[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR972.124]

[Page 562-563]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 972_CONVERSION OF PUBLIC HOUSING TO TENANT-BASED ASSISTANCE--Table 
of Contents
 
      Subpart A_Required Conversion of Public Housing Developments
 
Sec. 972.124  Standards for identifying public housing developments 
subject to required conversion.

    The development, or portions thereof, must be converted if it is a 
general occupancy development of 250 or more dwelling units and it meets 
the following criteria:
    (a) The development is on the same or contiguous sites. This refers 
to the actual number and location of units, irrespective of HUD 
development project numbers.
    (b) The development has a vacancy rate of at least a specified 
percent for dwelling units not in funded, on-schedule modernization, for 
each of the last three years, and the vacancy rate has not significantly 
decreased in those three years. (1) For a conversion analysis performed 
on or before March 16, 2009, the specified vacancy rate is 15 percent. 
For a conversion analysis performed after that date, the specified 
vacancy rate is 12 percent.
    (2) For the determination of vacancy rates, the PHA must use the 
data it relied upon for the PHA's latest Public Housing Assessment 
System (PHAS) certification, as reported on the Form HUD-51234 (report 
on Occupancy). Units in the following categories must not be included in 
this calculation:
    (i) Vacant units in an approved demolition or disposition program;
    (ii) Vacant units in which resident property has been abandoned, but 
only if state law requires the property to be left in the unit for some 
period of time, and only for the period of time stated in the law;
    (iii) Vacant units that have sustained casualty damage, but only 
until the insurance claim is adjusted;

[[Page 563]]

    (iv) Units that are occupied by employees of the PHA and units that 
are used for resident services; and
    (v) Units that HUD determines, in its sole discretion, are 
intentionally vacant and do not indicate continued distress.
    (c) The development either is distressed housing for which the PHA 
cannot assure the long-term viability as public housing, or more 
expensive for the PHA to operate as public housing than providing 
tenant-based assistance. (1) The development is distressed housing for 
which the PHA cannot assure the long-term viability as public housing 
through reasonable revitalization, density reduction, or achievement of 
a broader range of household income. (See Sec. 972.127)
    (i) Properties meeting the standards set forth in paragraphs (a) and 
(b) of this section will be assumed to be ``distressed,'' unless HUD 
determines that the reasons a property meets such standards are 
temporary in duration and are unlikely to recur.
    (ii) A development satisfies the long-term viability test only if it 
is probable that, after reasonable investment, for at least 20 years (or 
at least 30 years for rehabilitation equivalent to new construction) the 
development can sustain structural/system soundness and full occupancy; 
will not be excessively densely configured relative to other similar 
rental (typically family) housing in the community; can achieve a 
broader range of family income; and has no other site impairments that 
clearly should disqualify the site from continuation as public housing.
    (2) The development is more expensive for the PHA to operate as 
public housing than to provide tenant-based assistance if it has an 
estimated cost, during the remaining useful life of the project, of 
continued operation and modernization of the development as public 
housing in excess of the cost of providing tenant-based assistance under 
section 8 of the United States Housing Act of 1937 for all families in 
occupancy, based on appropriate indicators of cost (such as the 
percentage of total development cost required for modernization).
    (i) For purposes of this determination, the costs used for public 
housing must be those necessary to produce a revitalized development as 
described in paragraph (c)(1) of this section.
    (ii) These costs, including estimated operating costs, modernization 
costs, and accrual needs must be used to develop a per unit monthly cost 
of continuing the development as public housing.
    (iii) That per unit monthly cost of public housing must be compared 
to the per unit monthly Section 8 cost.
    (iv) The cost methodology necessary to conduct the cost comparisons 
for required conversions has not yet been finalized. PHAs are not 
required to undertake conversions under this subpart until six months 
after the effective date of the cost methodology, which will be 
announced in the Federal Register. Once effective, the cost methodology 
will be codified as an appendix to this part.