Streamlining Public Housing Maintenance and Operation Rules

Summary

This proposed rule would amend regulations on public housing maintenance and operation to streamline and simplify necessary requirements and to eliminate unnecessary requirements.

Full text

SUMMARY: This proposed rule would amend regulations on public housing 
maintenance and operation to streamline and simplify necessary 
requirements and to eliminate unnecessary requirements.

DATES: Comments due date: November 24, 1995.
ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Rules Docket Clerk, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC 20410-0500. 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: William C. Thorson, Acting Director, 
Administration and Maintenance Division, Room 4214, Office of Public 
and Indian Housing, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC 20410, telephone (202) 708-4703 
(voice). Hearing- or speech-impaired persons may use the 
Telecommunications Devices for the Deaf (TDD) by contacting the Federal 
Information Relay Service on 1-800-877-TDDY (1-800-877-8339) or (202) 
708-9300. (Other than the ``800'' TDD number, telephone numbers are not 
toll-free.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

    The information collection requirements contained in this proposed 
rule have been submitted to the Office of Management and Budget for 
review under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520). 
The burden on the public associated with the information collections is 
described more fully below under the heading, Other Matters. Send 
comments regarding this burden estimate or any other aspect of this 
information collection to the Rules Docket Clerk, Room 10276, 
Department of Housing and Urban Development, 451 Seventh Street, SW, 
Washington, DC 20410-0500; and to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Attention: Desk 
Officer for HUD, Washington, DC 20503.

II. Background

    Upon assuming the leadership of the Department of Housing and Urban 
Development (HUD) in 1993, Secretary Cisneros made the reinvention of 
HUD one of his first priorities. HUD's reinvention efforts took place 
in the context of a broader, government-wide reinvention process, the 
National Performance Review, under the leadership of Vice President 
Gore. At that time, HUD established five program goals to accomplish 
its mission that involved working for healthy growth in cities, 
providing adequate housing for all, and protection of society's most 
vulnerable people.
    HUD determined that one of the first steps needed in its 
transformation from the old HUD to a new HUD was the consolidation and 
streamlining of funding programs. HUD recently submitted to Congress 
sweeping changes to transform public housing to a resident-based 
program.
    Another aspect of the reinvention involve HUD's rules, which have 
been at the forefront of HUD's reinvention efforts since those efforts 
commenced in 1993. The foundation of HUD's regulatory process is 
Executive Order 12866 (Regulatory Planning and Review) issued by 
President Clinton on September 30, 1993. This order directs agencies 
to, among other things, explore regulatory alternatives and, if 
regulations are determined to be necessary, to select approaches that 
maximize benefits and involve enhanced public accessibility and 
participation in the rulemaking process.
    HUD has done a comprehensive review of 24 CFR Part 965, PHA-Owned 
or Leased Projects--Maintenance and Operation. Part 965 contains 8 
subparts, covering a wide range of topics. Based on its comprehensive 
review, HUD has determined that one subpart can be eliminated; three 
subparts can be revised and simplified; two subparts that are 
applicable to other housing programs can be consolidated and relocated 
to a new ``general'' part that will be applicable to all programs; one 
subpart will have to be revised to reflect new statutory requirements; 
and one subpart recently issued will be unchanged.

