3. The Family agrees to repay the stated balance by paying monthly installments of

3 to the Lessor acting on behalf of the Housing Authority. These payments shall begin on the first day of the second month of the lease, and they shall be in addition to the Family's regular monthly rental payments to the Lessor.

4. The Lessor agrees to collect from the Family the monthly amounts specified in item 3 above and remit them to the Housing Authority, with the understanding, however, that failure on the part of the Family to pay such amounts shall not affect the Lessor's rights to housing assistance payments otherwise payable to him by the Housing Authority.

(Signature of LHA Representative)

(Signature of the Family Head) (Signature of the Lessor Representative)

(Date)

1277.214 Preparation

1 Insert name of utility company to which deposit is paid.

2 Insert an amount equal to the lesser of (a) one-twelfth of the Total Amount of Deposits stated in Item I above or (b) one month's gross family contribution.

* Insert monthly amount to be paid by the Family, generally in the amount of oneeleventh of the balance due. This amount may subsequently be adjusted by the Housing Authority be reason of changes in income or rent-paying ability of the Family by amendment of this Agreement.

Rehabilitation period.

Execution of Housing Assistance

1277.219 HUD review of contract com

pliance.

1277.220 PHA reporting requirements [Reserved]

APPENDICES

NOTE-Various prescribed forms which relate to internal HUD processing procedures are not included herein, but will appear in the HUD Substantial Rehabilitation Handbook.

I. Agreement to enter into housing assistance payments contract-private-owner or PHA-owner project.

II. Housing assistance payments contractprivate-owner or PHA-owner project.

III. Annual contributions contract-private-owner/PHA project.

IV. Agreement to enter into housing assistance payments contract-private-owner/PHA project.

V. Housing assistance payments contractprivate-owner/PHA project.

AUTHORITY: Sec. 7(d), Department of Housing and Urban Development Act (42 U.S.C. 3535(d)); sec. 5(b) of the U.S. Housing Act of 1937 (42 U.S.C. 1437c (b); sec. 8 of the U.S. Housing Act of 1937 (42 U.S.C. 14371).

SOURCE: 39 FR 45132, Dec. 30, 1974, unless otherwise noted.

Subpart A—Applicability, Scope and Basic Policies

§ 1277.101

Applicability and scope.

(a) The policies and procedures contained herein are applicable to the making of housing assistance payments on behalf of Eligible Families leasing substantially rehabilitated housing pursuant to the provisions of Section 8 of the U.S. Housing Act of 1937 ("Act").

(b) For the purpose of this Part, "substantially rehabilitated housing" shall mean housing requiring substantial rehabilitation (See Sec. 1277.102(bb)) for which, prior to the start of rehabilitation, an Agreement to Enter into Housing Assistance Payments Contract is executed between the Owner and the Department of Housing and Urban Development ("HUD") or the Public Housing Agency. However, housing already undergoing rehabilitation may be eligible for participation if all subsequent actions are in compliance with this Part and if the Owner certifies and demonstrates to the satisfaction of HUD that:

(1) At the date of application to HUD, a substantial amount of rehabilitation (generally at least 25 percent) remains to be completed; and

(2) At the date of applications HUD, the project cannot be completed without a commitment for assistance under this Part; and

(3) At the time rehabilitation was initiated, all of the parties reasonably expected that the project would be completed without assistance under this Part.

(c) Conversions of Section 23 projects to the Section 8 program will be permitted where appropriate, provided that all parties (including HUD) agree to the terms and conditions.

ment"). (1) In the case of a PrivateOwner Project or a PHA-Owner Project, a written agreement between the Owner and HUD that, upon satisfactory completion of the rehabilitation in accordance with the HUD-approved Final Proposal, HUD will enter into a Housing Assistance Payments Contract with the Owner. (See Appendix I.)

