
that are already in place under consolidation plan and applicable 
public housing and Section 8 regulations. In addition, as noted in the 
response to the preceding comment, this rule is a planning rule and not 
a rule directed to the enforcement of the duty to affirmatively further 
fair housing. Procedures to receive and investigate complaints, conduct 
compliance reviews, challenge AFFH certifications, and obtain 
compliance are already available to HUD under regulations implementing 
the Fair Housing Act and other civil rights statutes.
    Comment: Do not establish a public complaint or contestation of an 
AFH. In contrast to the above commenters, other commenters stated that 
they are aware of some stakeholders and advocates who are asking that 
HUD include a process for public complaints or contestation of

[[Page 42314]]

an AFH and the fair housing goals derived from that assessment, and 
that HUD provide interested members of the public with standing for 
individual actions concerning AFHs and fair housing goals. The 
commenters stated that they are strongly opposed to both of these 
possibilities. The commenters stated that recent decisions surrounding 
fair housing litigation have demonstrated the imagination and 
persistence of fair housing litigants, and that there are ample tools 
available for fair housing litigation without any additional grounds 
being created.
    HUD Response: The AFH process contains opportunities for public 
involvement in the AFH process, which are provided in Sec. Sec.  5.158, 
91.105, 91.115, 91.401, 903.17, and 903.19. HUD anticipates that 
participation in the process will reduce complaints regarding the 
results. Furthermore, any aggrieved person can file a complaint with 
HUD regarding any fair housing-related matters, including an AFH. Since 
such complaint process already exists, HUD declines to include 
additional complaint provisions in the rule.
    Comment: The new AFH process will not reduce litigation. Commenters 
stated that HUD repeatedly advised in the proposed rule that one of the 
goals of the new AFH process is to ``reduce the risk of litigation for 
program participants.'' The commenters expressed concern that the rule 
will increase litigation due to a lack of specificity as to what is 
expected of program participants, and as program participants pursue 
competing goals set by HUD. The commenters asked HUD to provide program 
participants with protection from litigation based on their compliance 
with the policies and procedures of the AFH rule.
    HUD Response: One way in which this final rule is intended to help 
reduce the risk of litigation is by providing more specificity compared 
to the AI process that the AFH approach replaces. By creating an 
Assessment Tool that will allow program participants to identify 
housing segregation, disproportionate housing needs, and the 
contributing factors that affect fair housing choice and access to 
opportunity, program participants will better be able to direct their 
Federal and other resources and make other decisions relating to 
housing and community development in ways that fulfill their civil 
rights obligations, thus reducing the potential for liability. Public 
participation in the AFH process may also reduce the need to seek 
recourse in courts. Regarding protection from litigation, HUD cannot by 
regulation either grant or foreclose legal jurisdiction over particular 
claims in courts.
16. Procedural Issues
a. Period of Review of an AFH
    Comment: The 60-day review period is too brief given the volume of 
AFHs to be reviewed and HUD's limited staff, and will result in an 
incomplete review. Many commenters expressed the concern that the 60-
day review period is too brief for HUD to undertake a thorough review 
of AFHs. Commenters stated that HUD has limited staff and there will be 
times when HUD will receive many AFHs at once making it difficult for 
HUD to give all the AFHs the thorough and critical review that is 
needed, and consequently some AFHs may be deemed accepted based on an 
incomplete review.
    Several commenters recommended that HUD phase-in initial AFH 
submission dates so that limited staff resources can provide the 
highest level of review for all AFHs and ensure that most AFHs will be 
reviewed within two years after the effective date of the regulation.
    Several commenters recommended that, to avoid such a consequence, 
the rule should provide for a longer review period by HUD, such as 90 
days or 120 days. The commenters submitted that 60 days is too brief a 
period to provide any meaningful review of the AFH and the likely 
result will be as ineffective a review process as the current AIs and 
consolidated planning review process.
    Other commenters suggested that for any AFH that did not undergo a 
thorough review but HUD deems accepted the acceptance should be valid 
for only a one-year period.
    Other commenters stated that the final rule must provide a backstop 
to prevent acceptance of inadequate AFHs.
    HUD Response: In developing the proposed rule, HUD gave careful 
consideration to the period of time that HUD staff would need to 
properly review and evaluate AFHs and HUD determined that a 60-day 
period presented a reasonable period for HUD staff to review and 
determine whether to accept or not accept an AFH. In settling on a 60-
day period, HUD considered that the AFH Assessment Tool would not only 
provide a streamlined format making it easier for program participants 
to submit an AFH, but also make it easier for HUD staff to review an 
AFH.
    HUD points out that its review of an AFH does not end with the 60-
day review period and HUD's possible acceptance of an AFH. HUD's review 
of strategies and actions to affirmatively further fair housing 
continues with HUD's review of a consolidated plan or PHA Plan. As 
stated in the proposed rule, ``an accepted AFH and completion of 
corresponding requirements related to affirmatively furthering fair 
housing in the consolidated plan and PHA Plan will be required for HUD 
to approve those respective plans.'' (See 78 FR 43715.)
    However, HUD believes that a staggered submission deadline, as 
recommended by many commenters, would be helpful not only to HUD but to 
program participants, and the final rule adopts a staggered submission 
approach.
    Rule change. In this final rule, HUD revises Sec.  5.160 
(Submission Requirements) to provide for a staggered submission 
deadline for AFHs. Entitlement jurisdictions that receive an FY 2015 
CDBG grant of more than $500,000, and PHAs joining in submission with 
such entitlement jurisdictions will be the first program participants 
to submit their first AFH. States, Insular Areas, PHAs, and entitlement 
jurisdictions receiving an FY 2015 CDBG grant that is $500,000 or less 
will have a later first AFH submission deadline.
b. Approval Versus Acceptance of an AFH
    Comment: HUD should approve an AFH, not simply accept. Commenters 
requested that there should be an active approval by HUD, not solely an 
acceptance of an AFH, and that HUD should allow sufficient time for 
review to be able to approve an AFH. Another commenter stated that, in 
spite of HUD disclaimers to the contrary, HUD's deemed acceptance of an 
AFH creates the impression of a ``safe harbor'' for jurisdictions that 
may be violating the Fair Housing Act on an ongoing basis. The 
commenter recommended that the deemed accepted provision be removed, 
and replaced with an audit-type review.
    Commenters recommended that if HUD cannot perform a thorough review 
of any one AFH within the time period for AFH review, HUD should 
designate the AFH as un-reviewed, and not deem it accepted. In a 
similar vein, other commenters stated that HUD should eliminate the 
characterization of ``deemed accepted'' for AFHs that were not 
reviewed. The commenters stated that HUD must make an affirmative 
determination of AFH compliance, rather than allowing for acceptance by 
default.
    Another commenter suggested that HUD not automatically deem 
accepted any AFH that HUD has not had the time

[[Page 42315]]

to thoroughly review unless the program participant submits evidence 
that demonstrates its AFH is affirmatively supported by a broad cross 
section of stakeholders representing each of the protected classes, and 
is not subject to any significant challenges. Other commenters 
recommended that HUD not review each and every AFH but undertake a 
sample of AFHs and the sample reviewed would be based on fair housing 
complaints directed to a particular program participant.
    HUD Response: HUD believes that the final rule achieves the 
appropriate balance of interests by requiring program participants to 
submit AFHs to HUD for review and acceptance rather than requiring AFHs 
to be approved by HUD. Program participants have asked for flexibility 
in determining their goals, priorities, strategies, and actions to 
affirmatively further fair housing at the local level, and the rule 
provides this flexibility. However, HUD believes it would be 
inappropriate to create the perception of a safe harbor or limit a 
private right of action under the Fair Housing Act based on an 
``approval'' of an AFH. For this reason, HUD has decided to limit its 
review to acceptance or nonacceptance. HUD understands the concerns of 
commenters about the ``deemed accepted'' provision, but HUD believes 
the time allotted for review of AFHs, coupled with the adoption of a 
staggered AFH submission approach, is sufficient.
c. Appeal of HUD's Acceptance of an AFH
    Comment: The final rule should provide a right to appeal HUD's 
acceptance of an AFH. Many commenters asked that HUD establish a 
mechanism that enables advocates to appeal a HUD decision to ``accept'' 
an AFH. Commenters stated that such appeal would then trigger an 
immediate in-depth review by HUD of an AFH. Some commenters recommended 
that HUD provide for public comment on the AFH during HUD's review of 
the AFH. Commenters recommended that members of a community be allowed 
to file a complaint at any time, and that the final rule outline the 
specific process involved for filing a complaint, and provide that HUD 
respond to all complaints, in writing, within 90 days.
    Other commenters stated that allowing a complaint to be filed will 
add additional layers of burden to the AFH process and might be easily 
abused. Commenters stated that the requirements for public 
participation in the AFH process and those involved in the consolidated 
and PHA Plans provide ample opportunities for the public to register 
their concerns. Commenters stated that any further appeal or complaint 
process for members of the public will unreasonably delay 
implementation of plans and recommends that HUD reject proposals to 
create a private right of action or any further appeal or complaint 
processes in the proposed rule.
    Commenters recommended that if HUD adds an appeal process that the 
grounds for an appeal be narrowly defined and the burden of proof 
placed on the party challenging the AFH. Other commenters suggested 
that the final rule provide a process by which interested members of 
the public can file a challenge with HUD in cases where they believe 
that a participant has failed to meet the requirements of the 
regulation or failed to meet its obligation to affirmatively further 
fair housing. Commenters stated that such a challenge should trigger 
HUD's reconsideration of the AFH that was submitted, in light of the 
information provided by the party bringing the challenge.
    Other commenters stated that HUD should reject recommendations by 
commenters to create a private right of action for a deficient AFH.
    HUD Response: HUD believes that establishing a new appeal process 
specifically regarding HUD's decision to accept an AFH is unnecessary 
given that HUD maintains a complaint process for any fair housing 
matter. Further, HUD's requirement of robust community participation in 
the development of an AFH will create a forum for the public to seek 
changes. This complements and in no way diminishes the current 
complaint review process. The final rule provides at Sec.  5.158, as 
did the proposed rule, that to ensure that the AFH is informed by 
meaningful community participation, program participants must give the 
public reasonable opportunities for involvement in the development of 
the AFH and in the incorporation of the AFH into the consolidated plan, 
PHA Plan, and other planning documents, as may be applicable. This 
section further provides that the consolidated plan program participant 
must follow the policies and procedures described in its applicable 
citizen participation plan adopted pursuant to 24 CFR part 91 (see 
Sec. Sec.  91.105, 91.115, and 91.401) in the process of developing the 
AFH, obtaining community feedback, and addressing complaints. The 
jurisdiction must consult with the agencies and organizations 
identified in consultation requirements at 24 CFR part 91 (see 
Sec. Sec.  91.100, 91.110, and 91.235). For PHA Plans, this section 
provides that PHAs must follow the policies and procedures described in 
Sec. Sec.  903.13, 903.15, 903.17, and 903.19 in the process of 
developing the AFH, obtaining community feedback and addressing 
complaints.
    The processes, both for the consolidated plan and the PHA Plan, 
require the program participant to provide a summary of the public 
comments and a summary of the comments or views not accepted and the 
reasons that they were not accepted. By applying the longstanding 
citizen participation requirements of the consolidated plan and the PHA 
Plan to the AFH, which were not applied to the AI, HUD submits that any 
serious deficiencies that may be in a proposed AFH or other concerns 
that members of the public may have about an AFH will be addressed in 
the citizen participation processes. For these reasons, HUD's final 
rule does not need to provide another public comment period during the 
HUD review of AFHs.
    With respect to filing a complaint that a program participant has 
failed to meet the requirements of the regulations or failed to meet 
its obligation to affirmatively further fair housing, nothing in the 
proposed rule or in this final rule prohibits a member of the public 
from notifying or filing a complaint with HUD that a program 
participant has violated a statutory or regulatory requirement, whether 
such requirement is the duty to affirmatively further fair housing or 
another program requirement. As noted earlier in this preamble, HUD has 
existing procedures under the Fair Housing Act and other civil rights 
statutes to handle such complaints, including complaints that question 
a program participant's AFH.
d. Distinguishing AFH Planning From Affirmatively Furthering Fair 
Housing
    Comment: Clarify the relationship of an acceptance of an AFH to the 
duty to affirmatively further fair housing. Commenters stated that 
acceptance of an AFH should mean that HUD has determined that a program 
participant has complied with its obligation to affirmatively further 
fair housing under the Fair Housing Act; has complied with other 
provisions of the Act, and has complied with other civil rights laws, 
regulations or guidance. According to a commenter, if HUD is not 
willing to indemnify a program participant based on HUD's acceptance of 
the participant's AFH, HUD should include in the final rule a list of 
safe harbor criteria and guidance for compliance and noncompliance. 
Commenters further stated that the purpose of preparing the AFH and 
submitting it to HUD for review and approval, and the program 
participant's good faith efforts

[[Page 42316]]

in addressing its fair housing goals, should mean that the jurisdiction 
has complied with its legal obligation to affirmatively further fair 
housing. Commenters stated that program participants that comply with 
the standards of HUD's regulation must be provided with a safe harbor 
from litigation.
    In contrast to these commenters, other commenters stated that the 
final rule should clarify that an accepted AFH does not provide a 
determination of compliance with the obligation to affirmatively 
further fair housing, including, but not limited to, any ``safe 
harbor'' provision. The commenters stated that, in this regard, HUD 
should clarify that the final rule does not foreclose litigation, and 
that HUD specifically disclaim any notion of a ``safe harbor'' for 
jurisdictions with a current AFH plan that has been accepted by HUD.
    HUD Response: The preparation and submission of an AFH that is 
accepted by HUD does not fulfill a program participant's obligation to 
affirmatively further fair housing, rather it is a first step towards 
that duty. As stated in HUD's proposed rule, and earlier in this 
preamble to the final rule, the purpose of the AFH is to provide and 
aid program participants with a more effective means of meeting the 
statutory obligation to affirmatively further fair housing. Whether a 
program participant, in fact, affirmatively furthers fair housing 
depends upon the actions the program participant takes, not the actions 
a program participant states that it plans to take in its AFH.
    For purposes of receiving funding from HUD, each program 
participant must certify that it will affirmatively further fair 
housing. In general, this means that a program participant will take 
meaningful actions to further the goals in its AFH, conducted in 
accordance with the requirements of 24 CFR 5.150 through 5.180, and 
that it will take no action that is materially inconsistent with its 
obligation to affirmatively further fair housing. Specific 
certification language can be found in 24 CFR 91.225 (entitlements), 
91.325 (States), 91.425 (consortia), 570.487(b)(1) (State CDBG 
grantees), 570.601 (all CDBG grantees) and 903.7(o)(3) (public housing 
agencies). The rule also defines affirmatively furthering fair housing 
for purposes of fair housing planning, at 24 CFR 5.152, as by stating 
that it means taking meaningful actions, in addition to combating 
discrimination, that overcome patterns of segregation and foster 
inclusive communities free from barriers that restrict access to 
opportunity based on protected characteristics. As this section 
provides, specifically, affirmatively furthering fair housing means 
taking actions that, taken together, address significant disparities in 
housing needs and in access to opportunity, replacing segregated living 
patterns with truly integrated and balanced living patterns, 
transforming racially or ethnically concentrated areas of poverty into 
areas of opportunity, and fostering and maintaining compliance with 
civil rights and fair housing laws.
    HUD explicitly stated in the proposed rule that HUD's acceptance of 
an AFH only means that the program participant has met the planning 
requirement described in the rule, but does not mean that HUD has 
determined that a program participant has complied with its obligation 
to affirmatively further fair housing under the Fair Housing Act, or 
with other civil rights statutes and regulations. HUD reiterates that 
statement in this final rule.
    Comment: Notify program participants of acceptance of its AFH. 
Commenters recommended that HUD send program participants 
acknowledgement of acceptance of their AFH.
    HUD Response: As described in Sec.  5.162 of this final rule, 
program participants will know that their AFH has been accepted 61 
calendar days after the date that HUD receives the AFH, unless HUD has 
provided written notification that it does not accept the AFH.
e. Submission and Response Deadlines
i. 45 Days To Resubmit Nonaccepted AFH
    Comment: Allow more than 45 days to revise a rejected AFH. 
Commenters asked that HUD allow more than 45 days to resubmit an AFH to 
permit participants to develop the changes and obtain whatever 
governing body approvals it may need before resubmitting it. The 
commenters stated that many governing boards meet only on a monthly 
basis.
    HUD Response: HUD understands that there may be circumstances where 
program participants will require more than 45 days to resubmit an AFH 
that HUD will accept. Therefore, this final rule states that HUD will 
provide program participants with a specific time period to revise and 
resubmit the AFH, and that this period will be at least 45 days, but 
may be greater if so warranted.
    Rule change. HUD revises Sec.  5.162(c) to state that HUD will 
provide a program participant with a time period to revise and resubmit 
the AFH of no less than 45 calendar days after the date on which HUD 
provides written notification that it does not accept the AFH.
    Comment: Clarify the process to revise a rejected AFH. Commenters 
stated that HUD's proposed rule was unclear whether the public comment 
period required by 24 CFR part 91 applies to AFHs that are resubmitted 
because they were originally rejected by HUD. The commenters stated 
that if the public comment period does apply, that would make it 
difficult to meet the 45-day resubmission deadline of paragraph. 
Commenters asked that HUD clarify whether another public comment period 
and consultations are not required when resubmitting a rejected AFH.
    HUD Response: HUD has revised Sec.  5.162(c) to clarify the process 
for revisions and resubmissions of an AFH. Program participants will be 
afforded a period of time no less than 45 days after the data on which 
HUD notifies the program participant that it does not accept the AFH.
ii. Comment Period on Draft AFH
    Comment: HUD should require jurisdictions to provide a longer 
comment period on draft AFHs. Commenters stated that HUD should require 
jurisdictions to provide a 45-day to 60-day public comment period on 
their draft AFHs. Commenters stated that a longer period is important 
to ensure that the process is open and inclusive of all members of the 
community.
    HUD Response: HUD's consolidated plan regulations provide and have 
long provided for a minimum 30-day public comment period for its 
citizen participation requirement. As stated earlier in this preamble, 
HUD emphasizes that this is the minimum and not maximum period of time 
provided for the citizen participation requirement under the 
consolidated planning processing. With respect to PHAs, this final rule 
adopts the provisions in the proposed AFH rule that PHAs must follow 
the policies and procedures in 24 CFR part 903 pertaining to community 
input.
iii. 270 Day Submission of AFH
    Comment: The 270-day submission places the AFH process outside of 
the Consolidated Plan process. Commenters stated that the requirement 
that a participant must submit an initial AFH to HUD at least 270 
calendar days before the start of the program participant's program 
year substantially places the AFH process outside many communities' 
consolidated plan process and will not integrate fair housing

[[Page 42317]]

concerns into the consolidated plan process but will force a 
participant to conduct a separate process with associated expenses and 
allocations of scarce administrative resources. Commenters stated that 
participants should be allowed the option to choose, based on local 
conditions and characteristics of the participant and its community, to 
prepare the AFH within its consolidated plan process and timing 
schedule.
    Other commenters stated that the 270 days is too long a submission 
prior to the consolidated plan. The commenters stated that State 
participants would have to start the AFH/consolidated plan process in 
mid-December of 2013 to meet a 2016 due date, or almost 2 and \1/2\ 
years before the consolidated plan would become effective. The 
commenters stated that with this length of time since the start of the 
development of the AFH, the data that is used for the AFH may not be 
valid by the time the AFH is submitted, and that the data should be 
fresh when program participants are thinking about fair housing at the 
same time consolidated plans are being developed.
    Other commenters stated that under the proposed rule, an AFH would 
be due 270 days before a consolidated plan participant could begin its 
plan, and that the ``begin'' date would occur after 60 days of HUD 
review of the AFH, a total of 330 days. Commenters stated that, in 
effect, this would mean State grantees would have to start their AFH 
and consolidated planning efforts a minimum of 19 months ahead of the 
consolidated plan start date. Commenters stated that the time and 
resources necessary to complete the AFH and consolidated planning 
processes are simply too long and intensive, and that the effect of 
this AFH and consolidated planning processes would be that program 
participants would be in a constant planning and reporting cycle, 
draining staff time and resources away from effective implementation 
and monitoring of identified goals and objectives of both the AFH and 
consolidated plan.
    HUD Response: The 270-day period remains in the final rule but that 
period only pertains to the first AFH to be submitted by program 
participants. The final rule provides ample time to prepare the first 
AFH and better aligns with the consolidated and PHA planning processes. 
HUD believes the 270-day time period is needed to allow the results of 
the AFH to inform the consolidated and PHA plans.
    Comment: Clarify when the 270 days commences, and clarify what 
program year means. Commenters asked that the submission of the AFH 270 
days in advance needs to be clearly defined in the rule. The commenters 
asked whether the submission deadline refers to the start of the 
program participant's fiscal year or the due date of the consolidated 
plan. Other commenters asked whether ``program year'' as used in the 
rule refers to a PHA's fiscal year, the federal fiscal year, or the 
calendar year. The commenters stated that many PHAs participate in 
multiple programs, and they operate on a mix of schedules, rendering 
the term ``program year'' largely meaningless.
    HUD Response: HUD believes that the staggered submission deadline 
provided in Sec.  5.160, which divides program participants into 
categories, clarifies what is meant by program year and fiscal year.
    Comment: Reconcile contradiction in AFH submission between Sec.  
5.160(a) and Sec.  5.160(c). Commenters stated that the proposed 
regulations provide the requirements for submission of the AFH to HUD 
in terms of submission deadline and frequency. Commenters stated that 
proposed Sec.  5.160(a)(1) and (a)(2) state the submission deadline for 
initial AFH and subsequent AFH Statements, respectively as follows: (1) 
``. . . each program participant . . . shall submit an initial AFH to 
HUD at least 270 calendar days before the start of the program 
participant's program year,'') and (2) ``After acceptance of its 
initial AFH, each program participant . . . shall submit subsequent 
AFHs to HUD at least 195 calendar days before the start of the 
jurisdiction's program year.'') Commenters stated that these two 
provisions contradict proposed Sec.  5.160(c) (Frequency of 
submission): (``Each consolidated plan program participant must submit 
an AFH at least once every 5 years, or as such time agreed upon by HUD 
and the program participant in order to coordinate the AFH submission 
with time frames used for consolidated plans, . . .'') Commenters 
stated that HUD's Consolidated Plan regulations require entitlement 
jurisdictions to submit their Consolidated Plan One-Year Action Plans 
annually 45 days prior to the start of jurisdiction's program year, and 
therefore, it is unclear whether HUD expects the localities to submit 
an AFH on an annual or 5 year basis.
    Commenters further stated that, in addition, the proposed rule at 
Sec.  5.160(a)(1), which requires submission of the initial AFH 
Statement 270 calendar days prior to the start of a jurisdiction's 
program year would result in localities having to formulate and submit 
their initial AFH during their CAPER formulation and submission process 
for the prior program year's consolidated plan. Commenters stated that 
attempting to formulate and submit both Federally-required reports 
within the same time frame would create an excessive administrative 
burden.
    Commenters recommended that HUD: (1) Modify proposed Sec.  
5.160(a)(1) and (a)(2) to provide clarification and be consistent with 
proposed regulation Sec.  5.160(c) regarding frequency of submission; 
and (2) modify proposed regulation Sec.  5.160(a)(1) to change the 
submission deadline to relieve the administrative burden to be closer 
the consolidated planning cycle (for example, 180-210 calendar days 
before), and provided the following suggested language: The amended 
regulation Sec.  5.160(a)(1) may be modified to read as follows: ``. . 
. each program participant . . . shall submit an initial AFH to HUD at 
least (180-210) calendar days before the start of their 3- or 5-year 
consolidated planning process, . . .'').
    Finally, PHA commenters stated that a PHA that elects to submit an 
independent AFH is required to update its PHA Plan annually, while all 
other program participants are required to submit only every 5 years? 
The commenters asked HUD to justify this position.
    HUD Response: The staggered submission deadlines provided in the 
final rule address the concerns raised by the commenters. In addition, 
as noted earlier in this preamble, under the overview of changes made 
at the final rule stage, PHAs will be required to submit AFHs every 5 
years.
f. Abbreviated AFH for Small Entities
    Comment: Allow small program participants to submit an abbreviated 
AFH. Commenters requested that HUD allow small program participants to 
submit an abbreviated AFH. Commenters stated that small program 
participants do not have the resources or staff to develop the AFH 
envisioned in the proposed rule. Commenters stated that small program 
participants have smaller staffs which would be burdened with these new 
data requirements and goals in the rule. The commenters stated that 
little data is available at the jurisdiction level for small 
jurisdictions but only available at county or even State regional level 
resulting in a skewed measurement that can falsely shape the AFH. 
Commenters suggested that an abbreviated AFH would focus solely on (1) 
a summary of fair housing issues in the jurisdiction, if any, (2) 
community input through the Consolidated Plan, and (3) a discussion of 
the use of CDBG, HOME, and other

[[Page 42318]]

possible resources to address fair housing issues in the community.
    HUD Response: HUD recognizes that a ``one size fits all'' approach 
may place the same burdens on all entities but that such small entities 
have fewer resources to deal reasonably with such burdens. As discussed 
in Section II.D of this preamble, the final rule provides for a 
staggered AFH submission deadline. Certain program participants 
(States, Insular Areas, PHAs) and small program participants (qualified 
PHAs and jurisdictions that receive a small CDBG grant in fiscal 2015) 
have the option of submitting their first AFH at a later date than 
provided for entitlement jurisdictions that receive an FY 2015 CDBG 
grant of more than $500,000. The staggered submission recognizes the 
capacity challenges, especially of small entities, and it is HUD's 
expectation that by the time their AFHs are due, the AFH approach and 
submission requirements will be more refined and these small entities 
and HUD can benefit from the experience of program participants that 
have already submitted AFHs.
    The term ``qualified PHA'' was established by the Housing and 
Economic Recovery Act of 2008 (HERA) (Pub. L. 110-289, approved July 
30, 2008) and defines such PHA as one that has a combined unit total of 
550 or less public housing units and section 8 vouchers; is not 
designated as troubled under section 6(j)(2) of the 1937 Act, and does 
not have a failing score under SEMAP during the prior 12 months. HERA 
exempted qualified PHAs from the requirement to prepare and submit an 
annual plan. As discussed in Section II.D of this preamble, an FY 2015 
CDBG grant of $500,000 or less has been designated a small CDBG grant.
    Rule Change. Section 5.160 provides that PHAs, and entitlement 
jurisdictions that receive an FY 2015 CDBG grant that is $500,000 or 
less, as well as States, and Insular Areas, may submit their first AFHs 
at a later date than entitlement jurisdictions that receive an FY 2015 
CDBG grant of more than $500,000 and PHAs that jointly submit an AFH 
with an entitlement jurisdiction that receives an FY 2015 CDBG grant of 
more than $500,000.
g. Recently Completed AIs
    The proposed rule asked the question whether HUD should waive or 
delay preparation and issuance of an AFH for program participants that 
recently conducted a ``comprehensive'' AI. Although a few commenters 
stated that the AFH should not be waived because the AI is a failed 
process, overwhelmingly commenters responded yes, that the AFH should 
be waived or delayed because significant time and resources already 
went into preparation of the AI. Specific comments were as follows:
    Comment: Allow the use of a recently completed AI to comply with 
first AFH submission requirement. Commenters stated that developing an 
AI can be a costly and time-consuming effort and the product of that 
effort should not be discarded and that it would seem unfair and a 
waste of resources to require a program participant that, in good 
faith, recently completed a comprehensive AI to start all over and 
create a new AFH. Commenters requested that HUD not require program 
participants to create a new AFH if an AI was completed within 5 years 
of the date of the final AFH and the program participant's current 
consolidated plan has already been submitted or their next Consolidated 
Plan is due to be submitted within 12 months or less of the date the 
AFFH final rule. In that case, the AFH would be required to be 
submitted in conjunction with the program participant's next 5-year 
consolidated plan.
    Other commenters ask that HUD allow a completed Fair Housing and 
Equity Assessment (FHEA) to count as an AFH. Commenters recommended 
that Regional Analysis of Impediments developed in support of the 
Sustainable Communities program should also be permitted to continue 
for some period of time.
    HUD Response: HUD believes that the staggered AFH submission 
deadline provided in this final rule addresses to a considerable extent 
the commenters' concerns about recently completing an AI and then 
having to, perhaps within a short period of time, complete an AFH. HUD, 
however, wanted to ensure that for recipients of an FY2010 or 2011 
Sustainable Communities Competition award that completed a regional 
analysis of impediment (RAI) in connection with such award, and where 
the RAI was submitted within 30 months prior to the date when the 
program participant's AFH is due, such RAI would be accepted in lieu of 
the AFH. The analysis required under the Sustainable Communities 
competition award is a more rigorous analysis and more comparable to 
the AFH approach provided in this rule.
    Rule change. HUD has revised Sec.  5.160 to provide that 
entitlement jurisdictions that participated in and signed on to a HUD-
approved RAI in accordance with a grant awarded under HUD's FY 2010 or 
2011 Sustainable Communities Competition that was submitted within 30 
months prior to the date when the program participant's AFH is due will 
be accepted in lieu of the AFH.
h. Resolving Disputes on the Content of a Joint or Regional AFH
    In the proposed rule, HUD asked commenters what process should 
guide the resolution of disputes between collaborating program 
participants if an AFH is not accepted because of disagreements between 
the collaborating program participants. The comments were as follows:
    Comment: Provide for dispute resolution and set an end date for 
such resolution. Commenters stated that a dispute among program 
participants is particularly worrisome, because failure to submit a 
consolidated plan within the federal fiscal year precludes the ability 
of the program participant to work through the issues and ever receive 
funding. Commenters requested that HUD allow a program participant, 
caught in this situation, to proceed to submit its consolidated plan, 
and then allow the program participant a specific amount of time for 
the participant to work through differences with HUD. Commenters stated 
that it is critical that the process for resolving disputes about the 
content of an AFH should not jeopardize receipt of critical funding. 
The commenters stated that HUD should assure that resources do not get 
unreasonably delayed and establish a review/approval/dispute process 
that is responsive to local operational needs such that funds continue 
to flow while these issues are addressed, barring a clearly 
unresponsive noncompliant program participant.
    Commenters stated that there needs to be some HUD Headquarters 
involvement where a disagreement continues beyond some reasonable 
period, such as 60 to 90 days. Commenters stated that meeting with HUD 
to facilitate agreement and/or mediation as a last resort would be a 
great process to guide the resolution of disputes between program 
participants. The commenters stated that HUD would be in the best 
position to provide technical assistance to iron out any differences.
    Other commenters stated that HUD should offer technical assistance 
with the disapproval of the first AFH submitted, and needs to be clear 
about all issues in the first letter of disapproval, so a program 
participant can expect, once identified issues are addressed, approval 
of the AFH would be forthcoming, rather than learning that additional 
issues have been identified.
    Commenters stated that the rule should provide for a dispute 
process so that everyone knows how to resolve a

[[Page 42319]]

dispute and funding will not be jeopardized.
    In contrast to the foregoing commenters, other commenters stated 
that HUD should not concern itself with the internal problem-solving 
mechanisms of the regional collaboration. Commenters stated that the 
party responsible for submitting the regional AFH to HUD should have 
authority over disputes, as they are lead agency and responsible for 
the AFH. Commenters stated that if a participant does not agree with 
the AFH, they can submit a dissenting opinion. This should include 
ability by the dissenter to not do the activity they disagree with, or 
to do activities they deem more appropriate.
    HUD Response: HUD appreciates commenters responding to the specific 
question posed on this issue. On further consideration, HUD declines to 
include a dispute resolution process in the rule and has also removed 
the provisions regarding PHA dissenting opinions. Since joint and 
regional collaborations are entirely voluntary, HUD anticipates that 
disputes among collaborative program participants would be the 
exception as the program participants themselves selected the 
collaborative relationship. HUD also encourages MOUs to be entered into 
by collaborative program participants as a means of resolution, so that 
if disputes do arise, the collaborative program participants can 
resolve issues among themselves without HUD intervention.
i. Impact of Disaster Situations on an AFH
    Comment: Serious consideration must be given to timing of 
submission of an AFH that must be revised as a result of a declared 
disaster. Commenters stated that the requirement that an AFH be revised 
in the event of a Presidentially-declared disaster is appropriate but 
when the revision must be done and submitted to HUD must be considered 
in light of the multiplicity of tasks required during disaster 
recovery. Commenters stated that the program participants will likely 
be consumed with disaster recovery tasks for some time, and that any 
requirement by HUD to revise the AFH within a brief period following 
the disaster may divert human resources from disaster recovery. 
Commenters stated that HUD must recognize that a program participant's 
first responsibility will be to deal with the victims of the disaster. 
Commenters stated that HUD should leave preliminary determinations of 
the need for and timing of revisions to the local jurisdiction.
    Commenters stated that the rule should integrate revising the AFH 
with the timeline for the Action Plan recovery expenditures required 
under HUD's Community Development Block Grant-Disaster Recovery (CDBG-
DR) program, and recommended that HUD establish a requirement that, as 
part of the Action Plan process under CDBG-DR, grantees be required to 
discuss in the Action Plan how the AFFH related data that the CDBG-DR 
Notice provides impacts the barriers identified in the AFH and/or 
creates any new barriers, and how the Action Plan's programs address 
those barriers. Commenters stated that a uniform requirement of a 
revision following a disaster calls for specificity not only regarding 
the timing and submission of the revised AFH but the content. 
Commenters stated that the elements included in revision of the AFH 
should be a modified or condensed set of elements that target the most 
impacted aspects of the disaster rather than require a complete 
revision and rewrite of the AFH. Additionally, commenters stated that 
HUD should at least exempt grantees from the public hearings, only when 
a revision is needed due to a major disaster.
    Other commenters also stated that there should be no assumption 
that a natural disaster automatically requires jurisdictions to deviate 
from the priorities set out in a compliant AFH. Commenters stated that 
this is an issue that would need to be addressed on a case-by-case 
basis. Commenters stated that, in some cases, a disaster could have no 
effect on compliance with the AFH if it is fairly localized in a rural 
area or the low-income housing is repairable and the most immediate 
need would be to get people back into their homes. Commenters stated 
that revising an AFH following a disaster should only be required where 
the disaster requires substantial reconstruction of new housing, not 
those primarily requiring repair of existing housing. Commenters stated 
that HUD's rule needs to allow some flexibility and discretion in 
determining whether and when a jurisdiction needs to revise its AFH.
    Other commenters state that while HUD must give program 
participants adequate time to revise an AFH in the event of a major 
natural disaster, program participants should not be exempt from 
revision as a result of a major natural disaster. Commenters stated 
that natural disasters confront communities with a challenge to rebuild 
and to start over, and that this presents a totally unique opportunity 
to rebuild without the pre-disaster patterns of segregation. Commenters 
stated that the rule must anticipate these pressures and create the 
circumstances where fair housing practices can be applied and a 
positive pro-integrative transformation can take place. Other 
commenters similarly stated that natural disasters, while creating many 
barriers, also can provide opportunities to increase access and better 
inclusion in the future, and that these opportunities should be pointed 
out to the entities and they should be monitored to see how well they 
serve fair housing goals during the disaster and in their rebuilding 
efforts. Commenters stated that the AFH and disaster relief goals can 
and should be coordinated so that disaster relief funds are not 
misdirected to maintain the status quo, including high levels of racial 
segregation and low levels of affordable housing in high opportunity 
areas.
    Some commenters suggested that HUD should work with the Federal 
Emergency Management Agency (FEMA) on developing appropriate 
recommendations and guidelines instead of establishing a new and 
separate mandated process. In addition to opposing a mandate to revise 
an AFH as a result of a disaster situation, commenters stated that HUD 
should be precluded from denying relief to jurisdictions due to 
disputes about the AFH and the actions identified therein. Commenters 
stated that it would be unconscionable that HUD use disaster relief 
funds as leverage in bona fide disputes with local jurisdictions.
    Other commenters recommended that HUD should consider an AFH 
template specifically for a disaster-declared area, similar to what it 
does with waivers requests for the use of CDBG-DR funding, with options 
that a grantee can utilize under various categories. The commenters 
stated that the template should establish fair share allocations of 
disaster recovery resources for households based on income, sex, age, 
national origin, disability etc. to ensure members of classes of 
persons protected under the Fair Housing Act receive access to disaster 
recovery funds at a rate equal to the degree they were impacted by the 
disaster; require housing units rebuilt in the wake of a disaster to be 
``visitable'' to persons with disabilities; and require a disaster 
vulnerability assessment of neighborhoods and ensure that in 
neighborhoods where there are concentrations of persons protected under 
the Fair Housing Act such residents receive fair access to 
infrastructure to remediate the vulnerability of these areas to future 
disaster.
    Other commenters suggested that HUD provide a guidebook for

[[Page 42320]]

jurisdictions to use to modify their AFH post-disaster plans and to 
lawfully exercise opportunities posed by large rebuilding programs. In 
the immediate aftermath of a major disaster jurisdictions face many 
challenges in gearing up to rebuild. The commenters stated that, by 
pre-developing guidance, HUD would ensure that the process of modifying 
the AFH would be informed by best practices and proceed smoothly.
    HUD Response: HUD appreciates the very good suggestions offered by 
commenters regarding preparation of an AFH in the face of a disaster 
situation causing significant damage to an area or areas of the U.S., 
and, thereby, possibly requiring changes to a program participant's 
AFH. HUD wholeheartedly agrees with the commenters that their first 
responsibility is to assist the residents in the areas affected by the 
disaster. HUD will consider working with FEMA on guidance related to 
the revision of an AFH after a disaster.
    Rule change. HUD has revised Sec.  5.164 (Revising an Accepted AFH) 
to provide that a program participant must revise its AFH whenever a 
``material change'' in circumstances occurs in the jurisdiction of a 
program participant, which is a change that affects the information on 
which the AFH is based to the extent that the analysis, fair housing 
contributing factors, or the priorities and goals of the AFH no longer 
reflect actual circumstances.
    Revised Sec.  5.164 provides examples of what constitutes a 
material change such as a Presidentially declared disaster, under title 
IV of the Robert T. Stafford Disaster Relief and Emergency Assistance 
Act (42 U.S.C. 5121 et seq.), in the program participant's area that is 
of such a nature as to significantly impact the program participant's 
duty to affirmatively further fair housing; significant demographic 
changes; new significant contributing factors in the participant's 
jurisdiction; and civil rights findings, determinations, settlements 
(including Voluntary Compliance Agreements), or court orders. While a 
Presidentially declared disaster is the most prominent example, it is 
only one example, and a material change is not limited to 
Presidentially declared disasters. Other disasters that cause 
significant damage to housing or infrastructure, result in significant 
displacement of populations, or have significant disproportionate 
effects based on protected class in their direct effects in response or 
recovery, would be among the types of disasters likely to significantly 
impact the steps required to affirmatively further fair housing and 
therefore be consider a ``material change.'' HUD will work with 
grantees that experience such events and provide additional clarifying 
guidance as may be needed given the material change at issue.
    Revised Sec.  5.164 further provides that where a revision to an 
AFH is required because of a material change in circumstances, the 
revision shall be submitted within 12 months of the onset of the 
material change in circumstances, or at such later date as HUD may 
provide, and that where a revision is required due to a Presidentially 
declared disaster, the time for submission shall be automatically 
extended to the date that is 2 years after the date upon which the 
disaster declaration is made, and the deadline may be further extended 
upon the request for good cause shown.
    Revised Sec.  5.164 also provides that HUD may require a program 
participant to revise an AFH upon written notification to the program 
participant specifying the reasons why HUD determined a revised AFH is 
necessary. Revised Sec.  5.164 allows, however, for a program 
participant to respond to HUD and advise of reasons why the program 
participant believes a revised AFH is not necessary.
j. Need for Safe Harbor
    Comment: Provide a safe harbor for program participants that 
faithfully follow the requirements in the AFH rule. Commenters stated 
that the proposed rule lacks a ``safe harbor''; that is, that the rule 
provides no assurances that a program participant has sufficiently met 
its obligation to affirmatively further fair housing. Commenters stated 
that a safe harbor is especially important in the initial years of 
implementation of the new AFH process because it is a major change from 
the AI process, and, as with any transition to a new system, the new 
AFH approach may not play out as HUD envisioned. Commenters stated that 
HUD needs to recognize program participants for their good faith 
efforts to comply with new requirements, and hold them harmless for 
factors outside of their control. Commenters stated that they 
appreciate HUD stating that, through this new AFH process, HUD expects 
to reduce litigation and the commenters suggest that including a safe 
harbor would definitely reduce litigation.
    Commenters stated that part of the reason for requesting a safe 
harbor is that HUD must recognize that there are factors beyond a 
program participant's control, and that such factors include operating 
under a consent decree pursuant to a court order that requires a 
program participant to take action in accordance with the decree that 
may conflict with the AFH rule, or a program participant is faced with 
concentrations of populations that occur for nondiscriminatory 
purposes, as for example, populations surrounding HUD-funded 
Historically Black Colleges and Universities.
    Other commenters clarified that they are not seeking a safe harbor 
that the program participant has fulfilled its duty to affirmatively 
further fair housing, but rather the commenters stated that they are 
seeking a safe harbor that, if a program participant submits an AFH, 
and if HUD approves the AFH, then the program participant is considered 
in compliance with the AFH planning requirements.
    HUD Response: As stated earlier in this preamble, this rule does 
not assess whether a program participant has carried out its statutory 
obligation to affirmatively further fair housing. As also stated 
earlier in this preamble, an AFH will be deemed accepted after 60 
calendar days from the date HUD receives an AFH unless HUD has provided 
the program participant(s) with notification that HUD does not accept 
the AFH.
17. Entitlement and Nonentitlement Jurisdictions and Role of the States
    Comment: State AFHs should cover only nonentitlement jurisdictions. 
Commenters stated that State AFHs should cover only the non-entitlement 
jurisdictions, and should not be required to cover entitlement 
jurisdictions. Commenters stated that entitlement jurisdictions will be 
required to prepare their own AFH, therefore requiring the State to 
also complete an assessment of the same area would be redundant and a 
waste of time and money. Commenters stated that the basis for States 
preparing the AFH is based on the use of CDBG, HOME, ESG, and HOPWA 
funding, and that States use these resources primarily in non-
entitlement jurisdictions, and that, in fact, States may not legally 
use most of their HUD resources in entitlement jurisdictions, just as 
entitlement jurisdictions are required to use their HUD funding within 
their own geographic boundaries. Commenters stated that since 
entitlement jurisdictions will be required to prepare their own AFHs, 
having the State do an assessment of these same areas would be 
redundant and a waste of resources. Commenters stated that if States 
choose to participate in regional AFHs that include entitlement 
jurisdictions, they may do so and the AFH would include the entitlement 
jurisdictions. Commenters recommended that the definition of a State 
AFH (Sec.  5.152

