30 June 1998
Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html

-------------------------------------------------------------------------

[Federal Register: June 30, 1998 (Volume 63, Number 125)]
[Proposed Rules]
[Page 35649-35660]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jn98-41]

[[Page 35649]]

_______________________________________________________________________

Part III

_______________________________________________________________________

Department of Housing and Urban Development

_______________________________________________________________________

24 CFR Parts 5, 207, et al.

Uniform Physical Condition Standards and Physical Inspection
Requirements for Certain HUD Housing; Proposed Rule

[[Page 35650]]

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 207, 266, 880, 881, 882, 883, 884, 886, 891, 965,
and 983

[Docket No. FR-4280-P-01]
RIN 2501-AC45


Uniform Physical Condition Standards and Physical Inspection
Requirements for Certain HUD Housing

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would establish for housing assisted under
certain HUD programs uniform physical condition standards. These
standards are intended to ensure that such housing is decent, safe,
sanitary and in good repair. HUD's Section 8 housing, Public Housing,
HUD-insured multifamily housing, and other HUD assisted housing
(collectively, HUD housing) currently must meet certain standards and
must undergo an annual physical inspection to determine that the
housing qualifies as decent, safe, sanitary and in good repair. The
description or components of what constitutes acceptable physical
housing quality and the physical inspection procedures by which the
standards are determined to be met, however, vary from HUD program to
HUD program. To the extent possible, HUD believes that housing assisted
under its programs should be subject to uniform physical standards,
regardless of the source of the subsidy or assistance. Additionally, to
the extent feasible, HUD believes that the physical inspection
procedures by which the standards will be assessed should be uniform in
the covered programs. Therefore, this rule proposes that certain HUD
housing, as defined in this rule, must meet uniform physical condition
standards to ensure that the HUD housing is decent, safe, sanitary and
in good repair. This rule also generally describes new physical
inspection procedures that will allow HUD to determine conformity with
such standards. This rule would not change the requirement for annual
physical inspections currently found in the covered HUD programs.
Additionally, this rule would not affect the existing requirements in
each covered HUD program regarding which entity is responsible for
conducting the physical inspection of the program.

DATES: Comments must be submitted on or before July 30, 1998.

ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Regulations Division, Office of General
Counsel, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, SW, Washington, DC 20410. Communications should refer
to the above docket number and title. Facsimile (FAX) comments are not
acceptable. A copy of each communication submitted will be available
for public inspection and copying between 7:30 a.m. and 5:30 p.m.
weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: For further information, contact the
Real Estate Assessment Center, Attention: William Thorson, Department
of Housing and Urban Development, 4900 L'Enfant Plaza East, SW, Room
8204, Washington, DC 20410; telephone (202) 755-0102. Persons with
hearing and speech impairments may contact the Center via TTY by
calling the Federal Information Relay Service at (800) 877-8399.

SUPPLEMENTARY INFORMATION:

I. Background--Statutory Directive To Provide Decent, Safe, and
Sanitary Housing

    ``The Declaration of Policy'' in section 2 of the United States
Housing Act of 1937 (42 U.S.C. 1437) (1937 Act) provides in relevant
part as follows:

    It is the policy of the United States to promote the general
welfare of the Nation by employing its funds and credit, as provided
in this Act, to assist the several States and their political
subdivisions to remedy the unsafe and unsanitary housing conditions
and the acute shortage of decent, safe, and sanitary dwellings for
families of lower income * * *. (Emphasis added)

    More recently, in the Cranston-Gonzalez National Affordable Housing
Act (Pub. L. 101-625, approved November 28, 1990; 42 U.S.C. 12701 et
seq.), the Congress reaffirmed the nation's housing policy. Section 102
of this statute (42 U.S.C. 12702) states in relevant part as follows:

    The objective of national housing policy shall be to reaffirm
the long-established national commitment to decent, safe, and
sanitary housing for every American by strengthening a nationwide
partnership of public and private institutions.

    The housing standard set by the Congress as the standard for all
American families is one of decent, safe, and sanitary housing. As the
statutes cited above reflect, this is also the standard by which HUD
housing should be evaluated.

II. Current Requirements Governing Physical Condition and Property
Maintenance Standards for HUD Housing

    The majority of HUD programs currently contain requirements
governing the physical condition and maintenance of the housing. In
discussing the various housing that is proposed to be covered by this
rule (Section 8 project-based housing, Public Housing, HUD-insured
multifamily housing, and other HUD-assisted housing) the term ``HUD
housing'' is used for purposes of brevity.

Current Standards Applicable to Section 8 Housing

    HUD's Section 8 project-based assistance is provided under the
Section 8 New Construction, Substantial Rehabilitation, Loan Management
Set-Aside, Property Disposition, Moderate Rehabilitation (including the
Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) program
for homeless individuals), and project-based Certificate programs. The
statutory physical condition standard for all Section 8 housing is
``decent, safe, and sanitary.'' Specifically, section 2 of the 1937
Act, as noted above, declares the statutory policy to provide
assistance for low-income individuals in ``decent, safe, and sanitary''
dwellings in the Section 8 (and Public Housing) program. Additionally,
section 3(b)(1) of the 1937 Act defines the term ``low-income
housing,'' which term includes Public Housing and housing receiving
Section 8 assistance, as ``decent, safe, and sanitary dwellings
assisted under this Act.''
    The various forms of Section 8 Housing Assistance Payments (HAP)
Contracts covering all of these Section 8 programs contain broad
references to the quality or the physical condition of the housing that
must be maintained, language that is similar to the 1937 Act language.
While there is some minor variation in language, these contracts
generally require owners to maintain project units and related premises
in decent, safe, and sanitary condition.
    The program regulations for each of the Section 8 programs provide
the substantive physical condition standards for each program, but they
differ somewhat from one another. For the Section 8 New Construction
and Substantial Rehabilitation programs, the regulations provide that
housing is decent, safe, and sanitary if it is maintained in a
condition substantially the same as at the time of acceptance (see 24
CFR 880.201 and 881.201). Section 8 New Construction projects

[[Page 35651]]

also must comply with HUD minimum property standards; <SUP>1</SUP>
applicable State and local laws, codes, ordinances, and regulations;
HUD requirements pertaining to noise abatement and control; and HUD
requirements pursuant to section 209 of the Housing and Community
Development Act of 1974 for ``projects for the elderly or handicapped''
(24 CFR 880.207). Section 8 Substantial Rehabilitation projects must
comply with HUD minimum design standards for rehabilitation for
residential properties; <SUP>2</SUP> applicable State and local laws,
codes, ordinances, and regulations; HUD noise abatement and control
requirements; and HUD section 209 requirements (24 CFR 881.207). The
requirements in Secs. 880.207 and 881.207 generally relate to design,
construction, and rehabilitation standards, rather than to physical
maintenance requirements. This proposed rule only addresses physical
condition after completion of construction and/or rehabilitation. This
rule does not propose to revise the design, construction, and
rehabilitation standards currently found in HUD regulations.
---------------------------------------------------------------------------

    \1\ The minimum property standards pertain to HUD requirements
for site design, building design, materials, and construction of
projects. An owner has the obligation to maintain a project
constructed in accordance with the minimum property standards in a
condition ``substantially the same as at the time of [its]
acceptance'' (24 CFR 880.201).
    \2\ The HUD minimum design standards contain the basic HUD
requirements for the rehabilitation of projects. An owner has the
obligation to maintain a project rehabilitated in accordance with
the minimum design standards in a condition ``substantially the same
as at the time of [its] acceptance'' (Sec. 881.201).
---------------------------------------------------------------------------

    Additionally, this rule does not propose to revise the housing
quality standards (HQS) applicable to the Section 8 Certificates and
Vouchers program. As discussed later in this preamble, HQS will remain
applicable to the Section 8 Certificates and Vouchers Program.