III. Proposed Changes

    Subpart A, Preemption of State Prevailing Wage Rates, makes higher 
State determined prevailing wage rates ``inapplicable'' to a contract 
for PHA-performed work. The ``inapplicability'' of these higher State 
rates represents cost savings to public housing agencies (PHAs) 
permitting limited resources to go further in addressing much needed 
maintenance. For this reason, HUD does not propose to revise this 
requirement. At the same time, there are similar requirements in the 
development regulations, 24 CFR part 941, and in the modernization 
regulations, 24 CFR part 968. HUD plans to consolidate these 
requirements in a single regulation in another rulemaking.
    Subpart B, Required Insurance Coverage, was codified for the first 
time on October 5, 1993. It provides policies concerning insurance 
coverage required under the Annual Contributions Contract when provided 
by a qualified PHA-Owned insurance entity, pursuant to the HUD 
Appropriations Act of 1992. A comprehensive review of this subpart 
indicates that its provisions are the minimum necessary to implement 
the statutory provisions. No further simplification or streamlining is 
necessary, except to remove a cross-reference to a provision of the 
Annual Contributions Contract (ACC), since a new, completely revised 
ACC with different numbering of the provisions is now being adopted.
    Three subparts of this part have a bearing on the Federal 
government's utility costs associated with the public housing program. 
Subpart C, Energy Audits and Energy Conservation Measures, deals with a 
subject that is critical to the long term success, viability and 
livability of public housing. Conducting energy audits and installation 
of energy conservation measures has a significant financial impact for 
both PHAs and the Department. Approximately $1.5 billion is spent on 
public housing utility costs annually, most of which is paid by the 
Federal government. As a result, the current requirement to conduct 
energy audits and install cost effective energy conservation measures 
is judicious. At the same time, HUD's review of this subpart reveals 
that it can be simplified. In revising the text of this subpart, HUD 
gave consideration to the final rule published in the Federal Register 
on April 10, 1995 regarding Indian Housing Program Amendments, 24 CFR 
Parts 905 and 950 (60 FR 18174, 18268). HUD's Office of Native American Programs reduced the size and scope of the 
comparable portion of its rule (now 24 CFR 950.805 through 950.825) to 
a reasonable level that still ensures that energy conservation is 
appropriately addressed. Accordingly, this subpart is proposed to be 
revised in substantially the same manner as part 950.
    A second subpart of this part that has an effect on utility costs 
is subpart D, Individual Metering of Utilities for Existing PHA-Owned 
Projects. Public housing agencies spend over $1 billion each year for 
utility costs, a substantial portion of which is funded by Federal 
operating subsidies. It is appropriate that HUD require PHAs to take 
reasonable steps to reduce these utility costs. One significant step is 
determining the extent to which it is cost effective to individually 
meter projects and require residents to pay utility costs directly, as 
is currently required by subpart D. Because of its impact on the cost 
of public housing to the Federal government, HUD is retaining this 
requirement in substantially its current form. HUD does believe that 
some streamlining is possible. The revised language is consistent with 
the new Indian Programs rule at Secs. 950.840 through 950.850. (See 60 
FR 18268-18269.)
    HUD is proposing to eliminate the purpose and definitions sections 
because they are self-evident. This rule also proposes to eliminate 
much of the technical language now contained in Sec. 965.404. The 
language of the current Sec. 965.407 concerning PHA consultation with 
resident organizations, which is advisory only, is revised to reflect 
the Department's intent that it be mandatory.
    The third subpart with an impact on utility costs is subpart E, 
Tenant Allowances for Utilities. To the extent individual metering or 
checkmetering is determined cost effective, it is necessary for a PHA 
to establish resident allowances for utilities. The current subpart E 
provides a broad framework and allows PHAs the flexibility to determine 
the appropriate allowances. This philosophy is consistent with the 
principles of the reinvention of government. As a result, HUD will 
retain subpart E substantially in its current form. However, HUD 
believes that some streamlining is possible. Revisions similar to those 
made in the new Indian Programs rule at Secs. 950.860 through 950.876 
(60 FR 18269-18270) have been made to eliminate the much of the 
purpose, applicability, definitions and other unnecessary language.
    Subpart F, Modernization of Oil-Fired Heating Plants, was issued in 
1980 to implement a statutory set-aside of $25 million to modernize 
oil-fired heating equipment. This subpart is now obsolete and is 
proposed to be removed.
    HUD plans to consolidate Subpart H, Lead-Based Paint Poisoning 
Prevention, with similar provisions for other HUD programs. However, 
that change will be made in a separate rule.
    Subpart I, Fire Safety, will be revised in a separate rule that 
updates provisions throughout HUD rules that deal with this subject. 
[HUD published amendments to a number of assisted housing rules on July 
30, 1992, to ensure that residents are protected from fire hazards. On 
October 26, 1992, Congress passed the Fire Administration Authorization 
Act of 1992 (Pub. L. 102-522), which prohibits the use of housing 
assistance in connection with certain assisted and insured properties, 
unless various fire protection and safety standards are met. The fire 
protection and safety standards prescribed by the statute add 
requirements beyond those contained in this subpart.]

IV. Other Matters

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implements section 102(2)(C) of the National Environmental Policy 
Act of 1969 (NEPA). This 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 the General Counsel, Department of Housing and 
Urban Development, Room 10276, 451 Seventh Street, SW., Washington, DC 
20410-0500.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this proposed rule, and, in 
so doing, certifies that the proposed rule would not have a significant 
economic impact on a substantial number of small entities. This 
proposed rule streamlines and reduces the existing administrative 
burden on PHAs, regardless of whether the recipient is categorized as a 
large entity or a small entity.