[[Page 42321]]

Definitions) should be limited to non-entitlement areas of the State.
    Commenters stated that HUD does not appear to understand how States 
operate, and how they are different from entitlement jurisdictions. 
Commenters stated that what a State can accomplish is different from 
what an entitlement community can accomplish. The commenters stated 
that the geographic scope of entitlement communities is limited and 
their structures of control are far greater, both politically and 
economically. The commenters stated that State entities cover widely 
varying geographies and tend to have far more limited capacity to 
control political and economic outcomes. Commenters stated that, 
throughout the proposed rule, guidelines that may be appropriate to 
entitlement local governments are being applied inappropriately to 
State programs.
    Commenters stated that the new mapping system to gather data is not 
workable for State grantees. Commenters stated that it would be helpful 
if when HUD designs mapping systems for collecting data they work with 
a sub-committee that includes State grantees. The commenters stated 
that the whole data gathering system for the e-con planning suite is 
another example of mapping systems that do not work for State grantees. 
It is fine if HUD wants to offer this mapping system as a tool that can 
be used but its use should not be made mandatory.
    To resolve the treatment of States in the AFH regulations, 
commenters recommended that HUD have separate regulatory sections for 
States and local governments that acknowledge the differences in their 
needs, capabilities and size of geography. Commenters stated that HUD's 
proposed rule did not acknowledge that State governments operate at a 
different level of responsibility and for a different geographic area 
of coverage; and that States are more like HUD in their administration 
of housing and community development programs than local governments.
    Commenters further stated that States have limited influence over 
local government actions that could be most effective addressing a fair 
housing issue, and that while there may be significant fair housing 
issues in a locality, a State may have no ability to influence the 
locality, and, therefore, a State cannot include goals for mitigating 
the factors contributing to the fair housing issue. Commenters stated 
that States do not have control over zoning and local land use 
decisions; that land use decisions are local responsibilities that can 
be informed by using geographic data systems and maps that analyze 
current demographic and socio-economic conditions. The commenters 
stated that State AFHs should not be rejected under Sec.  5.162(b) if 
they do not address local issues.
    Commenters stated that providing separate sections for State and 
local governments is not unprecedented, pointing to HUD's Consolidated 
Plan regulations at 24 CFR part 91 that separate certain State and 
local requirements in recognition of their differences. Commenters 
further recommended that HUD draft regulatory sections applicable to 
States in close consultation with a wide variety of States (small and 
large States; States with many local entitlement jurisdictions and 
States with few local entitlement jurisdictions; and States with few 
metropolitan areas and states that are predominantly metropolitan) and 
their associations, such as the Council of State Community Development 
Agencies (COSCDA) and the National Council of State Housing Agencies 
(NCSHA).
    Commenters stated that while HUD specifically addresses four 
distinct types of program participants, States apparently fall under 
the more generic category of ``jurisdiction'' per Sec.  91.5. 
Commenters stated that this becomes problematic when examining the 
language describing the required elements of the analysis, which speaks 
in terms of various signifiers within ``the jurisdiction and region.'' 
Commenters stated that, in the case of States, what this means is not 
altogether clear. Commenters asked that HUD clarify whether the State 
analysis covers the jurisdiction (which the commenters said taken 
literally would mean the State as a whole) or only those portions of 
the State nonentitlement areas that are subject to the various CPD 
programs (noting that the geography of entitlements varies with each 
program). The commenters stated that the inclusion or exclusion of 
entitlement jurisdictions with their primarily urban/suburban 
populations would produce very different assessment outcomes.
    Commenters recommended that regional analysis should only be 
required when a regional AFH is prepared. The commenters stated that 
since a State's jurisdiction is much larger than a local 
jurisdiction's, the rule should require only a statewide analysis, but 
allow those States that prefer to undertake smaller geography analyses 
to do so. Other commenters stated that HUD should revise Sec.  5.154 
(d) and (e) of the proposed rule to establish different requirements 
that are appropriate to State governments.
    Commenters stated that if HUD does not distinguish the 
responsibilities of the State from nonentitlement jurisdictions in the 
final rule, HUD must clarify that a State is not responsible for the 
failure of its subrecipients to comply with the requirements of this 
rule or to monitor their compliance. Commenters stated that States 
should not be bound by administrative actions taken by HUD against a 
local jurisdiction that fails to submit an acceptable AFH. Commenters 
stated that in the case of a local jurisdiction's failure to submit an 
accepted AFH, and HUD withholds the jurisdiction's CDBG award, the 
State jurisdiction should not be prohibited from awarding other CPD 
funds to the local jurisdiction. Commenters stated that States are 
better equipped and suited to develop policies and priorities for 
distributing funds according to procedures that seek to minimize 
concentrations and promote choices of places to live. Commenters stated 
that States should only be responsible for monitoring their 
subgrantees' efforts to affirmatively further fair housing, not all of 
the jurisdictions in the non-entitlement areas, and that for non-
entitlement areas within the State that have not been funded by the 
State, the final rule should not expect States to be held responsible 
for subgrantees' actions to affirmatively further fair housing.
    Other commenters stated that States, particularly, should be held 
accountable for the duty to affirmatively further fair housing based 
not only on how States expend HUD funds, but also on the level of 
compliance they require of local jurisdictions, including those that do 
not receive HUD funds. Commenters stated that State laws and 
regulations governing zoning and preventing exclusionary practices are 
one such mechanism for encouraging compliance. The commenters stated 
that expenditure of State discretionary funds (including non-HUD funds 
as well as non-federal funds) for housing production and preservation, 
economic development, water and sewer infrastructure, transportation, 
and school building facilities can also have a powerful impact and 
should be included in the creation and implementation of an AFH.
    Finally, commenters addressed the consultation requirement and 
noted that the proposed rule states at Sec.  91.110(a)(2) that the 
``State shall consult with state and regionally-based organizations 
that represent protected class members . . . and other public and 
private fair housing service agencies, to the extent such agencies 
operate in the State.'' Commenters recommended that States be required 
to consult with entities in non-entitlement areas only and that the

[[Page 42322]]

focus should be on these non-entitlement areas in these consultations. 
Commenters stated that regarding consultation by States, only statewide 
public housing authorities must be consulted in developing an AFH. 
Commenters stated that the proposed rule at Sec.  91.110 (a)(1) 
provides: ``The State shall consult with any state housing agency 
administering public housing (PHA) concerning consideration of public 
housing needs, planned programs and activities, the AFH . . .'' 
Commenters stated that the language should indicate clearly that it is 
only statewide housing authorities that must be consulted. Commenters 
stated that if HUD's intent was broader, that language should be 
limited to ``representatives of public housing authorities covered by 
the state's Consolidated Plan'' not all public housing authorities.
    HUD Response: The commenters raise very valid points about the 
differences between entitlement jurisdictions and the role of States 
with respect to receipt, distribution, and expenditure of HUD funds. 
HUD believes a rule change is not necessary, however, in recognition of 
the unique role that States play, HUD intends to develop a format of 
the Assessment Tool that is more tailored to the activities of States.
18. Regional Collaboration and Regional Analysis.
    Comment: It is important for PHA and local jurisdictions to 
collaborate: Require a letter affirming cooperation. Commenters stated 
that currently, in most locations, fair housing planning between 
jurisdictions and PHAs is not significantly interwoven. Commenters 
stated that PHAs are oftentimes distinct legal entities outside the 
control of local governments, even though they may be located within 
the geographical boundary of a jurisdiction, and that the only linkage 
may be the appointment of PHA board members by the local elected 
official or body. Commenters stated that notwithstanding a strong 
linkage, a jurisdiction's discussion with PHAs is often very helpful in 
better understanding the real ``impediments'' a PHA's residents face in 
trying to locate affordable housing outside of the public housing 
developments and gaining a better understanding of the nuances of any 
discriminatory actions they may encounter, and that therefore, it is 
important for jurisdictions and PHAs to come to the table and fully 
collaborate in the development of the AFH.
    Commenters requested that to ensure such cooperation, HUD should 
require a letter affirming cooperation between the two entities in the 
development and implementation of the AFH. Other commenters stated that 
HUD should require a meeting of the entities seeking to engage in joint 
participation with HUD's staff in FHEO. Commenters stated that HUD 
should issue a sample agreement for use between or among program 
participants seeking to jointly undertake the AFH planning process.
    HUD Response: HUD appreciates the value that the commenters see in 
a joint participation by PHA and local government, and HUD seeks to be 
helpful to such entities in their efforts to jointly undertake AFH 
planning, but HUD declines to require such entities to execute a letter 
or agreement affirming cooperation or meet with FHEO staff. As noted in 
response to an earlier comment, HUD encourages the creation of MOUs to 
govern the joint participation process when completing an AFH.
    Comment: Clarify whether a regional analysis is required of every 
AFH and if so, define ``region.'' Commenters stated that Sec.  
5.154(d)(2) requires analysis of various data ``within the jurisdiction 
and region.'' Commenters stated that the mandated nature of this 
provision, ``that the program participant must identify, within the 
jurisdiction and region, integration and segregation patterns and 
trends across protected classes; racially or ethnically concentrated 
areas of poverty; whether significant disparities in access to 
community assets exist across protected classes within the jurisdiction 
and region; and whether disproportionate housing needs exist across 
protected classes'' appears to require a participant to in effect 
conduct a regional AFH effort and eventual plan without drawing any 
distinctions between a community's jurisdiction where it practices a 
higher level of responsibility and influence than for a ``region.'' 
Commenters stated that for many participants this provision will be 
burdensome and ineffectual especially for larger metro regions of a 
large number of diverse and independent governmental entities. The 
commenters stated that the provision as worded will mandate a high 
level of added expense and administrative burden. The commenters asked 
HUD to clarify whether the intention of the rule is to require a 
regional analysis only when there is a regional plan, or for every AFH.
    Other commenters stated that a regional analysis should only be 
required when a regional AFH is prepared. The commenters recommended 
that HUD modify the rule so that it is clear that the analysis applies 
to the jurisdiction or, if a regional AFH is prepared, the region 
consisting of the regional AFH participants.
    Commenters stated that if HUD is requiring a regional analysis for 
every entity submitting an AFH, then HUD must define what is meant by a 
``region.'' Commenters stated that the definition of a region indicated 
in HUD's proposed rule is that a region is the area in which two or 
more program participants collaborate on a single AFH. Commenters 
stated that this definition is problematic for many reasons, one of the 
most important being that it could perpetuate a core problem with 
current strategies to affirmatively further fair housing. The 
commenters stated that under current regulations, communities can form 
a consortium for purposes of obtaining HUD funds subject to the 
requirement to affirmatively further fair housing, but that it is often 
the case that asset-rich communities--often times communities greatly 
in need of affirmatively furthering fair housing--have little incentive 
to join a consortium.
    Commenters asked whether a region for State AFH planning purposes 
is the State and surrounding States, or all the regions within a State, 
however those are defined. Other commenters also asked that HUD exempt 
states from analyzing data for regions.
    HUD Response: All program participants must use HUD-provided data 
and that data will include regional data. A look at regional data is 
important because the demographic makeup of a program participant's 
population may be very different from the demographic makeup of the 
larger region's population. For example, certain communities within a 
region may have large concentrations of persons with disabilities when 
compared to the broader region, or a disproportionately small 
percentage of families with children when compared to the larger 
region, or contain most of the region's racially or ethnically 
concentrated areas of poverty. Therefore, an examination of such data 
is important in order to accurately assess the factors that contribute 
to a program participant's own fair housing issues.
    With respect to the set of comments requesting that HUD clarify the 
definition of a region when referring to ``regional data'' or a 
``regional analysis,'' the Assessment Tool will address this request.
    With respect to the set of comments requesting that HUD require 
particular communities to participate in a regional AFH, HUD declines 
to impose such a requirement. Program participants should determine 
whether they want to

[[Page 42323]]

collaborate with other program participants and, if so, who they want 
to collaborate with.
    Comment: HUD must provide incentives to achieve regional 
collaboration because regional collaboration is difficult. Commenters 
stated that many fair housing issues transcend local jurisdictions but 
they are not convinced that increased collaboration will result from 
HUD's rule. Commenters stated that the proposed rule encourages 
regional collaboration in the development of AFHs, but stated that 
there are many factors that make regional collaboration difficult. 
Commenters stated that without these incentives, jurisdictions may be 
reluctant to take on the challenge of inter-jurisdictional 
collaboration. Commenters stated that policies adopted by one 
jurisdiction or region are not simply voted on by another jurisdiction. 
Commenters stated that the difficulty is that decisions are made within 
the boundaries of the jurisdictions, and though collaboration can be 
attempted, the politics of ideology and money often get in the way of 
noble regional efforts.
    Commenters also stated that HUD must ensure that all program 
participants that participate in regional AFHs identify priorities, set 
goals appropriate to the needs in individual jurisdictions, adopt 
spending plans and strategies to achieve goals, and establish 
timetables, benchmarks and measurable outcomes for each goal. 
Commenters stated that they are concerned that regional collaboration 
efforts over the past 15 to 20 years have more often resulted in 
overly-generalized analyses which fail to provide accountability for 
individual jurisdictions, and recommend few, if any, meaningful actions 
to overcome fair housing barriers. Commenters stated that HUD must take 
care to avoid this result in the proposed rule. Commenters stated that 
Sec.  5.156(d) of the proposed rule states only that ``A Regional AFH 
does not relieve each regionally collaborating program from its 
obligation to analyze and address local fair housing issues and 
determinants that affect housing choice within its respective 
jurisdiction.'' Commenters expressed concern about the sufficiency of 
this provision and recommended that this section should be amended to 
require that regionally collaborating programs, especially those 
exercising land use and zoning powers, are required not just to analyze 
barriers within their own boundaries but also to adopt jurisdiction-
specific actions to overcome those barriers. Commenters stated that HUD 
might also provide more detail about how such regional planning would 
work in non-contiguous jurisdictions.
    Other commenters stated that the need to analyze and address local 
fair housing issues and contributing factors creates burden and does 
not relieve collaborating regions from burdens as suggested by HUD's 
promotion of regional collaboration. Commenters stated that it is 
counterintuitive to suggest or even encourage participants to engage 
each other in developing a regional AFH if participants are still 
required to provide an analysis of local issues as stated in Sec.  
5.156(d). Commenters stated that a regional AFH would only benefit from 
reduced burden if the issues at the regional and local level are 
consistent to the extent that one analysis would cover both levels, but 
that participants would not know this until well into the AFH process. 
Commenters stated that this may result in increased costs and use of 
resources, as well as delays in completion of the AFH, which is the 
opposite of HUD's promotion of regional collaboration on AFHs. 
Commenters stated that they agree that any regional analysis must tie 
back to each collaborating community with specific actions it will take 
to affirmatively further fair housing, but that given the goal of 
connecting the AFH with future consolidated plans, this requirement 
could be better crafted to incentivize partnership. Commenters stated 
that with the tight timeframe for the completion of the AFH within one 
year before the submission of the consolidated plan, communities are 
developing recommendations for fair housing twice within a 2-year 
period, creating redundancy.
    Commenters suggested the rule include stronger language 
recommending the creation of regional AFHs in large metropolitan 
regions that focus on robust analyses of fair housing conditions and 
include broader regional recommendations, and that the rule not include 
recommendations specific to individual program participant 
jurisdictions. Commenters suggested that for each consolidated plan 
completed by jurisdictions within the region covered by the regional 
AFH, the AFH should include strategic plan recommendations to 
affirmatively further fair housing tied both to the analysis and 
recommendations included in the regional AFH. Commenters stated that 
under this model the regional AFH becomes the ``existing conditions 
report'' for multiple communities on the state of fair housing in the 
region, with each community using the consolidated planning process to 
develop local implementation in response. The commenters stated that 
since only one regional AFH would be needed in each of these regions, 
the reporting burden for individual program participants within each 
region would be reduced, but clarified that in recommending this model 
of a regional AFH, the regional AFH would be developed in active 
collaboration with program participant jurisdictions.
    Other commenters stated that for regional collaboration to be 
meaningful it must not be conducted exclusively by jurisdictions 
consisting of uniform or near-uniform demographics.
    Other commenters stated that, as proposed, the rule encourages only 
narrow partnerships, primarily among existing CDBG or HOME consortia, 
and given the regional scope needed to properly analyze and 
contextualize the provided data, these small collaborations will need 
to use scarce administrative dollars to find outside assistance. The 
commenters stated that while there is some efficiency to be gained from 
these types of collaborations, the most effective AFHs will be based on 
regions defined by the boundaries of MPOs or Regional Councils.
    Commenters stated that regional jurisdictions do not necessarily 
conform to MSA boundaries, and that many have the capacity to perform 
the analysis and policy recommendation tasks necessary to complete a 
regional AFH. Commenters stated that none of the materials released by 
HUD in association with the proposed rule mention the FHEA or the RAI 
being developed by participants in the Sustainable Communities Regional 
Planning Grant program, and this is a mistake on HUD's part. Commenters 
stated that these regions are large enough to capture the dynamics that 
create both RCAPs and areas of opportunity, and that they also have 
existing agencies with the capacity to provide rigorous data analysis 
and community engagement, linking fair housing efforts with other 
Federal planning efforts, such as transportation.
    Other commenters expressed concern that the rule would allow non-
contiguous jurisdictions to collaborate on a regional AFH. The 
commenters stated that as proposed, the rule would allow any two 
jurisdictions across the nation to form a regional AFH, and this allows 
for illogical and counterproductive collaborations. The commenters 
stated that this would allow a partnership of all-white communities to 
submit a regional AFH that could mask the fair housing issues in their 
jurisdictions. The commenters

[[Page 42324]]

stated that this risk is intensified given that the proposed rule does 
not require specific outcomes and allows AFHs to identify only one 
issue.
    Other commenters stated that the importance of assessing housing 
needs on a regional basis should be emphasized, including in the 
definitions of ``disproportional housing needs,'' ``segregation'' and 
``fair housing choice.''
    HUD Response: HUD understands that regional collaboration can be 
challenging, but believes that, in many cases, the benefits will 
outweigh the challenges, and HUD will continue to encourage regional 
collaboration and provide incentives, such as bonus points in HUD 
notices of funding availability (NOFAs), where feasible.
    With respect to commenters' concern that regional collaboration 
will produce overly generalized analyses and fail to provide 
accountability for individual jurisdictions, the proposed rule 
specifies that a regional AFH must include barriers to fair housing at 
both the local and regional levels, and that participating in a 
regional AFH does not relieve program participants from analyzing and 
addressing fair housing issues and contributing factors within 
individual jurisdictions.
    As the rule makes clear, when collaborating to submit a joint or 
regional AFH, program participants may divide work as they choose, but 
all participants are accountable for the analysis and any joint goals 
and priorities. Program participants are also accountable for their 
individual analysis, goals, and priorities. (See Sec.  5.156(a)(3).) 
For example, in a regional collaboration involving two entitlement 
jurisdictions and two PHAs, the entitlement jurisdictions may conduct 
certain parts of the joint analysis and the PHAs may conduct other 
parts. HUD believes it is best left to the program participants in a 
joint or regional collaboration to decide how their individual 
expertise may best contribute to a joint or regional AFH. However, 
notwithstanding the division of labor that program participants may 
choose, each program participant is accountable for the joint analysis, 
goals, and priorities in a joint or regional AFH, as well as being 
accountable for any individual analysis, goals, and priorities that the 
participant includes in the joint or regional AFH.
    Rule clarification. HUD has revised the final rule to clarify that 
joint participants and regionally collaborating participants must not 
only analyze and address local fair housing issues and contributing 
factors that affect choice but must also set goals within their 
respective geographic areas of analysis. (See Sec.  5.156(e).)
    With respect to commenters suggestion that regional collaboration 
will not be as meaningful if collaboration is only among regions with 
like demographics, and those that stated that regional jurisdictions do 
not necessarily conform to MSA boundaries, HUD declines to impose 
additional requirements for jurisdictions that choose to collaborate on 
regional AFHs, in order to require a particular demographic mix. HUD 
notes that all program participants must conduct an analysis of fair 
housing barriers both within a local jurisdiction and at the regional 
level, which will prevent jurisdictions from conducting a narrow 
analysis of patterns solely within the jurisdiction.
    With respect to the comments regarding FHEAs prepared with support 
from the HUD Sustainable Communities Initiative, HUD encourages 
communities that have prepared a FHEA to use this process and analysis 
to inform the creation of a RAI. HUD will provide guidance to grantees 
on how to convert a FHEA to a successful Regional AFH.
    With respect to the comments regarding RAIs prepared with support 
from the HUD Sustainable Communities Initiative, HUD noted earlier in 
this preamble that a RAI prepared in connection with an FY 2010 and FY 
2011 Sustainable Communities Initiative award will be accepted by HUD 
as the program participant's first AFH due under the submission 
requirements of Sec.  5.160. (See Sec.  5.160(a)(2).)
    With respect to commenters' concern that allowing noncontiguous 
jurisdictions will result in ineffective collaborations, HUD has 
revised Sec.  5.156(a)(1) to clarify that regionally collaborating 
participants need not be contiguous but must be located within the same 
CBSA, as defined by OMB at the time of submission of the regional AFH. 
Alternatively, if the program participants are not located in a CBSA, 
the program participants may submit a request in writing to HUD seeking 
approval as regionally collaborating program participants for the 
reasons stated in the request. The term ``Combined Statistical Area'' 
was removed from the final rule due to concerns with adding an 
unnecessary level of complexity and administrative burden in the 
provision of Federal data for program participants.
    While all forms of regional collaborations are greatly encouraged, 
HUD acknowledges that there may be administrative challenges to 
providing the data, maps, and tables for some elements in the 
Assessment Tool that will need to be provided to some types of regional 
collaborations. For instance, program participants seeking to do a 
regional AFH, that are not in the same CBSA, could likely have numerous 
issues with aggregating different types of data. HUD notes that it will 
work with program participants to address such challenges, but may be 
limited by considerations with the format in which the data may be 
realistically provided. HUD will nevertheless endeavor to provide such 
collaborations with appropriate leeway in submitting their AFHs in a 
manner so that they can be accepted by HUD.
    Whatever form of collaboration is selected by program participants 
and approved by HUD, HUD reiterates that the rule specifies that a 
regional AFH must include barriers to fair housing at both the local 
and regional levels, and that participating in a regional AFH does not 
relieve program participants from analyzing and addressing fair housing 
issues and contributing factors within individual jurisdictions. (See 
Sec.  5.156(e).)
    With respect to commenters' request that the definitions of 
``disproportionate housing needs,'' ``segregation'' and ``fair housing 
choice,'' emphasize the importance of assessing housing needs on a 
regional basis, please see HUD's earlier response to comments about 
suggested revisions to these terms.
    Comment: Mandate that municipalities consider regional needs for 
members of a protected class. A commenter stated that the most crucial 
omission in the proposed rule is allowing municipalities the option of 
taking a regional approach to affirmatively furthering fair housing 
rather than mandating consideration of regional needs for increased 
housing opportunity for members of protected classes. The commenter 
stated that this flaw allows affluent communities that have excluded 
members of protected classes to continue excluding because they have no 
existing concentrations of class members who are being denied fair 
housing. A program participant could argue that it has no need to allow 
the development of additional subsidized housing that might be 
affordable for protected class members because it had no existing 
residents who would be income-eligible.
    Other commenters stated that the rule should require participants 
to analyze the regional impacts of local decisions and implement 
strategies that make measurable progress toward promoting integration 
and reducing disparities in access to community assets across 
jurisdictional lines. The commenters

[[Page 42325]]

stated that in many cases this will require the sort of regional 
collaboration that the proposed rule encourages.
    HUD Response: All program participants submitting an AFH must take 
regional needs into consideration. The regulatory text at Sec.  
5.154(d)(2), entitled ``Analysis of data'' requires identification of 
various issues ``within the jurisdiction and region'' (emphasis added). 
With respect to commenters' request that participants analyze regional 
impacts of local decisions, HUD believes that the requirement that 
participants analyze issues and impacts of both a jurisdiction and a 
region addresses the commenters' concern.
    Comment: Regional assessment is at odds with consultation 
requirements. Commenters stated the proposed rule at Sec.  5.156(a) 
(Regional assessments and fair housing planning) indicates that 
consultation with adjacent units of general local government, while 
encouraged, is not mandatory. The commenters stated that the rule 
provides that two or more program participants (regionally 
collaborating program participants) may, and are encouraged to, 
collaborate to conduct and submit a single regional AFH to evaluate 
fair housing issues and contributing factors from a regional 
perspective (Regional AFH). The commenters stated that, however, 
proposed regulations in 24 CFR part 91 regarding the formulation of a 
locality's consolidated plan require consultation with adjacent 
localities. The commenters stated that HUD's regulation at Sec.  
91.100(a)(5) (Consultation; local governments, General) provides that 
``[t]he jurisdiction also shall consult with adjacent units of general 
local government, including local government agencies with 
metropolitan-wide planning and transportation responsibilities, 
particularly for problems and solutions that go beyond a single 
jurisdiction.'' (Emphasis added.) The commenters stated that to require 
a central city in a metropolitan area, such as New York City, to 
consult with adjacent local governments, and by implication, request 
that such localities use their limited entitlement grant funds to 
assist the central city to meet its fair housing goals, may not be 
practical or financially feasible.
    The commenters requested that Sec.  91.100(a)(5) be amended to be 
consistent with the proposed regulation Sec.  5.156(a). The commenters 
stated that Sec.  91.100(a)(5) should be revised to read as follows: 
``The jurisdiction may also consult with adjacent units of general 
local government, including local government agencies with 
metropolitan-wide planning and transportation responsibilities, 
particularly for problems and solutions that go beyond a single 
jurisdiction.'' (Emphasis added.)
    HUD Response: HUD agrees with commenters and is maintaining 
existing consultation requirements, which provides in Sec.  
91.100(a)(5) that jurisdictions should consult with adjacent units of 
general local government.
    Comment: Allow PHAs to participate in a regional AFH. Commenters 
stated that an option for PHAs to participate in a regional AFH should 
be specifically stated in the rule and cited to Sec.  5.156 and Sec.  
903.15. The commenters stated that most PHAs in cities that are HUD 
`entitlements' should collaborate in their city's AFH, but that for 
PHAs in cities participating in a regional AFH, an additional option 
should be added to the list in Sec.  903.15.
    HUD Response: HUD agrees with the commenters and has made explicit 
that PHAs have the option to participate in a regional AFH.
    Rule change. The final rule revises the proposed definition of 
``regionally collaborating program participants'' in Sec.  5.152, now 
entitled ``regionally collaborating participants,'' to state that ``A 
PHA may participate in a regional assessment in accordance with PHA 
Plan participation requirements under 24 CFR 903.15(a)(1).''
    Comment: Allow States to participate in a regional AFH. It is not 
clear from the proposed rule whether or not States are able to be a 
partner in a regional AFH and what that collaboration would look like.
    HUD Response: States are encouraged to participate in joint or 
regional AFHs, particularly with program participants within their own 
jurisdictions. In cases where the participants are not located in the 
same State or CBSA, the participants must submit a written request to 
HUD for approval stating why the collaboration is appropriate.
    Rule change. The final rule provides that program participants, 
whether contiguous or noncontiguous, that are either not located within 
the same CBSA or that are not located within the same State and seek to 
collaborate on an AFH, must submit a written request to HUD for 
approval of the collaboration, stating why the collaboration is 
appropriate. The collaboration may proceed upon approval by HUD. (See 
Sec.  5.156(a)(2).)
    Comment: Regional councils of governments, Metropolitan Planning 
Organizations and other regional planning bodies should be permitted to 
serve as the lead entity for Regional AFHs. Commenters stated that 
regional councils of government should be explicitly permitted to serve 
as the ``lead entity.'' The commenters stated that the preamble to the 
draft rule calls for a ``lead entity,'' but states that the lead entity 
must be a ``member.'' The commenters stated that regional councils 
serve all local governments in the region and are in a strong position 
to oversee and administer preparation of an AFH.
    The commenters also stated that the opportunity presented by the 
revisions of the AFH process for HUD grant participants is an 
opportunity to build on existing capacities in regional partnerships 
which would further the intentions of the proposed rule to include 
incorporation of fair housing issues across the spectrum of regional 
decisions. The commenters stated that specifically, many regional 
planning commissions, MPOs and/or councils of government already 
prepare detailed assessments of housing needs within a region, 
utilizing many of the same data sets, assessment tools, and public 
participation techniques envisioned for AFH planning in the proposed 
rule, but that because these institutions are not formally participants 
in the consolidated planning process, they have not traditionally been 
involved in consolidated planning nor in coordinating consolidated 
plans with other regional land use and transportation plans.
    The commenters stated that HUD should add language at the final 
rule state to maximize the opportunity and flexibility for a variety of 
regional institutions to be involved in AFH planning processes. The 
commenters stated that HUD should make it reasonably easy for 
participants to designate other agencies or institutions (including 
county governments, MPOs, Regional Planning Commissions, etc.) as lead 
agencies in development of AFH plans and assessments, and that HUD 
should support a wide range of institutional partnership structures at 
the regional and state levels in the preparation of AFHs, even to the 
extent of including non-participants in the governance structure of 
these organizations. The commenters stated that the exact institutional 
configuration of regional AFH planning agencies should be allowed to 
vary from state to state, with states encouraged to utilize existing 
structures of regional governance and collaboration.
    The commenters further stated that like other Federal agencies 
which administer grant programs with regional entities (and the 
commenters cited to EPA, DOT), HUD should strive for

[[Page 42326]]

flexibility in the form of regional collaborative partnerships for AFH 
preparation, both to leverage existing partnerships in AFH development, 
but also to catalyze increased integration between housing and 
community development issues with larger regional development plans, 
and noted that participation in regional AFHs would be voluntary. The 
commenters stated that rather than writing rules and policies with a 
``one-size-fits-all'' approach standardized across the country, HUD 
should be flexible in encouraging AFH preparation on a regional level 
and working with existing regional institutions, but noted that this 
flexibility must be combined with strong standards to ensure that 
regions and individual communities are making progress in their goals 
to affirmatively further fair housing.
    HUD Response: HUD agrees with the commenters that a variety of 
regional institutions should be involved in AFH planning processes. For 
this reason, HUD requires consultation with local and regional 
government agencies with metropolitan-wide planning and transportation 
responsibilities in Sec.  91.100. HUD also agrees that collaboration to 
prepare a regional AFH can take many forms and that the rule should be 
flexible to allow for a range of regional collaborations, which is 
provided for in Sec.  5.156(a).
    HUD declines to expand the definition of a ``lead entity,'' at 
Sec.  5.156(a), to include any entity that is not a program 
participant. HUD has revised the final rule to clarify that the lead 
entity need not be responsible for the preparation of an AFH (by 
deleting ``the development'' of the regional AFH from the ``lead 
entities'' responsibilities). A lead entity is responsible for 
overseeing the submission of a regional AFH and obtaining the express 
consent of all other regionally collaborating program participants who 
join in the regional AFH. In addition, where alignment of program years 
and/or fiscal years is not possible, the submission deadline for a 
regional AFH will be based on the lead entity's program years and/or 
fiscal years. Regional councils of governments, MPOs, and other 
regional planning bodies may lead and coordinate the development of a 
RAI, as long as a regionally collaborating participant serves as a lead 
entity for submission purposes.
19. Bonuses and Incentives
a. Bonuses and Incentives, Generally
    Comment: Reward HUD program participants that show progress in 
affirmatively furthering fair housing. Commenters suggested that HUD 
reward participants that can demonstrate integration within their 
jurisdiction or substantial efforts to promote integration within their 
jurisdiction. The commenters stated that such rewards could include 
bonus points awarded under competitive funding, additional or set aside 
funds, and/or reduced regulatory burdens for such participants. The 
commenters stated that these rewards would be communities that are 
moving in a positive direction; that is, they are at, near, or moving 
closer to the demographics of their region. The commenters stated that 
diverse communities should be offered higher marks for their progress 
(intentional or not) and be given preference over exclusionary 
communities for Federal investments. The commenters stated that would 
be a much stronger incentive if it were tied to regional plans that 
included the potential for other Federal agencies (especially those of 
the Sustainable Communities Partnership--HUD, EPA, DOT--and the 
Department of Education) to consider a community's ranking or score 
related to inclusion and integration. Other commenters stated that HUD 
should provide priority scoring on competitive grants for projects and 
activities that implement stated goals in adopted AFHs (similar to 
Preferred Sustainability Status adopted by some Partnership for 
Sustainable Communities agencies, but with inclusion of additional 
agencies that have authority over issues related to fair housing, 
including Treasury, DOJ, EDA, USDA.
    HUD Response: HUD appreciates these suggestions and will take them 
into consideration.
    Comment: Include the Qualified Allocation Plan (QAP) in the AFH 
analysis. Commenters stated a QAP should be included in an AFH 
analysis, and that the QAP should include incentives and/or bonuses for 
proposals that will affirmatively further fair housing.
    HUD Response: A QAP is the mechanism by which state housing finance 
agencies establish the criteria by which applicants will be awarded 
low-income housing tax credits (LIHTC). QAPs are required by statute to 
include certain specified criteria and preferences; however, states are 
permitted discretion in other program design elements. Because the 
LIHTCs are the largest producer of affordable housing in the country 
today, QAPs have a significant impact on the location and occupancy of 
new affordable housing units. Accordingly, QAPs play a key role in 
shaping local fair housing issues. Program participants, including 
States, will be required in the Assessment Tool to analyze data on the 
location and occupancy of affordable LIHTC units and to consider the 
impact of a QAP on fair housing issues in their jurisdiction. HUD 
welcomes innovative approaches by States to encourage state housing 
finance agencies to affirmatively further fair housing through benefits 
and incentives.
    Comment: States can provide incentives for their subgrantees to 
affirmatively further fair housing. Commenters stated that a State can 
choose to fund non-entitlement communities that plan to address fair 
housing issues that are identified in the AFH. The commenters stated 
that States can also, to the extent feasible, use HOME funds to 
directly address fair housing issues in non-entitlement areas.
    HUD Response: HUD welcomes innovative approaches by States to 
ensure that subgrantees effectively affirmatively further fair housing.
b. Bonuses and Incentives for Regional Collaboration
    Comment: Incentives are necessary to achieve regional collaboration 
because of the difficulties involved in collaborating beyond regions. 
Commenters stated that encouragement of regional collaboration by HUD 
is an important acknowledgement that segregation does not stop at a 
community's borders. The commenters stated that it is also important 
because there are many factors that make regional collaboration 
difficult, and if HUD wants to encourage regional AFHs, HUD should 
provide incentives--financial or non-financial--for such efforts. The 
commenters stated that without these incentives, jurisdictions may be 
reluctant to take on the challenge of inter-jurisdictional 
collaboration. Commenters stated that because of the difficulties of 
collaborating regionally, incentives will need to be of great worth. 
Some commenters stated that the best incentive is money, but recognized 
that HUD's ability to provide financial incentives is limited. Some 
commenters stated that awarding bonus points for collaborative and 
cooperative approaches is an excellent idea to increase the potential 
for diverse input into the document, especially for competitive 
funding, such as has been done in HUD's Continuum of Care and 
Sustainable Communities competitions.
    Other commenters suggested non-financial incentives that HUD should 
consider to encourage regional collaboration among local governments

[[Page 42327]]

and States and greater engagement with public housing planning, 
including: (1) National level partnerships: The commenters stated that 
HUD should continue to build strong partnerships at the national level, 
opening the doors to encourage collaboration at the local and regional 
level. The commenters stated that national level partnerships can be 
effective in setting the tone at the local and regional levels and can 
catalyze regional planning in partnership with other public and private 
agencies. The commenters stated that partnerships develop and increase 
capacity, ensure coordination among stakeholders, increase program 
efficiency and sustainability and, most importantly, help to meet the 
needs of the community. As an example of such national partnerships, 
the commenters cited to the partnership between HUD and DOL, under the 
American Recovery and Reinvestment Act, 2009, which was created to 
encourage PHAs and local Workforce Investment Boards (WIBs) to 
collaboratively identify opportunities to train and place public 
housing residents into jobs created by PHAs' Recovery-funded capital 
improvement projects. (2) Grant Application Bonus Points: The 
commenters stated that awarding bonus points in HUD grant applications 
for creating partnerships with other local governments and Federal 
grant programs will assist in increasing capacity, avoid duplication of 
services, and create sustainability. As an example of this effective 
grant bonus points, the commenters cited to the recent NOFA in which 
HUD awarded bonus points for applicants that have received Preferred 
Sustainability Status.
    Other commenters stated HUD should request the Department of 
Treasury to provide incentives for states to grant regions a direct 
allocation of low-income housing tax credits if: (1) They have an 
approved regional AFH that is aligned with their Regional 
Transportation Plan; and, (2) their QAP will help implement goals of 
the AFH. However, the commenters did not provide suggestions on what 
incentives should be offered.
    HUD Response: HUD appreciates these suggestions offered by all 
commenters, and will take them into consideration.
    Comment: Reward regional collaboration by giving priority in the 
provision of HUD technical assistance. Commenters stated that regional 
collaborations and large urban counties should be allowed to have some 
priority in the provision of HUD fair housing technical assistance. 
Commenter stated that these potential collaborations may be more 
complicated in nature and may have a greater need for technical 
assistance, especially at the planning stage.
    PHA commenters submitted similar comments stating that HUD needs to 
consider that the governance of public housing agencies varies from 
state to state. The commenters stated that not all local governments 
have authority over their local PHA or even the ability to require the 
PHA to engage in any type of collaborative effort or planning, nor do 
many local governments financially support (or have the means to 
financially support) the local PHA. The commenters stated that one way 
to promote regional collaboration would be to provide the technical 
assistance needed to bring all parties to the table and then assurance 
that the work product will be accepted by HUD. The commenters stated 
that in large regions with many HUD-funded jurisdictions, including 
multiple PHAs, there are often multiple HUD representatives assigned to 
the local jurisdictions. The commenters further stated that when local 
jurisdictions meet to discuss common issues, they sometimes find that 
the guidance they have been given by their various HUD representatives 
is not consistent. The commenters stated that a consistent message from 
HUD would be one way to promote regional collaboration.
    HUD Response: With respect to commenters seeking first priority for 
HUD technical assistance, HUD will not commit to prioritize which 
program participants receive technical assistance, but as HUD has 
stated in its proposed rule and reiterates in this final rule, HUD is 
committed to providing technical assistance to all program participants 
throughout the process and as promptly as possible.
    Comment: Consider a broader meaning of regional collaboration, and 
require AFHs to include entire metropolitan regions. Commenters stated 
that the rule considers a ``regional'' collaboration to be a 
collaboration of two or more program participants. The commenters 
stated that the most obvious collaborations would arise from 
jurisdictions that are members of HOME consortia, but that a two-
community ``region'' or even a HOME consortium is hardly a true region. 
The commenters stated that housing discrimination may be localized, but 
public policies that discourage housing choice occur over a much 
broader area. The commenters stated that while they would not 
discourage such smaller collaborations if such collaborations are the 
only ones possible, the commenters felt that HUD should encourage 
program participants to consider broader regional collaborations that 
align with other regional planning processes, such as those of a 
metropolitan planning organization or regional planning council.
    The commenters stated that Sec.  5.156(b) requires that entitlement 
jurisdictions coordinate program years and submission deadlines. The 
commenters stated that this requirement works well for existing HOME 
consortia as these entities have already aligned their program years, 
but that many urban counties have discovered, during negotiations over 
HOME consortia, the adjusting of program years can be a barrier to 
collaboration, particularly for smaller jurisdictions that fear the 
fiscal and budgeting impacts of such a change. The commenters stated 
that steps should be taken to ensure that this issue does not prevent 
regional collaboration in the development and implementation of AFHs.
    The commenters also stated that Sec.  5.156(d) states that the 
preparation of a regional AFH ``does not relieve each regionally 
collaborating program participant from its obligation to analyze and 
address local fair housing issues and contributing factors that affect 
housing choice within its respective jurisdiction.'' The commenters 
stated that they agree that any regional analysis must connect each 
collaborating community with specific actions it will take to 
affirmatively further fair housing, but that given the goal of 
connecting the AFH with future consolidated plans, this requirement 
could be better crafted to incentivize partnerships. The commenters 
stated that with the tight timeframe for the completion of the AFH 
within one year before the submission of the consolidated plan, 
communities are developing recommendations for fair housing twice 
within a 2-year period, and this creates redundancy.
    Conversely, other commenters recommended that the final regulations 
allow regional AFHs to focus on robust analyses of fair housing 
conditions and to include broader regional recommendations for 
implementation, leaving recommendations for actions specific to 
individual entitlement jurisdictions to the consolidated planning 
process. The commenters stated that such local recommendations should 
be consistent with the analysis included in the regional AFH, and 
supportive of the implementation steps included in the regional AFH. 
The commenters stated that under this model the regional AFH becomes 
the ``existing conditions report'' for multiple communities on the 
state of