(2) In the case of a Private-Owner/ PHA Project, a written agreement between the private Owner and the PHA, approved by HUD, that, upon satisfactory completion of the rehabilitation in accordance with the HUD-approved Final Proposal, the PHA will enter into a Housing Assistance Payments Contract with the private Owner. (See Appendix IV.)

(b) Allowance for Utilities and Other Services ("Allowance"). An amount determined or approved by HUD as an allowance for the cost of utilities (except telephone) and charges for other services payable directly by the Family. In the case of a proposal under which the Families must pay directly for one or more utilities or services, the amount of the Allowance is deducted from the Gross Rent in determining the Contract Rent and is included in the Gross Family Contribution.

(c) Annual Contributions Contract ("ACC"). In the case of a PrivateOwner/PHA Project, a written agreement between HUD and the PHA to provide annual contributions to the PHA with respect to the project. (See Appendix III.)

(d) Contract Rent. The rent payable to the Owner under his Contract including the portion of the rent payable by the Family in the case of a cooperative, the term "Contract Rent" means charges under the occupancy agreements between the members and the cooperative.

(e) Decent, Safe, and Sanitary. Housing is Decent, Safe, and Sanitary at completion of rehabilitation if the dwelling units and related facilities are accepted by HUD as meeting the requirements of the Agreement. (See Sec. 1277.216.) Housing continues to be Decent, Safe, and Sanitary if it is being maintained in a condition substantially the same as that on acceptance in all pertinent respects, including the following:

(1) Condition of the exterior (including the grounds) and the interior of the structure and of the housing unit;

(2) Operating condition of sanitary facilities and of solid and liquid waste disposal facilities;

(3) Operating condition of kitchen facilities, including range and refrigerator, sink, and space for storage of food and for storage of utensils and dishes;

(4) Operating condition of heating, lighting and ventilating equipment and/ or other facilities; and

(5) Size, number of rooms, and furnishability in relation to the size and type of Family in occupancy in accordance with any applicable State or local codes.

(f) Eligible Family ("Family"). A Family which qualifies as a Lower-Income Family and which meets the other requirements of the Act and this Part. The term Family includes an elderly, disabled, handicapped, or displaced person and the remaining member of a tenant family as defined in section 3(2) of the Act. A Family's housing assistance payment may continue until its Gross Family Contribution equals the Gross Rent for the dwelling unit it occupies, but the termination of housing assistance payments at such point shall not affect the family's other rights under its Lease nor shall such termination preclude resumption of payments as a result of subsequent changes in income or other relevant circumstances during the term of the Contract.

(g) Fair market rent. (1) The rent which is determined by HUD as the Fair Market Rent for new construction projects under Section 8 of Act. This Fair Market Rent is the rent, including utilities (except telephone), ranges and refrigerators, parking, and all maintenance, management and other services, which, as determined at least annually by HUD, would be required to be paid in order to obtain privately developed and owned, newly constructed rental housing of modest (non-luxury) nature with suitable amenities and sound architectural design meeting the objectives of the HUD Minimum Property Standards.

(2) Separate Fair Market Rents will be established for dwelling units by various sizes (number of bedrooms) and types (e.g., elevator, row, detached; housing designed for the elderly or handicapped shall be a separate type for this purpose).

(3) The Fair Market Rents will be published in the FEDERAL REGISTER, and, in order to allow for the period of rehabilitation, computation of the published

39-082-75—25

Fair Market Rents will include HUD's estimate of anticipated rent increases during an appropriate future period as stated in the publication. Accordingly, for any given project for which the scheduled time for rehabilitation will be less than such future period, an appropriate reduction will be made in determining the approvable Contract Rent.

(4) The Fair Market Rent, minus the amount of any applicable Allowance for Utilities and Other Services payable directly by the Family, shall be the maximum amount that can be approved as the Contract Rent, except that the maximum approvable amount may be lower as stated in paragraph (g) (3) of this Section and may be higher or lower as provided in Sec. 1277.103 (f).