Current Standards Applicable to Public Housing

    HUD Public Housing is also subject to a standard of decent, safe,
and sanitary. Section 3(b)(1) of the 1937 Act provides in relevant part
as follows:

    The term low-income housing means decent, safe, and sanitary
dwellings assisted under this Act. The term ``public housing'' means
low-income housing, and all necessary appurtenances thereto,
assisted under this Act other than under section 8.

    Section 14 of the 1937 Act, which addresses Public Housing
modernization, also emphasizes a decent, safe, and sanitary housing
standard. Section 14(j)(2) provides, in relevant part, that ``the
Secretary shall issue rules and regulations establishing standards
which provide for decent, safe, and sanitary living conditions in low-
rent public housing projects * * *.'' In addition to the references to
the decent, safe, and sanitary standard, other sections of the 1937 Act
refer to the ``obligation'' of a public housing agency (PHA) to inspect
and maintain the Public Housing units in the PHA's projects. For
example, in connection with the Public Housing Management Assessment
Program (PHMAP), established by section 6(j) of the 1937 Act, section
6(j)(1)(G) requires the PHA to inspect the units to ascertain
``maintenance or modernization needs.''
    The current regulatory provisions addressing the physical condition
of Public Housing projects are found in several sections of HUD's
regulations in Title IX of 24 CFR: Secs. 901.30 (of the PHMAP
regulations), 941.203 (of the Public Housing Development regulations),
965.704 (of the PHA-Owned or Leased Projects regulations), and 968.315
(of the Comprehensive Improvement Program Regulations). In the current
Public Housing Development regulations, Sec. 941.203 (Design and
construction standards) provides that Public Housing projects must
comply with a national building code; applicable State and local laws,
codes, ordinances, and regulations; and other Federal requirements,
including fire safety requirements and HUD minimum property standards.
(HUD's minimum property standards are found in 24 CFR part 200, subpart
S, and remain applicable to Public Housing as design and construction
standards.)
    As noted earlier in this preamble, Public Housing is not only
currently subject to a standard of ``decent, safe, and sanitary''
housing, there is also a statutory obligation on the PHA to inspect
Public Housing units (see section 6(j) of the 1937 Act). This
requirement is found in the current Public Housing Management
Assessment Program (PHMAP) regulations (see 24 CFR 901.30). Section
901.30, captioned ``Indicator #5, Annual Inspection of Units and
Systems,'' provides in relevant part that: ``All occupied units are
required to be inspected.'' This proposed rule would not change the
current requirement that PHAs inspect all of their units annually to
determine maintenance and modernization needs. However, through a
separate rulemaking, HUD is proposing new assessment regulations for
Public Housing under which PHAs would be required to maintain their
units in accordance with the same decent, safe, and sanitary standard
proposed in part 5, subpart G of this rule.

Current Standards Applicable to Insured Multifamily Housing

    Generally, in HUD-insured multifamily housing, the mortgagors are
subject, by contract, to maintain the mortgaged premises,
accommodations, and the grounds appurtenant thereto, in good repair and
condition. Additionally, HUD's standard mortgage form requires the
mortgagor to keep the premises in good repair. Although existing FHA
regulations and supplementary materials (such as handbooks) do not
provide exact details on what is meant by ``good repair,'' the ``good
repair'' standard is very similar if not identical to the ``decent,
safe, and sanitary'' standard. For example, HUD Handbook 4350.1 REV-1,
Multifamily Asset Management and Project Servicing, provides that in
determining the level of management review HUD should perform on site,
it should review the mortgagee's annual physical inspection ``to
determine if the condition of the property is consistent with the
provision of ``decent, safe, and sanitary housing'' (emphasis added).
For HUD-owned projects, section 203 of the Housing and Community
Development Amendments of 1978 (12 U.S.C. 1701-z-11) provides that HUD
shall manage or dispose of HUD-owned projects and projects covered by a
HUD-held mortgage in a manner that will, in the least costly fashion
among reasonable available alternatives, address the goal of
maintaining existing housing stock in a ``decent, safe, and sanitary
condition,'' among other things.

Summary of Current Applicable Standards

    While Section II of the preamble does not address all the various
HUD programs that contain housing physical condition standards and
physical inspection requirements, the section provides examples of the
similarities and differences in housing standards and inspection
requirements to which certain HUD subsidized, assisted, and/or insured
housing is currently subject under various HUD programs. These
standards are found throughout HUD regulations, and are also
supplemented by HUD handbooks, contracts, agreements, and other
documents. Although several sets of housing standards apply to HUD
housing, HUD finds it warranted, by the proper administration of its
duties, to apply a uniform set of physical condition standards to the
housing related to HUD's Section 8 (project-based assistance only),
Public Housing,

[[Page 35652]]

Section 202/811 Supportive Housing, and multifamily mortgage insurance
programs. (As described below, HUD's Section 8 Certificate and Voucher
Programs will continue to be subject to the existing housing quality
standards (HQS) set forth in HUD's regulations in 24 CFR part 982.)
However, in adopting uniform physical condition standards for HUD
housing, this proposed rule would not alter the statutory standard for
maintaining HUD housing. Instead, this proposed rule, by using the
statutory terminology, clearly acknowledges that the physical condition
of the housing that is to be met is one of ``decent, safe, and
sanitary.''

III. Proposed Uniform Physical Condition Standards

    Through this rule, HUD proposes uniform physical condition
standards that will serve to determine whether certain HUD housing is
decent, safe, sanitary and in good repair. HUD also proposes that these
standards be evaluated through uniform physical inspection procedures.
These proposed standards and inspection process are intended to achieve
three significant objectives:
    (1) Consistency in physical condition standards for HUD housing;
    (2) Standardization of the inspection to be undertaken to determine
compliance with the standards; and
    (3) Implementation of an electronically-based inspection system to
evaluate, rate and rank the physical condition of HUD housing
objectively.

HUD Programs Covered by the New Standards

    The proposed new physical condition standards will apply to housing
assisted by HUD under the following programs (Section V of this
preamble discusses the specific regulatory parts and sections that are
proposed to be amended). In this rule, the various types of HUD housing
that are proposed to be subject to the new physical condition
standards, as set forth in paragraphs (1) through (3) below, are
collectively referred to as ``HUD housing.''
1. Section 8 Project-Based and Other Assisted Housing
--Section 8 Project-Based Assistance, including the Section 8 New
Construction, Substantial Rehabilitation, Loan Management Set-Aside,
Property Disposition, Moderate Rehabilitation (including the Single
Room Occupancy program for homeless individuals), and project-based
Certificate programs;
--Section 202 Program of Supportive Housing for the Elderly;
--Section 811 Program of Supportive Housing for Persons with
Disabilities; and
--Section 202 Loan Program for Projects for the Elderly and Handicapped
(including 202/8 projects and 202/162 projects).