[[Page 42328]]

fair housing in the region, along with steps that can be taken 
throughout the region, with each community using the consolidated 
planning process to develop recommendations for response within their 
own jurisdiction. The commenters stated that these two efforts will be 
connected and supportive of one another, but not redundant.
    Other commenters suggested that HUD strengthen its regional 
emphasis by requiring AFHs to include entire metropolitan regions 
(working through MPOs, large PHAs, and/or counties) and to measure 
existing conditions (housing segregation, poverty concentration and 
opportunity assets) as well as the goals and progress of the 
consolidated plan based on a region's demographics and opportunity 
structures. The commenters stated that while metropolitan regions 
should be the scope and scale for assessing and addressing integration 
and housing opportunity, local jurisdictions cannot be let ``off the 
hook.'' The commenters stated that each community within a metro region 
(and unincorporated areas that aren't within local jurisdictions but 
part of the metro area) must be included in both the analysis of 
available data in the AFH and the plans and goals reflected in a 
regional consolidated plan, and that each local community's current 
situation as well as its goals and progress should be measured against 
regional demographics, trends, and assets. The commenters suggested 
that a community's progress should be assessed and measured in 
connection with its region.
    The commenters further stated that a community's goals should be 
based on regional goals, which should be based on regional demographics 
and opportunity structures. The commenters stated that, in this way, 
the most pressure for making progress toward greater inclusion would be 
put on communities that have done the least (the most exclusive), have 
the most (community assets--schools, jobs, tax base, etc.), and whose 
racial and economic demographics are the farthest away from the 
region's demographics. The commenters stated that, at the same time, 
communities that are moving in a positive direction (becoming 
increasingly diverse and inclusive and closer to the region's 
demographic and economic mix) should be viewed in a more positive light 
and given credit for their progress. The commenters concluded by 
stating the need to ensure that communities with fewer assets (in 
relationship to its region) such as lower fiscal capacity, lower 
incomes, and struggling schools are not viewed in the same light as 
their wealthier neighbors.
    HUD Response: With respect to the set of comments regarding timing 
of submissions, HUD encourages program participants preparing a 
regional AFH to align submission deadlines using procedures already 
available for changing program year and fiscal year start dates. Where 
such alignment is not practicable, program participants may still 
collaborate but may require incorporation into their respective plans 
at different time periods that more closely align with their 
consolidated plan or PHA Plan cycle.
    With respect to the set of comments requesting that HUD require all 
or a majority of jurisdictions within a metropolitan area to 
participate in a regional AFH, HUD declines to impose this as a 
requirement in the rule. HUD prefers to preserve flexibility in the 
rule and believes that program participants should determine the other 
program participants with which they collaborate on a regional AFH.
    HUD agrees with the comment that it should encourage program 
participants to consider broader regional collaborations that align 
with other regional planning processes, such as those of a metropolitan 
planning organization or regional planning council. HUD will work with 
the DOT to include guidance on partnering with metropolitan planning 
organizations in the guidance it provides to program participants.
    With respect to the set of comments requesting that HUD clarify 
whether regionally collaborating participants must set fair housing 
goals specific to individual jurisdictions included in the regional 
AFH, HUD has changed the language of the rule to make clear that they 
must do so.
    Rule clarification. In Sec.  5.156, HUD clarifies that each 
regionally collaborating program participant must set goals for its 
geographic area of analysis.
    Comment: Incentives for regional collaboration may harm rural 
communities. Commenters stated that providing incentives to program 
participants that engage in regional collaboration can work to the 
disadvantage of rural communities that are in critical need of 
resources because they will not be able to gain bonus points for 
competitively distributed funding, and therefore may not be rated 
sufficiently high in a funding competition to secure funding.
    HUD Response: HUD appreciates commenters raising this concern. HUD 
will seek to encourage jurisdictions to collaborate with rural 
communities. As HUD's final rule provides, a regional AFH does not 
require regions to be contiguous, subject to HUD approval. In addition, 
in its funding competitions, HUD structures any bonus points in a 
manner that avoids precluding any applicant from the ability to obtain 
bonus points.
    Comment: Allow States to award bonus points to subgrantees. 
Commenters stated that HUD should allow States to structure ``bonus 
points'' and criteria for awarding bonus points to subgrantees. The 
commenters stated that State grantees would be better served by 
allowing them to structure their evaluation of applications from 
subgrantees to consider the degree to which the applicant's proposal 
encourages regional collaboration.
    HUD Response: HUD welcomes innovative approaches by States to 
ensure that subgrantees effectively affirmatively further fair housing, 
consistent with program requirements.
    Comment: Reward bonus points for regional AFHs that are effective 
not simply because they are regional AFHs. Commenters stated that 
rather than merely allowing regional AFHs, the final rule should give 
incentives to jurisdictions that are willing to reach out and work 
together to improve housing choice. The commenters stated that it may 
require more time and political leadership from a jurisdiction to be 
part of a meaningful regional AFH process, but it also could result in 
a more effective fair housing strategy. The commenters stated that 
regions often work together on transportation planning, so it would 
make sense to give incentives for regional fair housing planning as 
well.
    HUD Response: The reason that HUD strongly encourages collaboration 
by program participants (whether regionally collaborating program 
participants or joint participants) is that HUD expects that 
jurisdictions working together will more effectively affirmatively 
further fair housing, and may be able to reduce costs by sharing 
resources. HUD already strongly encourages collaboration by program 
participants (whether regionally collaborating participants or joint 
participants) because HUD expects that the very fact that jurisdictions 
are working together will lead them to more effectively affirmatively 
further fair housing.
    Comment: Provide an incentive for PHAs to participate in Regional 
AFHs by providing an Option 4 similar to Option 3. HUD could provide an 
Option 4, similar to Option 3, which would allow any PHA that primarily 
serves an area covered by a regional AFH to be bound by the regional 
AFH, whether or not the PHA participates in its

[[Page 42329]]

preparation. The commenters stated that an Option 4 concerning regional 
AFHs would go further to incentivize regional collaboration, as well as 
make this option more viable to PHAs. The commenters recommended that 
HUD incorporate in Sec.  903.15, in a new Option 4 or such other 
section as HUD determines best, the option for two or more PHAs to join 
together to submit a regional AFH, with or without Con Plan 
jurisdictions.
    HUD Response: HUD has reordered and substantially revised PHA 
options to participate. HUD is now providing a new Option 2 entitled 
``Assessment of Fair Housing with PHAs,'' which allows PHAs to engage 
in joint collaboration in the preparation and submission of the AFH. 
PHAs may also engage in an AFH with a group of PHAs under Option 2, or 
may engage with State or relevant CDBG jurisdictions under Option 1, 
entitled ``Assessment of Fair Housing with Units of General Local 
Government or State Government Agencies.''
20. Public Housing Issues and Options 1, 2, and 3
a. PHA Certification
    Comment: PHA's certification, in particular, is subject to 
challenge. Commenters stated that proposed Sec.  903.2(d)(3)(i)(A) 
Validity of Certification, which is moved to Sec.  903.15(d) in this 
final rule, indicates that a PHA's certification that it is 
affirmatively furthering fair housing is subject to challenge if it 
``does not reduce racial and national origin concentrations in 
developments or buildings and is perpetuating segregated housing.'' The 
commenters stated that there is danger that this provision could be 
interpreted to preclude the use of capital funds or other resources to 
rehabilitate, modernize, or otherwise improve the living conditions for 
existing residents of public housing who choose to remain in their 
homes and communities. The commenters stated that they are especially 
concerned because challenges may occur after HUD has accepted an AFH 
completed by a jurisdiction required to submit a consolidated plan, by 
PHA that elects to prepare its own AFH, or by a State; and after HUD 
has approved a Consolidated Plan or a Public Housing Agency Plan. The 
commenters stated that therefore, after PHAs have complied with these 
requirements in good faith, and after HUD has reviewed documents and 
determined that they meet fair housing requirements, PHAs remain at 
risk of being found out of compliance with fair housing requirements, 
as a result of the certification. The commenters stated that PHAs 
should not be burdened with having to prove they are accomplishing 
tasks or outcomes which HUD does not define, nor should HUD be 
authorized to challenge civil rights certifications on the basis of 
general or ill-defined grounds.
    Commenters recommended that to overcome the vagueness in the PHA 
civil rights certification, and to tie the assessment of compliance 
more to results, the rule should state that an action or set of actions 
qualifies as ``meaningful'' only if the PHA explains in its PHA Plan 
the measurable results it expects to see within a specified timeframe, 
explains how the anticipated results would further the goals identified 
in the applicable AFH, and then reports and assesses the actual results 
in a subsequent Plan. The commenters stated that these changes would 
advance the overall purpose of the rule, as stated in Sec.  5.150, to 
provide ``a stronger accountability system governing fair housing 
planning, strategies, and actions.'' The commenters stated that their 
suggested changes also are consistent with language in proposed Sec.  
903.2(d)(3) and Sec.  903.7(o)(3)(vii) that emphasize that compliance 
with the obligation to affirmatively further fair housing depends on 
the implementation of the plan and the results of actions.
    HUD Response: Section 903.15(d) (formerly, Sec.  903.2(d)) of this 
final rule applies to PHAs generally and is not limited in time to 
HUD's review of an AFH or PHA Plan (which includes the civil rights 
certification). HUD has clarified the validity of certification 
language to correspond with a PHA's civil rights and fair housing 
requirements, as well as the duty to adhere to the AFFH regulations in 
Sec. Sec.  5.150-5.180.
    Comment: Exempt certain program participants from submitting 
certifications. Commenters encouraged HUD to exempt certain agencies 
from submitting the certifications required by 24 CFR 903.2. Commenters 
stated PHAs operating under a consent decree pursuant to a court order, 
PHAs that have received a SEMAP deconcentration bonus, or PHAs that 
have otherwise made acceptable deconcentration certifications should be 
exempt as HUD has already determined that the PHA is acting in 
accordance with the goals of the proposed rule.
    HUD Response: HUD will not exempt certain participants from 
submitting the statutorily required civil rights certification, which 
incorporates an AFFH certification, as implemented by HUD's rule at 
Sec.  903.7(o). The fact that a PHA has received a deconcentration 
bonus is commendable but is not a basis for exemption from the AFFH 
certification.
    Comment: Clarify that a PHA's AFFH certification applies to a PHA's 
Housing Choice Voucher Administrative Plan. Commenters stated that 
proposed Sec.  903.7(o)(2) adds the specification that the 
certification applies to any plan that is incorporated in a PHA's 
annual or 5-year plan under other regulations. The commenters 
recommended that HUD state specifically that the AFFH certification 
applies to a PHA's HCV Administrative Plan, which includes numerous 
policies that are central to the obligation to affirmatively further 
fair housing, such as payment standards, occupancy standards, policies 
on housing search time, and how the PHA Plans to expand housing 
choices.
    HUD Response: The AFFH rule provides that the civil rights 
certification implemented atSec.  903.7(o) applies to all PHA plans and 
any plan incorporated therein. No category of PHAs has been excluded.
    Comment: Clarify what ``contribution'' means in Sec.  
903.7(o)(3)(vi). Commenters stated that in the civil rights 
certification required in Sec.  903.7(o), paragraph (3) states that a 
PHA shall be considered in compliance with the certification 
requirement to affirmatively further fair housing if the PHA fulfills 
the requirements of Sec.  903.2(d) and, among other things, complies 
with any contribution or consultation requirement with respect to any 
applicable AFH under 24 CFR 5.150-5.166. The commenters stated that it 
is not clear what is meant by ``contribution.''
    HUD Response: The rule at Sec.  5.156 sets out the roles PHAs may 
play when contributing to joint or regional AFHs, as well as setting 
out specific consultation requirements.
b. Planning Efforts Required of PHAs
    Comment: Other planning efforts go beyond activities that PHAs can 
handle; other planning efforts should not be part of the AFH 
requirement. Commenters stated that the proposed rule takes an 
expansive view of the scope of a program participant's obligations 
entailing activities and strategies well beyond the usual scope of 
activities for a consolidated plan agency. Commenters stated that these 
include actions to influence local land use and zoning, social service 
delivery, public transportation, etc., and that while these actions may 
have some utility where a program participant is a unit of a local 
government that has a greater degree of direct control over these and 
other areas, they do not fit as well with the

[[Page 42330]]

varied scope of powers and responsibilities of PHAs and housing finance 
agencies (HFAs), especially those whose activities are limited to 
voucher administration. Commenters stated that this suggests that the 
other planning efforts and programs should not be tied in to the AFH 
requirement. The commenters stated that related to this concern is 
HUD's statement in the rule that it plans to use transportation and 
other data, and whether local/regional transportation agencies or other 
agencies agree with the data could be problematic. The commenters 
stated that if there are disagreements over not only data but also the 
goals or methods to be used, the process for reconciling these 
differences only adds to the administrative complexity and potential 
cost of implementation. The commenters stated that it is unclear how 
much leverage or authority the HUD programs associated with the AFH 
would have in these other areas.
    HUD Response: HUD understands that the scope of activities in any 
program participant's jurisdiction, not only that of a PHA, that may 
impact fair housing choice and access to opportunity are broad and the 
rule acknowledges such broad scope. However, the Assessment Tool helps 
program participants to determine which activities or factors have 
greater impact than others, prioritize these factors, and establish 
goals to address those that are designed by the program participant as 
priorities.
c. Options for AFH Submission
    Comment: Clarify which PHAs may participate under each of the three 
options. Commenters stated that PHAs are required to submit an AFH (and 
to conduct an AI) and the current rule limits Option 3 to PHAs 
``covered by state agencies,'' but all PHAs are covered by one State 
agency or another. It appears that all PHAs have the option of 
participating in the State AFH and consolidated plan. If that is not 
the case, HUD must clarify language to indicate which PHAs may 
participate under a State's AFH. Finally, the regulation seems to 
permit agencies within jurisdictions subject to consolidated plan 
requirements and those which are not to conduct their own AFH. However, 
although PHAs outside of jurisdictions that are required to submit 
consolidated plans, ``may choose whether to participate or not with the 
State in the preparation of the state agency's AFH,'' they, ``will be 
bound either way by the state agency conclusions contained in the 
State's AFH.'' HUD should clarify this language. If PHAs have 3 options 
available, as it appears, the rule should state those choices clearly. 
If PHAs have only 2 options available, the rule should state so 
clearly. If PHAs outside local jurisdictions that are required to 
submit consolidated plans have only 1 option available, HUD should 
amend the proposed rule to allow those PHAs discretion to conduct their 
own AFH.
    HUD Response: HUD agrees and has clarified the three options 
available to PHAs. The final rule collapses the proposed rule's Option 
1 and Option 3 into a revised Option 1 entitled ``Assessment of Fair 
Housing with Units of General Local Government or State Governmental 
Agencies.'' As such, HUD is indicating that a PHA may participate in 
the development of an AFH with either a unit of general local 
government or a State governmental agency, as applicable, under Option 
1. HUD has further clarified in Sec.  91.110(a)(1) that only PHAs that 
operate on a State-level or that certify consistency with a State 
consolidated plan will participate with State Governmental Agencies 
under Option 1.
i. Option 1
    Comment: The final rule must reinforce the acceptability of option 
1. Commenters stated that the final rule must clearly reinforce the 
acceptability of the first option throughout the text of the final 
rule, including in the definition of ``affirmatively furthering fair 
housing'', the definition of ``fair housing choice,'' and in the 
opening subsection pertaining to the Assessment of Fair Housing. The 
final rule must recognize that affirmatively furthering fair housing 
may entail devoting resources to improve areas of concentrated racial 
and ethnic poverty by preserving and improving affordable housing, and 
by implementing investment policies that augment access to essential 
community assets for protected class residents who wish to remain in 
their communities--while protecting them from the forces of 
displacement.
    HUD Response: As noted earlier in this preamble, the ``Purpose'' 
section of the rule and the definition of ``affirmatively furthering 
fair housing'' have been clarified in this final rule in a manner that 
indicates preserving affordable housing may be part of an appropriate 
strategy for addressing fair housing issues and contributing factors 
raised in the assessment of fair housing. The concept of affirmatively 
furthering fair housing embodies a balanced approach in which 
additional affordable housing is developed in areas of opportunity with 
an insufficient supply of affordable housing; racially or ethnically 
concentrated areas of poverty are transformed into areas of opportunity 
that continue to contain affordable housing as a result of preservation 
and revitalization efforts; and the mobility of low-income residents 
from low-opportunity areas to high-opportunity areas is encouraged and 
supported as a realistic, available part of fair housing choice.
    Comment: Give PHAs the discretion to collaborate with whatever 
jurisdiction the PHA chooses. Commenters stated where a PHA operates in 
more than one jurisdiction, the agency must collaborate with the 
jurisdiction within which 60 percent of its housing is located unless, 
``the majority is closer to 50 percent,'' in which case the agency may 
choose the locality with which it collaborates. Commenters stated that 
since PHAs will be attending to local political and policy 
relationships, they should have the discretion to collaborate with any 
jurisdiction within whose boundaries it operates housing, and that such 
jurisdiction will likely be the one where most of the PHA's housing is 
located, but there may be good reasons for PHAs to collaborate with 
other jurisdictions. The commenters stated that HUD's rule does not 
address agencies operated under forms of consortia in several 
jurisdictions, and that the agency may prefer to operate under a single 
AFH and may need to collaborate with one jurisdiction that includes 60 
percent of its housing stock. Commenters stated that HUD should grant 
PHAs discretion to choose a jurisdiction without Federally-imposed 
conditions.
    Similarly, commenters stated that HUD should modify standards in 
Sec.  903.15(a)(1) which allows a PHA to participate in the AFH of 
``its'' local jurisdiction rather than submit its own AFH. Commenters 
stated that the following changes ensure PHAs and localities consider 
use of all resources and reduce burdens for PHAs. The commenters 
recommended that which jurisdictions can collaborate should not be 
determined only with regard to where majority of ``hard units'' are 
located--that PHAs should have discretion to decide whom to collaborate 
with, so long as the PHA has some ``hard units'' or vouchers in the 
same geographical area as the chosen jurisdiction, and the joint AFH 
covers all the PHA's units and vouchers. Commenters stated that 
focusing on hard units will narrow the assessment and could lead to 
overlooking how changes in policies that affect where families use HCVs 
to rent homes could help overcome barriers to fair housing choice and 
promote desegregation and deconcentration.

[[Page 42331]]

    Similarly, other commenters stated that amending Option 1 in Sec.  
903.15 to allow a PHA to participate in an AFH with a broad choice of 
program participants is one way that HUD can best encourage 
collaboration. Commenters stated that this would allow PHAs flexibility 
and control of the AFH process. Commenters stated that HUD should 
define ``hard units'' to include all Federally-assisted owned and 
managed units subject to a PHA's control including but not limited to 
Section 202 Supportive Housing for the Elderly, Section 8 Moderate 
Rehabilitation, project-based vouchers and RAD conversions. Commenters 
stated that many PHAs are currently converting their public housing 
stock to RAD project-based Section 8 or project-based vouchers, and 
that if HUD does not broaden the definition in the final rule, then 
formerly public housing units that will not be considered in PHAs' AFH 
processes. Commenters stated that in some cases a PHA's vouchers may be 
utilized primarily or substantially in an adjacent jurisdiction, which 
should be considered a basis for determining an applicable 
jurisdiction. Commenter stated that Option 1 does not accurately 
reflect HUD's intent to implement a full range of regionalization 
options, and needs to be clarified to allow and encourage two or more 
PHAs to work together on an AFH, within a regional boundary. Commenters 
stated that Option 1 is meant to cover PHAs that wish to file an AFH 
with another PHA in the region, although the language is unclear, and 
therefore must be modified to explicitly allow for PHAs that wish to 
submit an AFH with other PHAs in its region.
    HUD Response: HUD appreciates the concerns raised by the commenters 
and agrees that PHAs should be given the option to choose a 
jurisdiction with regard to all units in their inventory, and that HUD 
should not question that selection unless the PHA is required under a 
VCA to participate with a specific jurisdiction.
    Rule change. This final rule revises Sec.  903.15(a) to incorporate 
these provisions.
    Comment: PHAs should determine which Unit of General Local 
Government to work with. PHAs choosing Option 1 should have the 
discretion to decide which consolidated plan jurisdiction to work with 
in developing a joint AFH, provided the PHA has some ``hard units'' or 
some vouchers in the same geographic area as the consolidated plan 
jurisdiction, and provided the joint AFH covers all of the PHA's hard 
units and vouchers. Commenters stated that it is unclear if ``hard 
units'' means only public housing units or PHA-owned units that have 
PBVs or PBRA, or PBV units in properties that the PHA does not own. 
Commenters requested that HUD define ``hard units'' to include all PHA-
owned units that have HUD-funded rental assistance, and all units, 
regardless of ownership, that have PHA-administered PBVs. Commenters 
stated that paragraph (a)(1) of Sec.  903.15 assumes one jurisdiction 
``governs the PHA's operation'' for HCV-only agencies, but that is 
untrue for some agencies, and the rule should allow an HCV-only PHA 
administering vouchers in the area of a sub-state consolidated plan 
jurisdiction to participate in the locality's AFH.
    HUD Response: HUD agrees that PHAs should be given the option to 
choose a jurisdiction with regard to all units in their inventory, 
regardless of the type of HUD assistance attached. HUD has clarified 
Option 1 in Sec.  903.15 to address this concern. However, if a PHA is 
under a VCA and such PHA chooses to participate with a unit of general 
local government or a State governmental agency, then it shall 
participate with the entity specified in its VCA.
    Comment: Are PHAs administering HCV programs only limited to Option 
1? Commenters stated that changes to the proposed Sec.  903.15(a)(1) 
indicate that a Section 8 only PHA would choose Option 1 and coordinate 
with the jurisdiction that governs PHA's operation for developing the 
AFH. The commenters asked whether Section 8 only PHAs are precluded 
from choosing Option 2 or Option 3.
    HUD Response: HCV-only PHAs will have all available options open to 
them. In addition, like all participating PHAs, HCV-only PHAs will have 
the ability to choose their level of involvement in the planning 
process.
    Comment: Why not adopt preamble language on dissenting views in 
Option 1? Commenters stated that it appears that the difference between 
Options 1 and 3 is that the PHA can submit dissenting views under 
Option 1. The commenters asked why was the verbiage found in the 
Summary of Proposed Rule regarding submission of dissenting opinions 
for Option 1, but not included in the regulatory text at Sec.  
903.15(a)(1) of the proposed rule. The commenters stated that the rule 
takes an expansive view of the scope of a program participant's 
obligations that entails activities and strategies well beyond the span 
of a state HFA's control or involvement, such as actions to influence 
local land use and zoning, social service delivery and public 
transportation. The commenters stated that the proposed requirements 
may make sense where the program participant is a unit of local 
government, but they do not fit the powers and responsibilities of PHAs 
and state HFAs, that are without any oversight or management of public 
housing.
    HUD Response: After receiving significant comment on dissenting 
opinions and on program participant disputes, HUD has removed the 
dissenting opinion from the rule. Instead, HUD encourages that jointly 
participating entities execute a MOU to govern the dispute resolution 
process.
ii. Option 2
    Comment: Option 2 is a burdensome option. Commenters stated that in 
the case of PHAs who choose Option 2, documenting and analyzing the PHA 
programs and policies has been running at least 500 hours. Commenters 
stated that imposing this burden when there have been significant cuts 
in agency funding is a real cause for alarm. Commenters stated that, in 
particular, for HOME agencies which bore the brunt of budget cuts, the 
available Administrative funds have been cut severely and makes this 
added ``unfunded mandate'' almost impossible to take seriously.
    Similarly, commenters stated that Option 2 permits PHAs to do their 
own AFH, but a PHA would still be required to contribute or consult in 
the formulation of the separate AFHs of jurisdictions that overlap with 
the PHA, and to implement initiatives that require their involvement. 
The commenter stated that Sec.  903.15(c) would require PHAs doing 
their own AFH to update their AFH annually, and this is unnecessarily 
burdensome. All other PHAs would be required to update their AFHs every 
5 years. The commenters stated that PHAs should be subject to the same 
5-year AFH requirement as required of all other entities.
    Other commenters stated that if the PHA selects Option 2 then the 
PHA must update its AFH yearly. The commenters stated that due to the 
comprehensive nature of the AFH plan, the AFH should be completed with 
the 5-Year PHA Plan. The commenters stated that the PHA Annual Plan 
would provide updates of agency's progress furthering the goals of the 
AFH. The commenters stated that the requirement for an annual update to 
the AFH should be removed because an PHA Annual Plan can meet the same 
objective as an annually updated AFH for the following reasons: (1) The 
Annual Plan will continue to focus on the goals of the AFH as it 
provides a progress report on

[[Page 42332]]

both the successes achieved and adjustments made related to the AFH 
goals; (2) It will retain an ongoing focus on the attainment of the AFH 
goals; and (3) It will streamline the process while achieving the 
intent of the AFH planning process.
    HUD Response: HUD agrees with the commenters that if PHAs are 
engaging in the Independent PHA Planning Option, they do not have to 
engage in the exercise with a consolidated plan participant but may 
still be consulted for data; and if PHAs are engaging in the 
Independent PHA Planning Option, they may still engage in community 
participation with the consolidated plan entity's AFH preparation and 
may submit comments to allow a disagreement to be known.
    Rule change. This final rule revises the paragraph on PHAs 
submitting an independent AFH and moves it from proposed Sec.  
903.15(a)(2) to Sec.  903.15(a)(3), and removes proposed Sec.  
903.15(c), which had required such PHAs to update annually.
    Comment: Small PHAs have no option other than Option 2, which is 
burdensome. Commenters stated that a PHA may conduct its own AFH with 
Option 2 and update its AFH every year. Commenters stated that small 
PHAs and consortia of PHAs that operate in communities are not subject 
to the consolidated plan requirement, and that these agencies may find 
that collaborating with development of a statewide plan is 
inappropriate. Commenters stated that they should not be burdened with 
a requirement to update AFHs annually nor be forced into an AFH 
collaboration that may not be in the agency's best interests or those 
of its participants. The commenters recommended that PHAs preparing an 
AFH under Option 2 should be subject to the same revision requirements 
as imposed on all other program participants.
    Similarly, others commenters stated the proposed rule would require 
PHAs preparing their own AFH to update that assessment annually without 
any justification for this differential treatment. The commenters 
stated that while many PHAs may elect to participate in an AFH with 
their locality, many smaller agencies are located in localities which 
do not receive grants covered by this proposed rule and so do not 
prepare consolidated plans. The commenters stated that the only choices 
available to them are to participate in their state's AFH or prepare 
their own assessment, and the latter alternative carries with it the 
unreasonable burden of revising the assessment annually rather than 
quinquennially. The commenters stated that with Federal funding for 
PHAs at unprecedented low levels, PHAs simply will not have the funds 
or other resources to implement an exceptionally burdensome requirement 
for annual reviews and revisions. The commenters stated that HUD should 
not impose revision and updating requirements on PHAs that are more 
burdensome than requirements imposed on other program participants that 
are required to prepare an AFH and consolidated plan.
    HUD Response: HUD agrees that PHAs should not have a higher burden 
under the Independent PHA Planning Option than consolidated plan 
participants engaged in drafting the AFH. However, HUD disagrees with 
the suggestion of only one option and reiterates that PHAs always have 
three options. They may always perform the AFH with units of general 
local government or State governmental agencies (as applicable), other 
PHAs in the region, or independently.
    Comment: A PHA in a metropolitan area administering an HCV program 
should be required to consider the entire metropolitan area. Commenters 
stated that any PHA in a metropolitan area administering an HCV program 
that chooses Option 2 should be required to consider the entire 
metropolitan area as its geographic scope for the AFH and in certifying 
that it is affirmatively furthering fair housing choice. Commenters 
also recommended that, in Sec.  903.15(a)(2), the PHA be required to 
consider the whole metro area as its scope for analysis and action.
    HUD Response: PHAs choosing to conduct and submit an independent 
AFH, that are engaging in the HCV program, must include an analysis for 
the PHA service area and region, in a form prescribed by HUD in 
accordance with Sec.  5.154(d)(2). This may include an entire 
metropolitan area or not, depending upon the state and locality. Their 
strategies and actions will address contributing factors, related fair 
housing issues, and goals in the applicable AFH, consistent with Sec.  
5.154, in a reasonable manner in view of the resources available. PHAs 
actions shall be related to the geographic scope of their operations. 
HUD encourages PHAs to collaborate with relevant entities.
    Comment: A PHA choosing Option 2 must certify that it has reviewed 
and considered existing regional or statewide AFHs. Commenters stated 
that a PHA that chooses Option 2 and submits its own AFH should be 
required in the final rule to demonstrate and certify that it has 
reviewed and considered existing regional or statewide AFHs for the 
area.
    HUD Response: This is not a requirement of the rule but a best 
practice.
iii. Option 3
    Comment: Clarify which PHAs can opt for Option 3. Commenters stated 
that this section must be redrafted to spell out to whom this option is 
applicable and whether these agencies have any options for preparing 
AFHs or not. The commenters stated that most agencies not located in 
local jurisdictions required to submit consolidated plans may choose to 
participate in the States' AFHs and comply with goals in their 
consolidated plans, these agencies deserve the same set of choices as 
are available to agencies in a local jurisdiction. The commenters 
stated that this section is confusing as it pertains to agencies 
operating jointly with other agencies as consortia or simply under a 
memorandum of understanding concerning joint administration and 
management. The commenters stated that this section does not discuss 
options available to PHAs that may operate in more than one 
jurisdiction, one of which may prepare a local consolidated plan and 
one which may not. The commenters urged HUD to permit all PHAs the 
ability to perform their own AFH and certify their plans consistent 
with that assessment.
    Commenters also stated it is unclear to which agencies HUD intends 
Option 3 to apply. The commenters stated that this option is likely 
attractive to some PHAs that overlap with a sub-state entitlement 
jurisdiction and are not interested in spending the staff time that 
Options 1 or 2 require. The commenters stated that any PHA (except one 
that administers only public housing that is located primarily or 
wholly within a sub-state jurisdiction that submits an AFH) should be 
able to opt to be covered by the state AFH, unless there is a regional 
AFH that covers its service area. The commenters stated that PHAs must 
still submit the civil rights certification and should have to explain 
how they will address fair housing issues and contributing factors in 
their own programs, even if the state AFH does not include goals or 
strategies directly applicable to the PHA. The commenters stated that 
AFHs of many local jurisdictions may not have appropriate regional 
focus to cover PHAs that serve suburban cities or towns too small to be 
entitlement jurisdictions.
    HUD Response: HUD has removed Option 3 as a separate option and has 
incorporated Option 3 into Option 1.

[[Page 42333]]

    Comment: Option 3 may result in a more cumbersome process for 
States. Commenters stated that this language (Sec.  903.15(a)(3)) seems 
to be an effort to entice local PHAs to participate in the statewide 
AFH process by requiring annual updates of local PHA developed AFHs. 
The commenters stated that they are concerned that the AFH process 
could become somewhat more cumbersome for States, depending on the 
expectations of the State when local PHAs opt into the state AFH and on 
the number of participating local PHAs.
    HUD Response: HUD has clarified both the consultation requirement 
for States under Sec.  91.110(a)(1) and the options for PHA assessment 
to provide greater clarity on State/PHA interactions. The obligation 
for States to consult with the applicable PHAs has been clarified and 
further instruction will be provided when HUD publishes a State entity 
AFH template for public comment in accordance with the Paperwork 
Reduction Act.
    Comment: Option 3 indicates that PHAs need not assess 
administration of a PHA's HCV program. Commenters stated that the rule 
states PHAs choosing Option 3 ``must demonstrate that their development 
related activities affirmatively further fair housing. . . .'' which 
implies that these PHAs have no obligation to demonstrate that how they 
administer their HCV programs, which many have, meets the obligation to 
affirmatively further fair housing. The commenters stated that HUD 
should revise the final sentence of Sec.  903.15(a)(3) to include the 
administration of HCV programs.
    HUD Response: HUD disagrees that PHAs need not assess their HCV 
program, as it is covered by fair housing and civil rights laws and 
regulations. HCV-only PHAs will be required to participate in 
cooperation with a State, jurisdiction, or insular area as provided in 
Option 1, participate with other PHAs as provided in Option 2, or 
participate alone under Option 3.
d. Additional Options for HUD Consideration
    Comment: Allow one or more PHAs to submit a joint AFH. Commenters 
stated that there should be an additional option available to PHAs 
explicitly allowing one or more PHAs in a region to work together to 
develop a joint AFH. The commenters stated that each PHA should 
maintain its own obligation to affirmatively further fair housing and 
to set its own PHA-specific goals and report on its progress in meeting 
these goals. The commenters stated that HUD should modify Sec.  
5.154(e)(1), which addresses what happens when a PHA and a Con Plan 
jurisdiction collaborate on a joint AFH and disagree over some 
elements. The commenters stated that HUD should reference Sec.  
5.154(e)(1) in the parenthetical at the end of Sec.  903.15(a)(1).
    HUD Response: HUD agrees that regional partnerships of consolidated 
plan participants may conduct a regional AFH, and has clarified that 
PHAs participating under Option 1 in Sec.  903.15 may also be part of a 
regional collaboration if the unit of general local government or State 
governmental agency that they are participating with is part of a 
regional collaboration. In addition, HUD agrees with commenters and has 
explicitly indicated that PHAs may conduct an AFH under Option 2 in 
Sec.  903.15. In all cases where a PHA is jointly participating in 
conducting an AFH, the PHA must incorporate any joint and individual 
goals developed in the AFH into its PHA Plan, as per the requirements 
in Sec.  5.154. As HUD has noted earlier in this preamble, whether a 
PHA or another program participant, all collaborating program 
participants are also accountable for their individual analysis, goals, 
and priorities to be included in the collaborative AFH.
v. Other Comments
    Comment: The PHA Plan does not appropriately reference the AFH. 
Commenters stated that unlike the proposed changes to the Consolidated 
Plan's public participation provisions, the proposed rule did not 
insert references to the AFH in the key provisions of the PHA Plan 
rule, especially those relating to resident and public participation. 
The commenters stated that the AFH and consideration of its goals with 
respect to a PHA's programs, policies, and practices should be 
integrated into the PHA Plan.
    HUD Response: HUD disagrees but has clarified Sec.  903.15 to 
clarify the impact of the AFH on the PHA Plan. HUD has also clarified 
its regulations in Sec. Sec.  5.150-5.180 to provide that strategies 
and actions to effectuate the goals and priorities in the AFH must be 
reflected in PHAs' and jurisdictions' planning documents.
    Comment: Remove the requirement that a PHA notify HUD of selected 
option 60 days before AFFH certification is due. Commenters stated that 
the proposed rule would require PHAs to notify HUD 60 days before their 
PHA Plan AFFH certification is due to HUD of which option they are 
following. Commenters recommended HUD remove this notification 
requirement, stating that it serves no apparent purpose. The commenters 
stated that this time frame seems inconsistent with the requirement 
that an initial AFH be submitted to HUD at least 270 days before the 
start of the program year. The commenters stated that if HUD believes 
that it is important to make sure each PHA has thought about which 
option it will follow, HUD could require PHAs to include in the Annual 
PHA Plan submitted after the effective date of the rule its decision 
about which option it intends to choose for the AFH, which would allow 
public and resident input into the decision. In that case, the initial 
AFH should not be due until at least one year later.
    HUD Response: HUD agrees with the commenters. The selection should 
be made earlier, but should not have a required deadline. PHAs must 
notify HUD of the option they choose.
    Comment: Clarify what is meant by ``differentiated sections'' in 
Sec.  5.154(e)(1). Commenters stated that HUD should clarify the 
proposed language of Sec.  5.154(e)(1). The commenters stated that it 
is not clear what ``differentiated sections'' means, and what the 
consequences are of HUD's decisions on which provisions are approved in 
the case of a disagreement. Commenters stated that if HUD approves the 
jurisdiction's AFH despite the PHA's dissent on some portion, the PHA 
should be bound by the approved provisions from which it had dissented, 
and that conversely, if HUD agrees with the PHA's alternative, the 
jurisdiction should be bound by it. The commenters stated that because 
of the potential consequences for jurisdictions in such a case, HUD 
should make clear that jurisdictions can include in their submission to 
HUD their response to a PHA's disagreements.
    HUD Response: HUD agrees that differentiated sections of an AFH, 
due to one or more PHA dissents, is untenable for review. As such, HUD 
has removed the dissenting opinion from the joint participation option 
and instead encourages MOUs to govern dispute resolution amongst 
jointly participating entities.
    Rule change. This final rule removes Sec.  5.154(e) and thus all 
references to ``differentiated sections.''
    Comment: Allow a PHA that disagrees with any aspect of a 
jurisdiction's AFH to propose alternative priorities and strategies. 
Commenters recommended that HUD require a PHA that disagrees with any 
aspect of the jurisdiction's AFH to propose an alternative strategy or 
priority, and explain why the alternative is better designed to achieve 
the joint goal(s).
    HUD Response: As provided in the response to the preceding comment,

[[Page 42334]]

HUD has removed the dissenting opinion provision.
    Comment: Additional guidance is needed on collaboration on AFHs. 
Commenters stated that the rule provides no guidance on notice 
requirements of program participants seeking to collaborate with other 
program participants in an AFH. The commenters stated that, at minimum, 
consolidated plan jurisdictions should be required to publicly notice 
other program participants within their regional boundaries of the AFH 
process. The commenters stated that Sec.  5.156 should be amended to 
add a section encouraging program participants that plan to submit a 
joint AFH to notify consolidated plan jurisdictions and PHAs within 
their region of their intention to file a regional AFH and who to 
contact for more information about the regional process.
    HUD Response: Additional guidance is forthcoming on such issues.
    Comment: A regional approach to AFH does not exempt PHAs from an 
individual affirmatively furthering fair housing obligation. Commenters 
stated regionalization must not relieve program participants of 
individual obligations to affirmatively further fair housing. The 
commenters stated that the final rule must reflect that each 
collaborating PHA has an obligation to affirmatively further fair 
housing, to set local PHA-specific goals, and to report on progress. 
The commenters recommended that the final rule add language as follows 
at Sec.  5.156(d) Content of the Regional Assessment: ``Each 
collaborating member must set its own goals to affirmatively further 
fair housing, take its own meaningful actions to affirmatively further 
fair housing and report on its progress to affirmatively further fair 
housing.'' The commenters stated that an AFH submitted by a PHA 
independently should not be too narrow in scope that it precludes 
consideration of regional fair housing issues. The commenters stated 
that currently a PHA is required to certify that its PHA Plan is 
consistent with the consolidated plan of overlapping jurisdictions.
    HUD Response: HUD agrees that each program participant, including 
each PHA, has its own duty to affirmatively further fair housing, which 
is not reduced by participation in a collaborative AFH. HUD disagrees 
with the commenters as to the specific language suggested and does not 
incorporate this language into this final rule. However, the rule has 
been clarified to indicate that all program participants must perform 
the AFH and that any relevant fair housing issues, contributing 
factors, and goals for each program participant must be addressed in 
their joint AFH, and strategies and actions to address the AFH goals 
and priorities must be included in planning documents.
    Comment: 5-Year Plan Should Align with Applicable AFH. Commenters 
recommended that HUD modify Sec.  903.6 to clarify that the 5-year Plan 
should align with the applicable AFH. Commenters stated that his change 
integrates the AFH into already-required planning processes. The 
commenter stated that HUD should include a provision that requires PHAs 
to incorporate in their next 5-year Plan after the preparation of the 
AFH goals and objectives consistent with the AFH, and adopt 
quantifiable measures for achievement over the 5-year period. The 
commenter stated that this is consistent with Sec.  903.15(e) which 
would require PHAs to modify their 5-year PHA Plans if a significant 
change in the applicable AFH ``necessitates a PHA Plan amendment.''
    HUD Response: HUD recommends aligning the 5-year planning cycle, if 
possible, for purposes of ensuring consistency with the most current 
AFH. Also, HUD has clarified in 24 CFR part 5 that strategies and 
actions to address contributing factors and related goals and 
priorities identified in a PHA's AFH must be included in PHA plan 
documents.
    Comment: Clarify consultation requirement when a PHA is under a 
voluntary compliance agreement. Commenters cited the proposed rule 
language that states: ``The State shall consult with any PHA concerning 
consideration of public housing needs, planned programs and activities 
for the AFH, strategies for affirmatively furthering fair housing, and 
proposed actions to affirmatively further fair housing, and proposed 
actions to affirmatively further fair housing. If a PHA is required to 
implement remedies under a VCA, the State should consult with the PHA 
and identify the actions it may take, if any, to assist the PHA in 
implementing the required remedies.'' The commenters stated that this 
may be interpreted to force States to assist PHAs financially, 
potentially in conflict with a state consolidated plan method of 
distribution of Federal funds. The commenters stated that this language 
appears to have no legal basis under the QHWRA or the Fair Housing Act, 
and the language should be removed from the rule.
    HUD Response: HUD disagrees with the commenters. The language in 
the proposed rule provided only that a State jurisdiction may assist, 
if possible. The language is therefore permissive and not mandated or 
required.
21. Access to Opportunity
    Several commenters expressed opposition to the rule's objective to 
provide access to opportunity on the basis of statements that included 
the following: Access to better neighborhoods should depend on hard 
work and not on government give away programs; adequate mechanisms 
exist through the free market for access to areas where equal 
opportunities exist for all persons regardless of any special emphasis 
status that significantly lag actual conditions; that the preamble to 
the rule itself acknowledges that improving educational outcomes for 
disadvantaged children relies upon the family structure and that 
illegitimacy is the most important factor in children's educational 
attainment; and that the rule runs the risk of encouraging reformers to 
pursue policies that will hurt communities because any policy that 
seeks to make homes in a higher income area accessible to lower income 
families (disproportionately minority) could do so only by functionally 
decreasing the value of some homes or providing them some sort of 
assistance.
    Other commenters expressed strong support that the Fair Housing Act 
should be a tool for creating equal opportunity in our country. The 
commenters stated that the Fair Housing Act requires that housing and 
community development programs be administered in a way to help 
overcome problems associated with racial segregation and expand the 
housing choices available in America, and that, in the proposed rule, 
HUD clarifies that this also means expanding access to important 
community assets and resources that have an impact on the quality of 
life for residents.
    Specific issues raised by commenters on access to opportunity 
include the following:
    Comment: Program participants should not be required to examine 
data beyond that required under the Fair Housing Act. Commenters stated 
that while they understand that the availability of certain data is 
necessary for program participants to examine certain fair housing 
issues in their community, they do not agree that requiring program 
participants to examine data surrounding access to education, 
employment, low-poverty, transportation, and environmental health are 
required as part of the Fair Housing Act. Commenters stated that these 
social and physical improvement indices represent HUD's selection of 
relevant factors, but there are significant

