A New Direction for a New HUD
The regulatory plan of the Department of Housing and Urban Development (HUD) for fiscal year 1997 reflects the new direction that HUD is taking under the leadership of Secretary Henry Cisneros. As the Department concludes its fourth year under the administration of Secretary Cisneros, there is much to be proud of in the regulatory changes that have been achieved to date, and there is much to look forward to in the regulatory changes contemplated for the future.
At the outset of his administration, Secretary Cisneros recognized that, all too frequently, regulations served as impediments rather than roadmaps to achieving successful results in Government programs, and he challenged HUD staff to look beyond tedious rules and eliminate those which are clearly useless and outdated.
The Secretary's regulatory challenge to HUD staff not only reflected President Clinton's regulatory philosophy, as outlined in Executive Order 12866, which holds that agencies should only issue regulations where necessary, but also complemented President Clinton's Governmentwide regulatory challenge announced in March 1995. In March 1995, President Clinton directed all Government agencies to conduct a page-by-page review of all regulations and to eliminate obsolete and unnecessary regulations and reinvent existing regulations.
In response to the Secretary's challenge and the President's directive to cut obsolete and unnecessary regulations, HUD, to date, has cut approximately 2,000 pages out of a total of 4,300 pages of regulations. The regulations that were eliminated represent obsolete or unnecessary regulations or repetitive and duplicative provisions, whose presence in the Code of Federal Regulations, in many cases, simply ``cluttered'' HUD's regulations, made them confusing, and lent the appearance of over-regulation by HUD. Removal of approximately 800 additional CFR pages is planned in the next several months, which will result in an over 60 percent reduction in HUD regulations. The new streamlined regulations will focus on requirements that must be maintained in the CFR.
In reviewing its existing regulations to determine which regulations could be removed, consolidated, and streamlined, HUD recognized that situations and activities related to housing and community planning and development change rapidly and out-pace the revision of regulations. Using the Code of Federal Regulations as a self-contained, comprehensive source of all HUD statutory and regulatory requirements, policies and guidance for each program is of limited value.
The Code of Federal Regulations for each agency is revised only once each calendar year. Given statutory changes to programs, administrative changes to programs, and the changes in the housing market and in communities throughout the Nation, this once-a-year revision means that often the new CFR is already outdated when issued. To keep pace with the changes, to ensure that HUD's housing partners and clients have the most up-to-date information, HUD will use sources other than the CFR to relay program information, policies, and guidance and use sources that can be updated quickly and easily and that can better reach HUD's targeted audience.
HUD is already making use of the Internet to provide widespread immediate dissemination of information about HUD, its housing programs, and the related information HUD gathers. For example, on August 1, 1996, Secretary Cisneros announced the new homeownership initiative, called ``Democratizing Data.'' The Democratizing Data initiative collects detailed information on home loa applications, approvals, and n denials from 9,500 lending institutions and makes it widely accessible to lenders, community groups, and others on the Internet's World Wide Web. The data show where loans were made in particular geographic areas by individual lenders and to different population groups identified by race, national origin, sex, and annual income. Community groups will be able to use the information to work with lenders on outreach programs to increase home loans to under-served groups and areas. The media can use the data to learn more about local lending practices. Lenders can use the data to assess their performance in meeting lending goals.
For those regulations that are determined necessary and remain in the CFR, HUD has undertaken significant consolidation and streamlining. HUD has consolidated definitions and requirements used in more than one program in a single regulatory part. Placing all common definitions and requirements in one part simplifies the structure of HUD's regulations and saves time for the user searching for definitions or requirements and trying to determine the programs to which the definitions or requirements apply. This consolidation also minimizes confusion resulting from duplicative or conflicting definitions of the same terms.