    While this proposed rule covers Section 8 project-based assistance,
as described above, this proposed rule would not cover Section 8
tenant-based assistance (i.e., housing assisted by HUD's Section 8
Certificate and Vouchers Rental Assistance Program; see 24 CFR part
982). The housing quality standards (HQS) were originally established
by the Secretary for the purpose of Section 8 tenant-based housing
assistance. Unlike Section 8 project-based assistance, HUD is
continuously reviewing and approving new units into the Section 8
tenant-based assistance programs, and HUD has found that HQS is
appropriate for this purpose. As discussed earlier in this rule, HUD
believes that all of its programs should be subject to the same uniform
physical inspection requirements. HUD also believes that it would be
appropriate to require the Section 8 Certificate and Voucher (tenant-
based assistance) programs to be subject to the uniform standards.
However, HUD is not proposing at this time to apply the new uniform
standards to such housing, but instead will consider doing so at a
later date.
2. FHA Multifamily Housing
    The proposed standards also will apply to multifamily housing with
mortgages insured or held by HUD, or housing that is receiving
assistance from HUD, under the following authorities:

--Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 et
seq.) (Rental Housing Insurance);
--Section 213 of the NHA (Cooperative Housing Insurance);
--Section 220 of the NHA (Rehabilitation and Neighborhood Conservation
Housing Insurance);
--Section 221(d) (3) and (5) of the NHA (Housing for Moderate Income
and Displaced Families);
--Section 221(d)(4) of the NHA (Housing for Moderate Income and
Displaced Families);
--Section 231 of the NHA (Housing for Elderly Persons);
--Section 232 of the NHA (Mortgage Insurance for Nursing Homes,
Intermediate Care Facilities, Board and Care Homes);
--Section 234(d) of the NHA (Rental) (Mortgage Insurance for
Condominiums);
--Section 236 of the NHA (Rental and Cooperative Housing for Lower
Income Families);
--Section 241 of the NHA (Supplemental Loans for Multifamily Projects);
and
--Section 542(c) of the Housing and Community Development Act of 1992
(12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing Program).

    The proposed standards would not apply to housing insured under
HUD's single family mortgage insurance programs. Section 5.701(b)(1) of
this proposed rule lists those sections of the National Housing Act
that specifically give the Secretary authority to insure mortgages.
Sections of the NHA that give the Secretary authority to insure
mortgages ``pursuant to'' another section of the NHA are not listed in
the coverage of Sec. 5.701 of this proposed rule, because HUD
ultimately has insured the mortgages under one of the listed statutory
sections.
3. Public Housing
--Housing receiving assistance under sections 5, 9 or 14 of the U.S.
Housing Act of 1937.

    Through a separate rulemaking, HUD is proposing new assessment
regulations for Public Housing under which PHAs would be required to
maintain their units in accordance with the same decent, safe, and
sanitary standard proposed in part 5, subpart G of this rule. Under the
HUD 2020 Management Reform Plan, published in the Federal Register on
August 12, 1997 (62 FR 43204), HUD is seeking new tools to strengthen
its abilities to ensure the soundness and physical condition of Public
Housing. Consistent with HUD's responsibilities under the new Real
Estate Assessment Center, HUD intends to conduct independent
inspections of a statistically valid number of Public Housing units for
each PHA, in order to confirm compliance with the new uniform physical
condition standards.
    Although HUD encourages PHAs to use its inspection software during
the course of their own annual inspections in order to promote
uniformity in inspections, HUD is not proposing at this time to require
PHAs to use HUD's inspection software for two reasons. First, PHAs may
have existing software for operations (e.g., work order systems) that
may be incompatible with the HUD software. It would be unreasonable and
uneconomical to require PHAs to change their existing systems. Second,
PHAs may, as a part of their operating procedures, combine other
inspections (e.g., housekeeping, preventative

[[Page 35653]]

maintenance) with their annual unit inspections. HUD believes that its
role, consistent with section 2 of the U.S. Housing Act of 1937 (42
U.S.C. 1437), is to prescribe broad standards, giving PHAs maximum
latitude as to how best to meet those standards consistent with
existing statutes, regulations, and their own operating procedures and
practices. HUD has no objection, however, if the PHA determines that
use of the HUD software for its own purposes is in its best interests.

Standards for Determining Housing That Is Decent, Safe, Sanitary and in
Good Repair

    The uniform standards in this proposed rule would set parameters
under which the HUD housing must be maintained and will be evaluated.
These standards are designed to analyze, score, and rank the overall
and general physical condition of a project. This evaluation would not
focus on a single element, but would take into consideration
significant observable deficiencies and score compliance taken as a
whole. A single critical element with a major defect (for example, an
inoperable heating system), however, could have a significant impact on
a project's overall evaluation. The proposed standards emphasize health
and safety considerations as essential to housing that is decent, safe,
sanitary and in good repair.
    The physical condition standards are intentionally broad and are
defined with terms such as in ``proper operating condition,''
``adequately functional,'' and ``free of health and safety hazards.''
Given the differences in construction and design of HUD housing, and
the different types of electrical and utility systems that an inspector
will encounter, the rule cannot define or describe proper operating
condition for every type of system. For example, an inspection of
whether an electrical heating system is operating properly might be
different from an inspection of whether an oil-based heating system is
operating properly. This would not mean, however, that these two
systems should be subject to a different physical condition standard.
The standard--proper operating condition--is the same for both types of
systems and is the same for all heating systems.
    The uniform physical condition standards in this proposed rule do
not include design or configuration requirements for housing (e.g.,
these standards do not require that every unit have a kitchen). The
regulations for the individual housing programs will continue to
contain any such design or configuration requirements. The uniform
physical condition standards in this proposed rule are structured so
that regardless of the configuration of a particular project or unit
(for example, a shared kitchen versus private kitchens), the project or
unit would be inspected under the uniform standards. Similarly, the
proposed standards do not address occupancy requirements of a dwelling
unit, that is, the number of residents per unit. The proposed standards
are solely concerned with the physical condition of the housing and the
operational state of its various elements, to the extent relevant.
    The proposed new standards address six major areas of the HUD
housing:
    (1) Site;
    (2) Building exterior;
    (3) Building systems;
    (4) Dwelling units;
    (5) Common areas; and
    (6) Health and safety.
    Under this proposed rule, the major areas of the HUD housing and
their related elements are to be maintained in a manner that is decent,
safe, sanitary and in good repair. Intrinsic to all these areas are
health and safety considerations. However, there are other broad health
and safety concerns that HUD will evaluate at any time they are
observed. Since HUD places such a high priority on health and safety
concerns, this proposed rule identifies them separately.
    1. Site. The site components, such as fencing and retaining walls,
grounds, lighting, mailboxes/project signs, parking lots/driveways,
play areas and equipment, refuse disposal, roads, storm drainage and
walkways must be free of health and safety hazards and be in good
repair. The site must not be subject to material adverse conditions,
such as abandoned vehicles, dangerous walks or steps, poor drainage,
septic tank back-ups, sewer hazards, excess accumulations of trash,
vermin or rodent infestation or fire hazards.
    2. Building Exterior. Each building on the site must be
structurally sound, secure, habitable, and in good repair. Each
building's doors, fire escapes, foundations, lighting, roofs, walls,
and windows, where applicable, must be free of health and safety
hazards, operable, and in good repair.
    3. Building Systems. Each building's domestic water, electrical
system, elevators, emergency power, fire protection, HVAC, and sanitary
system must be free of health and safety hazards, functionally
adequate, operable, and in good repair.
    4. Dwelling Units. Each dwelling unit within a building must be
structurally sound, habitable, and in good repair. All areas and
aspects of the dwelling unit must be free of health and safety hazards.
The unit's bathroom, call-for-aid, ceiling, doors, electrical systems,
floors, hot water heater, HVAC, kitchen, lighting, outlets/switches,
patio/porch/balcony, smoke detectors, stairs, walls, and windows (where
applicable) must be free of health and safety hazards, functionally
adequate, operable, and in good repair. Where applicable, the dwelling
unit must have hot and cold running water, including an adequate source
of potable water (note for example that single room occupancy units may
not contain water facilities). If the dwelling unit includes its own
sanitary facility, it must be in proper operating condition, usable in
privacy, and adequate for personal hygiene and the disposal of human
waste. The dwelling unit must include at least one battery-operated or
hard-wired smoke detector, in proper working condition, on each level
of the unit. Properties that are subject to the specific requirements
of the Fire Administration Authorization Act must also comply with
those requirements.
    5. Common Areas. The common areas must be structurally sound,
secure, and functionally adequate for the purposes intended. The
basement/garage/carport, restrooms, closets, utility, mechanical,
community rooms, day care, halls/corridors, stairs, kitchens, laundry
rooms, office, porch, patio, balcony, and trash collection areas, if
applicable, must be free of health and safety hazards, operable, and in
good repair. All common area ceilings, doors, floors, HVAC, lighting,
outlets/switches, smoke detectors, stairs, walls, and windows, to the
extent applicable, must be free of health and safety hazards, operable,
and in good repair. These standards for common areas would apply, to a
varying extent, to all HUD housing, but will be particularly relevant
to congregate housing, independent group homes/residences, and single
room occupancy units, in which the individual dwelling units (sleeping
areas) do not contain kitchen and/or bathroom facilities.
    6. Health and Safety Considerations. All areas and components of
the housing must be free of health and safety hazards. As discussed in
the preceding section, the five other major inspectable areas contain
health and safety considerations that will be evaluated in the
applicable areas. In addition, there are broad health and safety
concerns by which HUD will evaluate the housing. These areas include,
but are not limited to, air quality, electrical hazards, elevators,
emergency/fire exits, flammable materials, garbage and debris, handrail
hazards, infestation, and lead-based

