80 FR 36830 - Rental Assistance Demonstration: Revised Program Notice

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 80, Issue 123 (June 26, 2015)

On July 26, 2012, HUD announced through notice in the Federal Register the implementation of the statutorily authorized Rental Assistance Demonstration (RAD), which provides the opportunity to test the conversion of public housing and other HUD-assisted properties to long-term, project-based section 8 rental assistance. The July 26, 2012, Federal Register notice also announced the availability of the program notice (PIH 2012-32), providing program instruction on HUD's Web site. On July 2, 2013, HUD issued a revised program notice (PIH 2012-32, REV-1). This Federal Register notice announces further revisions to RAD and solicits public comment on changed eligibility and selection criteria. It also announces the posting of a further revised program notice (Revised Program Notice, PIH 2012-32, REV-2). As provided by the RAD Statute, this notice addresses the requirement that the demonstration may proceed after publication of notice of its terms in the Federal Register. This notice summarizes the key changes made to PIH 2012-32, REV-1. This notice also meets the RAD statutory requirement to publish at least 10 days before they may take effect, waivers and alternative requirements authorized by the statute, which does not prevent the demonstration from proceeding immediately.

[Federal Register Volume 80, Number 123 (Friday, June 26, 2015)]
[Notices]
[Pages 36830-36832]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-15764]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5630-N-07]


Rental Assistance Demonstration: Revised Program Notice

AGENCY: Office of the Assistant Secretary for Public and Indian Housing 
and Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: On July 26, 2012, HUD announced through notice in the Federal 
Register the implementation of the statutorily authorized Rental 
Assistance Demonstration (RAD), which provides the opportunity to test 
the conversion of public housing and other HUD-assisted properties to 
long-term, project-based section 8 rental assistance. The July 26, 
2012, Federal Register notice also announced the availability of the 
program notice (PIH 2012-32), providing program instruction on HUD's 
Web site. On July 2, 2013, HUD issued a revised program notice (PIH 
2012-32, REV-1). This Federal Register notice announces further 
revisions to RAD and solicits public comment on changed eligibility and 
selection criteria. It also announces the posting of a further revised 
program notice (Revised Program Notice, PIH 2012-32, REV-2). As 
provided by the RAD Statute, this notice addresses the requirement that 
the demonstration may proceed after publication of notice of its terms 
in the Federal Register. This notice summarizes the key changes made to 
PIH 2012-32, REV-1. This notice also meets the RAD statutory 
requirement to publish at least 10 days before they may take effect, 
waivers and alternative requirements authorized by the statute, which 
does not prevent the demonstration from proceeding immediately.

DATES: Comment Due Date: July 27, 2015. Interested persons are invited 
to submit comments electronically to [email protected] no later than the 
comment due date. Effective Dates: The Revised Program Notice, PIH 
2012-32, REV-2, other than those items listed as subject to notice and 
comment or new statutory or regulatory waivers or alternative 
requirements specified in this notice, is effective June 26, 2015
    The new statutory and regulatory waivers and alternative 
requirements are effective July 6, 2015.
    The items listed as subject to notice and comment will be effective 
upon July 27, 2015. If HUD receives adverse comment that leads to 
reconsideration, HUD will notify the public in a new notice immediately 
upon the expiration of the comment period.

FOR FURTHER INFORMATION CONTACT: To assure a timely response, please 
direct requests for further information electronically to the email 
address [email protected]. Written requests may also be directed to the 
following address: Office of Public and Indian Housing--RAD Program; 
Department of Housing and Urban Development; 451 7th Street SW., Room 
2000; Washington, DC 20410.