Federalism Impact

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order No. 12611, Federalism, has determined that this 
proposed rule will not have a substantial, direct effect on the States 
or on the relationship between the Federal government and the States, 
or on the distribution of power or responsibilities among the various 
levels of government. The proposed rule does not effect the autonomy of 
local PHAs. Instead, it streamlines and eliminates requirements 
currently in effect.

Impact on the Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that the proposed rule will not 
have a significant impact on family formation, maintenance, and well-
being, and, therefore, is not subject to review under the Order.

Catalog

    The Catalog of Federal Domestic Assistance numbers for the public 
housing program is 14.850.

Public Reporting Burden

    The public reporting burden for the information collections 
contained in this proposed rule are shown in a chart below. These 
estimates include the time for reviewing the instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information. Tabulation of Annual Reporting Burden--Proposed Rule Streamlining Public Housing Maintenance and Operations  
----------------------------------------------------------------------------------------------------------------
                                                                 No. of                                         
                                     Section of     No. of     responses    Total ann.    Hrs. per              
    Description of info. coll.         24 CFR    respondents      per       responses     response   Total hours
                                      affected                 respondent                                       
----------------------------------------------------------------------------------------------------------------
Energy audits every 5 years.......      965.302        3,400          1/5          700            2        1,400
Review of energy contracting soli-                                                                              
 citations and contracts..........      965.308           10            1           10            8           80
Benefit/cost analysis.............      965.402        1,360          1/3          454            2          908
Review of util. allowances........      965.507        1,924            1        1,924            2        3,848
                                   -----------------------------------------------------------------------------
      Total Annual Burden                                                                                       
       (Reduction from current                                                                                  
       burden of 1,764 hours).....  ...........  ...........  ...........  ...........  ...........        6,236
----------------------------------------------------------------------------------------------------------------



List of Subjects in 24 CFR Part 965

    Grant programs--housing and community development, Housing, Loan 
programs--housing and community requirements, Small businesses.

    Accordingly, 24 CFR part 965, is proposed to be amended as follows:

PART 965--PHA-OWNED OR LEASED PROJECTS--MAINTENANCE AND OPERATION

    1. The authority citation for part 965 continues to read as 
follows:

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


Sec. 965.205  [Amended]

    2. In subpart B, Sec. 965.205 is amended by removing the phrase 
``(in section 305 of the ACC)'' from the first sentence in paragraph 
(a).


Secs. 965.303, 965.309, 965.310, 965.315  [Removed]

    3. In subpart C, Secs. 965.301, 965.302, and 965.304 through 
965.308 are revised, and Secs. 965.303, 965.309, 965.310, and 965.315 
are removed, to read as follows:

Subpart C--Energy Audits and Energy Conservation Measures


Sec. 965.301  Purpose and applicability.

    (a) Purpose. The purpose of this subpart is to implement HUD 
policies in support of national energy conservation goals by requiring 
PHAs to conduct energy audits and undertake certain cost-effective 
energy conservation measures.
    (b) Applicability. The provisions of this subpart apply to all PHAs 
with PHA-owned housing, but they do not apply to Indian Housing 
Authorities. (For similar provisions applicable to Indian housing, see 
part 950 of this chapter.) No PHA-leased project or Section 8 Housing 
Assistance Payments Program project, including PHA-owned Section 8 
projects, is covered by this subpart.


Sec. 965.302  Requirements for energy audits.

    All PHAs shall complete an energy audit for each PHA-owned project 
under management, not less than once every five years. Standards for 
energy audits shall be equivalent to State standards for energy audits 
or as approved by HUD. Energy audits shall analyze all of the energy 
conservation measures, and the payback period for these measures, that 
are pertinent to the type of buildings and equipment operated by the 
PHA.


Sec. 965.304  Order of funding.

    Within the funds available to a PHA, energy conservation measures 
should be accomplished with the shortest pay-back periods funded first. 
A PHA may make adjustments to this funding order because of 
insufficient funds to accomplish high-cost energy conservation measures 
(ECM), or a situation in which an ECM with a longer pay-back period can 
be more efficiently installed in conjunction with other planned 
modernization. A PHA may not install individual utility meters that 
measure the energy or fuel used for space heating in dwelling units 
that need substantial weatherization, when installation of meters would 
result in economic hardship for residents. In these cases, the ECMs 
related to weatherization shall be accomplished before the installation 
of individual utility meters.


