[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR882.805]

[Page 92-95]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER VIII--OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL 
 
PART 882--SECTION 8 MODERATE REHABILITATION PROGRAMS--Table of Contents
 
   Subpart H--Section 8 Moderate Rehabilitation Single Room Occupancy 
                    Program for Homeless Individuals
 
Sec. 882.805  HA application process, ACC execution, and pre-rehabilitation activities.

    (a) Review. When funds are made available for assistance, HUD will 
publish a notice of funding availability (NOFA) in the Federal Register 
in accordance with the requirements of 24 CFR part 4. HUD will review 
and screen applications in accordance with the guidelines, rating 
criteria, and procedures published in the NOFA.
    (b) ACC Execution. (1) Before execution of the annual contributions 
contract (ACC), the HA must submit to the appropriate HUD field office 
the following:
    (i) Estimates of Required Annual Contributions, Forms HUD-52672 and 
HUD-52673;
    (ii) Administrative Plan, which should include:
    (A) Procedures for tenant outreach;
    (B) A policy governing temporary relocation; and
    (C) A mechanism to monitor the provision of supportive services.
    (iii) Proposed Schedule of Allowances for Tenant-Furnished Utilities 
and Other Services, Form HUD-52667, with a justification of the amounts 
proposed;

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    (iv) If applicable, proposed variations to the acceptability 
criteria of the Housing Quality Standards (see Sec. 882.803(b)); and
    (v) The fire and building code applicable to each structure.
    (2) After HUD has approved the HA's application, the review and 
comment requirements of 24 CFR part 791 have been complied with, and the 
HA has submitted (and HUD has approved) the items required by paragraph 
(b)(1) of this section, HUD and the HA must execute the ACC in the form 
prescribed by HUD. The initial term of the ACC must be 11 years. This 
term allows one year to rehabilitate the units and place them under a 
10-year HAP contract. The ACC must give HUD the option to renew the ACC 
for an additional 10 years.
    (3) Section 882.403(a) (Maximum Total ACC Commitments) applies to 
this program.
    (4) Section 882.403(b) (Project account) applies to this program.
    (c)(1) If an owner is proposing to accomplish at least $3000 per 
unit of rehabilitation by including work to make the unit(s) accessible 
to a person with disabilities occupying the unit(s) or expected to 
occupy the unit(s), the PHA may approve such units not to exceed 5 
percent of the units under its Program, provided that accessible units 
are necessary to meet the requirements of 24 CFR part 8, which 
implements section 504 of the Rehabilitation Act of 1973. The 
rehabilitation must make the unit(s), and access and egress to the 
unit(s), barrier-free with respect to the disability of the individual 
in residence or expected to be in residence.
    (2) The PHA must take the applications and determine the eligibility 
of all tenants residing in the approved units who wish to apply for the 
Program. After eligibility of all the tenants has been determined, the 
Owner must be informed of any adjustment in the number of units to be 
assisted. In order to make the most efficient use of housing assistance 
funds, an Agreement may not be entered into covering any unit occupied 
by a family which is not eligible to receive housing assistance 
payments. Therefore, the number of units approved by the PHA for a 
particular proposal must be adjusted to exclude any unit(s) determined 
by the PHA to be occupied by a family not eligible to receive housing 
assistance payments. Eligible Families must also be briefed at this 
stage as to their rights and responsibilities under the Program.
    (3) Should the Owner agree with the assessment of the PHA as to the 
work that must be accomplished, the preliminary feasibility of the 
proposal, and the number of units to be assisted, the Owner, with the 
assistance of the PHA where necessary, must prepare detailed work write-
ups including specifications and plans (where necessary) so that a cost 
estimate may be prepared. The work write-up will describe how the 
deficiencies eligible for amortization through the Contract Rents are to 
be corrected including minimum acceptable levels of workmanship and 
materials. From this work write-up, the Owner, with the assistance of 
the PHA, must prepare a cost estimate for the accomplishment of all 
specified items.
    (4) The owner is responsible for selecting a competent contractor to 
undertake the rehabilitation. The PHA must propose opportunities for 
minority contractors to participate in the program.
    (5) The PHA must discuss with the Owner the various financing 
options available. The terms of the financing must be approved by the 
PHA in accordance with standards prescribed by HUD.
    (6) Before execution of the Agreement, the HA must:
    (i)(A) Inspect the structure to determine the specific work items 
that need to be accomplished to bring the units to be assisted up to the 
Housing Quality Standards (see Sec. 882.803(b)) or other standards 
approved by HUD;
    (B) Conduct a feasibility analysis, and determine whether cost-
effective energy conserving improvements can be added;
    (C) Ensure that the owner prepares the work write-ups and cost 
estimates required by paragraph (c)(3) of this section;
    (D) Determine initial base rents and contract rents;

