Final Rule

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24 CFR Parts 5, 880, 881, 884, 886, 891,
960, 966, 984 and 985

Information Relay Service at (800) 877–
8339. You also may contact the
individuals listed above by e-mail:
Patricia S. [email protected] and
Willie [email protected].

[Docket No. FR–4485–F–03]

SUPPLEMENTARY INFORMATION:

RIN 2501–AC59

Organization of this Preamble
I. Background

DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT

Changes to Admission and Occupancy
Requirements in the Public Housing
and Section 8 Housing Assistance
Programs
Office of the Secretary, HUD.
Final rule.

AGENCY:
ACTION:

SUMMARY: This final rule implements
changes to the admission and
occupancy requirements for the public
housing and Section 8 assisted housing
programs made by the Quality Housing
and Work Responsibility Act of 1998.
These changes concern choice of rent,
community service and self-sufficiency
in public housing, and admission
preferences and determination of
income and rent in public housing and
Section 8 housing assistance programs.
This final rule follows a proposed rule
published on April 30, 1999, and takes
into consideration the public comments
received on the proposed rule.
DATES: Effective Date: The provisions of
this rule are effective on April 28, 2000,
except for the provisions of § 5.661,
which will become effective when the
information collections it contains
receive approval from the Office of
Management and Budget. The
announcement of approval and the
effective date will be published in the
Federal Register.
FOR FURTHER INFORMATION CONTACT: For
the public housing and Section 8 tenantbased housing assistance programs—
Patricia Arnaudo, Senior Program
Manager, Office of Public and Assisted
Housing Delivery, Department of
Housing and Urban Development, 451
Seventh Street, SW, Room 4224,
Washington, DC, 20410; telephone (202)
708–0744, or the Public and Indian
Housing Resource Center at 1–800–955–
2232.
For the Section 8 project-based
programs—Willie Spearmon, Director,
Office of Multifamily Business Products,
Office of Housing, Department of
Housing and Urban Development, 451
Seventh Street, SW, Room 6138,
Washington, DC, 20410; telephone (202)
708–3000.
(With the exception of the telephone
number for the PIH Resource Center,
these are not toll-free telephone
numbers.) Persons with hearing or
speech impairments may access these
numbers via TTY by calling the Federal

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l l
l

II. Changes Made at the Final Rule Stage
A. Reorganization of program regulations
B. Common occupancy requirements
C. Section 8 project-based programs
D. Public housing program
E. Removal of outdated references to
federal preferences
F. Summary of regulatory changes
1. Family disclosure of HUD notice
concerning family income—§ 5.240
(proposed rule § 5.211)
2. Selection preferences—§§ 5.655 and
960.206 (proposed rule § 5.410)
3. Definition of economic self-sufficiency
program—§ 5.603(b)
4. Income eligibility and income targeting
for admission—(For most Section 8 projectbased programs, § 5.653; for public housing,
§ 960.202) (proposed rule § 5.607)
5. Annual income—§ 5.609
6. Adjusted income—§ 5.611
7. Public housing self-sufficiency
incentives—§ 960.255 (proposed rule § 5.612)
8. Choice of rent in public housing—
§ 960.253 (proposed rule § 5.614)
9. Minimum rent—5.630(b) (proposed rule
§ 5.616)
10. Public housing and Section 8 tenantbased assistance programs: How welfare
benefit reduction affects family income—
§§ 5.603 and 5.615 (proposed rule § 5.618)
11. Occupancy by police officers in public
housing and Section 8 project-based
housing—§§ 5.661 and 960.503–505
12. How PHA administers service
requirement—§ 960.605

13. Assuring resident compliance—
§ 960.607
14. Definitions—§ 984.103
15. Administrative fees—§ 984.302
16. Utility reimbursements—§ 5.632
17. Family income and verification—
§ 960.259
III. Discussion of the Public Comments
A. General
B. Using Computer Matching—
Results—Family disclosure of income
(proposed rule § 5.211; final rule
§ 5.240)
C. Repeal of Preference for Elderly,
Disabled, and Displaced over Other
Single Persons (proposed and final rule
§ 5.405)
D. Repeal of Federal Preferences
(proposed rule: removed §§ 5.415, 5.420,
5.425 and 5.430 and revised § 5.410;
final rule removes in addition to above
§§ 5.405 and 5.410, adds a new § 5.655,
and revises §§ 960.204–960.206)
E. Income Targeting (proposed rule
§ 5.607; final rule §§ 5.653 and 960.202)

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F. Annual Income, Adjusted Income
(proposed and final rule §§ 5.603, 5.609,
and 5.611)
1. Exclusions vs. Deductions
2. Permissive Deductions—Applicable
to Public Housing Only
G. Minimum Rents (proposed rule
§ 5.616; final rule § 5.630)
H. Self-Sufficiency Incentives—Public
Housing Only (proposed rule § 5.612;
final rule § 960.255)
1. Disallowance of Increases in
Income as a Result of Employment
2. Individual Savings Account
I. Income Changes Resulting From
Noncompliance with Welfare Program
Requirements (proposed rule § 5.618;
final rule §§ 5.603, 5.613, and 5.615)
J. Rents in Public Housing (proposed
rule §§ 5.603 and 5.614; final rule
§§ 5.603 and 960.253)
1. Income-Based Rents
2. Flat Rents
3. Family Choice
4. Switching Rent Methods to Lower
Rent Because of Financial Hardship
5. Retaining Ceiling Rents
K. New Community Service and SelfSufficiency Requirements for Public
Housing (proposed rule §§ 960.603–
960.611; final rule §§ 960.601–960.609)
1. General
2. Exemptions
3. Noncompliance
L. Reexamination and Verification of
Family Income and Composition
(proposed rule §§ 5.617 and 960.209;
final rule §§ 5.657, 960.257, and
960.259)
M. Occupancy by Police Officers and
Over-Income Families (proposed and
final rule §§ 5.619 and 960.503–960.505)
N. Changes to Existing SelfSufficiency Programs—Public Housing
and Section 8 Certificate/Voucher
Programs (proposed and final rule Part
984)
O. Lease Requirements (proposed and
final rule § 966.4)
P. Escrow Deposits (proposed and
final rule § 966.55)
IV. Findings and Certifications
I. Background
On April 30, 1999 (64 FR 23460),
HUD published a proposed rule that
addressed several changes related to
admission and occupancy requirements
in HUD’s public housing and Section 8
assisted housing programs. These were
made by the Quality Housing and Work
Responsibility Act of 1998 (title V of the
FY 1999 HUD appropriations Act,
Public Law 105–276, 112 Stat. 2518,
approved October 21, 1998) (referred to
in this rule as ‘‘the 1998 Act’’) which
amended the United States Housing Act
of 1937 (42 U.S.C. 1437, et seq., ‘‘the

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations
1937 Act’’). The 1998 Act made
comprehensive changes to HUD’s public
housing, Section 8 tenant-based and
project-based programs. Some of the
reforms made by the 1998 Act affect
public housing only, and others affect
Section 8 tenant-based and projectbased programs in addition to public
housing.
The preamble to the April 30, 1999
proposed rule provided a detailed
overview of the changes made to
admission and occupancy requirements
for the public housing and Section 8
housing assistance programs by the
1998 Act. The preamble to the proposed
rule also addressed admission and
occupancy provisions of the 1998 Act
that are already in effect, and those
admission and occupancy provisions
proposed to be implemented through
the April 30, 1999 rule. The preamble to
the April 30, 1999 proposed rule also
listed which sections of the 1998 Act
were addressed by the proposed rule,
and which HUD programs were affected
by the changes. This information was
described in the preamble to the April
30, 1999 proposed rule, and also
presented in chart form (see 64 FR
23462). The preamble to this final rule
does not repeat that information.
In addition to the rulemaking, HUD
published a notice in the Federal
Register on August 6, 1999 (64 FR
42956), which provided guidance
pending publication of this final rule.
That notice instructed PHAs to
implement certain rent provisions
effective October 1, 1999, based on the
proposed rule. The notice stated that
PHAs following the guidance would not
be penalized for any changes made by
HUD to the proposed rule provisions at
the final rule stage and would be
provided adequate time to adjust their
policies.
The public comment period on the
proposed rule closed on June 29, 1999.
At the close of the public comment
period, HUD had received 113 public
comments. The commenters included
housing authorities, national
organizations representing housing
authorities or residents, property
managers, organizations representing
victims of domestic violence, legal
services organizations, policy
organizations, and city and county
organizations that provide housing or
human services. All the comments were
carefully considered and significant
issues raised by the comments are
addressed in Section III of this
preamble. Section II of this preamble,
which immediately follows, highlights
the changes made at this final rule stage.

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II. Changes Made at the Final Rule
Stage
A. Reorganization of Program
Regulations
At this final rule stage, HUD has
reorganized the program regulations in
a number of ways to make it easier to
find and view specific requirements that
apply to a particular program.
Therefore, the provisions on preferences
for admission and income targeting for
the public housing and Section 8 tenantbased assistance programs, as well as
public housing choice of rents, were
moved from Part 5 to the applicable
program regulations (24 CFR part 960
for public housing, and 24 CFR part 982
for the Section 8 tenant-based assistance
programs). Provisions that only apply to
Section 8 tenant-based assistance
programs were covered in the Housing
Choice Voucher Program final rule
(amendments to 24 CFR part 982),
published October 21, 1999 (64 FR
56894–56915). Most of the tenant-based
program public comments were
addressed in that rule.
B. Common occupancy requirements
Part 5 is reorganized by grouping
common requirements for determination
of ‘‘family income’’ and ‘‘family
payments’’ that apply to both Section 8
and public housing.
The rule adds a heading for
provisions on ‘‘family income’’ (§ 5.609
to § 5.632). The provisions under this
heading cover determination of annual
income (§ 5.609), adjusted income
(§ 5.611), cooperation with welfare
agency (§ 5.613), and effect of welfare
benefits reduction on family income
(§ 5.615).
The rule also adds a heading for
provisions on ‘‘family payment’’
(§ 5.628 to § 5.632). The provisions
under this heading cover determination
of total tenant payment (§ 5.628),
minimum rent (§ 5.630), and utility
reimbursements (for the public housing
and Section 8 programs, except for the
Section 8 voucher program) (§ 5.632).
C. Section 8 Project-Based Programs
Before this rule, there was no place to
group regulatory ‘‘occupancy
requirements’’ that only apply to the
Section 8 project-based assistance
programs. This rule therefore adds a
new heading in 24 CFR part 5 to
consolidate occupancy requirements for
the various Section 8 project-based
assistance programs (§§ 5.653 to 5.661).
The provisions for Section 8 projectbased assistance under this heading
cover determination of income
eligibility and income targeting
(§ 5.653), owner selection preferences

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(§ 5.655), family information and
verification (§ 5.659), and approval for
security personnel to live in a project
(§ 5.661).
D. Public Housing Program
For a clearer presentation, the final
rule reorganizes and consolidates public
housing admission and occupancy
requirements in the existing part 960.
Subpart A of part 960 specifies that
part 960 applies to public housing and
lists defined terms. Subpart A also states
the requirement to administer public
housing in accordance with applicable
civil rights laws and regulations, the
PHA duty to affirmatively further fair
housing, and the requirement for the
PHA to submit applicable equal
opportunity certifications.
Subpart B of part 960 reorganizes,
revises, and consolidates public housing
admission requirements. This subpart
covers:
—requirements for eligibility and for
targeting assistance to extremely low
income families (§ 960.202);
—policies and criteria for selecting
families (§§ 960.204 and 960.205);
—waiting list and local preferences in
admission (§ 960.206).
Subpart C of part 960 reorganizes and
consolidates public housing
requirements concerning reexamination
of income and determination of rent for
public housing residents. This subpart
covers:
—the new choice of rent requirements
under the 1998 Public Housing
Reform Act, that allow the family to
choose annually whether to pay a flat
market-based rent or an income-based
rent (§ 960.253);
—the requirement for the PHA to
disregard increases in income as a
result of employment in calculating
income-based rent (§ 960.255);
—policies on regular and interim
reexamination of family income and
composition (§ 960.257);
—requirements for obtaining and
verifying family information
(§ 960.259); and
—restrictions on eviction when family
income increases (§ 960.261).
A new subpart E of part 960 contains
provisions describing the circumstances
in which a PHA may permit occupancy
of public housing units by persons who
are not eligible for assistance in the
public housing program:
—A PHA with a small public housing
program (fewer than 250 units) may
lease a public housing unit to ‘‘overincome’’ families—who are not
income eligible for admission to the
public housing program (§ 960.503).
—A PHA may allow professional police
officers to reside in public housing to

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increase security for public housing
residents (§ 960.505).
Subpart F of part 960 states the
requirements for PHA administration of
the new community service and
economic self-sufficiency requirements
for public housing residents under the
1998 Public Housing Reform Act. The
rule also incorporates related changes in
the public housing lease and grievance
requirements at 24 CFR part 966. These
include amendments concerning the
term and renewal of a public housing
lease in accordance with the 1998 law
(§ 966.4).
One change made to § 966.4(l) is to
clarify the relationship between a
revision to the lease and the right of a
PHA to terminate tenancy. Section 966.3
provides that the PHA can modify the
lease at any time during the lease term,
so long as it follows the requirements of
notice to tenants and resident
organizations and consideration of their
comments before adopting any new
lease form. That remains unchanged.
This rule does modify the provisions for
a written rider executed by both parties
(§ 966.4(o) and (p)) and moves it to a
new location, § 966.4(a)(3). The revised
§ 966.4(a)(3) provides that the lease may
be modified at any time by written
agreement of the tenant and the PHA.
The rule also adds a provision
concerning termination of tenancy to
§ 966.4(l), to permit a PHA to terminate
a tenancy if the tenant refuses to accept
a revision to the lease after being given
at least 60 days notice of its proposed
effect and being allowed a reasonable
time to respond to the offer.
E. Removal of Outdated References to
Federal Preferences
A number of the regulations for
Section 8 project-based programs
continued to include a paragraph
concerning the federal preferences,
which have been eliminated by statute,
and outdated references to parts 812 and
813, which no longer exist. Therefore,
these superfluous references to Federal
preferences are removed and the
outdated references to parts 812 and 813
are corrected in this rule. (See the
revisions to parts 880, 884, 886, and
891.) HUD will make any necessary
conforming changes to parts 882 and
982, to reflect changes in income
targeting, owner selection, and family
information and verification in a
separate rule.
F. Summary of Regulatory Changes
HUD also made the following changes
to the April 30, 1999 proposed rule.
1. Family disclosure of HUD notice
concerning family income—§ 5.240
(proposed rule § 5.211).

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The final rule provides that a family
must promptly furnish to the
responsible entity (the PHA or owner
responsible for determining family
income) any letter from HUD
concerning the amount or verification of
family income. This requirement
applies to a family that resides in a
dwelling unit with assistance in the
public housing program or the Section
8 tenant-based assistance program, or
for which project-based assistance is
provided under Section 8, Section 202,
or Section 811. (The rule implements
section 3(f) of the 1937 Act (42 U.S.C.
1437a(f)), as amended by the 1998
Public Housing Reform Act, and as
further amended by the HUD FY 2000
appropriation act (Public Law 106–74,
section 214(a), approved October 20,
1999. The FY 2000 appropriation
extends applicability of this provision
from just public housing and Section 8
tenant-based assistance, as provided
under the 1998 act, to project-based
assistance under Section 8, Section 202,
and Section 811.)
The PHA or other responsible entity
must verify the information received
from the family and make appropriate
adjustments in the amount of income,
rent, or housing assistance payment.
With respect to families no longer in
occupancy, the PHA or other
responsible entity should pursue abuses
regarding excess rental assistance, such
as reporting the deficiency of payments
to credit bureaus, if it is practical to do
so, and recovery of such amounts, if
they have the resources to do so.
2. Selection Preferences—§§ 5.655
and 960.206 (proposed rule § 5.410).
Residency Preference
HUD has clarified at § 5.655 (for
Section 8 projects) and § 960.206(b)(1)(i)
(for public housing) that residency
requirements are still prohibited, and
that any residency preferences must be
implemented in accordance with
applicable nondiscrimination and equal
opportunity requirements listed at
§ 5.105(a). The final rule provides that
use of a residency preference may not
have the ‘‘purpose or effect’’ of delaying
or otherwise denying admission to a
project or unit based on the race, color,
ethnic origin, gender, religion, disability
or age of any member of an applicant
family.
‘‘Residency preference’’ is defined as
a preference for admission of persons
who reside in a specified geographic
area. For public housing, the rule
provides that the PHA may adopt a
preference for admission of a resident of
a county or municipality. However, the
PHA may not adopt a residency

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preference for an area smaller than a
county or municipality.
A PHA that administers a public
housing program or a Section 8 tenantbased program must include any PHA
residency preference in its statement of
PHA policies that govern eligibility,
selection and admission to the program.
(For public housing, see
§ 960.206(b)(1).) Such policies are
included in the PHA Plan submitted to
HUD, in accordance with 24 CFR part
903. HUD may disapprove the plan if
any part of the plan is not consistent
with applicable laws and regulations—
including the applicable civil rights
authorities and regulations. In the case
of the Section 8 project-based assistance
programs, the owner of a project must
adopt a written tenant selection plan in
accordance with HUD requirements,
including civil rights authorities and
regulations (see § 5.655(b)(2)).
If an owner adopts a residency
preference, it must use one approved by
HUD. There are several ways that a
residency preference could be approved
by HUD: (1) Prior approval in the
owner’s affirmative fair housing
marketing plan; (2) prior approval in the
jurisdiction’s PHA Plan; or (3)
modification of the owner’s affirmative
fair housing marketing plan. In applying
any residency preference, the rule
requires the owner to treat an applicant
who is working or has been hired in the
residency preference area as a resident
of the residency preference area. The
project owner may treat as residents
applicants who are graduates of, or
active participants in, education and
training programs in the residency
preference area if the education or
training program is designed to prepare
individuals for the job market.
Preference for Working Families
HUD also has clarified, in
§ 960.206(b)(2) (public housing) and in
§ 5.655 (Section 8 projects), that a PHA
or Section 8 project owner may adopt a
preference for working families (families
where the head, spouse, or sole member,
is employed). If the responsible entity
chooses to adopt a working family
preference, an applicant must be given
the benefit of the working family
preference if the head and spouse, or
sole member, is age 62 or older, or is a
person with disabilities, as defined for
eligibility purposes (see § 5.403(a)). A
working family preference cannot be
based on the amount of earned income.
(See § 5.655(c)(2)(ii).) By statute and this
rule, the owner is prohibited from
preferring higher income families over
families of lower income to occupy a
project or unit (§ 5.655(b)(3); 42 U.S.C.
1437n(c)(4)).

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations
Preference for Person With Disabilities
A Section 8 owner or PHA
administering public housing may adopt
a preference for admission of families
that include a person with disabilities,
but not for persons with a specific
disability (§§ 5.655(c)(3) and
960.206(b)(3)).
Preference for Victims of Domestic
Violence
The PHA or owner should consider
whether to adopt a preference for
victims of domestic violence, as
provided in §§ 5.655(c)(4) and
960.206(b)(4).
Preference for Single Persons
The law no longer mandates a
federally directed priority for elderly or
disabled over other single persons. The
final rule specifies that the responsible
entity may adopt a preference for
admission of single persons who are
elderly, displaced, homeless, or persons
with disabilities over other single
persons (§§ 5.655(c)(5) and
960.206(b)(5)).
3. Definition of economic selfsufficiency program—§ 5.603(b).
HUD has added a new definition of
the term ‘‘economic self-sufficiency
program’’. It is defined as any program
designed to encourage, assist, train, or
facilitate the economic independence of
assisted families or to provide work for
such families. Economic self-sufficiency
programs can include job training,
employment counseling, work
placement, basic skills training,
education, English proficiency,
workfare, financial or household
management, apprenticeship, and any
other program necessary to ready a
participant to work (such as substance
abuse or mental health treatment). As
defined in this rule, ‘‘economic selfsufficiency program’’ includes any work
activities as defined in the Social
Security Act (42 U.S.C. 607(d)). (See the
definition of work activities at
§ 5.603(c).)
The new definition of the term
‘‘economic self-sufficiency program’’ is
used in the following regulatory
provisions, pursuant to the Public
Housing Reform Act:
• Provision that family income (for
the public housing and Section 8 tenantbased assistance programs) includes
welfare benefits reduced because of
family failure to comply with welfare
agency requirements to participate in an
economic self-sufficiency program
(§ 5.615); and
• The requirement for public housing
residents to participate in an economic
self-sufficiency program or other eligible
activities (24 CFR part 960, subpart F).

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4. Income eligibility and income
targeting for admission—(For most
Section 8 project-based programs,
§ 5.653; for public housing, § 960.202)
(proposed rule § 5.607).
In the final rule, provisions
concerning Section 8 project-based
admission and income targeting are
found in § 5.653, and for public housing
in § 960.202.
Eligibility
The rule provides that no family other
than a low income family is eligible for
admission to the public housing
program or the Section 8 project-based
assistance program (other than the
project-based voucher program)
(§ 5.653(b); § 960.202(a)). The final rule
adds a definition of the term ‘‘low
income family’’ (in §§ 5.603), replacing
a previous statutory reference.
Generally, ‘‘low income’’ designates a
family whose income does not exceed
80 percent of area median income, with
certain adjustments.
Targeting
The Public Housing Reform Act
targets available Section 8 and public
housing units to families with incomes
below thirty percent of the area median
income (Section 513 of the Act). In the
rule, such families are called ‘‘extremely
low income families’’.
The law sets the minimum percent of
Section 8 or public housing units that
must be rented to extremely low income
families each year. In the Section 8
tenant-based program, the PHA must
generally target at least 75 percent of
annual admissions to such families. In
public housing, the PHA must generally
target at least 40 percent of annual
admissions to such families (with credit
if the PHA exceeds the target number of
admissions in its Section 8 tenant-based
program). In the Section 8 project-based
programs, the owner must target 40
percent of annual project admissions to
units assisted under the program to
extremely low income families.
As originally enacted, the Public
Housing Reform Act provided that HUD
was authorized to adjust the extremely
low income (30 percent of median
income) limit only ‘‘for smaller and
larger families’’ (42 U.S.C. 1437n).
However, the law was subsequently
amended to also permit adjustments
necessary ‘‘because of unusually high or
low family incomes’’ (at section 205 of
the fiscal year 2000 HUD appropriation
act, Public Law 106–74, 10/20/99). In
the final rule, the definition of the term
‘‘extremely low income family’’ is
revised to incorporate this statutory
change (§ 5.603). This definition applies

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to the three categories of 1937 Act
housing subject to income targeting.
The final rule restates the provisions
that specify public housing targeting
requirements, including the calculation
of public housing targeting credits for
admission to the PHA’s tenant-based
voucher program (§ 960.202(b)).
The final rule provides that the
responsible entity (PHA or owner) must
comply with HUD prescribed reporting
requirements, including income
reporting requirements that will permit
HUD to maintain the data necessary to
monitor compliance with incomeeligibility and income-targeting
requirements (§ 5.653(f); § 960.202(d)).
5. Annual Income—§ 5.609.
a. Income of minors—§ 5.609(c)(1)).
The proposed rule would have removed
the existing provision that specifies that
annual income does not include earned
income of minors and made it a
deduction instead. That proposal is not
adopted in this final rule.
b. Resident stipend for member of
PHA governing board (§ 5.609(c)(iv)).
The Public Housing Reform Act
provides that the governing board of a
PHA must generally contain at least one
member who is directly assisted by the
PHA (42 U.S.C. 1437(b)). To support
and facilitate implementation of this
new statutory requirement, HUD is
clarifying that the resident service
stipend exclusion covers amounts
received by residents who serve on the
PHA governing board. HUD is
concerned that without this
clarification, residents may be
discouraged from participating. This
provision was not included in the April
30, 1999 proposed rule. However, the
added language does not reflect any
change in HUD’s position, but instead
clarifies what is permissible under
current regulations.
6. Adjusted Income—§ 5.611.
The rule is revised (at § 5.611(a)(3)(ii))
to clarify that the allowance for
unreimbursed reasonable attendant care
and auxiliary apparatus expenses may
not exceed the employment income
received by family members (including
the person with disabilities) who are 18
years of age or older and who are able
to work as a result of the assistance to
the person with disabilities.
7. Public housing self-sufficiency
incentives—§ 960.255 (proposed rule
§ 5.612).
The final rule comprehensively
restates and revises the provisions for
disallowance of increases in income as
a result of employment in calculation of
annual income of a public housing
family after a family member is first
employed (§ 960.255). The new
provisions include:

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—Definitions of disallowance,
previously unemployed, and qualified
family (§ 960.255(a)).
—A revised technical description of the
calculation of the disallowance during
the initial twelve months, the second
twelve month exclusion and phase in,
and the maximum four year period of
disallowance for increases in income
as a result of employment of
individual family members
(§ 960.255(b)).
—Specification that the disallowance of
increases in income as a result of
employment only applies for
calculation of rent after admission to
the program, but does not apply in
determination of income eligibility or
income targeting for admission
(§ 960.255(c)).
—Specification that the disallowance of
increases in income as a result of
employment applies to persons who
are or were assisted, within 6 months,
under any State program of temporary
assistance for needy families funded
under part A of title IV of the Social
Security Act only if the amount of
TANF-funded assistance, benefits or
services is at least five hundred
dollars.
During the first 12 months after
commencement of employment of a
family member, the PHA disallows the
incremental increase in a family
member’s income as a result of
employment. In the second 12-month
period, the PHA disallows 50 percent of
the incremental increase. The final rule
clarifies that the amount of the
incremental increase in income is
calculated by comparing the amount of
the family member’s income before the
beginning of qualifying employment to
the amount of such income after
beginning the employment. It is this
amount that is subject to being
disregarded.
The rule is revised to specify the
maximum disallowance for income as a
result of employment of an individual
family member (§ 960.255(b)(3)). The
family may receive the disallowance
only as follows:
—Disallowance is limited to one fortyeight month period from the
beginning of the first month after
commencement of qualifying
employment of an individual family
member; and
—During this forty-eight month period,
for a maximum of twelve months, the
incremental increase is disregarded,
and for a maximum of twelve months,
50 percent of the incremental increase
is disregarded. (If the period of
increased income does not last for 12
consecutive months, the disallowance

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period may be resumed at any time
within the 48 month period. However,
each qualifying family member is only
entitled to a total of 12 months of each
disallowance.)
The final rule also specifies that the
disallowance of an incremental increase
of income as a result of employment is
only applied to determine the annual
income of families residing in public
housing units, not to determine annual
income of applicants for purposes of
income eligibility or targeting
(§ 960.255(c)).
8. Choice of Rent in Public Housing—
§ 960.253 (proposed rule § 5.614).
Once a year, the PHA must give a
public housing tenant the opportunity
to choose between paying a ‘‘flat rent,’’
based on the unit’s rental value, or an
‘‘income-based rent,’’ based on family
income. The final rule substantially
revises and clarifies the regulatory
requirements for choice of rent that are
provided in the 1998 Public Housing
Reform Act.
Flat rent (§ 960.253(b))
The final rule provides that the flat
rent is based on the market rent. The
market rent is the rent charged for
comparable units in the private,
unassisted rental market at which the
PHA could lease the public housing unit
after preparation for occupancy. In
determining the flat rent, a PHA must
consider:
—The location, quality, and the size,
type and age of the unit; and
—Any amenities, housing services,
maintenance, and utilities provided
by the PHA.
The PHA must use a reasonable
method to determine flat rent and must
keep records that document this
method. The PHA records must show
how the PHA determines flat rents in
accordance with its method and
document flat rents offered to families.
For families who pay an incomebased rent, the PHA reimburses the
family if the allowance for tenant paid
utilities is greater than the family’s total
tenant payment. This is called a ‘‘utility
reimbursement.’’ The final rule provides
that the PHA will not pay a utility
reimbursement for a family that has
chosen to pay a flat rent for its home.
Income-based rent (§ 960.253(c))
If a family chooses to pay an ‘‘incomebased rent,’’ the tenant rent paid to the
PHA is based on family income and the
PHA rental policies. The PHA will use
a percentage of family income or some
other reasonable system to set incomebased rents.
The PHA has broad flexibility in
deciding how to set income-based rent

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for its tenants. However, the incomebased tenant rent plus the PHA’s
allowance for tenant paid utilities may
not exceed the ‘‘total tenant payment’’
as determined by a statutory formula.
The rule provides that if the utility
allowance for tenant paid utilities
exceeds the total tenant payment, the
PHA must pay the excess as a ‘‘utility
reimbursement’’ on behalf of the family.
The rule provides that the PHA may
choose to pay the utility reimbursement
either to the family, or directly to the
utility supplier for the utility bills on
behalf of the family. If the PHA elects
to pay the utility supplier, the PHA
must notify the family of the amount of
utility reimbursement paid to the utility
supplier (§ 960.253(c)(3).
9. Minimum Rent—§ 5.630(b)
(proposed rule § 5.616).
Section 8 and public housing families
are required to pay a minimum rent (42
U.S.C. 1437a(a)(3); § 5.630(a)). However,
the family is exempt from minimum
rent if the family shows that it is unable
to pay the minimum rent because of a
‘‘financial hardship’’ situation
(§ 5.630(b)).
In the public housing program, the
Section 8 certificate and voucher
programs (including both tenant-based
and project-based assistance under these
programs), and the Section 8 moderate
rehabilitation program, the PHA may
establish a monthly minimum rent from
$0 to $50 for a family (§ 5.630(a)). In the
public housing and the Section 8 tenantbased assistance programs, the PHA
policies for determining the amount of
minimum rent up to this maximum are
described in submissions with the
PHA’s annual plan, and in the PHA’s
Section 8 administrative plan (§ 903.7).
In the other Section 8 programs, the
owner is required to charge a fixed
minimum rent of $25 set by HUD.
The final rule modifies the provision
that allows a hardship exemption for a
family that has lost eligibility or is
awaiting an eligibility determination for
a Federal, State, or local assistance
program. The rule provides that the
exemption applies to a family with a
member who is a noncitizen lawfully
admitted for permanent residence under
the Immigration and Nationality Act
who would be entitled to public benefits
but for title IV of the Personal
Responsibility and Work Opportunity
Act of 1996 (§ 5.630(b)(1)).
The final rule provides that hardship
includes a situation where the family
would be evicted ‘‘because it is unable
to pay the minimum rent’’
(§ 5.630(b)(1)(ii)). The rule also provides
that the financial hardship exemption
only applies to payment of minimum
rent—not to rent based on the other