[[Page 35654]]

paint. For example, the buildings must have fire exits that are not
blocked and are accessible to all residents, and have hand rails that
are undamaged and have no other observable deficiencies. The housing
must have no evidence of infestation by rats, mice, or other vermin, or
of garbage and debris. The housing must have no evidence of electrical
hazards, natural hazards, or fire hazards. The dwelling units and
common areas must have proper ventilation and be free of mold, odor, or
other observable deficiencies. The housing must comply with all
requirements related to the evaluation and reduction of lead-based
paint hazards and have available proper certifications of such.
    With regard to the evaluation and reduction of lead-based paint
hazards, HUD is developing consolidated final regulations to implement
sections 1012 and 1013 of the Residential Lead-Based Paint Hazard
Reduction Act of 1992, which is Title X of the Housing and Community
Development Act of 1992 (42 U.S.C 4851 et seq.). These final
regulations will be based upon a proposed rule published on June 7,
1996 (61 FR 29170), and will be codified in 24 CFR part 35.
    No Preemption of State and Local Building and Maintenance Codes.
The new uniform physical condition standards in this rule would not
supersede or preempt State and local building and maintenance codes
with which HUD housing must comply. HUD housing must continue to adhere
to these codes.

IV. Proposed Uniform Physical Inspection Requirements

Frequency of Inspection

    To make a determination of whether the owner is providing HUD
housing that is decent, safe, sanitary and in good repair, this rule
proposes to continue the practice currently found in HUD programs of
requiring a physical inspection of each HUD housing structure (except
that Public Housing shall be inspected as described below). This
proposed rule would require such inspections annually, unless HUD
provides notice to the contrary. HUD housing is currently subject to an
annual inspection requirement; therefore, an annual inspection would
impose no new requirement.

The New Inspection Protocol

    Along with the uniform physical condition standards proposed in
this rule, HUD intends to implement a new computer-driven physical
inspection protocol. The inspection would not have to be performed by
an engineer or architect, but may be performed by a person who is
generally familiar with real estate of the type to be inspected. Any
eligible individual who is trained and certified under HUD auspices to
use the new HUD computer program may conduct the inspection. The
inspector will complete the inspection using a hand-held computer that
uses the HUD software. The new HUD computer program would guide the
inspector through the inspection, prompting the necessary observations
to be made regarding the condition of the property. The computer
program is based on substantially objective observations, which will
tend to eliminate the uncertainty of subjective interpretation of the
physical condition standards. The results of the inspection will be
electronically transferred to HUD and will be processed and scored by
electronic means and recorded in a Central Integrated Data Repository.

Determining Whether HUD Housing Meets the New Physical Condition
Standards

    The determination of whether the HUD housing meets the standard of
decent, safe, sanitary and in good repair would be based on a review of
observable deficiencies of the health and safety conditions, the site,
the building, the dwelling units, and the common areas of such housing.
The computer program will generate a score for these major areas and
their respective elements. The scores will allow HUD to rank the
housing according to physical condition as determined by the computer-
based inspection.
    Inherent in such a scoring system is the weighting of factors that
make up the physical condition standards. For instance, health and
safety hazards are of utmost importance to HUD; therefore, these
factors, as well as other key components of the building (i.e., roof,
walls, heating) might be more heavily weighted in the scoring. Other
factors that are less crucial to health and safety, although still
related to housing that is decent, safe, sanitary and in good repair,
might receive a lower weight. For example, a faulty roof would
generally be weighed more heavily than a faulty sidewalk, because it
could generally have a greater impact on the residents' health and
safety. The evaluation system will create a composite score for HUD
housing by calculating the component scores on a weighted average
basis.

V. Regulatory Amendments

New Subpart for Physical Condition Standards and Inspection
Requirements

    This rule proposes to create a new subpart G in 24 CFR part 5. The
regulations in part 5 represent HUD's general program requirements, as
well as requirements that cut across one or more HUD programs. This new
subpart G would consist of three sections. Section 5.701 would provide
the lists of the types of HUD housing to which the uniform physical
condition standards and inspection requirements would apply. This
section also would describe the unique applicability of the proposed
requirements to the Public Housing program, as described above.
    Section 5.703 would contain the physical condition standards for
HUD housing that is decent, safe, sanitary and in good repair. These
are the standards to which HUD housing must be maintained. Section
5.705 would simply provide that any entity responsible for conducting a
physical inspection of HUD housing must inspect such housing annually
(unless HUD provides notice to the contrary), in accordance with HUD-
prescribed physical inspection procedures. This rule would not affect
the existing requirements under each covered HUD program regarding
which entity is responsible for conducting the physical inspection. HUD
intends to provide more details with respect to the implementation of
its physical inspection system through notices and other guidance
materials.