(h) Final proposal. A proposal to provide substantially rehabilitated housing submitted in response to a HUD notification of section of Preliminary Proposal. (See Secs. 1277.204 and 1277.2081277.210.)

(i) Gross family contribution. The portion of the Gross Rent payable by an Eligible Family, i.e., the difference between the amount of the housing assistance payment payable on behalf of the Family and the Gross Rent.

(j) Gross rent. The Contract Rent plus any Allowance for Utilities and Other Services.

(k) HCD Act. The Housing and Community Development Act of 1974.

(1) Housing Assistance Payments Contract ("Contract"). (1) In the case of a Private-Owner Project or a PHAOwner Project, a written contract between the Owner and HUD for the purpose of providing housing assistance payments to the Owner on behalf of Eligible Families. (See Appendix II.)

(2) In the case of a Private-Owner/ PHA Project, a written contract between the private Owner and the PHA, approved by HUD, for the purpose of providing housing assistance payments to the Owner on behalf of Eligible Families. (See Appendix V.)

(m) Housing assistance payments on behalf of eligible family. The amount of housing assistance payment on behalf of an Eligible Family determined in accordance with schedules and criteria established by HUD. (See Sec. 1277.103 (t).)

(n) HUD. The Department of Housing and Urban Development or its designee.

(0) Income. Income from all sources of each member of the household as de

termined in accordance with criteria established by HUD.

(p) Invitation for preliminary proposals-substantial rehabilitation ("Invitation for Preliminary Proposals"). A notice published by HUD inviting the submission of Preliminary Proposals in accordance with this Part. (See Sec. 1277.203.)

(q) Lease. A written agreement between an Owner and an Eligible Family for the leasing of a Decent, Safe, and Sanitary dwelling unit in accordance with the applicable Contract, which agreement is in compliance with the provisions of this Part.

(r) Local Housing Assistance Plan. A housing assistance plan submitted by a unit of general local government and approved by HUD under section 104 of the HCD Act or, in the case of a unit of general local government not participating under Title I of the HCD Act, a housing plan which contains the elements set forth in section 104 (a) (4) of the HCD Act and which is approved by the Secretary as meeting the requirements of section 213 of that Act.

(s) Lower-income family. A family whose income does not exceed 80 percent of the median income for the area as determined by HUD with adjustments for smaller or larger families, except that HUD may establish income limits higher or lower than 80 percent on the basis of its findings that such variations are necessary because of the prevailing levels of construction costs, unusually high or low incomes, or other factors.

(t) New communities. New community developments approved under Title IV of the Housing and Urban Development Act of 1968 and Title VII of the Housing and Urban Development Act of 1970.

(u) Owner. Any private person or entity, including a cooperative, or a PHA, having the legal right to lease or sublease substantially rehabilitated dwelling units.

(v) PHA-Owner Proposal and PHAOwner Project. A proposal for a project under this Part (and the resulting project) to be owned by a PHA throughout the term of the Agreement and Contract where such Agreement and Contract are to be entered into between the PHA and HUD.

(w) Preliminary proposal. A proposal to provide substantially rehabilitated housing submitted in response to a HUD Invitation for Preliminary Proposals. (See Secs. 1277.203-1277.208.)

(x) Private-Owner/PHA Proposal and Private-Owner/PHA Project. A proposal for a project under this Part (and the resulting project) to be owned by a private Owner throughout the term of the Agreement and Contract where such Agreement and Contract are to be entered into between the private Owner and the PHA pursuant to an ACC between the PHA and HUD.

(y) Private-Owner Proposal and Private-Owner Project. A proposal for a project under this Part (and the resulting project) to be owned by a private Owner throughout the term of the Agreement and Contract where such Agreement and Contract are to be entered into between the private Owner and HUD.

(z) Public Housing Agency (“PHA”). Any State, county, municipality, or other governmental entity or public body (or agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of housing for low-income Families.

(aa) Secretary. The Secretary of Housing and Urban Development.