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branches of the formula for determining
the total tenant payment
(§ 5.630(b)(2)(iii)(C)).
10. Public housing and Section 8
tenant-based assistance programs: How
welfare benefit reduction affects family
income—§§ 5.603 and 5.615 (proposed
rule § 5.618).
A welfare agency may reduce welfare
benefit payments to sanction a family
for noncompliance with welfare selfsufficiency or work activities
requirements. The 1998 Public Housing
Reform Act provides that the rental
contribution of a family assisted in the
public housing or tenant-based
assistance programs ‘‘may not be
decreased’’ if welfare benefits are
reduced for this reason (Public Law
105–276, section 512(d); 42 U.S.C.
1437j(d)). This requirement is triggered
when a family’s rental contribution is
calculated on the basis of family
income. The law requires that family
income include the amount of the
welfare benefits that would have been
paid if not for the welfare agency
sanction. Therefore, the family rental
contribution is not decreased because of
the welfare sanction. The final rule
substantially revises the proposed
regulation to implement the statutory
requirement.
For this purpose, the final rule
(§ 5.615(b)) adds three defined terms to
designate and describe key statutory and
regulatory concepts.
Covered Families
The statutory term ‘‘covered families’’
designates the universe of families who
are required to participate in a welfare
agency economic self-sufficiency
program and may, therefore, be the
subject of a welfare benefit sanction for
noncompliance with this obligation. As
defined in the rule, ‘‘covered families’’
means families who receive welfare
assistance or other public assistance
benefits from a State or other public
agency under a program for which
Federal, State, or local law requires that
a member of the family must participate
in an economic self-sufficiency program
as a condition for the assistance.
Specified Welfare Benefit Reduction
The term ‘‘specified welfare benefit
reduction’’ designates those reductions
of welfare agency benefits (for a covered
family) that may not result in a
reduction of the family rental
contribution. As defined in the rule,
‘‘specified welfare benefit reduction’’
means a reduction of welfare benefits by
the welfare agency, in whole or in part,
for a family member, as determined by
the welfare agency, because of fraud by
a family member in connection with the

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welfare program; or because of welfare
agency sanction against a family
member for noncompliance with a
welfare agency requirement to
participate in an economic selfsufficiency program.
Imputed Welfare Income
The term ‘‘imputed welfare income’’
is defined in this rule, ‘‘imputed welfare
income’’ means the amount of annual
income not actually received by a
family, as a result of a specified welfare
benefit reduction, that is nonetheless
included in the family’s annual income.
This amount is included in family
annual income and, therefore, reflected
in the family rental contribution based
on this income. The final rule provides
that a family’s annual income includes
the amount of imputed welfare income
plus the total amount of other annual
income (§ 5.615(c)(1)). However, the
rule provides that the amount of
imputed annual income is offset by
income from other sources received by
the family that starts after the sanction
is imposed.
The rule is revised to clarify the
relationship between the welfare
agency, which is responsible for
determining the amount of any specified
reduction in welfare benefits, and the
PHA, which is responsible for
determining family income (including
any imputed welfare income because of
the welfare agency’s reduction of
welfare benefits.
The 1998 Public Housing Reform Act
provides that the PHA must count
imputed welfare income of a covered
family only after the PHA has received
notice of the welfare reduction from the
welfare agency (42 U.S.C. 1437j(d)(4)).
Accordingly, the rule provides that the
PHA bases its imputed welfare income
on information provided to it by the
welfare agency (§ 5.615(c)(1)). The rule
provides that, at the request of the PHA,
the welfare agency will inform the PHA
in writing of the amount and term of
any specified welfare benefit reduction
for a family member and the reason for
such reduction (§ 5.615(c)(2)). The
welfare agency will also inform the PHA
of any subsequent change in the term or
amount of a specified benefit reduction.
The implementation of the statutory
imputed rent requirement (i.e., the
prohibition of a decrease in rent paid by
the family because of the welfare
sanction), as well as other efforts to
promote economic independence of
assisted families, requires close
cooperation between the PHA and local
welfare agencies. The final rule,
therefore provides that PHAs must make
their best efforts to enter into
cooperation agreements with welfare

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16697

agencies (§ 5.613). These cooperation
agreements will be designed:
—To target public assistance, benefits
and services for families assisted in
the PHA’s Section 8 and public
housing programs to achieve selfsufficiency; and
—To verify information on welfare
benefits for applicants and
participants in these programs.
Function of PHA
The PHA is responsible for
determining the amount of imputed
welfare income that is included in the
family’s annual income—which is used
to determine maximum income-based
rent for a public housing family—and
the amount of the housing assistance
payment for a voucher family (§ 5.615(c)
and (e)(1)). During the term of the
welfare agency’s welfare benefit
reduction, the PHA includes imputed
welfare benefits in family income, as
determined by the PHA at an interim or
regular reexamination (§ 5.615(c)(3)).
For this purpose, as provided in the law,
the PHA uses the information provided
to the PHA by the welfare agency. The
welfare agency informs the PHA of the
fact, amount, and reason for a welfare
benefit reduction (§ 5.615).
Under the rule, the PHA is required
to ask welfare agencies to inform the
PHA of any welfare benefit reduction
that may result in imputed welfare
income, the term of the reduction, and
the amount of a specified welfare
benefit reduction. In computing a
family’s annual income, the PHA must
include the imputed welfare income
because of the welfare agency
determination to reduce the family’s
welfare benefit. However, the final rule
specifies that the PHA is not responsible
for determining that a reduction of
welfare benefits was correctly
determined by the welfare agency in
accordance with welfare agency
requirements and procedures
(§ 5.615(e)(2). The rule states that:
Such welfare agency determinations are
the responsibility of the welfare agency, and
the family may seek appeal of such
determinations through the welfare agency’s
normal due process procedures. The PHA
shall be entitled to rely on the welfare agency
notice to the PHA of the welfare agency’s
determination of a specified welfare benefit
reduction. (§ 5.615(e)(3)

Review of PHA decision
In the public housing program and the
Section 8 tenant-based assistance
programs, the family may seek an
administrative hearing for review of the
PHA determination of family income, or
the calculation of the family rent or
housing assistance payment, in

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accordance with HUD requirements.
The final rule specifies that the family
may invoke the PHA’s regular program
hearing processes for review of a PHA
determination of the amount of imputed
welfare income in accordance with HUD
requirements (§ 5.615(d)).
The final rule provides that if a family
(public housing tenant or Section 8
participant) claims that the PHA has not
correctly calculated the amount of
imputed welfare income, and if the PHA
denies the family’s request to modify
such amount, the PHA must give the
family written notice of such denial,
with a brief explanation of the basis for
the PHA determination. The PHA notice
must state that if the family does not
agree with the PHA determination, the
family may request a hearing in
accordance with the applicable program
hearing procedures (the public housing
grievance procedures under part 966 or
the Section 8 hearing procedures under
§ 982.555). In the case of public
housing, the rule specifies that the
tenant is not required to deposit the
disputed amount in escrow in order to
obtain a grievance hearing. (There is no
parallel escrow requirement for Section
8. The participant may obtain a hearing
without deposit of an escrow.)
11. Occupancy by police officers in
public housing and Section 8 projectbased housing—§§ 5.661 and 960.503–
505.
Section 8 Projects
The final rule provides (§ 5.661) that
a Section 8 project owner may ask the
contract administrator (PHA or HUD) for
approval to lease a Section 8 assisted
unit to a police officer or other security
personnel, for the purpose of increasing
security for Section 8 families residing
in the development. The rule defines
the terms ‘‘security’’, ‘‘security
personnel’’ and ‘‘police officer.’’
Security includes the protection of
project residents, including resident
project management, from criminal or
other activity that is a threat to person
or property, or that arouses fear of such
threat. Security personnel means a
police officer or other qualified security
officer. A police officer is a full-time
duly licensed police officer. Other
security personnel must have adequate
training and experience to provide
security for project residents.
The owner’s application must
include:
—A description of criminal activity in
the project and community;
—The effect of criminal activity on
resident security;
—Qualifications of proposed security
personnel who will live in the
housing;

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—How the owner proposes to check
their backgrounds and qualifications;
—Disclosure of a family relationship
between the owner and any security
personnel;
—How residence by security personnel
will increase security of Section 8
residents;
—Rent to be paid and terms of
occupancy by resident security
personnel.
The contract administrator has
discretion whether to approve or
disapprove occupancy by security
personnel in a Section 8 project, and
such approval may be withdrawn at the
discretion of the contract administrator.
The amount of contract rent for a unit
does not change when the unit is
occupied by security personnel.
However, the monthly housing
assistance payment to owner equals the
contract rent (as determined in
accordance with the Housing Assistance
Payments Contract and HUD
requirements) minus the amount of
monthly rent payable by security
personnel residing in the housing.
Public housing
For public housing, before a PHA
permits occupancy by police officers,
the PHA must include in the PHA Plan
or supporting documents a description
of the terms and conditions for them to
occupy units and a statement that this
action was taken to increase security for
public housing residents.
12. How PHA administers service
requirement—§ 960.605. HUD has
revised the rule to clarify that the PHA’s
notice to the resident on the community
service and economic self-sufficiency
requirements must also describe the
process to change exemption status of
family members.
13. Assuring Resident Compliance—
§ 960.607. HUD has revised § 960.607(c)
to clarify how a PHA should respond to
a report that an individual covered by
community service has moved from the
household.
14. Definitions—§ 984.103. HUD has
revised the definition of ‘‘welfare
assistance’’ for the FSS program to refer
only to cash maintenance payments for
ongoing basic needs, funded under
Federal or State welfare programs such
as the TANF program. The definition
borrows from the Department of Health
and Human Services’ TANF definition
of ‘‘assistance’’ and excludes
nonrecurring short term benefits
designed to address individual crisis
situations. For FSS purposes, the
following do not constitute welfare
assistance: food stamps; emergency
rental and utilities assistance; and SSI,
SSDI, and Social Security.

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15. Administrative fees—§ 984.302.
HUD has revised § 984.302(a) to delete
the reference to the minimum program
size of the public housing FSS
programs. The performance funding
system provides for the inclusion of
reasonable eligible administrative costs
for both mandatory and voluntary
public housing FSS programs.
16. Utility Reimbursements—§ 5.632.
HUD has revised the provision
previously found at § 5.615, which
required PHAs to get the consent of a
public housing family before sending a
utility reimbursement directly to the
utility supplier. Section 5.632 now
allows PHAs to send the utility
reimbursement directly to the utility
supplier without the consent of the
public housing family that is paying an
income-based rent. This change was
first mentioned in the preamble to the
proposed rule, Streamlining the Public
Housing Admission and Occupancy
Requirements, published in the Federal
Register on May 9, 1997 (62 FR 25731).
A similar provision has been in effect
since July 3, 1995, for the tenant-based
Section 8 program. In response to a
comment received on that rule, § 5.632
also requires that the PHA notify the
public housing family of the amount
paid to the utility supplier.
17. Family Income and Verification—
§ 960.259.
HUD has made a conforming change,
at § 960.259, to mirror the Section 8
requirement for third party verification
of information. If third party
documentation is not available, the
reason must be documented in the file.
In addition to these substantive
changes, HUD has made editorial
changes in some of the regulations, such
as adding subheadings to certain
paragraphs to make the subject matter of
the paragraph easily identifiable, and
dividing a lengthy paragraph into
subparagraphs. As HUD proceeds with
the rulemaking required under the 1998
Act to make the changes required to
various components of the public
housing and Section 8 program
regulations, HUD may, at a later date
reorganize Chapter IX of the HUD
regulations, as well as certain subparts
of part 5, to better reflect where
requirements applicable to public
housing and the Section 8 programs are
identical and where they differ, and to
better highlight the new additions to the
regulations such as the PHA Plans, the
Capital Fund and the Operating Fund.
III. Discussion of the Public Comments
A. General
This section presents HUD responses
to the significant issues raised by the

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individuals and entities who submitted
comments on the April 30, 1999
proposed rule. The organization of the
discussion of public comments
generally follows the organization of
changes made to admission and
occupancy requirements as set out in
Section II of the preamble of the April
30, 1999 proposed rule. The heading
‘‘Comment’’ states the comment made
by a commenter or commenters and the
heading ‘‘Response’’ presents HUD’s
response to the issue or issues raised by
the commenter or commenters.
There were certain concerns raised by
the commenters that were directed to
more than one change in admission and
occupancy requirements. The majority
of the commenters expressed concern
about the administrative burden
imposed by the changes, particularly the
community service requirements. Some
commenters also were concerned that
the income targeting requirements will
substantially reduce affordable housing
for some persons, such as elderly
families in need whose income may be
above the targeting requirements. As the
commenters recognized, these are
statutory requirements and the
flexibility that HUD has to implement
these statutory requirements is very
limited.
Other commenters recognized that
there are limits to the amount of
information that HUD can provide in
regulatory text, and requested that HUD
provide additional guidance and
information on many of the new
admission and occupancy requirements.
HUD recognizes that the changes made
by the 1998 Act to public housing and
Section 8 programs are significant and
there is much information to absorb. As
HUD stated in its guidance published on
February 18, 1999 (64 FR 8192), HUD
staff, and especially staff of HUD’s
Office of Public and Indian Housing at
Headquarters and in the Field Offices
are ready to assist PHAs and owners in
understanding the provisions of the
1998 Act, and with carrying out their
responsibilities under the new statute.
As noted in the February 18, 1999
guidance, HUD’s Office of Public and
Indian Housing has established a
website that is devoted to providing
additional information about the various
provisions of the statute, as well as
additional information and guidance on
1998 Act rules issued by HUD. (See
http://www.hud.gov/pih/
legistitlev.html; Public Housing Reform
link; the Multifamily Tenant
Characteristics System (MTCS) website
can be found at http://www.hud.gov/
pih/systems/mtcs/pihmtcs.html.) HUD
intends to provide additional training
and guidance during the coming year.

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The following provides a discussion
of specific issues raised by the
commenters.

C. Repeal of Preference for Elderly,
Disabled, and Displaced Over Other
Single Persons (Proposed and Final Rule
§ 5.405) (Section 506 of the 1998 Act
Amending Section 3(b) of the 1937 Act)

B. Using Computer Matching Results—
Family Disclosure of Income (Proposed
Rule § 5.211; Final Rule § 5.240)
Comment. The final rule should (1)
provide for HUD to notify the PHA that
the income discrepancy letter was sent
to the family, and (2) specify the time
limit for the family to contact the PHA.
The rule should provide that PHAs be
notified by HUD of the date that the
family was sent an income discrepancy
letter or mailed a copy of the letter, and
that a time limit of less than 10 working
days be established for the family to
contact the PHA.
Response. PHAs or owners, as the
responsible entity, have the primary
responsibility for income verification,
reexamination, and debt collection. The
responsible entity can enforce § 5.240(b)
and implement § 5.240(c) through their
contractual relationships with assisted
families. HUD’s authority to use Federal
tax return data from the Internal
Revenue Service (IRS) is limited by
statute to disclosure to tenants. HUD
will provide responsible entities with a
list of tenants to whom it has sent
income discrepancy letters. The rule
does require tenants who receive such
letters, containing information about
Federal tax return data, to disclose the
letter to the responsible entity promptly.
Usually, the responsible entity should
interpret this prompt submission
requirement to mean that the family
must disclose the letter within 30 days
of receipt.
Comment. The final rule should
require PHAs to take appropriate action
(for example, to recover excessive
housing assistance received by tenants)
only with respect to current residents
and tenant-based participants and not
former residents and participants.
Response. The final rule has been
modified to reflect the language of
section 508(d) of the 1998 Act by
limiting application of the income
matching provisions to families that (1)
reside in a public housing dwelling
unit; (2) receive Section 8 assistance; or
reside in a project assisted under the
Section 202 or Section 811 program.
Responsible entities who have the
resources to pursue abuses regarding
recovery of excess rental assistance of
former tenants may do so.

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Comment. The repeal of the
preference for elderly, persons with
disabilities, and displaced persons over
other single persons will cause a
shortage of affordable housing for these
persons. Without the preference, these
groups will face a more difficult time in
finding affordable housing.
Response. The 1998 Act eliminated
the statutory preference for single
persons who are elderly, have
disabilities, or are displaced over other
single persons. However, the repeal of
federal preferences does not prevent a
PHA from choosing to establish a local
preference for single persons who are
elderly, have disabilities, are displaced,
or are homeless over other single
persons.
Comment. While it was appropriate
for HUD to implement the statutory
elimination of Federal preferences, the
result is the elimination of the rule in
§ 5.415(b) that PHAs must give
households of elderly persons and
persons with disabilities the benefits of
any employment preference and not
discriminate among applicants based on
the amount of employment income.
Response. HUD revised
§ 960.206(b)(2) to include some of the
language from former § 5.415, which
states that if a working family
preference is adopted as a local
preference, the preference must be
extended to households whose head and
spouse, or sole member, is age 62 or
older or meets the definition of a person
with disabilities.
Comment. The final rule should: (1)
Expand the implicit meaning of
‘‘disabled’’ in the old rule, as well as in
the new § 5.410(c), to give the benefit of
employment preferences to those who
can provide evidence of a disability, but
who may not be receiving benefit
payments based on the inability to
work; (2) broaden the employment
preference exception to include
individuals who satisfy the definition of
‘‘disabled’’ under section 3(b)(3)(E) of
the U.S. Housing Act of 1937 or
otherwise cannot comply with the terms
of the preference due to a disability; and
(3) exempt those individuals with
serious disabilities lasting less than
twelve months. These changes are
needed to prevent discrimination based
on disability status.
Response. As noted in the preceding
response, HUD has retained some of the
language previously found at § 5.415(b)
and expanded the benefit to apply to

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persons who meet the definition of
‘‘persons with a disability’’, regardless
of whether they are receiving disability
income. Sections 5.655 and 960.206
remind PHAs and owners that their
admission preferences must comply
with certain governing statutes,
regulations and executive orders
pertaining to nondiscrimination,
including HUD’s affirmative fair
housing objectives. In addition, the PHA
system of local preferences is included
in the PHA Plan, which requires civil
rights certifications. (Although § 5.410,
which described nondiscrimination
provisions has been removed in this
final rule, § 5.105(a) lists the applicable
requirements.)
D. Repeal of Federal Preferences
(Proposed Rule Removed §§ 5.415,
5.420, 5.425 and 5.430 and Revised
§ 5.410; Final Rule Removes in Addition
to Above §§ 5.405 and 5.410, Adds a
new § 5.655, and Revises §§ 960.204–
960.206)
Comment. With permanent repeal of
Federal preferences, can owners still
apply them voluntarily? When federal
preferences were suspended, owners
were advised that they could still use
them if they so chose, and asked
whether the permanent repeal of these
preferences precludes owners from
continuing to exercise this option.
Response. By law, the selection of
tenants from among eligible applicants
is left to the discretion of the owner.
Now the owner may choose to use any
or all of the federal preferences and may
determine the hierarchy of any
preferences it adopts.
Comment. Many PHAs will continue
to use the formerly required federal
admission preferences as part of their
local preferences, and therefore the final
rule should eliminate the duplicate
tenant notification requirements when
PHAs alter their federal admission
preferences. It should be sufficient for
PHAs to notify the public and tenants
through resident advisory board
consultation and the public inspection
and hearing requirements associated
with the PHA Plan.
Response. The public comment
process for the PHA Plan provides the
method of public consultation
concerning the establishment of local
preferences. The rule does eliminate a
separate process just for approval of
preferences, now that the statutory
foundation for that provision has been
eliminated.
Comment. The proposed rule was
right to encourage consideration of
preferences for individuals who are
victims of domestic violence. The final

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rule should give battered women
priority consideration for housing.
Response. The final rule keeps the
language of the proposed rule
concerning consideration of preferences
for individuals who are victims of
domestic violence. The final rule,
consistent with the statute, eliminates
Federal preferences and permits PHAs
to establish local preferences, including
preferences for victims of domestic
violence.
Comment. The final rule should
require that all preferences be based
solely on the need for housing.
Response. Consistent with the statute,
the rule requires that any local
preferences be based on housing needs
and priorities, not solely housing need.
Comment. The discretion of Section 8
owners to develop their own
preferences must be limited to ensure
that they do not exclude extremely lowincome tenants, minority applicants, or
victims of domestic violence.
Response. The statute urges PHAs to
consider granting a preference for
victims of domestic violence in public
housing and Section 8 tenant-based
programs. Section 8 owners may choose
to adopt a preference for victims of
domestic violence. Of course, under the
new § 5.655, owner preferences are still
subject to anti-skipping, residency
preference, and fair housing
requirements.
Comment. The final rule should
require resident input on selection
preferences for private owners.
Response. The law does not require
the owner to solicit resident input
regarding an owner’s selection
preferences. The law gives the owner
the discretion to develop its own
selection preferences. The owner,
however, may provide opportunity for
resident comment.
Comment. Section 5.410(b) needs to
clarify that PHAs are not required to add
preferences based on public comment
regardless of merit.
Response. The language in
§ 960.206(a)(1), ‘‘as determined by the
PHA,’’ is clear that a PHA has the
discretion to determine whether public
comments should be adopted.
Comment. The admission preference
information required to be provided to
applicants by § 5.410(h) of the proposed
rule should be required to include brief
descriptions of the preferences.
Response. PHAs generally are aware
that the preference information
provided to applicants should clearly
convey through description who is
eligible for the preference. Section 5.410
has been removed in the final rule. The
requirement for informing applicants

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has been moved to §§ 5.655 and
960.206.
Comment. The final rule should
include the requirement that PHAs’
local preferences must be consistent
with the needs identified in the
applicable Consolidated Plan(s) and the
requirements of civil rights statutes and
the obligation to affirmatively further
fair housing. It is not sufficient, as the
proposed rule states, that a PHA must
consider public comments on the
Consolidated Plan and the PHA Plan in
setting local preferences. The
preferences must be consistent with the
needs identified in the applicable
Consolidated Plans.
Response. The system of local
preferences is included in the PHA
Plan, which requires civil rights
certifications. The PHA Plan is the
vehicle in which PHAs describe any
local preferences and the PHA Plan
must be consistent with the
Consolidated Plan for the jurisdiction in
which the PHA is located.
Comment. The final rule should
ensure that any local preferences do not
result in discrimination against persons
protected by civil rights laws by
requiring: (1) The PHA or owner to
consider the applicable Analysis of
Impediments to Fair Housing Choice; (2)
the PHA or owner to analyze the
potential discriminatory effects of any
proposed preference on the protected
classes; and (3) the PHA or owner to
refrain from setting a preference that
will have a discriminatory effect,
undermine the ability of the PHA or
local jurisdiction to affirmatively further
fair housing or remove impediments to
fair housing choice, or impede
implementation of an affirmative
marketing plan.
Response. As noted earlier in this
preamble, the final rule does require
preferences to comply with
nondiscrimination requirements. In
addition, the final rule reinstates the
language of former § 5.415(b) requiring
that elderly families and persons with
disabilities be given the same preference
as working families (§§ 5.655(e)(2) and
960.206(b)(2)). ‘‘Working family’’ means
a family whose head, spouse, or sole
member is employed. If a Section 8
owner chooses to adopt a working
family preference, the preference may
not be based on the amount of earned
income. This restriction does not apply
to selection by a PHA for admission to
public housing.
Comment. The final rule should
provide for HUD approval of residency
preferences for compliance with civil
rights laws. Although the rule retains
the prohibition against residency
requirements, the rule fails to include

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the former requirement for the Section
8 tenant-based programs that HUD
approve residency preferences after
review for compliance with civil rights
laws, and this omission may be
inconsistent with section 511 of the
1998 Act.
Response. For both the public housing
and Section 8 tenant-based programs, a
PHA’s residency preferences are part of
the PHA’s Annual Plan (see new
§ 903.7(c)). There is no separate HUD
approval of a PHA’s residency
preferences, and the entire plan is
subject to input by the Resident
Advisory Board (§ 903.13), a public
hearing, and public comments
(§ 903.17). PHA plan approval requires
certification by the PHA of its
compliance with civil rights
requirements (§ 903.7(o)). Part 960 states
that public housing admission policies
must contain a statement that any
residency preferences will not have the
purpose or effect of delaying or
otherwise denying admission to the
program based on the race, color, ethnic
origin, gender, religion, disability, or age
of any member of an applicant family.
The final rule provides that if an owner
adopts a residency preference, it must
comport with its Affirmative Fair
Housing Marketing plan or be identical
to the one in the PHA Plan for the
jurisdiction. (See discussion above.)
E. Income Targeting (Proposed Rule
§ 5.607; Final Rule § 5.653 and 960.202)
(Section 513 of the 1998 Act Amending
Section 16 of the 1937 Act)
Comment. The targeting requirement
will reduce affordable housing for
elderly persons who are not extremely
low-income. A significant number of
elderly persons are not at or below 30%
of median income, and they will lose
access to affordable housing as a result
of the targeting requirements. Voluntary
income targeting should be adopted, not
mandatory targeting.
Response. The targeting requirement
is a statutory requirement, directed to
providing housing to those most in need
of housing. There are many elderly
persons who will be assisted by the
targeting requirements. In addition,
other HUD programs, for example,
HUD’s Section 202 Program for Elderly
Persons, and programs administered by
other public and private entities, will
work to maintain affordable housing for
those elderly persons who are not at or
below 30% of median income.
Comment. The Welfare Reform Act
employment requirements will make it
difficult to meet the public housing
admission requirement for 40%
extremely low income families, since
many families are required to seek and

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maintain employment. Additionally, the
40% targeting requirement will cause
major lease problems for PHAs who
have high rent jurisdictions.
Response. The Welfare Reform Act
has moved millions of families from
welfare to work, but there are many
families—including those remaining on
welfare and those who have moved into
entry level jobs—who remain in need of
housing assistance. HUD believes that
the reality for most jurisdictions is that
it will not be difficult for a jurisdiction
to meet the 40% targeting requirement.
Comment. The 40% targeting
requirement will greatly reduce the
number of public housing families who
pay a reasonable portion of total tenant
payment (TTP).
Response. The purpose of targeting is
to ensure that some of the neediest
families will continue to have access to
housing assistance. The number of
families served by funding for these
programs is an issue not addressed in
this rule.
Comment. The proposed rule
provided, in § 5.607(b)(i), for a
limitation of 30 percent of the area
median income with ‘‘adjustments’’ for
smaller and larger families. The final
rule should clarify the type of
adjustment that will be used.
Additionally, the final rule omits any
standard to govern HUD’s discretion to
determine a higher or lower percent of
area median income as may be
necessary because of unusually high or
low family incomes.
Response. The adjustments for
smaller and larger families are
incorporated into the income limits for
the public housing and Section 8
programs, which are issued by HUD
each fiscal year.
Comment. The targeting requirement
simply steers PHAs to focus on
percentages rather than families. This
will result in families on the waiting list
being ‘‘skipped’’ in order to admit
another family based solely on income.
Response. PHA admission policies to
achieve both the goals of reducing
poverty and income mixing in public
housing may generally include skipping
over certain applicants on the waiting
list based on incomes. Skipping may be
necessary to serve the required
percentage of the neediest families
(extremely low income). Such skipping
is not new, however, with respect to
assisted housing admissions; both
federal and local preferences always
have involved skipping of families on
the waiting list in the public housing
program, provided it is uniformly
applied.
Comment. The final rule should
exempt small PHAs and PHAs with high

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vacancy rates from income targeting
requirements. The final rule must
specify a standard for good cause
requests made by PHAs to establish
different targeting requirements, and
what documentation the PHA must
provide to HUD.
Response. HUD understands that
some PHAs may have challenges
regarding income targeting; however,
these requirements are statutory. For
most jurisdictions, it will not be
difficult to meet the 40% targeting
requirement for public housing.
Comment. The final rule should
clarify whether the income targeting
requirement is applicable to ‘‘move-in’’
actions only or also includes situations
where an initial certification is done to
move someone from a section 236
project to a section 8 project.
Response. The rule has been revised
to clarify that the income targeting
requirement applies upon initial
admission to the Section 8 project-based
assistance program.
Comment. The final rule should
define the term ‘‘relatively low
incomes,’’ which is used in
§ 5.607(a)(3). Another comment suggests
that the final rule needs to clearly
express the prohibition against
concentration in public housing.
Response. The rule, at § 960.202, is
revised to refer to the deconcentration
requirements (more detail is in the PHA
Plan rule), as well as the targeting
requirements. The term ‘‘relatively low
incomes’’ is no longer referenced.
Comment. The final rule should
clarify that income targeting standards
are to be applied on a PHA-wide basis
and not on a project-by-project basis.
Response. The rule, at
§ 960.202(b)(1)(i), requires that at least
40% of the admissions to the public
housing program in each fiscal year
must be extremely low income families.
This language clearly reflects that the
requirement is applied on a PHA-wide
basis. The rule at § 960.202(b)(ii) also
reflects that this requirement is
applicable to PHAs on a PHA-wide
basis.
Comment. HUD must be cognizant
that PHAs will be in a quandry when
attempting to simultaneously
implement the skipping provision,
associated with the deconcentration
policy, and the targeting requirement for
annual admissions to public housing.
HUD should consider the income mix
and deconcentration policies that
agencies submit as part of their PHA
Plan, and the HUD respect the ‘‘good
faith efforts’’ that PHAs undertake to
create mixed-income communities
based on the PHA management
discretion and local conditions.