Conforming Amendments in Program Regulations

    In accordance with the proposed physical condition standards and
inspection requirements, this rule also proposes to make several
conforming amendments to HUD's program regulations.
    1. 24 CFR part 207; Multifamily Housing Mortgage Insurance. This
rule proposes to add a new Sec. 207.260, which will provide that for
FHA-insured multifamily properties, the mortgagor must maintain the
insured project in accordance with the physical condition standards in
the new subpart G of part 5. This section would also require the
mortgagee to inspect the project in accordance with the requirements in
subpart G of part 5. As described above, the requirements for the
mortgagor to maintain the property in a condition that is decent, safe,
sanitary and in good repair (and for the mortgagee to inspect the
property) are not new. This rule provides a clear set of physical
condition standards and inspection requirements to help ensure that
these

[[Page 35655]]

properties are maintained in accordance with such obligations.
    2. 24 CFR part 266; Housing Finance Agency (HFA) Risk-Sharing. This
rule proposes to add a new Sec. 266.507 to provide that the mortgagor
must maintain the project in accordance with the new physical condition
standards in subpart G of part 5. This new section would apply the new
standards to all projects insured previously or in the future. This
rule also proposes to remove Sec. 266.505(b)(6) regarding the
maintenance requirements of the Regulatory Agreement between the HFA
and the mortgagor, since the maintenance requirements would be in the
new Sec. 266.507. This rule would also amend Sec. 266.510(a) to require
HFAs to perform their inspections in accordance with the inspection
requirements in subpart G of part 5.
    3. 24 CFR part 880; Section 8 New Construction. This rule proposes
to amend Sec. 880.201 to revise the definition of the term ``Decent,
safe, and sanitary.'' This rule would provide that decent, safe, and
sanitary housing is housing that meets the requirements of subpart G of
part 5. This rule also proposes to remove paragraph (a) of Sec. 880.207
regarding HUD's minimum property standards, since compliance with the
new subpart G of part 5 would replace the continuing requirement to
comply with these standards.
    4. 24 CFR part 881; Section 8 Substantial Rehabilitation. This rule
proposes to amend Sec. 881.201 to revise the definition of the term
``Decent, safe, and sanitary.'' This rule would provide that decent,
safe, and sanitary housing is housing that meets the requirements of
subpart G of part 5. This rule also proposes to remove paragraph (a) of
Sec. 881.207 regarding HUD's minimum design standards, since compliance
with the new subpart G of part 5 would replace the continuing
requirement to comply with these standards.
    5. 24 CFR part 882; Section 8 (Project-Based) Moderate
Rehabilitation (including the Single Room Occupancy program for
homeless individuals). HUD recently amended its regulations in part 882
to remove the regulatory provisions on certificates. These provisions
are now in part 982. (Please see the Section 8 Certificate and Voucher
Programs Conforming Rule, published in the Federal Register on April
30, 1998, 63 FR 23826.) The only regulatory provisions remaining in
part 882 are for two Section 8 project-based programs--Moderate
Rehabilitation and Single Room Occupancy for homeless individuals.
    This rule proposes to amend part 882 further to recognize the new
uniform physical condition standards. This rule would amend
Sec. 882.102 to revise the definition of the term ``Decent, safe, and
sanitary.'' This rule would provide that decent, safe, and sanitary
housing is housing that meets the requirements of subpart G of part 5.
This rule would also remove the definition of ``Housing Quality
Standards'' from Sec. 882.102, since those standards would be replaced
by the new uniform physical condition standards in this proposed rule.
    This rule would then amend Sec. 882.404 by replacing the Housing
Quality Standards with references to the new physical condition
standards in subpart G of part 5. This rule would retain, however, the
lead-based paint requirements that are otherwise embedded in the
Housing Quality Standards. This rule would not affect the applicability
of HUD's lead-based paint requirements (although please see the
reference above to the separate regulations that are under development
for lead-based paint). Similarly, this rule would also amend
Sec. 882.803(b) for the SRO program by replacing references to the
Housing Quality Standards with references to Sec. 882.404.
    6. 24 CFR part 883; Section 8 State Housing Agencies. This rule
proposes to amend Sec. 883.302 to add a definition of the term
``Decent, safe, and sanitary.'' This rule would provide that decent,
safe, and sanitary housing is housing that meets the requirements of
subpart G of part 5. This rule also proposes to remove the definition
of ``MPS (Minimum Property Standards)'' in Sec. 883.302, and paragraphs
(a)(1) and (b)(1) of Sec. 883.310 regarding HUD's minimum property and
design standards, since compliance with the new subpart G of part 5
would replace the continuing requirement to comply with these
standards.
    7. 24 CFR part 884; Section 8 New Construction Set-Aside for Rural
Rental Housing. This rule proposes to amend Sec. 884.102 to revise the
definition of the term ``Decent, safe, and sanitary.'' This rule would
provide that decent, safe, and sanitary housing is housing that meets
the requirements of subpart G of part 5. This rule also proposes to
remove the definition of ``Minimum property standards'' in
Sec. 884.102, and paragraph (b)(1) of Sec. 884.110 regarding HUD's
minimum property standards, since compliance with the new subpart G of
part 5 would replace the continuing requirement to comply with those
standards.
    8. 24 CFR part 886; Section 8 Special Allocations (Loan Management
Set-Aside (LMSA) and Property Disposition (PD)). This rule proposes to
amend Secs. 886.102 (LMSA) and 886.302 (PD) to revise the definition of
the term ``Decent, safe, and sanitary.'' This rule would provide that
decent, safe, and sanitary housing is housing that meets the
requirements of subpart G of part 5. This rule also would amend
Secs. 886.113 (LMSA) and 886.307 (PD) by replacing the Housing Quality
Standards with references to the new physical condition standards in
subpart G of part 5. This rule would retain, however, the specific
occupancy requirements (i.e., the number of tenants per dwelling unit);
such requirements are not addressed by the new uniform physical
condition standards. This rule also would retain the lead-based paint
requirements that are otherwise embedded in the Housing Quality
Standards. This rule would not affect the applicability of HUD's lead-
based paint requirements (although please see the reference above to
the separate regulations that are under development for lead-based
paint).
    9. 24 CFR part 891; Supportive Housing for the Elderly and Persons
with Disabilities. This rule would add a new Sec. 891.180 to provide
that housing assisted under these supportive housing programs must be
maintained and inspected in accordance with the proposed physical
condition standards and inspection requirements in subpart G of part 5.
    10. 24 CFR part 965; PHA-Owned or Leased Projects--General
Provisions. This rule proposes to add a new subpart F (consisting of
Sec. 965.601) to part 965. Section 965.601 would require that housing
that is owned or leased by a PHA must be maintained in accordance with
the new uniform physical condition standards. Section 965.601 would
also provide that for each PHA, HUD intends to perform independent
inspections to confirm that Public Housing is being maintained in
accordance with the new uniform physical condition standards using the
proposed new inspection system, based upon a statistically valid sample
of Public Housing units for each PHA.
    11. 24 CFR part 983; Section 8 Project-Based Certificate Program.
This rule proposes to amend Sec. 983.5 by replacing the Housing Quality
Standards with references to the new physical condition standards in
subpart G of part 5. This rule would retain, however, the specific
occupancy requirements, since these requirements are not addressed by
the new uniform physical condition standards. This rule also would
retain the lead-based paint requirements that are otherwise embedded in
the Housing Quality Standards. This rule would not affect the
applicability of HUD's lead-based paint requirements (although please
see the reference above to the

[[Page 35656]]

separate regulations that are under development for lead-based paint).