[[Page 42335]]

questions as to the viability of those factors in judging the results 
of efforts to affirmatively further fair housing. Commenters stated 
that HUD should list these data elements as an option for program 
participants to use in their AFH, not a requirement.
    HUD Response: HUD understands the commenters' concerns surrounding 
the type of data to be used in the AFH. HUD will provide program 
participants with data, which will be more fully addressed in the 
Assessment Tool. The HUD-provided data will need to be supplemented 
with local data, which is subject to a HUD determination of statistical 
validity and relevance to the program participant's geographic areas of 
analysis. As noted earlier in this preamble, the phrase ``subject to a 
determination of statistical validity by HUD'' clarifies that HUD may 
decline to accept local data that HUD has determined is not valid but 
not that HUD intends to apply a rigorous statistical validity test for 
all local data. This local data should be readily available to the 
program participant at little or no cost and can be found through a 
reasonable amount of search.
    Analyzing data and incorporating local knowledge on community 
assets is an important part of a fair housing analysis. As currently 
proposed, this data will include information on segregation, racially 
or ethnically concentrated areas of poverty, disproportionate housing 
needs and disparities in access to opportunity among protected classes. 
Disparities in access to opportunity--which includes ``substantial and 
measurable'' differences in access to educational, transportation, 
economic, and other important opportunities in a community--affects 
fair housing choice and patterns of segregation and integration. 
Measuring these differences is vital to understanding fair housing 
issues and furthering fair housing choice in a community.
    Comment: Allow program participants to use the Integrated 
Disbursement and Information System performance measurement system. 
Commenters stated that HUD should allow program participants to use the 
Integrated Disbursement and Information System (IDIS) Performance 
Measurement System, which allows one to select a Goal, Outcome, 
Objective, and a Goal Outcome Indicator for each activity, and 
qualitative performance is then reported in narratives in the CAPER. 
The commenters stated that this process should continue to be allowed 
as it is manageable, and that HUD should be careful to not develop 
unrealistic outcome measures that are based on theory and may not 
accurately reflect the impact of a particular activity.
    HUD Response: HUD appreciates the commenters' suggestion. 
Consolidated plan participants will continue to use IDIS to report on 
their performance under the consolidated plan, which includes actions 
taken to affirmatively further fair housing.
    Comment: HUD must validate idiosyncratic measures it has selected 
ahead of their use on a national basis. Commenters stated that while 
some measures and indices in HUD's rule are commonly used, other unique 
measures have been developed by HUD, and in particular, the 
idiosyncratic measures must be validated ahead of their use on a 
national basis for such an important task. The commenters asked about 
the following: (1) For RCAPs and ECAPS, why has HUD chosen the 
thresholds it describes, because, the commenters stated, they do not 
seem consistent with other commonly used measures of the concentration 
of poverty, race or ethnicity, and HUD should justify and validate 
these thresholds; (2) for the Indices of Dissimilarity and Isolation, 
the commenters stated that although both are common measure of spatial 
segregation, it is not clear why program participants should use both, 
and commenters asked what values HUD used to define low, moderate and 
high segregation using the dissimilarity index; (3) for Predicted 
Racial/Ethnic Composition Ratio, the commenters asked why HUD proposed 
using income brackets in this ratio because they appear to be 
irrelevant to the measure, and the ratio appears to treat higher than 
predicted proportions of high income minorities and lower than 
predicted proportions of low income minorities as a problem. The 
commenters asked that since the income brackets described are, 
``notional,'' how does HUD propose to develop actual brackets, and how 
are those brackets related to the predicted racial/ethnic composition 
ratio; (4) for Community Asset Exposure Indices, the commenters stated 
that the descriptions of these indices and their uses implies that 
there may be more or different indices used in the future; and (5) for 
Disproportionate Housing Needs, the commenters asked the basis for the 
threshold of 10 percent as defining ``disproportionate.''
    HUD Response: HUD recognizes that particular thresholds and 
measurements may not apply equally to all program participants. 
However, most of the issues raised by these specific comments are 
better addressed through the Assessment Tool and related guidance and 
not through direct changes to the regulatory text itself. In terms of 
the comment on the 10 percent threshold for disproportionate housing 
needs that was present in the proposed rule text, HUD agrees with the 
commenter and has changed the definition of the term to delete the 
threshold from the regulatory text.
    Rule Change. As noted earlier in this preamble, the definition of 
``disproportionate housing needs'' in Sec.  5.152 of this final rule 
has been revised to remove the 10 percent threshold. This final rule 
states that disproportionate housing needs exist where there are 
significant disparities in the proportion of members of a protected 
class experiencing a category of housing need when compared to the 
proportion of members of any other relevant groups or the total 
population experiencing that category of housing need in the applicable 
geographic area.
    Commenters: Indicators of effectiveness should be measurable and 
show progress of improved integration over time. Commenters stated that 
HUD should identify long-term indicators and short-term performance 
measures for program participants to meet fair housing goals. The 
commenters stated that performance measures could include metrics 
related to the number of jurisdictions in high-opportunity areas that 
revise zoning codes to reduce fair housing issues; strategic 
investments made in high-poverty communities that expand multiple 
aspects of opportunity (besides affordability); and the number of 
affordable housing units for families with children that are located 
near schools with high educational opportunity. The commenters stated 
that long-term indicators could be borrowed from segregation, 
concentrated poverty, and opportunity data that HUD provides, in 
addition to some of the housing choice indicators that the Partnership 
for Sustainable Communities have identified for their grantees--but 
disaggregated to evaluate housing choice for protected classes.
    Other commenters stated that the primary indicators of 
effectiveness in a jurisdiction and its region are changes over time, 
in the rates of segregation and percentage of families of color living 
in high poverty neighborhoods, and the comparative distribution of 
government assisted housing resources by neighborhood poverty rates and 
levels of racial concentration.
    Commenters stated that indicators must be matched to the program 
implemented and stated, for example, that if a jurisdiction implements 
a homeownership program to disperse the minority population into non-
minority

[[Page 42336]]

areas one measure of effectiveness is the time it takes to market and 
fill a vacant unit. The commenters stated that this would assist in 
evaluating the advertising effectiveness as well as the receptivity of 
minorities willing to relocate their families possibly out of their 
comfort zone into a non-minority neighborhood.
    HUD Response: HUD appreciates the commenters' suggestions and will 
consider them in developing guidance that will assist program 
participants in complying with this rule.
    Comment: Compare the number of fair housing complaints filed in one 
year to the prior two years. Commenters stated that one indicator that 
could be used to determine effectiveness would be to compare the number 
of fair housing complaints filed within a certain jurisdiction in a 
year, in comparison to previous years. The commenters stated that it 
would also be useful to compare the number of units created in higher 
income areas over a period of time--perhaps 5 years--to see if the 
state/locally conceived and implemented policies are providing for 
greater housing choice for lower income households.
    HUD Response: HUD appreciates the suggestion and will give 
consideration as to whether such comparison is helpful in determining 
the effectiveness of the new AFH approach and in creating guidance for 
program participants on effective goals and the metrics and milestones 
that program participants will use to measure and report on their 
success in meeting goals. HUD notes, however, that individuals decide 
to file or not file fair housing complaints for a variety of reasons, 
so a simple comparison of the number of complaints in various years may 
not be very meaningful when considered in isolation from other factors.
    Comment: The job access index is not applicable to rural areas. 
Commenters stated that one of the key measures provided in the proposed 
rule is the job access index, which pertains to the accessibility of a 
given residential neighborhood as a function of its distance to all job 
locations, with distance to larger employment centers weighted more 
heavily. The commenters stated that the job access index may not be 
appropriate for rural areas, where the real distance to the job 
location is from the house to the barn. The commenters stated that 
community assets are fewer in rural areas, but that does not mean this 
situation needs to be corrected. The commenters stated that population 
density needs to be considered in the application of key measures, and 
that communities with a population density that would classify the area 
as ``rural'' should be exempt from this regulation.
    HUD Response: HUD acknowledges the unique issues and challenges in 
applying the rule to rural communities and intends the implementation 
of the rule to be flexible and adaptable to meet those challenges. The 
commenter is correct that some of the data on community assets, 
including access to jobs, transportation, and education may very well 
appear different when mapped or incorporated into an index to measure 
those assets. The purpose of the indices is to provide an easy-to-use 
simple measure, in part to reduce the burden on program participants in 
developing an AFH. However, where the usefulness of the index itself is 
limited, either by data limitations or how it is applied in certain 
areas, including rural areas, those limitations can be acknowledged by 
the program participant in the AFH by supplementing HUD-provided data 
with local data and knowledge.
    The larger question is what goals, strategies, and actions the 
program participant can design and adopt to meet the fair housing and 
equal opportunity needs of its jurisdiction. In many rural areas, for 
instance where poverty is much more widespread than in an urban or 
metro area, the strategies will often be different. HUD's rule already 
acknowledges that place-based strategies can be adopted to address 
problematic issues identified in the needs analysis portion of the AFH 
Plan. In the case of rural areas, this is particularly important to 
acknowledge. For instance, in making decisions about where an 
affordable housing development or assistance is needed, the fact that 
poverty is often spread over large geographic portions of rural America 
will be a key consideration in deciding how to best allocate housing 
resources.
    Valuable research and guidance on the topic of poverty in rural 
areas and the unique challenges and potential strategies that can be 
employed to address it is available from a variety of private sources 
as well as different Federal agencies and offices. Among the Federal 
sources of information on this issue are: CPD's Rural Housing and 
Economic Development Gateway Web site; the U.S. Department of 
Agriculture's Economic Research Service; and the Federal Reserve, which 
has sponsored and produced studies on rural poverty issues.
    Comment: The rule should support a multi-agency approach to access 
to opportunity.
    Commenters stated that ``the proposed rule acknowledges that the 
prospects for individual or familial success are influenced by a 
variety of neighborhood features far more extensive than just 
housing.'' The commenters ask why a multi-agency approach, such as a 
Federal interagency working group, has not been formulated to address 
these issues, as has been done in the areas of environmental justice 
and healthy homes.
    HUD Response: HUD agrees with the premise of the question and takes 
this proposal under advisement. It is consistent with the approach 
adopted by the current Administration, which has convened Federal 
interagency working groups on both affordable housing and neighborhood 
issues.
    The Neighborhood Revitalization Initiative included staff from HUD, 
and the Departments of Education, Justice, HHS, and Treasury. It 
examined and made recommendations for place-based revitalization 
initiatives and combining Federal programs with similar goals to do so. 
Out of these recommendations, these agencies were able to achieve 
better coordination with respect to HUD's Choice Neighborhoods 
Initiative, Education's Promise Neighborhoods Grant Program, and DOJ's 
Byrne Criminal Justice Innovation Grant Program. See also OMB 
Memorandum M-09-28, Developing Effective Place-Based Policies for the 
FY 2011 Budget, dated August, 11, 2009, available online at http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09-28.pdf.
    A related Rental Policy Working Group convened staff from Federal 
agencies--HUD, USDA's Rural Housing Service, and Treasury--to reduce 
and streamline regulatory requirements, and to help preserve the 
existing affordable rental housing stock. For more information, see: 
http://archives.huduser.org/aff_rental/home.html. HUD's Strong Cities, 
Strong Communities (www.huduser.org/portal/sc2/home.html) provides 
capacity building resources and technical assistance to local 
governments and helps coordinate programs and reduce regulatory burden 
when combining funding from different Federal agencies.
    Comment: Access to the community asset of public education is not 
the same thing as access to high-performing schools. Commenters stated 
that HUD needs to make clear that access to educational opportunities 
that should be pursued is access to high-performing schools. Commenters 
stated that consistent with settled civil rights law in the areas of 
education and fair housing, the rule must make clear that access to 
education means access to

[[Page 42337]]

stably-integrated or majority white schools with at least average 
standardized test scores, graduation rates, and college or technical 
training matriculation rates. Access to educational opportunity cannot 
involve high poverty, non-white schools with lower than average test 
scores, higher than average dropout rates, and/or lower than average 
college or technical training matriculation.
    HUD Response: HUD agrees that access to high-performing schools is 
a critical neighborhood component that should be considered in efforts 
to affirmatively further fair housing. The neighborhood school 
proficiency index includes school-level data on the percent of 
elementary school students who are proficient in reading and math 
according to state exams, to determine which neighborhoods have high-
proficient and low-proficient elementary schools.
    Comment: Access to transit alone does not satisfy the duty to 
affirmatively further fair housing. The commenters stated that 
performance of schools near segregated central city projects continues 
at very low levels, while unemployment and crime are higher in these 
areas than in any other part of the region. The commenters stated that 
many public health measures are also the worst in the region, but 
because these areas are near transit, color-blind community developers 
have persuaded state and local authorities that locating housing in 
these declining segregated neighborhoods is consistent with their 
obligation to affirmatively further fair housing.
    The commenters stated that transit does a poor job of connecting 
low-wage workers with available jobs because most new jobs are 
scattered and beyond the access of even the best transit systems. The 
commenters stated that many of the most exclusive and wealthiest 
communities will rank poorly on the transit access index. The 
commenters stated that using access to and distance from bus or rail 
transit could have the unintentional effect of undermining regional 
fair housing goals by reducing the responsibility of some of the 
highest opportunity communities to promote fair housing and achieve 
more inclusive communities. The commenters stated that, in too many 
cases, this was an intentional and common tactic to discourage low-
income residents from moving into such communities. The commenters 
stated that lack of transit should not be allowed to reduce a 
community's responsibility or steer a region's plan away from 
communities with strong assets such as schools and jobs and toward 
higher poverty communities or even diverse communities. The commenters 
stated that access to transit is not a substitute for good schools and 
strong diverse neighborhoods and should not be used to encourage more 
affordable housing in places impacted by poverty while exclusionary 
communities with less transit are let ``off the hook.''
    The commenters stated that the proposed rule must clarify that 
neighborhoods, which are impoverished and segregated, but proximate to 
transit cannot be considered areas of opportunity for which access 
ranks high.
    HUD Response: HUD agrees that a racially or ethnically concentrated 
area of poverty is not an area of opportunity simply because it is 
served by a public transportation system or any single indicator of 
opportunity. However, access to public transportation may be one 
indicator of access to opportunity. The comments address the manner in 
which HUD will provide data on transportation rather than the language 
of the regulation itself. This final rule continues to reference 
transportation as a key community asset that program participants 
should take into consideration in developing their AFH.
    Transportation is a key factor in assessing total housing 
affordability, and, specifically, access to public transportation 
options can be critical to providing access to jobs, education, health 
care, and other amenities and community assets for low-income families, 
the elderly, and persons with disabilities. Increasingly, planners and 
policymakers are taking transportation into account for purposes of 
both new development and prioritizing preservation of existing 
affordable housing. Reviewing available data can also assist planners 
in identifying existing communities in need of improved transportation 
options.
    HUD has worked to identify a comprehensive set of data that allow a 
multisector assessment. Moreover, because research on measuring access 
to community assets is continually evolving, HUD is committed to 
reviewing the data on an ongoing basis for potential improvements. As 
with all data metrics, the measures in each category have strengths as 
well as limitations, and no criteria should be assessed in isolation 
from the other measures or required assessments.
    The specific measures and data to be used to assess transportation 
issues as one possible source of disparities in access to opportunity 
will be determined through guidance, including the Assessment Tool.
    Comment: Access to employment alone does not satisfy the duty to 
affirmatively further fair housing. As with access to transit, access 
to employment opportunities cannot alone satisfy the duty to 
affirmatively further fair housing. The rule must make clear that 
access to employment means access to jobs that could actually be filled 
by low-income, low-skilled, non-white citizens. As a result, residents 
have been less likely--not more likely--to be employed and far more 
likely to become incarcerated. ``Access to employment neighborhoods'' 
must be defined as areas where new entry-level jobs are increasing and 
where there is evidence that these jobs will actually be filled by 
poor, low-skilled, non-white citizens. Throughout the country the 
growth of jobs--and particularly the growth of jobs for poorly 
educated, low-skilled, non-white citizens--is at the edge of 
metropolitan areas. Segregated and unequal education received in 
segregated neighborhoods prevents workers from accessing existing 
employment opportunities.
    The commenters stated that the final rule must clarify that, when 
neighborhoods are proximate to clusters of employment but have high 
rates of unemployment and comparatively low wages, these neighborhoods 
cannot be considered areas with access to employment opportunity for 
purposes of the proposed rule.
    HUD Response: As stated above, HUD agrees that a racially or 
ethnically concentrated area of poverty is not an area of opportunity 
simply because of any single indicator of opportunity. However, HUD 
declines to include in the final rule the commenters' proposal. 
Economic factors, including access to jobs, are key considerations in 
assessing neighborhood opportunity. As with transportation, HUD-
provided data will help program participants better assess local needs 
and frame appropriate strategies, which can encompass both mobility and 
place-based investment approaches. The specific data sources and 
indices used to measure access to employment opportunities will be 
determined through the Assessment Tool and guidance.
    Comment: Access to quality food is an important community asset 
that helps build strong neighborhoods. Commenters stated that areas 
with restricted access to affordable, healthy food options are heavily 
concentrated in communities of color and low-income neighborhoods. The 
commenters stated that lack of access to quality foods increases the 
prevalence of obesity, diabetes, and other diet-related conditions, and 
that this is a problem

[[Page 42338]]

with racial and economic dimensions. The commenters stated that wealthy 
neighborhoods have three times the number of supermarkets as their low-
income counterparts, and that this disparity becomes even more dramatic 
when comparing predominantly white neighborhoods with black 
neighborhoods. The commenters asked that access to quality food be a 
community asset measure.
    HUD Response: While HUD agrees with the commenters about the 
importance of access to high-quality and affordable food options at the 
neighborhood level, this final rule does not adopt the suggestion that 
this topic be added as an additional separate measure of access to 
community assets in the Code of Federal Regulations. This and other 
important neighborhood factors will be addressed in guidance and in the 
data that HUD will provide to program participants. Moreover, lack of 
access to affordable, high-quality sources of food is the type of 
information that could be expected to be identified through community 
participation, which is a required part of the AFH process. Program 
participants must summarize comments made in the community 
participation process and explain why any such comments are not 
addressed in the AFH.
22. Data and Mapping Issues
a. Data and Index Issues
    In the preamble to the proposed rule, HUD solicited comments on a 
number of specific issues. Among the questions posed by HUD were the 
following two questions (#1 and #9) regarding data that will be used 
for completing an AFH:

1. The field of geo-coded data is rapidly evolving and, as HUD works 
to refine data related to access to important community assets, it 
welcomes suggestions for improvement. Such comments can include the 
description of cases or situations where the indicators may or may 
not appropriately portray neighborhood qualities. Are the nationally 
uniform data that HUD is providing to assist in the assessment of 
segregation, concentration of poverty, and disparities in access to 
community assets appropriate? Do these data effectively measure 
differences in access to community assets for each protected class, 
such as persons with disabilities? To what extent, if at all, should 
local data, for example on public safety, food deserts, or PHA-
related information, be required to supplement this nationally 
uniform local and regional data? (See 78 FR 43724.)
9. An analysis of disproportionate housing needs is currently 
required as part of the consolidated plan, and this proposed rule 
would make disproportionate housing needs an element of the AFH as 
well. If a disproportionate housing needs analysis is a part of the 
AFH, should it remain in the consolidated plan as well? Is this 
analysis most appropriate in either the AFH or the consolidated 
plan, or is it appropriate, as the current proposed rule 
contemplates, to have the analysis in both places, assuming the 
analysis is the same for both planning exercises?(See 78 FR 43724.)

    In response to these requests for public input and to the 
information on the data methodology posted online, HUD received a large 
volume of public comments and questions on data issues.
    Comments: The public comments received included the views, 
recommendations, and further questions as follows:
     States and rural areas require a different level of data 
and analysis as compared to metropolitan areas and urban counties.
     The format in which data are provided--HUD should provide 
the data as either raw data or tabular datasets.
     HUD should allow groups to upload additional data to the 
data tool.
     HUD should provide additional datasets, such as HMDA data, 
foreclosures, fair housing complaint data, testing results, local 
surveys, and citizen narratives.
     Some specific types of data on access measures may not be 
effective. The education data may not capture local enrollment 
policies. In terms of the transportation data, many localities do not 
have this data reported or publicly available. Job access data does not 
capture actual commute time.
     Many commenters noted that since the proposed rule did not 
contain the data tool, or the AFH Assessment Tool, the commenters could 
not make more specific points on what they will, should, or should not 
contain.
     HUD should provide data on concentrations of poverty by 
protected class other than race/ethnicity.
     HUD should preview the tool and make the data tool 
available to the public, in addition to grantees (this will help in the 
public's participation in the local AFH process).
     Program participants should be required to post the data 
they are using on their own Web sites and do so prior to any public 
hearing.
     The data that HUD is requiring is excessive, and the data 
may also be duplicated in the consolidated plan and action plans.
     HUD should provide one composite index to assess 
neighborhood access to community assets and stressors, rather than 
HUD's approach to provide separate indices represented independently.
    HUD Response: In regard to commenters' requests for greater 
specificity in the regulatory language itself, HUD continues to take 
the position that it is appropriate that many of these items are better 
addressed in the Assessment Tool and as guidance and should not be 
included in the regulatory text itself. This will allow flexibility and 
further refinements to be made on a timelier basis in response to 
public input and in response to experience gained through program 
participants' use of the Assessment Tool in preparing and submitting an 
AFH.
    In response to the numerous comments that the data tool as 
originally presented for public comment was not effective for all types 
of program participants, including smaller jurisdictions and States, 
HUD has made numerous changes and improvements. The public comments in 
this area were extremely valuable, and HUD expects to make further 
refinements during the guidance and implementation process.
    Program participants and the public have had additional opportunity 
for providing comments on both the Assessment Tool, as that document 
went through the Paperwork Reduction Act process and, in the case of 
the data tool itself, HUD will continue to refine the data tool based 
on ongoing public input and future research and analysis.
    HUD is incorporating nationally available data determined to be 
statistically valid by HUD after conducting thorough research and 
analysis, as well as extensive consultation between HUD staff and 
external research and policy experts. Many comments requested that 
additional types of data be added to the types to be provided by HUD. 
The data are not intended to be exhaustive but are intended to provide 
a baseline for program participants to use and HUD encourage program 
participants to supplement with local data and knowledge. HUD also 
expects that as more nationally uniform sources of data become 
available the types of data provided to program participants for their 
planning purposes can be added to.
    The manner in which the assessment of data should be used to inform 
local decision making will be provided in the Assessment Tool and 
through technical assistance and guidance. These will be particularly 
important for State-level, as well as smaller, nonmetro and rural 
program participants.
    Comment: Definitions are not effective in capturing important 
racially or ethnically concentrated areas of poverty in a particular 
community. Commenters stated that the rule should allow

[[Page 42339]]

participants to propose an alternative definition, which should be 
subject to public comment as part of the AFH process and approval by 
HUD before they can be adopted.
    HUD Response: HUD has not adopted this proposal because of the need 
to provide for some level of consistency in the way program 
participants conduct an AFH. HUD notes, however, that the rule affords 
program participants the flexibility to supplement the HUD-provided 
data with relevant, statistically valid State and local data, 
qualitative analysis and explanation, and information received during 
the public participation and outreach process. In addition, program 
participants have latitude to adjust their goals and strategies in the 
local decisionmaking process in order to select the most effective ways 
to address the issues and contributing factors identified by the data 
and analysis.
    Comment: HUD should clarify how it will use and evaluate any 
supplemental local data. Commenters stated that localities should have 
the opportunity to explain how the data should be properly interpreted 
and would welcome a dialogue with HUD regarding this data. Commenters 
recommended that HUD explicitly offer this level of transparency and 
suggest this type of exchange. Commenters stated that, at a minimum, 
the rule should clarify that when localities submit supplemental data 
that is more accurate or telling, HUD will rely on that local source in 
place of the standard indices.
    HUD Response: HUD will grant considerable weight to any convincing 
showing from a program participant that adds to the AFH, particularly 
with additional data sources used to supplement the HUD-provided data, 
where these are found HUD to be accurate, statistically valid, and 
relevant. HUD expects to provide additional guidance to assist program 
participants as they conduct their AFHs.
    Comment: The rule should require program participants to survey 
local opinions about diversity. Several commenters made this 
recommendation.
    HUD Response: Program participants are encouraged to undertake 
active outreach efforts such as this, but the rule does not require it 
outside of the public participation requirements in the rule.
    Comment: Make local data publicly available. Commenters stated that 
program participants should make all the data they are using available 
for public review prior to a hearing and opportunity for comment.
    HUD Response: The final rule includes this requirement in the 
citizen participation section of the regulations. (See Sec. Sec.  
91.105(b)(1)(i) and 91.115(b)(1)(i).)
    Comment: Revise Sec.  5.154(d) and (e) to establish different 
requirements that are appropriate to State governments. Commenters 
stated that the level of data analysis required of state governments 
must cover broader areas of geography, but should not require the same 
level of geographic specificity as local governments.
    HUD Response: HUD agrees that the requirements of the rule should 
be appropriate for different types of HUD program participants, 
including States, and the definition of ``geographic area'' in the 
final rule reflects this fact. Also, HUD believes Sec.  5.154 is 
appropriate as presented in the rule. HUD anticipates that the level of 
data analysis for different types of program participants is best 
addressed through the Assessment Tool, the associated data tool, and 
guidance rather than in the final rule.
b. Data Documentation
    Comment: Comments received on the AFFH Data Documentation paper 
were as follows:
     Where did HUD discover the values it uses to define low, 
moderate, and high segregation using the dissimilarity index? Are these 
arbitrary values?
     The definition of RCAPs/ECAPs will be problematic for many 
regions. The 40 percent threshold is too high in many rural and smaller 
regions.
     HUD should use an alternative to the 40 percent poverty 
threshold for RCAPs/ECAPs.
     The proposed rule was vague about the proposed weights to 
various input categories for accessing fair housing neighborhoods. For 
example, does ``transportation access'' rate higher, lower, or the same 
as school proficiency index scores?
     HUD should provide data at the census tract level.
    HUD Response: The comments refer not to the rule itself, but to the 
AFFH Data Documentation paper that was posted online concurrently with 
the proposed rule. HUD appreciates the very useful feedback that 
commenters provided on the Data Documentation paper. These comments 
will be used in developing and refining the Assessment Tool and the 
related data tool.
    While HUD's final rule and the Assessment Tool rely heavily on the 
use of census tracts in identifying areas of concentration as well as 
opportunity areas, among researchers there are well known limitations 
to the use of census tracts. A census tract with relatively high 
poverty may actually be located within a larger area experiencing 
significant economic improvement. Moreover, HUD recognizes that while 
census tracts are often used in the research literature in part due to 
their value in quantitative analysis and the existence of relevant 
data, there are known limitations, including the fact that they are not 
always synonymous with neighborhoods as understood at the local level 
and their varying relevance in different geographies, for example, 
between central cities and rural areas.
    In interpreting the presence of RCAPs/ECAPs, program participants 
should take into account the characteristics of adjoining or nearby 
census tracts, for instance, that may indicate a particular tract is 
located in a more desirable area or an area that is experiencing 
improved overall economic conditions or residency patterns. In 
addition, HUD notes that the definitions of segregation and RCAPs/ECAPs 
are not new legal thresholds based on a bright line test alone. 
Further, it is not HUD's intent that the current regulation 
inadvertently lead to decisions based strictly on an overly strict 
application of the various definitions and thresholds in the 
regulations and the Assessment Tool. The program participant's AFH can 
and should expand on both through qualitative discussion, and the legal 
definitions themselves are restricted in purpose to the rule (as 
provided in Sec.  5.152 that has been revised to clarify that the 
definitions apply only to the AFH planning process in Sec. Sec.  5.150 
through 5.180). On a related note, the regulation, in the definition of 
``geographic area,'' allows for the use of census block groups, 
although HUD notes and recognizes that doing so can often carry even 
more caveats in terms of possible limitations than do census tracts but 
nevertheless the rule retains the flexibility for program participants 
to include the use of block groups, at their discretion.
    Comment: Clarify that statistical measurements do not apply to 
individuals. Commenters asked that the regulatory text clarify that the 
new statistical measurements are not intended to apply to private 
persons.
    HUD Response: HUD believes the rule is sufficiently clear on this 
point as is, and, therefore, the change suggested by the comment is not 
adopted.
    Comment: No funding should be denied for disparities revealed by 
HUD data. Commenters stated that, because of the unreliability of HUD 
data, no funding should be denied to a program

[[Page 42340]]

participant where data or other information in an AFH shows either a 
failure to meet affirmative obligations or a prima facie case of 
intentional or disparate impact discrimination. Commenters stated that 
HUD must further investigate the matter and not act on the basis of its 
data.
    HUD Response: The AFH is an analysis to be used by program 
participants in setting priorities and goals and informing strategies 
on how to affirmatively further fair housing. The identification of a 
fair housing contributing factor or issue in an AFH is meant to aid 
program participants in fulfilling their duty to affirmatively further 
fair housing, and is not intended to result in the nonacceptance of an 
AFH or deny funding. While the data provided in an AFH may assist HUD 
in understanding some of a program participant's fair housing successes 
and challenges, HUD's findings of noncompliance with fair housing and 
other civil rights requirements, and its acceptance or nonacceptance of 
an AFH, are not based solely on demographic data. HUD findings are the 
result of investigations that are consistent with statutory and 
regulatory standards. Furthermore, HUD will not undertake an 
enforcement action without affording the program participant due 
process, which could include the program participant's questioning 
HUD's investigative findings and conclusions.
    The AFH is intended primarily as a planning document to assist 
program participants in planning appropriate strategies to address the 
challenges that may be present in their jurisdiction or region. The 
definition of fair housing issues provided in the regulation and any 
numeric thresholds associated with it that HUD provides in guidance for 
the AFH document do not create separate new legal thresholds for the 
purposes of enforcement, establishing prima facie findings of 
violations of civil rights laws or similar new legal requirements. They 
are for the purposes of guiding program participants in identifying 
potential fair housing issues in the State, locality, or region that 
should be addressed in the AFH itself.
    Comment: Deference should be given to local data. Other commenters 
stated that when a program participant has more recent data, even if it 
contradicts HUD's data, deference should be given to the participant's 
data so that HUD is not substituting its judgment for that of the 
program participants. Commenters stated that the final rule should 
explicitly allow for deference to each entity's choices of data used to 
support the AFH.
    HUD Response: Program participants are not limited to the use of 
data provided by HUD but, for consistency purposes, they must include 
data provided by HUD in their analysis of fair housing issues and 
contributing factors. Indeed, where relevant local data is available to 
a program participant, the program participant must consider it in 
conducting its AFH.
    Comment: Establish a process to resolve disputes over data. 
Commenters stated that a process should be established for settling 
disputes over the use of certain data or inaccurate data analysis. 
Commenters stated that HUD data varies in its reliability, citing fair 
market rents that do not reflect current actual market rents and the 
lack of data with respect to persons with disabilities, and suggested 
creating a process for a participant to challenge the HUD data.
    HUD Response: The use of local data is subject to HUD review for 
statistical validity. reliability, and relevance. Any questions HUD may 
have regarding the use of local data would arise as HUD reviews a 
program participant's AFH. In the review process, HUD may ask questions 
about the local data used by a program participant or HUD may decide 
not to accept an AFH if it determines that the data used are not valid, 
reliable, or relevant. The rule provides a process for HUD and a 
program participant to communicate and resolve AFH deficiencies leading 
to HUD's nonacceptance of an AFH. (See Sec.  5.162.) Disputes over data 
would be addressed in this process.
    Comment: Advise how frequently HUD will update its data. Commenters 
stated that HUD should advise how frequently it will update the data it 
provides. Commenters stated that the proposed rule stated that HUD 
would update the data periodically, but program participants need more 
specificity as to when the updates will occur. Commenters stated that 
HUD should update the data annually or biannually. Commenters stated 
that if jurisdictions are to use the data to track the progress of 
their policies, they will need to have updates at regular, timely and 
predictable intervals.
    HUD Response: HUD will keep program participants advised as to 
updates to the data it provides and any other data-related enhancements 
to the AFH Assessment Tool. HUD declines to specify an interval for 
periodic updating of data--in part, because it does not always control 
the source of data and, in part, because enhancements to the data are 
likely to occur without particular regularity.
    Comment: Local data should be an option not a requirement to 
supplement other data. Commenters stated that local data should not be 
required to supplement the national uniform local and regional data. It 
should be used at the program participant's discretion. Commenters 
stated that supplementing HUD's data with their own data collection 
efforts will be expensive and time-consuming, undermining one of the 
agency's goals for the new rule. The commenters stated that they want 
to be sure that they are addressing their most pressing fair housing 
needs and issues, but they do not want to be required to participate in 
a data analysis exercise that will not provide useful guidance about 
how to proceed.
    HUD Response: HUD agrees that obtaining and compiling data could be 
a resource-intensive pursuit. HUD will only require program 
participants to obtain data that is readily available at little or no 
cost, including in terms of staff time. HUD believes that local data 
should be used to supplement HUD-provided data and is requiring program 
participants to include such data in their AFH. Where useful local data 
exists, it can be a valuable means of supplementing the national data 
and could be quite important to an AFH that applies to a particular 
area. Therefore, this rule balances these competing values by not 
requiring data to be compiled or obtained if it does not exist 
(although doing so is not prohibited), but where useful data exists, is 
relevant to the program participant's geographic area of analysis, and 
is readily available at little or no cost, the rule requires that it be 
considered.
    Rule Change. This final rule adds new definitions for the terms, 
``local data'' and ``local knowledge'' in Sec.  5.152.
c. Rural Data Issues
    Comment: HUD must provide reliable data for rural areas. Commenters 
expressed concern about the reliability of HUD's available data for 
rural areas. The commenters stated that their experience has been that 
assessing social, economic, and housing characteristics is often 
complicated in rural areas due to sparse populations, limited sampling, 
undercounts, and exclusion. The commenters stated that there is a clear 
relationship between the population size of a geographic area and the 
reliability of data: As the population in rural areas is smaller, the 
likelihood of reliability within survey data is lower.
    The commenters stated that while the ACS provides more timely data 
than its predecessor, the decennial long-form, it has a somewhat 
smaller sample and therefore less reliable results for less populated 
areas, potentially distorting

[[Page 42341]]

the actual picture of segregation or isolation. Commenters further 
stated that the ACS provides only pooled estimates (five years' worth 
of data) for jurisdictions with 20,000 or fewer people, and that as a 
result, the figures may not show some important details, especially 
when things change markedly as they did at the beginning of the recent 
recession. The commenters stated that data averaged over a period 
``masked'' the dramatic change. The commenters stated that the best 
solution for this problem would be to expand the ACS sample size, or 
alternatively, calculate and provide a data reliability indicator to 
accompany the datasets.
    HUD Response: HUD appreciates the valuable feedback provided by 
commenters on these and other issues specific to rural America. As 
stated above in the response to comments on the community assets 
section, HUD acknowledges the unique issues and challenges in applying 
the rule to rural communities and intends the implementation of the 
rule to be flexible and adaptable to meet those challenges.
    While HUD does not believe specific changes are required to the 
regulatory text, it does plan to take into account specific issues 
related to data concerns in developing and refining the Assessment Tool 
over time. In addition, HUD plans to provide guidance and technical 
assistance recognizing that different strategies will be appropriate in 
different places. Jurisdictions in nonmetropolitan areas can also work 
with state grantees which will have a role in developing AFHs. Program 
participants will also have flexibility in developing their AFH to 
explain actual local conditions in qualitative terms that may not be 
reflected by data.
    Comment: Rural areas will be required to rely on local data, which 
will be burdensome and costly and will force rural areas to use 
inaccurate or incomplete information. Commenters stated that useful 
data from other Federal sources either is not available for rural 
jurisdictions or is not recent enough to be reliable. The commenters 
stated that, for example, it is more difficult to obtain residential 
building data for sparsely populated counties or smaller geographic 
units, but this information is readily available in metropolitan areas. 
The commenters stated that Home Mortgage Disclosure Act information, 
too, is limited for rural, nonmetropolitan areas because banks 
operating entirely outside of metropolitan areas are not required to 
provide lending data, and that out-of-date data sources include HUD's 
Picture of Subsidized Housing data, currently available only for 2009.
    The commenters stated that the net effect of these data issues is 
that rural jurisdictions preparing AFHs must supplement the data HUD 
provides with locally sourced information such as tax records, building 
permits, etc., to ensure as complete a picture as possible, verifying, 
clarifying, or challenging what the HUD data sets indicate., and that 
compiling such data will be burdensome and costly. Commenters stated 
that jurisdictions in rural areas be given additional resources to 
conduct research and gather local data.
    Similarly, commenters stated that because of the concerns with 
accuracy of data to be provided by HUD for rural areas, HUD should not 
require rural jurisdictions to use HUD data but be provided the option 
to use such data or only local data.
    Other commenters reiterated the concerns about the accuracy and 
reliability of HUD-provided data for rural areas, and asked HUD to 
provide guidance on what additional information should be sought and 
considered by rural areas. Commenters stated that HUD could aid rural 
jurisdictions by providing a data guide explaining these issues and 
suggesting alternative sources, such as the Census Bureau's Small Area 
Income and Poverty Estimates.
    HUD Response: HUD appreciates this valuable feedback and the time 
and effort made by commenters to present their valid concerns with 
applying data to different parts of the nation, including rural areas. 
While HUD does not believe that specific changes in the regulatory text 
are needed, it does plan to take these and other points into 
consideration during the development of the Assessment Tool.
23. Transparency
    Comment: All AFH and related documents and the availability of such 
documents for public viewing should be provided to the public through 
all available means. Commenters stated that the key to making the AFH 
process work is to maximize public participation and that is achieved 
by having AFHs and related documents available to the public using all 
available means, including posting online and having hard copies 
available at program participants' offices or libraries. Many 
commenters requested that AFH information be posted on program 
participants' Web sites. Commenters recommended that a program 
participant's proposed and final AFHs and all relevant data and other 
information used in preparing the AFH be made available on an easily 
identifiable page of the participant's Web site. Commenters recommended 
that the consolidated plan and all performance reports, including all 
attachments and supporting data be posted in full length in a 
searchable format, easily downloadable, on a dedicated page of the 
participant's Web site. Commenters stated that the availability of AFH 
documents should be made through social media.
    HUD Response: HUD understands the importance of the Internet when 
communicating with the public and has made rule changes to update the 
outreach requirements for program participants.
    Rule change. HUD has revised Sec.  5.158 to explicitly state that, 
in order to ensure that the AFH, the consolidated plan, and the PHA 
Plan are informed by meaningful community participation, program 
participants should employ communications means designed to reach the 
broadest audience. This final rule says that such communications may be 
met by publishing a summary of each document in one or more newspapers 
of general circulation, and by making copies of each document available 
on the Internet--on the program participant's official government Web 
site--as well as at libraries, government offices, and public places. 
Further, the rule requires program participants to ensure that all 
aspects of community participation are conducted in accordance with 
fair housing and civil rights laws, including title VI of the Civil 
Rights Act of 1964 and the regulations at 24 CFR part 1, Section 504 of 
the Rehabilitation Act of 1973 and the regulations at 24 CFR part 8, 
and the Americans with Disabilities Act and the regulations at 28 CFR 
parts 35 and 36, as applicable.
    Rule Change. HUD has revised Sec. Sec.  91.105(b)(1) and 
91.115(b)(1) to provide that a jurisdiction may make the HUD-provided 
data available to the public by cross-referencing to the data on HUD's 
Web site.
    Comment: Publicly post AFHs. Some commenters also proposed that HUD 
should post the completed and accepted AFHs on its own Web site as an 
information clearinghouse. Commenters stated that this could be a 
valuable resource for best practices, as an aid and guide for other 
program participants in completing their own AFHs and for 
practitioners, industry professionals, researchers and advocates in 
assessing fair housing issues and strategies. Other commenters 
suggested that HUD should post all submitted AFHs.
    HUD Response: HUD thanks the commenters for this proposal and will 
explore options for posting completed AFHs online, along with 
additional

[[Page 42342]]

guidance that may be helpful to program participants, affordable 
housing advocates and organizations, fair housing groups, and the 
general public.
    Comment: All relevant documents should be translated by program 
participants into other languages and be accessible to persons with 
disabilities. Commenters stated that relevant documents, AFHs, 
consolidated plans should be translated by program participants into 
languages other than English for LEP residents, and should be made 
available in newspapers or other media serving non-English speaking 
stakeholders or interested members of the community, or that summaries 
of the documents should be provided through such news outlets. 
Commenters also stated that outreach for public engagement should be 
either conducted in other languages or with interpretation services. 
Other commenters asked that HUD ensure that these documents are 
available to persons with disabilities.
    HUD Response: Federal law pertaining to ensuring that persons with 
limited English proficiency (LEP) can participate in Federal and 
Federally-funded programs is well established, and HUD does not need to 
further address this matter in its rule. Title VI of the Civil Rights 
Act of 1964 protects individuals from discrimination on the basis of 
their race, color, or national origin in programs that receive Federal 
financial assistance. The failure to ensure that persons who are LEP 
can effectively participate in, or benefit from, Federally-assisted 
programs may violate Title VI's prohibition against national origin 
discrimination. Executive Order 13166, signed on August 11, 2000, 
directs all Federal agencies, including HUD, to work to ensure that 
programs receiving Federal financial assistance provide meaningful 
access to LEP persons. All programs and operations of entities that 
receive Federal financial assistance from the Federal Government, 
including, but not limited to, state agencies, local agencies, and for-
profit and non-profit entities, must comply with the title VI 
requirements. With respect to persons with disabilities, section 504 of 
the Rehabilitation Act of 1973 requires HUD recipients to make 
information accessible to persons with disabilities, and the Americans 
with Disabilities Act requires State and local governments to provide 
equal access and effective communication with individuals with 
disabilities by, inter alia, providing information in accessible 
formats (e.g., accessible electronic formats, large print, Braille, 
audio recordings); providing sign language interpreters and computer-
assisted real time transcription, as needed, to persons who are deaf or 
hard of hearing; and holding meetings in venues that are accessible to 
persons with disabilities, including individuals who use wheelchairs.
    Comment: Program participants should report their progress and 
outcomes from their AFH. Commenters stated that program participants 
should report their progress and outcomes from the AFH in their various 
grant reports, just as they do for individual grant activities. 
Commenters stated that the rule should specify what information program 
participants are required to provide about the progress they have made, 
including their use of financial resources and any actions they have 
taken with respect to their policies, practices, and non-financial 
resources. Other commenters stated that assessment and compliance 
reports should be posted promptly on the jurisdiction's Web site.
    HUD Response: HUD's consolidated plan regulations already provide 
for performance reports and the opportunity for the public to comment 
on performance reports. (See Sec.  91.105(d).)
    Comment: HUD should have a Web page devoted to AFHs. Several 
commenters stated that HUD should have a page on its Web site with 
information on the AFH submission deadlines and copies of all AFHs. 
Another commenter stated that for each AFH submission HUD should assign 
a number that should be used to track the submission status on HUD's 
Web site.
    HUD Response: HUD appreciates these recommendations. While HUD 
cannot commit at this time to have a Web site that provides this 
information, HUD will definitely explore this recommendation.
    Comment: Make uniform data available to the public. Commenters ask 
that the nationally uniform local and regional data be made available 
to the public, including via HUD's Web site to encourage research.
    HUD Response: HUD's data will be available on HUD's Web site for 
all the public to view and access. The data will not be limited to 
program participants that must prepare an AFH.
24. Technical Assistance
    Comment: HUD-provided technical assistance will be critical to the 
success of the new AFH process. Many commenters stated that HUD-
provided technical assistance will be critical as program participants 
adapt to dramatic changes in regulatory requirements, not to mention 
reduced HUD funding that has had a significant impact on the ability of 
local jurisdictions to maintain adequate staffing levels. Commenters 
stated that, as suggested by the GAO report addressing the duty to 
affirmatively further fair housing, HUD, and its field offices have not 
provided sufficient technical assistance or conducted adequate 
monitoring. Commenters stated that even conscientious, experienced 
staffs of program participants are challenged by the lack of direction, 
assistance and oversight from field offices, and that imposing new 
regulations is not going to solve this problem; rather, it will only 
serve to exacerbate it.
    HUD Response: HUD reiterates the commitment made in the proposed 
rule to provide technical assistance to program participants as they 
transition to the new AFH process.
    Comment: Types of technical assistance that would be helpful. In 
the proposed rule, HUD solicited comment on what forms of technical 
assistance would be most helpful to program participants. In response 
to this question, commenters suggested regional meetings hosted by HUD, 
webinars, audio-visual materials, and other online training, face-to-
face training, classroom training, and guidance that includes numerous 
examples of how to undertake the analysis required and complete the 
Assessment Tool.
    HUD Response: HUD appreciates the suggestions and will strive to 
provide as much and as varied assistance as possible.
25. Administrative Burden
a. Duplication and Redundancy
    Comment: Eliminate the duplication between the AFH and Consolidated 
Plan. Commenters stated that the proposed rule added duplication 
between the AFH and elements currently required to be included in the 
consolidated plan. Commenters stated that given the avowed desire of 
HUD to simplify and shorten these key planning documents with a view 
toward making them more accessible to affected parties, this 
duplication of publication seems unnecessary.
    Other commenters state that, at the outset, former Secretary 
Donovan stated that one of his goals was reducing redundancy and 
conflicting Federal planning requirements and making plans more 
integrated and effective. Commenters stated that the proposed rule, if 
adopted, threatens to move further away from the goal of integrated 
planning and places a significant new burden on localities at time when 
support and resources from HUD are shrinking.