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Response. The deconcentration of
poverty and income mixing
requirements are discussed in the final
rule on the PHA Plan.
Comment. In some jurisdictions, there
are apparent discrepancies between SSI
grant levels, minimum wage earnings,
and the extremely low income level in
some counties, but these discrepancies
can be administratively addressed by
HUD.
Response. HUD makes adjustments
every year for areas with unusually high
or low housing costs relative to means.
HUD also has made further adjustments
for unusually high or low incomes for
income eligibility to take into account
State Supplemental Security Income
(SSI) benefit levels. HUD issued Notice
PDR 99–04 on July 21, 1999, to make
changes that relate to the ‘‘30 percent of
area median income’’ limits. These
income limits have been increased
wherever necessary to ensure that the
one-person 30 percent income limit is at
least as high as the State Supplemental
Security Income (SSI) benefit level. The
SSI program provides a minimum
entitlement income standard for elderly
and disabled households.
HUD will not make further
adjustments to fiscal year income limits
to accommodate minimum wage
households, because this would
drastically alter the 30 percent standard
and would be inconsistent with
Congressional intent.
F. Annual Income, Adjusted Income
(Proposed and Final Rule § § 5.603,
5.609, and 5.611) (Section 508 of the
1998 Act Amending Section 3 of the
1937 Act)
1. Exclusions vs. Deductions
Comment. The mandatory deduction
from income for the earned income of
minors will have the consequences of
reducing the number of households
eligible to move in. HUD has the
statutory authority discretion to exclude
(not deduct) income from minors.
Response. HUD agrees with this
comment. The final rule maintains the
language § 5.609(c)(1) that excludes the
income of minors from the definition of
annual income. HUD provided advance
notice of this provision to PHAs in its
notice on ‘‘Public Housing Rent
Policies; Guidance Pending Publication
of Final Rule on Admission and
Occupancy Requirements’’ published on
August 6, 1999 (64 FR 42956). The
change from the proposed rule applies
to all Section 8 programs as well as to
public housing.
Comment. HUD should revise the
mandatory deduction language
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dependent. Section 5.611(a)(1) should
be modified to read as follows: ‘‘$480
for each member of the family residing
in the household (other than the head of
the household or his or her spouse) who
is less than 18 years of age or is
attending school or vocational training
on a full-time basis, or who is 18 years
of age or older and is a person with
disabilities.’’
Response. The suggested revision is
not necessary. The $480 deduction
applies for each dependent. The term
‘‘dependent’’ is defined in § 5.603(d)
and includes the recommended
categories of dependent.
Comment. Section 5.611(a)(3)(ii) of
the current rule places a limit on the
amount of the deduction for
unreimbursed reasonable attendant care
and auxiliary apparatus expenses. It
states that ‘‘this allowance may not
exceed the employment income
received by family members who are age
18 years of age or older.’’ The proposed
provision does not contain any limit on
the amount of the deduction. The
limitation language in the existing rule
should be retained.
Response. HUD agrees with this
comment and has revised
§ 5.611(a)(3)(ii) to clarify that the
allowance may not exceed the
employment income received by family
members who are 18 years of age or
older and who are able to work as a
result of the assistance to the person
with disabilities.
Comment. Section 508 of the 1998 Act
does not support HUD’s interpretation
that certain exclusions from income be
treated as deductions. Congress refers to
the items listed in section 508 as
mandatory exclusions from income not
deductions. HUD’s interpretation, as
reflected in § 5.611, applies the
permissive exclusions to adjusted
income but not to annual income. Since
PHAs do have the authority under the
current regulation to exclude earned
income from annual income, and this
rule removes that authority, this rule
renders certain families ineligible for
assistance. The statutory grant of
authority to PHAs—to adopt
‘‘permissive exclusions’’ (42 U.S.C.
1437a(b)(5)(B)—does not deprice HUD
of the authority pursuant to which it
granted PHAs the discretion to adopt
non-mandatory exclusions for the
purpose of ascertaining public housing
income eligibility under § 5.609(d),
which HUD now proposes to repeal.
Response. The language on
‘‘permissive exclusions’’ (found in
section 508 of the 1998 Act, which
amends section 3(b) of the 1937 Act)
makes a change in the determination of
‘‘adjusted income’’ (which is used to

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determine rent), not in ‘‘annual income’’
(which is used to determine eligibility).
HUD has distinguished between
subtractions from these terms by calling
the subtractions from annual income
‘‘exclusions’’ and the subtractions from
adjusted income ‘‘deductions.’’
Therefore, the statutory change directs
that there be permissive deductions
from adjusted income. Of course,
adjusted income is an amount that is
based on ‘‘annual income,’’ so an
exclusion from annual income also
impacts ‘‘adjusted income.’’
Since the new statutory language
mandates permitting a deduction from
‘‘adjusted income’’ and an exclusion
from ‘‘annual income’’ on the same
basis could result in a double benefit
with respect to the same type of income,
HUD has eliminated the permissive
exclusion from annual income for
earned income. However, HUD notes
that the new permissive deduction is
much broader than the language in the
regulations regarding optional
exclusions for earned income. Although
the new rule provides flexibility with
respect to the subsidy amount paid to
the family as a result of the rent
calculation rather than flexibility on
what families are admitted (based on an
eligibility determination), it permits a
PHA to grant a permissive deduction for
categories other than working families.
Therefore, the proposed language in
§ 5.611 is not revised in this final rule.
Comment. The term ‘‘adult co-tenant’’
used in § 5.611(a)(5) should be added to
the definition of ‘‘family head or
spouse.’’ The final rule should also
clarify whether an adult co-tenant has
the same status as a spouse for
eligibility determination and other
purposes.
Response. The rule does not currently
define ‘‘family head or spouse,’’ and
HUD does not believe a definition of
‘‘adult co-tenant’’ is necessary. A PHA
has the discretion to define ‘‘family’’
and a PHA can include in its definition
of family the term ‘‘adult co-tenant.’’
2. Permissive Deductions—Applicable
to Public Housing Only
Comment. Permissive deductions
should be extended to the Section 8
tenant-based programs. Permissive
deductions should not be limited to
public housing.
Response. Section 508(a)(5)(B) of the
1998 Act explicitly provides that
permissive deductions are applicable
only to the income of families residing
in public housing units. HUD therefore
is precluded by statute from extending
permissive deductions to the Section 8
tenant-based programs.

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Comment. The statute provides
several examples of permissive
deductions for public housing such as
excessive travel expenses up to $25 per
week and earned income in certain
situations, and these examples should
be included in the rule.
Response. While HUD recognizes that
examples are helpful, HUD believes that
regulatory text generally is not the
appropriate place to include examples,
guidance and similar information. There
are better formats other than codified
regulations (which are updated only
once a year) to provide this sort of
information. HUD will provide
examples in future guidance.
Comment. Section 5.611(b) of the rule
provides that the PHA must describe its
permissive deductions in its written
policies. The final rule should provide
that private entities administering
public housing units are allowed to
diverge from the PHA’s plan, and these
entities can implement permissive
income exclusions without being
included in the PHA’s plan.
Response. The PHA and any private
entity administering public housing
units on behalf of a PHA must follow
the PHA’s written policies, which are
required to be available to the public
locally in connection with the PHA’s
Plan.
G. Minimum Rents (Proposed Rule
§ 5.616; Final Rule § 5.630) (Section 507
of the 1998 Act Amending Section 3(a)
of the 1937 Act)
Comment. For project-based Section
8, there are a set of exemptions to
minimum rent. It is unclear in this
rulemaking whether these exemptions
are eliminated and replaced by the
financial hardship exemption, or is
financial hardship being added to the
list?
Response. The financial hardship
exemption constitutes the only statutory
exemption to minimum rent. The statute
then establishes subcategories of
financial hardship exemptions.
Comment. While HUD has taken the
minimum rent requirements directly
from the statute, these requirements, as
written in the proposed rule, make the
imposition and collection of minimum
rent meaningless. Since the law (and
proposed rule) would prohibit the
eviction of any family who fails to pay
the minimum rent. PHAs have no way
to enforce collection. The impact of the
no eviction policy on public housing
will result in an increase in operating
subsidy needs to offset uncollected
rents. By prohibiting PHAs from
evicting those who do not pay, PHAs
will likely experience an increase in
tenant accounts receivable.

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Additionally, the hardship exemption
eliminates any need for minimum rent.
The exemption from payment of
minimum rent due to financial hardship
will have the effect of causing PHAs to
establish a minimum rent of $0, and a
minimum rent of $0 should be allowed
only for exceptional situations.
Response. The exemption that
prohibits public housing and Section 8
evictions resulting from the minimum
rent is statutorily required. PHAs still
have the option to determine the level
of minimum rent. For public housing
and the Section 8 certificate, voucher
and moderate rehabilitation programs,
the minimum rent maybe set any where
from $0 to $50. For other project-based
Section 8, the minimum rent is $25.
Comment. The initial rent freeze for
hardship determinations should be
reduced from 90 days to 30 days. This
will benefit the family should the PHA
find that a hardship does not exist,
resulting in the family having to pay
retroactive rent for a period that the rent
was frozen. If a hardship does exist,
PHAs could extend the rent freeze in 30
day increments (with documentation
from the family). A maximum limit for
hardships should be established at the
discretion of the PHA.
Response. The statute dictates the 90day waiting period. This would not
preclude a family from paying back
amounts owed prior to that period.
Comment. Although the choice of
minimum rents is discretionary on the
part of the PHA, the final rule should be
explicit that this discretionary
decisionmaking is subject to all the due
process protections of any lease change,
especially given the fact that electing to
institute a minimum rent affects
residents’ property rights.
Response. Protections regarding any
lease changes are already provided
under 24 CFR part 966.
Comment. The final rule should direct
PHAs to make sure that they have
procedures in place to prevent any
eviction against a family in minimum
rent status. The final rule should make
clear that the tenants in minimum rent
status my not be evicted for nonpayment of the minimum rent in excess
of the tenant rent otherwise payable;
that is (1) eviction restriction is not
limited to a 90-day period and (2) it
does not apply to section 8 families.
Response. The rule already provides
that PHAs must have written policies
governing hardship. Those policies
must include an exemption of payment
of the minimum rent when the family
would be evicted as a result of the
imposition of the minimum rent
requirement. (See § 5.630.)

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Comment. The final rule should
clarify that inability to pay minimum
rent cannot be grounds to reject an
applicant for housing if the applicant
qualifies for a hardship exemption.
Response. Eligibility for housing is a
separate determination from calculation
of rent. If a family is income-eligible and
meets the PHA of owner’s screening
criteria, then the family’s applicant for
housing would not be rejected. Once the
family signs a lease, it has the same
protections as all families with respect
to hardship exemptions.
Comment. Notwithstanding the
authority to set a minimum rent in
project-based settings of not more than
$50 per month, HUD has chosen to
continue its previous decision to set a
minimum rent amount of $25 for all
project-based settings. In light of the
burden and complexity of the
decisionmaking process concerning
hardship requests which HUD delegated
to project-based owners, HUD should
set the minimum rent at a maximum of
$25 for project-based owners and let the
private owner at its operation choose to
impose a $0 minimum rent.
Response. The final rule maintains
the language of the proposed rule. The
statute directed HUD to establish the
minimum rent for the project-based
Section 8 assistance programs of not
more that $50 month. HUD selected a
mid-point figure of $25 as a reasonable
minimum for these programs.
Comment. The statutory language is
clearer than HUD’s rule on the hardship
exemption, and the rule should more
closely mirror the statutory language.
Another comment suggests that the final
rule should make clear that § 5.616(b)(1)
includes situations where a tenant has
requested government assistance, been
denied, and is appealing the denial,
either through the administrative or a
judicial process. Another comment
states the proposed rule omitted
language from the 1998 Act regarding
families with a member who is an alien
lawfully admitted for permanent
resident, and suggests that § 5.616(b)(1)
be revised accordingly.
Response. HUD has revised
§ 5.60(b)(1)(i) in this final rule to read as
follows: ‘‘When the family has lost
eligibility for or is awaiting an eligibility
determination for a Federal, State, or
local assistance program, including a
family that includes a member who is a
noncitizen lawfully admitted for
permanent residence under the
Immigration and Nationality Act who
would be entitled to public benefits but
for title IV of the Personal
Responsibility and Work Opportunity
Act of 1996.’’ HUD believes that this
revision will address the first and third

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comments. HUD disagrees that
additional language is necessary on the
second matter regarding appeals. The
language in the regulation mirrors the
statutory language.
Comment. It is not clear why HUD
established different standards in
§ 5.616 for public housing tenants and
Section 8 tenants. For public housing
this section provides that one a family
requests an exemption, the PHA must
immediately suspend the minimum rent
until a hardship determination is made.
With respect to Section 8 tenants, the
rule provides that the PHA must
suspend the minimum rent beginning
the month following the request, not
immediately. There seems no reason to
provide less protection to section 8
tenants.
Response. HUD interprets
‘‘Immediately’’ to mean the month
following the family’s hardship request
until the responsible entity determines
whether there is a qualifying financial
hardship, and whether or not it is
temporary or long term. The rule now
contains identical language regarding
suspension of the minimum rent
requirement beginning the month
following the hardship request for both
the public housing and Section 8 tenantbased programs (§ 5.630(b)(2)).
Comment. The final rule should
clarify that temporary hardship is 90
days or less, and a long term hardship
is one that is of more than 90 days
duration. Once the hardship lasts 90
days, the rule should require the PHA
to treat the hardship as long term, grant
the exemption and make it retroactive to
the beginning. The final rule should
further provide that in situations where
it is immediately clear that an income
loss will last longer than 90 days or that
income loss has already lasted more
than 90 days, HUD should require the
PHA to grant the exemption.
Response.The statute does not
provide 90 days as an absolute in
defining temporary hardship versus
long term hardship. The 90 days relates
to a prohibition on eviction
commencing on the date of the family’s
request for exemption from the
minimum rent in excess of the tenant
rent otherwise payable.
Comment. The final rule should
provide a specific time frame for
notifying residents of their right to
request a minimum rent hardship
exemption.
Response. HUD declines to provide a
specific time frame for notification to
residents. The statute, and consequently
the rule also, leave this decision to the
PHA.
Comment. The minimum rent
exception policy does not address (and

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should address) the family’s inability to
repay a retroactive rent without creating
another hardship. The temporary
hardship period should be debt free.
Additionally, the rule needs to address
more fully the repayment agreement
process.
Response. HUD declines to adopt this
suggestion, which is not supported by
the statute. The language in the
regulation that requires the PHA or
owner to offer the family a reasonable
repayment agreement addresses this
concern in a manner consistent with the
statute.
Comment. Allowing housing
authorities to set a minimum rent based
on local conditions is a good idea.
However, the exemption from payment
of the minimum rent due to financial
hardship will result in housing
authorities electing not to establish a
minimum rent. A minimum rent of $0
should only be allowed for exceptional
situations.
Response. The exemption for
hardship cases is statutorily required.
H. Self-Sufficiency Incentives—Public
Housing Only (Proposed Rule § 5.612;
Final Rule § 960.255) (Section 508 of the
1998 Act Amending Section 3 of the
1937 Act)
1. Disallowance of Increases in Income
as a Result of Employment
Comment. The April 30, 1999
proposed rule did not place a limit on
the number of times a family or
individual can benefit from
disallowance of increases in income as
a result of employment, but HUD
specifically sought comment on that
issue. The majority of commenters who
commented on this issue favored a
limit. Some commenters favored a limit
but did not make suggestions on what
the limit should be. One commenter
simply opposed the disallowance.
Specific suggestions on the limits that
should be placed on claiming an income
disregard were as follows: (1) Limit to
fixed number of months, as opposed to
some fixed number of times an
individual could qualify to begin the
period of earning disallowances; (2)
limit one time per household; limit one
time per household but allow family to
retain welfare benefits longer; (3) limit
two times per household; (4) limit two
times in a five-year period; (5) limit 3
times and each time the 12 month
period is decreased; and (6) allow PHAs
to set limit.
Response. HUD appreciates and
carefully considered all proposals. HUD
has revised the rule to limit each
member of a family to receipt of the
benefit of the 12 month cumulative

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income disregard (and the subsequent
12 month phase in) for no more than
twelve months of each benefit (the full
disregard and the phase-in) over a four
year period commencing the first time
the individual is eligible for the benefit.
After that 48-month period, there would
be no further eligibility of the family
member for this disregard. Additionally,
the rule also limits eligibility for
persons who are or were assisted,
within 6 months, under any State
program of temporary assistance under
part A of title IV of the Social Security
Act only when the amount of TANFfunded assistance, benefits or services
during the 6 month period totals at least
$500. The $500 floor was chosen
because that amount demonstrated that
the person was not receiving only
minimal assistance. These limitations
both recognize the potential
administrative burden for PHAs, and
support the self-sufficiency efforts by
individuals who need to use this
provision more than one time for valid
reasons (newly working families often
have changes in jobs and experience
periods of unemployment, especially
during the first few years of starting
employment). A Congressional floor
colloquy [144 Cong. Rec. S11840 (daily
ed. October 8, 1998) (statement of Sen.
Mack)] before enactment of the statute,
suggested that the rules implementing
the disallowance of increased income as
a result of employment should provide
flexibility but at the same time not
encourage households to change their
employment patterns to take advantage
of the disregard.
Comment. HUD should not impose a
limit on the income disregard. The
statute imposes no limit on the
availability of the income disregard, and
neither should the rule.
Response. HUD has the authority to
implement the disallowance of
increases in income as a result of
employment in a flexible manner that
creates incentives for work, but does not
allow for abuse of this benefit. The floor
colloquy cited earlier directed HUD to
do this.
Comment. PHAs should not have to
wait to increase a family’s rent and also
be limited in the amount of increase.
Response. The new statute clearly
requires PHAs to delay increase in the
rent of a newly employed family for one
year, and then limits the amount of
increase for another year.
Comment. In § 5.612(a)(1), HUD
should replace the phrase ‘‘established
minimum wage’’ with the ‘‘highest
applicable minimum wage.’’ This
change, if implemented, will account for
variations in minimum wage among
jurisdictions and where the state

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minimum wage is higher, assure that the
higher wage is used in the calculation.
Response. HUD recognizes that the
minimum wage may be higher in some
states, and that the higher minimum
wage of the state is the prevailing wage
for HUD purposes. The language of the
rule is clear on this point and no
elaboration is needed.
Comment. The final rule should
clarify the continued application of
existing § 5.609(c)(13) for transition
purposes. The preamble to the proposed
rule repeats the statute’s continued
application of § 5.609(c) for residents
qualified prior to October 1, 1999. This
continued coverage should be stated in
the final rule, to minimize difficulty
with implementation of the income
disregard.
Response. The continued application
of § 5.609(c)(13) is clear and no
elaboration of this point is needed in the
rule.
Comment. HUD needs to develop a
fool proof data tracking system for
monitoring the periods used for this
disregard. This tracking system could be
incorporated into the HUD 50058 form
and the Multifamily Tenant
Characteristics System (MTCS).
Response. HUD is in the process of
updating MTCS to capture all of the
changes necessary as a result of the
changes made by the 1998 Act.
Comment. The final rule should
clarify that the burden is on the family
to notify the PHA of eligibility for an
income disallowance. Section 5.612
should contain language that requires a
family to notify the PHA of its eligibility
for a disallowance for increases in
income as a result of employment, and
to provide the requisite information in
support of any requested disallowance.
Response. It is at the PHA’s discretion
to establish policies prescribing when
and under what conditions a family
must report changes in income, if other
than at the annual re-examination, and
to establish reasonable income
verification. Additionally, under revised
§ 960.257(b), a family may request an
interim reexamination of income at any
time.
Comment. The final rule should
provide a broad interpretation of
participation in a self-sufficiency or job
training program to include not only the
phase of the program spent in job
training or job preparation but also to
include the work experience phase of
self-sufficiency training in which
participants are working full-time but
still receive monitoring or counseling
from the self-sufficiency program.
Response. There is nothing in the
proposed rule or this final rule that
limits the interpretation suggested by

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the comment. No additional
clarification is needed.
Comment. The final rule should
clarify that eligibility for the
disallowance for increases in income as
a result of employment begins at the
time the income is earned.
Response. The rule is clear that
eligibility for this disallowance begins
on the date the employment starts or the
date income from employment increases
(see revised § 960.255(b)(1)).
Comment. To serve as a selfsufficiency incentive, the rule needs to
accord favorable treatment to increased
earnings that occur shortly after
completion of a training program, rather
than during participation in one.
Section 5.612(a)(2) of the proposed rule
leads one to the conclusion that
increased earnings that occur after
completion of a training program would
not qualify for special treatment under
the rule because the increase did not
occur ‘‘during participation.’’
Response. The statute is clear
regarding this provision. Eligible
amounts to be excluded under
§ 960.255(a)(ii) are any income increases
received by a family member during
participation in any family selfsufficiency or other job training program
and not increases that occur after
participation in a self-sufficiency or
other job training program. For example,
a family member could be eligible for
this exclusion if a component of the
training program provides training,
monitoring, or assistance after the
person becomes employed. However, a
family member whose income does not
increase during participation in a family
self-sufficiency or other job training
program may still be eligible for a
disallowance of increases in income
under paragraph § 960.255(a)(i) or
(a)(iii).
Comment. The rule should state
clearly that families may qualify for the
limit on rent increases when they begin
employment or increase their earnings.
The rule should clarify that for the
purposes of determining eligibility for
disregard of earned income, a family has
been assisted within 6 months ‘‘under
any state program for temporary
assistance for needy families funded
under Part A of Title IV of the Social
Security Act.’’ The final rule should
clarify that there are two programs
under Part A of Title IV of the Social
Security Act that qualify a family for the
earned income disregard, and that there
are several benefits and services funded
from federal or state TANF funds.
Response. The two programs under
Part A of Title IV of the Social Security
Act include the TANF program
administered by the State or local

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welfare agency and the Welfare-to-Work
(WTW) program administered by the
State or local WTW agency. Under the
TANF program, the State or local
welfare agency can use funds to pay for
benefits or services, such as wage
subsidies, child care, and
transportation, as well as a one-time
payment of assistance or diversion
assistance funded from Federal or State
TANF funds. Families assisted under
any program under Part A of Title IV of
the Social Security Act and who meet
the other criteria under § 5.612 are
eligible for the disallowance for
increases in income as a result of
employment. The PHA needs to
coordinate and verify with its local
welfare and WTW agencies to help the
PHA determine who is eligible under
§ 5.612 for this disallowance.
Comment. The final rule should
clarify that training includes technical
schools and community colleges. The
final rule also should clarify in § 5.612
that family self-sufficiency includes
training programs for people with
disabilities that provide stipends or very
low wages in a sheltered workshop type
of job prior to transitioning to
competitive employment.
Response. There is nothing in the rule
that would preclude technical schools,
community colleges and training
programs for persons with disabilities
from being considered as family selfsufficiency or job training. The rule
cannot list all eligible programs that
may qualify as training, but this could
be addressed further in future guidance
issued by the Department.
2. Individual Savings Account
Comment. The final rule should
clarify that individual savings accounts
are permissive on the part of PHAs and
not mandatory.
Response. The statute and regulation,
at § 960.255(d), clearly state that a
public housing agency may establish an
individual savings account. The PHA
has the option of offering individual
savings accounts. The rule reflects the
statutory language. Therefore, a family
cannot require the PHA to establish an
individual savings account.
Comment. Section 5.612(c) gives the
PHA the choice of offering individual
savings accounts to eligible families and
the choice transfers to the residents.
This is not what the statute provides.
The statute places the choice first with
the eligible family, not the PHA. The
rule should be revised to conform to the
statutory language.
Response. HUD disagrees with this
comment. As noted in the preceding
response, the statute clearly gives the
PHA the option to offer individual

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savings accounts. A family cannot
compel the PHA to offer these accounts.
Comment. The final rule should
clarify conditions of authorized
withdrawals from the individual savings
account, and specifically should
provide guidance on the term ‘‘moving
out.’’
Response. Sections 960.255(d)(3) and
(6) of the rule address the conditions
under which a family receives its
account when moving out.
Comment. Section 5.612(c) states:
‘‘The PHA must provide that any
balance in such an account when the
family moves out is the property of the
family unless the family is not in
compliance with the lease.’’ The rule
language is not clear whether the family
loses its savings account if the family is
evicted for any reason.
Response. A family does not
automatically lose its savings account if
the family is not in compliance with the
lease and is evicted. If a family is
evicted for non-compliance with the
lease, the family would receive its
savings account, less any amounts the
family owes the PHA.
Comment. HUD’s individual savings
accounts should be modeled on
accounts developed by other Federal
agencies or organizations.
Response. Both the statute and the
regulation provide a PHA with
flexibility in establishing individual
savings accounts. Given this flexibility,
HUD declines to require a PHA to
establish an individual savings account
in accordance with a specific model.
However, the final rule does clarify that
a PHA may not charge a fee for
maintaining an account for a family, but
it may pass along to the family any fee
that a financial institution imposes on it
for maintaining the account.
I. Income Changes Resulting From
Noncompliance With Welfare Program
Requirements (Proposed Rule § 5.618;
Final Rule §§ 5.603, 5.613, and 5.615)
(Section 512 of the 1998 Act Amending
Section 12 of the 1937 Act)
Comment. Section 5.618(a) lists those
households whose rental payments may
not reflect welfare reductions. It
includes failure to satisfy economic selfsufficiency requirements imposed by
the welfare agency. This list should be
expanded to include categories such as
failure to comply with child support
requirements.
Response. The statute is specific
regarding compliance with welfare
program requirements, including fraud
eradication and support for economic
self-sufficiency and work activity
requirements. When determining tenant
rent for families participating in the

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public housing and tenant-based
Section 8 programs, PHAs are required
not to consider reductions in income
attributable to the welfare agency’s
sanctioning and enforcement of other
welfare program requirements that are
not related to economic self-sufficiency
and work activity requirements. The
statute contains a definition of
economic self-sufficiency programs,
which the regulation incorporates
(§ 5.615).
Comment. The list of households
exempt from the limitation on rent
reduction should also include a
household that may have lost welfare
income due to economic self-sufficiency
sanction, but has subsequently obtained
income from new sources.
Response. The definition of ‘‘covered
family’’ in the statute means a family
that (1) receives benefits for welfare
assistance or public assistance from a
State, or other public agency under a
program for which the Federal State, or
local law relating to the program
requires, as a condition of eligibility for
assistance under the program,
participation of a member of the family
in an economic self-sufficiency
program, and (2) resides in a public
housing dwelling unit or is provided
tenant-based assistance under Section 8.
The comment suggests adding as an
exemption, persons who were
sanctioned but have since obtained
employment or have gained other
sources (of income).
This exception to the usual rent rules
provided by the statute is for loss or
reduction of welfare assistance or public
assistance benefits due to sanctioning.
The amount of income not actually
received by the family as a result of
sanctioning is included in the annual
income as ‘‘imputed welfare income’’. If
the member of the family is no longer
receiving any such benefits (because the
family member is now working) the
exception is not applicable. If, however,
the member of the family is still
receiving some portion of welfare/
public assistance benefits (due to a
reduction and not a total loss of benefits
as a result of sanctioning), the exception
remains applicable, even if the member
of the family has income from other
sources. A PHA should continue to
include the imputed welfare income
until either the sanction term ends or
the family’s income from other
resources is at least equal to the
imputed welfare income.
Comment. It is not clear in § 5.618(a)
that the only households subject to the
rent reduction limitation at issue are
those who meet the definition of
‘‘covered family’’ in the statute at 42

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U.S.C. 1436j(d)(1). The final rule should
clarify this point.
Response. HUD revised the rule, at
§ 5.615(b), to include a definition of
‘‘covered family’’ that tracks the
statutory language.
Comment. The final rule should
provide clarification of the term
‘‘fraud.’’ PHA staff is not always
knowledgeable about welfare law and
the subtleties involved in welfare fraud
issues, and therefore it may not be clear
to a PHA employee that the allegation
of fraud that results in restitution and
participation in civil rehabilitation
programs results in no welfare fraud
allegation or conviction.
Response. As noted earlier, each State
or local welfare agency determines for
its program when a family has failed to
comply with particular requirements or
has committed fraud. The PHA must
work with the State or local welfare
agency to understand what constitutes
fraud or noncompliance that results in
a reduction of welfare assistance or
public assistance benefits of a covered
family.
Comment. Section 5.618(b) needs to
clarify that a PHA cannot deny a rent
reduction pursuant to the statutory
requirements before the PHA obtains
notice described in the statute that
justifies application of 42 U.S.C.
1437j(d)(2) and (3) and justifies its
denial of rent reduction.
Response. The final rule, at
§ 5.615(c)(2), is clear regarding the
obligation of the PHA to obtain written
verification from the welfare agency of
the basis for the reduction of welfare
assistance or public assistance benefits
and the term of the reduction of
benefits.
Comment. Section 5.618(b) should
state with specificity that the PHA is
bound by federal confidentiality laws as
well as state and local data privacy and
confidentiality laws in its sharing of
information with the welfare agency.
Response. The verification of income
or welfare benefits is covered under
HUD existing regulations that provide
for confidentially and use of
information obtained from third parties.
Comment. HUD must provide clear
guidance to PHAs on what information
is appropriately required from the
welfare agency. The PHA will probably
need a release from the family to obtain
the verification the statute and
regulation require. HUD must provide
guidance in clearly limiting the scope of
the release to protect the resident and
the housing authority staff from
overreaching inquiries and unnecessary
release of protected information that
may leave the housing authority open to
liability if information is carelessly