VI. Justification for 30-Day Comment Period

    In general, it is HUD's policy that notices of proposed rulemaking
are to afford the public not less than 60 days for submission of
comments, in accordance with its regulations on rulemaking in 24 CFR
part 10. However, HUD has determined that there is good cause to reduce
the public comment period for this proposed rule to 30 days. As
discussed in more detail earlier in this preamble, the announcement,
through this rule, of HUD's proposal to establish a uniform set of
physical condition standards and to establish a uniform inspection
protocol has been developed with the participation of HUD's program
participants, industry leaders, and experts in the real estate
inspection industries. As also discussed in the preamble, in adopting
uniform physical condition standards for HUD housing, this proposed
rule would not alter the statutory standard for the maintenance of HUD
housing, nor the existing requirement to conduct property inspection.
HUD anticipates that making these standards uniform and consistent will
ease the administrative burden for participants in the covered HUD
programs, and therefore there is a benefit to making this standard
effective at the earliest date possible. Given these reasons, HUD has
determined that the 30-day comment period for this proposed rule should
provide sufficient notice and opportunity for interested entities to
comment. In order to provide the fullest and most expedient access to
the provisions of this proposed rule, HUD will make it available on the
HUD Home Page on the World Wide Web at http://www.hud.gov, on the date
of publication in the Federal Register. HUD will also directly notify
entities that have expressed a significant interest to HUD by sending
such entities a copy of this proposed rule.

VII. Findings and Certifications

Executive Order 12866

    The Office of Management and Budget (OMB) reviewed this proposed
rule under Executive Order 12866, Regulatory Planning and Review,
issued by the President on September 30, 1993. OMB determined that this
proposed 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 in this
proposed rule subsequent to its submission to OMB are identified in the
docket file, which is available for public inspection between 7:30 a.m.
and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk, Office
of General Counsel, Room 10276, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment
was made 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. 4223). The Finding is available for public inspection
between 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules
Docket Clerk, Office of General Counsel, Room 10276, Department of
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this proposed rule before publication and
by approving it certifies that this proposed rule is not anticipated to
have a significant economic impact on a substantial number of small
entities. All HUD housing is currently subject to physical condition
standards and a physical inspection requirement. As discussed in the
preamble to this proposed rule, there are statutory directives to
maintain HUD housing in a condition that is decent, safe, and sanitary.
Accordingly, this proposed rule does not alter that requirement, nor
does the proposed rule shift responsibility with respect to who
conducts the physical inspection of the property. The entities and
individuals currently responsible for the inspection of HUD subsidized
properties would remain responsible. The proposed rule, however,
provides for uniform physical inspection standards for the majority of
HUD programs. These standards would not be significantly different from
those standards to which HUD housing is currently subject. The existing
applicable standards are similar but there are some variations from HUD
program to program. HUD anticipates that making these standards uniform
and consistent for the HUD programs covered by this rule will ease the
administrative burden for participants in the covered HUD programs,
including and particularly small entities. As with the implementation
of any new or modified program requirement, HUD intends to provide
guidance to the covered entities, particularly small entities, to
assist them in understanding the changes being made.
    Notwithstanding HUD's determination that this proposed rule would
not have a significant economic impact on small entities, HUD
specifically invites comments regarding alternatives to this proposed
rule that would meet HUD's objectives as described in this preamble.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this proposed rule would not have substantial direct
effects on States or their political subdivisions, on the relationship
between the Federal Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
This proposed rule would provide a uniform set of physical condition
standards and physical inspection requirements for HUD housing, which
would make HUD's requirements clearer and more objective. As a result,
the proposed rule is not subject to review under the Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for Federal
agencies to assess the effects of their regulatory actions on State,
local, and tribal governments, and the private sector. This proposed
rule would not impose any Federal mandates on any State, local, or
tribal governments, or on the private sector, within the meaning of the
UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for the programs
that would be affected by this proposed rule are:

14.126--Mortgage Insurance--Cooperative Projects (Section 213)
14.129--Mortgage Insurance--Nursing Homes, Intermediate Care
Facilities, Board and Care Homes and Assisted Living Facilities
(Section 232)
14.134--Mortgage Insurance--Rental Housing (Section 207)
14.135--Mortgage Insurance--Rental and Cooperative Housing for Moderate
Income Families and Elderly, Market Rate Interest (Sections 221(d) (3)
and (4))
14.138--Mortgage Insurance--Rental Housing for Elderly (Section 231)
14.139--Mortgage Insurance--Rental Housing in Urban Areas (Section 220
Multifamily)

[[Page 35657]]

14.157--Supportive Housing for the Elderly (Section 202)
14.181--Supportive Housing for Persons with Disabilities (Section 811)
14.188--Housing Finance Agency (HFA) Risk Sharing Pilot Program
(Section 542(c))
14.856--Lower Income Housing Assistance Program--Section 8 Moderate
Rehabilitation

List of Subjects

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Drug abuse,
Drug traffic control, Grant programs--housing and community
development, Grant programs--Indians, 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.

24 CFR Part 207

    Manufactured homes, Mortgage insurance, Reporting and recordkeeping
requirements, Solar energy.

24 CFR Part 266

    Aged, Fair housing, Intergovernmental relations, Mortgage
insurance, Low and moderate income housing, Reporting and recordkeeping
requirements.

24 CFR Part 880

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

24 CFR Part 881

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

24 CFR Part 882

    Grant programs--housing and community development, Homeless, Lead
poisoning, Manufactured homes, Rent subsidies, Reporting and
recordkeeping requirements.

24 CFR Part 883

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

24 CFR Part 884

    Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements, Rural areas.

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 965

    Energy conservation, Government procurement, Grant programs--
housing and community development, Lead poisoning, Loan programs--
housing and community development, Public housing, Reporting and
recordkeeping requirements, Utilities.

24 CFR Part 983

    Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
    Accordingly, for the reasons stated in the preamble, title 24 of
the CFR is proposed to be amended as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

    1. The authority citation for 24 CFR part 5 continues to read as
follows:

    Authority: 42 U.S.C. 3535(d), unless otherwise noted.

    2. A new subpart G is added to part 5 to read as follows:

Subpart G--Physical Condition Standards and Inspection Requirements

Sec.
5.701  Applicability.
5.703  Physical condition standards for HUD housing that is decent,
safe, sanitary and in good repair (DSS/GR).
5.705  Uniform physical inspection requirements.

Subpart G--Physical Condition Standards and Inspection Requirements

Sec. 5.701  Applicability.

    (a) This subpart applies to housing assisted by HUD under the
following programs:
    (1) All Section 8 project-based assistance. ``Project-based
assistance'' means Section 8 assistance that is attached to the
structure (see Sec. 982.1(b)(1) regarding the distinction between
``project-based'' and ``tenant-based'' assistance);
    (2) Section 202 Program of Supportive Housing for the Elderly;
    (3) Section 811 Program of Supportive Housing for Persons with
Disabilities;
    (4) Section 202 loan program for projects for the elderly and
handicapped (including 202/8 projects and 202/162 projects).
    (b) This subpart also applies to housing with mortgages insured or
held by HUD, or housing that is receiving assistance from HUD, under
the following authorities:
    (1) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701
et seq.) (Rental Housing Insurance);
    (2) Section 213 of the NHA (Cooperative Housing Insurance);
    (3) Section 220 of the NHA (Rehabilitation and Neighborhood
Conservation Housing Insurance);
    (4) Section 221(d)(3) and (5) of the NHA (Housing for Moderate
Income and Displaced Families);
    (5) Section 221(d)(4) of the NHA (Housing for Moderate Income and
Displaced Families);
    (6) Section 231 of the NHA (Housing for Elderly Persons);
    (7) Section 232 of the NHA (Mortgage Insurance for Nursing Homes,
Intermediate Care Facilities, Board and Care Homes);
    (8) Section 234(d) of the NHA (Rental) (Mortgage Insurance for
Condominiums);
    (9) Section 236 of the NHA (Rental and Cooperative Housing for
Lower Income Families);
    (10) Section 241 of the NHA (Supplemental Loans for Multifamily
Projects); and
    (11) Section 542(c) of the Housing and Community Development Act of
1992 (12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing
Program).
    (c) This subpart also applies to Public Housing (housing receiving
assistance under sections 5, 9, or 14 of the U.S. Housing Act of 1937).
    (d) For purposes of this subpart, the term ``HUD housing'' means
the types of housing listed in paragraphs (a), (b), and (c) of this
section.