[[Page 42343]]

    Commenters stated, as proponents of local comprehensive planning, 
they understand and support the concept of looking broadly at the 
multiple factors that affect housing and community development. 
Commenters stated that it is less clear that the AFH is best suited for 
this analysis and could create both needlessly duplicative planning 
processes and uncertainty about enforcement and local control of key 
policies and regulatory functions. Commenters stated that this 
uncertainty could, ironically, actually slow the adoption of effective 
housing policies in many communities.
    Other commenters stated that to reduce the redundancy between the 
AFH and the consolidated plan, the consolidated plan should fully 
incorporate the AFH. Commenters stated that the AFH community 
participation process is duplicative of the citizen participation 
process in the consolidated plan process. Commenters stated that the 
rule is silent as to whether the community engagement process for the 
AFH can be combined with the consolidated planning community engagement 
process. If the process for both plans cannot be consolidated, this 
poses a potential burden on program participants and could lead to 
community members growing fatigued with duplicative events.
    Commenters stated that to fully integrate all planning processes, 
the AFH must be part of the consolidated plan process to more directly 
and effectively incorporate fair housing planning into the 
comprehensive housing and community development planning that program 
participants undertake through the consolidated plan. Commenters stated 
that the incorporation of the AFH into the consolidated plan would 
allow a single community participation process, and would reduce 
duplicative analyses. Commenters stated that a single plan would 
support the goal of closely linking the AFH with funding priorities, 
and could help avoid delays in funding and implementing fair housing 
and community investment strategies. Commenters stated that the 
incorporation of the two plans will save time and resources, and 
increase efficiency and consistency in the planning process. Commenters 
stated that the obligation to affirmatively further fair housing will 
be strengthened by a clearer and more direct inclusion of affirmatively 
furthering fair housing considerations and the AFH in the consolidated 
plan and PHA Plan processes for establishing fund allocation 
priorities.
    Commenters stated that the AFH should not separately precede the 
consolidated plan, but should be developed as part of the consolidated 
plan. If the AFH is submitted significantly ahead of the consolidated 
plan, program participants would be in a constant planning and 
reporting cycle which would drain staff time and resources from 
effective implementation and monitoring of identified goals and 
objectives of both the AFH and consolidated plan. Commenters stated 
that if the AFH is developed separately from the consolidated plan 
there would be unnecessarily redundant analysis, and public confusion 
resulting from separate duplicative citizen participation hearings.
    Commenters stated that having the fair housing goals right next to 
the data in the consolidated plan where the issues exist would fully 
integrate fair housing planning with the consolidated plan without 
requiring two entirely separate documents and planning periods. 
Commenters stated that this would also substantially ease the burden on 
program participants of having to prepare different submissions and 
would avoid having the fair housing discussion essentially separate 
from the Plan. Commenters stated that any nonduplicative elements that 
HUD felt was missing between the AFH and the Plan could be added to the 
Plan, but the need for separate documents would no longer exist.
    HUD Response: HUD appreciates the concerns and recommendations made 
by the commenters. HUD has previously addressed the importance of 
having the AFH precede and not be undertaken concurrently with the 
consolidated plan and PHA Plan. An analysis of barriers to fair housing 
choice has always been an analysis separate from the consolidated 
planning or PHA planning processes. The purpose of the separate 
analysis is to inform the broader scope in planning undertaken for the 
consolidated plan and PHA Plan. At the start of this new approach to 
analyzing fair housing issues HUD believes such analysis is more 
effective as a separate process. As the new AFH process is implemented 
and HUD has the opportunity to review how the new AFH process has 
worked among program participants following the first AFH submissions, 
HUD may consider greater integration in the consolidated planning and 
PHA planning processes, or other changes based on the experience with 
the first round of AFH submissions.
b. Placement of Disproportionate Housing Needs
    HUD's proposed rule sought comment regarding the inclusion of an 
analysis of disproportionate housing needs in the AFH and the 
consolidated plan. Specifically, the proposed rule asked: ``If a 
disproportionate housing needs analysis is a part of the AFH, should it 
remain in the consolidated plan as well? Is this analysis most 
appropriate in either the AFH or the consolidated plan, or is it 
appropriate, as the current proposed rule contemplates, to have the 
analysis in both places, assuming the analysis is the same for both 
planning exercises?''
    Comments: Commenters presented the following answers to this 
question:
    No duplication of analysis: Several commenters recommended that an 
analysis of disproportionate housing needs be included in either the 
AFH or the consolidated plan, but not in both. Commenters stated that 
given HUD's desire to simplify and shorten planning documents, the 
inclusion of a disproportionate housing needs analysis in both the AFH 
and the consolidated plan seems unnecessary and duplicative. Commenters 
suggested combining the AFH and the consolidated plan to create one 
plan. Commenters stated that it would be wasteful to put forth twice 
the effort in two different planning cycles to reach the same results, 
and instead recommended the analysis be completed once to avoid 
redundancy of process and minimize the possibility of unintentional 
inconsistencies. Commenters recommended that, wherever possible, the 
requirements should be nonduplicative.
    Analysis should be in AFH only. Commenters stated that an analysis 
of disproportionate housing needs is an essential element of fair 
housing planning, and should appear in the AFH. Commenters stated that 
an analysis of disproportionate housing needs is most relevant to the 
AFH, which can then influence the consolidated plan without being 
repeated. Commenters stated that understanding housing conditions and 
housing cost burdens of persons who are members of protected classes 
under the Fair Housing Act is a principal factor in planning for fair 
housing and for making decisions regarding the relative level of funds 
to allocate for activities targeted at populations in specific income 
categories. Commenters stated that if the AFH is to become a component 
of the consolidated plan, the analysis of disproportionate housing 
needs should be covered only once in

[[Page 42344]]

the AFH component of the consolidated plan. Commenters stated that if 
the AFH is to become the major analytical tool for assessing this 
aspect of housing, then ``serving a warmed over version in the 
consolidated plan accomplishes little'' and could simply be addressed 
through a reference in the consolidated plan to the AFH.
    Analysis should be in consolidated plan only. Several commenters 
recommended that an analysis of disproportionate housing needs only be 
included in the consolidated plan.
    Commenters stated that because disproportionate housing needs does 
not always mean `fair housing' the disproportionate housing needs 
analysis should not be a part of the AFH. Other commenters stated that 
disproportionate housing needs is not covered by the Fair Housing Act. 
Commenters stated that a disproportionate housing needs analysis is 
appropriate for inclusion in consolidated plans and PHA Plans, but is 
inappropriate for inclusion under affirmatively furthering fair housing 
standards.
    Analysis should be in both planning documents. Several commenters 
recommended including a disproportionate housing needs analysis in both 
the AFH and the consolidated plan. Commenters stated that the 
centrality of this data to the decision making process in both the AFH 
and consolidated planning process means that it belongs in both 
planning areas, and that inclusion in both will not result in added 
cost and will help decision makers focus on this piece of essential 
planning data. Commenters recommended that a disproportionate housing 
needs analysis should be in both the AFH and the consolidated plan, 
because the consolidated plan regulation calls for such an analysis to 
be based on the income categories of extremely low income, low income, 
moderate income, and middle income, and without that analysis in the 
consolidated plan, it would be even easier for jurisdictions to set 
consolidated plan priorities that do not address the critical need for 
housing programs and policies that serve extremely low income people. 
Commenters recommended that the analysis of disproportionate housing 
need appear in both the consolidated plan and the AFH, and recommended 
incorporating the AFH Assessment Tool and data into the Integrated 
Disbursement and Information System (IDIS) with the consolidated 
planning and reporting templates. Another commenter stated that if HUD 
does not incorporate fair housing directly into the consolidated plan, 
then the analysis of disproportionate housing needs should be in both 
the consolidated plan and the AFH.
    HUD Response: HUD appreciates the feedback in response to HUD's 
question about placement of the analysis of disproportionate housing 
needs. HUD agrees with the commenters that the analysis of 
disproportionate housing needs should not be in both documents. Since 
the analysis for disproportionate housing needs in the AFH and the 
consolidated plan would be almost identical, inclusion in both would be 
duplicative. The final rule provides for placement of the analysis of 
disproportionate housing needs in the AFH. HUD also agrees with the 
commenters who stated that analysis of disproportionate housing needs 
is an essential element of fair housing planning and that understanding 
the housing conditions and costs of housing for persons who are members 
of protected classes under the Fair Housing Act is a principal factor 
in fair housing planning.
    In this final rule, HUD requires program participants to identify 
disproportionate housing needs for members of racial and ethnic groups 
in their AFH, and to assess any such needs for fair housing issues.
    Under HUD's Consolidated Plan regulations, jurisdictions must 
include disproportionate housing needs in their consolidated plan. The 
regulations state that for any of the income categories enumerated in 
paragraph (b)(1) of the section, to the extent that any racial or 
ethnic group has disproportionately greater need in comparison to the 
needs of that category as a whole, assessment of that specific need 
shall be included. (See Sec.  91.205(b)(2).) The Consolidated Plan 
regulations also require the jurisdiction to identify and describe any 
areas within the jurisdiction with concentrations of racial/ethnic 
minorities and/or low-income families, stating how it defines the terms 
``area of low-income concentration'' and ``area of minority 
concentration'' for this purpose. (Sec.  91.210(a).)
    The disproportionate housing needs analysis required in the AFH is 
a broader analysis than must be done in connection with the 
consolidated plan since, for AFH purposes, the analysis must include 
groups with protected characteristics beyond race and ethnicity. HUD 
has determined that the disproportionate housing needs analysis is 
necessary to inform the AFH and that it therefore makes sense for the 
analysis to be performed at the time the program participant is 
preparing the AFH, rather than waiting until it prepares the 
consolidated plan. When a consolidated plan jurisdiction has conducted 
the requisite analysis on disproportionate housing needs of racial and 
ethnic minorities in an AFH, it will not be required to conduct a new 
analysis for purposes of the consolidated plan. In addition, HUD makes 
a similar change to reduce to the PHA Plan regulations. Section 
903.7(a) provides that were a housing needs assessment undertaken as 
part of the AFH, it is not required as part of the analysis conducted 
for the PHA Plan.
    Rule Change. HUD makes conforming changes to the Consolidated Plan 
regulations to provide that where a disproportionate housing needs 
assessment is undertaken as part of the AFH it is not required as part 
of the analysis conducted for the consolidated plan (see Sec. Sec.  
91.205(b)(2), 91.305(b)(2)).
c. Consultants
    Comment: Program participants will be forced to hire consultants to 
comply with the reporting requirements of the rule. Commenters stated 
that program participants will be forced to hire consultants to comply 
with the requirements of the rule. Commenters stated that because of 
the extensive analysis required by the proposed rule, it will be 
impossible for program participants to avoid hiring consultants, and 
because consultants will be needed by program participants to prepare 
their respective AFHs, the cost of hiring a consultant will rise 
because of increased demand for such services. Commenters stated that 
the costs associated with the hiring of a consultant will offset much 
or all of the cost benefit from the HUD-provided data, because such 
data is not sufficient for compliance. Commenters stated that 
consultants will also be expensive in rural areas because of the poor 
quality of HUD data in such rural areas.
    HUD Response: In the notice published in the Federal Register on 
September 26, 2014, soliciting public comment on the AFH Assessment 
Tool (79 FR 57949), HUD stated, ``With the data that HUD provides for 
use with the Assessment Tool supplemented by available local data and 
local knowledge, HUD does not anticipate the need for any program 
participant to turn to outside consultants to collect data and conduct 
the assessment.'' However, HUD appreciates the commenters' concern 
about the new AFH process and acknowledges that, in some cases, program 
participants may hire consultants, as they had when conducting the AI. 
HUD believes that by providing the data in a more systematic and 
accessible manner, most program participants will not require

[[Page 42345]]

consultants. To this end, HUD commits to tailor its AFHs to the program 
participant in a manner that strives to reduce burden and create an 
achievable AFH for all involved. HUD intends to provide, in the 
Assessment Tool, a set of questions in a standard format to clarify and 
ease the analysis that program participants must undertake. The 
Assessment Tool, coupled with the data provided by HUD, is designed to 
provide an easier way to undertake a fair housing assessment. With 
respect to concerns about data, the final rule invites program 
participants to supplement HUD's data with local data or with local 
knowledge.
    This final rule adopts new definitions of the terms ``local data'' 
and ``local knowledge'' to clarify that these terms refer to readily 
available information that requires little or no cost to obtain.
    In addition, HUD has committed to provide technical assistance with 
preparation of the AFH. These features and the approach of the AFH 
should result in an effective but not costly or burdensome assessment.
    Rule Change. Section 5.152 adds the definition of the terms ``local 
data'' and ``local knowledge.''
    Comment: Program participants can and should hire consultants to 
provide objective and expert analysis. In contrast to the preceding 
commenters, other commenters recommended that HUD make clear in the 
final rule that program participants may, and should, use independent 
outside consultants when preparing the required assessment. Commenters 
articulated the following reasons that consultants should be used. 
First, the commenters stated a self-assessment involves an inherent 
conflict and an independent assessment is necessary to generate an 
accurate and disinterested report. Commenters stated, for example, 
employees of a program participant may fear consequences of calling out 
a participant's practices that do not affirmatively further fair 
housing, or that reflect poorly on the local government or the 
community generally. Second, the commenters stated not every program 
participant has in-house resources or knowledge to complete an 
assessment. Commenters stated that program participants may not have 
sufficient staff to undertake the assessment, and even if they have 
sufficient staff, such staff may not have the skills or experience 
needed to conduct the assessment and accurately analyze and evaluate 
the data. Commenters stated that, in essence, the consultants are the 
best equipped to prepare the required analysis. Commenters stated that, 
if utilized, the consultants should be hired through an open and 
competitive bidding process. Commenters stated that, alternatively, HUD 
could maintain a registry of qualified consultants.
    HUD Response: HUD has designed the AFH process so that an AFH can 
be completed without the use of consultants. HUD intends to develop an 
Assessment Tool to bring certainty to the questions and issues that a 
program participant must explore to achieve a meaningful AFH. 
Therefore, program participants may, but are not required to, use 
consultants in preparing their AFHs, though HUD believes that a 
consultant will not be necessary to complete an AFH.
    Regarding the issue of requiring a competitive bidding process to 
hire consultants, regulating bidding procedures is outside the scope of 
this rulemaking. There are existing HUD and Federal guidelines 
concerning acquisition of services by program participants using 
Federal funds, and the program participant that seeks to obtain 
consultant services will need to determine whether these Federal 
guidelines apply and, if so, the applicable procedure for obtaining 
consultant services. HUD also declines to maintain a registry of 
consultants qualified to prepare AFHs.
d. Scarcity of Resources
    Comment: Additional resources are needed for the rule to succeed. 
Commenters stated that limited resources, economic conditions, the 
location of existing affordable housing, competing priorities for 
resources, and inability of states to impact local government and 
individual decision making to affect fair housing are just a few 
reasons that the rule will not succeed. Commenters stated that HUD 
underestimates the resource investment that will be necessary on the 
part of program participants. Commenters stated that, contrary to HUD's 
claim, simply providing data does not mean that the requirements will 
not be extremely burdensome to program participants. Commenters stated 
that HUD is presuming that the data will show a clear, consistent, and 
easily comprehensible picture--a highly unlikely outcome in most 
communities, and that the more plausible outcome is a muddled picture 
showing various needs in various locations, which program participants 
will have to parse and interpret in order to make use of the data.
    Other commenters stated that local governments and States are not 
responsible for individual differences, and should not be blamed for 
the results of those differences. The commenters stated that they 
should not be forced into the business of spending limited resources 
and forcing the private market into building or offering housing, 
infrastructure and transportation that have questionable benefit, and 
possibly negative consequences, for targeted groups.
    HUD Response: As stated in the proposed rule, HUD's approach to 
fair housing planning envisions a process that is structurally 
incorporated into the consolidated planning and PHA planning processes, 
building upon what is already familiar to HUD program participants--
supported by HUD technical assistance, HUD-provided data, and an 
Assessment Tool. HUD is aware that the provision of data alone will not 
necessarily reduce burden, but data provided by HUD and utilization of 
familiar planning processes, in conjunction with use of an Assessment 
Tool, will make for a more effective and less burdensome fair housing 
planning process.
    The rule itself establishes four broad categories of fair housing-
related issues that must be addressed in the AFH and for which HUD will 
provide relevant data, including maps and tables for the jurisdiction. 
The four categories, as provided in Sec.  5.154, are: integration and 
segregation; racially or ethnically concentrated areas of poverty; 
disparities in access to opportunity; and disproportionate housing 
needs. The specific criteria for how to address each of the main 
categories of needs and potential issues will be provided in greater 
detail in the Assessment Tool and related guidance. HUD intends to 
refine and improve the Assessment Tool on an ongoing basis, with the 
goal of effective implementation while minimizing the burden on HUD 
program participants.
    HUD also agrees that many AFHs will not always present one clear 
picture with only one obvious available solution. By its very nature, 
the AFH is a planning document intended to help inform and guide local 
decisionmaking in addressing complex physical, social, and economic 
problems, including a greater need for affordable housing, and 
addressing neighborhood conditions with limited budgets. By providing 
data and a framework for analysis, however, the AFH is intended to 
assist program participants in their own prioritization of how best to 
allocate scarce resources to meet identified local needs and comply 
with their duty to affirmatively further fair housing. The goal is not 
to create difficulties for program participants, but to empower 
participants to fulfill their legal

[[Page 42346]]

obligation to affirmatively further fair housing.
    A basic tenet of planning and performance management is recognition 
of ``external factors'' and other barriers to achieving goals, and 
which are beyond an organization to control (See, e.g., the Federal 
Government Performance and Results Act). This rule allows grantees to 
identify such barriers. Included in such considerations is the 
identification of funding dependencies and contingencies.
    Comment: HUD should delay implementation of AFH until there is an 
improved economic environment. Commenters stated that regardless of how 
well-meaning this rule may be, it is the worst possible time to impose 
new regulatory burdens on housing authorities and other program 
participants. PHA commenters stated that most, if not all of PHA 
programs, are currently funded at an all-time low level. Commenters 
stated that public housing operating subsidy is funded at 82 percent, 
that Section 8/HCV administrative fees are funded at 69 percent, that 
voucher subsidy is at 94 percent which is resulting in voucher programs 
serving fewer families nationwide, forcing agencies to terminate 
families. PHA commenters stated that the capital fund grants to address 
the $25 billion capital repair backlog is now below $2 billion which 
HUD admits does not even keep up with annual accrual. Commenters stated 
that PHAs are struggling to meet payroll and keep their units leased as 
housing authorities' waiting lists grow, much less meeting the myriad 
existing regulations on the books. Commenters stated that HUD proposed 
an approach to the duty to affirmatively further fair housing that will 
increase workload and regulatory burden at a time program participants 
cannot handle such increased workload. Commenters stated that former 
HUD Secretary Donovan himself testified to Congress that HUD was 
finding it difficult to meet its own obligations due to funding cuts.
    HUD Response: HUD understands the constraints of the funding 
environment. The intent of HUD's rule is to provide for a meaningful 
AFH, while minimizing burden on PHA staff and acknowledging the 
diversity of PHAs in terms of capacity. By providing the data to the 
program participants and creating an Assessment Tool that allows 
program participants to perform the assessment themselves rather than 
hire consultants, this rule should ensure that PHAs can complete the 
AFH within their current funding environment. Also, the AFH may assist 
program participants in making choices as to the uses of their funding 
that will affirmatively further fair housing. In addition, as discussed 
earlier, HUD has decided to implement staggered submission deadlines 
for different categories of program participants in Sec.  5.160.
    Comment: HUD should have taken modest steps to improve fair housing 
planning. Commenters stated that since 1995, HUD has not been able to 
oversee and monitor program participants' compliance with or 
performance related to HUD's existing requirement to affirmatively 
further fair housing, its requirement to conduct an AI, or determine 
whether program participants were successful in affirmatively 
furthering fair housing. Commenters stated that the GAO report and 
HUD's internal report on the matter included suggestions for improving 
the HUD's performance of these tasks without a wholesale revision of 
the affirmatively furthering fair housing process or a radical 
expansion of the concepts involved in affirmatively furthering fair 
housing. Commenters stated that those approaches appeared to be well 
within HUD's reach and could have finally provided a baseline against 
which HUD could measure the effectiveness of the rule's approach to 
affirmatively furthering fair housing. The commenters stated that 
rather than taking those modest steps to improve affirmatively 
furthering fair housing performance and outcomes, HUD has proposed a 
dramatic expansion and modification to the rule governing affirmatively 
furthering fair housing. The commenters stated that HUD's proposal 
imposes new and burdensome tasks on program participants and on HUD at 
a time when the resources needed to administer existing programs are 
inadequate for HUD program participants and for HUD. Commenters stated 
that they are concerned that this regulatory expansion will have the 
same impact on affirmatively furthering fair housing and fair housing 
goals as HUD's 1995 rule and its amendments, which is that program 
participants and HUD will complete additional analyses, submit 
additional reports to HUD in prescriptive formats, report on outcomes 
or the lack thereof, to approximately the same effect. Commenters 
stated that this is not the time to implement a new rule on 
affirmatively furthering fair housing--not for HUD and not for the HUD 
program participants.
    HUD Response: HUD previously addressed comments asking why HUD took 
the direction it did to improve the effectiveness of affirmatively 
furthering fair housing.
    HUD's rule responds not only to the recommendations of the 2010 GAO 
study, but HUD's own internal 2009 review, which included requiring 
that the required fair housing analyses AFHs be submitted to HUD for 
review, and for HUD to accept or not accept them within specific 
timeframes according to a clear standard of review. HUD's rule also 
places a duty upon HUD to provide data in a reliable and accessible 
format to reduce the burden on program participants in completing their 
AFHs.\16\
---------------------------------------------------------------------------

    \16\ See: ``HUD Needs to Enhance Its Requirements and Oversight 
of Jurisdictions' Fair Housing Plans,'' GAO-10-905 (September 2010), 
GAO; and ``Analysis of Impediments Study,'' (Washington, DC, 2009) 
HUD, Policy Development Division, Office of Policy Development and 
Research, HUD.
---------------------------------------------------------------------------

    Comment: The rule must clearly state that the AFH does not create 
an obligation to fund a specific project. Commenters stated that the 
rule must clearly state that the AFH does not create an obligation to 
fund a specific project, program, need, or geographic area and that the 
final rule should contain a statement acknowledging that program 
participants have limited resources and must make choices how to 
allocate funds in a manner that may not address all needs.
    HUD Response: The commenters are correct, the AFH, which is a 
planning process does not create an obligation to fund a specific 
project, program, need, or geographic area. The final rule, takes into 
consideration that a program participant in all likelihood will not be 
able to address all fair housing issues it may want to tackle and, 
therefore, prioritization will be necessary. The AFH process 
established by this rule allows for a flexible approach that permits 
program participants to consider a variety of available strategies to 
meet a wide range of local needs and housing market conditions 
consistent with the duty to affirmatively further fair housing with 
limited programmatic resources. The AFH is intended to aid rather than 
supplant local decisionmaking, and the various policy options adopted 
by program participants will depend fundamentally on the local context 
and the particular circumstances that prevail when the issues are 
considered.
    Comment: Fair housing planning should be considered a CDBG eligible 
activity so that it can be properly funded. Commenters stated that 
there is added stress on declining CDBG budget to do more with less 
money. Commenters stated that if this rule is put in place there needs 
to be clear expectations for what smaller communities can do as opposed 
to larger communities. Commenters stated that this rule creates 
additional burdens for program participants trying to make

[[Page 42347]]

a community better with activities when they have only two staff 
persons able to administer the entire program. Commenters stated that 
making a difference in a small community can only be done in 
incremental steps and a community of 50,000 compared with a community 
of 1.5 million must be considered differently, and that for a small 
community the tactics to deal with segregation are limited by funding. 
Commenters stated that for the new AFH process to be successful fair 
housing planning should be considered a CDBG activity instead of being 
an eligible expense under the CDBG administrative cap.
    Commenters recommended that fair housing be identified as a 
separate or stand-alone eligible activity, not subject to the 20 
percent administrative and 15 percent public service caps, so that more 
funding may be directed to these activities. The commenters stated that 
in addition, fair housing programs and planning should automatically be 
presumed to meet the low- and moderate-income national objective.
    Other commenters stated that HUD must be realistic about the cost 
implications of its proposed rule, especially on small organizations, 
and ensure that the requirements are consistent with the capacity of 
agencies to implement them. The commenters stated that this might mean 
a phase-in of requirements for smaller program participants, or 
providing technical assistance or funding to program participants to 
carry out their responsibilities.
    HUD Response: HUD recognizes that smaller program participants do 
not have the same capacity as larger participants and therefore burdens 
can be greater. HUD has strived in this final rule to reduce costs and 
burdens involved in implementation of the new AFH as much as possible, 
especially for smaller program participants. The guidance that HUD 
intends to provide will further refine the application of the rule's 
requirements to specific types of program participants, especially 
smaller PHAs and local government agencies with limited staff and 
resources. In addition, HUD plans to provide technical assistance to 
program participants where requested, which will help smaller program 
participants that may have small staffs to complete the AFH. HUD has 
provided for later submission deadlines for CDBG entitlement 
jurisdictions receiving an FY 2015 grant of $500,000 or less and 
``qualified PHAs'' in this final rule in an effort to reduce burdens on 
smaller program participants and jurisdictions in conducting the AFH.
    Comment: Paperwork costs will increase under the new AFH process. 
Commenters stated that costs, not solely paperwork costs, but travel 
costs, advertising costs, and costs for administrative staff would 
increase under the new AFH process. Commenters stated that the costs of 
advertisements alone, to meet the additional public hearing 
requirements at the State level are significant. Commenters stated that 
in addition to the requirement to spend resources for more hearings and 
advertising, program participants will have to: Dedicate huge amount of 
staff time to prepare an AFH (1,150 hours, or about 29 work weeks for 
the average State as per the record keeping requirements in the 
proposed rule); work with 15 local PHAs that are not in entitlement 
jurisdictions in developing their plans, and attend numerous requested 
meetings to undertake the require consultations. The commenters stated 
that the result of such burden is to draw staff away from effectively 
operating their programs to preparing the AFH instead.
    Other commenters stated that the addition of another series of 
public meetings, time consuming consolidation of documentation, 
drafting and staffing a report through city channels, and numerous 
meetings, outside of the consolidated plan cycle is extremely 
discouraging to a burdened staff with limited resources at their 
disposal. The commenters stated that the cost burden identified on 
Federal Register page 43728 with 1,637,200 hours for this should be 
enough to shelve this idea for a long time.
    Commenters stated that the process of holding public hearings 
around a state, especially a large state, would generate 
transportation, lodging and food costs as well as advertising to try to 
generate participation. Commenters stated that there also will be 
changes to internal processes that will result in additional paperwork 
needed during the eligibility review process to connect each funded 
activity to the AFH goals, and that there will be additional time and 
funding needed for various funded activities to support the AFH.
    Commenters stated that while they appreciate enhanced public 
participation requirements and the mandate that that Federal program 
participants consult with organizations representing members of 
protected classes as well as public and private fair housing agencies, 
they are concerned about the capacity of such organizations to have the 
time to offer meaningful input--especially if plan submission cycles 
result in multiple simultaneous requests. The commenters stated that it 
takes repeated effort to build rapport with their communities, and that 
it takes a significant investment in increasing civic participation 
among historically under represented community members. The commenters 
reiterated that this effort, although worthwhile, is very time 
consuming and requires more than one full-time employee, which for some 
communities, is more than the entire CDBG staff.
    Commenters stated that the proposed rule has the appearance of 
reducing the time spent by program participants in data collection but 
it increases the time spent in preparing a written analytical report. 
Commenters stated that given the volume of data presented combined with 
what the commenters stated appears to them to be an increase in the 
analysis expected, the commenters anticipate an increase to the 
paperwork costs associated with the AFH and stated that any efforts 
going toward increased paperwork could result in decreased financial 
resources available to serve tenants.
    HUD Response: HUD is cognizant of the additional costs that some 
aspects of the new process may present, such as the costs of public 
hearings, travel, and ensuring outreach to members of the community. 
However, HUD believes that the fact the AFH is submitted every 3 to 5 
years, and is not an annual submission, allows for greater planning on 
the part of the program participant with respect to how and where to 
conduct public hearings, which hopefully mitigates expenditures. With 
respect to time spent preparing the analysis, HUD believes that the 
Assessment Tool reduces such burden. HUD's Assessment Tool aides 
program participants in their analysis by providing a series of 
questions about fair housing issues and contributing factors and 
providing menus for several responses to certain questions, which 
decreases rather than increases paperwork. HUD also believes that the 
revised process for conducting an assessment will reduce or eliminate 
many program participants' view that they must rely on consultants, as 
many did in creating AIs under prior requirements set out in 
regulations and the Fair Housing Planning Guide.

V. Findings and Certifications

Regulatory Planning and 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 OMB in accordance with the 
requirements of the

[[Page 42348]]

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 Executive Order 
12866 (although not an economically significant regulatory action under 
the order). HUD submits that the approach to fair housing planning 
proposed by this rule is consistent with the objectives of Executive 
Order 13563 to modify regulations that are outmoded and ineffective. 
HUD completed a Regulatory Impact Analysis for this final rule, which 
can be found at www.regulations.gov, under the docket number 5173-F-03-
RIA. This section summarizes the findings of that analysis.
Summary of Analysis
    As more fully addressed earlier in this preamble, this rule 
establishes an integrated assessment and planning process, the 
Assessment of Fair Housing (AFH) approach, to give HUD program 
participants a more effective means to affirmatively further the 
purpose of the Fair Housing Act. The AFH replaces the analysis of 
impediments (AI) approach long used by HUD to aid its program 
participants in affirmatively furthering fair housing but ultimately 
determined not to be as effective as HUD envisioned. The new approach 
being established by this rule is accompanied by more support from HUD. 
HUD will provide States, local governments, and PHAs with data on 
patterns of (1) integration and segregation; (2) racially and 
ethnically concentrated areas of poverty; (3) access to education, 
employment, low-poverty neighborhoods, transportation, environmental 
health, and other assets that comprise areas of opportunity; and (4) 
disproportionate housing needs of protected classes. HUD will provide 
such data from nationally standardized datasets to local entities for 
the planning process. States, local, governments and PHAs will 
supplement HUD-provided data with local data and local knowledge they 
have of such fair housing issues. Although HUD is providing more 
support to its program participants through this new approach, HUD 
recognizes that the AFH process will be a substantial change from the 
current AI process.
    While the final rule imposes increased costs of data collection and 
paperwork on participating jurisdictions and PHAs, most of the positive 
impacts entail changes in equity, human dignity, and fairness. HUD's 
primary estimate of compliance costs for its program participants is 
$25 million per year. HUD estimates that it will incur costs of $9 
million to review participants' analyses and provide guidance and 
feedback.
Need for the Rule
    Despite genuine progress and a landscape of communities transformed 
in the more than 40 years since the Fair Housing Act was enacted, the 
ZIP code in which a child grows up all too often remains a strong 
predictor of that child's life course. There are communities that 
remain segregated by classes protected by the Fair Housing Act. 
Racially-concentrated areas of poverty exist in virtually every 
metropolitan area. Disparities in access to important community assets 
prevail in many instances.
    Efforts to not only combat ongoing discrimination, but increase 
housing choice and access to opportunity are at the core of HUD's fair 
housing efforts. However, HUD's efforts to date to have its grantees 
engage in fair housing planning, by undertaking an analysis of 
impediments (AI) to housing choice, have not been as effective as HUD 
intended. Under the AI planning process, HUD did not specify or provide 
grantees relevant information, and did not clearly link grantees' AIs 
to community planning efforts, such as the Consolidated Plan and the 
PHA Plan. Under the GAO report referenced earlier in this preamble, the 
GAO's analysis of 30 AIs highlighted the most common impediments to 
fair housing choice: zoning and site selection, inadequate public 
services in low- and moderate-income areas, less favorable mortgage 
terms from private lenders, and lack of access to information about 
fair housing rights and responsibilities (GAO, 2010).
    Barriers that inhibit community improvements are as costly as 
barriers that prevent people from settling in their preferred 
community. The assets offered by a neighborhood can influence the 
number and profile of people and families who want to live in such a 
neighborhood. These assets include good schools; safe streets; access 
to good jobs; a good health infrastructure; available services such as 
childcare, parks and open space; diverse and healthy food choices; and 
a range of transportation options (including accommodations for 
disabilities). As an alternative, increasing a neighborhood's appeal to 
families, families with different income and ethnic profiles, can 
encourage a more diversified population and reduce isolation, thus 
advancing fair housing goals.
    GAO's report recommended that HUD establish rigorous standards for 
submission, checking, and verification of AIs, and GAO recommended 
measuring grantees' progress in addressing fair housing impediments. 
HUD's new regulations being promulgated by this final rule adopt these 
recommendations.
    The new regulation provides a fair housing planning process that 
builds upon the Consolidated Plan and the PHA planning process, 
utilizing planning procedures familiar to HUD's program participants. 
As noted earlier, the regulations provide for grantees to submit their 
AFHs to HUD, every 5 years, and for HUD to review and evaluate AFHs to 
determine whether to accept or not accept. Although HUD will provide 
nationally available data to program participants, the regulations 
recognize the value of local data, which may be more relevant and 
current than HUD-provided data. Accordingly, program participants must 
describe any local data utilized in development of their AFH. The 
regulations also impose a separate community participation process for 
the AFH, but using the procedures already in place for the community 
participation process required by the Consolidated Plan and PHA Plan.
Benefits
    The benefits of this rule can be significant. HUD and its grantees 
have a statutory duty to affirmatively further fair housing. This is 
not an administrative requirement that can be waived by HUD. As the 
preamble to the proposed rule provided and reiterated in the preamble 
to this final rule, the AI process, utilized to date, has been highly 
criticized as not an effective AFFH tool. The outcomes that HUD seeks 
from this rule are those intended by the Fair Housing Act--overcoming 
historic patterns of segregation, promoting fair housing choice, and 
fostering inclusive communities that are free from discrimination.
    Executive Order 13563 (Improving Regulation and Regulatory Review, 
issued in January 2011) allows regulatory agencies ``where appropriate 
and permitted by law'' to ``consider (and discuss qualitatively) values 
that are

[[Page 42349]]

difficult or impossible to quantify, including equity, human dignity, 
fairness, and distributive impacts.'' While the final rule imposes 
increased costs of data collection and paperwork on participating 
jurisdictions and PHAs most of the positive impacts entail changes in 
equity, human dignity, and fairness. If the rule prompts communities to 
promote a more racially and socio-economically equitable allocation of 
neighborhood services and amenities, residents would enjoy the mere 
sense of fairness from the new distribution. Elevating communities out 
of segregation revitalizes the dignity of residents who felt suppressed 
under previous housing and zoning regimes. Quantifying such factors as 
fairness and dignity is likely impossible, yet these values are the 
crux of the final rule. Since the rule primarily results in such 
unquantifiable impacts, it is appropriate to consider many of its 
effects in qualitative terms.
    The new AFFH regulations are designed and intended to improve the 
process for carrying out a statutory mandate, potentially improving the 
lives of protected classes who face barriers to fair housing choice. 
The best outcome of the rule would be for each program participant to 
have the capacity and a well-considered strategy to affirmatively 
further fair housing. The regulations, however, do not prescribe, 
compel, or enforce concrete actions that must be taken by HUD's program 
participants. The regulations instead encourage a more engaged and 
data-driven approach to assessing the state of fair housing and 
planning actions.
    Increasing a neighborhood's appeal to families with different 
income and ethnic profiles can encourage a more diversified population 
and reduce isolation, thus advancing fair housing goals. A key 
challenge in transforming neighborhoods and promoting integrated 
communities is preserving their affordability and highlighting their 
appeal without radically changing their character. Transformation, 
particularly of lower income neighborhoods, can induce gentrification, 
which can help advance fair housing goals and integration, but it can 
also change the ethnic mix to the extent that the minorities who 
originally populated the neighborhood are no longer present, and thus 
do not accrue the benefit of the initial investments. The rule strives 
to establish a balanced approach, as discussed earlier in this rule, to 
avoid such outcomes that could negate the progress strived to be 
achieved by the new regulations.
Costs
    The rule's impacts on program participants are associated with 
executing the envisioned planning process. Though HUD estimates new 
costs exceed new cost savings, the final rule makes several key changes 
that will reduce costs and burden while replacing the AI process with 
the new AFH process. First, the final rule advises that HUD will 
provide versions of the Assessment Tools (or Template), the document by 
which a program participant will document its assessment of fair 
housing issues in its geographic area, that are tailored to the roles 
and responsibilities of the various program participants covered by 
this rule. HUD agreed with commenters that a one size Assessment Tool 
does not fit all and that Assessment Tools tailored to the roles and 
responsibilities of the various program participants, whether they are 
entitlement jurisdictions, States, or public housing agencies (PHAs), 
will eliminate examination of areas that are outside of a program 
participant's area of responsibility. Second, HUD recognizes that all 
program participants do not have the same recourses and capacity and 
HUD provides additional time for small entities, qualified PHAs (as 
defined by statute) and jurisdictions that receive a Community 
Development Block Grant (CDBG) of $500,000 or less, to complete their 
first AFH. Third, HUD provides a staggered submission deadline for 
program participants to submit their first AFH. As reflected in the 
proposed rule, HUD intends to provide all program participants with 
considerable time to transition from the current AI approach to the new 
AFH approach. Fourth, the final rule provides that a program 
participant that undertook a Regional AI in connection with a grant 
awarded under HUD's Fiscal Year 2010 or 2011 Sustainable Communities 
Competition is not required to undertake an AFH for the first AFH 
submission stage.
    While these significant changes reduce burden and costs and while 
the new AFH approach builds upon the existing Consolidated Planning and 
PHA Planning processes, HUD recognizes that there will be costs. The 
new AFH will involve additional document preparation. Costs associated 
with such preparation are not significantly increased because States, 
local governments, and PHAs are already required to address analyses 
comparable to those required by the AFH, such as disproportionate 
housing needs, and undertake activities to offer fair housing choice, 
and maintain records of the activities and their impact. However, the 
new AFH involves a separate community participation process, and HUD 
recognizes that this new participation process entails additional 
costs. Accordingly, the aggregate compliance cost on local entities is 
expected to be in the range of $25 million per year after the second 
year of implementation, $9 million for HUD, for a total of $34 million.
    There will also be costs associated with the strategies and actions 
program participants take to address the goals of the AFH. However, the 
rule covers program participants subject to a diversity of local 
conditions and economic and social contexts. Therefore, this analysis 
is unable to quantify the outcomes of the process to identify (1) 
barriers to fair housing, (2) program participants' decisions on which 
barriers to address, (3) the types of policies to address those 
barriers, and (4) those policies' effects on protected classes. The 
precise outcomes of the AFFH planning process are uncertain, but the 
rule will enable each jurisdiction to plan meaningfully.
    The net change in burden for specific local entities will depend on 
the extent to which they have been complying with the planning process 
already in place. The local entities that have been diligent in 
completing rigorous AIs may experience a net decrease in administrative 
burden as a result of the revised process. Many program participants 
spend considerable time and funds trying in good faith to comply with 
the existing AI requirements, given the absence of specificity, and for 
those program participants, the new AFH process, given its specificity 
should be easier and less costly.
    PHAs, which are not required to prepare AIs, may already spend 
considerable time cooperating with local governments by drawing upon 
the information and housing needs analysis in the local Consolidated 
Plan to inform the PHA plan and assessing the potential effectiveness 
of strategies such as local preferences. Indeed PHAs are currently 
required to certify that the PHA Plan is consistent with the 
consolidated plan applicable to the PHA. However, the demands of the 
new process are expected to result in a net increase of administrative 
burden for entities that have not regularly conducted an analysis of 
impediments to barriers to fair housing choice. For these entities, the 
new AFH process will result in an increase in burden and cost. 
Similarly, the burden of the rule will vary by data aptitude and 
resources of the program participant. Entities that have invested in 
data systems and are

[[Page 42350]]

able to access more easily relevant local data would in all likelihood 
have a reduced burden. A program participant that already collects data 
and employs analysts who study local trends will be able to respond 
with little additional effort compared to a program participant that 
does not have this capacity.
Summary Tables
    The primary compliance costs are for the HUD program participants 
to prepare a more rigorous five year plan. The cost will depend upon on 
the difficulty of preparation for a participant as well as how 
different the new fair housing planning process is from current 
practices. About $3 million annually of these costs are comprised of 
training and public participation costs. In addition to the burden on 
HUD program participants, HUD itself will need to hire staff to 
implement the rule; provide data support; and review submitted AFHs.