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handled. HUD should provide PHAs
with a model release form.
Response. HUD is in the process of
developing a model cooperation
agreement, which can be used to specify
the verification process to determine
welfare assistance or public assistance
benefits, as well as obtaining
verification of any loss of benefits due
to noncompliance or fraud. PHAs,
however, may not delay the
implementation of this provision based
on the Department’s timetable for design
or issuance of a model cooperation
agreement. The PHA is required to make
its best efforts to enter into such
cooperation agreements, with State,
local or other agencies providing
assistance to covered families under
welfare assistance or public assistance
programs, as may be necessary.
Comment. Section 5.618(c) references
the hearing procedures in § 982.555,
which are applicable to tenant-based
Section 8 tenants. This section should
also refer to the hearing procedures for
public housing residents in
§ 966.55(e)(2).
Response. The rule was revised, at
§ 5.615(d)(1), to reference the public
housing hearing procedures in part 966.
Comment. A PHA’s notice to a family
of the PHA’s decision to deny the rent
reduction after obtaining verification of
income reduction for noncompliance
with economic self-sufficiency
requirements should be in writing,
timely provided, specifically state the
decision of the PHA and the basis for
the decision in law and fact, and advise
the family of the procedure for seeking
review.
Response. The final rule, at § 5.615(d),
provides that a PHA must notify the
family in writing that they have a right
to ask for an explanation stating the
specific grounds of a PHA
determination, and that the family may
request a hearing under the grievance
procedure if they disagree with the
determination.
Comment. The rule should be revised
to require final action on the part of the
welfare agency before rent reduction can
be refused. Section 5.618(b), as
proposed, permits responsible entities
to delay rent adjustments until
verification is obtained from the welfare
program. The proposed rule conflicts
with the statutory basis for the rule, 42
U.S.C. 1437j(d), which states at
subsection (d)(4) that the PHA may not
refuse to take action to reduce rent until
written notification is obtained from the
welfare program.
Response. The final rule provides, at
§ 5.615(c)(2), that the PHA must rely on
the written determination of the welfare
agency to base its decision concerning

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rent reduction, which tracks the
statutory requirement.
Comment. Rent reduction limitation
also should apply to families for which
other benefits are decreased due to
fraud, for example, Social Security
benefits which have decreased due to
defrauding the Social Security
Administration.
Response. The treatment of income
changes resulting from welfare program
requirements which prohibit the
reduction of rent due to noncompliance
or fraud is statutory and is applicable to
welfare assistance and public assistance
benefits specifically. HUD does not have
the authority to expand this provision to
other federal assistance programs.
Comment. The rent reduction process
results in additional administrative
burden, specifically, increased reporting
requirements and tracking of eligible
families.
Response. HUD is aware that the rent
reduction process will require PHAs to
obtain written verification of
sanctioning from welfare agencies. HUD
believes that the administrative
responsibility imposed by the
verification process can be simplified
and minimized through cooperative
relationships with the welfare agencies.
Comment. HUD must provide
additional guidance for § 5.618 because
of the complex nature of the various
welfare programs and PHA
unfamiliarity with their operation.
Response. The best guidance
concerning the nature and operation of
the various welfare programs comes
from the welfare agencies who
administer these programs. HUD
anticipates that these welfare agencies
will be cooperative in assisting PHAs in
understanding their programs. HUD
strongly encourages PHAs to coordinate
with their State or local welfare agencies
to improve the reporting of income and
detection of fraud and to streamline the
process where possible. Additionally,
HUD encourages PHAs to use the
cooperation agreements, as described in
section 12(d)(7) of the 1937 Act, as
amended by section 512 of the 1998 Act,
to improve the service delivery between
the two agencies to promote selfsufficiency and otherwise address the
needs of low-income families.
J. Rents in Public Housing (Proposed
Rule §§ 5.603 and 5.614; Final Rule
§§ 5.603 and 960.253) (Section 523 of
the 1998 Act Amending Section 3(a) of
the 1937 Act)
1. Income-Based Rents
Comment. The preamble language in
the proposed rule that stated HUD
cannot provide assurance of its ability to

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subsidize ceiling rents is inappropriate.
Whenever Congress has conditioned a
commitment on the availability of future
appropriations, it has explicitly said so.
There is no such language conditioning
the statutory commitment to provide a
fair and equitable level of operating
assistance for tenancies that pay flat
rents or ceiling rents established in
accordance with section 523 of the 1998
Act.
Response. While the 1998 Act does
not explicitly condition this provision
on the availability of future
appropriations, the subsidy of either flat
rents or ceiling rents is an issue being
considered during the operating fund
negotiated rulemaking because of the
cost implications. The subsidy to pay
for any particular level or type of rent
cannot be assured.
2. Flat Rents
Comment. The language in
§ 5.614(a)(1) concerning the use of
comparability studies to justify a flat
rent system seems contrary to the
Federal Government’s policy
disfavoring statements in the Code of
Federal Regulations that give advice
about what a regulated entity should do,
rather than stating what it must do.
With respect to the specific suggestion
that a PHA should use a comparability
study to justify a flat rent system,
section 523 of the 1998 Act, which
establishes the requirement for
alternative rent systems, does not
employ the term ‘‘comparability.’’ To
the extent that comparability studies
may constitute one manner for
developing flat rents, section 523 of the
1998 Act, makes it one method among
equals.
Response. It is important that there be
a uniform standard for setting flat rents,
to ensure that the rents established meet
the statutory requirements and are
established in a comparable manner
across all PHAs. The cost implications
of flat rents further make a uniform
policy necessary. HUD has revised
§ 960.253(b)(2) to more clearly articulate
the statutory link between flat rents and
the rental market. The rule has been
further revised to clarify the
requirement for documenting the
method for setting the flat rents equal to
comparable market rents. In addition,
we note that to have adequate
information about the income levels of
families served by the 1937 Act
programs, HUD may seek income
information on a sampling basis from
families paying flat rents, whose
incomes are not regularly required to be
examined more often than every three
years.

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Comment. If a comparability study is
used, the rule needs to make sure that
such study includes certain additional
factors, such as crime level in the
project and in the vicinity; drug
activities in the project and in the
vicinity; and gang activities in the
project and in the vicinity, to name a
few.
Response. Section 960.253(b)(3)
broadly identifies the factors a PHA
must consider when determining flat
rents. HUD has clarified that the flat
rent must be the estimated rent at which
the PHA actually could rent the unit
once it is prepared for occupancy.
3. Family Choice
Comment. The family’s ability to
choose between an income-based rent
and a flat rent will be an administrative
burden for the PHA.
Response. Choice of rent is required
by section 523 of the 1998 Act. Section
523 increases a PHA’s flexibility
regarding rent policies, while also
requiring that a family be given a choice
of flat or income-based rent.
Comment. Section 523 of the 1998 Act
requires that tenants who pay a ceiling
or flat rent receive income
reexaminations not less than once every
three years. HUD should adopt the
statutory three-year standard. While the
statute allows the family to ‘‘elect
annually’’ without showing hardship to
change its rent-payment method, that is
the family’s choice, and in the absence
of that election, a PHA should not be
required to go through the costly,
unnecessary task of conducting an
annual income-based rent determination
for a family who does not want one and
does not need one.
Response. As stated in the comment,
section 523 of the 1998 Act requires
PHAs to provide families residing in
public housing the choice to elect
annually, which rent option they prefer,
even if they are paying a ceiling rent or
flat rent, but permits income to be
reviewed every three years if the family
chooses the flat rent. HUD emphasizes
that a family must be offered a choice
of rent options annually, and must be
provided sufficient information to make
an informed choice. To illustrate, if a
family elected an income-based rent
(because according to their calculations,
the income based rent is less than the
flat rent), but upon re-examination by
the PHA discovered that the incomebased rent is actually higher than the
flat rent, the family should be allowed
to opt for the flat rent at that time
(because the information regarding
choice of rents seems insufficient for the
family to have made a reasonable
choice). In response to the comment,

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however, the final rule provides that
where a family previously has elected a
flat rent (prior to the three year required
reexamination), the PHA must provide
the calculation of the income-based rent
only at the family’s request.
Comment. The PHA is responsible for
providing the rent option to the family
every year along with sufficient
information for the family to make an
informed choice. The rule should clarify
the meaning of ‘‘sufficient information.’’
Additionally, the preamble to the
proposed rule provides that the PHA
should provide each affected family a
worksheet so that it may compute its
own income-based alternative rent. The
preamble language appears to contradict
proposed § 5.614(c), which requires the
PHA to conduct an annual rent
determination for the family—as though
the family had elected to pay rent based
on income—and provide the family a
copy of its policy on switching between
rent systems.
Response. The preamble to the
proposed rule provided a discussion of
the minimum amount of information a
PHA should, and the types of
information a PHA could provide to a
family regarding choice of rents. The
regulation clearly states what minimum
amount of ‘‘sufficient’’ information is
necessary. The preamble suggested a
worksheet as a possible alternative, in a
manner similar to PHAs who provide
residents worksheets at annual reexamination.
Comment. All residents should be
notified by the PHA about the flat rent
and income-based rent prior to
implementation.
Response. HUD believes that a PHA’s
obligations concerning rent options and
notification to families of their options
is appropriately addressed in the rule.
The rule requires the PHA to (1)
establish written policies concerning
rent policies, and (2) inform families of
their rent options.
4. Switching Rent Methods to Lower
Rent Because of Financial Hardship
Comment. Switching rents due to
financial hardship creates a significant
administrative burden.
Response. As noted earlier in this
preamble, choice of rent is explicitly
required by section 523 of the 1998 Act,
as is the ability to switch rents because
of financial hardship. Choice of rents is
intended to provide increased amount
of flexibility regarding rent policies for
PHAs and residents, as families
transition from welfare to work.
Congress believed it necessary,
however, to have hardship provisions
for families who may need additional

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assistance at certain points in the
transition.
Comment. Granting a rent waiver to
one family penalizes other families who
are meeting their obligations; additional
rent collections will decrease. A sizable
percentage of all households living in
public housing experience financial
hardship frequently, yet the PHA
expects them to pay their rent in full, on
time. In special circumstances, a family
may sign a payment agreement to make
up rent which is in arrears. However,
granting a rent ‘‘waiver’’ to one family
penalizes others who are meeting their
rent obligation. Ultimately rent
collection rates will go down.
Response. Section 960.257(b) now
provides that families may request an
interim reexamination of family income
or composition because of any changes
since the last determination. Families
who experience an unanticipated
reduction in income are able to request
an interim reexamination, and have
their rent adjusted accordingly.
Therefore, these families are not
penalized, as suggested by the comment.
Comment. The final rule should make
clear that a family must specifically
notify the PHA of its wish to switch rent
methods due to financial hardship, and
the rule should provide that the rent be
lowered no later than the first of the
month following the month the family
reports the hardship is unreasonable
and should be revised.
Response. As stated in the proposed
rule, the PHA must switch the family’s
rental payment immediately if there is
a hardship. However, HUD realizes that
the PHA may not be able to immediately
adjust its systems to switch a family’s
rental payment. When establishing its
policies, a PHA should indicate the
timeframe in which a family must notify
the PHA of a financial hardship, and the
need to switch rent systems, and the
PHA should be able to act within 30
days, which includes verifying the
financial hardship, before switching the
family from one rent system to another.
Such policies should attempt to
maintain administrative simplicity
while being responsive to unforeseen
changes in family circumstances.
Comment. There should be a limit on
the number of times within a specified
period of time that a family or
individual can claim the hardship
exemption.
Response. The rule provides such a
limitation. The rule provides that once
a family switches to income based rent
due to financial hardship, the family
must wait until its next annual option
to select the type of rent.
Comment. The final rule should
clarify that circumstances for

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exemptions for death apply only to
family members on the lease or
principal wage earners, to prevent
multiple requests for hardships due to
death for other circumstances not
envisioned by the Congress or HUD.
Response. The statute indicates that
financial hardship policies must include
situations where the family has
experienced a decrease in income
because of a death in the family. HUD
does not believe that this was intended
to be limited to the death of family
members who are wage earners, but
rather any family members on the lease
for the unit, whose death created a loss
of income in the household.
Comment. The statute requires a PHA
to ‘‘immediately’’ provide for the family
to switch to an income-based rent upon
a determination that a family is unable
to pay the previously chosen flat rent
because of financial hardship. The rule
seems to imply that the PHA can make
its own policy on switching from a flat
rent to income-based; however, it
appears that the statute gives the PHA
no choice in certain specific instances.
HUD needs to clarify this matter.
Response. As stated in the proposed
rule, the PHA must switch the family’s
rental payment immediately if there is
a hardship. Though the PHA does not
have discretion in determining whether
or not to switch a family’s rent because
of hardship, the PHA does have
discretion in establishing its hardship
policies, including the time frame in
which a family must notify the PHA of
a financial hardship, and the need to
switch, the type of verification required,
etc. When establishing such policies,
the PHA should attempt to maintain
administrative simplicity while being
responsive to unforeseen changes in the
family circumstances.
5. Retaining Ceiling Rents
Comment. HUD should provide the
option to use ceiling rents beyond three
years. HUD’s interpretation that the
statute limits the retention of ceiling
rents is wrong. The 1998 Act explicitly
permits PHAs with ceiling rents to
retain them, instead of developing flat
rents based on neighborhood market
rental levels for comparable housing.
Response. HUD is not revising the
ceiling rent provision from that
provided in the proposed rule. As stated
in the proposed rule, PHAs that have
already established ceiling rents may
continue to use those ceiling rents in
lieu of establishing a flat rent for those
units for three years. After the three year
period, ceiling rents will continue to be
allowed as a cap on an income based
rent, but not as an alternative to flat
rents.

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At the time the 1998 Act was enacted,
a proposed rule was pending which
would have resulted in a requirement
that ceiling rents reflect the market in a
manner similar to that required by the
statute and this regulation for flat rents.
That rule would have been finalized
accordingly. HUD thus believes that a
maximum 3-year time period on
retention of ceiling rents as an
alternative to flat rents is both
reasonable and fully consistent with
Congressional intent. Of course, the flat
rents will have a similar effect to ceiling
rents set at market. In addition, tenants
for whom the flat rents are higher than
the current ceiling rents always can
choose to pay the income-based rent,
which will not exceed thirty percent of
their adjusted incomes.
K. New Community Service and SelfSufficiency Requirements for Public
Housing (Proposed Rule §§ 960.603–
960.611; Final Rule §§ 960.601–960.609)
(Section 512 of the 1998 Act Amending
Section 12 of the 1937 Act)
1. General
Comment. There is a significant
administrative burden associated with
the new community service and selfsufficiency requirements. The
community service requirement is
punitive to public housing residents.
The requirement to establish a
community service program exceeds the
PHA’s charter. These requirements
clearly constitute an unfunded mandate.
HUD must take steps to minimize the
burden to the fullest extent without
compromising statutory intent.
Response. The new community
service and self-sufficiency
requirements are statutory. HUD has
strived to provide as much flexibility as
possible to PHAs to allow them to
administer this provision without
creating significant burden.
HUD urges implementation of this
provision in a manner consistent with
its intent, as discussed in the Senate
Committee Report (S. Rep. No. 63, 105th
Cong., 1st Sess. 1997). The Report states
that the provision is not intended to be
perceived as punitive, but rather
considered as rewarding activity that
will assist residents in improving their
own and their neighbors’ economic and
social well-being and give residents a
greater stake in their communities.
Comment. The final rule should
eliminate the requirement for a PHA to
identify and notify each individual of
the community service status. The PHA
should only be obligated to notify all
families of the general requirements and
exemptions and place the burden upon
the family to notify the housing

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16709

authority of the required participation of
some of its family members, under the
pain of lease violation and subsequent
eviction actions. Additionally, the final
rule should permit the resident to selfcertify concerning his or her ability to
comply with the community service
requirement.
Response. HUD has revised
§§ 960.605 and 960.607 to provide PHAs
as much flexibility as possible, while
still meeting the statutory requirement.
The revision to § 960.605(c) requires
PHAs to verify compliance annually, at
least 30 days before the expiration of the
lease term. Self-certification by
residents is not acceptable; third party
certification must be provided by the
entity with whom the resident is
working.
There are various community service
models that PHAs may want to consider
in developing their process for
administration of the community
service requirement. One of the models
is based on a high school requirement
for graduation used by high schools,
that each student is required to perform
a certain number of hours of community
service in order to graduate. Similarly,
PHAs could provide guidance lists of
acceptable activities to residents, along
with ways to contact various groups or
PHA-sponsored activities that meet the
requirement and intent of the
community service provision. Residents
could, perhaps two months prior to the
end of the lease, have a signed
certificate from the community service
or self-sufficiency activity contact, that
in fact they have provided the requisite
amount of service.
Additionally, PHAs may, but are not
required to, provide advance approval
of a community service activity.
Advance approval by the PHA may
avoid the possibility of refusing to
recognize the activity as eligible after it
was performed by the resident. Advance
approval also may help to ensure that
the activity is not performed under
conditions that would be considered
hazardous, or that the work is not labor
that would be performed by the PHA’s
employees responsible for essential
maintenance and property services, or
that the work is otherwise unacceptable.
Comment. Residents who are not
exempt from community service should
be provided a statement of rights and
obligations.
Response. The rule provides, at
§ 960.605(c), for written notification of
the provisions of the community service
requirement to all residents, including a
description of the service requirement,
who is exempt, and how the exemption
will be verified.

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Comment. A community service
contribution of 8 hours a month is too
low. The requirement should be at least
16 hours a month. Another comment
suggests that the rule should clarify
whether required hours may be accrued.
Response. The statute is clear that the
expectation is that each adult member of
the family unless otherwise exempt is
required to contribute eight hours per
month of community service. HUD,
however, believes that there should be
some flexibility for PHAs to allow
individuals, based on circumstances
that may prevent the individual from
performing the eight hours of
community service/economic selfsufficiency each month, to remedy this
requirement by performing the activity
prior to the renewal of the lease or
within a reasonable period determined
by the PHA.
Comment. The final rule should go
further and require residents to provide
verification that they applied for
employment in 3 different locations
each week.
Response. This suggestion exceeds the
requirement imposed by the statute. The
rule reflects the statutory requirement to
engage in community service.
Comment. The final rule should
provide for duly-elected resident
councils to administer community
service requirements and have
community service activities include
activities to develop and strengthen the
capacity of resident councils.
Additionally, the final rule needs to
address issue of acceptable community
service providers.
Response. As noted earlier in this
preamble, HUD’s position is to allow
PHAs as much flexibility as possible in
administering the community service
and self-sufficiency requirements. PHAs
have the discretion to involve dulyelected resident councils in the
administration of community service
requirements. Additionally, PHAs are in
the best position to determine
acceptable community service activities
within the broad parameters
established. HUD encourages PHAs to
involve qualified resident councils
where they can facilitate effective
implementation of the community
service requirement.
Comment. HUD should provide
funding from resident initiatives funds
for third party administration of the
community service requirement.
Response. This comment is outside
the scope of this rulemaking. The
purpose of this rulemaking is limited to
implementing the changes in admission
and occupancy requirements made by
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Comment. With respect to
§ 960.607(d) that provides, in relevant
part, ‘‘if the noncompliant adult moves
from the unit, the lease may be
renewed,’’ the rule should explain how
a PHA should respond to a report that
a covered individual has moved from
the household.
Response. HUD believes the following
revision to § 960.607(c)(2) will address
this issue. Section 960.607, which
addresses ‘‘Assuring Resident
Compliance,’’ is revised at the final rule
stage to add the following language:
‘‘All members of the family who are
subject to the service requirement are
complying with the service requirement
or are no longer residing in the unit.’’
Comment. There is concern about
liability that may be attributable to
PHAs for requiring or explicitly
approving community service activities.
HUD and the Congress must fully
consider the implications of this
requirement and implement this
provision so as to ensure maximum
protection for PHAs against possible
litigation in this regard.
Response. Again, PHAs are given
considerable discretion to implement
the community service and selfsufficiency requirements as they
determine appropriate, taking into
consideration their resident population
and local circumstances (e.g., using
local community service providers).
PHAs can and should implement
community service programs in a
prudent manner that will minimize
liability.
Comment. The final rule should
provide no adverse action against a
resident if a community service
provider is not responsive. Since PHAs
will rely on other agencies for
verification of resident community
service activity, it is essential that no
adverse action be taken against a
resident if the third party agency fails to
respond to housing authority and
resident requests for verification.
Another comment suggests that the rule
should provide owners and PHAs with
the right to require tenants to provide
reasonable documentation for activities
that meet community service
requirements. Another comment
suggests that the rule also should
require PHAs to provide notice to
residents of programs in which the
residents may participate to meet the
community service requirement.
Another comment suggests that the rule
should provide that the 8 hour per
month requirement can be a
combination of the community service
and economic self-sufficiency
requirements. Another comment
suggests that HUD should advise

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whether it will issue a form of
certification to be executed by entities
for which residents perform community
service activities; if the certification
appears valid on its face, may the PHA
rely on the certification, or must it take
any further action to confirm that the
certification is accurate.
Response. The rule strikes the
appropriate balance of setting out the
basic requirements for community
service (and the exemptions) and selfsufficiency, as required by the statute,
and providing PHAs with the flexibility
to establish the manner in which they
will administer these requirements.
HUD therefore declines to adopt all of
these specific suggestions. The
regulation has been revised to clarify
that the eight hours can be a
combination of the community service
and economic self-sufficiency activities
to meet the requirement.
Comment. The final rule needs to
address the relationship between a
person performing community service
and the PHA or community service
provider. The rule should clearly
specify that: the resident performing
community service is neither an
employee of the PHA nor the
community service provider; the
resident is not entitled to a stipend,
unemployment or worker’s
compensation or disability benefits.
Response. The statute and this
regulation clearly do not create or
contemplate an employer/employee
relationship between the public housing
resident performing community service
and the PHA or other community
service provider.
2. Exemptions
Comment. Persons with disabilities
should not be exempt from community
service requirements, because generally
all persons with disabilities can perform
some type of community service—for
example, collating material for a
nonprofit agency. In contrast to this first
comment were the following comments.
Persons with disabilities should be
exempt on basis of any existing
documentation already in place of their
status, and not require new certification.
There should not be a dual test to
exempt persons with disabilities, i.e.,
disability and inability to work. The
final rule must provide clear standards
on how to determine that a person with
disabilities is unable to work. The final
rule should exempt persons with
disabilities who are not yet officially
labeled as such. Persons receiving
disability assistance under a state
disability program should be
automatically exempt.

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Exempt all persons with disabilities
absent clear evidence to the contrary.
Response. The exemption from the
community service requirement for
persons with disabilities who are also
not able to perform community service
is statutory. In terms of documentation
of a disability, standards already exist,
as provided in the language of
§ 960.601. Existing documentation will
be accepted as evidence of a disability,
and disabled individuals will be
permitted to self-certify that they can or
cannot perform community service or
self-sufficiency activities. The rule
cannot exempt persons with disabilities
who are not yet officially classified as
such, because documentation is
required, as provided in § 960.601 and
in the statute. Persons receiving
disability assistance under a State
disability program may be exempt, if
they meet the disability definition in
section 12 of the 1937 Act and in
§ 960.601.
Comment. Any PHA verification of
disability is not consistent with Fair
Housing Act regulations.
Response. Verification of disability is
not inconsistent with the Fair Housing
Act regulations. The new law
establishes a community service
requirement and provides a definition of
person with disabilities that is separate
from the definition provided under the
Fair Housing Act.
Comment. Documentation that a
family is receiving assistance under the
TANF Program should be sufficient
verification of a family member’s
exemption from community service
requirement. If PHAs verify that the
resident family is receiving assistance
under the TANF program without
sanction for non-compliance with a
work activity requirement, there should
be no additional verification.
Response. To determine whether a
family member is exempt from the
community service requirement, the
PHA must verify with the welfare
agency that the person is complying
with a work activities requirement.
‘‘Work activities’’ is broadly defined in
Section 407(d) of the Social Security Act
(42 U.S.C. 607(d)), and it is expected
that individuals participating in these
work activities will be exempt from
community service requirements under
this part. (HUD will make the definition
of work activities available through its
website and through additional
guidance.) Additionally, the PHA has
the discretion to adopt the verification
process suggested by the commenter.
Comment. Exemption for welfare
status will be difficult to determine and
enforce because status can change
frequently.

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Response. To minimize burden to the
PHA, HUD suggests that PHAs include
the determination of welfare status in
the cooperation agreement they enter
into with the local welfare agency.
Comment. The final rule should
provide that PHAs are to rely on
documentary evidence from other
agencies bearing responsibility for
determining an exemption category.
PHAs are not responsible for making an
independent determination of status.
Response. Nowhere in the rule is a
burden placed on PHAs to determine an
exemption category of a family member
that is related to welfare programs. That
determination is clearly left to welfare
agencies, and PHAs are to look to these
agencies for the determination of
exemption of a family member.
Comment. The process for
qualification for an exemption needs to
be addressed by the rule. The proposed
rule did not adequately address how a
PHA would determine whether an
adult, non-elderly household member
would establish qualification for an
exemption from the community service
requirement.
Response. As stated in an earlier
response, the rule strikes the
appropriate balance of setting out the
basic requirements for community
service (and the exemptions) and selfsufficiency as required by the statute,
and providing PHAs with the flexibility
to establish the manner in which they
will administer these requirements.
HUD declines to establish by rule a
process for qualification for an
exemption.
Comment. The final rule should
exempt primary caregivers; retirees
below the age of 62; homemakers; and
pregnant women.
Response. The categories of
individuals exempt from the community
service and self-sufficiency
requirements are statutory. HUD does
not have the authority to add additional
categories.
Comment. The final rule should
codify in the regulatory text the
preamble language that states that PHAs
must establish policies that permit
residents to change exemption status
during the year if their situation
changes. This language should be added
to paragraph (2) of § 960.605(c).
Response. HUD has included
language at § 960.605(c) that requires
PHAs to establish and describe policies
addressing categories of individuals
exempt from the service requirement.
The PHA policy should include how the
PHA will deal with any changes in
exemption status.

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3. Noncompliance
Comment. The rule should clarify
whether a person who has been
declared to be required to participate in
community service has the right to a
grievance hearing to challenge the
decision of the PHA.
Response. Section 512 of the 1998 Act
contains the requirement of due process
for residents when the PHA is reviewing
and determining resident compliance
with the community service and selfsufficiency requirements.
Comment. Notice of noncompliance
and a copy of any agreement for cure
should be given to both the
noncompliant resident and the
leaseholder. It is critical that the
leaseholder be included because it is the
leaseholder’s obligation to ensure
compliance.
Response. HUD agrees. The rule (at
§ 960.607(b)) already specifies that the
noncompliant adult and the head of
household must sign any
noncompliance and cure agreement.
L. Reexamination and Verification of
Family Income and Composition
(Proposed Rule §§ 5.617 and 960.209;
Final Rule §§ 5.657, 960.257, and
960.259)
Comment. For a family paying
income-based rent, it is of paramount
importance that the rent is incomebased and that an interim reexamination
be processed immediately, not ‘‘within
a reasonable time after the family
request.’’ The responsible entity should
be required to make the reexamination
immediately, or within 5 working days
of the family’s request to prevent
hardship to the family. Another
comment suggests that § 5.617 should
require that any reduction must be
effective either in the month in which
the family loses income or the following
month and that reductions can be
retroactive. Another comment suggests
the final rule specify how long an
interim reexamination must take, as the
current regulations do, otherwise delays
in decreases in rent can cause tenants to
be able to afford rents and be evicted.
Response. HUD does not prescribe the
time period between the reexamination
and implementation of the new rent.
Whatever action the responsible entity
intends to take in this regard and the
time periods involved should be
reasonable, consistent with and
according to State law. When
establishing its lease policies, the
responsible entity should attempt to
maintain administrative simplicity,
while being responsive to unforeseen
changes in family’s circumstances.
Additionally, current regulations do not

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specify how long an interim
reexamination must take.
Comment. The rule requires strict
annualization of interim income
changes in every case, and
annualization can cause substantial
increases in rent for assisted tenants
even where significant income
reductions are quite foreseeable in the
future. The rule should permit
responsible entities to be able to ‘‘look
back’’ at a family’s historical income
patterns in appropriate cases if available
information is not reliable for predicting
income for the reasonably foreseeable
future.
Response. Annual income is defined
in § 5.609(a)(2) as ‘‘all amounts
monetary or not, which . . . are
anticipated to be received from a source
outside the family during the 12-month
period following admission or annual
reexamination effective date . . .’’ This
definition always has allowed PHAs to
base anticipated income for the next
year on historical patterns rather than
current or immediate past income, and
PHAs will have an additional incentive
to do this in situations where the
family’s income then will assist the
PHA in meeting income targeting goals.
To provide additional flexibility in this
area, section 5.609 (e) of the existing
rule, which permits PHAs to anticipate
income for a shorter period when 12
months is not feasible, has been further
revised in the new § 5.609(d). It now
references seasonal or cyclic income
and permits—but does not require—
annualization when the PHA believes
that past income is the best available
indicator of expected future income.
PHAs should consider the effect of their
policy on the treatment of seasonal or
cyclic income on their ability to satisfy
the requirement for targeting admission
to very low income families.
Comment. Section 5.617 requires at
least annual income and family
composition determinations for public
housing residents paying income-based
rent, but notes that the rule does not
require this determination for public
housing residents who have chosen flat
rents. Annual reexaminations of income
and family composition are necessary
for families paying flat rents because
PHAs must allow families to choose
their rent structure annually.
Response. The statute specifically
states that for families electing to pay a
flat rent, the PHA need only reexamine
their income every three years. As
reflected in responses to other
comments, during the three-year period,
PHAs are required to provide families
paying a flat rent with the calculation of
the income-based rent only if the family
requests that information.

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Comment. Section 5.617(b)(2) should
be revised to assure that any interim
reporting process include oral and
written explanation to the resident of
the factors considered in the rent
recalculation, particularly disregard of
increases in income from employment,
choice of rent, and child care and
medical care deductions.
Response. A PHA must establish
policies and procedures regarding
interim reexaminations, and such
policies are reported in connection with
the PHA Annual Plan. It is at the PHA’s
discretion to establish policies on how
it will conduct an interim
reexamination, beyond what is specified
in § 960.257(b) for the public housing
program.
M. Occupancy by Police Officers and
Over-Income Families (Proposed and
Final Rule §§ 5.619 and 960.503–
960.505) (Sections 524 and 548 of the
1998 Act Amending Sections 3 and 8 of
the 1937 Act)
Comment. In light of the public nature
of the PHA planning process, the
portion of the plan that addresses police
officer placement in public housing
should not contain the level of detail
demanded by the current rule with
respect to the number and location of
officers to be placed in particular
projects.
Response. The regulation clarifies that
the PHA Plan or supporting documents
include the number and location of the
public housing units to be occupied by
police officers and the terms and
conditions of their tenancies and a
statement that the action is taken to
increase security for public housing
residents. The new law provided
substantial relief to PHAs in this area
compared to previous requirements
found in 24 CFR part 960. Reporting of
this limited information in connection
with the PHA Plan is not unreasonable.
Comment. The rule requires owners of
Section 8 project-based buildings to
submit a written plan to the local HUD
Field Office for authorization to lease a
unit to over income police officers. Such
plans should be submitted to the PHA
for approval or disapproval in those
instances where the housing authority is
the contract administrator.
Response. HUD agrees with this
comment and has revised the rule to
adopt this suggestion.