Sec. 965.305  Funding.

    (a) The cost of accomplishing cost-effective energy conservation 
measures, including the cost of performing energy audits, shall be 
funded from operating funds of the PHA to the extent feasible. When 
sufficient operating funds are not available for this purpose, such 
costs are eligible for inclusion in a modernization program, for 
funding from any available development funds in the case of projects 
still in development, or for other available funds that HUD may 
designate to be used for energy conservation.
    (b) If an PHA finances energy conservation measures from sources 
other than modernization or operating reserves, such as on the basis of 
a promise to repay, HUD may agree to provide adjustments in its 
calculation of the PHA's operating subsidy eligibility under the PFS 
for the project and utility involved if the financing arrangement is 
cost-beneficial to HUD. (See Sec. 990.107(g) of this chapter.)


Sec. 965.306  Energy conservation equipment and practices.

    In purchasing original or, when needed, replacement equipment, PHAs 
shall acquire only equipment that meets or exceeds the minimum 
efficiency requirements established by the U.S. Department of Energy. 
In the operation of their facilities, PHAs shall follow operating 
practices directed to maximum energy conservation.


Sec. 965.307  Compliance schedule.

    All energy conservation measures determined by energy audits to be 
cost effective shall be accomplished as funds are available.


Sec. 965.308  Energy performance contracts.

    (a) Method of procurement. Energy performance contracting shall be 
conducted using one of the following methods of procurement:
    (1) Competitive proposals (see 24 CFR 85.36(d)(3)). In identifying 
the evaluation factors and their relative importance, as required by 
Sec. 85.36 (d)(3)(i) of this title, the solicitation shall state that 
technical factors are significantly more important than price (of the 
energy audit); or
    (2) If the services are available only from a single source, 
noncompetitive proposals (see 24 CFR 85.36 (d)(4)(i)(A)).
    (b) HUD Review. Solicitations for energy performance contracting 
shall be submitted to the HUD Field Office for review and approval 
prior to issuance. Energy performance contracts shall be submitted to the HUD Field Office 
for review and approval before award.


Secs. 965.408, 965.409, 965.410  [Removed]

    4. In subpart D, Secs. 965.401 through 965.407 are revised, and 
Secs. 965.408, 965.409, and 965.410 are removed, to read as follows:

Subpart D--Individual Metering of Utilities for Existing PHA-Owned 
Projects


Sec. 965.401  Individually metered utilities.

    (a) All utility service shall be individually metered to residents, 
either through provision of retail service to the residents by the 
utility supplier or through the use of checkmeters, unless:
    (1) Individual metering is impractical, such as in the case of a 
central heating system in an apartment building;
    (2) Change from a mastermetering system to individual meters would 
not be financially justified based upon a benefit/cost analysis; or
    (3) Checkmetering is not permissible under State or local law, or 
under the policies of the particular utility supplier or public service 
commission.
    (b) If checkmetering is not permissible, retail service shall be 
considered. Where checkmetering is permissible, the type of individual 
metering offering the most savings to the PHA shall be selected.


Sec. 965.402  Benefit/cost analysis.

    (a) A benefit/cost analysis shall be made to determine whether a 
change from a mastermetering system to individual meters will be cost 
effective, except as otherwise provided in Sec. 965.405.
    (b) Proposed installation of checkmeters shall be justified on the 
basis that the cost of debt service (interest and amortization) of the 
estimated installation costs plus the operating costs of the 
checkmeters will be more than offset by reduction in future utilities 
expenditures to the PHA under the mastermeter system.
    (c) Proposed conversion to retail service shall be justified on the 
basis of net savings to the PHA. This determination involves making a 
comparison between the reduction in utility expense obtained through 
eliminating the expense to the PHA for PHA-supplied utilities and the 
resultant allowance for resident-supplied utilities, based on the cost 
of utility service to the residents after conversion.


Sec. 965.403  Funding.

    The cost to change mastermeter systems to individual metering of 
resident consumption, including the costs of benefit/cost analysis and 
complete installation of checkmeters, shall be funded from operating 
funds of the PHA to the extent feasible. When sufficient operating 
funds are not available for this purpose, such costs are eligible for 
inclusion in a modernization project or for funding from any available 
development funds.