SUPPLEMENTARY INFORMATION: 

I. Background

    RAD, authorized by the Consolidated and Further Continuing 
Appropriations Act, 2012 (Pub. L. 122-55, signed November 18, 2011) 
(2012 Appropriations Act), allows for the conversion of assistance 
under the public housing, Rent Supplement (Rent Supp), Rental 
Assistance (RAP), and Moderate Rehabilitation (Mod Rehab) programs 
(collectively, ``covered programs'') to long-term, renewable assistance 
under section 8.\1\ As provided in the Federal Register notice 
published on March 8, 2012, at 77 FR 14029, RAD has two separate 
components:
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    \1\ The RAD statutory requirements were amended by the 
Consolidated Appropriations Act, 2014 (Pub. L. 113-76, signed 
January 17, 2014) (2014 Appropriations Act) and the Consolidated and 
Further Continuing Appropriations Act, 2015 (Pub. L. 113-235, signed 
December 16, 2014) (2015 Appropriations Act). The statutory 
provisions of the 2012 Appropriations Act pertaining to RAD, as 
amended, are referred to as the RAD Statute in this notice.
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    First Component: Under the RAD Statute, the First Component of RAD 
allows projects funded under the public housing and Mod Rehab programs 
\2\ to convert to long-term section 8 rental assistance contracts. 
Under this component of RAD, which is covered by section I of the 
Revised Program Notice, Public Housing Authorities (PHAs) and Mod Rehab 
owners may apply to HUD to convert to one of two forms of section 8 
Housing Assistance Payment (HAP) contracts: Project-based vouchers 
(PBVs) or project-based rental assistance (PBRA). No additional or 
incremental funds were authorized for this component of RAD and, 
therefore, PHAs and Mod Rehab owners will be required to convert 
assistance for projects at current subsidy levels. The RAD Statute 
authorizes up to 185,000 units to convert assistance under this 
component.\3\ The RAD Statute further specifies that HUD shall provide 
an opportunity for public comment on draft eligibility and selection 
criteria and the procedures that will apply to the selection of 
properties that will

[[Page 36831]]

participate in this component of the demonstration.
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    \2\ While the statute authorizes conversions from Mod Rehab 
assistance under the First Component, the revisions to the program 
notice are requiring that all conversions from Mod Rehab be 
conducted under the Second Component.
    \3\ The original 2012 Appropriations Act allowed for a cap of 
only 60,000 units to convert assistance under the First Component. 
However, this cap was raised to 185,000 by the 2015 Appropriations 
Act.
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    The First Component became effective on July 26, 2012. The initial, 
competitive application period for the First Component opened on 
September 24, 2012, and closed on October 24, 2012, at which time the 
second application period opened.
    Second Component: The Second Component of RAD, which is covered 
under sections II and III of the Revised Program Notice, allows owners 
of projects funded under the Rent Supp, RAP, and Mod Rehab programs 
with a contract expiration or termination occurring after October 1, 
2006, to convert tenant protection vouchers (TPVs) to PBVs or PBRA.\4\ 
There is no cap on the number of units that may be converted under this 
component of RAD. While these conversions are not necessarily subject 
to the current funding levels for each project or a unit cap similar to 
public housing conversions, the rents will be subject to rent 
reasonableness under the PBV program and are subject to the 
availability of overall appropriated amounts for TPVs.
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    \4\ Authority to convert assistance to PBRA under the Second 
Component was granted by the 2015 Appropriations Act. In addition, 
the 2015 Appropriations Act expanded the authority to convert Mod 
Rehab contracts under both the First and Second Components to 
include Mod Rehab Single Room Occupancy contracts, which were 
explicitly excluded under the 2012 Appropriations Act.
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    The Second Component was effective on March 8, 2012, in Notice PIH 
2012-18, and has been amended in subsequent program notice revisions, 
including the Revised Program Notice. Applications for conversion of 
assistance under this component may be submitted immediately.
    Waivers and Alternative Requirements. The RAD Statute provides that 
waivers and alternative requirements authorized under the First 
Component must be published by notice in the Federal Register no later 
than 10 days before the effective date of such notice. Under the Second 
Component of RAD, HUD is authorized to waive or alter the provisions of 
subparagraphs (C) and (D) of section 8(o)(13) of the United States 
Housing Act of 1937 (42 U.S.C. 1437f) (the 1937 Act).
    HUD has previously published its waivers and alternative 
requirements for RAD, on July 26, 2013 (77 FR 43850) and July 2, 2013 
(78 FR 39759). This notice only includes waivers and alternative 
requirements not previously published. Although waivers or alternative 
requirements under the Second Component are not subject to a Federal 
Register publication requirement, the new Second Component waivers and 
alternative requirements are included in this notice as a matter of 
convenience.