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N. Changes to Existing Self-Sufficiency
Programs—Public Housing and Section
8 Certificate/Voucher Programs
(Proposed and Final Rule Part 984)
(Section 509 of the 1998 Act Amending
Section 23 of the 1937 Act)
Comment. The change to the
definition of ‘‘welfare assistance’’ for
purposes of the Family Self-Sufficiency
Program in § 984.103 (i.e., removing
Medicaid and SSI from the definition)
will assist low-income families by
allowing working participants to
complete the program successfully
without sacrificing their family’s health
associated benefits.
Response. HUD agrees that the new
definition of ‘‘welfare assistance’’ for
purposes of the Family Self Sufficiency
(FSS) program supports welfare reform.
This definition remains basically
unchanged in the final rule, except that
we have borrowed language from the
definition of assistance used in the
TANF program. Additional
clarifications are addressed in the
following comments and responses.
Comment. The final rule should
clarify whether the new definition of
welfare assistance covers emergency
assistance and food stamps.
Response. HUD has revised the
language in § 984.103 to confirm that
Food Stamps and emergency rental and
utilities assistance are not included in
welfare assistance for purposes of the
FSS program.
Comment. The definition of welfare
assistance in § 984.103 should be
revised to read as follows: ‘‘Welfare
assistance does not include the income
assistance received by non-head-ofhouse family members for their
disabilities (SSI, SSDI, etc.) or for Social
Security.’’ Without this change an FSS
participant is penalized for having a
disabled or elderly family member.
Response. HUD has revised the
language at § 984.103 to confirm that
SSDI, SSI, and Social Security benefits
are not welfare assistance.
Comment. The final rule should
clarify participants to which the new
definition of ‘‘welfare assistance’’ is
applicable.
Response. Guidance on this issue is
more appropriate for implementing
instructions and guidance documents
than for this rule.
Comment. The definition of ‘‘welfare
assistance’’ appears contradictory,
because it states that the term ‘‘welfare
assistance’’ does not include programs
that provide ‘‘health care, child care, or
other services to working families’’, but
the TANF program provides these very
services and the TANF program is
included in the definition of welfare
assistance.

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Response. HUD has revised the
definition of ‘‘welfare assistance’’ for
purposes of the FSS program to clarify
what is and is not included.
Comment. The rule should clarify that
for voluntary or mandatory FSS
programs, HUD reimburses PHAs for the
cost of the FSS escrow.
Response. This comment is not within
the scope of this rulemaking. The issue
of reimbursement is a matter to be
addressed by the negotiated rulemaking
committees for the Section 8 Renewal
Fund and the Public Housing Operating
Fund.
Comment. The rule should include
authorization for Section 8 FSS families
to use their escrow accounts funds for
homeownership through HUD
programs, as well as other governmental
programs.
Response. The rule does not provide
any restriction to use escrow account
funds for homeownership through HUD
programs or other governmental
programs. Therefore no explicit
authorization is needed.
Comment. The rule should address
PHA approval of portability moves
during the initial year of the FSS
contract. Additionally, the rule should
clarify whether a tenant has a right to a
hearing if a PHA denies the tenant’s
request to move outside of a PHA’s
jurisdiction during the first 12 months
after the effective date of the contract.
Response. The rule is not the
appropriate place to address the various
situations in which a PHA should or
should not approve requests for moves
during the first year of the FSS contract.
Specifying the circumstances in which
a PHA must approve a move would
unnecessarily limit the PHA’s discretion
in administering its programs. Although
a PHA should not arbitrarily restrict
moves where there is good cause for the
tenant to move, the decision to approve
or disapprove the move rests with the
PHA. A hearing is not required if a PHA
denies the tenant’s request to move
outside of a PHA’s jurisdiction.
Families, however, always have the
option of bringing their complaints to
HUD if they believe that the PHA has
acted without justification. Also, see
§ 982.353 for portability restrictions

during the first 12 months after
admission.
Comment. The rule should contain a
specific requirement that in determining
whether to grant a FSS participant’s
request to move within the initial 12
month period of tenancy, the PHA must
consider its duty to affirmatively further
fair housing.
Response. The Department will not
adopt this suggestion. A PHA’s duty to
affirmatively further fair housing is a
consideration at the basis of many PHA
decisions with respect to tenants. This
is only one factor, however, considered
by a PHA with respect to a tenant’s
request to move. Others include the
availability of appropriate services,
training, and employment
opportunities.
O. Lease Requirements (Proposed and
Final Rule § 966.4) (Section 512 of the
1998 Act Adding Section 6(l)(1) to the
1937 Act)
Comment. The requirement for a 12month lease will adversely affect PHAs
both financially and with respect to unit
occupancy. The 12-month lease will
have an adverse impact on Tenant
Accounts Receivable. The 12-month
lease term should be optional. Allow
PHAs to establish lease terms based on
local practices and conditions. The rule
should provide exceptions to the 12month lease term.
Response. The requirement for a 12month lease is statutory, as well as the
requirement that the PHA lease be
renewable for all purposes except
noncompliance with community service
requirements. Regardless of the term of
the lease, PHAs may allow for a 30-day
(or less) notice period for tenants to
notify the PHA that they wish to
terminate the lease. This will eliminate
any adverse impact on tenants or Tenant
Accounts Receivable. In establishing the
initial term, a PHA may extend the
period a few days beyond 12 months to
make the lease term extend to the end
of a month.
P. Escrow Deposits (Proposed and Final
Rule § 966.55)
Comment. Escrow deposits, as
provided in § 966.55, should be required
only when the PHA asserts that rent is

due because of the family’s act or failure
to act.
Response. The regulatory language is
clear that an escrow deposit is required
only in instances where a hearing is
scheduled in any grievance involving
the amount of rent. The rule goes on to
say that the escrow deposit is the
amount of rent the PHA states is due
and payable as of the first of the month
preceding the month in which the
family’s act, or failure to act, took place.
No additional clarification is necessary.
Comment. Escrow requirements
should be waived whenever recent
hardship or welfare benefit rent
reductions are involved.
Response. The regulatory language is
clear that the PHA must waive the
requirement for an escrow deposit in
cases where either (1) a family is
appealing a financial hardship
determination related to minimum rent
requirements, or (2) the family is
appealing a PHA’s decision not to
reduce the annual income of a family as
a result of a reduction in welfare
benefits attributable to fraud or a failure
to participate in an economic selfsufficiency program or to comply with
a work activities requirement. No
additional clarification is necessary.
IV. Findings and Certifications
Public Reporting Burden
The information collection
requirements contained in this final rule
are unchanged from the proposed rule.
The final rule, however, reorganized
certain regulatory sections of the
proposed rule. The sections containing
the information collections affected by
the proposed and final rules are stated
in the chart below. These information
collections were reviewed by the Office
of Management and Budget (OMB)
under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501–3520) and
assigned OMB control number 2577–
0230. In accordance with the Paperwork
Reduction Act, no agency may 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.
Section of
24 CFR in
final rule

Section of 24 CFR in Proposed Rule
5.410 Residency Preferences ..................................................................................................................................................................
5.611 New Deductions .............................................................................................................................................................................
5.612(c) Individual Savings Accounts ......................................................................................................................................................
5.614(c) Written Rent Options .................................................................................................................................................................
5.618(b) Welfare Rent Verification ..........................................................................................................................................................
5.618(c) Welfare Rent Notice ..................................................................................................................................................................

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5.655(c)
960.206(b)
5.611
960.255(d)
960.253(e)
5.615(c)
5.615(d)

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations
Section of
24 CFR in
final rule

Section of 24 CFR in Proposed Rule
960.605(c) Community Service ...............................................................................................................................................................
960.505 Over Income Families in Small PHAs .......................................................................................................................................

Regulatory Review
The Office of Management and Budget
(OMB) reviewed this final rule under
Executive Order 12866, Regulatory
Planning and Review. OMB determined
that this final rule is a ‘‘significant
regulatory action,’’ as defined in section
3(f) of the Order (although not
economically significant, as provided in
section 3(f)(1) of the Order). Any
changes made to the final rule
subsequent to its submission to OMB
are identified in the docket file, which
is available for public inspection in the
office of the Department’s Rules Docket
Clerk, Room 10276, 451 Seventh Street,
SW, Washington, DC 20410–0500.
Impact on Small Entities
The Secretary, in accordance with the
Regulatory Flexibility Act, 5 U.S.C.
605(b), has reviewed and approved this
rule and in so doing certifies that this
rule would not have a significant
economic impact on a substantial
number of small entities. The rule
implements changes to admission and
occupancy requirements in public
housing made by the Quality Housing
and Work Responsibility Act of 1998.
These are statutory changes, and these
admission and occupancy requirements
apply to all families residing in public
housing or receiving Section 8
assistance or applying for public
housing or Section 8 assistance. The
Congress did not provide exceptions for
admission and occupancy requirements
to families because the PHAs or
responsible entities that administer the
covered HUD programs are small
entities. Admission and occupancy
policies are the type of policies that
should be uniform throughout HUD’s
programs, except to the extent that the
type of program (i.e., public housing or
Section 8 assistance) because of its
statutory basis creates differences in this
requirements. Because these are
statutory requirements, HUD has no
discretion to alter these requirements on
the basis of the size of the entity
administering the program, but has
made every effort in this rule to
minimize administrative burden for all
entities whenever possible.
Environmental Finding
A Finding of No Significant Impact
with respect to the environment was
made at the proposed rule stage in

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accordance with HUD regulations in 24
CFR part 50 that implement section
102(2)(C) of the National Environmental
Policy Act of 1969 (42 U.S.C. 4223). The
Finding remains applicable to this final
rule, and is available for public
inspection during regular business
hours in the Office of the Rules Docket
Clerk, Office of General Counsel,
Department of Housing and Urban
Development, Room 10276, 451 Seventh
Street, S.W., Washington, DC 20410.
Federalism Impact
This final rule does not have
federalism implications. It does not
impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning
of Executive Order 13132 (entitled
‘‘Federalism’’).
Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act
of 1995 (2 U.S.C. 1532) establishes
requirements for Federal agencies to
assess the effects of their regulatory
actions on State, local, and tribal
governments and the private sector.
This rule does not impose a Federal
mandate that will result in the
expenditure by State, local, or tribal
governments, in the aggregate, or by the
private sector, or $100 million or more
in any one year.
Catalog
The Catalog of Federal Domestic
Assistance numbers for these programs
are 14.850, 14.855, and 14.857.
24 CFR Part 5
Administrative practice and
procedure, Aged, Claims, Drug abuse,
Drug traffic control, Grant programs—
housing and community development,
Individuals with disabilities, Loan
programs—housing and community
development, Low and moderate
income housing, Mortgage insurance,
Pets, Public housing, Rent subsidies,
Reporting and recordkeeping
requirements.

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24 CFR Part 886
Grant programs—housing and
community development, Lead
poisoning, Rent subsidies, Reporting
and recordkeeping requirements.
24 CFR Part 891
Aged, Capital advance programs, Civil
rights, Grant programs—housing and
community development, Individuals
with disabilities, Loan programs—
housing and community development,
Low- and moderate-income housing,
Mental health programs, Rent subsidies,
Reporting and recordkeeping
requirements.
24 CFR Part 960
Aged, Grant programs—housing and
community development, Individuals
with disabilities, Public housing.
24 CFR Part 966
Grant programs—housing and
community development, Public
housing.

PART 5—GENERAL HUD PROGRAM
REQUIREMENTS; WAIVERS

Grant programs—housing and
community development, Rent
subsidies, Reporting and recordkeeping
requirements.

Frm 00024

24 CFR Part 884
Grant programs—housing and
community development, Rent
subsidies, Reporting and recordkeeping
requirements, Rural areas.

24 CFR Part 985
Grant programs—housing and
community development, Housing, Rent
subsidies, Reporting and recordkeeping
requirements.
Accordingly, HUD amends parts 5,
880, 881, 884, 886, 891, 960, 966, 984,
and 985 of title 24 of the Code of
Federal Regulations as follows:

24 CFR Part 880

PO 00000

24 CFR Part 881
Grant programs—housing and
community development, Rent
subsidies, Reporting and recordkeeping
requirements.

24 CFR Part 984
Grant programs—housing and
community development, Rent
subsidies, Reporting and recordkeeping
requirements.

List of Subjects

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960.605(c)
960.505

1. The authority citation for part 5
continues to read as follows:
Authority: 42 U.S.C. 3535(d), unless
otherwise noted.

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations
2. In part 5, revise all references to the
term ‘‘HA’’ to read ‘‘PHA’’.
Subpart A—Generally Applicable
Definitions and Federal Requirements;
Waivers
3. Amend § 5.100 as follows:
a. Revise the introductory text to read
as set forth below;
b. Remove the definition of ‘‘housing
agency (HA)’’;
c. Add, in alphabetical order,
definitions of the terms ‘‘public
housing’’, and ‘‘responsible entity’’.
§ 5.100

Definitions.

The following definitions apply to
this part and also in other regulations,
as noted:
*
*
*
*
*
Public housing means housing
assisted under the 1937 Act, other than
under Section 8. ‘‘Public housing’’
includes dwelling units in a mixed
finance project that are assisted by a
PHA with capital or operating
assistance.
*
*
*
*
*
Responsible entity means:
(1) For the public housing program,
the Section 8 tenant-based assistance
program (part 982 of this title), and the
Section 8 project-based certificate or
voucher programs (part 983 of this title),
and the Section 8 moderate
rehabilitation program (part 882 of this
title), responsible entity means the PHA
administering the program under an
ACC with HUD;
(2) For all other Section 8 programs,
responsible entity means the Section 8
project owner.
*
*
*
*
*
§ 5.105

[Amended]

4. Amend paragraph (a) of § 5.105 by
adding, after the phrase ‘‘section 504 of
the Rehabilitation Act of 1973 (29 U.S.C.
794) and implementing regulations at’’,
the phrase ‘‘part 8 of this title; title II of
the Americans with Disabilities Act, 42
U.S.C. 12101 et seq.;’’.
Subpart B—Disclosure and Verification
of Social Security Numbers and
Employer Identification Numbers;
Procedures for Obtaining Income
Information
§ 5.210

[Amended]

5. Amend paragraph (b)(2) of § 5.210
by removing the phrase ‘‘, as provided
in parts 813 and 913 of this title’’.
6. Amend § 5.214 as follows:
a. In the definition of ‘‘assistance
applicant’’, revise paragraph (2) to read
as set forth below;
b. In the definition of ‘‘participant’’,
revise paragraph (2) to read as set forth
below;

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§ 5.240 Family disclosure of income
information to the responsible entity and
verification.

c. Revise the definition of the term
‘‘Processing entity’’ to read as set forth
below:
§ 5.214

Definitions.

*

*
*
*
*
Assistance applicant. * * *
(2) For the public housing program: A
family or individual that seeks
admission to the program.
*
*
*
*
*
Participant. * * *
(2) For the public housing program: A
family or individual that is assisted
under the program;
*
*
*
*
*
Processing entity means the person or
entity that, under any of the programs
covered under this subpart B, is
responsible for making eligibility and
related determinations and an income
reexamination. (In the Section 8 and
public housing programs, the
‘‘processing entity’’ is the ‘‘responsible
entity’’ as defined in § 5.100.)
*
*
*
*
*
7. In § 5.236, revise paragraphs (b)(1)
and (b)(3)(i)(B) and (C) to read as
follows:
§ 5.236 Procedures for termination, denial,
suspension, or reduction of assistance
based on information obtained from a
SWICA or Federal agency.

*

*
*
*
*
(b) * * *
(1) Procedures for independent
verification. (1) Any determination or
redetermination of family income
verified in accordance with this
paragraph must be carried out in
accordance with the requirements and
procedures applicable to the individual
covered program. Independent
verification of information obtained
from a SWICA or a Federal agency may
be:
(i) By HUD;
(ii) In the case of the public housing
program, by a PHA; or
(iii) In the case of any Section 8
program, by a PHA acting as contract
administrator under an ACC.
*
*
*
*
*
(3) * * *
(i) * * *
(B) The responsible entity (as defined
in § 5.100) in the case of the public
housing program or any Section 8
program.
(C) The owner or mortgagee, as
applicable, with respect to the rent
supplement, Section 221(d)(3) BMIR,
Section 235 homeownership assistance,
or Section 236 programs.
*
*
*
*
*
8. Add new § 5.240 to read as follows:

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16715

(a) This section applies to families
that reside in dwelling units with
assistance under the public housing
program, the Section 8 tenant-based
assistance programs, or for which
project-based assistance is provided
under the Section 8, Section 202, or
Section 811 program.
(b) The family must promptly furnish
to the responsible entity any letter or
other notice by HUD to a member of the
family that provides information
concerning the amount or verification of
family income.
(c) The responsible entity must verify
the accuracy of the income information
received from the family, and change
the amount of the total tenant payment,
tenant rent or Section 8 housing
assistance payment, or terminate
assistance, as appropriate, based on
such information.
Subpart C—Pet Ownership for the
Elderly or Persons with Disabilities
9. In § 5.300 revise paragraph (a)(3) to
read as follows:
§ 5.300

Purpose.

(a) * * *
(3) The public housing program.
*
*
*
*
*
§ 5.306

[Amended]

10. Amend § 5.306 by removing the
definition of ‘‘public housing
programs’’.
11. Revise the heading of Subpart D
to read as follows:
Subpart D—Definitions for Section 8
and Public Housing Assistance Under
the United States Housing Act of 1937
§ 5.400

[Amended]

12. Amend § 5.400 by removing the
parenthetical phrase.
§ 5.403

[Amended]

13. Amend § 5.403 as follows:
a. Remove paragraph (a), the
introductory text of paragraph (b), and
the paragraph designation of paragraph
(b);
b. Revise the definitions of ‘‘disabled
family’’ and ‘‘elderly family’’ to read as
set forth below; and
c. Add, in alphabetical order, the
definition of ‘‘person with disabilities’’
to read as set forth below:
§ 5.403

Definitions.

*

*
*
*
*
Disabled family means a family whose
head, spouse, or sole member is a

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person with disabilities. It may include
two or more persons with disabilities
living together, or one or more persons
with disabilities living with one or more
live-in aides.
*
*
*
*
*
Elderly family means a family whose
head, spouse, or sole member is a
person who is at least 62 years of age.
It may include two or more persons who
are at least 62 years of age living
together, or one or more persons who
are at least 62 years of age living with
one or more live-in aides.
*
*
*
*
*
Person with disabilities:
(1) Means a person who:
(i) Has a disability, as defined in 42
U.S.C. 423;
(ii) Is determined, pursuant to HUD
regulations, to have a physical, mental,
or emotional impairment that:
(A) Is expected to be of longcontinued and indefinite duration;
(B) Substantially impedes his or her
ability to live independently, and
(C) Is of such a nature that the ability
to live independently could be
improved by more suitable housing
conditions; or
(iii) Has a developmental disability as
defined in 42 U.S.C. 6001.
(2) Does not exclude persons who
have the disease of acquired
immunodeficiency syndrome or any
conditions arising from the etiologic
agent for acquired immunodeficiency
syndrome;
(3) For purposes of qualifying for lowincome housing, does not include a
person whose disability is based solely
on any drug or alcohol dependence; and
(4) Means ‘‘individual with
handicaps’’, as defined in § 8.3 of this
title, for purposes of reasonable
accommodation and program
accessibility for persons with
disabilities.
§§ 5.405, 5.410, 5.415, 5.420, 5.425, and
5.430 [Removed]

14. Remove §§ 5.405, 5.410, 5.415,
5.420, 5.425, and 5.430.
15. In part 5, revise the heading of
subpart F to read as follows:
Subpart F—Section 8 and Public
Housing: Family Income and Family
Payment; Occupancy Requirements
for Section 8 Project-Based Assistance
16. Revise § 5.601 to read as follows:
§ 5.601

Purpose and applicability.

This subpart states HUD requirements
on these subjects:
(a) Determining annual and adjusted
income of families who apply for or
receive assistance in the Section 8 and
public housing programs;

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(b) Determining payments by and
utility reimbursements to families
assisted in these programs;
(c) Additional occupancy
requirements that apply to the Section
8 project-based assistance programs.
These additional requirements concern:
(1) Income-eligibility and incometargeting when a Section 8 owner
admits families to a Section 8 project or
unit;
(2) Owner selection preferences;
(3) Owner reexamination of family
income and composition.
17. Amend § 5.603 as follows:
a. Remove paragraphs (b) and (c) and
redesignate paragraph (d) as paragraph
(b);
b. Revise paragraph (a) to read as set
forth below;
c. Amend the definition of ‘‘owner’’ in
newly designated paragraph (b) by
removing the phrase ‘‘24 CFR part 885.’’
and adding in its place ‘‘part 891 of this
title.’’; and
d. Amend newly designated
paragraph (b) by revising the definitions
of ‘‘full-time student’’, ‘‘tenant rent’’,
and ‘‘utility reimbursement’’; and by
adding, in alphabetical order,
definitions of ‘‘economic selfsufficiency program’’, ‘‘extremely low
income family’’, ‘‘imputed welfare
income’’, ‘‘low income family’’, ‘‘very
low income family’’, and ‘‘work
activities’’ to read as set forth below:
§ 5.603

Definitions.

*

*
*
*
*
(a) Terms found elsewhere in part 5—
(1) Subpart A. The terms 1937 Act,
elderly person, public housing, public
housing agency (PHA), and Section 8
are defined in § 5.100.
(2) Subpart D. The terms ‘‘disabled
family’’, ‘‘elderly family’’, ‘‘family’’,
‘‘live-in aide’’, and ‘‘person with
disabilities’’ are defined in § 5.403.
(b) * * *
Economic self-sufficiency program.
Any program designed to encourage,
assist, train, or facilitate the economic
independence of HUD-assisted families
or to provide work for such families.
These programs include programs for
job training, employment counseling,
work placement, basic skills training,
education, English proficiency,
workfare, financial or household
management, apprenticeship, and any
program necessary to ready a participant
for work (including a substance abuse or
mental health treatment program), or
other work activities.
Extremely low income family. A
family whose annual income does not
exceed 30 percent of the median income
for the area, as determined by HUD,
with adjustments for smaller and larger

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families, except that HUD may establish
income ceilings higher or lower than 30
percent of the median income for the
area if HUD finds that such variations
are necessary because of unusually high
or low family incomes.
*
*
*
*
*
Full-time student. A person who is
attending school or vocational training
on a full-time basis.
Imputed welfare income. See § 5.615.
Low income family. A family whose
annual income does not exceed 80
percent of the median income for the
area, as determined by HUD with
adjustments for smaller and larger
families, except that HUD may establish
income ceilings higher or lower than 80
percent of the median income for the
area on the basis of HUD’s findings that
such variations are necessary because of
unusually high or low family incomes.
*
*
*
*
*
Tenant rent. The amount payable
monthly by the family as rent to the unit
owner (Section 8 owner or PHA in
public housing). (This term is not used
in the Section 8 voucher program.)
*
*
*
*
*
Utility reimbursement. The amount, if
any, by which the utility allowance for
a unit, if applicable, exceeds the total
tenant payment for the family
occupying the unit. (This definition is
not used in the Section 8 voucher
program, or for a public housing family
that is paying a flat rent.)
Very low income family. A family
whose annual income does not exceed
50 percent of the median family income
for the area, as determined by HUD with
adjustments for smaller and larger
families, except that HUD may establish
income ceilings higher or lower than 50
percent of the median income for the
area if HUD finds that such variations
are necessary because of unusually high
or low family incomes.
*
*
*
*
*
Work activities. See definition at
section 407(d) of the Social Security Act
(42 U.S.C. 607(d)).
§§ 5.605 and 5.607

[Removed]

18. Remove §§ 5.605 and 5.607.
19. Before § 5.609, add an
undesignated center heading to read as
follows:
Family Income
20. Amend § 5.609 as follows:
a. Remove and reserve paragraph
(c)(13);
b. Revise paragraph (c)(8)(iv) to read
as set forth below;
c. Revise paragraph (d) to read as set
forth below; and
d. Remove paragraph (e).

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§ 5.609

Annual income.

*

*
*
*
*
(c) * * *
(8) * * *
(iv) Amounts received under a
resident service stipend. A resident
service stipend is a modest amount (not
to exceed $200 per month) received by
a resident for performing a service for
the PHA or owner, on a part-time basis,
that enhances the quality of life in the
development. Such services may
include, but are not limited to, fire
patrol, hall monitoring, lawn
maintenance, resident initiatives
coordination, and serving as a member
of the PHA’s governing board. No
resident may receive more than one
such stipend during the same period of
time;
*
*
*
*
*
(d) Annualization of income. If it is
not feasible to anticipate a level of
income over a 12-month period (e.g.,
seasonal or cyclic income), or the PHA
believes that past income is the best
available indicator of expected future
income, the PHA may annualize the
income anticipated for a shorter period,
subject to a redetermination at the end
of the shorter period.
21. Revise § 5.611 to read as follows:
§ 5.611

Adjusted income.

Adjusted income means annual
income (as determined by the
responsible entity) of the members of
the family residing or intending to
reside in the dwelling unit, after making
the following deductions:
(a) Mandatory deductions. In
determining adjusted income, the
responsible entity must deduct the
following amounts from annual income:
(1) $480 for each dependent;
(2) $400 for any elderly family or
disabled family;
(3) The sum of the following, to the
extent the sum exceeds three percent of
annual income:
(i) Unreimbursed medical expenses of
any elderly family or disabled family;
and
(ii) Unreimbursed reasonable
attendant care and auxiliary apparatus
expenses for each member of the family
who is a person with disabilities, to the
extent necessary to enable any member
of the family (including the member
who is a person with disabilities) to be
employed, but this allowance may not
exceed the earned income received by
family members who are 18 years of age
or older who are able to work because
of such attendant care or auxiliary
apparatus; and
(4) Any reasonable child care
expenses necessary to enable a member

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of the family to be employed or to
further his or her education.
(b) Permissive deductions—for public
housing only. For public housing only,
a PHA may adopt additional deductions
from annual income. The PHA must
establish a written policy for such
deductions.
22. Revise §§ 5.613 and 5.615 to read
as follows:
§ 5.613 Public housing program and
Section 8 tenant-based assistance program:
PHA cooperation with welfare agency.

(a) This section applies to the public
housing program and the Section 8
tenant-based assistance program.
(b) The PHA must make best efforts to
enter into cooperation agreements with
welfare agencies under which such
agencies agree:
(1) To target public assistance,
benefits and services to families
receiving assistance in the public
housing program and the Section 8
tenant-based assistance program to
achieve self-sufficiency;
(2) To provide written verification to
the PHA concerning welfare benefits for
families applying for or receiving
assistance in these housing assistance
programs.
§ 5.615 Public housing program and
Section 8 tenant-based assistance program:
How welfare benefit reduction affects family
income.