Sec. 965.404  Order of conversion.

    Conversions to individually metered utility service shall be 
accomplished in the following order when a PHA has projects of two or 
more of the designated categories, unless the PHA has a justifiable 
reason to do otherwise, which shall be documented in its files.
    (a) In projects for which retail service is provided by the utility 
supplier and the PHA is paying all the individual utility bills, no 
benefit/cost analysis is necessary, and residents shall be billed 
directly after the PHA adopts revised payment schedules providing 
appropriate allowances for resident-supplied utilities.
    (b) In projects for which checkmeters have been installed but are 
not being utilized as the basis for determining utility charges to the 
residents, no benefit/cost analysis is necessary. The checkmeters shall 
be used as the basis for utility charges and residents shall be 
surcharged for excess utility use.
    (c) Projects for which meter loops have been installed for 
utilization of checkmeters shall be analyzed both for the installation 
of checkmeters and for conversion to retail service.
    (d) Low- or medium-rise family units with a mastermeter system 
should be analyzed for both checkmetering and conversion to retail 
service, because of their large potential for energy savings.
    (e) Low- or medium-rise housing for elderly should next be analyzed 
for both checkmetering and conversion to retail service, since the 
potential for energy saving is less than for family units.
    (f) Electric service under mastermeters for high-rise buildings, 
including projects for the elderly, should be analyzed for both use of 
retail service and of checkmeters.


Sec. 965.405  Actions affecting residents.

    (a) Before making any conversion to retail service, the PHA shall 
adopt revised payment schedules, providing appropriate allowances for 
the resident-supplied utilities resulting from the conversion.
    (b) Before implementing any modifications to utility services 
arrangements with the residents or charges with respect thereto, the 
requisite changes shall be made in resident dwelling leases in 
accordance with 24 CFR part 966.
    (c) PHAs must work closely with resident organizations, to the 
extent practicable, in making plans for conversion of utility service 
to individual metering, explaining the national policy objectives of 
energy conservation, the changes in charges and rent structure that 
will result, and the goals of achieving an equitable structure that 
will be advantageous to residents who conserve energy.
    (d) A transition period of at least six months shall be provided in 
the case of initiation of checkmeters, during which residents will be 
advised of the charges but during which no surcharge will be made based 
on the readings. This trial period will afford residents ample notice 
of the effects the checkmetering system will have on their individual 
utility charges and also afford a test period for the adequacy of the 
utility allowances established.
    (e) During and after the transition period, PHAs shall advise and 
assist residents with high utility consumption on methods for reducing 
their usage. This advice and assistance may include counseling, 
installation of new energy conserving equipment or appliances, and 
corrective maintenance.


Sec. 965.406  Benefit/cost analysis for similar projects.

    PHAs with more than one project of similar design and utilities 
service may prepare a benefit/cost analysis for a representative 
project. A finding that a change in metering is not cost effective for 
the representative project is sufficient reason for the PHA not to 
perform a benefit/cost analysis on the remaining similar projects.


Sec. 965.407  Reevaluations of mastermeter systems.

    Because of changes in the cost of utility services and the periodic 
changes in utility regulations, PHAs with mastermeter systems are 
required to reevaluate mastermeter systems without checkmeters by 
making benefit/cost analyses at least every 36 months. These analyses 
may be omitted under the conditions specified in Sec. 965.406.
    5. Subpart E is revised to read as follows:

Subpart E--Resident Allowances for Utilities

Sec.
965.501  Applicability.
965.502  Establishment of utility allowances by PHAs.
965.503  Categories for establishment of allowances.
965.504  Period for which allowances are established. 965.505  Standards for allowances for utilities.
965.506  Surcharges for excess consumption of PHA-furnished 
utilities.
965.507  Review and revision of allowances.
965.508  Individual relief.

Subpart E--Resident Allowances for Utilities


Sec. 965.501  Applicability.

    (a) This subpart applies to public housing, including Turnkey III 
Homeownership Opportunities program. This subpart also applies to units 
assisted under sections 10(c) and 23 of the U. S. Housing Act of 1937 
as in effect before amendment by the Housing and Community Development 
Act of 1974 and to which 24 CFR part 900 is not applicable. This 
subpart does not apply to Indian housing projects (see 24 CFR part 
950).
    (b) In rental units for which utilities are furnished by the PHA 
but there are no checkmeters to measure the actual utilities 
consumption of the individual units, residents shall be subject to 
charges for consumption of resident-owned major appliances, or for 
optional functions of PHA-furnished equipment, in accordance with 
Sec. 965.502(e) and 965.506(b), but no utility allowance will be 
established.