Sec. 5.703  Physical condition standards for HUD housing that is
decent, safe, sanitary and in good repair (DSS/GR).

    HUD housing must be decent, safe, sanitary and in good repair.
Owners of housing described in Sec. 5.701(a), mortgagors of housing
described in Sec. 5.701(b), and PHAs and other entities approved by HUD
owning housing described in Sec. 5.701(c) must maintain such housing in
a manner that meets the physical condition standards set forth in this
section in order to be considered decent, safe, sanitary and in good
repair.

[[Page 35658]]

These standards address the major areas of the HUD housing: the site;
the building exterior; the building systems; the dwelling units; the
common areas; and health and safety considerations.
    (a) Site. The site components, such as fencing and retaining walls,
grounds, lighting, mailboxes/project signs, parking lots/driveways,
play areas and equipment, refuse disposal, roads, storm drainage and
walkways must be free of health and safety hazards and be in good
repair. The site must not be subject to material adverse conditions,
such as abandoned vehicles, dangerous walks or steps, poor drainage,
septic tank back-ups, sewer hazards, excess accumulations of trash,
vermin or rodent infestation or fire hazards.
    (b) Building exterior. Each building on the site must be
structurally sound, secure, habitable, and in good repair. Each
building's doors, fire escapes, foundations, lighting, roofs, walls,
and windows, where applicable, must be free of health and safety
hazards, operable, and in good repair.
    (c) Building systems. Each building's domestic water, electrical
system, elevators, emergency power, fire protection, HVAC, and sanitary
system must be free of health and safety hazards, functionally
adequate, operable, and in good repair.
    (d) Dwelling units. (1) Each dwelling unit within a building must
be structurally sound, habitable, and in good repair. All areas and
aspects of the dwelling unit (for example, the unit's bathroom, call-
for-aid, ceiling, doors, electrical systems, floors, hot water heater,
HVAC (where individual units are provided), kitchen, lighting, outlets/
switches, patio/porch/balcony, smoke detectors, stairs, walls, and
windows) must be free of health and safety hazards, functionally
adequate, operable, and in good repair.
    (2) Where applicable, the dwelling unit must have hot and cold
running water, including an adequate source of potable water (note for
example that single room occupancy units may not contain water
facilities).
    (3) If the dwelling unit includes its own sanitary facility, it
must be in proper operating condition, usable in privacy, and adequate
for personal hygiene and the disposal of human waste.
    (4) The dwelling unit must include at least one battery-operated or
hard-wired smoke detector, in proper working condition, on each level
of the unit.
    (e) Common areas. The common areas must be structurally sound,
secure, and functionally adequate for the purposes intended. The
basement/garage/carport, restrooms, closets, utility, mechanical,
community rooms, day care, halls/corridors, stairs, kitchens, laundry
rooms, office, porch, patio, balcony, and trash collection areas, if
applicable, must be free of health and safety hazards, operable, and in
good repair. All common area ceilings, doors, floors, HVAC, lighting,
outlets/switches, smoke detectors, stairs, walls, and windows, to the
extent applicable, must be free of health and safety hazards, operable,
and in good repair. These standards for common areas would apply, to a
varying extent, to all HUD housing, but will be particularly relevant
to congregate housing, independent group homes/residences, and single
room occupancy units, in which the individual dwelling units (sleeping
areas) do not contain kitchen and/or bathroom facilities.
    (f) Health and safety concerns. All areas and components of the
housing must be free of health and safety hazards. These areas include,
but are not limited to, air quality, electrical hazards, elevators,
emergency/fire exits, flammable materials, garbage and debris, handrail
hazards, infestation, and lead-based paint. For example, the buildings
must have fire exits that are not blocked and are accessible to all
residents, and have hand rails that are undamaged and have no other
observable deficiencies. The housing must have no evidence of
infestation by rats, mice, or other vermin, or of garbage and debris.
The housing must have no evidence of electrical hazards, natural
hazards, or fire hazards. The dwelling units and common areas must have
proper ventilation and be free of mold, odor, or other observable
deficiencies. The housing must comply with all requirements related to
the evaluation and reduction of lead-based paint hazards and have
available proper certifications of such (see 24 CFR part 35).
    (g) Compliance with State and local codes. The physical condition
standards in this section do not supersede or preempt State and local
codes building and maintenance with which HUD housing must comply. HUD
housing must continue to adhere to these codes.

Sec. 5.705  Uniform physical inspection requirements.

    Any entity responsible for conducting a physical inspection of HUD
housing, to determine compliance with this subpart, must inspect such
HUD housing annually (unless otherwise specifically notified by HUD),
in accordance with HUD-prescribed physical inspection procedures. For
Public Housing, PHAs have the option to inspect Public Housing units
using the procedures prescribed in accordance with this section.

PART 207--MULTIFAMILY HOUSING MORTGAGE INSURANCE

    3. The authority citation for 24 CFR part 207 continues to read as
follows:

    Authority: 12 U.S.C. 1701z-11(e), 1713, and 1715b; 42 U.S.C.
3535(d).

    4. A new Sec. 207.260 is added, immediately after Sec. 207.259a, to
read as follows:

Sec. 207.260  Maintenance and inspection of property.

    As long as the mortgage is insured or held by the Commissioner, the
mortgagor must maintain the insured project in accordance with the
physical condition requirements in 24 CFR part 5, subpart G; and the
mortgagee must inspect the project in accordance with the physical
inspection requirements in 24 CFR part 5, subpart G.

PART 266--HOUSING FINANCE AGENCY RISK-SHARING PROGRAM FOR INSURED
AFFORDABLE MULTIFAMILY PROJECT LOANS

    5. The authority citation for 24 CFR part 266 continues to read as
follows:

    Authority: 12 U.S.C. 1707; 42 U.S.C. 3535(d).

Sec. 266.505  [Amended]

    6. Section 266.505 is amended by removing and reserving paragraph
(b)(6).
    7. A new Sec. 266.507 is added, to read as follows:

Sec. 266.507  Maintenance requirements.

    The mortgagor must maintain the project in accordance with the
physical condition standards in 24 CFR part 5, subpart G.
    8. In Sec. 266.510, paragraph (a) is revised to read as follows:

Sec. 266.510  HFA responsibilities.

    (a) Inspections. The HFA must perform inspections in accordance
with the physical inspection procedures in 24 CFR part 5, subpart G.
* * * * *

PART 880--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW
CONSTRUCTION

    9. The authority citation for 24 CFR part 880 continues to read as
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and
13611-13619.

    10. Section 880.201 is amended by revising the definition of
``Decent, safe and sanitary'', to read as follows:

[[Page 35659]]

Sec. 880.201  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary
if it meets the physical condition requirements in 24 CFR part 5,
subpart G.
* * * * *

Sec. 880.207  [Amended]

    11. Section 880.207 is amended by removing and reserving paragraph
(a).

PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR
SUBSTANTIAL REHABILITATION

    12. The authority citation for 24 CFR part 881 continues to read as
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and
13611-13619.