II. Key Changes Made to RAD

    The following highlights key changes to the RAD program that are 
included in the Revised Program Notice:

First Component

    1. Reflecting the increase to the unit cap from 60,000 to 185,000 
units.
    2. Modifying the first-come, first-serve approach for selecting 
projects for participation in RAD in order to prioritize properties 
that are part of broader neighborhood revitalization and that have 
higher investment needs (see section 1.11). [Subject to 30-day notice 
and comment].
    3. Limiting conversions under the First Component to public housing 
projects. Mod Rehab projects will now be converted only under the 
Second Component (see section 2.1). [Subject to 30-day notice and 
comment].
    4. Extending the time period for submission of the application of 
the final phase of multi-phase projects to July 1, 2018 (see section 
1.9.C).
    5. Providing contract rents at fiscal year (FY) 2014 rent levels 
for all awards made subsequent to the increase in the unit cap (see 
sections 1.6.B.5 and 1.7.A.5).
    6. Ensuring residents retain rights and protections when their 
total tenant payment (TTP) exceeds the gross rent on the HAP contract 
(see sections 1.6.C.10 and 1.7.B.9).
    7. Eliminating interim program milestones to streamline processing 
and providing additional time to submit Financing Plans for tax credit 
transactions, to better align those deadlines with those of tax credit 
providers (see section 1.12).
    8. Identifying the specific HUD nondiscrimination and equal 
opportunity requirements that are applicable under different conversion 
plans and establishing an up-front HUD review of these requirements for 
certain transactions (see section 1.2.E).
    9. Clarifying when nondwelling property and land can be removed or 
released from the public housing program in conjunction with the 
conversion of assistance (Attachment 1A.M).
    10. Permitting RAD contract rents to increase by a portion of the 
estimated savings in resident utility allowances (see sections 1.6.B.5 
and 1.7.A.5 and Attachment 1C).
    11. Permitting section 8 assistance to ``float'' within certain 
mixed-income properties, so that assistance is not permanently tied to 
specific units in a project (see sections 1.6.B.10 and 1.7.A.11).
    12. Providing additional flexibility for voucher agencies to 
implement Choice-Mobility provisions in PBV conversions (see section 
1.6.D.9).
    13. Clarifying the applicability of site and neighborhood standards 
to new construction on the site of the existing public housing (see 
section 1.4.A.7).
    14. Clarifying that a PHA may operate a PBV program-wide or HCV 
program-wide waiting list and that a project owner may operate a 
community-wide waiting list for its PBRA projects (see sections 1.6.D.4 
and 1.7.C.3).
    15. Providing greater detail around conversions that would transfer 
the assistance to a new site, including criteria HUD will use to assess 
the new site and options for the use or disposition of the original 
public housing site (see section 1.4.A.12).

Second Component

    1. Providing an option for owners of Mod Rehab, Rent Supp, and RAP 
projects to convert to 20-year PBRA (see sections 2 and 3).
    2. Allowing Mod Rehab SROs that were funded under the McKinney-
Vento Homeless Assistance Act (SROs) to convert to long-term PBV or 
PBRA contracts (see section 2).
    3. Formalizing applicability of Davis-Bacon wages for conversions 
of assistance (see sections 2.5.J, 2.6.G, 3.5.J, and 3.6.I).
    4. Clarifying PBV rent setting in section 236 decoupled projects 
(see section 3.5.H).

III. New Waivers and Alternative Requirements

    The RAD Statute provides that waivers and alternative requirements 
authorized under the First Component must be published by notice in the 
Federal Register no later than 10 days before the effective date of 
such notice. Under the Second Component of RAD, HUD is authorized to 
waive or alter the provisions of subparagraphs (C) and (D) of section 
8(o)(13) of the 1937 Act. Although waivers under the Second Component 
are not subject to a Federal Register publication requirement, the 
second component waivers are included as a matter of convenience.
    On July 26, 2012, and July 2, 2013, HUD published by notice lists 
of RAD waivers and alternative requirements. Those lists, which became 
effective August 6, 2012, and July 12, 2013, respectively, are still in 
effect and are not reproduced here. Provided below is a list of new 
waivers and alternative