(a) Applicability. This section applies
to covered families who reside in public
housing (part 960 of this title) or receive
Section 8 tenant-based assistance (part
982 of this title).
(b) Definitions. The following
definitions apply for purposes of this
section:
Covered families. Families who
receive welfare assistance or other
public assistance benefits (‘‘welfare
benefits’’) from a State or other public
agency (‘‘welfare agency’’) under a
program for which Federal, State, or
local law requires that a member of the
family must participate in an economic
self-sufficiency program as a condition
for such assistance.
Economic self-sufficiency program.
See definition at § 5.603.
Imputed welfare income. The amount
of annual income not actually received
by a family, as a result of a specified
welfare benefit reduction, that is
nonetheless included in the family’s
annual income for purposes of
determining rent.
Specified welfare benefit reduction.
(1) A reduction of welfare benefits by
the welfare agency, in whole or in part,
for a family member, as determined by
the welfare agency, because of fraud by

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16717

a family member in connection with the
welfare program; or because of welfare
agency sanction against a family
member for noncompliance with a
welfare agency requirement to
participate in an economic selfsufficiency program.
(2) ‘‘Specified welfare benefit
reduction’’ does not include a reduction
or termination of welfare benefits by the
welfare agency:
(i) at expiration of a lifetime or other
time limit on the payment of welfare
benefits;
(ii) because a family member is not
able to obtain employment, even though
the family member has complied with
welfare agency economic selfsufficiency or work activities
requirements; or
(iii) because a family member has not
complied with other welfare agency
requirements.
(c) Imputed welfare income.
(1) A family’s annual income includes
the amount of imputed welfare income
(because of a specified welfare benefits
reduction, as specified in notice to the
PHA by the welfare agency), plus the
total amount of other annual income as
determined in accordance with § 5.609.
(2) At the request of the PHA, the
welfare agency will inform the PHA in
writing of the amount and term of any
specified welfare benefit reduction for a
family member, and the reason for such
reduction, and will also inform the PHA
of any subsequent changes in the term
or amount of such specified welfare
benefit reduction. The PHA will use this
information to determine the amount of
imputed welfare income for a family.
(3) A family’s annual income includes
imputed welfare income in family
annual income, as determined at the
PHA’s interim or regular reexamination
of family income and composition,
during the term of the welfare benefits
reduction (as specified in information
provided to the PHA by the welfare
agency).
(4) The amount of the imputed
welfare income is offset by the amount
of additional income a family receives
that commences after the time the
sanction was imposed. When such
additional income from other sources is
at least equal to the imputed welfare
income, the imputed welfare income is
reduced to zero.
(5) The PHA may not include imputed
welfare income in annual income if the
family was not an assisted resident at
the time of sanction.
(d) Review of PHA decision. (1) Public
housing. If a public housing tenant
claims that the PHA has not correctly
calculated the amount of imputed
welfare income in accordance with HUD

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requirements, and if the PHA denies the
family’s request to modify such amount,
the PHA shall give the tenant written
notice of such denial, with a brief
explanation of the basis for the PHA
determination of the amount of imputed
welfare income. The PHA notice shall
also state that if the tenant does not
agree with the PHA determination, the
tenant may request a grievance hearing
in accordance with part 966, subpart B
of this title to review the PHA
determination. The tenant is not
required to pay an escrow deposit
pursuant to § 966.55(e) for the portion of
tenant rent attributable to the imputed
welfare income in order to obtain a
grievance hearing on the PHA
determination.
(2) Section 8 participant. A
participant in the Section 8 tenant-based
assistance program may request an
informal hearing, in accordance with
§ 982.555 of this title, to review the PHA
determination of the amount of imputed
welfare income that must be included in
the family’s annual income in
accordance with this section. If the
family claims that such amount is not
correctly calculated in accordance with
HUD requirements, and if the PHA
denies the family’s request to modify
such amount, the PHA shall give the
family written notice of such denial,
with a brief explanation of the basis for
the PHA determination of the amount of
imputed welfare income. Such notice
shall also state that if the family does
not agree with the PHA determination,
the family may request an informal
hearing on the determination under the
PHA hearing procedure.
(e) PHA relation with welfare agency.
(1) The PHA must ask welfare agencies
to inform the PHA of any specified
welfare benefits reduction for a family
member, the reason for such reduction,
the term of any such reduction, and any
subsequent welfare agency
determination affecting the amount or
term of a specified welfare benefits
reduction. If the welfare agency
determines a specified welfare benefits
reduction for a family member, and
gives the PHA written notice of such
reduction, the family’s annual incomes
shall include the imputed welfare
income because of the specified welfare
benefits reduction.
(2) The PHA is responsible for
determining the amount of imputed
welfare income that is included in the
family’s annual income as a result of a
specified welfare benefits reduction as
determined by the welfare agency, and
specified in the notice by the welfare
agency to the PHA. However, the PHA
is not responsible for determining
whether a reduction of welfare benefits

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by the welfare agency was correctly
determined by the welfare agency in
accordance with welfare program
requirements and procedures, nor for
providing the opportunity for review or
hearing on such welfare agency
determinations.
(3) Such welfare agency
determinations are the responsibility of
the welfare agency, and the family may
seek appeal of such determinations
through the welfare agency’s normal
due process procedures. The PHA shall
be entitled to rely on the welfare agency
notice to the PHA of the welfare
agency’s determination of a specified
welfare benefits reduction.
§ 5.617

[Removed]

23. Remove § 5.617.
24. After § 5.615, add an undesignated
center heading and new §§ 5.628, 5.630,
5.632, and 5.634 to read as follows:
Family Payment
§ 5.628

Total tenant payment.

(a) Determining total tenant payment
(TTP). Total tenant payment is the
highest of the following amounts,
rounded to the nearest dollar:
(1) 30 percent of the family’s monthly
adjusted income;
(2) 10 percent of the family’s monthly
income;
(3) If the family is receiving payments
for welfare assistance from a public
agency and a part of those payments,
adjusted in accordance with the family’s
actual housing costs, is specifically
designated by such agency to meet the
family’s housing costs, the portion of
those payments which is so designated;
or
(4) The minimum rent, as determined
in accordance with § 5.630.
(b) Determining TTP if family’s
welfare assistance is ratably reduced. If
the family’s welfare assistance is ratably
reduced from the standard of need by
applying a percentage, the amount
calculated under paragraph (a)(3) of this
section is the amount resulting from one
application of the percentage.
§ 5.630

Minimum rent.

(a) Minimum rent. (1) The PHA must
charge a family no less than a minimum
monthly rent established by the
responsible entity, except as described
in paragraph (b) of this section.
(2) For the public housing program
and the section 8 moderate
rehabilitation, and certificate or voucher
programs, the PHA may establish a
minimum rent of up to $50.
(3) For other section 8 programs, the
minimum rent is $25.
(b) Financial hardship exemption
from minimum rent. (1) When is family

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exempt from minimum rent? The
responsible entity must grant an
exemption from payment of minimum
rent if the family is unable to pay the
minimum rent because of financial
hardship, as described in the
responsible entity’s written policies.
Financial hardship includes these
situations:
(i) When the family has lost eligibility
for or is awaiting an eligibility
determination for a Federal, State, or
local assistance program, including a
family that includes a member who is a
noncitizen lawfully admitted for
permanent residence under the
Immigration and Nationality Act who
would be entitled to public benefits but
for title IV of the Personal
Responsibility and Work Opportunity
Act of 1996;
(ii) When the family would be evicted
because it is unable to pay the minimum
rent;
(iii) When the income of the family
has decreased because of changed
circumstances, including loss of
employment;
(iv) When a death has occurred in the
family; and
(v) Other circumstances determined
by the responsible entity or HUD.
(2) What happens if family requests a
hardship exemption? (i) Public housing.
(A) If a family requests a financial
hardship exemption, the PHA must
suspend the minimum rent requirement
beginning the month following the
family’s request for a hardship
exemption, and continuing until the
PHA determines whether there is a
qualifying financial hardship and
whether it is temporary or long term.
(B) The PHA must promptly
determine whether a qualifying
hardship exists and whether it is
temporary or long term.
(C) The PHA may not evict the family
for nonpayment of minimum rent
during the 90-day period beginning the
month following the family’s request for
a hardship exemption.
(D) If the PHA determines that a
qualifying financial hardship is
temporary, the PHA must reinstate the
minimum rent from the beginning of the
suspension of the minimum rent. The
PHA must offer the family a reasonable
repayment agreement, on terms and
conditions established by the PHA, for
the amount of back minimum rent owed
by the family.
(ii) All section 8 programs. (A) If a
family requests a financial hardship
exemption, the responsible entity must
suspend the minimum rent requirement
beginning the month following the
family’s request for a hardship
exemption until the responsible entity

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determines whether there is a qualifying
financial hardship, and whether such
hardship is temporary or long term.
(B) The responsible entity must
promptly determine whether a
qualifying hardship exists and whether
it is temporary or long term.
(C) If the responsible entity
determines that a qualifying financial
hardship is temporary, the PHA must
not impose the minimum rent during
the 90-day period beginning the month
following the date of the family’s
request for a hardship exemption. At the
end of the 90-day suspension period,
the responsible entity must reinstate the
minimum rent from the beginning of the
suspension. The family must be offered
a reasonable repayment agreement, on
terms and conditions established by the
responsible entity, for the amount of
back rent owed by the family.
(iii) All programs. (A) If the
responsible entity determines there is
no qualifying financial hardship
exemption, the responsible entity must
reinstate the minimum rent, including
back rent owed from the beginning of
the suspension. The family must pay the
back rent on terms and conditions
established by the responsible entity.
(B) If the responsible entity
determines a qualifying financial
hardship is long term, the responsible
entity must exempt the family from the
minimum rent requirements so long as
such hardship continues. Such
exemption shall apply from the
beginning of the month following the
family’s request for a hardship
exemption until the end of the
qualifying financial hardship.
(C) The financial hardship exemption
only applies to payment of the
minimum rent (as determined pursuant
to § 5.628(a)(4) and § 5.630), and not to
the other elements used to calculate the
total tenant payment (as determined
pursuant to § 5.628(a)(1), (a)(2) and
(a)(3)).
(3) Public housing: Grievance hearing
concerning PHA denial of request for
hardship exemption. If a public housing
family requests a hearing under the PHA
grievance procedure, to review the
PHA’s determination denying or
limiting the family’s claim to a financial
hardship exemption, the family is not
required to pay any escrow deposit in
order to obtain a grievance hearing on
such issues.
§ 5.632

Utility reimbursements.

(a) Applicability. This section is
applicable to:
(1) The Section 8 programs other than
the Section 8 voucher program (for
distribution of a voucher housing
assistance payment that exceeds rent to
owner, see § 982.514(b) of this title);

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(2) A public housing family paying an
income-based rent (see § 960.253 of this
title). (Utility reimbursement is not paid
for a public housing family that is
paying a flat rent.)
(b) Payment of utility reimbursement.
(1) The responsible entity pays a utility
reimbursement if the utility allowance
(for tenant-paid utilities) exceeds the
amount of the total tenant payment.
(2) In the public housing program
(where the family is paying an incomebased rent), the Section 8 moderate
rehabilitation program and the Section 8
certificate or voucher program, the PHA
may pay the utility reimbursement
either to the family or directly to the
utility supplier to pay the utility bill on
behalf of the family. If the PHA elects
to pay the utility supplier, the PHA
must notify the family of the amount
paid to the utility supplier.
(3) In the other Section 8 programs,
the owner must pay the utility
reimbursement either:
(i) To the family, or
(ii) With consent of the family, to the
utility supplier to pay the utility bill on
behalf of the family.
§ 5.634

Tenant rent.

(a) Section 8 programs. For Section 8
programs other than the Section 8
voucher program, tenant rent is total
tenant payment minus any utility
allowance.
(b) Public housing. See § 960.253 of
this title for the determination of tenant
rent.
25. Add an undesignated center
heading, followed by §§ 5.653, 5.655,
5.657, 5.659, and 5.661 to read as
follows:
Section 8 Project-Based Assistance:
Occupancy Requirements
§ 5.653 Section 8 project-based assistance
programs: Admission—Income-eligibility
and income-targeting.

(a) Applicability. This section
describes requirements concerning
income-eligibility and income-targeting
that apply to the Section 8 project-based
assistance programs, except for the
moderate rehabilitation and the projectbased certificate or voucher programs.
(b) Who is eligible?
(1) Basic eligibility. An applicant must
meet all eligibility requirements in order
to receive housing assistance. At a
minimum, the applicant must be a
family, as defined in § 5.403, and must
be income-eligible, as described in this
section. Such eligible applicants include
single persons.
(2) Low income limit. No family other
than a low income family is eligible for
admission to the Section 8 project-based
assistance programs. (This paragraph (b)
does not apply to the Section 8 project-

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16719

based voucher program under part 983
of this title.)
(c) Targeting to extremely low income
families. For each project assisted under
a contract for project-based assistance,
of the dwelling units that become
available for occupancy in any fiscal
year that are assisted under the contract,
not less than 40 percent shall be
available for leasing only by families
that are extremely low income families
at the time of admission.
(d) Limitation on admission of nonvery low income families.
(1) Admission to units available
before October 1, 1981. Not more than
25 percent of the Section 8 project-based
dwelling units that were available for
occupancy under Section 8 Housing
Assistance Payments Contracts effective
before October 1, 1981 and that are
leased on or after that date shall be
available for leasing by low income
families other than very low income
families. HUD reserves the right to limit
the admission of low income families
other than very low income families to
these units.
(2) Admission to units available on or
after October 1, 1981. Not more than 15
percent of the Section 8 project-based
dwelling units that initially become
available for occupancy under Section 8
Housing Assistance Payments (HAP)
Contracts on or after October 1, 1981
shall be available for leasing by low
income families other than families that
are very low income families at the time
of admission to the Section 8 program.
Except with the prior approval of HUD
under paragraphs (d)(3) and (d)(4) of
this section, the owner may only lease
such units to very low income families.
(3) Request for exception. A request
by an owner for approval of admission
of low income families other than very
low income families to section 8 projectbased units must state the basis for
requesting the exception and provide
supporting data. Bases for exceptions
that may be considered include the
following:
(i) Need for admission of a broader
range of tenants to preserve the financial
or management viability of a project
because there is an insufficient number
of potential applicants who are very low
income families;
(ii) Commitment of an owner to
attaining occupancy by families with a
broad range of incomes;
(iii) Project supervision by a State
Housing Finance Agency having a
policy of occupancy by families with a
broad range of incomes supported by
evidence that the Agency is pursuing
this goal throughout its assisted projects

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in the community, or a project with
financing through Section 11(b) of the
1937 Act (42 U.S.C. 1437i) or under
Section 103 of the Internal Revenue
Code (26 U.S.C. 103); and
(iv) Low-income families that
otherwise would be displaced from a
Section 8 project.
(4) Action on request for exception.
Whether to grant any request for
exception is a matter committed by law
to HUD’s discretion, and no implication
is intended to be created that HUD will
seek to grant approvals up to the
maximum limits permitted by statute,
nor is any presumption of an
entitlement to an exception created by
the specification of certain grounds for
exception that HUD may consider. HUD
will review exceptions granted to
owners at regular intervals. HUD may
withdraw permission to exercise those
exceptions for program applicants at
any time that exceptions are not being
used or after a periodic review, based on
the findings of the review.
(e) Income used for eligibility and
targeting. Family annual income (see
§ 5.609) is used both for determination
of income-eligibility and for incometargeting under this section.
(f) Reporting. The Section 8 owner
must comply with HUD-prescribed
reporting requirements, including
income reporting requirements that will
permit HUD to maintain the data
necessary to monitor compliance with
income-eligibility and income-targeting
requirements.
§ 5.655 Section 8 project-based assistance
programs: Owner preferences in selection
for a project or unit.

(a) Applicability. This section applies
to the section 8 project-based assistance
programs. The section describes
requirements concerning the Section 8
owner’s selection of residents to occupy
a project or unit, except for the
moderate rehabilitation and the projectbased certificate or voucher programs.
(b) Selection. (1) Selection for owner’s
project or unit. Selection for occupancy
of a project or unit is the function of the
Section 8 owner. However, selection is
subject to the income-eligibility and
income-targeting requirements in
§ 5.653.
(2) Tenant selection plan. The owner
must adopt a written tenant selection
plan in accordance with HUD
requirements.
(3) Amount of income. The owner
may not select a family for occupancy
of a project or unit in an order different
from the order on the owner’s waiting
list for the purpose of selecting a
relatively higher income family.
However, an owner may select a family

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for occupancy of a project or unit based
on its income in order to satisfy the
targeting requirements of § 5.653(c).
(4) Selection for particular unit. In
selecting a family to occupy a particular
unit, the owner may match family
characteristics with the type of unit
available, for example, number of
bedrooms. If a unit has special
accessibility features for persons with
disabilities, the owner must first offer
the unit to families which include
persons with disabilities who require
such features (see §§ 8.27 and 100.202 of
this title).
(5) Housing assistance limitation for
single persons. A single person who is
not an elderly or displaced person, a
person with disabilities, or the
remaining member of a resident family
may not be provided a housing unit
with two or more bedrooms.
(c) Particular owner preferences. The
owner must inform all applicants about
available preferences and must give
applicants an opportunity to show that
they qualify for available preferences.
(1) Residency requirements or
preferences. (i) Residency requirements
are prohibited. Although the owner is
not prohibited from adopting a
residency preference, the owner may
only adopt or implement residency
preferences in accordance with nondiscrimination and equal opportunity
requirements listed at § 5.105(a).
(ii) A residency preference is a
preference for admission of persons who
reside in a specified geographic area
(‘‘residency preference area’’).
(iii) An owner’s residency preference
must be approved by HUD in one of the
following methods:
(A) Prior approval of the housing
market area in the Affirmative Fair
Housing Marketing plan (in accordance
with § 108.25 of this title) as a residency
preference area;
(B) Prior approval of the residency
preference area in the PHA plan of the
jurisdiction in which the project is
located;
(C) Modification of the Affirmative
Fair Housing Marketing Plan, in
accordance with § 108.25 of this title,
(iv) Use of a residency preference may
not have the purpose or effect of
delaying or otherwise denying
admission to a project or unit based on
the race, color, ethnic origin, gender,
religion, disability, or age of any
member of an applicant family.
(v) A residency preference must not
be based on how long an applicant has
resided or worked in a residency
preference area.
(vi) Applicants who are working or
who have been notified that they are
hired to work in a residency preference

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area must be treated as residents of the
residency preference area. The owner
may treat graduates of, or active
participants in, education and training
programs in a residency preference area
as residents of the residency preference
area if the education or training program
is designed to prepare individuals for
the job market.
(2) Preference for working families. (i)
The owner may adopt a preference for
admission of working families (families
where the head, spouse or sole member
is employed). However, an applicant
shall be given the benefit of the working
family preference if the head and
spouse, or sole member, is age 62 or
older, or is a person with disabilities.
(ii) If the owner adopts a preference
for admission of working families, the
owner must not give a preference based
on the amount of earned income.
(3) Preference for person with
disabilities. The owner may adopt a
preference for admission of families that
include a person with disabilities.
However, the owner may not adopt a
preference for admission of persons
with a specific disability.
(4) Preference for victims of domestic
violence. The owner should consider
whether to adopt a preference for
admission of families that include
victims of domestic violence.
(5) Preference for single persons who
are elderly, displaced, homeless or
persons with disabilities over other
single persons. The owner may adopt a
preference for admission of single
persons who are age 62 or older,
displaced, homeless, or persons with
disabilities over other single persons.
§ 5.657 Section 8 project-based assistance
programs: Reexamination of family income
and composition.

(a) Applicability. This section states
requirements for reexamination of
family income and composition in the
Section 8 project-based assistance
programs, except for the moderate
rehabilitation and the project-based
certificate or voucher programs.
(b) Regular reexamination. The owner
must conduct a reexamination and
redetermination of family income and
composition at least annually.
(c) Interim reexaminations. A family
may request an interim reexamination of
family income because of any changes
since the last examination. The owner
must make the interim reexamination
within a reasonable time after the family
request. The owner may adopt policies
prescribing when and under what
conditions the family must report a
change in family income or
composition.

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations
§ 5.659 Family information and
verification.

(a) Applicability. This section states
requirements for reexamination of
family income and composition in the
Section 8 project-based assistance
programs, except for the moderate
rehabilitation program and the projectbased certificate or voucher programs.
(b) Family obligation to supply
information. (1) The family must supply
any information that HUD or the owner
determines is necessary in
administration of the Section 8 program,
including submission of required
evidence of citizenship or eligible
immigration status (as provided by part
5, subpart E of this title). ‘‘Information’’
includes any requested certification,
release or other documentation.
(2) The family must supply any
information requested by the owner or
HUD for use in a regularly scheduled
reexamination or an interim
reexamination of family income and
composition in accordance with HUD
requirements.
(3) For requirements concerning the
following, see part 5, subpart B of this
title:
(i) Family verification and disclosure
of social security numbers;
(ii) Family execution and submission
of consent forms for obtaining wage and
claim information from State Wage
Information Collection Agencies
(SWICAs).
(4) Any information supplied by the
family must be true and complete.
(c) Family release and consent. (1) As
a condition of admission to or
continued occupancy of a unit with
Section 8 assistance, the owner must
require the family head, and such other
family members as the owner
designates, to execute a HUD-approved
release and consent form (including any
release and consent as required under
§ 5.230 of this title) authorizing any
depository or private source of income,
or any Federal, State or local agency, to
furnish or release to the owner or HUD
such information as the owner or HUD
determines to be necessary.
(2) The use or disclosure of
information obtained from a family or
from another source pursuant to this
release and consent shall be limited to
purposes directly connected with
administration of the Section 8 program.
(d) Owner responsibility for
verification. The owner must obtain and
document in the family file third party
verification of the following factors, or
must document in the file why third
party verification was not available:
(1) Reported family annual income;

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16721

(2) The value of assets;
(3) Expenses related to deductions
from annual income; and
(4) Other factors that affect the
determination of adjusted income.

personnel residing in the project
(including a description of how this
amount is determined), and the amount
of any other compensation by the owner
to such resident security personnel.

§ 5.661 Section 8 project-based assistance
programs: Approval for police or other
security personnel to live in project.

(vi) The terms of occupancy by such
security personnel. The lease by owner
to the approved security personnel may
provide that occupancy of the unit is
authorized only while the security
personnel is satisfactorily performing
any agreed responsibilities and
functions for project security.

(a) Applicability. This section
describes when a Section 8 owner may
lease a Section 8 unit to police or other
security personnel with continued
Section 8 assistance for the unit. This
section applies to the Section 8 projectbased assistance programs.
(b) Terms. (1) Security personnel
means:
(i) A police officer, or
(ii) A qualified security professional,
with adequate training and experience
to provide security services for project
residents.
(2) Police officer means a person
employed on a full-time basis as a duly
licensed professional police officer by a
Federal, State or local government or by
any agency of these governments.
(3) Security includes the protection of
project residents, including resident
project management from criminal or
other activity that is a threat to person
or property, or that arouses fears of such
threat.
(c) Owner application. (1) The owner
may submit a written application to the
contract administrator (PHA or HUD) for
approval to lease an available unit in a
Section 8 project to security personnel
who would not otherwise be eligible for
Section 8 assistance, for the purpose of
increasing security for Section 8
families residing in the project. (2) The
owner’s application must include the
following information:
(i) A description of criminal activities
in the project and the surrounding
community, and the effect of criminal
activity on the security of project
residents.
(ii) Qualifications of security
personnel who will reside in the project,
and the period of residence by such
personnel. How owner proposes to
check backgrounds and qualifications of
any security personnel who will reside
in the project.
(iii) Full disclosure of any family
relationship between the owner and any
security personnel. For this purpose,
‘‘owner’’ includes a principal or other
interested party.
(iv) How residence by security
personnel in a project unit will increase
security for Section 8 assisted families
residing in the project.
(v) The amount payable monthly as
rent to the unit owner by security

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(vii) Other information as requested
by the contract administrator.
(d) Action by contract administrator.
(1) The contract administrator shall
have discretion to approve or
disapprove owner’s application, and to
impose conditions for approval of
occupancy by security personnel in a
section 8 project unit.
(2) Notice of approval by the contract
administrator shall specify the term of
such approved occupancy. Such
approval may be withdrawn at the
discretion of the contract administrator,
for example, if the contract
administrator determines that such
occupancy is not providing adequate
security benefits as proposed in the
owner’s application; or that security
benefits from such occupancy are not a
sufficient return for program costs.
(e) Housing assistance payment and
rent. (1) During approved occupancy by
security personnel as provided in this
section, the amount of the monthly
housing assistance payment to the
owner shall be equal to the contract rent
(as determined in accordance with the
HAP contract and HUD requirements)
minus the amount (as approved by the
contract administrator) of rent payable
monthly as rent to the unit owner by
such security personnel. The owner
shall bear the risk of collecting such rent
from such security personnel, and the
amount of the housing assistance
payment shall not be increased because
of non-payment by such security
personnel. The owner shall not be
entitled to receive any vacancy payment
for the period following occupancy by
such security personnel.
(2) In approving the amount of
monthly rent payable by security
personnel for occupancy of a contract
unit, the contract administrator may
consider whether security services to be
performed are an adequate return for
housing assistance payments on the
unit, or whether the cost of security
services should be borne by the owner
from other project income.

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations

PART 880—SECTION 8 HOUSING
ASSISTANCE PAYMENTS PROGRAM
FOR NEW CONSTRUCTION
26. The authority citation for part 880
continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f,
3535(d), 12701, and 13611–13619.

27. Amend § 880.104 as follows:
a. Revise the section heading to read
as set forth below;
b. Revise paragraph (c) to read as set
forth below;
c. Amend paragraph (d) by removing
the phrase ‘‘(concerning preferences for
selection of applicants)’’.
§ 880.104

Applicability of part 880.

*

*
*
*
*
(c) Section 880.607 (Termination of
tenancy and modification of leases)
applies to all families.
*
*
*
*
*
28. Amend § 880.201 as follows:
a. Remove the introductory text;
b. Remove the definitions of the terms
‘‘Gross rent’’, ‘‘Household type’’,
‘‘Housing type’’, and ‘‘Housing
Assistance Plan’’;
c. Add definitions, in alphabetical
order, of the terms ‘‘Fair Market Rent
(FMR)’’, ‘‘HUD’’, ‘‘NOFA’’, and ‘‘Public
Housing Agency (PHA)’’;
d. Revise the definitions of ‘‘ACC
(Annual Contributions Contract)’’,
‘‘Annual income’’, ‘‘Contract rent’’,
‘‘Elderly family’’, ‘‘Family’’, ‘‘Housing
Assistance Payment’’, ‘‘Low income
family’’, ‘‘Tenant rent’’, ‘‘Total tenant
payment’’, ‘‘Utility allowance’’, ‘‘Utility
reimbursement’’ and ‘‘Very low-income
family’’ to read as set forth below.
§ 880.201

Definitions.

Annual Contributions Contract (ACC).
As defined in part 5 of this title.
*
*
*
*
*
Annual income. As defined in part 5
of this title.
*
*
*
*
*
Contract rent. The total amount of
rent specified in the contract as payable
to the owner for a unit.
*
*
*
*
*
Elderly family. As defined in part 5 of
this title.
Fair Market Rent (FMR). As defined in
part 5 of this title.
Family. As defined in part 5 of this
title.
*
*
*
*
*
Housing assistance payment. The
payment made by the contract
administrator to the owner of an
assisted unit as provided in the contract.
Where the unit is leased to an eligible
family, the payment is the difference
between the contract rent and the tenant

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rent. An additional payment is made to
the family when the utility allowance is
greater than the total tenant payment. A
housing assistance payment, known as a
‘‘vacancy payment’’. may be made to the
owner when an assisted unit is vacant,
in accordance with the terms of the
contract.
HUD. Department of Housing and
Urban Development.
*
*
*
*
*
Low income family. As defined in part
5 of this title.
NOFA. As defined in part 5 of this
title.
*
*
*
*
*
Public Housing Agency (PHA). As
defined in part 5 of this title.
*
*
*
*
*
Tenant rent. As defined in part 5 of
this title.
Total tenant payment. As defined in
part 5 of this title.
Utility allowance. As defined in part
5 of this title.
Utility reimbursement. As defined in
part 5 of this title.
*
*
*
*
*
Very low income family. As defined in
part 5 of this title.
29. In § 880.501, revise paragraph (e)
to read as follows:
§ 880.501

The contract.

*

*
*
*
*
(e) Payment of utility reimbursement.
Where applicable, the owner will pay a
utility reimbursement in accordance
with § 5.632 of this title. HUD will
provide funds for the utility
reimbursement to the owner in trust
solely for the purpose of paying the
utility reimbursement.
30. In § 880.601, revise paragraph (b)
to read as follows:
§ 880.601

Responsibilities of owner.

*

*
*
*
*
(b) Management and maintenance.
The owner is responsible for all
management functions, including
determining eligibility of applicants,
selection of tenants, reexamination and
verification of family income and
composition, determination of family
rent (total tenant payment, tenant rent
and utility reimbursement), collection of
rent, termination of tenancy and
eviction, and performance of all repair
and maintenance functions (including
ordinary and extraordinary
maintenance), and replacement of
capital items. (See part 5 of this title.)
All functions must be performed in
accordance with applicable equal
opportunity requirements.
*
*
*
*
*

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§ 880.603

[Amended]

31. Amend § 880.603 as follows:
a. In the introductory text of
paragraph (b), remove the phrase ‘‘in
accordance with 24 CFR part 813’’ and
‘‘and 24 CFR part 813’’;
b. In paragraph (c)(1), remove the
phrase ‘‘24 CFR part 813’’ and add in its
place ‘‘part 5 of this title’’; and
c. In paragraph (c)(3), remove the
phrase ‘‘Gross Rent’’ and add in its
place ‘‘contract rent plus any utility
allowance’’.
§ 880.612a

[Amended]

32. In § 880.612a, remove paragraph
(g) and redesignate paragraph (h) as
paragraph (g).
PART 881—SECTION 8 HOUSING
ASSISTANCE PAYMENTS PROGRAM
FOR SUBSTANTIAL REHABILITATION
33. The authority citation for part 881
continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f,
3535(d), 12701, and 13611–13619.

34. Amend § 881.104 as follows:
a. Revise the section heading to read
as set forth below;
b. Revise paragraph (c) to read as set
forth below;
c. Amend paragraph (d) by removing
the phrase ‘‘(concerning preferences for
selection of applicants)’’.
§ 881.104

Applicability of part 881.

*

*
*
*
*
(c) Section 881.607 (Termination of
tenancy and modification of leases)
applies to all families.
*
*
*
*
*
35. Amend § 881.201 as follows:
a. Remove the introductory text;
b. Remove the definitions of the terms
‘‘Gross rent’’, ‘‘Household type’’,
‘‘Housing Assistance Plan’’, and
‘‘Housing type’’;
c. Add definitions, in alphabetical
order, of the terms ‘‘Fair Market Rent
(FMR)’’, ‘‘HUD’’, ‘‘NOFA’’, and ‘‘Public
Housing Agency (PHA)’’;
d. Revise the definitions of ‘‘ACC
(Annual Contributions Contract)’’,
‘‘Annual income’’, ‘‘Contract rent’’,
‘‘Elderly family’’, ‘‘Family’’, ‘‘Housing
Assistance Payment’’, ‘‘Low income
family’’, ‘‘Tenant rent’’, ‘‘Total tenant
payment’’, ‘‘Utility allowance’’, ‘‘Utility
reimbursement’’ and ‘‘Very low-income
family’’ to read as set forth below.
§ 881.201

Definitions.

Annual Contributions Contract (ACC).
As defined in part 5 of this title.
Annual income. As defined in part 5
of this title.
*
*
*
*
*

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations
Contract rent. The total amount of
rent specified in the contract as payable
to the owner for a unit.
*
*
*
*
*
Elderly family. As defined in part 5 of
this title.
Fair Market Rent (FMR). As defined in
part 5 of this title.
Family. As defined in part 5 of this
title.
*
*
*
*
*
Housing assistance payment. The
payment made by the contract
administrator to the owner of an
assisted unit as provided in the contract.
Where the unit is leased to an eligible
family, the payment is the difference
between the contract rent and the tenant
rent. An additional payment is made to
the family when the utility allowance is
greater than the total tenant payment. A
housing assistance payment, known as a
‘‘vacancy payment’’. may be made to the
owner when an assisted unit is vacant,
in accordance with the terms of the
contract.
HUD. Department of Housing and
Urban Development.
*
*
*
*
*
Low income family. As defined in part
5 of this title.
NOFA. As defined in part 5 of this
title.
*
*
*
*
*
Public Housing Agency (PHA). As
defined in part 5 of this title.
*
*
*
*
*
Tenant rent. As defined in part 5 of
this title.
Total tenant payment. As defined in
part 5 of this title.
Utility allowance. As defined in part
5 of this title.
Utility reimbursement. As defined in
part 5 of this title.
*
*
*
*
*
Very low income family. As defined in
part 5 of this title.
PART 884—SECTION 8 HOUSING
ASSISTANCE PAYMENTS PROGRAM,
NEW CONSTRUCTION SET-ASIDE FOR
SECTION 515 RURAL RENTAL
HOUSING PROJECTS
36. The authority citation for part 884
continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f,
3535(d), and 13611–13619.