    13. Section 881.201 is amended by revising the definition of
``Decent, safe and sanitary'', to read as follows:

Sec. 881.201  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary
if it meets the physical condition requirements in 24 CFR part 5,
subpart G.
* * * * *

Sec. 881.207  [Amended]

    14. Section 881.207 is amended by removing and reserving paragraph
(a).

PART 882--SECTION 8 MODERATE REHABILITATION PROGRAMS

    15. The authority citation for 24 CFR part 882 continues to read as
follows:

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

    16. Section 882.102 is amended in paragraph (b) by revising the
definition of ``Decent, safe, and sanitary''; and by removing the
definition of ``Housing quality standards (HQS)''; to read as follows:

Sec. 882.102  Definitions.

* * * * *
    (b) * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary
if it meets the physical condition standards in 24 CFR part 5, subpart
G.
* * * * *
    17. Section 882.404 is amended by revising the heading; by revising
paragraph (a); by removing and reserving paragraph (b); by revising
paragraph (c); and by removing paragraph (d); to read as follows:

Sec. 882.404  Physical condition standards; physical inspection
requirements.

    (a) Compliance with physical condition standards. Housing in this
program must be maintained and inspected in accordance with the
requirements in 24 CFR part 5, subpart G.
* * * * *
    (c) Compliance with lead-based paint requirements. Housing used in
the Section 8 moderate rehabilitation program must comply with the
lead-based paint requirements in 24 CFR 982.401(j). For purposes of the
SRO program, however, see Sec. 882.803(b).
    18. Section 882.803 is amended by revising paragraph (b), to read
as follows:

Sec. 882.803  Project eligibility and other requirements.

* * * * *
    (b) Physical condition standards. Section 882.404 applies to this
program, except that the lead-based paint requirements in 24 CFR
982.401(j) do not apply to this program, since these SRO units will not
house children.
* * * * *

PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE
HOUSING AGENCIES

    19. The authority citation for 24 CFR part 883 continues to read as
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

    20. Section 883.302 is amended by adding a definition of ``Decent,
safe, and sanitary'', in alphabetical order; and by removing the
definition of ``MPS (Minimum Property Standards''; to read as follows:

Sec. 883.302  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary
if it meets the physical condition requirements in 24 CFR part 5,
subpart G.
* * * * *

Sec. 883.310  [Amended]

    21. Section 883.310 is amended by removing and reserving paragraphs
(a)(1) and (b)(1).

PART 884--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW
CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING
PROJECTS

    22. The authority citation for 24 CFR part 884 continues to read as
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.

    23. Section 884.102 is amended by revising the definition of
``Decent, safe, and sanitary''; and by removing the definition of
``Minimum property standards''; to read as follows:

Sec. 884.102  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary
if it meets the physical condition requirements in 24 CFR part 5,
subpart G.
* * * * *

Sec. 884.110  [Amended]

    24. Section 884.110 is amended in paragraph (b) by removing ``(1)
Minimum Property Standards,'' and the designations ``(2)'', ``(3)'',
``(4)'', and ``(5)''.

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

    25. The authority citation for 24 CFR part 886 continues to read as
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-
13619.
    26. Section 886.102 is amended by revising the definition of
``Decent, Safe and Sanitary'', to read as follows:

Sec. 886.102  Definitions.

* * * * *
    Decent, Safe, and Sanitary. Housing is decent, safe, and sanitary
if it meets the physical condition requirements in 24 CFR part 5,
subpart G.
* * * * *
    27. Section 886.113 is amended by revising the heading; by removing
the introductory text; by revising paragraphs (a) and (b); by removing
and reserving paragraphs (c) through (h); and by removing paragraphs
(j) through (n); to read as follows:

Sec. 886.113  Physical condition standards; physical inspection
requirements.

    (a) General. Housing used in this program must be maintained and
inspected in accordance with the requirements in 24 CFR part 5, subpart
G.
    (b) Space and security. In addition to the standards in 24 CFR part
5, subpart G, the dwelling unit must have a living room, a kitchen
area, and a bathroom. The dwelling unit must have at least one bedroom
or living/sleeping room for each two persons.
* * * * *
    28. Section 886.302 is amended by revising the definition of
``Decent, safe, and sanitary'', to read as follows:

Sec. 886.302  Definitions.

* * * * *
    Decent, safe, and sanitary. Housing is decent, safe, and sanitary
if it meets the

[[Page 35660]]

physical condition requirements in 24 CFR part 5, subpart G.
* * * * *
    29. Section 886.307 is amended by revising the heading; by removing
the introductory text; by revising paragraphs (a) and (b); by removing
and reserving paragraphs (c) through (h); and by removing paragraphs
(j) through (p); to read as follows:

Sec. 886.307  Physical condition standards; physical inspection
requirements.

    (a) General. Housing assisted under this part must be maintained
and inspected in accordance with the requirements in 24 CFR part 5,
subpart G.
    (b) Space and security. In addition to the standards in 24 CFR part
5, subpart G, the dwelling unit must have a living room, a kitchen
area, and a bathroom. The dwelling unit must have at least one bedroom
or living/sleeping room for each two persons.
* * * * *

PART 891--SUPPORTIVE HOUSING FOR THE ELDERLY AND PERSONS WITH
DISABILITIES

    30. The authority citation for 24 CFR part 891 continues to read as
follows:

    Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437f, 3535(d) and 8013.

    31. In subpart A of part 891, a new Sec. 891.180 is added, to read
as follows:

Sec. 891.180  Physical condition standards; physical inspection
requirements.

    Housing assisted under this part must be maintained and inspected
in accordance with the requirements in 24 CFR part 5, subpart G.

PART 965--PHA-OWNED OR LEASED PROJECTS--GENERAL PROVISIONS

    32. The authority citation for 24 CFR part 965 continues to read as
follows:

    Authority: 2 U.S.C. 1437, 1437a, 1437d, 1437g, and 3535(d).
Subpart H is also issued under 42 U.S.C. 4821-4846.

    33. In part 965, a new subpart F, consisting of Sec. 965.601, is
added, to read as follows:

Subpart F--Physical Condition Standards and Physical Inspection
Requirements

Sec. 965.601  Physical condition standards; physical inspection
requirements.

    Housing owned or leased by a PHA, and public housing owned by
another entity approved by HUD, must be maintained in accordance with
the physical condition standards in 24 CFR part 5, subpart G. For each
PHA, HUD will perform an independent physical inspection of a
statistically valid sample of such housing based upon the physical
condition standards in 24 CFR part 5, subpart G.

PART 983--SECTION 8 PROJECT-BASED CERTIFICATE PROGRAM

    34. The authority citation for 24 CFR part 983 continues to read as
follows:

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

    35. Section 983.5 is revised to read as follows:

Sec. 983.5  Physical condition standards; physical inspection
requirements.

    (a) General. Housing used in this program must be maintained and
inspected in accordance with the requirements in 24 CFR part 5, subpart
G.
    (b) Space and security. In addition to the standards in 24 CFR part
5, subpart G, the dwelling unit must have a living room, a kitchen
area, and a bathroom. The dwelling unit must have at least one bedroom
or living/sleeping room for each two persons.
    (c) Lead-based paint. 24 CFR 982.401(j) applies to assistance under
this part.

    Dated: June 5, 1998.
Andrew Cuomo,
Secretary.
[FR Doc. 98-17271 Filed 6-29-98; 8:45 am]
BILLING CODE 4210-32-P