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    (ii) Assure that the owner has selected a contractor in accordance 
with paragraph (c)(4) of this section;
    (iii) After the financing and a contractor are obtained, determine 
whether the costs can be covered by initial contract rents, computed in 
accordance with paragraph (d) of this section; and, if a structure 
contains more than 50 units to be assisted, submit the base rent and 
contract rent calculations to the appropriate HUD field office for 
review and approval in sufficient time for execution of the Agreement in 
a timely manner;
    (iv) Obtain firm commitments to provide necessary supportive 
services;
    (v) Obtain firm commitments for other resources to be provided;
    (vi) Determine that the $3,000 minimum amount of work requirement 
and other requirements in paragraph (c)(1) of this section are met;
    (vii) Determine eligibility of current tenants, and select the units 
to be assisted, in accordance with paragraph (c)(2) of this section;
    (viii) Comply with the financing requirements in paragraph (c)(5) of 
this section;
    (ix) Assure compliance with all other applicable requirements of 
this subpart; and
    (x) If the HA determines that any structure proposed in its 
application is infeasible, or the HA proposes to select a different 
structure for any other reason, the HA must submit information for the 
proposed alternative structure to HUD for review and approval. HUD will 
rate the proposed structure in accordance with procedures in the 
applicable notice of funding availability. The HA may not proceed with 
processing for the proposed structure or execute an Agreement until HUD 
notifies the HA that HUD has approved the proposed alternative structure 
and that all requirements have been met.
    (d) Initial contract rents. Section 882.408 (Initial contract 
rents), including the establishment of fair market rents for SRO units 
at 75 percent of the O-bedroom Moderate Rehabilitation Fair Market Rent, 
applies to this program, except as follows:
    (1)(i) In determining the monthly cost of a rehabilitation loan, in 
accordance with Sec. 882.408(c)(2), a loan term of a least 10 years 
(instead of 15 years) may be used. The exception in 
Sec. 882.408(c)(2)(iii) for using the actual loan term if the total 
amount of the rehabilitation is less than $15,000 continues to apply. In 
addition, the cost of the rehabilitation that may be included for the 
purpose of calculating the amount of the initial contract rent for any 
unit must not exceed the lower of:
    (A) The projected cost of rehabilitation; or
    (B) The per unit cost limitation that is established by Federal 
Register notice, plus the cost of the fire and safety improvements 
required by 24 CFR 982.605(b)(4). HUD may, however, increase the 
limitation in paragraph (d)(1)(i)(B) of this section by an amount HUD 
determines is reasonable and necessary to accommodate special local 
conditions, including high construction costs or stringent fire or 
building codes. HUD will publish future cost limitation changes in the 
Federal Register in the Notice of Funding Availability issued each year.
    (ii) If the Federal Housing Administration (FHA) believes that high 
construction costs warrant an increase in the per unit cost limitation 
in paragraph (d)(1)(i)(B) of this section, the HA must demonstrate to 
HUD's satisfaction that a higher average per unit amount is necessary to 
conduct this program, and that every appropriate step has been taken to 
contain the amount of the rehabilitation within the published per unit 
cost limitation established at that time, plus the cost of the required 
fire and safety improvements. These higher amounts will be determined as 
follows:
    (A) HUD may approve a higher per unit amount up to, but not to 
exceed, an amount computed by multiplying the HUD-approved High Cost 
Percentage for Base Cities (used for computing FHA high cost area 
adjustments) for the area, by the current published cost limitation plus 
the cost of the required fire and safety improvements.
    (B) HUD may, on a structure-by-structure basis, increase the level 
approved in paragraph (d)(1)(i) of this section to up to an amount 
computed by multiplying 2.4 by the current published cost limitation 
plus the cost of

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the required fire and safety improvements.
    (2) In approving changes to initial contract rents during 
rehabilitation in accordance with Sec. 882.408(d), the revised initial 
contract rents may not reflect an average per unit rehabilitation cost 
that exceeds the limitation specified in paragraph (d)(1) of this 
section.
    (3) If the structure contains four or fewer SRO units, the Fair 
Market Rent for that size structure (the Fair Market Rent for a 1-, 2-, 
3-, or 4-bedroom unit, as applicable) must be used to determine the Fair 
Market Rent limitation instead of using the separate Fair Market Rent 
for each SRO unit. To determine the Fair Market Rent limitation for each 
SRO unit, the Fair Market Rent for the structure must be apportioned 
equally to each SRO unit.
    (4) Contract rents must not include the costs of providing 
supportive services, transportation, furniture, or other nonhousing 
costs, as determined by HUD. SRO program assistance may be used for 
efficiency units selected for rehabilitation under this program, but the 
gross rent (contract rent plus any Utility Allowance) for these units 
will be no higher than for SRO units (i.e., 75 percent of the 0-bedroom 
Moderate Rehabilitation Fair Market Rent).

(Approved by the Office of Management and Budget under control number 
2506-0131)

[61 FR 48057, Sept. 11, 1996, as amended at 63 FR 23855, Apr. 30, 1998]