Sec. 965.502  Establishment of utility allowances by PHAs.

    (a) PHAs shall establish allowances for PHA-furnished utilities for 
all checkmetered utilities and allowances for resident-purchased 
utilities for all utilities purchased directly by residents from the 
utilities suppliers.
    (b) The PHA shall maintain a record that documents the basis on 
which allowances and scheduled surcharges, and revisions thereof, are 
established and revised. Such record shall be available for inspection 
by residents.
    (c) The PHA shall give notice to all residents of proposed 
allowances, scheduled surcharges, and revisions thereof. Such notice 
shall be given, in the manner provided in the lease or homebuyer 
agreement, not less than 60 days before the proposed effective date of 
the allowances or scheduled surcharges or revisions; shall describe 
with reasonable particularity the basis for determination of the 
allowances, scheduled surcharges, or revisions, including a statement 
of the specific items of equipment and function whose utility 
consumption requirements were included in determining the amounts of 
the allowances or scheduled surcharges; shall notify residents of the 
place where the PHA's record maintained in accordance with paragraph 
(b) of this section is available for inspection; and shall provide all 
residents an opportunity to submit written comments during a period 
expiring not less than 30 days before the proposed effective date of 
the allowances or scheduled surcharges or revisions. Such written 
comments shall be retained by the PHA and shall be available for 
inspection by residents.
    (d) Schedules of allowances and scheduled surcharges shall not be 
subject to approval by HUD before becoming effective, but will be 
reviewed in the course of audits or reviews of PHA operations.
    (e) The PHA's determinations of allowances, scheduled surcharges, 
and revisions thereof shall be final and valid unless found to be 
arbitrary, capricious, an abuse of discretion, or otherwise not in 
accordance with the law.


Sec. 965.503  Categories for establishment of allowances.

    Separate allowances shall be established for each utility and for 
each category of dwelling units determined by the PHA to be reasonably 
comparable as to factors affecting utility usage. The PHA will 
establish allowances for different size units, in terms of numbers of 
bedrooms. Other categories may be established at the discretion of the 
PHA.


Sec. 965.504  Period for which allowances are established.

    (a) PHA-furnished utilities. Allowances will normally be 
established on a quarterly basis; however, residents may be surcharged 
on a monthly basis. The allowances established may provide for seasonal 
variations.
    (b) Resident-purchased utilities. Monthly allowances shall be 
established at a uniform monthly amount based on an average monthly 
utility requirement for a year; however, if the utility supplier does 
not offer residents a uniform payment plan, the allowances established 
may provide for seasonal variations.


Sec. 965.505  Standards for allowances for utilities.

    (a) The objective of a PHA in designing methods of establishing 
utility allowances for each dwelling unit category and unit size shall 
be to approximate a reasonable consumption of utilities by an energy-
conservative household of modest circumstances consistent with the 
requirements of a safe, sanitary, and healthful living environment.
    (b) Allowances for both PHA-furnished and resident-purchased 
utilities shall be designed to include such reasonable consumption for 
major equipment or for utility functions furnished by the PHA for all 
residents (e.g., heating furnace, hot water heater), for essential 
equipment whether or not furnished by the PHA (e.g., range and 
refrigerator), and for minor items of equipment (such as toasters and 
radios) furnished by residents.
    (c) The complexity and elaborateness of the methods chosen by the 
PHA, in its discretion, to achieve the foregoing objective will depend 
upon the data available to the PHA and the extent of the administrative 
resources reasonably available to the PHA to be devoted to the 
collection of such data, the formulation of methods of calculation, and 
actual calculation and monitoring of the allowances.
    (d) In establishing allowances, the PHA shall take into account 
relevant factors affecting consumption requirements, including:
    (1) The equipment and functions intended to be covered by the 
allowance for which the utility will be used. For instance, natural gas 
may be used for cooking, heating domestic water, or space heating, or 
any combination of the three.
    (2) The climatic location of the housing projects.
    (3) The size of the dwelling units and the number of occupants per 
dwelling unit.
    (4) Type of construction and design of the housing project.
    (5) The energy efficiency of PHA-supplied appliances and equipment.
    (6) The utility consumption requirements of appliances and 
equipment whose reasonable consumption is intended to be covered by the 
total resident payment.
    (7) The physical condition, including insulation and 
weatherization, of the housing project.
    (8) Temperature levels intended to be maintained in the unit during 
the day and at night, and in cold and warm weather.
    (9) Temperature of domestic hot water.
    (e) If a PHA installs air conditioning, it shall provide, to the 
maximum extent economically feasible, systems that give residents the 
option of choosing to use air conditioning in their units. The design 
of systems that offer each resident the option to choose air 
conditioning shall include retail meters or checkmeters and residents 
shall pay for the energy used in its operation. For systems that offer 
residents the option to choose air conditioning, the PHA shall not 
include air conditioning in the utility allowances. For systems that 
offer residents the option to choose air conditioning but can not be 
checkmetered, residents are to be surcharged in accordance with Sec. 965.506. If an air condition system 
does not provide for resident option, residents are not to be charged 
and these systems should be avoided whenever possible.