37. Amend § 884.102 as follows:
a. Remove the definition of ‘‘Gross
rent’’; and
b. Revise the definitions of ‘‘Annual
income’’, ‘‘Family’’, ‘‘Tenant rent’’,
‘‘Total tenant payment’’, ‘‘Utility
allowance’’, ‘‘Utility reimbursement’’,
and ‘‘Very low-income family’’ to read
as follows:

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§ 884.102

Definitions.

§ 884.223a

*

16723

[Amended]

*
*
*
*
Annual income. As defined in part 5
of this title.
*
*
*
*
*
Family. As defined in part 5 of this
title.
*
*
*
*
*
Low-income family. As defined in part
5 of this title.
*
*
*
*
*
Tenant rent. As defined in part 5 of
this title.
Total tenant payment. As defined in
part 5 of this title.
Utility allowance. As defined in part
5 of this title.
Utility reimbursement. As defined in
part 5 of this title.
Very low-income family. As defined
in part 5 of this title.

43. Amend § 884.223a by removing
paragraph (g) and redesignating
paragraph (h) as paragraph (g).

§ 884.105

§ 886.102

[Amended]

38. Amend § 884.105(a) by removing
the phrase ‘‘Gross Rents’’ and adding in
its place ‘‘Contract Rents plus any
utility allowances’’.
§ 884.116

[Amended]

39. Amend § 884.116(b) by removing
the phrase ‘‘24 CFR part 813’’ and
adding in its place ‘‘part 5 of this title’’.
§ 884.118

[Amended]

40. Amend § 884.118 as follows:
a. In paragraph (a)(3), remove the
phrase ‘‘24 CFR parts 5 and 813’’ and
add in its place ‘‘part 5 of this title’’;
b. In paragraph (a)(7), remove the
phrase ‘‘24 CFR part 813’’ and add in its
place ‘‘part 5 of this title’’; and
c. In paragraph (a)(8), remove the
phrase ‘‘813 of this chapter’’ and add in
its place ‘‘5 of this title’’.
§ 884.214

[Amended]

42. Amend § 884.218 as follows:
a. In paragraph (a), remove the phrase
‘‘813 of this chapter’’ and add in its
place ‘‘5 of this title’’; and
b. In paragraph (c), remove the phrase
‘‘Gross Rent’’ and add in its place
‘‘Contract Rent plus any utility
allowance’’.

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44. The authority citation for part 886
continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f,
3535(d), and 13611–13619.

45. Amend § 886.102 as follows:
a. Remove the definition of ‘‘Gross
rent’’; and
b. Revise the definitions of ‘‘Annual
income’’, ‘‘Family’’, ‘‘Low-income
family’’, ‘‘Tenant rent’’, ‘‘Total tenant
payment’’, ‘‘Utility allowance’’, ‘‘Utility
reimbursement’’, and ‘‘Very low-income
family’’ to read as follows:

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Definitions.

*

*
*
*
*
Annual income. As defined in part 5
of this title.
*
*
*
*
*
Family. As defined in part 5 of this
title.
*
*
*
*
*
Low-income family. As defined in part
5 of this title.
*
*
*
*
*
Tenant rent. As defined in part 5 of
this title.
Total tenant payment. As defined in
part 5 of this title.
Utility allowance. As defined in part
5 of this title.
Utility reimbursement. As defined in
part 5 of this title.
Very low-income family. As defined
in part 5 of this title.
§ 886.119

[Amended]

41. Amend § 884.214 as follows:
a. Paragraph (b)(2) is amended by
removing from the second sentence the
comma before the word ‘‘except’’,
adding a period in its place, and
removing the remainder of the sentence
starting with the word ‘‘except’’ and
ending with the period.
b. Paragraph (b)(8) is amended by
removing the phrase ‘‘24 CFR 812.9, and
also 24 CFR 812.10’’ and add in its place
‘‘part 5 of this title’’.
§ 884.218

PART 886—SECTION 8 HOUSING
ASSISTANCE PAYMENTS
PROGRAM—SPECIAL ALLOCATIONS

[Amended]

46. Amend § 886.119 as follows:
a. In paragraph (a)(3), remove the
phrases ‘‘24 CFR parts 812 and 813’’ and
‘‘24 CFR part 5’’ and add in their place
‘‘part 5 of this title’’; and remove the
phrase ‘‘provision of Federal selection
preferences’’; and
b. In paragraphs (a)(7) and (a)(8),
remove the phrase ‘‘813 of this chapter’’
and add in its place ‘‘5 of this title’’.
§ 886.121

[Amended]

47. Amend § 886.121 as follows:
a. In paragraph (b), remove the phrase
‘‘24 CFR part 812’’ and add in its place
‘‘part 5 of this title’’; and
b. In paragraph (c), remove the phrase
‘‘24 CFR 812.9, and also 24 CFR 812.10’’
and add in its place ‘‘part 5, subpart E,
of this title’’.
§ 886.124

[Amended]

48. Amend § 886.124 as follows:

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations

a. In paragraph (a), remove the phrase
‘‘part 813 of this chapter’’ and add in its
place ‘‘part 5 of this title’’;
b. In paragraphs (a) and (b), remove
the phrase ‘‘24 CFR part 812’’ from the
three places that it occurs, and add in
its place ‘‘part 5, subpart E, of this title’’;
and
c. In paragraph (c), remove the phrase
‘‘24 CFR 812.9 and also 24 CFR 812.10’’
and add in its place ‘‘part 5, subpart E,
of this title’’.
§ 886.128

[Amended]

49. Amend § 886.128 as follows:
a. Remove the phrase ‘‘24 CFR parts
247 and 812’’ and add in its place ‘‘parts
247 and 5 of this title’’; and
b. Remove the phrase ‘‘24 CFR
812.10’’ and add in its place ‘‘part 5,
subpart E, of this title’’.
§ 886.129

[Amended]

50. Amend § 886.129(e) by removing
the phrase ‘‘24 CFR 812.9’’ from the one
place it appears and by removing the
phrase ‘‘24 CFR 812.10’’ from the two
places it appears, and adding in each of
those places ‘‘part 5, subpart E, of this
title’’.
51. Revise § 886.132 to read as
follows:
§ 886.132

Tenant selection.

Sections 5.653 through 5.661 of this
title govern selection of tenants and
occupancy requirements applicable
under this subpart A.
§ 886.138

[Amended]

52. Amend § 886.138 by removing
from paragraph (g)(1)(iii)(A)(2) the
phrase ‘‘24 CFR 813.107’’ and by adding
in its place ‘‘part 5 of this title’’.
53. Section 886.302 is amended as
follows:
a. Remove the definition of ‘‘Gross
rent’’; and
b. Revise the definitions of ‘‘Annual
income’’, ‘‘Family’’, ‘‘Low-income
family’’, ‘‘Tenant rent’’, ‘‘Total tenant
payment’’, ‘‘Utility allowance’’, ‘‘Utility
reimbursement’’, and ‘‘Very low-income
family’’ to read as follows:
§ 886.302

Definitions.

*

*
*
*
*
Annual income. As defined in part 5
of this title.
*
*
*
*
*
Family. As defined in part 5 of this
title.
*
*
*
*
*
Low-income family. As defined in part
5 of this title.
*
*
*
*
*
Tenant rent. As defined in part 5 of
this title.
Total tenant payment. As defined in
part 5 of this title.

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Utility allowance. As defined in part
5 of this title.
Utility reimbursement. As defined in
part 5 of this title.
Very low-income family. As defined
in part 5 of this title.
§ 886.318

by adding in its place ‘‘parts 247 and 5
of this title’’, and by removing the
phrase ‘‘24 CFR 812.10’’ and by adding
in its place ‘‘part 5, subpart E, of this
title’’.
§ 886.329

[Amended]

54. Amend § 886.318 as follows:
a. Remove the phrase ‘‘parts 812 and
813’’ from paragraph (a)(3) and add
‘‘part 5 of this title’’ in its place;
b. Remove the phrase ‘‘provision of
Federal selection preferences in
accordance with § 886.337,’’ from
paragraph (a)(3);
c. In paragraph (a)(6), remove the
phrase ‘‘part 813 of the chapter’’ and
add in its place ‘‘part 5 of this title’’; and
d. In paragraph (a)(7), remove the
phrase ‘‘part 813 of this chapter’’ and
add in its place ‘‘part 5 of this title’’.
55. Amend § 886.321 as follows:
a. Revise paragraph (b)(1) to read as
set forth below;
b. In paragraph (b)(2), remove the
phrase ‘‘or to accept applications only
from families that claim a Federal
preference under § 886.337’’ and remove
the sentence starting with the word
‘‘Notwithstanding’’; and
c. In paragraph (b)(7), remove the
phrase ‘‘24 CFR 812.9, and 24 CFR
812.10’’ and add in its place ‘‘part 5 of
this title’’:
§ 886.321

Marketing.

*

*
*
*
*
(b)(1) HUD will determine the
eligibility for assistance of families in
occupancy before sales closing. After
the sale, the owner shall be responsible
for taking applications, selecting
families, and all related determinations,
in accordance with part 5 of this title.
(See especially, §§ 5.653 through 5.661.)
*
*
*
*
*
§ 886.324

[Amended]

56. Amend § 886.324 as follows:
a. In paragraph (a), remove the phrase
‘‘part 813 of this chapter’’ and add in its
place ‘‘part 5 of this title’’, and remove
the phrase ‘‘of part 812’’ and add in its
place ‘‘of part 5 of this title’’;
b. In paragraphs (a) and (b), remove
the phrase ‘‘24 CFR part 812’’ and add
in its place ‘‘part 5 of this title’’;
c. In paragraph (c), remove the phrase
‘‘Gross Rent’’ and add in its place
‘‘Contract Rent plus any applicable
Utility Allowance’’, and remove the
phrase ‘‘24 CFR 812.9, and also 24 CFR
812.10’’ and add in its place ‘‘part 5,
subpart E, of this title’’.
§ 886.328

[Amended]

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[Amended]

59. In § 886.329a, remove paragraph
(g) and redesignate paragraph (h) as
paragraph (g).
§ 886.334

[Amended]

60. Amend § 886.334 by removing
from paragraph (b)(4) the phrase ‘‘Gross
Rents’’ and adding in its place ‘‘Contract
Rents plus any applicable Utility
Allowances’’.
§ 886.338

[Amended]

61. Amend § 886.338 by removing
from paragraph (g)(1)(iii)(A)(2) the
phrase ‘‘24 CFR 813.107’’ and adding in
its place ‘‘part 5 of this title’’.
PART 891—SUPPORTIVE HOUSING
FOR THE ELDERLY AND PERSONS
WITH DISABILITIES
62. The authority citation for part 891
continues to read as follows:
Authority: 12 U.S.C. 1701q; 42 U.S.C.
1437f, 3535(d), and 8013.
§ 891.410

[Amended]

63. Amend § 891.410 by removing
paragraph (h).
§ 891.550

[Removed]

64. Remove § 891.550.
PART 960—ADMISSION TO, AND
OCCUPANCY OF, PUBLIC HOUSING
65. The authority citation for part 960
continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437d,
1437n, and 3535(d).

66. Amend part 960 by adding a new
subpart A to read as follows:
Subpart A—Applicability, definitions, equal
opportunity requirements.
Sec.
960.101 Applicability.
960.102 Definitions.
960.103 Equal opportunity requirements.
Subpart A—Applicability, Definitions, Equal
Opportunity Requirements
§ 960.101

57. Amend § 886.328 by removing the
phrase ‘‘24 CFR parts 247 and 812’’ and

[Amended]

58. Amend § 886.329(e) by removing
the phrase ‘‘24 CFR 812.9’’ and by
adding in its place ‘‘part 5, subpart E, of
this title’’, and by removing the phrase
‘‘24 CFR 812.10’’ from the two places
where it occurs and by adding in those
places ‘‘part 5, subpart E, of this title’’.

Applicability.

This part is applicable to public
housing.

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§ 960.102

Definitions.

(a) Definitions found elsewhere: (1)
General definitions. The following terms
are defined in part 5, subpart A of this
title: 1937 Act, HUD, MSA, public
housing, public housing agency (PHA),
Section 8.
(2) Definitions under the 1937 Act.
The following terms are defined in part
5, subpart D of this title: annual
contributions contract (ACC), applicant,
elderly family, elderly person, extremely
low income family, family, low income
family, person with disabilities.
(3) Definitions and explanations
concerning income and rent. The
following terms are defined or
explained in part 5, subpart F of this
title: Annual income (see § 5.609);
economic self-sufficiency program,
tenant rent, total tenant payment (see
§ 5.628), utility allowance.
(b) Additional definitions. In addition
to the definitions in paragraph (a), the
following definitions and crossreferences apply:
Ceiling rent. See § 960.253(d).
Designated housing. See part 945 of
this chapter.
Disabled families. See § 5.403 of this
title.
Eligible families. Low income families
who are eligible for admission to the
public housing program.
Flat rent. See § 960.253(b).
Income-based rent. See § 960.253(c).
Mixed population development. A
public housing development, or portion
of a development, that was reserved for
elderly and disabled families at its
inception (and has retained that
character). If the development was not
so reserved at its inception, the PHA has
obtained HUD approval to give
preference in tenant selection for all
units in the development (or portion of
development) to elderly families and
disabled families. These developments
were formerly known as elderly
projects.
Over-income family. A family that is
not a low income family. See subpart E
of this part.
PHA plan. See part 903 of this
chapter.
Residency preference. A preference
for admission of persons who reside in
a specified geographic area.
Tenant-based. See § 982.1(b) of this
chapter.
§ 960.103

Equal opportunity requirements.

(a) Applicable requirements. The PHA
must administer its public housing
program in accordance with all
applicable equal opportunity
requirements imposed by contract or
federal law, including the authorities
cited in § 5.105(a) of this title.

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(b) PHA duty to affirmatively further
fair housing. The PHA must
affirmatively further fair housing in the
administration of its public housing
program.
(c) Equal opportunity certification.
The PHA must submit signed equal
opportunity certifications to HUD in
accordance with § 903.7(o) of this title,
including certification that the PHA will
affirmatively further fair housing.
67. Revise the heading of subpart B of
part 960 to read as follows:
Subpart B—Admission
68. Revise §§ 960.201 and 960.202 to
read as follows:
§ 960.201

Purpose.

(a) This subpart states HUD eligibility
and selection requirements for
admission to public housing.
(b) See also related HUD regulations
in this title concerning these subjects:
(1) 1937 Act definitions: part 5,
subpart D;
(2) Restrictions on assistance to
noncitizens: part 5, subpart E;
(3) Family income and family
payment: part 5, subpart F;
(4) Public housing agency plans: part
903;
(5) Rent and reexamination: part 960,
subpart C;
(6) Mixed population developments:
part 960, subpart D;
(7) Occupancy by over-income
families or police officers: part 960,
subpart E.
§ 960.202 Eligibility and targeting for
admission.

(a) Who is eligible? (1) Basic
eligibility. An applicant must meet all
eligibility requirements in order to
receive housing assistance. At a
minimum, the applicant must be a
family, as defined in § 5.403 of this title,
and must be income-eligible, as
described in this section. Such eligible
applicants include single persons.
(2) Low income limit. No family other
than a low income family is eligible for
admission to a PHA’s public housing
program.
(b) Targeting admissions to extremely
low income families.—(1) Targeting
requirement. (i) Not less than 40 percent
of the families admitted to a PHA’s
public housing program during the PHA
fiscal year from the PHA waiting list
shall be extremely low income families.
This is called the ‘‘basic targeting
requirement’’.
(ii) To the extent provided in
paragraph (b)(2) of this section,
admission of extremely low income
families to the PHA’s Section 8 voucher
program during the same PHA fiscal

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year is credited against the basic
targeting requirement.
(iii) A PHA must comply with both
the targeting requirement found in this
part and the deconcentration
requirements found in part 903 of this
chapter.
(2) Credit for admissions to PHA
voucher program. (i) If admissions of
extremely low income families to the
PHA’s voucher program during a PHA
fiscal year exceeds the 75 percent
minimum targeting requirement for the
PHA’s voucher program (see
§ 982.201(b)(2) of this chapter), such
excess shall be credited (subject to the
limitations in paragraph (b)(2)(ii) of this
section) against the PHA’s basic
targeting requirement for the same fiscal
year.
(ii) The fiscal year credit for voucher
program admissions that exceed the
minimum voucher program targeting
requirement shall not exceed the lower
of:
(A) Ten percent of public housing
waiting list admissions during the PHA
fiscal year;
(B) Ten percent of waiting list
admission to the PHA’s Section 8
tenant-based assistance program during
the PHA fiscal year; or
(C) The number of qualifying low
income families who commence
occupancy during the fiscal year of PHA
public housing units located in census
tracts with a poverty rate of 30 percent
or more. For this purpose, qualifying
low income family means a low income
family other than an extremely low
income family.
(c) Income used for eligibility and
targeting. Family annual income (see
§ 5.609) is used both for determination
of income eligibility under paragraph (a)
and for PHA income targeting under
paragraph (b) of this section.
(d) Reporting. The PHA must comply
with HUD-prescribed reporting
requirements that will permit HUD to
maintain the data, as determined by
HUD, necessary to monitor compliance
with income eligibility and targeting
requirement.
69. Amend § 960.204 as follows:
a. Revise paragraph (a)(2)(i) to read as
set forth below;
b. Remove existing paragraph
(a)(2)(iii) and redesignate paragraph
(a)(2)(iv) as new paragraph (a)(2)(iii);
c. Amend paragraph (a)(3)(ii) by
inserting a semicolon after the words
‘‘waiting list’’, by removing the phrase
‘‘that includes the following:’’, and by
removing paragraphs (a)(3)(ii)(A)
through (D).
§ 960.204

Tenant selection policies.

(a) * * *

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(2) * * *
(i) To provide for deconcentration and
income-mixing in accordance with the
PHA plan (see § 903.7 of this title).
*
*
*
*
*
70. Amend § 960.205 as follows:
a. Revise paragraph (b) introductory
text to read as set forth below; and
b. Revise paragraph (c) to read as set
forth below
§ 960.205

Selection criteria.

*

*
*
*
*
(b) In selection of families for
admission to its public housing
program, or to occupy a public housing
development or unit, the PHA is
responsible for screening family
behavior and suitability for tenancy.
The PHA may consider all relevant
information, which may include, but is
not limited to:
*
*
*
*
*
(c) The requirements with respect to
deconcentrating poverty and producing
a mix of incomes in the PHA’s public
housing developments are found in the
PHA Plan rule, at part 903 of this title.
*
*
*
*
*
71. Revise § 960.206 to read as
follows:
§ 960.206 Waiting list: Local preferences in
admission to public housing program.

(a) Establishment of PHA local
preferences. (1) The PHA may adopt a
system of local preference for selection
of families admitted to the PHA’s public
housing program. The PHA system of
selection preferences must be based on
local housing needs and priorities as
determined by the PHA. In determining
such needs and priorities, the PHA shall
use generally accepted data sources.
Such sources include public comment
on the PHA plan (as received pursuant
to § 903.17 of this chapter), and on the
consolidated plan for the relevant
jurisdiction (as received pursuant to
part 91 of this title).
(2) The PHA may limit the number of
applicants that qualify for any local
preference.
(3) PHA adoption and implementation
of local preferences is subject to HUD
requirements concerning incometargeting (§ 960.202(b)), deconcentration
and income-mixing (§ 903.7), and
selection preferences for developments
designated exclusively for elderly or
disabled families or for mixed
population developments (§ 960.407).
(4) The PHA must inform all
applicants about available preferences
and must give applicants an opportunity
to show that they qualify for available
preferences.
(b) Particular local preferences.—(1)
Residency requirements or preferences.

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(i) Residency requirements are
prohibited. Although a PHA is not
prohibited from adopting a residency
preference, the PHA may only adopt or
implement residency preferences in
accordance with non-discrimination
and equal opportunity requirements
listed at § 5.105(a) of this title.
(ii) A residency preference is a
preference for admission of persons who
reside in a specified geographic area
(‘‘residency preference area’’). A county
or municipality may be used as a
residency preference area. An area
smaller than a county or municipality
may not be used as a residency
preference area.
(iii) Any PHA residency preferences
must be included in the statement of
PHA policies that govern eligibility,
selection and admission to the program,
which is included in the PHA annual
plan (or supporting documents)
pursuant to part 903 of this chapter.
Such policies must specify that use of
a residency preference will not have the
purpose or effect of delaying or
otherwise denying admission to the
program based on the race, color, ethnic
origin, gender, religion, disability, or age
of any member of an applicant family.
(iv) A residency preference must not
be based on how long an applicant has
resided or worked in a residency
preference area.
(v) Applicants who are working or
who have been notified that they are
hired to work in a residency preference
area must be treated as residents of the
residency preference area. The PHA
may treat graduates of, or active
participants in, education and training
programs in a residency preference area
as residents of the residency preference
area if the education or training program
is designed to prepare individuals for
the job market.
(2) Preference for working families.
The PHA may adopt a preference for
admission of working families (families
where the head, spouse, or sole member,
is employed). However, an applicant
must be given the benefit of the working
family preference if the head and
spouse, or sole member is age 62 or
older, or is a person with disabilities.
(3) Preference for person with
disabilities. The PHA may adopt a
preference for admission of families that
include a person with disabilities.
However, the PHA may not adopt a
preference for persons with a specific
disability.
(4) Preference for victims of domestic
violence. The PHA should consider
whether to adopt a local preference for
admission of families that include
victims of domestic violence.

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(5) Preference for single persons who
are elderly, displaced, homeless or a
person with disabilities. The PHA may
adopt a preference for admission of
single persons who are age 62 or older,
displaced, homeless, or persons with
disabilities over other single persons.
(c) Selection for particular unit. In
selecting a family to occupy a particular
unit, the PHA may match characteristics
of the family with the type of unit
available, for example, number of
bedrooms. In selection of families to
occupy units with special accessibility
features for persons with disabilities,
the PHA must first offer such units to
families which include persons with
disabilities who require such
accessibility features (see §§ 8.27 and
100.202 of this title).
(d) Housing assistance limitation for
single persons. A single person who is
not an elderly or displaced person, or a
person with disabilities, or the
remaining member of a resident family
may not be provided a housing unit
with two or more bedrooms.
(e) Selection method. (1) The PHA
must use the following to select among
applicants on the waiting list with the
same priority for admission:
(i) Date and time of application; or
(ii) A drawing or other random choice
technique.
(2) The method for selecting
applicants must leave a clear audit trail
that can be used to verify that each
applicant has been selected in
accordance with the method specified
in the PHA plan.
§ 960.208

[Removed]

72. Remove § 960.208.
§ 960.207

[Redesignated]

73. Redesignate § 960.207 as
§ 960.208.
§§ 960.209 and 960.210

[Removed]

74. Remove §§ 960.209 and 960.210.
75. In part 960, add new subpart C, to
read as follows:
Subpart C—Rent and Reexamination
Sec.
960.253 Choice of rent.
960.255 Self-sufficiency incentives—
Disallowance of increase in annual
income.
960.257 Family income and composition:
Regular and interim reexaminations.
960.259 Family information and
verification.
960.261 Restriction on eviction of families
based on income.

Subpart C—Rent and Reexamination
§ 960.253

Choice of rent.

(a) Rent options. (1) Annual choice by
family. Once a year, the PHA must give

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each family the opportunity to choose
between the two methods for
determining the amount of tenant rent
payable monthly by the family. The
family may choose to pay as tenant rent
either a flat rent as determined in
accordance with paragraph (b) of this
section, or an income-based rent as
determined in accordance with
paragraph (c) of this section. Except for
financial hardship cases as provided in
paragraph (d) of this section, the family
may not be offered this choice more
than once a year.
(2) Relation to minimum rent.
Regardless of whether the family
chooses to pay a flat rent or incomebased rent, the family must pay at least
the minimum rent as determined in
accordance with § 5.630 of this title.
(b) Flat rent. (1) The flat rent is based
on the market rent charged for
comparable units in the private
unassisted rental market. It is equal to
the estimated rent for which the PHA
could promptly lease the public housing
unit after preparation for occupancy.
(2) The PHA must use a reasonable
method to determine the flat rent for a
unit. To determine the flat rent, the PHA
must consider:
(i) The location, quality, size, unit
type and age of the unit; and
(ii) Any amenities, housing services,
maintenance and utilities provided by
the PHA.
(3) The flat rent is designed to
encourage self-sufficiency and to avoid
creating disincentives for continued
residency by families who are
attempting to become economically selfsufficient.
(4) If the family chooses to pay a flat
rent, the PHA does not pay any utility
reimbursement.
(5) The PHA must maintain records
that document the method used to
determine flat rents, and also show how
flat rents are determined by the PHA in
accordance with this method, and
document flat rents offered to families
under this method.
(c) Income-based rent. (1) An incomebased rent is a tenant rent that is based
on the family’s income and the PHA’s
rent policies for determination of such
rents.
(2) The PHA rent policies may specify
that the PHA will use percentage of
family income or some other reasonable
system to determine income-based
rents. The PHA rent policies may
provide for depositing a portion of
tenant rent in an escrow or savings
account, for imposing a ceiling on
tenant rents, for adoption of permissive
income deductions (see § 5.611(b) of
this title), or for another reasonable

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system to determining the amount of
income-based tenant rent.
(3) The income-based tenant rent
must not exceed the total tenant
payment (§ 5.628 of this title) for the
family minus any applicable utility
allowance for tenant-paid utilities. If the
utility allowance exceeds the total
tenant payment, the PHA shall pay such
excess amount (the utility
reimbursement) either to the family or
directly to the utility supplier to pay the
utility bill on behalf of the family. If the
PHA elects to pay the utility supplier,
the PHA must notify the family of the
amount of utility reimbursement paid to
the utility supplier.
(d) Ceiling rent. Instead of using flat
rents, a PHA may retain ceiling rents
that were authorized and established
before October 1, 1999, for a period of
three years from October 1, 1999. After
this three year period, the PHA must
adjust such ceiling rents to the level
required for flat rents under this section;
however, ceiling rents are subject to
paragraph (a) of this section, the annual
reexamination requirements, and the
limitation that the tenant rent plus any
utility allowance may not exceed the
total tenant payment.
(e) Information for families. For the
family to make an informed choice
about its rent options, the PHA must
provide sufficient information for an
informed choice. Such information must
include at least the following written
information:
(1) The PHA’s policies on switching
type of rent in circumstances of
financial hardship, and
(2) The dollar amounts of tenant rent
for the family under each option. If the
family chose a flat rent for the previous
year, the PHA is required to provide the
amount of income-based rent for the
subsequent year only the year the PHA
conducts an income reexamination or if
the family specifically requests it and
submits updated income information.
For a family that chooses the flat rent
option, the PHA must conduct a
reexamination of family income at least
once every three years.
(f) Switch from flat rent to incomebased rent because of hardship. (1) A
family that is paying a flat rent may at
any time request a switch to payment of
income-based rent (before the next
annual option to select the type of rent)
if the family is unable to pay flat rent
because of financial hardship. The PHA
must adopt written policies for
determining when payment of flat rent
is a financial hardship for the family.
(2) If the PHA determines that the
family is unable to pay the flat rent
because of financial hardship, the PHA
must immediately allow the requested

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switch to income-based rent. The PHA
shall make the determination within a
reasonable time after the family request.
(3) The PHA policies for determining
when payment of flat rent is a financial
hardship must provide that financial
hardship include the following
situations:
(i) The family has experienced a
decrease in income because of changed
circumstances, including loss or
reduction of employment, death in the
family, or reduction in or loss of
earnings or other assistance;
(ii) The family has experienced an
increase in expenses, because of
changed circumstances, for medical
costs, child care, transportation,
education, or similar items; and
(iii) Such other situations determined
by the PHA to be appropriate.
§ 960.255 Self-sufficiency incentives—
Disallowance of increase in annual income.