[[Page 36832]]

requirements that will become effective July 6, 2015.
    1. Under-Occupied Units at Time of Conversion. Provisions affected: 
24 CFR 983.259 and 24 CFR 880.605. Alternative requirements: Families 
occupying, at the time of conversion of assistance, a unit that is 
larger than is appropriate, may remain in the unit until an 
appropriate-sized unit becomes available in the covered project. For 
conversions of assistance under the Second Component, this alternative 
requirement will only apply to families who are elderly or disabled.
    2. Assistance for Families when Total Tenant Payment (TTP) Exceeds 
Gross Rent. Provisions affected: Section 8(o)(13)(H) of the 1937 Act 
and 24 CFR 983.301 and 983.53(d); sections 8-5 C and 8-6 A.1 of Housing 
Handbook 4350.3, REV-1. Alternative requirements: PHAs and owners must 
continue to treat certain families in public housing that has converted 
assistance as assisted and charge 30 percent of adjusted gross income 
in rent. The families covered by this alternative requirement must have 
incomes high enough for their TTP to exceed the contract rent yet still 
remain eligible for assistance or otherwise be unable to afford market 
rate housing in their community.
    3. Choice-Mobility Cap for Public Housing Conversions to PBV. 
Provisions affected: Section 8(o)(13)(E) of the 1937 Act and 24 CFR 
983.261(c). Alternative requirements: PHAs may, for projects that have 
converted assistance from public housing to PBV, provide one of every 
four turnover vouchers to households on their regular HCV waiting list 
instead of for Choice-Mobility vouchers.
    4. Rent Supp/RAP Contracts After Section 236 Prepayment. Provision 
affected: 24 CFR 236.725. Alternative requirement: The original RAP or 
Rent Supp contract may remain in place for 60 days after repayment of a 
section 236 mortgage until the PBV HAP contract is executed.
    5 Uniform Physical Condition Standards (UPCS) Inspections. 
Provision affected: 24 CFR part 5, subpart G. Alternative requirement: 
All units converting assistance to PBRA must meet the Uniform Physical 
Condition Standards no later than the date of completion of initial 
repairs as indicated in the RAD conversion commitment.
    6. Floating Units. Provision affected: 24 CFR 983.203(c). 
Alternative requirement: For certain projects (Choice, Mixed Finance, 
and HOPE VI), HUD is allowing PBV assistance to float among unassisted 
units.

IV. Other New Provisions

    In addition to the waivers above, the following change to the RAD 
program has been implemented:
    Initial Contract Rent Setting for Conversions of Assistance from 
Rent Supp/RAP. The 2015 Appropriations Act permitted HUD to convert 
Rent Supp and RAP properties to PBRA. To implement this authority, HUD 
must establish how to set the contract rents for these conversions. 
Rents will be set on the post-rehabilitation market rents, as 
determined by a rent comparability study, not to exceed 110 percent of 
the fair market rent.

V. Revised Program Notice Availability

    The Revised Program Notice (PIH 2012-32, REV-2) can be found on 
RAD's Web site, www.hud.gov/RAD.

VI. Environmental Review

    A Finding of No Significant Impact with respect to the environment 
was made in connection with HUD notice PIH 2012-32 issued on March 8, 
2012, and in 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. 4332(2)(C)). The Finding remains applicable to the 
Revised Program Notice and is available for public inspection during 
regular business hours in the Regulations Division, Office of General 
Counsel; Department of Housing and Urban Development; 451 7th Street 
SW., Room 10276; Washington, DC 20410- 0500. Due to security measures 
at the HUD Headquarters building, please schedule an appointment to 
review the Finding by calling the Regulations Division at 202-402-3055 
(this is not a toll-free number). Individuals with speech or hearing 
impairments may access this number via TTY by calling the Federal Relay 
Service at 800-877-8339.

    Dated: June 19, 2015.
Lourdes Castro Ram[iacute]rez,
Principal Deputy Assistant Secretary for Public and Indian Housing.
Edward L. Golding,
Principal Deputy Assistant Secretary for Housing.
    Approved on: June 3, 2015.
Nani A. Coloretti,
Deputy Secretary.
[FR Doc. 2015-15764 Filed 6-25-15; 8:45 am]
 BILLING CODE 4210-67-P