Sec. 965.506  Surcharges for excess consumption of PHA-furnished 
utilities.

    (a) For dwelling units subject to allowances for PHA-furnished 
utilities where checkmeters have been installed, the PHA shall 
establish surcharges for utility consumption in excess of the 
allowances. Surcharges may be computed on a straight per unit of 
purchase basis (e.g., cents per kilowatt hour of electricity) or for 
stated blocks of excess consumption, and shall be based on the PHA's 
average utility rate. The basis for calculating such surcharges shall 
be described in the PHA's schedule of allowances. Changes in the dollar 
amounts of surcharges based directly on changes in the PHA's average 
utility rate shall not be subject to the advance notice requirements of 
this section.
    (b) For dwelling units served by PHA-furnished utilities where 
checkmeters have not been installed, the PHA shall establish schedules 
of surcharges indicating additional dollar amounts residents will be 
required to pay by reason of estimated utility consumption attributable 
to resident-owned major appliances or to optional functions of PHA-
furnished equipment. Such surcharge schedules shall state the resident-
owned equipment (or functions of PHA-furnished equipment) for which 
surcharges shall be made and the amounts of such charges, which shall 
be based on the cost to the PHA of the utility consumption estimated to 
be attributable to reasonable usage of such equipment.


Sec. 965.507  Review and revision of allowances.

    (a) Annual review. The PHA shall review at least annually the basis 
on which utility allowances have been established and, if reasonably 
required in order to continue adherence to the standards stated in 
Sec. 965.505 shall establish revised allowances. The review shall 
include all changes in circumstances (including completion of 
modernization and/or other energy conservation measures implemented by 
the PHA) indicating probability of a significant change in reasonable 
consumption requirements and changes in utility rates.
    (b) Revision as a result of rate changes. The PHA may revise its 
allowances for resident-purchased utilities between annual reviews if 
there is a rate change (including fuel adjustments) and shall be 
required to do so if such change, by itself or together with prior rate 
changes not adjusted for, results in a change of 10 percent or more 
from the rates on which such allowances were based. Adjustments to 
resident payments as a result of such changes shall be retroactive to 
the first day of the month following the month in which the last rate 
change taken into account in such revision became effective.


Sec. 965.508  Individual relief.

    Requests for relief from surcharges for excess consumption of PHA-
purchased utilities, or from payment of utility supplier billings in 
excess of the allowances for resident-purchased utilities, may be 
granted by the PHA on reasonable grounds, such as special needs of 
elderly, ill or disabled residents, or special factors affecting 
utility usage not within the control of the resident, as the PHA shall 
deem appropriate. The PHA's criteria for granting such relief, and 
procedures for requesting such relief, shall be adopted at the time the 
PHA adopts the methods and procedures for determining utility 
allowances. Notice of the availability of such procedures (including 
identification of the PHA representative with whom initial contact may 
be made by residents), and the PHA's criteria for granting such relief, 
shall be included in each notice to residents given in accordance with 
Sec. 965.502(c) and in the information given to new residents upon 
admission.

    Dated: August 24, 1995.
MaryAnn Russ,
Director, Office of Assisted Housing.
[FR Doc. 95-23643 Filed 9-22-95; 8:45 am]
BILLING CODE 4210-33-P  

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