(2) Substantial rehabilitation also includes renovation, alteration or remodeling for the conversion or adaptation of structurally sound property to the design and condition required for use under this Part (e.g., conversion of a hotel to housing for the elderly).

(cc) Very low-income family. A family whose income does not exceed 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller or larger families. § 1277.103 Basic policies.

(a) Limitation on Use of Substantially Rehabilitated Housing. (1) No proposal for housing to be rehabilitated may be approved by HUD unless HUD requirements implementing the provisions of

sections 213 (a), (b), and (c) of the HCD Act regarding review by the unit of general local government have been satisfied.

(2) Substantial Rehabilitated projects shall be permitted only where: (i) HUD determines that there is not and there is not likely soon to be an adequate supply of existing housing which, with the aid of housing assistance payments provided under the Section 8 Housing Assistance Payments Program-Existing Housing, can meet the needs of Eligible Families, or (ii) the proposed project is specifically approved by HUD in accordance with priorities established from time to time by the Secretary including priorities for New Communities which involve substantial rehabilitation.

(b) Preference for Certain Types of Projects. (1) 20 percent projects. Assistance payments may be made with respect to up to 100 percent of the dwelling units in any structure or project. However, within the category of projects that are not designed for use primarily by the elderly and the handicapped and which involve the rehabilitation of more than 50 units, a preference will be provided for projects in which housing assistance will be limited to 20 percent or less of the units. (See Sec. 1277.208(e) (1).)

(2) Three or more bedroom projects. Where the need for dwelling units of three or more bedroom size ("large dwelling units") is shown, each HUD field office shall be responsible, to the extent feasible, for inviting and selecting proposals which in the aggregate will achieve the goal of providing a number of large dwelling units equal to at least 20 percent of all the assisted units approved under the section 8 Housing Assistance Payments Program, without undue concentration of such large dwelling units in any one location.

(c) Maximum Total Annual Housing Assistance Payments (Private-Owner or PHA-Owner Projects). (1) The maximum total annual housing assistance payments that may be committed under the Contract shall be the total of the Gross Rents for all the Contract units in the project.

(2) A project account will be established and maintained, in an amount as determined by the Secretary consistent with his responsibilities under section 8(c) (6) of the Act, out of amounts by which the maximum Contract commitment per year exceeds amounts paid under the Contract for any year. This ac

count will be established and maintained by HUD as a specifically identified and segregated account, and payment shall be made therefrom only for the following purposes:

(i) Increases in housing assistance payments; and

(ii) Other costs specifically authorized or approved by the Secretary.

Any balance in this account after payment of the last housing assistance payment shall be applied by HUD as a receipt under section 10(b) of the Act.

(d) Annual contributions (privateowner/PHA projects). (1) The maximum total annual contributions that may be contracted for in the ACC for a project shall be: (i) the total of the Gross Rents for all the Contract Units in the project plus (ii) a fee for the regular costs of PHA administration. HUD-approved preliminary costs for administration (including administrative costs in connection with PHA activities related to relocation of occupants) shall be payable out of this total.

(2) A project account will be established and maintained, in an amount as determined by the Secretary consistent with his responsibilities under section 8(c) (6) of the Act, out of amounts by which the maximum ACC commitment per year exceeds amounts paid under the ACC for any year. This account shall be established and maintained by HUD as a specifically identified and segregated account, and payment shall be made therefrom only for the following purposes:

(i) Increases in housing assistance payments;

(ii) Increases in the amount of the fee for regular PHA costs of administration; and

(iii) Other costs specifically authorized or approved by the Secretary.

Any balance in this account after payment of the last annual contribution for the project shall be applied by HUD in accordance with law.

(e) Housing assistance payments to owners.-(1) General. Housing assistance payments shall be paid to Owners for units under lease by Eligible Families, in accordance with the Contract and as provided in this paragraph (e). The housing assistance payment will pay the Owner the difference between the Contract Rent and the portion of said rent payable by the Family as determined in accordance with the HUD-established schedules and criteria.