                                         Table--Annual Compliance Costs
----------------------------------------------------------------------------------------------------------------
                                 Compliance costs in a typical year ($millions)
-----------------------------------------------------------------------------------------------------------------
                                              Costs to all grantees
-----------------------------------------------------------------------------------------------------------------
                                                                Primary Estimate    Lower Bound     Upper Bound
----------------------------------------------------------------------------------------------------------------
Analysis.....................................................                 22               4              39
Training.....................................................                2.2             0.8             2.2
Participation................................................                1.2             1.2             1.2
                                                              --------------------------------------------------
    Total....................................................               25.4             6.0            42.4
----------------------------------------------------------------------------------------------------------------
* Note: Compliance Costs in first two years are less.


                                Table--Annual Total Costs and HUD Resource Costs
----------------------------------------------------------------------------------------------------------------
                                                                Primary estimate    Lower bound     Upper bound
----------------------------------------------------------------------------------------------------------------
                                               Annual Costs to HUD
----------------------------------------------------------------------------------------------------------------
HUD Costs....................................................                  9  ..............  ..............
----------------------------------------------------------------------------------------------------------------
                                     Annual Total Costs to Grantees and HUD
----------------------------------------------------------------------------------------------------------------
Total........................................................               34.4            15.0            51.4
----------------------------------------------------------------------------------------------------------------

    HUD judges the merits of this rule by the value it can create for 
protected classes. Ultimately, that value will be created by new 
program participant policies that result from the improved planning and 
analytical process. Section 5 of HUD's Regulatory Impact Analysis 
assesses several examples of policies that may be pursued by program 
participants in response to the new AFFH process. While this list is 
far from exhaustive, it does provide insight into the types of impacts 
we can expect from this rule. As such, the impacts are summarized in 
the table below.

        Table--Summary of Impacts of New Grantee Policy Examples
------------------------------------------------------------------------
                               Potential benefits
   Potential rule outcome         and transfers        Potential costs
------------------------------------------------------------------------
Inclusionary Zoning Policies  Transfer: Housing     Costs: Reductions in
                               units and             consumer and
                               associated            producer surplus
                               locational            (deadweight loss)
                               amenities that        associated with
                               would have            increased prices
                               otherwise been        and reduced
                               market-rate are       quantities.
                               transferred to
                               protected classes.
Removal of Harmful            Benefit: Increased    None.
 Regulations that act as       consumer surplus
 Barriers to Fair Housing      from reduction in
 (e.g. minimum lot size        prices and
 requirements).                increased
                               quantities.
Creation of New Amenities     Benefit: Reductions   Costs: Construction,
 (Transit Stop Example).       in commute times or   maintenance, and
                               costs.                operating costs.
Mobility Policies...........  Transfer: Units and   Costs:
                               associated            Administrative
                               locational            costs associated
                               amenities that        with implementing
                               otherwise would       mobility programs
                               have been market-     (e.g. paperwork
                               rate, are             costs and outreach
                               transferred to        to target
                               protected classes.    landlords.)
------------------------------------------------------------------------

Summary of Impact
    The AFFH regulations being promulgated by this final rule are 
designed and expected to improve the process for carrying out a 
statutory mandate, potentially improving the lives of protected classes 
who face barriers to fair housing choice. As presented above, HUD's 
Regulatory Impact Analysis estimates compliance costs for its program 
participants and costs to HUD to implement the rule.
    Actions taken by program participants as a result of this rule may 
result in new local approaches to reducing segregation, eliminating 
racially concentrated areas of poverty, reducing disparities in access 
to opportunity, and reducing disproportionate housing needs. HUD 
believes that some of these new approaches would better achieve the 
goals of fair housing, meaning that communities would be more 
integrated, fewer people would live in high-

[[Page 42351]]

poverty, segregated neighborhoods, and access to high-quality 
education, job opportunities, and other community assets would be more 
equal.
    The preceding provides an overview of the analysis that is more 
fully discussed in HUD's Regulatory Impact Analysis, and which can be 
found at HUD's docket for this rule at www.regulations.gov. HUD's 
Regulatory Flexibility Analysis below highlights changes made at the 
final rule stage to minimize burden on small entities.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The undersigned 
certifies that this rule would not have a significant economic impact 
on a substantial number of small entities.
    HUD anticipates that the final rule will strengthen the way in 
which HUD and its program participants will take affirmative steps to 
further fair housing under the Fair Housing Act. Although local 
governments, States, and PHAs must affirmatively further fair housing 
independent of any regulatory requirement imposed by HUD, HUD 
recognizes its statutory responsibility to provide leadership and 
direction in this area under the Fair Housing Act, while preserving 
local determination of fair housing needs and strategies.
    To help program participants more effectively meet their statutory 
obligation to affirmatively further fair housing, this rule establishes 
a fair housing planning process, the AFH process, to assist program 
participants in identifying barriers to fair housing choice in their 
areas. The AFH approach replaced the prior AI process, which did not 
work as effectively as HUD initially envisioned. Although the fair 
housing planning process established by this rule presents a more 
comprehensive approach than the prior AI process, HUD designed the 
approach to minimize burden to the extent feasible. The rule minimizes 
burden by coordinating the AFH with existing planning processes, the 
consolidated plans for State and local governments, and PHA Plans for 
PHAs.
    The AFH approach requires program participants to complete a fair 
housing analysis using factors stated in the rule along with HUD-
provided data, which is national in scope, and to supplement the HUD-
provided data where relevant and easily obtainable, with local data. 
This analysis will then be updated every 3 to 5 years through the 
consolidated plan for States and local governments, and every 5 years 
through the PHA Plan for PHAs, as a basis for strategies to address 
identified factors that contribute to or impede fair housing choice and 
access to opportunity, such as quality schools or improved 
transportation. Thus, part of the burden minimization presented by this 
approach is to require such analysis not annually but every 3 to 5 
years. HUD believes that given the comprehensive nature of this new 
approach, the analysis should sustain a multi-year span.
    In addition to building upon existing planning processes, this rule 
further strives to minimize burden by HUD by providing program 
participants with data on access to opportunity through categories such 
as education, employment, low poverty exposure, and transportation, as 
well as patterns of integration and segregation, racially or ethnically 
concentrated areas of poverty, disproportionate housing needs based on 
protected class, and data on national trends in housing discrimination. 
The national data will be provided at the time of the issuance of the 
Assessment Tool, which is currently undergoing the approval process 
under the Paperwork Reduction Act. The 60-day notice, required under 
the Paperwork Reduction Act, can be found at 79 FR 57949 (September 26, 
2014).
    With HUD-provided data and any additional local data provided by 
program participants, program participants can better identify, in 
their areas, patterns of integration and segregation, disparities in 
access to opportunity by members of protected classes, racially or 
ethnically concentrated areas of poverty, and disproportionate housing 
needs based on protected class. With such identification, program 
participants can focus on areas for improvement, develop strategies to 
address barriers to fair housing choice, and prioritize where resources 
will be deployed first. To further ease burden on program participants, 
through this rule, HUD commits to be available to provide technical 
assistance to program participants in the development of their AFHs.
    The provision of data by HUD, and the agency's active role in 
assisting program participants with an AFH, will minimize burden for 
all program participants, large and small, in meeting their statutory 
obligation to affirmatively further fair housing.
    At this final rule stage and in response to public comment, HUD has 
taken additional steps to reduce burden on entities that are small in 
size or may, notwithstanding size, have less capacity to perform the 
assessment of fair housing as provided in the rule. HUD recognizes that 
small program participants may have extremely limited staff or, as a 
result of funding shortages, currently struggle to effectively carry 
out program requirements. This final rule provides that, while all 
participants will be given significant lead time to complete their 
first AFH, program participants that are PHAs, entitlement 
jurisdictions receiving an FY 2015 CDBG grant of $500,000 or less, 
States (including State PHAs submitting alone), and Insular Areas are 
all provided with the option to submit their first AFH at a date later 
than that required for entitlement jurisdictions that receive an FY 
2015 CDBG grant of more than $500,000.
    This submission structure extends the time that the staff of these 
program participants have to complete their first AFH, submitted 
through the Assessment Tool as provided in the rule. The delayed 
submission date for the first AFH not only extends the time in which 
staff of these program participants may work with HUD on addressing any 
issues that arise in completing the Assessment Tool, but they will have 
the benefit of the experience of those program participants that were 
the first to submit their AFHs. It is expected that after submission of 
the first AFH, program participants will have both experience and a 
system in place, making future submissions an easier task.
    HUD also intends to design an Assessment Tool that is tailored for 
program participants other than entitlement jurisdictions that receive 
an FY 2015 CDBG grant of more than $500,000, another measure designed 
to minimize burden. HUD believes that through the measures taken in 
this rule--HUD-provided data, technical assistance, a delayed 
submission deadline for the first AFH, and a planned tailored 
Assessment Tool--HUD has minimized burden associated with the new AFH 
approach, without, however, minimizing the effectiveness of the new 
approach. As a result of these measures, this rule does not have a 
significant economic impact on a substantial number of small entities.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct

[[Page 42352]]

compliance costs on state and local governments and is not required by 
statute, or preempts state law, unless the relevant requirements of 
section 6 of the executive order are met. This rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on state and local governments or preempt state law 
within the meaning of the executive order. HUD anticipates that the 
rule will assist program participants of HUD funds in undertaking their 
actions and strategies to affirmatively further fair housing. As HUD 
has noted in the preceding section discussing the Regulatory 
Flexibility Act and in the Background section of this preamble, the 
obligation to affirmatively further fair housing is imposed by statute 
directly on local governments, States, and PHAs, as the agencies 
charged with administering the Fair Housing Act.
    HUD is responsible for overseeing that its programs are 
administered in a manner that furthers the purposes and policies of 
fair housing and entities receiving HUD funds fulfill their 
affirmatively furthering fair housing obligation.
    The approach taken by HUD in this rule is to help local 
governments, States, and PHAs meet this obligation in a way that is 
meaningful, but without undue burden. As noted throughout this 
preamble, HUD will provide local and regional data on patterns of 
integration and segregation and access to community assets in 
education, neighborhood stability, credit, employment, transportation, 
health, and other community amenities, as well as national trends in 
housing discrimination. This approach, in which HUD offers data, clear 
standards, guidance, and technical assistance, is anticipated to reduce 
the burden and cost that are involved in current regulatory schemes 
governing affirmatively furthering fair housing. Since Federal law 
requires states and local governments to affirmatively further fair 
housing, there is no preemption, by this rule, of State law.

Paperwork Reduction Act

    The information collection requirements of this rule are those 
largely contained in the Assessment Tool. The Assessment Tool consists 
of questions to the grantees to solicit information to help grantees in 
the fair housing planning required by this rule. The Assessment Tool is 
undergoing the required notice and solicitation of public comment 
process required by the Paperwork Reduction Act. This process commenced 
with the first notice published by HUD on September 26, 2014. When this 
process has been concluded, HUD will submit the information collection 
requirements to OMB for approval. 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.

List of Subjects

24 CFR Part 5

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

24 CFR Part 91

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

24 CFR Part 92

    Administrative practice and procedure, Grant programs--housing and 
community development, Low and moderate income housing, Manufactured 
homes, Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Lead poisoning, Loan 
programs--housing and community development, Low and moderate income 
housing, New communities, Northern Mariana Islands, Pacific Islands 
Trust Territory, Pockets of poverty, Puerto Rico, Reporting and 
recordkeeping requirements, Small cities, Student aid, Virgin Islands.

24 CFR Part 574

    Community facilities, Disabled, Grant programs--health programs, 
Grant programs--housing and community development, Grant programs--
social programs, HIV/AIDS, Homeless, Housing, Low and moderate income 
housing, Nonprofit organizations, Rent subsidies, Reporting and 
recordkeeping requirements, Technical assistance.

24 CFR Part 576

    Community facilities, Emergency solutions grants, Grant programs--
housing and community development, Grant program--social programs, 
Homeless, Reporting and recordkeeping requirements.

24 CFR Part 903

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

    Accordingly, for the reasons described in the preamble, HUD amends 
parts 5, 91, 92, 570, 574, 576, and 903 of title 24 of the Code of 
Federal Regulations as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

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

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

Subpart A--Generally Applicable Definitions and Federal 
Requirements; Waivers

0
2. Add an authority citation for part 5, subpart A, to read as follows:

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


0
3. Subpart A is amended by adding Sec. Sec.  5.150-5.152, 5.154, 5.156, 
5.158, 5.160, 6.162, 5.164, 5.166, 5.168, and 5.169-5.180 under an 
undesignated center heading to read as follows:
Affirmatively Furthering Fair Housing
Sec.
5.150 Affirmatively Furthering Fair Housing: Purpose.
5.151 Affirmatively Furthering Fair Housing: Implementation.
5.152 Definitions.
5.154 Assessment of Fair Housing (AFH).
5.156 Joint and Regional AFHs.
5.158 Community participation, consultation, and coordination.
5.160 Submission requirements.
5.162 Review of AFH.
5.164 Revising an accepted AFH.
5.166 AFFH certification.
5.168 Recordkeeping.
5.167-5.180 [Reserved]

Affirmatively Furthering Fair Housing


Sec.  5.150  Affirmatively Furthering Fair Housing: Purpose.

    Pursuant to the affirmatively furthering fair housing mandate in

[[Page 42353]]

section 808(e)(5) of the Fair Housing Act, and in subsequent 
legislative enactments, the purpose of the Affirmatively Furthering 
Fair Housing (AFFH) regulations in Sec. Sec.  5.150 through 5.180 is to 
provide program participants with an effective planning approach to aid 
program participants in taking meaningful actions to overcome historic 
patterns of segregation, promote fair housing choice, and foster 
inclusive communities that are free from discrimination. The 
regulations establish specific requirements for the development and 
submission of an Assessment of Fair Housing (AFH) by program 
participants (including local governments, States, and public housing 
agencies (PHAs)), and the incorporation and implementation of that AFH 
into subsequent consolidated plans and PHA Plans in a manner that 
connects housing and community development policy and investment 
planning with meaningful actions that affirmatively further fair 
housing. A program participant's strategies and actions must 
affirmatively further fair housing and may include various activities, 
such as developing affordable housing, and removing barriers to the 
development of such housing, in areas of high opportunity; 
strategically enhancing access to opportunity, including through: 
Targeted investment in neighborhood revitalization or stabilization; 
preservation or rehabilitation of existing affordable housing; 
promoting greater housing choice within or outside of areas of 
concentrated poverty and greater access to areas of high opportunity; 
and improving community assets such as quality schools, employment, and 
transportation.


Sec.  5.151  Affirmatively Furthering Fair Housing: Implementation.

    Section 5.160 of the AFH regulations provides the date by which 
program participants must submit their first AFH. A program 
participant's AFH submission date is the date by which the program 
participant must comply with the regulations in Sec. Sec.  5.150 
through 5.180. Until such time, the program participant shall continue 
to conduct an analysis of impediments, as required of the program 
participant under one or more of the HUD programs listed in Sec.  
5.154, in accordance with requirements in effect prior to August 17, 
2015.


Sec.  5.152  Definitions.

    For purposes of Sec. Sec.  5.150 through 5.180, the terms 
``consolidated plan,'' ``consortium,'' ``unit of general local 
government,'' ``jurisdiction,'' and ``State'' are defined in 24 CFR 
part 91. For PHAs, ``jurisdiction'' is defined in 24 CFR 982.4. The 
following additional definitions are provided solely for purposes of 
Sec. Sec.  5.150 through 5.180 and related amendments in 24 CFR parts 
91, 92, 570, 574, 576, and 903:
    Affirmatively furthering fair housing means taking meaningful 
actions, in addition to combating discrimination, that overcome 
patterns of segregation and foster inclusive communities free from 
barriers that restrict access to opportunity based on protected 
characteristics. Specifically, affirmatively furthering fair housing 
means taking meaningful actions that, taken together, address 
significant disparities in housing needs and in access to opportunity, 
replacing segregated living patterns with truly integrated and balanced 
living patterns, transforming racially and ethnically concentrated 
areas of poverty into areas of opportunity, and fostering and 
maintaining compliance with civil rights and fair housing laws. The 
duty to affirmatively further fair housing extends to all of a program 
participant's activities and programs relating to housing and urban 
development.
    Assessment of Fair Housing (assessment or AFH) means the analysis 
undertaken pursuant to Sec.  5.154 that includes an analysis of fair 
housing data, an assessment of fair housing issues and contributing 
factors, and an identification of fair housing priorities and goals, 
and is conducted and submitted to HUD using the Assessment Tool. The 
AFH may be conducted and submitted by an individual program participant 
(individual AFH), or may be a single AFH conducted and submitted by two 
or more program participants (joint AFH) or two or more program 
participants, where at least two of which are consolidated plan program 
participants (regional AFH).
    Assessment Tool refers collectively to any forms or templates and 
the accompanying instructions provided by HUD that program participants 
must use to conduct and submit an AFH pursuant to Sec.  5.154. HUD may 
provide different Assessment Tools for different types of program 
participants. In accordance with the Paperwork Reduction Act (44 U.S.C. 
Chapter 35) (PRA), the Assessment Tool will be subject to periodic 
notice and opportunity to comment in order to maintain the approval of 
the Assessment Tool as granted by the Office of Management and Budget 
(OMB) under the PRA.
    Community participation, as required in Sec.  5.158, means a 
solicitation of views and recommendations from members of the community 
and other interested parties, a consideration of the views and 
recommendations received, and a process for incorporating such views 
and recommendations into decisions and outcomes. For HUD regulations 
implementing the Housing and Community Development Act of 1974, the 
statutory term for ``community participation'' is ``citizen 
participation,'' and, therefore, the regulations in 24 CFR parts 91, 
92, 570, 574, and 576 use this term.
    Consolidated plan program participant means any entity specified in 
Sec.  5.154(b)(1).
    Contributing factor. See definition of ``fair housing contributing 
factor'' in this section.
    Data. The term ``data'' refers collectively to the sources of data 
provided in paragraphs (1) and (2) of this definition. When 
identification of the specific source of data in paragraph (1) or (2) 
is necessary, the specific source (HUD-provided data or local data) 
will be stated.
    (1) HUD-provided data. As more fully addressed in the Assessment 
Tool, the term ``HUD-provided data'' refers to HUD-provided metrics, 
statistics, and other quantified information required to be used with 
the Assessment Tool. HUD-provided data will not only be provided to 
program participants but will be posted on HUD's Web site for 
availability to all of the public;
    (2) Local data. As more fully addressed in the Assessment Tool, the 
term ``local data'' refers to metrics, statistics, and other quantified 
information, subject to a determination of statistical validity by HUD, 
relevant to the program participant's geographic areas of analysis, 
that can be found through a reasonable amount of search, are readily 
available at little or no cost, and are necessary for the completion of 
the AFH using the Assessment Tool.
    Disability. (1) The term ``disability'' means, with respect to an 
individual:
    (i) A physical or mental impairment that substantially limits one 
or more major life activities of such individual;
    (ii) A record of such an impairment; or
    (iii) Being regarded as having such an impairment.
    (2) The term ``disability'' as used herein shall be interpreted 
consistent with the definition of such term under section 504 of the 
Rehabilitation Act of 1973, as amended by the ADA Amendments Act of 
2008. This definition does not change the definition of ``disability'' 
or ``disabled person'' adopted pursuant to a HUD program statute for 
purposes of determining an individual's eligibility

[[Page 42354]]

to participate in a housing program that serves a specified population.
    Disproportionate housing needs refers to a condition in which there 
are significant disparities in the proportion of members of a protected 
class experiencing a category of housing need when compared to the 
proportion of members of any other relevant groups or the total 
population experiencing that category of housing need in the applicable 
geographic area. For purposes of this definition, categories of housing 
need are based on such factors as cost burden, severe cost burden, 
overcrowding, and substandard housing conditions, as those terms are 
applied in the Assessment Tool.
    Fair housing choice means that individuals and families have the 
information, opportunity, and options to live where they choose without 
unlawful discrimination and other barriers related to race, color, 
religion, sex, familial status, national origin, or disability. Fair 
housing choice encompasses:
    (1) Actual choice, which means the existence of realistic housing 
options;
    (2) Protected choice, which means housing that can be accessed 
without discrimination; and
    (3) Enabled choice, which means realistic access to sufficient 
information regarding options so that any choice is informed. For 
persons with disabilities, fair housing choice and access to 
opportunity include access to accessible housing and housing in the 
most integrated setting appropriate to an individual's needs as 
required under Federal civil rights law, including disability-related 
services that an individual needs to live in such housing.
    Fair housing contributing factor (or contributing factor) means a 
factor that creates, contributes to, perpetuates, or increases the 
severity of one or more fair housing issues. Goals in an AFH are 
designed to overcome one or more contributing factors and related fair 
housing issues, as provided in Sec.  5.154.
    Fair housing issue means a condition in a program participant's 
geographic area of analysis that restricts fair housing choice or 
access to opportunity, and includes such conditions as ongoing local or 
regional segregation or lack of integration, racially or ethnically 
concentrated areas of poverty, significant disparities in access to 
opportunity, disproportionate housing needs, and evidence of 
discrimination or violations of civil rights law or regulations related 
to housing. Participation in ``housing programs serving specified 
populations,'' as defined in this section, does not present a fair 
housing issue of segregation, provided that such programs are 
administered by program participants so that the programs comply with 
title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4) 
(Nondiscrimination in Federally Assisted Programs); the Fair Housing 
Act (42 U.S.C. 3601-19), including the duty to affirmatively further 
fair housing; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
794); the Americans with Disabilities Act (42 U.S.C. 12101, et seq.); 
and other Federal civil rights statutes and regulations.
    Fair housing enforcement and fair housing outreach capacity means 
the ability of a jurisdiction, and organizations located in the 
jurisdiction, to accept complaints of violations of fair housing laws, 
investigate such complaints, obtain remedies, engage in fair housing 
testing, and educate community members about fair housing laws and 
rights. This definition covers any State or local agency that enforces 
a law substantially equivalent to the Fair Housing Act (see 24 CFR part 
115) and any organization participating in the Fair Housing Initiative 
Programs (see 24 CFR part 125).
    Geographic area means a jurisdiction, region, State, Core-Based 
Statistical Area (CBSA), or another applicable area (e.g., census 
tract, neighborhood, Zip code, block group, housing development, or 
portion thereof) relevant to the analysis required to complete the 
assessment of fair housing, as specified in the Assessment Tool.
    Housing programs serving specified populations. Housing programs 
serving specified populations are HUD and Federal housing programs, 
including designations in the programs, as applicable, such as HUD's 
Supportive Housing for the Elderly, Supportive Housing for Persons with 
Disabilities, homeless assistance programs under the McKinney-Vento 
Homeless Assistance Act (42 U.S.C. 11301 et seq.), and housing 
designated under section 7 of the United States Housing Act of 1937 (42 
U.S.C. 1437e), that:
    (1) Serve specific identified populations; and
    (2) Comply with title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d-2000d-4) (Nondiscrimination in Federally Assisted Programs); the 
Fair Housing Act (42 U.S.C. 3601-19), including the duty to 
affirmatively further fair housing; section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794); the Americans with Disabilities Act (42 
U.S.C. 12101, et seq.); and other Federal civil rights statutes and 
regulations.
    Insular area has the same meaning as provided in Sec.  570.405.
    Integration means a condition, within the program participant's 
geographic area of analysis, as guided by the Assessment Tool, in which 
there is not a high concentration of persons of a particular race, 
color, religion, sex, familial status, national origin, or having a 
disability or a particular type of disability when compared to a 
broader geographic area. For individuals with disabilities, integration 
also means that such individuals are able to access housing and 
services in the most integrated setting appropriate to the individual's 
needs. The most integrated setting is one that enables individuals with 
disabilities to interact with persons without disabilities to the 
fullest extent possible, consistent with the requirements of the 
Americans with Disabilities Act (42 U.S.C. 12101 et seq.) and section 
504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). See 28 CFR part 
35, appendix B (addressing 28 CFR 35.130 and providing guidance on the 
American with Disabilities Act regulation on nondiscrimination on the 
basis of disability in State and local government services).
    Joint participants refers to two or more program participants 
conducting and submitting a single AFH (a joint AFH), in accordance 
with Sec.  5.156 and 24 CFR 903.15(a)(1) and (2), as applicable.
    Local knowledge. As more fully addressed in the Assessment Tool, 
local knowledge means information to be provided by the program 
participant that relates to the participant's geographic areas of 
analysis and that is relevant to the program participant's AFH, is 
known or becomes known to the program participant, and is necessary for 
the completion of the AFH using the Assessment Tool.
    Meaningful actions means significant actions that are designed and 
can be reasonably expected to achieve a material positive change that 
affirmatively furthers fair housing by, for example, increasing fair 
housing choice or decreasing disparities in access to opportunity.
    Program participants means any entities specified in Sec.  
5.154(b).
    Protected characteristics are race, color, religion, sex, familial 
status, national origin, having a disability, and having a type of 
disability.
    Protected class means a group of persons who have the same 
protected characteristic; e.g., a group of persons who are of the same 
race are a protected class. Similarly, a person who has a mobility 
disability is a member of the protected class of persons with

[[Page 42355]]

disabilities and a member of the protected class of persons with 
mobility disabilities.
    Qualified public housing agency (Qualified PHA). Refers to a PHA:
    (1) For which the sum of:
    (i) The number of public housing dwelling units administered by the 
PHA; and
    (ii) The number of vouchers under section 8(o) of the United States 
Housing Act of 1937 (42 U.S.C. 1437f(o)) administered by the PHA is 550 
or fewer; and
    (2) That is not designated under section 6(j)(2) of the United 
States Housing Act of 1937 as a troubled PHA, and does not have a 
failing score under the Section 8 Management Assessment Program (SEMAP) 
during the prior 12 months.
    Racially or ethnically concentrated area of poverty means a 
geographic area with significant concentrations of poverty and minority 
populations.
    Regionally collaborating participants refers to joint participants, 
at least two of which are consolidated plan program participants. A PHA 
may participate in a regional assessment in accordance with PHA Plan 
participation requirements under 24 CFR 903.15(a)(1). Regionally 
collaborating participants conduct and submit a single AFH (regional 
AFH) in accordance with Sec.  5.156.
    Segregation means a condition, within the program participant's 
geographic area of analysis, as guided by the Assessment Tool, in which 
there is a high concentration of persons of a particular race, color, 
religion, sex, familial status, national origin, or having a disability 
or a type of disability in a particular geographic area when compared 
to a broader geographic area. For persons with disabilities, 
segregation includes a condition in which the housing or services are 
not in the most integrated setting appropriate to an individual's needs 
in accordance with the requirements of the Americans with Disabilities 
Act (42 U.S.C. 12101, et seq.), and section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794). (See 28 CFR part 35, appendix B, 
addressing 25 CFR 35.130.) Participation in ``housing programs serving 
specified populations'' as defined in this section does not present a 
fair housing issue of segregation, provided that such programs are 
administered to comply with title VI of the Civil Rights Act of 1964 
(42 U.S.C. 2000d-2000d-4) (Nondiscrimination in Federally Assisted 
Programs): The Fair Housing Act (42 U.S.C. 3601-19), including the duty 
to affirmatively further fair housing: section 504 of the 
Rehabilitation Act of 1973 (29 U.S.C. 794); the Americans with 
Disabilities Act (42 U.S.C. 12101, et seq.); and other Federal civil 
rights statutes and regulations.
    Significant disparities in access to opportunity means substantial 
and measurable differences in access to educational, transportation, 
economic, and other important opportunities in a community, based on 
protected class related to housing.


Sec.  5.154  Assessment of Fair Housing (AFH).

    (a) General. To develop a successful affirmatively furthering fair 
housing strategy, it is central to assess the elements and factors that 
cause, increase, contribute to, maintain, or perpetuate segregation, 
racially or ethnically concentrated areas of poverty, significant 
disparities in access to opportunity, and disproportionate housing 
needs. For HUD program participants already required to develop plans 
for effective uses of HUD funds consistent with the statutory 
requirements and goals governing such funds, an AFH will be integrated 
into such plans.
    (b) Requirement to submit an AFH. In furtherance of the statutory 
obligation to affirmatively further fair housing, an AFH must be 
developed following the AFH consultation, content, and submission 
requirements described in Sec. Sec.  5.150 through 5.180, and submitted 
in a manner and form prescribed by HUD by the following entities:
    (1) Jurisdictions and Insular Areas that are required to submit 
consolidated plans for the following programs:
    (i) The Community Development Block Grant (CDBG) program (see 24 
CFR part 570, subparts D and I);
    (ii) The Emergency Solutions Grants (ESG) program (see 24 CFR part 
576);
    (iii) The HOME Investment Partnerships (HOME) program (see 24 CFR 
part 92); and
    (iv) The Housing Opportunities for Persons With AIDS (HOPWA) 
program (see 24 CFR part 574).
    (2) Public housing agencies (PHAs) receiving assistance under 
sections 8 or 9 of the United States Housing Act of 1937 (42 U.S.C. 
1437f or 42 U.S.C.1437g).
    (c) Fair housing data. Program participants will use HUD-provided 
data, as defined within the definition of ``data'' in Sec.  5.152, and 
supplement the HUD-provided data, as needed, with local data and local 
knowledge, as guided by the Assessment Tool.
    (d) Content. Using the Assessment Tool prescribed by HUD, each 
program participant shall conduct an AFH for the purpose of examining 
its programs, jurisdiction, and region, and identifying goals to 
affirmatively further fair housing and to inform fair housing 
strategies in the consolidated plan, annual action plan, the PHA Plan 
and any other plan incorporated therein, and community plans including, 
but not limited to, education, transportation, or environmental related 
plans. The AFH's analysis, goals, and priorities will address 
integration and segregation; racially or ethnically concentrated areas 
of poverty; disparities in access to opportunity; and disproportionate 
housing needs based on race, color, religion, sex, familial status, 
national origin, and disability. The AFH will assess the jurisdiction's 
fair housing enforcement and fair housing outreach capacity. At a 
minimum, the AFH will include the following elements:
    (1) Summary of fair housing issues and capacity. The AFH must 
include a summary of fair housing issues in the jurisdiction, including 
any findings, lawsuits, enforcement actions, settlements, or judgments 
related to fair housing or other civil rights laws, an assessment of 
compliance with existing fair housing laws and regulations, and an 
assessment of the jurisdiction's fair housing enforcement and fair 
housing outreach capacity.
    (2) Analysis of data. Using HUD-provided data, local data, local 
knowledge, including information gained through community 
participation, and the Assessment Tool, the program participant will 
undertake the analysis required by this section. This analysis will 
address the following to the extent the data or local knowledge are 
informative of the following:
    (i) Identification of integration and segregation patterns and 
trends based on race, color, religion, sex, familial status, national 
origin, and disability within the jurisdiction and region;
    (ii) Identification of racially or ethnically concentrated areas of 
poverty within the jurisdiction and region;
    (iii) Identification of significant disparities in access to 
opportunity for any protected class within the jurisdiction and region; 
and
    (iv) Identification of disproportionate housing needs for any 
protected class within the jurisdiction and region.
    (3) Assessment of fair housing issues. Using the Assessment Tool 
provided by HUD, the AFH will identify the contributing factors for 
segregation, racially or ethnically concentrated areas of poverty, 
disparities in access to opportunity, and disproportionate housing 
needs as identified under paragraph (d)(2) of this section.
    (4) Identification of fair housing priorities and goals. Consistent 
with the

[[Page 42356]]

identification of fair housing issues, and the analysis and assessment 
conducted under paragraphs (d)(1) through (3) of this section, the AFH 
must:
    (i) Identify and discuss the fair housing issues arising from the 
assessment; and
    (ii) Identify significant contributing factors, prioritize such 
factors, and justify the prioritization of the contributing factors 
that will be addressed in the program participant's fair housing goals. 
In prioritizing contributing factors, program participants shall give 
highest priority to those factors that limit or deny fair housing 
choice or access to opportunity, or negatively impact fair housing or 
civil rights compliance; and
    (iii) Set goals for overcoming the effects of contributing factors 
as prioritized in accordance with paragraph (d)(4)(ii) of this section. 
For each goal, a program participant must identify one or more 
contributing factors that the goal is designed to address, describe how 
the goal relates to overcoming the identified contributing factor(s) 
and related fair housing issue(s), and identify the metrics and 
milestones for determining what fair housing results will be achieved. 
For instance, where segregation in a development or geographic area is 
determined to be a fair housing issue, with at least one significant 
contributing factor, HUD would expect the AFH to include one or more 
goals to reduce the segregation.
    (5) Strategies and actions. To implement goals and priorities in an 
AFH, strategies and actions shall be included in program participants' 
consolidated plans, Annual Action Plans, and PHA Plans (including any 
plans incorporated therein), and need not be reflected in their AFH. 
Strategies and actions must affirmatively further fair housing and may 
include, but are not limited to, enhancing mobility strategies and 
encouraging development of new affordable housing in areas of 
opportunity, as well as place-based strategies to encourage community 
revitalization, including preservation of existing affordable housing, 
including HUD-assisted housing.
    (6) Summary of community participation. The AFH must include a 
concise summary of the community participation process, public 
comments, and efforts made to broaden community participation in the 
development of the AFH; a summary of the comments, views, and 
recommendations, received in writing, or orally at public hearings, 
during the community participation process; and a summary of any 
comments, views, and recommendations not accepted by the program 
participant and the reasons for nonacceptance.
    (7) Review of progress achieved since submission of prior AFH. For 
each AFH submitted after the first AFH submission, the program 
participant will provide a summary of progress achieved in meeting the 
goals and associated metrics and milestones of the prior AFH, and 
identify any barriers that impeded or prevented achievement of goals.


Sec.  5.156  Joint and Regional AFHs.

    (a) General. For the purposes of sharing resources and addressing 
fair housing issues from a broader perspective, program participants 
are encouraged to collaborate to conduct and submit a single AFH, 
either a joint AFH or regional AFH (as defined in Sec.  5.152), for the 
purpose of evaluating fair housing issues and contributing factors.
    (1) Collaborating program participants, whether joint participants 
or regionally collaborating participants, need not be located in 
contiguous jurisdictions and may cross State boundaries, provided that 
the collaborating program participants are located within the same Core 
Based Statistical Area (CBSA), as defined by the United States Office 
of Management and Budget (OMB) at the time of submission of the joint 
or regional AFH.
    (2) Program participants, whether contiguous or noncontiguous, that 
are either not located within the same CBSA or that are not located 
within the same State and seek to collaborate on an AFH, must submit a 
written request to HUD for approval of the collaboration, stating why 
the collaboration is appropriate. The collaboration may proceed upon 
approval by HUD.
    (3) Collaborating program participants must designate, through 
express written consent, one participant as the lead entity to oversee 
the submission of the joint or regional AFH on behalf of all 
collaborating program participants. When collaborating to submit a 
joint or regional AFH, program participants may divide work as they 
choose, but all program participants are accountable for the analysis 
and any joint goals and priorities, and each collaborating program 
participant must sign the AFH submitted to HUD. Collaborating program 
participants are also accountable for their individual analysis, goals, 
and priorities to be included in the collaborative AFH.
    (4) Program participants that intend to prepare either a joint or 
regional AFH shall promptly notify HUD of such intention and provide 
HUD with a copy of their written agreement.
    (b) Coordinating program years and submission deadlines. (1) To the 
extent practicable, all collaborating program participants must be on 
the same program year and fiscal year (as applicable) before submission 
of the joint AFH or regional AFH. (See Sec.  5.160 and 24 CFR 91.10 and 
903.5.) The applicable procedures for changing consolidated plan 
program participant program year start dates, if necessary, are 
described in 24 CFR 91.10. The applicable procedures for changing PHA 
fiscal year beginning dates, if necessary, are described in 24 CFR part 
903.
    (2) If alignment of a program year or fiscal year is not 
practicable, the submission deadline for a joint AFH or regional AFH 
must be based on the designated lead entity's program year start date 
or fiscal year beginning date (as applicable), as provided in Sec.  
5.160(c). Within 12 months after the date of AFH acceptance, each 
collaborating program participant that has a program year start date, 
or fiscal year beginning date, earlier than the designated lead entity 
must make appropriate revisions to its full consolidated plan (as 
described in Sec.  91.15(b)(2) of this chapter), or PHA Plan and any 
plan incorporated therein, to incorporate strategies and proposed 
actions consistent with the fair housing goals, issues, and other 
elements identified in the joint AFH or regional AFH.
    (c) Procedures for withdrawal from a joint or regional 
collaboration. A program participant that, for any reason, decides to 
withdraw from a previously arranged collaborative AFH must promptly 
notify HUD of the withdrawal. HUD will work with the withdrawing 
program participant, as well as the remaining collaborative 
participants, to determine whether a new submission date is needed for 
the withdrawing participant or the remaining participants. If a new 
submission date is needed for the withdrawing participant or the 
remaining participants, HUD will establish a submission date that is as 
close as feasible to the originally intended submission date and is no 
later than the original joint or regional submission date unless good 
cause for an extension is shown.
    (d) Community participation. Collaborating program participants 
must have a plan for community participation that complies with the 
requirements of Sec. Sec.  5.150 through 5.180. The community 
participation process must include residents, and other interested 
members of the public, in the jurisdictions of each collaborating 
program participant, and

[[Page 42357]]

not just those of the lead entity. In addition, the community 
participation process must be conducted in a manner sufficient for each 
consolidated plan program participant collaborating in a joint AFH or 
regional AFH to certify that it is following its applicable citizen 
participation plan, and for each PHA, collaborating in a joint AFH or 
regional AFH, to satisfy the notice and comment requirements in 24 CFR 
part 903. To the extent that public notice and comment periods provided 
in Sec. Sec.  5.150 through 5.180 or in the consolidated plan or PHA 
plan regulations differ, the longer period shall apply. A material 
change that requires any collaborating program participant to revise 
its AFH pursuant to Sec.  5.164(a)(1) will trigger a requirement to 
revise the joint or regional AFH.
    (e) Content of the joint or regional AFH. A joint or regional AFH 
must include the elements required under Sec.  5.154(d). A joint or 
regional AFH does not relieve each collaborating program participant 
from its obligation to analyze and address local and regional fair 
housing issues and contributing factors that affect housing choice, and 
to set priorities and goals for its geographic area to overcome the 
effects of contributing factors and related fair housing issues.