(a) Definitions. The following
definitions apply for purposes of this
section.
Disallowance. Exclusion from annual
income.
Previously unemployed includes a
person who has earned, in the twelve
months previous to employment, no
more than would be received for 10
hours of work per week for 50 weeks at
the established minimum wage.
Qualified family. A family residing in
public housing:
(i) Whose annual income increases as
a result of employment of a family
member who was unemployed for one
or more years previous to employment;
(ii) Whose annual income increases as
a result of increased earnings by a
family member during participation in
any economic self-sufficiency or other
job training program; or
(iii) Whose annual income increases,
as a result of new employment or
increased earnings of a family member,
during or within six months after
receiving assistance, benefits or services
under any state program for temporary
assistance for needy families funded
under Part A of Title IV of the Social
Security Act, as determined by the PHA
in consultation with the local agencies
administering temporary assistance for
needy families (TANF) and Welfare-toWork (WTW) programs. The TANF
program is not limited to monthly
income maintenance, but also includes
such benefits and services as one-time
payments, wage subsidies and
transportation assistance—provided that
the total amount over a six-month
period is at least $500.
(b) Disallowance of increase in annual
income. (1) Initial twelve month
exclusion. During the cumulative twelve

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month period beginning on the date a
member of a qualified family is first
employed or the family first experiences
an increase in annual income
attributable to employment, the PHA
must exclude from annual income (as
defined in § 5.609 of this title) of a
qualified family any increase in income
of the family member as a result of
employment over prior income of that
family member.
(2) Second twelve month exclusion
and phase-in. During the second
cumulative twelve month period after
the date a member of a qualified family
is first employed or the family first
experiences an increase in annual
income attributable to employment, the
PHA must exclude from annual income
of a qualified family fifty percent of any
increase in income of such family
member as a result of employment over
income of that family member prior to
the beginning of such employment.
(3) Maximum four year disallowance.
The disallowance of increased income
of an individual family member as
provided in paragraph (b)(1) or (b)(2) of
this section is limited to a lifetime 48
month period. It only applies for a
maximum of twelve months for
disallowance under paragraph (b)(1) and
a maximum of twelve months for
disallowance under paragraph (b)(2),
during the 48 month period starting
from the initial exclusion under
paragraph (b)(1) of this section.
(c) Inapplicability to admission. The
disallowance of increases in income as
a result of employment under this
section does not apply for purposes of
admission to the program (including the
determination of income eligibility and
income targeting).
(d) Individual Savings Accounts. As
an alternative to the disallowance of
increases in income as a result of
employment described in paragraph (b)
of this section, a PHA may choose to
provide for individual savings accounts
for public housing residents who pay an
income-based rent, in accordance with a
written policy, which must include the
following provisions:
(1) The PHA must advise the family
that the savings account option is
available;
(2) At the option of the family, the
PHA must deposit in the savings
account the total amount that would
have been included in tenant rent
payable to the PHA as a result of
increased income that is disallowed in
accordance with paragraph (b) of this
section;
(3) Amounts deposited in a savings
account may be withdrawn only for the
purpose of:
(i) Purchasing a home;

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(ii) Paying education costs of family
members;
(iii) Moving out of public or assisted
housing; or
(iv) Paying any other expense
authorized by the PHA for the purpose
of promoting the economic selfsufficiency of residents of public
housing;
(4) The PHA must maintain the
account in an interest bearing
investment and must credit the family
with the net interest income, and the
PHA may not charge a fee for
maintaining the account;
(5) At least annually the PHA must
provide the family with a report on the
status of the account; and
(6) If the family moves out of public
housing, the PHA shall pay the tenant
any balance in the account, minus any
amounts owed to the PHA.

with such policies. The PHA
reexamination policies must be in
accordance with the PHA plan.
§ 960.259 Family information and
verification.

§ 960.257 Family income and composition:
Regular and interim reexaminations.

(a) When PHA is required to conduct
reexamination. (1) For families who pay
an income-based rent, the PHA must
conduct a reexamination of family
income and composition at least
annually and must make appropriate
adjustments in the rent after
consultation with the family and upon
verification of the information.
(2) For families who choose flat rents,
the PHA must conduct a reexamination
of family composition at least annually,
and must conduct a reexamination of
family income at least once every three
years.
(3) For all families who include
nonexempt individuals, as defined in
§ 960.601, the PHA must determine
compliance once each twelve months
with community service and selfsufficiency requirements in subpart F of
this part.
(4) The PHA may use the results of
these reexaminations to require the
family to move to an appropriate size
unit.
(b) Interim reexaminations. A family
may request an interim reexamination of
family income or composition because
of any changes since the last
determination. The PHA must make the
interim reexamination within a
reasonable time after the family request.
The PHA must adopt policies
prescribing when and under what
conditions the family must report a
change in family income or
composition.
(c) PHA reexamination policies. The
PHA must adopt admission and
occupancy policies concerning conduct
of annual and interim reexaminations in
accordance with this section, and shall
conduct reexaminations in accordance

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(a) Family obligation to supply
information. (1) The family must supply
any information that the PHA or HUD
determines is necessary in
administration of the public housing
program, including submission of
required evidence of citizenship or
eligible immigration status (as provided
by part 5, subpart E of this title).
‘‘Information’’ includes any requested
certification, release or other
documentation.
(2) The family must supply any
information requested by the PHA or
HUD for use in a regularly scheduled
reexamination or an interim
reexamination of family income and
composition in accordance with HUD
requirements.
(3) For requirements concerning the
following, see part 5, subpart B of this
title:
(i) Family verification and disclosure
of social security numbers;
(ii) Family execution and submission
of consent forms for obtaining wage and
claim information from State Wage
Information Collection Agencies
(SWICAs).
(4) Any information supplied by the
family must be true and complete.
(b) Family release and consent. (1) As
a condition of admission to or
continued assistance under the program,
the PHA shall require the family head,
and such other family members as the
PHA designates, to execute a consent
form (including any release and consent
as required under § 5.230 of this title)
authorizing any depository or private
source of income, or any Federal, State
or local agency, to furnish or release to
the PHA or HUD such information as
the PHA or HUD determines to be
necessary.
(2) The use or disclosure of
information obtained from a family or
from another source pursuant to this
release and consent shall be limited to
purposes directly connected with
administration of the program.
(c) PHA responsibility for
reexamination and verification. (1) The
PHA must obtain and document in the
family file third party verification of the
following factors, or must document in
the file why third party verification was
not available:
(i) Reported family annual income;
(ii) The value of assets;
(iii) Expenses related to deductions
from annual income; and

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(iv) Other factors that affect the
determination of adjusted income or
income-based rent.
§ 960.261 Restriction on eviction of
families based on income.

No PHA shall commence eviction
proceedings based on the income of the
tenant family unless:
(a) It has determined that there is
decent, safe, and sanitary housing of
suitable size for the family available at
a rent not exceeding the tenant rent; or
(b) It is required to do so by local law.
Subpart D—Preference for Elderly
Families and Disabled Families in
Mixed Population Projects
§ 960.405

[Removed]

76. Remove § 960.405.
77. Revise § 960.407 to read as
follows:
§ 960.407 Selection preference for mixed
population developments.

(a) The PHA must give preference to
elderly families and disabled families
equally in determining priority for
admission to mixed population
developments. The PHA may not
establish a limit on the number of
elderly families or disabled families
who may be accepted for occupancy in
a mixed population development.
(b) In selecting elderly families and
disabled families to occupy units in
mixed population developments, the
PHA must first offer units that have
special accessibility features for persons
with disabilities to families who include
persons with disabilities who require
the accessibility features of such units
(see §§ 8.27 and 100.202 of this title).
78. Revise subpart E to read as
follows:
Subpart E—Occupancy by overincome families or police officers
Sec.
960.503 Occupancy by over-income
families.
960.505 Occupancy by police officers to
provide security for public housing
residents.

Subpart E—Occupancy by overincome families or police officers
§ 960.503
families.

Occupancy by over-income

A PHA that owns or operates fewer
than two hundred fifty (250) public
housing units, may lease a unit in a
public housing development to an overincome family (a family whose annual
income exceeds the limit for a low
income family at the time of initial
occupancy), in accordance with its PHA
annual plan (or supporting documents),

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if all the following conditions are
satisfied:
(a) There are no eligible low income
families on the PHA waiting list or
applying for public housing assistance
when the unit is leased to an overincome family;
(b) The PHA has publicized
availability of the unit for rental to
eligible low income families, including
publishing public notice of such
availability in a newspaper of general
circulation in the jurisdiction at least
thirty days before offering the unit to an
over-income family;
(c) The over-income family rents the
unit on a month-to-month basis for a
rent that is not less than the PHA’s cost
to operate the unit;
(d) The lease to the over-income
family provides that the family agrees to
vacate the unit when needed for rental
to an eligible family; and
(e) The PHA gives the over-income
family at least thirty days notice to
vacate the unit when the unit is needed
for rental to an eligible family.
§ 960.505 Occupancy by police officers to
provide security for public housing
residents.

(a) Police officer. For purpose of this
subpart E, ‘‘police officer’’ means a
person determined by the PHA to be,
during the period of residence of that
person in public housing, employed on
a full-time basis as a duly licensed
professional police officer by a Federal,
State or local government or by any
agency of these governments. An officer
of an accredited police force of a
housing agency may qualify.
(b) Occupancy in public housing. For
the purpose of increasing security for
residents of a public housing
development, the PHA may allow police
officers who would not otherwise be
eligible for occupancy in public
housing, to reside in a public housing
dwelling unit. The PHA must include in
the PHA annual plan or supporting
documents the number and location of
the units to be occupied by police
officers, and the terms and conditions of
their tenancies; and a statement that
such occupancy is needed to increase
security for public housing residents.
79. Add a new subpart F, to read as
follows:
Subpart F—When Resident Must
Perform Community Service Activities
or Self-Sufficiency Work Activities
Sec.
960.600 Implementation.
960.601 Definitions.
960.603 General requirements.
960.605 How PHA administers service
requirements.

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16729

960.607 Assuring resident compliance.
960.609 Prohibition against replacement of
PHA employees.

Subpart F—When Resident Must
Perform Community Service Activities
or Self-Sufficiency Work Activities
§ 960.600

Implementation.

PHAs and residents must comply
with the requirements of this subpart
beginning with PHA fiscal years that
commence on or after October 1, 2000.
Unless otherwise provided by § 903.11
of this chapter, Annual Plans submitted
for those fiscal years are required to
contain information regarding the PHA’s
compliance with the community service
requirement, as described in § 903.7 of
this chapter.
§ 960.601

Definitions.

(a) Definitions found elsewhere.
(1) General definitions. The following
terms are defined in part 5, subpart A
of this title: public housing, public
housing agency (PHA).
(2) Definitions concerning income and
rent. The following terms are defined in
part 5, subpart F of this title: economic
self-sufficiency program, work activities.
(b) Other definitions. In addition to
the definitions in paragraph (a) of this
section, the following definitions apply:
Community service. The performance
of voluntary work or duties that are a
public benefit, and that serve to improve
the quality of life, enhance resident selfsufficiency, or increase resident selfresponsibility in the community.
Community service is not employment
and may not include political activities.
Exempt individual. An adult who:
(1) Is 62 years or older;
(2)(i) Is a blind or disabled individual,
as defined under 216(i)(1) or 1614 of the
Social Security Act (42 U.S.C. 416(i)(1);
1382c), and who certifies that because of
this disability she or he is unable to
comply with the service provisions of
this subpart, or
(ii) Is a primary caretaker of such
individual;
(3) Is engaged in work activities;
(4) Meets the requirements for being
exempted from having to engage in a
work activity under the State program
funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et
seq.) or under any other welfare
program of the State in which the PHA
is located, including a Stateadministered welfare-to-work program;
or
(5) Is a member of a family receiving
assistance, benefits or services under a
State program funded under part A of
title IV of the Social Security Act (42
U.S.C. 601 et seq.) or under any other
welfare program of the State in which

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the PHA is located, including a Stateadministered welfare-to-work program,
and has not been found by the State or
other administering entity to be in
noncompliance with such a program.
Service requirement. The obligation of
each adult resident, other than an
exempt individual, to perform
community service or participate in an
economic-self sufficiency program
required in accordance with § 960.603.
§ 960.603

General requirements.

(a) Service requirement. Except for
any family member who is an exempt
individual, each adult resident of public
housing must:
(1) Contribute 8 hours per month of
community service (not including
political activities); or
(2) Participate in an economic selfsufficiency program for 8 hours per
month; or
(3) Perform 8 hours per month of
combined activities as described in
paragraphs (a)(1) and (a)(2) of this
section.
(b) Family violation of service
requirement. The lease shall specify that
it shall be renewed automatically for all
purposes, unless the family fails to
comply with the service requirement.
Violation of the service requirement is
grounds for nonrenewal of the lease at
the end of the twelve month lease term,
but not for termination of tenancy
during the course of the twelve month
lease term (see § 966.4(l)(2)(i) of this
chapter).
§ 960.605 How PHA administers service
requirements.

(a) PHA policy. Each PHA must
develop a local policy for
administration of the community
service and economic self-sufficiency
requirements for public housing
residents.
(b) Administration of qualifying
community service or self-sufficiency
activities for residents. The PHA may
administer qualifying community
service or economic self-sufficiency
activities directly, or may make such
activities available through a contractor,
or through partnerships with qualified
organizations, including resident
organizations, and community agencies
or institutions.
(c) PHA responsibilities. (1) The PHA
policy must describe how the PHA
determines which family members are
subject to or exempt from the service
requirement, and the process for
determining any changes to exempt or
non-exempt status of family members.
(2) The PHA must give the family a
written description of the service
requirement, and of the process for

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claiming status as an exempt person and
for PHA verification of such status. The
PHA must also notify the family of its
determination identifying the family
members who are subject to the service
requirement, and the family members
who are exempt persons.
(3) The PHA must review family
compliance with service requirements,
and must verify such compliance
annually at least thirty days before the
end of the twelve month lease term. If
qualifying activities are administered by
an organization other than the PHA, the
PHA shall obtain verification of family
compliance from such third parties.
(4) The PHA must retain reasonable
documentation of service requirement
performance or exemption in
participant files.
(5) The PHA must comply with nondiscrimination and equal opportunity
requirements listed at § 5.105(a) of this
title.
§ 960.607

Assuring resident compliance.

(a) Third-party certification. If
qualifying activities are administered by
an organization other than the PHA, a
family member who is required to fulfill
a service requirement must provide
signed certification to the PHA by such
other organization that the family
member has performed such qualifying
activities.
(b) PHA notice of noncompliance. (1)
If the PHA determines that there is a
family member who is required to fulfill
a service requirement, but who has
violated this family obligation
(noncompliant resident), the PHA must
notify the tenant of this determination.
(2) The PHA notice to the tenant
must:
(i) Briefly describe the
noncompliance;
(ii) State that the PHA will not renew
the lease at the end of the twelve month
lease term unless:
(A) The tenant, and any other
noncompliant resident, enter into a
written agreement with the PHA, in the
form and manner required by the PHA,
to cure such noncompliance, and in fact
cure such noncompliance in accordance
with such agreement; or
(B) The family provides written
assurance satisfactory to the PHA that
the tenant or other noncompliant
resident no longer resides in the unit.
(iii) State that the tenant may request
a grievance hearing on the PHA
determination, in accordance with part
966, subpart B of this chapter, and that
the tenant may exercise any available
judicial remedy to seek timely redress
for the PHA’s nonrenewal of the lease
because of such determination.

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(c) Tenant agreement to comply with
service requirement. If the tenant or
another family member has violated the
service requirement, the PHA may not
renew the lease upon expiration of the
term unless:
(1) The tenant, and any other
noncompliant resident, enter into a
written agreement with the PHA, in the
form and manner required by the PHA,
to cure such noncompliance by
completing the additional hours of
community service or economic selfsufficiency activity needed to make up
the total number of hours required over
the twelve-month term of the new lease,
and
(2) All other members of the family
who are subject to the service
requirement are currently complying
with the service requirement or are no
longer residing in the unit.
§ 960.609 Prohibition against replacement
of PHA employees.

In implementing the service
requirement under this subpart, the
PHA may not substitute community
service or self-sufficiency activities
performed by residents for work
ordinarily performed by PHA
employees, or replace a job at any
location where residents perform
activities to satisfy the service
requirement.
PART 966—LEASE AND GRIEVANCE
PROCEDURES
80. The authority citation for part 966
continues to read as follows:
Authority: 42 U.S.C. 1437a, 1437d note,
and 3535(d).

81. Amend § 966.4 as follows:
a. Revise paragraph (a) to read as set
forth below;
b. Revise paragraph (b)(1) to read as
set forth below;
c. Add new headings for paragraphs
(b)(2) to (b)(5) as set forth below;
d. Revise paragraph (l)(1) and
paragraph (l)(2)(i) to read as set forth
below;
e. Add paragraphs (l)(2)(iii) and
(l)(2)(iv) to read as set forth below;
f. Remove paragraph (o) and
paragraph (p).
§ 966.4

Lease requirements.

*

*
*
*
*
(a) Parties, dwelling unit and term. (1)
The lease shall state:
(i) The names of the PHA and the
tenant;
(ii) The unit rented (address,
apartment number, and any other
information needed to identify the
dwelling unit);

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(iii) The term of the lease (lease term
and renewal in accordance with
paragraph (a)(2) of this section);
(iv) A statement of what utilities,
services and equipment are to be
supplied by the PHA without additional
cost, and what utilities and appliances
are to be paid for by the tenant;
(v) The composition of the household
as approved by the PHA (family
members and any PHA-approved livein-aide). The family must promptly
inform the PHA of the birth, adoption or
court-awarded custody of a child. The
family must request PHA approval to
add any other family member as an
occupant of the unit.
(2) Lease term and renewal. (i) The
lease shall have a twelve month term.
Except as provided in paragraph
(a)(2)(ii) of this section, the lease term
must be automatically renewed for the
same period.
(ii) The PHA may not renew the lease
if the family has violated the
requirement for resident performance of
community service or participation in
an economic self-sufficiency program in
accordance with part 960, subpart F of
this chapter.
(iii) At any time, the PHA may
terminate the tenancy in accordance
with § 966.4(l).
(3) Execution and modification. The
lease must be executed by the tenant
and the PHA, except for automatic
renewals of a lease. The lease may
modified at any time by written
agreement of the tenant and the PHA.
(b) Payments due under the lease. (1)
Tenant rent. (i) The tenant shall pay the
amount of the monthly tenant rent
determined by the PHA in accordance
with HUD regulations and other
requirements. The amount of the tenant
rent is subject to change in accordance
with HUD requirements.
(ii) The lease shall specify the initial
amount of the tenant rent at the
beginning of the initial lease term. The
PHA shall give the tenant written notice
stating any change in the amount of
tenant rent, and when the change is
effective.
(2) PHA charges. * * *
(3) Late payment penalties. * * *
(4) When charges are due. * * *
(5) Security deposits. * * *
*
*
*
*
*
(l) Termination of tenancy and
eviction.
(1) Procedures. The lease shall state
the procedures to be followed by the
PHA and by the tenant to terminate the
tenancy.
(2) Grounds for termination of
tenancy. (i) The PHA may terminate the
tenancy only for serious or repeated

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violation of material terms of the lease,
such as failure to make payments due
under the lease or to fulfill tenant
obligations, as described in paragraph (f)
of this section, or for other good cause
(including failure to accept the PHA’s
offer of a lease revision in accordance
with paragraph (l)(2)(iv) of this section).
*
*
*
*
*
(iii) Failure of a family member to
comply with service requirement
provisions of part 960, subpart F of this
chapter, is grounds only for nonrenewal of the lease and termination of
tenancy at the end of the twelve month
lease term.
(iv) The PHA may terminate the
tenancy if the family fails to accept the
PHA’s offer of a revision to an existing
lease. Such revision must be on a form
adopted by the PHA in accordance with
§ 966.3. The PHA must give the family
written notice of the offer of a revision
at least 60 calendar days before it is
scheduled to take effect. The offer must
specify a reasonable time limit within
that period for acceptance by the family.
*
*
*
*
*
82. Revise § 966.55(e) to read as
follows:
§ 966.55

Procedures to obtain a hearing.

*

*
*
*
*
(e) Escrow deposit. (1) Before a
hearing is scheduled in any grievance
involving the amount of rent (as defined
in § 966.4(b)) that the PHA claims is
due, the family must pay an escrow
deposit to the PHA. When a family is
required to make an escrow deposit, the
amount is the amount of rent the PHA
states is due and payable as of the first
of the month preceding the month in
which the family’s act or failure to act
took place. After the first deposit, the
family must deposit the same amount
monthly until the family’s complaint is
resolved by decision of the hearing
officer or hearing panel.
(2) A PHA must waive the
requirement for an escrow deposit
where required by § 5.630 of this title
(financial hardship exemption from
minimum rent requirements) or § 5.615
of this title (effect of welfare benefits
reduction in calculation of family
income). Unless the PHA waives the
requirement, the family’s failure to
make the escrow deposit will terminate
the grievance procedure. A family’s
failure to pay the escrow deposit does
not waive the family’s right to contest in
any appropriate judicial proceeding the
PHA’s disposition of the grievance.
*
*
*
*
*

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16731

PART 984—SECTION 8 AND PUBLIC
HOUSING FAMILY SELF-SUFFICIENCY
PROGRAM
83. The authority citation for part 984
continues to read as follows:
Authority: 42 U.S.C. 1437f, 1437u, and
3535(d).

84. Throughout part 984, remove the
terms ‘‘an HA’’ and ‘‘HA’’ and add in
their place the terms ‘‘a PHA’’ and
‘‘PHA’’.
85. Amend § 984.101 as follows:
a. In paragraph (a)(1), remove the
phrase ‘‘and Indian’’; and
b. Revise paragraphs (b)(3) and (c) to
read as set forth below:
§ 984.101 Purpose, scope, and
applicability.

*

*
*
*
*
(b) * * *
(3) Unless the PHA receives an
exemption under § 984.105:
(i) Each PHA for which HUD reserved
funding (budget authority) for
additional rental certificates or rental
vouchers in FY 1993 through October
20, 1998 must operate a Section 8 FSS
program.
(ii) Each PHA for which HUD
reserved funding (budget authority) to
acquire or construct additional public
housing units in FY 1993 through
October 20, 1998 must operate a public
housing FSS program.
(c) Applicability. This part applies to:
(1) The public housing program, and
(2) The Section 8 certificate and
voucher programs.
§ 984.102

[Amended]

86. Amend § 984.102 by removing the
phrase ‘‘or Indian housing assistance’’.
87. Amend § 984.103 as follows:
a. Revise paragraph (a) as set forth
below;
b. In paragraph (b), remove the
parenthetical phrase from the definition
of ‘‘Earned income’’;
b. Remove the definition of ‘‘HA’’
from paragraph (b); and
c. Revise the definitions of ‘‘Lowincome family’’ and ‘‘welfare
assistance’’ in paragraph (b) to read as
follows:
§ 984.103

Definitions.

(a) The terms 1937 Act, Fair Market
Rent, HUD, Public Housing, Public
Housing Agency (PHA), Secretary, and
Section 8, as used in this part, are
defined in part 5 of this title.
(b) * * *
Low-income family. As defined in part
5 of this title.
*
*
*
*
*
Welfare assistance means (for
purposes of the FSS program only)

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income assistance from Federal or State
welfare programs, and includes only
cash maintenance payments designed to
meet a family’s ongoing basic needs.
Welfare assistance does not include:
(1) Nonrecurrent, short-term benefits
that:
(i) Are designed to deal with a
specific crisis situation or episode of
need;
(ii) Are not intended to meet recurrent
or ongoing needs; and
(iii) Will not extend beyond four
months.
(2) Work subsidies (i.e., payments to
employers or third parties to help cover
the costs of employee wages, benefits,
supervision, and training);
(3) Supportive services such as child
care and transportation provided to
families who are employed;
(4) Refundable earned income tax
credits;
(5) Contributions to, and distributions
from, Individual Development Accounts
under TANF;
(6) Services such as counseling, case
management, peer support, child care
information and referral, transitional
services, job retention, job advancement
and other employment-related services
that do not provide basic income
support;
(7) Transportation benefits provided
under a Job Access or Reverse Commute
project, pursuant to section 404(k) of the
Social Security Act, to an individual
who is not otherwise receiving
assistance;
(8) Amounts solely directed to
meeting housing expenses;
(9) Amounts for health care;
(10) Food stamps and emergency
rental and utilities assistance; and
(11) SSI, SSDI, or Social Security.
88. Amend § 984.105 as follows:
a. Revise paragraphs (a) and (b) to
read as set forth below;
b. Redesignate paragraph (e) as
paragraph (f); and
c. Add a new paragraph (e), to read as
set forth below.
§ 984.105

Minimum program size.

(a) FSS program size. (1) Minimum
program size requirement. A PHA must
operate an FSS program of the
minimum program size determined in
accordance with paragraph (b) of this
section.
(2) Exception or reduction of
minimum program size. Paragraph (c) of
this section states when HUD may grant
an exception to the minimum program
size requirement, and paragraph (d)
states when the minimum program size
may be reduced.
(3) Option to operate larger FSS
program. A PHA may choose to operate

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an FSS program of a larger size than the
minimum.
(b) How to determine FSS minimum
program size. (1) Public housing. The
minimum size of a PHA’s public
housing FSS program is equal to the
number of public housing units
specified below:
(i) The total number of public housing
units reserved in FY 1993 through
October 20, 1998; plus
(ii) The number of public housing
units reserved in FY 1991 and FY 1992
under the FSS incentive award
competitions; minus
(iii) The number of families that have
graduated from the PHA’s public
housing FSS program on or after
October 21, 1998, by fulfilling their FSS
contract of participation obligations.
(2) Section 8. The minimum size of a
PHA’s Section 8 FSS program is equal
to the number of Section 8 certificate
and voucher program units as calculated
below:
(i) Units included. (A) The number of
rental certificates and rental voucher
units reserved under the combined FY
1991/1992 FSS incentive award
competition; plus
(B) The number of additional rental
certificates and rental voucher units
reserved in FY 1993 through October 20,
1998 (not including the renewal of
funding for units previously reserved),
minus such units that are excluded from
minimum program size in accordance
with paragraph (b)(2)(ii) of this section;
minus
(C) The number of families who have
graduated from the PHA’s Section 8 FSS
program on or after October 21, 1998, by
fulfilling their contract of participation
obligations.
(ii) Units excluded. When
determining a PHA’s minimum Section
8 FSS program size, funding reserved in
FY 1993 through October 20, 1998 for
the following program categories is
excluded (except as provided in
paragraph (b)(2)(ii)(B) of this section):
(A) Funding for families affected by
termination, expiration or owner opt-out
under Section 8 project-based programs;
(B) Funding for families affected by
demolition or disposition of a public
housing project or replacement of a
public housing project;
(C) Funding for families affected by
conversion of assistance from the
Section 23 leased housing or housing
assistance payments programs to the
Section 8 program;
(D) Funding for families affected by
the sale of a HUD-owned project; and
(E) Funding for families affected by
the prepayment of a mortgage or
voluntary termination of mortgage
insurance.

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(3) Maintaining minimum program
size. The minimum program size for a
PHA’s public housing or Section 8 FSS
program is reduced by one slot for each
family that graduates from the FSS
program by fulfilling its FSS contract of
participation on or after October 21,
1998. If an FSS slot is vacated by a
family that has not completed its FSS
contract of participation obligations, the
slot must be filled by a replacement
family which has been selected in
accordance with the FSS family
selection procedures set forth in
§ 984.203.
*
*
*
*
*
(e) Expiration of exception. A full or
partial exception to the FSS minimum
program size requirement (approved by
HUD in accordance with paragraph (c)
or (d) of this section) expires three years
from the date of HUD approval of the
exception. If a PHA seeks to continue an
exception after its expiration, the PHA
must submit a new request and a new
certification to HUD for consideration.
*
*
*
*
*
89. Revise paragraphs (a) and (c) of
§ 984.201 to read as follows:
§ 984.201

Action Plan.

(a) Requirement for Action Plan. A
PHA must have a HUD-approved Action
Plan that complies with the
requirements of this section before the
PHA implements an FSS program,
whether the FSS program is a
mandatory or voluntary program.
*
*
*
*
*
(c) Plan submission.—(1) Initial
submission.
(i) Mandatory program. Unless the
dates stated in paragraph (c) of this
section are extended by HUD for good
cause, a PHA that is establishing its first
FSS program must submit an Action
Plan to HUD for approval within 90
days after the PHA receives notice from
HUD of:
(A) Approval of the PHA’s application
for incentive award units; or
(B) Approval of other funding that
establishes the obligation to operate an
FSS program, if the PHA did not receive
FSS incentive award units.
(ii) Voluntary program. The PHA
must submit its Action Plan and obtain
HUD approval of the plan before the
PHA implements a voluntary FSS
program, including a program that
exceeds the minimum size for a
mandatory program.
(2) Revision. Following HUD’s initial
approval of the Action Plan, no further
approval of the Action Plan is required
unless the PHA proposes to make policy
changes to the Action Plan or increase
the size of a voluntary program; or HUD

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Federal Register / Vol. 65, No. 61 / Wednesday, March, 29, 2000 / Rules and Regulations
requires other changes. The PHA must
submit any changes to the Action Plan
to HUD for approval.
*
*
*
*
*
90. Amend § 984.301(a) as follows:
a. Redesignate paragraphs (a)(1),
(a)(2), and (a)(3), as paragraphs (a)(2)(i),
(a)(2)(ii), and (a)(2)(iii);
b. Add a new paragraph (a)(1) to read
as set forth below; and
c. Add a new heading for paragraph
(a)(2), to read as follows:
§ 984.301

Program implementation.

(a) Program implementation deadline.
(1) Voluntary program. There is no
deadline for implementation of a
voluntary program. A voluntary
program, however, may not be
implemented before the requirements of
§ 984.201 have been satisfied.
(2) Mandatory program.
*
*
*
*
*
§ 984.302

Administrative fees.

91. Amend § 984.302(a) by removing
the phrase ‘‘the minimum program size
of’’.

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92. Revise § 984.306(b) to read as
follows:

PART 985—SECTION 8 MANAGEMENT
ASSESSMENT PROGRAM (SEMAP)

§ 984.306 Section 8 residency and
portability requirements.

93. The authority citation for part 985
continues to read as follows:

*

*
*
*
*
(b) Initial occupancy.—(1) First 12
months. A family participating in the
Section 8 FSS program must lease an
assisted unit, for a minimum period of
12 months after the effective date of the
contract of participation, in the
jurisdiction of the PHA that selected the
family for the FSS program. However,
the PHA may approve a family’s request
to move outside the initial PHA
jurisdiction under portability (in
accordance with § 982.353 of this
chapter) during this period.
(2) After the first 12 months. After the
first 12 months of the FSS contract of
participation, the FSS family may move
outside the initial PHA jurisdiction
under portability procedures (in
accordance with § 982.353 of this
chapter).
*
*
*
*
*

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Authority: 42 U.S.C. 1437a, 1437c, 1437f,
and 3535(d).

94. Revise the second sentence of
paragraph (o)(2) to read as follows:
§ 985.3 Indicators, HUD verification
methods and ratings. * * *

*

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*
*
*
(o) * * *
(2) * * * This number is divided by
the number of mandatory FSS slots, as
determined under § 984.105 of this
chapter.
*
*
*
*
*
Dated: March 14, 2000.
Andrew Cuomo,
Secretary.
[FR Doc. 00–6898 Filed 3–28–00; 8:45 am]
BILLING CODE 4210–32–P

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