Sec.  5.158  Community participation, consultation, and coordination.

    (a) General. To ensure that the AFH is informed by meaningful 
community participation, program participants must give the public 
reasonable opportunities for involvement in the development of the AFH 
and in the incorporation of the AFH into the consolidated plan, PHA 
Plan, and other required planning documents. To ensure that the AFH, 
the consolidated plan, and the PHA Plan and any plan incorporated 
therein are informed by meaningful community participation, program 
participants should employ communications means designed to reach the 
broadest audience. Such communications may be met, as appropriate, by 
publishing a summary of each document in one or more newspapers of 
general circulation, and by making copies of each document available on 
the Internet, on the program participant's official government Web 
site, and as well at libraries, government offices, and public places. 
Program participants shall ensure that all aspects of community 
participation are conducted in accordance with fair housing and civil 
rights laws, including title VI of the Civil Rights Act of 1964 and the 
regulations at 24 CFR part 1; section 504 of the Rehabilitation Act of 
1973 and the regulations at 24 CFR part 8; and the Americans with 
Disabilities Act and the regulations at 28 CFR parts 35 and 36, as 
applicable. At a minimum, whether a program participant is preparing an 
AFH individually or in combination with other program participants, AFH 
community participation must include the following for consolidated 
plan program participants and PHAs (as applicable):
    (1) Consolidated plan program participants. The consolidated plan 
program participant must follow the policies and procedures described 
in its applicable citizen participation plan, adopted pursuant to 24 
CFR part 91 (see 24 CFR 91.105, 91.115, and 91.401), in the process of 
developing the AFH, obtaining community feedback, and addressing 
complaints. The jurisdiction must consult with the agencies and 
organizations identified in consultation requirements at 24 CFR part 91 
(see 24 CFR 91.100, 91.110, and 91.235).
    (2) PHAs. PHAs must follow the policies and procedures described in 
24 CFR 903.13, 903.15, 903.17, and 903.19 in the process of developing 
the AFH, obtaining Resident Advisory Board and community feedback, and 
addressing complaints.
    (b) Coordination. (1) As described in 903.15, a PHA may fulfill its 
responsibility to conduct an AFH by:
    (i) Participating with a consolidated plan program participant, 
including State jurisdictions; or
    (ii) Participating with one or more PHAs in the planning, and 
preparation of the AFH; or
    (iii) Preparing its own AFH.
    (2) When working with other program participants, PHAs are 
encouraged to enter into Memorandums of Understanding (MOUs) to clearly 
define the functions, level of member participation, method of dispute 
resolution, and decisionmaking process of the program participants, in 
the creation of the AFH.


Sec.  5.160  Submission requirements.

    (a) First AFH--(1) Submission deadline for program participants. 
(i) For each program participant listed in this paragraph (a)(1)(i), 
the first AFH shall be submitted no later than 270 calendar days prior 
to the start of:
    (A) For consolidated plan participants not covered in paragraph 
(a)(1)(i)(B) or (C) of this section, the program year that begins on or 
after January 1, 2017 for which a new consolidated plan is due, as 
provided in 24 CFR 91.15(b)(2); and
    (B) For consolidated plan participants whose fiscal year (FY) 2015 
CDBG grant is $500,000 or less, the program year that begins on or 
after January 1, 2018 for which a new consolidated plan is due, as 
provided in 24 CFR 91.15(b)(2); and
    (C) For consolidated plan participants that are Insular Areas or 
States, the program that begins on or after January 1, 2018 for which a 
new consolidated is due, as provided in 24 CFR 91.15(b)(2); and
    (D) For PHAs, except for qualified PHAs, the PHA's fiscal year that 
begins on or after January 1, 2018 for which a new 5-year plan is due, 
as provided in 24 CFR 903.5; and
    (E) For qualified PHAs, the PHA's fiscal year that begins on or 
after January 1, 2019 for which a new 5-year plan is due, as provided 
in 24 CFR 903.5; and
    (F) For joint or regional program participants, the date provided 
under this paragraph (a)(1) or under paragraph (a)(2) of this section, 
dependent upon the program participant that is selected to be the lead 
entity, as provided in Sec.  5.156(b)(2).
    (ii) If the time frame specified in this paragraph (a)(1) would 
result in a first AFH submission date that is less than 9 months after 
the date of publication of the Assessment Tool that is applicable to 
the program participant or lead entity, the participant(s)' submission 
deadline will be extended as specified in that Assessment Tool 
publication to a date that will not be less than 9 months from the date 
of publication of the Assessment Tool.
    (2) Exceptions to the first submission deadline for recently 
completed Regional Analysis of Impediments (RAI). An entitlement 
jurisdiction subject to the submission deadline in paragraph (a)(1) of 
this section is not required to submit an AFH by the deadline specified 
in such paragraph if the entitlement jurisdiction has completed a HUD-
approved RAI in accordance with a grant awarded under HUD's FY 2010 or 
2011 Sustainable Communities Competition and submitted the RAI within 
30 months prior to the date when the program participant's AFH is due 
as provided under this section.
    (3) Compliance with existing requirements until first AFH 
submission. Except as provided in paragraph (a)(4) of this section, 
until such time as program participants are required to submit an AFH, 
the program participant shall continue to conduct an analysis of 
impediments, as required of the program participant by one or more of 
the HUD programs listed in Sec.  5.154, in accordance with requirements 
in effect prior to August 17, 2015.
    (4) New program participants. For a new program participant that 
has not submitted a consolidated plan or PHA

[[Page 42358]]

plan as of August 17, 2015, HUD will provide the new program 
participant with a deadline for submission of its first AFH and the 
strategies and actions to implement an accepted AFH, which shall be 
incorporated into the program participant's consolidated plan or PHA 
plan, as applicable, within 18 months of the start date of its first 
program year or fiscal year, as applicable.
    (b) Second and subsequent AFHs. After the first AFH, for all 
program participants, subsequent AFHs are due 195 calendar days before 
the start of the first year of the next 3 to 5-year cycle (as 
applicable), as described in paragraph (a)(1) of this section; that is, 
the subsequent AFH is to precede the next strategic plan under 24 CFR 
91.15(b)(2) or 5-year plan under 24 CFR 903.5.
    (c) Collaborative AFHs. All collaborative program participants, 
whether joint participants or regionally collaborating participants, 
will select a lead entity and submit the AFH according to that entity's 
schedule.
    (d) Frequency. All program participants shall submit an AFH no less 
frequently than once every 5 years, or at such time agreed upon in 
writing by HUD and the program participant, in order to coordinate the 
AFH submission with time frames used for consolidated plans, 
participation in a regional AFH, cooperation agreements, PHA Plans, or 
other plans. (See 24 CFR 91.15(b)(2) and 903.15.)
    (e) Certification. Each program participant, including program 
participants submitting a joint or regional AFH, must certify that it 
will take meaningful actions to further the goals identified in its AFH 
conducted in accordance with the requirements in Sec. Sec.  5.150 
through 5.180 and 24 CFR 91.225(a)(1), 91.325(a)(1), 91.425(a)(1), 
570.487(b)(1), 570.601, 903.7(o), and 903.15(d), as applicable. The 
certification will be required at the time a program participant 
submits its first AFH and for each AFH thereafter. If a PHA Plan, 
consolidated plan, Action Plan, or other submission requiring a civil 
rights-related certification is due prior to the time of submission of 
the AFH, the participant will complete a certification, in a form 
provided by HUD, that it will affirmatively further fair housing, or 
complete such other certification that HUD may require in accordance 
with applicable program regulations in effect before August 17, 2015.


Sec.  5.162  Review of AFH.

    (a) Review and acceptance of AFH--(1) General. HUD's review of an 
AFH is to determine whether the program participant has met the 
requirements for providing its analysis, assessment, and goal setting, 
as set forth in Sec.  5.154(d). The AFH will be deemed accepted after 
60 calendar days after the date that HUD receives the AFH, unless on or 
before that date, HUD has provided notification that HUD does not 
accept the AFH. In its notification, HUD will inform the program 
participant in writing of the reasons why HUD has not accepted the AFH 
and the actions that the program participant may take to resolve the 
nonacceptance.
    (2) Meaning of ``acceptance''. HUD's acceptance of an AFH means 
only that, for purposes of administering HUD program funding, HUD has 
determined that the program participant has provided an AFH that meets 
the required elements, as set forth in Sec.  5.154(d). Acceptance does 
not mean that the program participant has complied with its obligation 
to affirmatively further fair housing under the Fair Housing Act; has 
complied with other provisions of the Fair Housing Act; or has complied 
with other civil rights laws and regulations.
    (b) Nonacceptance of an AFH. (1) HUD will not accept an AFH if HUD 
finds that the AFH or a portion of the AFH is inconsistent with fair 
housing or civil rights requirements or is substantially incomplete. In 
connection with a regional or joint AFH, HUD's determination to not 
accept the AFH with respect to one program participant does not 
necessarily affect the acceptance of the AFH with respect to another 
program participant.
    (i) The following are examples of an AFH that is inconsistent with 
fair housing and civil rights requirements:
    (A) HUD determines that the analysis of fair housing issues, fair 
housing contributing factors, goals, or priorities contained in the AFH 
would result in policies or practices that would operate to 
discriminate in violation of the Fair Housing Act or other civil rights 
laws;
    (B) The AFH does not identify policies or practices as fair housing 
contributing factors, even though they result in the exclusion of a 
protected class from areas of opportunity.
    (ii) The following are examples of an AFH that is substantially 
incomplete:
    (A) The AFH was developed without the required community 
participation or the required consultation;
    (B) The AFH fails to satisfy a required element in Sec. Sec.  5.150 
through 5.180. Failure to satisfy a required element includes an 
assessment in which priorities or goals are materially inconsistent 
with the data or other evidence available to the program participant or 
in which priorities or goals are not designed to overcome the effects 
of contributing factors and related fair housing issues.
    (2) HUD will provide written notification to the program 
participant, including each program participant involved in a 
collaborative AFH (joint or regional AFH), of HUD's nonacceptance of 
the AFH and the written notification will specify the reasons why the 
AFH was not accepted and will provide guidance on how the AFH should be 
revised in order to be accepted.
    (c) Revisions and resubmission. HUD will provide a program 
participant, including each program participant involved in a 
collaborative AFH, with a time period to revise and resubmit the AFH, 
which shall be no less than 45 calendar days after the date on which 
HUD provides written notification that it does not accept the AFH. The 
revised AFH will be deemed accepted after 30 calendar days of the date 
by which HUD receives the revised AFH, unless on or before that date 
HUD has provided notification that HUD does not accept the revised AFH.
    (d) Accepted AFH as requirement for consolidated plan and PHA Plan 
approval. If a program participant does not have an accepted AFH, HUD 
will disapprove a consolidated plan (see 24 CFR 91.500) or a PHA Plan 
(see 24 CFR 903.23) except where delayed submission is otherwise 
permitted under Sec.  5.156 or Sec.  5.160.
    (1) If a consolidated plan program participant fails to submit an 
AFH as required by Sec.  5.160, HUD may establish an alternative date 
for the jurisdiction to submit its consolidated plan, but in no event 
past the August 16 deadline provided in 24 CFR 91.15. Failure to submit 
a consolidated plan by August 16 of the Federal fiscal year for which 
funds are appropriated will automatically result in the loss of the 
CDBG funds to which the jurisdiction would otherwise be entitled.
    (2) If a PHA fails to submit the AFH in accordance with Sec.  
5.160, the PHA must have an accepted AFH no later than 75 calendar days 
before the commencement of the PHA's fiscal year to avoid any potential 
impacts on funding.


Sec.  5.164  Revising an accepted AFH.

    (a) General--(1) Minimum criteria for revising the AFH. An AFH 
previously accepted by HUD must be revised and submitted to HUD for 
review under the following circumstances:
    (i) A material change occurs. A material change is a change in 
circumstances in the jurisdiction of a program participant that affects 
the information on which the AFH is based

[[Page 42359]]

to the extent that the analysis, the fair housing contributing factors, 
or the priorities and goals of the AFH no longer reflect actual 
circumstances. Examples include Presidentially declared disasters, 
under title IV of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5121 et seq.), in the program participant's 
area that are of such a nature as to significantly impact the steps a 
program participant may need to take to affirmatively further fair 
housing; significant demographic changes; new significant contributing 
factors in the participant's jurisdiction; and civil rights findings, 
determinations, settlements (including Voluntary Compliance 
Agreements), or court orders; or
    (ii) Upon HUD's written notification specifying a material change 
that requires the revision.
    (2) Criteria for revising the AFH. The criteria that will be used 
in determining when revisions to the AFH are appropriate must be 
specified in the citizen participation plan adopted under the 
consolidated plan pursuant to 24 CFR part 91, and the public 
participation procedures and significant amendment process required 
under 24 CFR part 903. Such criteria must include, at a minimum, the 
circumstances described in paragraph (a)(1) of this section.
    (3) Revised AFH. A revision pursuant to paragraph (a)(1) of this 
section consists of preparing and submitting amended analyses, 
assessments, priorities, and goals that take into account the material 
change, including any new fair housing issues and contributing factors 
that may arise as a result of the material change. A revision may not 
necessarily require the submission of an entirely new AFH. The revision 
need only focus on the material change and appropriate adjustments to 
the analyses, assessments, priorities, or goals.
    (b) Timeframe for revision. (1) Where a revision is required under 
paragraph (a)(1)(i) of this section, such revision shall be submitted 
within 12 months of the onset of the material change, or at such later 
date as HUD may provide. Where the material change is the result of a 
Presidentially declared disaster, such time shall be automatically 
extended to the date that is 2 years after the date upon which the 
disaster declaration is made, and HUD may extend such deadline, upon 
request, for good cause shown.
    (2)(i) Where a revision is required under paragraph (a)(1)(ii) of 
this section, HUD will specify a date by which the program participant 
must submit the revision of the AFH to HUD, taking into account the 
material change, the program participant's capacity, and the need for a 
valid AFH to guide planning activities. HUD may extend the due date 
upon written request by the program participant that describes the 
reasons the program participant is unable to make the deadline.
    (ii) On or before 30 calendar days following the date of HUD's 
written notification under paragraph (a)(1)(ii) of this section, the 
program participant may advise HUD in writing of its belief that a 
revision to the AFH is not required. The program participant must state 
with specificity the reasons for its belief that a revision is not 
required. HUD will respond on or before 30 calendar days following the 
date of the receipt of the program participant's correspondence and 
will advise the program participant in writing whether HUD agrees or 
disagrees with the program participant. If HUD disagrees, the program 
participant must proceed with the revision. HUD may establish a new due 
date that is later than the date specified in its original 
notification.
    (c) Community participation. Revisions to an AFH, as described in 
this section, are subject to community participation. The jurisdiction 
must follow the notice and comment process applicable to consolidated 
plan substantial amendments under the jurisdiction's citizen 
participation plan adopted pursuant to 24 CFR part 91 (see 24 CFR 
91.105, 91.115, and 91.401). A consortium must follow the participation 
process applicable to consolidated plan substantial amendments under 
the consortium's citizen participation plan adopted pursuant to 24 CFR 
91.401. Insular areas submitting an abbreviated consolidated plan shall 
follow the citizen participation requirements of 24 CFR 570.441. The 
PHA must follow the notice and comment process applicable to 
significant amendments or modifications pursuant to 24 CFR 903.13, 
903.15, 903.17, and 903.21.
    (d) Submission to HUD of the revised AFH. Upon completion, any 
revision to the AFH must be made public and submitted to HUD at the 
time of the revision.
    (e) PHAs. Upon any revision to the AFH pursuant to Sec. Sec.  5.150 
through 5.180, PHAs must revise their PHA Plan within 12 months, 
consistent with the AFH revision, and pursuant to 24 CFR 903.15(c).


Sec.  5.166  AFFH certification.

    (a) Certifications. Program participants must certify that they 
will affirmatively further fair housing when required by statutes and 
regulations governing HUD programs. Such certifications are made in 
accordance with applicable program regulations. Consolidated plan 
program participants are subject to the certification requirements in 
24 CFR part 91, and PHA Plan program participants are subject to the 
certification requirements in 24 CFR part 903.
    (b) Procedure for challenging the validity of an AFFH 
certification. (1) For consolidated plan program participants, HUD's 
challenge to the validity of an AFFH certification will be based on 
procedures and standards specified in 24 CFR part 91.
    (2) For PHA Plan program participants, HUD's challenge to the 
validity of an AFFH certification will be based on procedures and 
standards specified in 24 CFR part 903.


Sec.  5.168  Recordkeeping.

    (a) General. Each program participant must establish and maintain 
sufficient records to enable HUD to determine whether the program 
participant has met the requirements of this subpart. A PHA not 
preparing its own AFH in accordance with 24 CFR 903.15(a)(3) must 
maintain a copy of the applicable AFH and records reflecting actions to 
affirmatively further fair housing as described in 24 CFR 903.7(o). All 
program participants shall make these records available for HUD 
inspection. At a minimum, the following records are needed for each 
consolidated plan program participant and each PHA that prepares its 
own AFH:
    (1) Information and records relating to the program participant's 
AFH and any significant revisions to the AFH, including, but not 
limited to, statistical data, studies, and other diagnostic tools used 
by the jurisdiction; and any policies, procedures, or other documents 
relating to the analysis or preparation of the AFH;
    (2) Records demonstrating compliance with the consultation and 
community participation requirements of Sec. Sec.  5.150 through 5.180 
and applicable program regulations, including the names of 
organizations involved in the development of the AFH, summaries or 
transcripts of public meetings or hearings, written public comments, 
public notices and other correspondence, distribution lists, surveys, 
or interviews (as applicable);
    (3) Records demonstrating the actions the program participant has 
taken to affirmatively further fair housing, including activities 
carried out in furtherance of the assessment; the program participant's 
AFFH goals and strategies set forth in its AFH,

[[Page 42360]]

consolidated plan, or PHA Plan, and any plan incorporated therein; and 
the actions the program participant has carried out to promote or 
support the goals identified in accordance with Sec.  5.154 during the 
preceding 5 years;
    (4) Where courts or an agency of the United States Government or of 
a State government has found that the program participant has violated 
any applicable nondiscrimination and equal opportunity requirements set 
forth in Sec.  5.105(a) or any applicable civil rights-related program 
requirement, documentation related to the underlying judicial or 
administrative finding and affirmative measures that the program 
participant has taken in response.
    (5) Documentation relating to the program participant's efforts to 
ensure that housing and community development activities (including 
those assisted under programs administered by HUD) are in compliance 
with applicable nondiscrimination and equal opportunity requirements 
set forth in Sec.  5.105(a) and applicable civil rights related program 
requirements;
    (6) Records demonstrating that consortium members, units of general 
local government receiving allocations from a State, or units of 
general local government participating in an urban county have 
conducted their own or contributed to the jurisdiction's assessment (as 
applicable) and documents demonstrating their actions to affirmatively 
further fair housing; and
    (7) Any other evidence relied upon by the program participant to 
support its affirmatively furthering fair housing certification.
    (b) Retention period. All records must be retained for such period 
as may be specified in the applicable program regulations.


Sec. Sec.  5.167-5.180  [Reserved]

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

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

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


0
5. In Sec.  91.5, the introductory text is revised to read as follows:


Sec.  91.5  Definitions.

    The terms Affirmatively Furthering Fair Housing, Assessment of Fair 
Housing or AFH, elderly person, and HUD are defined in 24 CFR part 5.
* * * * *

0
6. In Sec.  91.100, paragraphs (a)(1) and (5) and (c) are revised and 
paragraph (e) is added to read as follows:


Sec.  91.100  Consultation; local governments.

    (a) General. (1) When preparing the AFH and the consolidated plan, 
the jurisdiction shall consult with other public and private agencies 
that provide assisted housing, health services, and social services 
(including those focusing on services to children, elderly persons, 
persons with disabilities, persons with HIV/AIDS and their families, 
homeless persons), community-based and regionally-based organizations 
that represent protected class members, and organizations that enforce 
fair housing laws.
* * * * *
    (5) The jurisdiction also should consult with adjacent units of 
general local government and local and regional government agencies, 
including local government agencies with metropolitan-wide planning and 
transportation responsibilities, particularly for problems and 
solutions that go beyond a single jurisdiction.
* * * * *
    (c) Public housing agencies (PHAs). (1) The jurisdiction shall 
consult with local PHAs operating in the jurisdiction regarding 
consideration of public housing needs, planned programs and activities, 
the AFH, strategies for affirmatively furthering fair housing, and 
proposed actions to affirmatively further fair housing in the 
consolidated plan. (See also 24 CFR 5.158 for coordination when 
preparing an AFH jointly with a PHA.) This consultation will help 
provide a better basis for the certification by the authorized official 
that the PHA Plan is consistent with the consolidated plan and the 
local government's description of its strategy for affirmatively 
furthering fair housing and the manner in which it will address the 
needs of public housing and, where necessary, the manner in which it 
will provide financial or other assistance to a troubled PHA to improve 
the PHA's operations and remove the designation of troubled, as well as 
obtaining PHA input on addressing fair housing issues in the Public 
Housing and Housing Choice Voucher programs.
    (2) This consultation will also help ensure that activities with 
regard to affirmatively furthering fair housing, local drug 
elimination, neighborhood improvement programs, and resident programs 
and services, those funded under a PHA's program and those funded under 
a program covered by the consolidated plan, are fully coordinated to 
achieve comprehensive community development goals and affirmatively 
further fair housing. If a PHA is required to implement remedies under 
a Voluntary Compliance Agreement, the local jurisdiction should work 
with or consult with the PHA, as appropriate, to identify actions the 
jurisdiction may take, if any, to assist the PHA in implementing the 
required remedies. A local jurisdiction may use CDBG funds for eligible 
activities or other funds to implement remedies required under a 
Voluntary Compliance Agreement.
* * * * *
    (e) Affirmatively Furthering Fair Housing. (1) The jurisdiction 
shall consult with community-based and regionally-based organizations 
that represent protected class members, and organizations that enforce 
fair housing laws, such as State or local fair housing enforcement 
agencies (including participants in the Fair Housing Assistance Program 
(FHAP)), fair housing organizations and other nonprofit organizations 
that receive funding under the Fair Housing Initiative Program (FHIP), 
and other public and private fair housing service agencies, to the 
extent that such entities operate within its jurisdiction. This 
consultation will help provide a better basis for the jurisdiction's 
AFH, its certification to affirmatively further fair housing, and other 
portions of the consolidated plan concerning affirmatively furthering 
fair housing.
    (2) This consultation must occur with any organizations that have 
relevant knowledge or data to inform the AFH and that are sufficiently 
independent and representative to provide meaningful feedback to a 
jurisdiction on the AFH, the consolidated plan, and their 
implementation.
    (3) Consultation must occur at various points in the fair housing 
planning process, meaning that, at a minimum, the jurisdiction will 
consult with the organizations described in this paragraph (e) in the 
development of both the AFH and the consolidated plan. Consultation on 
the consolidated plan shall specifically seek input into how the goals 
identified in an accepted AFH inform the priorities and objectives of 
the consolidated plan.

0
7. In Sec.  91.105, paragraphs (a)(1) and (a)(2)(i) through (iii) are 
revised, paragraph (a)(4) is added, and paragraphs (b), (c), (e)(1), 
(f), (g), (h), (i), (j) and (l) are revised to read as follow:


Sec.  91.105  Citizen participation plan; local governments.

    (a) Applicability and adoption of the citizen participation plan. 
(1) The jurisdiction is required to adopt a citizen participation plan 
that sets forth

[[Page 42361]]

the jurisdiction's policies and procedures for citizen participation. 
(Where a jurisdiction, before August 17, 2015, adopted a citizen 
participation plan it, will need to amend the citizen participation 
plan to comply with provisions of this section.)
    (2) Encouragement of citizen participation. (i) The citizen 
participation plan must provide for and encourage citizens to 
participate in the development of the AFH, any revisions to the AFH, 
the consolidated plan, any substantial amendment to the consolidated 
plan, and the performance report. These requirements are designed 
especially to encourage participation by low- and moderate-income 
persons, particularly those persons living in areas designated by the 
jurisdiction as a revitalization area or in a slum and blighted area 
and in areas where CDBG funds are proposed to be used, and by residents 
of predominantly low- and moderate-income neighborhoods, as defined by 
the jurisdiction. A jurisdiction must take appropriate actions to 
encourage the participation of all its citizens, including minorities 
and non-English speaking persons, as provided in paragraph (a)(4) of 
this section, as well as persons with disabilities.
    (ii) The jurisdiction shall encourage the participation of local 
and regional institutions, Continuums of Care, and other organizations 
(including businesses, developers, nonprofit organizations, 
philanthropic organizations, and community-based and faith-based 
organizations) in the process of developing and implementing the AFH 
and the consolidated plan.
    (iii) The jurisdiction shall encourage, in conjunction with 
consultation with public housing agencies, the participation of 
residents of public and assisted housing developments (including any 
resident advisory boards, resident councils, and resident management 
corporations) in the process of developing and implementing the AFH and 
the consolidated plan, along with other low-income residents of 
targeted revitalization areas in which the developments are located. 
The jurisdictions shall make an effort to provide information to the 
PHA about the AFH, AFFH strategy, and consolidated plan activities 
related to its developments and surrounding communities so that the PHA 
can make this information available at the annual public hearing(s) 
required for the PHA Plan.
* * * * *
    (4) The citizen participation plan shall describe the 
jurisdiction's procedures for assessing its language needs and identify 
any need for translation of notices and other vital documents. At a 
minimum, the citizen participation plan shall require that the 
jurisdiction take reasonable steps to provide language assistance to 
ensure meaningful access to participation by non-English-speaking 
residents of the community.
    (b) Development of the AFH and the consolidated plan. The citizen 
participation plan must include the following minimum requirements for 
the development of the AFH and the consolidated plan:
    (1)(i) The citizen participation plan must require that at or as 
soon as feasible after the start of the public participation process 
the jurisdiction will make the HUD-provided data and any other 
supplemental information the jurisdiction plans to incorporate into its 
AFH available to its residents, public agencies, and other interested 
parties. The jurisdiction may make the HUD-provided data available to 
the public by cross-referencing to the data on HUD's Web site.
    (ii) The citizen participation plan must require that, before the 
jurisdiction adopts a consolidated plan, the jurisdiction will make 
available to residents, public agencies, and other interested parties 
information that includes the amount of assistance the jurisdiction 
expects to receive (including grant funds and program income) and the 
range of activities that may be undertaken, including the estimated 
amount that will benefit persons of low- and moderate-income. The 
citizen participation plan also must set forth the jurisdiction's plans 
to minimize displacement of persons and to assist any persons 
displaced, specifying the types and levels of assistance the 
jurisdiction will make available (or require others to make available) 
to persons displaced, even if the jurisdiction expects no displacement 
to occur.
    (iii) The citizen participation plan must state when and how the 
jurisdiction will make this information available.
    (2) The citizen participation plan must require the jurisdiction to 
publish the proposed AFH and the proposed consolidated plan in a manner 
that affords its residents, public agencies, and other interested 
parties a reasonable opportunity to examine its content and to submit 
comments. The citizen participation plan must set forth how the 
jurisdiction will publish the proposed AFH and the proposed 
consolidated plan and give reasonable opportunity to examine each 
document's content. The requirement for publishing may be met by 
publishing a summary of each document in one or more newspapers of 
general circulation, and by making copies of each document available on 
the Internet, on the jurisdiction's official government Web site, and 
as well at libraries, government offices, and public places. The 
summary must describe the content and purpose of the AFH or the 
consolidated plan (as applicable), and must include a list of the 
locations where copies of the entire proposed document may be examined. 
In addition, the jurisdiction must provide a reasonable number of free 
copies of the plan or the AFH (as applicable) to residents and groups 
that request it.
    (3) The citizen participation plan must provide for at least one 
public hearing during the development of the AFH or the consolidated 
plan (as applicable). See paragraph (e) of this section for public 
hearing requirements, generally.
    (4) The citizen participation plan must provide a period, not less 
than 30 calendar days, to receive comments from residents of the 
community on the consolidated plan or the AFH (as applicable).
    (5) The citizen participation plan shall require the jurisdiction 
to consider any comments or views of residents of the community 
received in writing, or orally at the public hearings, in preparing the 
final AFH or the final consolidated plan (as applicable). A summary of 
these comments or views, and a summary of any comments or views not 
accepted and the reasons why, shall be attached to the final AFH or the 
final consolidated plan (as applicable).
    (c) Consolidated plan amendments and AFH revisions--(1)(i) Criteria 
for amendment to consolidated plan. The citizen participation plan must 
specify the criteria the jurisdiction will use for determining what 
changes in the jurisdiction's planned or actual activities constitute a 
substantial amendment to the consolidated plan. (See Sec.  91.505.) The 
citizen participation plan must include, among the criteria for a 
substantial amendment, changes in the use of CDBG funds from one 
eligible activity to another.
    (ii) Criteria for revision to the AFH. The jurisdiction must 
specify the criteria the jurisdiction will use for determining when 
revisions to the AFH will be required. (At a minimum, the specified 
criteria must include the situations described in 24 CFR 5.164.)

[[Page 42362]]

    (2) The citizen participation plan must provide community residents 
with reasonable notice and an opportunity to comment on substantial 
amendments to the consolidated plan and revisions to the AFH. The 
citizen participation plan must state how reasonable notice and an 
opportunity to comment will be given. The citizen participation plan 
must provide a period, of not less than 30 calendar days, to receive 
comments on the consolidated plan substantial amendment or any revision 
to the AFH before the consolidated plan substantial amendment is 
implemented or the revised AFH is submitted to HUD for review.
    (3) The citizen participation plan shall require the jurisdiction 
to consider any comments or views of residents of the community 
received in writing, or orally at public hearings, if any, in preparing 
the substantial amendment of the consolidated plan or significant 
revision to the AFH (as applicable). A summary of these comments or 
views, and a summary of any comments or views not accepted and the 
reasons why, shall be attached to the substantial amendment of the 
consolidated plan or revision to the AFH (as applicable).
* * * * *
    (e) Public hearings--(1)(i) Consolidated plan. The citizen 
participation plan must provide for at least two public hearings per 
year to obtain residents' views and to respond to proposals and 
questions, to be conducted at a minimum of two different stages of the 
program year. Together, the hearings must address housing and community 
development needs, development of proposed activities, proposed 
strategies and actions for affirmatively furthering fair housing 
consistent with the AFH, and a review of program performance.
    (ii) Minimum number of hearings. To obtain the views of residents 
of the community on housing and community development needs, including 
priority nonhousing community development needs and affirmatively 
furthering fair housing, the citizen participation plan must provide 
that at least one of these hearings is held before the proposed 
consolidated plan is published for comment.
    (iii) Assessment of Fair Housing. To obtain the views of the 
community on AFH-related data and affirmatively furthering fair housing 
in the jurisdiction's housing and community development programs, the 
citizen participation plan must provide that at least one public 
hearing is held before the proposed AFH is published for comment.
* * * * *
    (f) Meetings. The citizen participation plan must provide residents 
of the community with reasonable and timely access to local meetings, 
consistent with accessibility and reasonable accommodation 
requirements, in accordance with section 504 of the Rehabilitation Act 
of 1973 and the regulations at 24 CFR part 8; and the Americans with 
Disabilities Act and the regulations at 28 CFR parts 35 and 36, as 
applicable.
    (g) Availability to the public. The citizen participation plan must 
provide that the consolidated plan as adopted, consolidated plan 
substantial amendments, HUD-accepted AFH, revisions to the AFH, and the 
performance report will be available to the public, including the 
availability of materials in a form accessible to persons with 
disabilities, upon request. The citizen participation plan must state 
how these documents will be available to the public.
    (h) Access to records. The citizen participation plan must require 
the jurisdiction to provide residents of the community, public 
agencies, and other interested parties with reasonable and timely 
access to information and records relating to the jurisdiction's AFH, 
consolidated plan, and use of assistance under the programs covered by 
this part during the preceding 5 years.
    (i) Technical assistance. The citizen participation plan must 
provide for technical assistance to groups representative of persons of 
low- and moderate-income that request such assistance in commenting on 
the AFH and in developing proposals for funding assistance under any of 
the programs covered by the consolidated plan, with the level and type 
of assistance determined by the jurisdiction. The assistance need not 
include the provision of funds to the groups.
    (j) Complaints. The citizen participation plan shall describe the 
jurisdiction's appropriate and practicable procedures to handle 
complaints from its residents related to the consolidated plan, 
amendments, AFH, revisions, and the performance report. At a minimum, 
the citizen participation plan shall require that the jurisdiction must 
provide a timely, substantive written response to every written 
resident complaint, within an established period of time (within 15 
working days, where practicable, if the jurisdiction is a CDBG grant 
recipient).
* * * * *
    (l) Jurisdiction responsibility. The requirements for citizen 
participation do not restrict the responsibility or authority of the 
jurisdiction for the development and execution of its consolidated plan 
or AFH.

0
8. In Sec.  91.110, paragraph (a) is revised to read as follows:


Sec.  91.110  Consultation; States.

    (a) When preparing the AFH and the consolidated plan, the State 
shall consult with public and private agencies that provide assisted 
housing (including any State housing agency administering public 
housing), health services, social services (including those focusing on 
services to children, elderly persons, persons with disabilities, 
persons with HIV/AIDS and their families, and homeless persons), and 
State-based and regionally-based organizations that represent protected 
class members and organizations that enforce fair housing laws during 
preparation of the consolidated plan.
    (1) With respect to public housing or Housing Choice Voucher 
programs, the State shall consult with any housing agency administering 
public housing or the section 8 program on a Statewide basis as well as 
all PHAs that certify consistency with the State's consolidated plan. 
State consultation with these entities may consider public housing 
needs, planned programs and activities, the AFH, strategies for 
affirmatively furthering fair housing, and proposed actions to 
affirmatively further fair housing. This consultation helps provide a 
better basis for the certification by the authorized official that the 
PHA Plan is consistent with the consolidated plan and the State's 
description of its strategy for affirmatively furthering fair housing, 
and the manner in which the State will address the needs of public 
housing and, where applicable, the manner in which the State may 
provide financial or other assistance to a troubled PHA to improve its 
operations and remove such designation, as well as in obtaining PHA 
input on addressing fair housing issues in public housing and the 
Housing Choice Voucher programs. This consultation also helps ensure 
that activities with regard to affirmatively furthering fair housing, 
local drug elimination, neighborhood improvement programs, and resident 
programs and services, funded under a PHA's program and those funded 
under a program covered by the consolidated plan, are fully coordinated 
to achieve comprehensive community development goals and affirmatively 
further fair housing. If a PHA is required to implement remedies under 
a

[[Page 42363]]

Voluntary Compliance Agreement, the State should consult with the PHA 
and identify actions the State may take, if any, to assist the PHA in 
implementing the required remedies.
    (2) The State shall consult with State-based and regionally-based 
organizations that represent protected class members, and organizations 
that enforce fair housing laws, such as State fair housing enforcement 
agencies (including participants in the Fair Housing Assistance Program 
(FHAP)), fair housing organizations and other nonprofit organizations 
that receive funding under the Fair Housing Initiative Program (FHIP), 
and other public and private fair housing service agencies, to the 
extent such entities operate within the State. This consultation will 
help provide a better basis for the State's AFH, its certification to 
affirmatively further fair housing, and other portions of the 
consolidated plan concerning affirmatively furthering fair housing. 
This consultation should occur with organizations that have the 
capacity to engage with data informing the AFH and be sufficiently 
independent and representative to provide meaningful feedback on the 
AFH, the consolidated plan, and their implementation. Consultation must 
occur at various points in the fair housing planning process, meaning 
that, at a minimum, the jurisdiction will consult with the 
organizations described in this paragraph (a)(2) in the development of 
both the AFH and the consolidated plan. Consultation on the 
consolidated plan shall specifically seek input into how the goals 
identified in an accepted AFH inform the priorities and objectives of 
the consolidated plan.
* * * * *

0
9. In Sec.  91.115, paragraphs (a)(1) and (2) are revised, paragraph 
(a)(4) is added, and paragraphs (b), (c), (f), (g), and (h) are revised 
to read as follows:


Sec.  91.115  Citizen participation plan; States.

    (a) * * *
    (1) When citizen participation plan must be amended. The State is 
required to adopt a citizen participation plan that sets forth the 
State's policies and procedures for citizen participation. (Where a 
State, before August 17, 2015, adopted a citizen participation plan, it 
will need to amend the citizen participation plan to comply with 
provisions of this section.)
    (2) Encouragement of citizen participation. (i) The citizen 
participation plan must provide for and encourage citizens to 
participate in the development of the AFH, any revision to the AFH, the 
consolidated plan, any substantial amendments to the consolidated plan, 
and the performance report. These requirements are designed especially 
to encourage participation by low- and moderate-income persons, 
particularly those living in slum and blighted areas and in areas where 
CDBG funds are proposed to be used and by residents of predominantly 
low- and moderate-income neighborhoods. A State must take appropriate 
actions to encourage the participation of all its residents, including 
minorities and non-English speaking persons, as provided in paragraph 
(a)(4) of this section, as well as persons with disabilities.
    (ii) The State shall encourage the participation of Statewide and 
regional institutions, Continuums of Care, and other organizations 
(including businesses, developers, nonprofit organizations, 
philanthropic organizations, and community-based and faith-based 
organizations) that are involved with or affected by the programs or 
activities covered by the consolidated plan in the process of 
developing and implementing the AFH and the consolidated plan.
    (iii) The State should also explore alternative public involvement 
techniques that encourage a shared vision of change for the community 
and the review of program performance; e.g., use of focus groups and 
use of the Internet.
* * * * *
    (4) Language assistance for those with limited English proficiency. 
The citizen participation plan shall describe the State's procedures 
for assessing its language needs and identify any need for translation 
of notices and other vital documents. At a minimum, the citizen 
participation plan shall require the State to make reasonable efforts 
to provide language assistance to ensure meaningful access to 
participation by non-English speaking persons.
    (b) Development of the AFH and the consolidated plan. The citizen 
participation plan must include the following minimum requirements for 
the development of the AFH and consolidated plan:
    (1)(i) The citizen participation plan must require that at or as 
soon as feasible after the start of the public participation process 
the State will make HUD-provided data and any other supplemental 
information the State intends to incorporate into its AFH available to 
the public, public agencies, and other interested parties. The State 
may make the HUD-provided data available to the public by cross-
referencing to the data on HUD's Web site.
    (ii) The citizen participation plan must require that, before the 
State adopts an AFH or consolidated plan, the State will make available 
to its residents, public agencies, and other interested parties 
information that includes the amount of assistance the State expects to 
receive and the range of activities that may be undertaken, including 
the estimated amount that will benefit persons of low- and moderate-
income and the plans to minimize displacement of persons and to assist 
any persons displaced. The citizen participation plan must state when 
and how the State will make this information available.
    (2) The citizen participation plan must require the State to 
publish the proposed AFH and the proposed consolidated plan in a manner 
that affords residents, units of general local governments, public 
agencies, and other interested parties a reasonable opportunity to 
examine the document's content and to submit comments. The citizen 
participation plan must set forth how the State will make publicly 
available the proposed AFH and the proposed consolidated plan and give 
reasonable opportunity to examine each document's content. To ensure 
that the AFH, the consolidated plan, and the PHA plan are informed by 
meaningful community participation, program participants should employ 
communications means designed to reach the broadest audience. Such 
communications may be met by publishing a summary of each document in 
one or more newspapers of general circulation, and by making copies of 
each document available on the Internet, on the grantee's official 
government Web site, and as well at libraries, government offices, and 
public places. The summary must describe the content and purpose of the 
AFH or the consolidated plan (as applicable), and must include a list 
of the locations where copies of the entire proposed document(s) may be 
examined. In addition, the State must provide a reasonable number of 
free copies of the plan or the AFH (as applicable) to its residents and 
groups that request a copy of the plan or the AFH.
    (3) The citizen participation plan must provide for at least one 
public hearing on housing and community development needs and proposed 
strategies and actions for affirmatively furthering fair housing 
consistent with the AFH, before the proposed consolidated plan is 
published for comment. To obtain the public's views on AFH-related data 
and affirmatively furthering fair housing in the State's housing and 
community development

[[Page 42364]]

programs, the citizen participation plan must provide that at least one 
public hearing is held before the proposed AFH is published for 
comment.
    (i) The citizen participation plan must state how and when adequate 
advance notice of the hearing will be given to residents, with 
sufficient information published about the subject of the hearing to 
permit informed comment. (Publishing small print notices in the 
newspaper a few days before the hearing does not constitute adequate 
notice. Although HUD is not specifying the length of notice required, 
HUD would consider 2 weeks adequate.)
    (ii) The citizen participation plan must provide that the hearing 
be held at a time and accessible location convenient to potential and 
actual beneficiaries, and with accommodation for persons with 
disabilities. The citizen participation plan must specify how it will 
meet these requirements.
    (iii) The citizen participation plan must identify how the needs of 
non-English speaking residents will be met in the case of a public 
hearing where a significant number of non-English speaking residents 
can be reasonably expected to participate.
    (4) The citizen participation plan must provide a period, of not 
less than 30 calendar days, to receive comments from residents and 
units of general local government on the consolidated plan or the AFH 
(as applicable).
    (5) The citizen participation plan shall require the State to 
consider any comments or views of its residents and units of general 
local government received in writing, or orally at the public hearings, 
in preparing the final AFH and the final consolidated plan. A summary 
of these comments or views, and a summary of any comments or views not 
accepted and the reasons therefore, shall be attached to the final AFH 
or the final consolidated plan (as applicable).
    (c) Amendments--(1)(i) Criteria for amendment to consolidated plan. 
The citizen participation plan must specify the criteria the State will 
use for determining what changes in the State's planned or actual 
activities constitute a substantial amendment to the consolidated plan. 
(See Sec.  91.505.) The citizen participation plan must include, among 
the criteria for a consolidated plan, substantial amendment changes in 
the method of distribution of such funds.
    (ii) Criteria for revision to the AFH. The State must specify the 
criteria it will use for determining when revision to the AFH will be 
appropriate. (At a minimum, the specified criteria must include the 
situations described in 24 CFR 5.164.)
    (2) The citizen participation plan must provide residents and units 
of general local government with reasonable notice and an opportunity 
to comment on consolidated plan substantial amendments and any revision 
to the AFH. The citizen participation plan must state how reasonable 
notice and an opportunity to comment will be given. The citizen 
participation plan must provide a period, of not less than 30 calendar 
days, to receive comments on the consolidated plan substantial 
amendment or revision to the AFH before the consolidated plan 
substantial amendment is implemented or the revised AFH is submitted to 
HUD.
    (3) The citizen participation plan shall require the State to 
consider any comments or views of its residents and units of general 
local government received in writing, or orally at public hearings, if 
any, in preparing the substantial amendment of the consolidated plan or 
revision to the AFH (as applicable). A summary of these comments or 
views, and a summary of any comments or views not accepted and the 
reasons why, shall be attached to the substantial amendment of the 
consolidated plan or any revision to the AFH (as applicable).
* * * * *
    (f) Availability to the public. The citizen participation plan must 
provide that the consolidated plan as adopted, consolidated plan 
substantial amendments, the HUD-accepted AFH, any revision to the AFH, 
and the performance report will be available to the public, including 
the availability of materials in a form accessible to persons with 
disabilities, upon request. The citizen participation plan must state 
how these documents will be available to the public.
    (g) Access to records. The citizen participation plan must require 
the State to provide its residents, public agencies, and other 
interested parties with reasonable and timely access to information and 
records relating to the State's AFH, consolidated plan and use of 
assistance under the programs covered by this part during the preceding 
5 years.
    (h) Complaints. The citizen participation plan shall describe the 
State's appropriate and practicable procedures to handle complaints 
from its residents related to the consolidated plan, consolidated plan 
amendments, the AFH, any revisions to the AFH, and the performance 
report. At a minimum, the citizen participation plan shall require that 
the State must provide a timely, substantive written response to every 
written resident complaint, within an established period of time 
(within 15 working days, where practicable, if the State is a CDBG 
grant recipient).
* * * * *

0
10. In Sec.  91.205, paragraph (b)(2) is revised to read as follows:


Sec.  91.205  Housing and homeless needs assessment.

* * * * *
    (b) * * *
    (2) Until the jurisdiction has submitted an AFH, which includes an 
assessment of disproportionate housing needs in accordance with 24 CFR 
5.154(d)(2)(iv), the following assessment shall continue to be included 
in the consolidated plan. For any of the income categories enumerated 
in paragraph (b)(1) of this section, to the extent that any racial or 
ethnic group has disproportionately greater need in comparison to the 
needs of that category as a whole, assessment of that specific need 
shall be included. For this purpose, disproportionately greater need 
exists when the percentage of persons in a category of need who are 
members of a particular racial or ethnic group in a category of need is 
at least 10 percentage points higher than the percentage of persons in 
the category as a whole. Once the jurisdiction has submitted an AFH, 
however, this assessment need not be included in the consolidated plan.
* * * * *

0
11. In Sec.  91.215, paragraph (a)(5) is added to read as follows:


Sec.  91.215  Strategic plan.

    (a) * * *
    (5)(i) Describe how the priorities and specific objectives of the 
jurisdiction under paragraph (a)(4) of this section will affirmatively 
further fair housing by setting forth strategies and actions consistent 
with the goals and other elements identified in an AFH conducted in 
accordance with 24 CFR 5.150 through 5.180.
    (ii) For AFH goals not addressed by these priorities and 
objectives, identify any additional objectives and priorities for 
affirmatively furthering fair housing.
* * * * *

0
12. In Sec.  91.220, paragraph (k) is revised to read as follows:


Sec.  91.220  Action plan.

* * * * *
    (k)(1) Affirmatively furthering fair housing. Actions it plans to 
take during the next year that address fair housing goals identified in 
the AFH.

[[Page 42365]]

    (2) Other actions. Actions it plans to take during the next year to 
address obstacles to meeting underserved needs, foster and maintain 
affordable housing, evaluate and reduce lead-based paint hazards, 
reduce the number of poverty-level families, develop institutional 
structure, and enhance coordination between public and private housing 
and social service agencies (see Sec.  91.215(a), (b), (i), (j), (k), 
and (l)).
* * * * *

0
13. In Sec.  91.225, paragraph (a)(1) is revised to read as follows:


Sec.  91.225  Certifications.

    (a) * * *
    (1) Affirmatively furthering fair housing. Each jurisdiction is 
required to submit a certification that it will affirmatively further 
fair housing, which means that it will take meaningful actions to 
further the goals identified in the AFH conducted in accordance with 
the requirements of 24 CFR 5.150 through 5.180, and that it will take 
no action that is materially inconsistent with its obligation to 
affirmatively further fair housing.
* * * * *

0
14. Section 91.230 is revised to read as follows:


Sec.  91.230  Monitoring.

    The plan must describe the standards and procedures that the 
jurisdiction will use to monitor activities carried out in furtherance 
of the plan, including strategies and actions that address the fair 
housing issues and goals identified in the AFH, and that the 
jurisdiction will use to ensure long-term compliance with requirements 
of the programs involved, including civil rights related program 
requirements, minority business outreach, and the comprehensive 
planning requirements.

0
15. In Sec.  91.235, paragraphs (c)(1) and (4) are revised to read as 
follows:


Sec.  91.235  Special case; abbreviated consolidated plan.

* * * * *
    (c) What is an abbreviated plan?--(1) Assessment of needs, 
resources, and planned activities. An abbreviated plan must contain 
sufficient information about needs, resources, and planned activities 
to address the needs to cover the type and amount of assistance 
anticipated to be funded by HUD. The plan must describe how the 
jurisdiction will affirmatively further fair housing by addressing 
issues identified in an AFH conducted in accordance with 24 CFR 5.150 
through 5.180.
* * * * *
    (4) Submissions, certifications, amendments, and performance 
reports. An Insular Area grantee that submits an abbreviated 
consolidated plan under this section must comply with the submission, 
certification, amendment, and performance report requirements of 24 CFR 
570.440. This includes certification that the grantee will 
affirmatively further fair housing, which means that it will take 
meaningful actions to further the goals identified in an AFH conducted 
in accordance with the requirements of 24 CFR 5.150 through 5.180, and 
that it will take no action that is materially inconsistent with its 
obligation to affirmatively further fair housing.
* * * * *

0
16. In Sec.  91.305, paragraph (b)(2) is revised to read as follows:


Sec.  91.305  Housing and homeless needs assessment.

* * * * *
    (b) * * *
    (2) Until the jurisdiction has submitted an AFH, which includes an 
assessment of disproportionate housing needs in accordance with 24 CFR 
5.154(d)(2)(iv), the following assessment shall continue to be included 
in the consolidated plan. For any of the income categories enumerated 
in paragraph (b)(1) of this section, to the extent that any racial or 
ethnic group has disproportionately greater need in comparison to the 
needs of that category as a whole, assessment of that specific need 
shall be included. For this purpose, disproportionately greater need 
exists when the percentage of persons in a category of need who are 
members of a particular racial or ethnic group in a category of need is 
at least 10 percentage points higher than the percentage of persons in 
the category as a whole. Once the jurisdiction has submitted an AFH, 
however, this assessment need not be included in the consolidated plan.
* * * * *

0
17. In Sec.  91.315, paragraph (a)(5) is added to read as follows:


Sec.  91.315  Strategic plan.

    (a) * * *
    (5)(i) Describe how the priorities and specific objectives of the 
State under Sec.  91.315(a)(4) will affirmatively further fair housing 
by setting forth strategies and actions consistent with the goals and 
other elements identified in an AFH conducted in accordance with 24 CFR 
5.150 through 5.180.
    (ii) For AFH goals not addressed by these priorities and 
objectives, identify any additional objectives and priorities for 
affirmatively furthering fair housing.
* * * * *

0
18. In Sec.  91.320, paragraph (j) is revised to read as follows:


Sec.  91.320  Action plan.

* * * * *
    (j)(1) Affirmatively furthering fair housing. Actions it plans to 
take during the next year that address fair housing goals identified in 
the AFH.
    (2) Other actions. Actions it plans to take during the next year to 
implement its strategic plan and address obstacles to meeting 
underserved needs, foster and maintain affordable housing (including 
allocation plans and policies governing the use of Low-Income Housing 
Credits under 26 U.S.C. 42, which are more commonly referred to as Low-
Income Housing Tax Credits), evaluate and reduce lead-based paint 
hazards, reduce the number of poverty-level families, develop 
institutional structure, enhance coordination between public and 
private housing and social service agencies, address the needs of 
public housing (including providing financial or other assistance to 
troubled PHAs), and encourage public housing residents to become more 
involved in management and participate in homeownership.
* * * * *

0
19. In Sec.  91.325, paragraph (a)(1) is revised to read as follows:


Sec.  91.325  Certifications.

    (a) General--(1) Affirmatively furthering fair housing. Each State 
is required to submit a certification that it will affirmatively 
further fair housing, which means that it will take meaningful actions 
to further the goals identified in an AFH conducted in accordance with 
the requirements of 24 CFR 5.150 through 5.180, and that it will take 
no action that is materially inconsistent with its obligation to 
affirmatively further fair housing.
* * * * *

0
20. Section 91.415 is revised to read as follows:


Sec.  91.415  Strategic plan.

    Strategies and priority needs must be described in the consolidated 
plan, in accordance with the provisions of Sec.  91.215, for the entire 
consortium. The consortium is not required to submit a nonhousing 
Community Development Plan; however, if the consortium includes CDBG 
entitlement communities, the consolidated plan must include the 
nonhousing Community Development Plans of the CDBG entitlement 
community members

[[Page 42366]]

of the consortium. The consortium must set forth its priorities for 
allocating housing (including CDBG and ESG, where applicable) resources 
geographically within the consortium, describing how the consolidated 
plan will address the needs identified (in accordance with Sec.  
91.405), setting forth strategies and actions consistent with the goals 
and other elements identified in an AFH conducted in accordance with 24 
CFR 5.150 through 5.180, describing the reasons for the consortium's 
allocation priorities, and identifying any obstacles there are to 
addressing underserved needs.

0
21. In Sec.  91.420, paragraph (b) is revised to read as follows:


Sec.  91.420  Action plan.

* * * * *
    (b) Description of resources and activities. The action plan must 
describe the resources to be used and activities to be undertaken to 
pursue its strategic plan, including actions the consortium plans to 
take during the next year that address fair housing issues identified 
in the AFH. The consolidated plan must provide this description for all 
resources and activities within the entire consortium as a whole, as 
well as a description for each individual community that is a member of 
the consortium.
* * * * *

0
22. In Sec.  91.425, paragraph (a)(1)(i) is revised to read as follows:


Sec.  91.425  Certifications.

    (a) Consortium certifications--(1) General--(i) Affirmatively 
furthering fair housing. Each consortium must certify that it will 
affirmatively further fair housing, which means that it will take 
meaningful actions to further the goals identified in an AFH conducted 
in accordance with the requirements of 24 CFR 5.150 through 5.180, and 
that it will take no action that is materially inconsistent with its 
obligation to affirmatively further fair housing.
* * * * *

0
23. In Sec.  91.505, add paragraph (d) to read as follows:


Sec.  91.505  Amendments to the consolidated plan.

* * * * *
    (d) The jurisdiction must ensure that amendments to the plan are 
consistent with its certification to affirmatively further fair housing 
and the analysis and strategies of the AFH.

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

0
24. The authority citation for part 92 continues to read as follows:

    Authority:  42 U.S.C. 3535(d) and 12701-12839.

0
25. Revise 92.104 to read as follows:


Sec.  92.104  Submission of a consolidated plan and Assessment of Fair 
Housing.

    A jurisdiction that has not submitted a consolidated plan to HUD 
must submit to HUD, not later than 90 calendar days after providing 
notification under Sec.  92.103, a consolidated plan in accordance with 
24 CFR part 91 and an Assessment of Fair Housing (AFH) in accordance 
with 24 CFR 5.150 through 5.180.

0
26. In Sec.  92.508, revise paragraph (a)(7)(i)(C) to read as follows:


Sec.  92.508  Recordkeeping.

    (a) * * *
    (7) * * *
    (i) * * *
    (C) Documentation of the actions the participating jurisdiction has 
taken to affirmatively further fair housing, including documentation 
related to the participating jurisdiction's Assessment of Fair Housing 
as described in 24 CFR 5.168.
* * * * *

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

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

    Authority:  42 U.S.C. 3535(d) and 5300-5320.

0
28. In Sec.  570.3, revise the introductory text to read as follows:


Sec.  570.3  Definitions.

    The terms Affirmatively Furthering Fair Housing, Assessment of Fair 
Housing or AFH, HUD, and Secretary are defined in 24 CFR part 5. All of 
the following definitions in this section that rely on data from the 
United States Bureau of the Census shall rely upon the data available 
from the latest decennial census or the American Community Survey.
* * * * *

0
29. In Sec.  570.205, paragraph (a)(4)(vii) is revised to read as 
follows:


Sec.  570.205  Eligible planning, urban environmental design and 
policy-planning-management-capacity building activities.

    (a) * * *
    (4) * * *
    (vii) Assessment of Fair Housing.
* * * * *

0
30. In Sec.  570.441, paragraphs (b) introductory text, (b)(1) 
introductory text, (b)(2), (b)(3), (b)(4), (c), (d), and (e) are 
revised to read as follows:


Sec.  570.441  Citizen participation--insular areas.

* * * * *
    (b) Citizen participation plan. The insular area jurisdiction must 
develop and follow a detailed citizen participation plan and must make 
the plan public. The plan must be completed and available before the 
AFH and statement for assistance is submitted to HUD, and the 
jurisdiction must certify that it is following the plan. The plan must 
set forth the jurisdiction's policies and procedures for:
    (1) Giving citizens timely notice of local meetings and reasonable 
and timely access to local meetings consistent with accessibility and 
reasonable accommodation requirements in accordance with section 504 of 
the Rehabilitation Act of 1973 and the regulations at 24 CFR part 8, 
and the Americans with Disabilities Act and the regulations at 28 CFR 
parts 35 and 36, as applicable, as well as information and records 
relating to the grantee's proposed and actual use of CDBG funds 
including, but not limited to:
* * * * *
    (2) Providing technical assistance to groups that are 
representative of persons of low- and moderate-income that request 
assistance in commenting on the AFH and developing proposals. The level 
and type of assistance to be provided is at the discretion of the 
jurisdiction. The assistance need not include the provision of funds to 
the groups;
    (3) Holding a minimum of two public hearings for the purpose of 
obtaining residents' views and formulating or responding to proposals 
and questions. Each public hearing must be conducted at a different 
stage of the CDBG program year. Together, the hearings must address 
affirmatively furthering fair housing, community development and 
housing needs, development of proposed activities, proposed strategies 
and actions for affirmatively furthering fair housing consistent with 
the AFH, and a review of program performance. There must be reasonable 
notice of the hearings, and the hearings must be held at times and 
accessible locations convenient to potential or actual beneficiaries, 
with reasonable accommodations, including materials in accessible 
formats, for persons with disabilities. The jurisdiction must specify 
in its citizen participation plan

[[Page 42367]]

how it will meet the requirement for hearings at times and accessible 
locations convenient to potential or actual beneficiaries;
    (4) Assessing its language needs, identifying any need for 
translation of notices and other vital documents and, in the case of 
public hearings, meeting the needs of non-English speaking residents 
where a significant number of non-English speaking residents can 
reasonably be expected to participate. At a minimum, the citizen 
participation plan shall require the jurisdiction to make reasonable 
efforts to provide language assistance to ensure meaningful access to 
participation by non-English speaking persons;
* * * * *
    (c) Publication of proposed AFH and proposed statement. (1) The 
insular area jurisdiction shall publish a proposed AFH and a proposed 
statement consisting of the proposed community development activities 
and community development objectives (as applicable) in order to afford 
affected residents an opportunity to:
    (i) Examine the document's contents to determine the degree to 
which they may be affected;
    (ii) Submit comments on the proposed document; and
    (iii) Submit comments on the performance of the jurisdiction.
    (2) The requirement for publishing in paragraph (c)(1) of this 
section may be met by publishing a summary of the proposed document in 
one or more newspapers of general circulation and by making copies of 
the proposed document available on the Internet, on the grantee's 
official government Web site, and as well at libraries, government 
offices, and public places. The summary must describe the contents and 
purpose of the proposed document and must include a list of the 
locations where copies of the entire proposed document may be examined.
    (d) Preparation of the AFH and final statement. An insular area 
jurisdiction must prepare an AFH and a final statement. In the 
preparation of the AFH and final statement, the jurisdiction shall 
consider comments and views received relating to the proposed document 
and may, if appropriate, modify the final document. The final AFH and 
final statement shall be made available to the public. The final 
statement shall include the community development objectives, projected 
use of funds, and the community development activities.
    (e) Program amendments. To assure citizen participation on program 
amendments to final statements and any revision to the AFH, the insular 
area grantee shall:
    (1) Furnish its residents with information concerning the amendment 
to the consolidated plan or any revision to the AFH (as applicable);
    (2) Hold one or more public hearings to obtain the views of 
residents on the proposed amendment to the consolidated plan or 
revision to the AFH;
    (3) Develop and publish the proposed amendment to the consolidated 
plan or any revision to the AFH in such a manner as to afford affected 
residents an opportunity to examine the contents, and to submit 
comments on the proposed amendment to the consolidated plan or revision 
to the AFH, as applicable;
    (4) Consider any comments and views expressed by residents on the 
proposed amendment to the consolidated plan or revision to the AFH, 
and, if the grantee finds it appropriate, make modifications 
accordingly; and
    (5) Make the final amendment to the community development program 
or revision to the AFH available to the public before its submission to 
HUD.
* * * * *

0
31. In Sec.  570.486, paragraphs (a)(2), (4), and (5) are revised to 
read as follows:


Sec.  570.486  Local government requirements.

    (a) * * *
    (2) Ensure that residents will be given reasonable and timely 
access to local meetings, consistent with accessibility and reasonable 
accommodation requirements in accordance with section 504 of the 
Rehabilitation Act of 1973 and the regulations at 24 CFR part 8, and 
the Americans with Disabilities Act and the regulations at 28 CFR parts 
35 and 36, as applicable, as well as information and records relating 
to the unit of local government's proposed and actual use of CDBG 
funds;
* * * * *
    (4) Provide technical assistance to groups that are representative 
of persons of low- and moderate-income that request assistance in 
developing proposals (including proposed strategies and actions to 
affirmatively further fair housing) in accordance with the procedures 
developed by the State. Such assistance need not include providing 
funds to such groups;
    (5) Provide for a minimum of two public hearings, each at a 
different stage of the program, for the purpose of obtaining residents' 
views and responding to proposals and questions. Together the hearings 
must cover community development and housing needs (including 
affirmatively furthering fair housing), development of proposed 
activities, and a review of program performance. The public hearings to 
cover community development and housing needs must be held before 
submission of an application to the State. There must be reasonable 
notice of the hearings and they must be held at times and accessible 
locations convenient to potential or actual beneficiaries, with 
accommodations for persons with disabilities. Public hearings shall be 
conducted in a manner to meet the needs of non-English speaking 
residents where a significant number of non-English speaking residents 
can reasonably be expected to participate;
* * * * *
0
32. In Sec.  570.487, paragraph (b) is revised to read as follows:


Sec.  570.487  Other applicable laws and related program requirements.

* * * * *
    (b) Affirmatively furthering fair housing. The Act requires the 
State to certify to the satisfaction of HUD that it will affirmatively 
further fair housing. The Act also requires each unit of general local 
government to certify that it will affirmatively further fair housing. 
The certification that the State will affirmatively further fair 
housing shall specifically require the State to assume the 
responsibility of fair housing planning by:
    (1) Taking meaningful actions to further the goals identified in an 
AFH conducted in accordance with the requirements of 24 CFR5.150 
through 5.180;
    (2) Taking no action that is materially inconsistent with its 
obligation to affirmatively further fair housing; and
    (3) Assuring that units of local government funded by the State 
comply with their certifications to affirmatively further fair housing.
* * * * *

0
33. In Sec.  570.490, paragraphs (a)(1) and (b) are revised to read as 
follows:


Sec.  570.490  Recordkeeping requirements.

    (a) State records. (1) The State shall establish and maintain such 
records as may be necessary to facilitate review and audit by HUD of 
the State's administration of CDBG funds under Sec.  570.493. The 
content of records maintained by the State shall be as jointly agreed 
upon by HUD and the States and sufficient to enable HUD to make the 
determinations described at Sec.  570.493. For fair housing and equal 
opportunity purposes, and as applicable, such records shall include 
documentation related to the State's AFH, as described in 24 CFR part 
5,

[[Page 42368]]

subpart A (Sec.  5.168). The records shall also permit audit of the 
States in accordance with 24 CFR part 85.
* * * * *
    (b) Unit of general local government's record. The State shall 
establish recordkeeping requirements for units of general local 
government receiving CDBG funds that are sufficient to facilitate 
reviews and audits of such units of general local government under 
Sec. Sec.  570.492 and 570.493. For fair housing and equal opportunity 
purposes, and as applicable, such records shall include documentation 
related to the State's AFH as described in 24 CFR part 5, subpart A 
(Sec.  5.168).
* * * * *

0
34. In Sec.  570.506, paragraph (g)(1) is revised to read as follows:


Sec.  570.506  Records to be maintained.

* * * * *
    (g) * * *
    (1) Documentation related to the recipient's AFH, as described in 
24 CFR part 5, subpart A (Sec.  5.168).
* * * * *

0
35. In Sec.  570.601, paragraph (a)(2) is revised to read as follows:


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

    (a) * * *
    (2) Public Law 90-284, which is the Fair Housing Act (42 U.S.C. 
3601-3620). In accordance with the Fair Housing Act, the Secretary 
requires that grantees administer all programs and activities related 
to housing and urban development in a manner to affirmatively further 
the policies of the Fair Housing Act. Furthermore, in accordance with 
section 104(b)(2) of the Act, for each community receiving a grant 
under subpart D of this part, the certification that the grantee will 
affirmatively further fair housing shall specifically require the 
grantee to take meaningful actions to further the goals identified in 
the grantee's AFH conducted in accordance with the requirements of 24 
CFR 5.150 through 5.180 and take no action that is materially 
inconsistent with its obligation to affirmatively further fair housing.
* * * * *

0
36. In Sec.  570.904, paragraph (c) is revised to read as follows:


Sec.  570.904  Equal opportunity and fair housing review criteria.

* * * * *
    (c) Review for fair housing--(1) General. See the requirements in 
the Fair Housing Act (42 U.S.C. 3601-20), as well as Sec.  570.601(a).
    (2) Affirmatively furthering fair housing. HUD will review a 
recipient's performance to determine if it has administered all 
programs and activities related to housing and urban development in 
accordance with Sec.  570.601(a)(2), which sets forth the grantee's 
responsibility to affirmatively further fair housing.
* * * * *

PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS

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

    Authority:  42 U.S.C. 3535(d) and 12901-12912.


0
38. Section 574.530 is revised to read as follows:


Sec.  574.530  Recordkeeping.

    Each grantee must ensure that records are maintained for a 4-year 
period to document compliance with the provisions of this part. 
Grantees must maintain the following:
    (a) Current and accurate data on the race and ethnicity of program 
participants.
    (b) Documentation related to the formula grantee's Assessment of 
Fair Housing, as described in 24 CFR 5.168.

PART 576--EMERGENCY SOLUTIONS GRANTS PROGRAM

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

    Authority: 42 U.S.C. 11371 et seq., 42 U.S.C. 3535(d).


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


Sec.  576.500  Recordkeeping and reporting requirements.

* * * * *
    (s) * * *
    (1) Records demonstrating compliance with the nondiscrimination and 
equal opportunity requirements under Sec.  576.407(a) and the 
affirmative outreach requirements in Sec.  576.407(b), including:
    (i) Data concerning race, ethnicity, disability status, sex, and 
family characteristics of persons and households who are applicants 
for, or program participants in, any program or activity funded in 
whole or in part with ESG funds; and
    (ii) Documentation required under 24 CFR 5.168 in regard to the 
recipient's Assessment of Fair Housing and the certification that the 
recipient will affirmatively further fair housing.
* * * * *

PART 903--PUBLIC HOUSING AGENCY PLANS

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

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


0
42. The heading of subpart A is revised to read as follows:

Subpart A--Deconcentration of Poverty

0
43. The heading of subpart B is revised to read as follows:

Subpart B--PHA Plans and Fair Housing Requirements

0
44. Section 903.1 is revised to read as follows:


Sec.  903.1  What is the purpose of this subpart?

    The purpose of this subpart is to specify the process which a 
Public Housing Agency, as part of its annual planning process and 
development of an admissions policy, must follow in order to develop 
and apply a policy that provides for deconcentration of poverty and 
income mixing in certain public housing developments.

0
45. Section 903.2 is amended by:
0
a. Revising the section heading;
0
b. Removing paragraph (d);
0
c. Redesignating paragraph (e) as paragraph (d); and
0
d. Revising newly redesignated paragraph (d).
    The revisions read as follows:


Sec.  903.2  With respect to admissions, what must a PHA do to 
deconcentrate poverty in its developments?

* * * * *
    (d) Relationship between poverty deconcentration and fair housing. 
The requirements for poverty deconcentration in paragraph (c) of this 
section and for fair housing in 24 CFR 903.15(d) arise under separate 
statutory authorities.

0
46. In Sec.  903.7, paragraphs (a) and (o) are revised to read as 
follows:


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

* * * * *
    (a) A statement of housing needs. (1) This statement must address 
the housing needs of the low-income and very low-income families who 
reside in the jurisdiction served by the PHA, and other families who 
are on the public housing and Section 8 tenant-based assistance waiting 
lists, including:
    (i) Families with incomes below 30 percent of area median 
(extremely low-income families);

[[Page 42369]]

    (ii) Elderly families;
    (iii) Until the PHA has submitted an Assessment of Fair Housing 
(AFH), which includes an assessment of disproportionate housing needs 
in accordance with 24 CFR 5.154(d)(2)(iv), households with individuals 
with disabilities and households of various races and ethnic groups 
residing in the jurisdiction or on the waiting list. Once the PHA has 
submitted an AFH, however, such households need not be addressed in 
this statement.
    (2) A PHA must make reasonable efforts to identify the housing 
needs of each of the groups listed in paragraph (a)(1) of this section 
based on information provided by the applicable consolidated plan, 
information provided by HUD, and other generally available data.
    (i) The identification of housing needs must address issues of 
affordability, supply, quality, accessibility, size of units, and 
location.
    (ii) The statement of housing needs also must describe the ways in 
which the PHA intends, to the maximum extent practicable, to address 
those needs and the PHA's reasons for choosing its strategy.
* * * * *
    (o) Civil rights certification. (1) The PHA must certify that it 
will carry out its plan in conformity with title VI of the Civil Rights 
Act of 1964 (42 U.S.C. 2000d-2000d-4), the Fair Housing Act (42 U.S.C. 
3601-19), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
794), title II of the Americans with Disabilities Act of 1990 (42 
U.S.C. 12101 et seq.), and other applicable Federal civil right laws, 
and that it will affirmatively further fair housing, which means that 
it will take meaningful actions to further the goals identified in the 
AFH conducted in accordance with the requirements of 24 CFR 5.150 
through 5.180, that it will take no action that is materially 
inconsistent with its obligation to affirmatively further fair housing, 
and that it will address fair housing issues and contributing factors 
in its programs, in accordance with paragraph (o)(3) of this section.
    (2) The certification is applicable to both the 5-Year Plan and the 
Annual Plan, including any plan incorporated therein.
    (3) A PHA shall be considered in compliance with the certification 
requirement to affirmatively further fair housing if the PHA fulfills 
the requirements of Sec. Sec.  903.7(o)(1) and 903.15(d) and:
    (i) Examines its programs or proposed programs;
    (ii) Identifies any fair housing issues and contributing factors 
within those programs, in accordance with 24 CFR 5.154;
    (iii) Specifies actions and strategies designed to address 
contributing factors, related fair housing issues, and goals in the 
applicable Assessment of Fair Housing consistent with 24 CFR 5.154, in 
a reasonable manner in view of the resources available;
    (iv) Works with jurisdictions to implement any of the 
jurisdiction's initiatives to affirmatively further fair housing that 
require the PHA's involvement;
    (v) Operates programs in a manner consistent with any applicable 
consolidated plan under 24 CFR part 91, and with any order or 
agreement, to comply with the authorities specified in paragraph (o)(1) 
of this section;
    (vi) Complies with any contribution or consultation requirement 
with respect to any applicable AFH, in accordance with 24 CFR 5.150 
through 5.180;
    (vii) Maintains records reflecting these analyses, actions, and the 
results of these actions; and
    (viii) Takes steps acceptable to HUD to remedy known fair housing 
or civil rights violations.
* * * * *

0
47. Section 903.15 is revised to read as follows:


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

    (a) The preparation of an Assessment of Fair Housing (AFH) is 
required once every 5 years, in accordance with 24 CFR 5.150 through 
5.180. PHAs have three options in meeting their AFH requirements. PHAs 
must notify HUD of the option they choose. The options are:
    (1) Option 1: Assessment of Fair Housing with Units of General 
Local Government or State Governmental Agencies. (i) A PHA may work 
with a unit of general local government or State governmental agency in 
the preparation of the AFH.
    (A) A PHA must choose the unit of general local government or State 
governmental agency in which the PHA is located, unless the PHA's 
service area is within two or more jurisdictions.
    (B) If the PHA serves residents of two or more jurisdictions, the 
PHA may choose the jurisdiction that most closely aligns to its 
planning activities under this part and 24 CFR part 905, unless the PHA 
has preexisting obligations prescribed in a binding agreement with HUD 
or the courts, such as a Recovery Agreement, Voluntary Compliance 
Agreement, or Consent Decree.
    (C) If a PHA has a preexisting obligation prescribed in a binding 
agreement with HUD or the courts, the PHA must work with the general 
unit of local government named in the Agreement or Decree, when 
preparing the AFH.
    (ii) A PHA working with a unit of general local government or State 
governmental agency in the preparation of the AFH will have fulfilled 
the requirements of AFH submission when the general unit of local 
government or State governmental agency submits an AFH.
    (iii) If the unit of general local government or state governmental 
agency's AFH is accepted, all PHAs working with the unit of general 
local government or State governmental agency in the preparation of the 
AFH will be covered by the applicable goals contained in the AFH.
    (iv) If a PHA joins with a unit of general local government or 
State governmental agency in the preparation of an AFH, the PHA must 
ensure that its PHA Plan is consistent with the general unit of local 
government's or State governmental agency's applicable consolidated 
plan and its AFH. (See also 24 CFR 5.158 for coordination when 
preparing an AFH jointly with a jurisdiction.)
    (v) PHAs are encouraged to enter into Memorandums of Understanding 
(MOU) with units of general local government, State governmental 
agencies, and other PHAs to clearly define the functions, level of 
member participation, method of dispute resolution, and decisionmaking 
process of the program participants in the creation of the AFH.
    (2) Option 2: Assessment of Fair Housing with Public Housing 
Agencies. (i) A PHA may jointly participate with one or more PHAs in 
the planning, participation, and preparation of the AFH consistent with 
the requirements of 24 CFR 5.150 through 5.180, and with the geographic 
scope and proposed actions scaled to the PHAs' operations and region, 
as provided in Sec.  5.154.
    (A) PHAs preparing a joint submission of an AFH are encouraged to 
prepare MOUs or other such cooperative agreements, which clearly define 
the functions, level of member participation, method of dispute 
resolution, and decisionmaking process for the jointly participating 
PHAs. The MOU or cooperative agreement should also clearly indicate a 
lead agency that will submit on behalf of the joint participants.
    (B) An accepted AFH submitted on behalf of jointly participating 
PHAs will fulfill the submission requirements for all entities.

[[Page 42370]]

    (C) If jointly participating PHAs' AFH is accepted, all PHAs 
participating in the creation of the AFH will be covered by the 
applicable goals contained in the AFH.
    (ii) If a PHA joins with other PHAs in the submission of an AFH, 
the PHA must ensure that its 5-year PHA Plan is consistent with the AFH 
and its obligation to affirmatively further fair housing.
    (iii) A PHA that is jointly participating with other PHAs in the 
creation of an AFH must certify consistency with the consolidated plan 
of the unit of general local government or State governmental agency in 
which the PHA is located, unless the PHA's service area is within two 
or more jurisdictions. If a PHA's service area is within two or more 
jurisdictions then:
    (A) The PHA may choose to certify consistency with the jurisdiction 
that most closely aligns to its planning activities under this part and 
24 CFR part 905, unless the PHA has pre-existing obligations prescribed 
in a binding agreement with HUD or the courts, such as a Recovery 
Agreement, Voluntary Compliance Agreement, or Consent Decree.
    (B) If a PHA has a preexisting obligation prescribed in a binding 
agreement with HUD or the courts, the PHA must certify consistency with 
the general unit of local government named in the Voluntary Compliance 
Agreement or Consent Decree, when preparing the AFH.
    (iv) In the event that HUD accepts an AFH under this option, and 
such AFH conflicts with the accepted AFH conducted by the unit of 
general local government or State governmental agency, a PHA's 
certification of consistency with the consolidated plan shall be 
accepted as a certification of consistency with the consolidated plan 
for all actions that do not directly conflict with the PHA's AFH that 
has been accepted by HUD.
    (3) Option 3: Independent PHA Assessment of Fair Housing. (i) A PHA 
may conduct its own AFH with geographic scope and proposed actions 
scaled to the PHA's operations and region, in accordance with 24 CFR 
5.154(d). An accepted AFH submitted by a PHA performing an independent 
AFH will fulfill the submission requirements for that PHA and the PHA 
shall be covered by the goals contained in the AFH.
    (ii) A PHA that is performing its own AFH must certify consistency 
with the consolidated plan of the unit of general local government or 
State governmental agency in which the PHA is located, unless the PHA's 
service area is within two or more jurisdictions. If a PHA's service 
area is in two or more jurisdictions then:
    (A) The PHA may choose to certify consistency with the jurisdiction 
that most closely aligns to its planning activities under this part and 
24 CFR part 905, unless the PHA has pre-existing obligations prescribed 
in a binding agreement with HUD or the courts, such as a Recovery 
Agreement, Voluntary Compliance Agreement, or Consent Decree.
    (B) If a PHA has a preexisting obligation prescribed in a binding 
agreement with HUD or the courts, the PHA must certify consistency with 
the general unit of local government named in the Voluntary Compliance 
Agreement or Consent Decree, when preparing the AFH.
    (iii) In the event that HUD accepts an AFH under this option, and 
such AFH conflicts with the AFH conducted by the unit of general local 
government or State governmental agency, the PHA's certification of 
consistency with the consolidated plan shall be accepted as a 
certification of consistency with the consolidated plan for all actions 
that do not directly conflict with the PHA's AFH that has been accepted 
by HUD.
    (b) PHAs may but are not required to request a change in their 
fiscal years to better coordinate their planning cycle with the 
planning performed under each of the options listed in paragraph (a) of 
this section.
    (c) If a material change in circumstances occurs in the 
jurisdiction of a PHA that requires a revision to the AFH, as specified 
in 24 CFR 5.164, the PHA will have up to 12 months to incorporate any 
goals from the revised AFH into its 5-Year PHA Plan, in accordance with 
the provisions of 24 CFR 903.21.
    (d) Fair housing requirements. A PHA is obligated to affirmatively 
further fair housing in its operating policies, procedures, and capital 
activities. All admission and occupancy policies for public housing and 
Section 8 tenant-based housing programs must comply with Fair Housing 
Act requirements and other civil rights laws and regulations and with a 
PHA's plans to affirmatively further fair housing. The PHA may not 
impose any specific income or racial quotas for any development or 
developments.
    (1) Nondiscrimination. A PHA must carry out its PHA Plan in 
conformity with the nondiscrimination requirements in Federal civil 
rights laws, including title VI of the Civil Rights Act of 1964, 
section 504 of the Rehabilitation Act of 1973, the Americans with 
Disabilities Act, and the Fair Housing Act. A PHA may not assign 
housing to persons in a particular section of a community or to a 
development or building based on race, color, religion, sex, 
disability, familial status, or national origin for purposes of 
segregating populations.
    (2) Affirmatively Furthering Fair Housing. A PHA's policies should 
be designed to reduce the concentration of tenants and other assisted 
persons by race, national origin, and disability in conformity with any 
applicable Assessment of Fair Housing as defined at 24 CFR 5.150 
through 5.180 and the PHA's assessment of its fair housing needs. Any 
affirmative steps or incentives a PHA plans to take must be stated in 
the admission policy.
    (i) HUD regulations provide that PHAs must take steps to 
affirmatively further fair housing. PHA policies should include 
affirmative steps to overcome the effects of discrimination and the 
effects of conditions that resulted in limiting participation of 
persons because of their race, national origin, disability, or other 
protected class.
    (ii) Such affirmative steps may include, but are not limited to, 
marketing efforts, use of nondiscriminatory tenant selection and 
assignment policies that lead to desegregation, additional applicant 
consultation and information, provision of additional supportive 
services and amenities to a development (such as supportive services 
that enable an individual with a disability to transfer from an 
institutional setting into the community), and engagement in ongoing 
coordination with state and local disability agencies to provide 
additional community-based housing opportunities for individuals with 
disabilities and to connect such individuals with supportive services 
to enable an individual with a disability to transfer from an 
institutional setting into the community.
    (3) Validity of certification. (i) A PHA's certification under 
Sec.  903.7(o) will be subject to challenge by HUD where it appears 
that a PHA:
    (A) Fails to meet the affirmatively furthering fair housing 
requirements at 24 CFR 5.150 through 5.180, including failure to take 
meaningful actions to further the goals identified in the AFH; or
    (B) Takes action that is materially inconsistent with its 
obligation to affirmatively further fair housing; or
    (C) Fails to meet the fair housing, civil rights, and affirmatively 
furthering fair housing requirements in 24 CFR 903.7(o).

[[Page 42371]]

    (ii) If HUD challenges the validity of a PHA's certification, HUD 
will do so in writing specifying the deficiencies, and will give the 
PHA an opportunity to respond to the particular challenge in writing. 
In responding to the specified deficiencies, a PHA must establish, as 
applicable, that it has complied with fair housing and civil rights 
laws and regulations, or has remedied violations of fair housing and 
civil rights laws and regulations, and has adopted policies and 
undertaken actions to affirmatively further fair housing, including, 
but not limited to, providing a full range of housing opportunities to 
applicants and tenants and taking affirmative steps as described in 
paragraph (d)(2) of this section in a nondiscriminatory manner. In 
responding to the PHA, HUD may accept the PHA's explanation and 
withdraw the challenge, undertake further investigation, or pursue 
other remedies available under law. HUD will seek to obtain voluntary 
corrective action consistent with the specified deficiencies. In 
determining whether a PHA has complied with its certification, HUD will 
review the PHA's circumstances relevant to the specified deficiencies, 
including characteristics of the population served by the PHA; 
characteristics of the PHA's existing housing stock; and decisions, 
plans, goals, priorities, strategies, and actions of the PHA, including 
those designed to affirmatively further fair housing.

0
48. In Sec.  903.23, paragraph (f) is added to read as follows:


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

* * * * *
    (f) Recordkeeping. PHAs must maintain a copy of the Assessment of 
Fair Housing as described in 24 CFR part 5, subpart A (Sec. Sec.  5.150 
through 5.180) and records reflecting actions to affirmatively further 
fair housing, as described in Sec.  903.7(o).

    Dated: June 30, 2015.
Juli[aacute]n Castro,
Secretary.
[FR Doc. 2015-17032 Filed 7-15-15; 8:45 am]
 BILLING CODE 4210-67-P