HUD has achieved significant regulatory streamlining through consolidation of overlapping and repetitious program requirements. Two decades of experience with HUD's Section 8 certificate and voucher programs have shown that tenant-based housing assistance is an extremely effective mechanism for meeting the urgent needs of low-income renters. One of the weaknesses of the certificate and voucher programs, however, was the division of these two closely related programs into two separate tenant-based programs with two separate sets of regulations and procedures. To correct this weakness, HUD published a final rule that presents a unified statement of program requirements for the tenant-based certificate and voucher programs and eliminates all nonstatutory differences between the two programs. The rule further eliminated requirements that have impeded public housing agency administration of the program and landlord participation in the program. HUD also consolidated the three separate regulations for the supportive housing programs for the elderly and persons with disabilities, which were largely duplicative of each other with only minor differences. In addition, HUD consolidated into one part the separate regulations for the restrictions on assistance governing noncitizens. Again, the requirements were virtually identical for the programs subject to these restrictions with the exception of certain differences, which were maintained in the consolidated regulations.
These are only some examples of the improvements made to HUD's regulations. HUD is currently reviewing recommendations for further streamlining that have emerged from the empowerment zone experience as well as customer surveys. Depending on this reivew, HUD may recommend a series of statutory revisions that would augment the regulatory streamlining effort.
On February 1, 1996, Secretary Cisneros released a report detailing HUD's continued reinvention. The report has four core elements: Q04
Much of this agenda is already underway--in administrative actions already taken or ongoing and in legislation now under consideration. HUD's regulations will support rather than impede this agenda for the future.
Regulatory Priorities
For fiscal year 1997, HUD will focus its resources on continued reinvention and streamlining in accordance with President Clinton's regulatory reform initiative and on the core principles enunciated by the Secretary on February 1, 1996. Although the following rules reflect essential elements of HUD's reinvention effort, other regulations described in HUD's semiannual agenda of regulations also reflect these efforts.
Priority: Giving Power to Communities
Regulatory Action: Public Housing Development Regulations, Including Mixed-Finance Development
This rule finalizes a comprehensive revision of the public housing development and acquisition program regulation at 24 CFR 941. One of the two interim rules merged in this final rule redesigned the public housing development process to give housing authorities and localities maximum flexibility in developing public housing in their communities. The revised procedures shift responsibilities to public housing agencies (PHAs) wherever possible; reduce the number and depth of HUD reviews; and, in the case of ``high performing'' PHAs, eliminate most HUD reviews of development activities. HUD anticipates that these changes will reduce average development times by 6 to 9 months.
Priority: Transform All Federal Housing Assistance
Regulatory Action: Reform of Public Housing Management
This rule proposes an extensive revision of the Public Housing Management Assessment Program (PHMAP), which contains the policies and procedures used by the Department of Housing and Urban Development to identify public housing authority (PHA) management capabilities and deficiencies; to designate high performing and troubled PHAs; and to enter into agreements and formulate plans to improve PHA management. Additionally, this rule adds a new security indicator which covers the provisions of the ``One Strike and You're Out'' policy for public housing residents and other anti-drug and/or anti-crime security initiatives for public housing.
On March 28, 1996, President Clinton announced a ``One Strike and and You're Out'' policy for public housing residents and signed into law the ``Housing Opportunity Program Extension Act of 1996,'' providing additional authority to PHAs in the areas of screening, lease enforcement, and eviction in order to help PHAs fight crime and drug-related crime in public housing communities. The policy will enhance the ability and related efforts of PHAs to develop and enforce stricter screening and eviction policies as a part of their anti-drug and/or anti-crime initiatives. Under the rule, PHAs will be assessed under this new security indicator, which measures PHA performance in implementing effective screening and eviction policies and other anti-crime strategies. Q04
Regulatory Action: Public Housing Development Regulations, Including Mixed-Finance Development
This rule finalizes a comprehensive revision of the public housing development and acquisition program regulation at 24 CFR 941. One of the two interim rules merged in this final rule provides procedures to permit PHAs to enter a partnership with an entity to develop and own public housing properties in mixed-income developments using a combination of public and private financing mechanisms, which may include borrowing public housing development funds from the PHA and/or the sale of low-income housing tax credits. The rule includes requirements that 1) must be met by the proposed partnership before HUD will approve a mixed-finance proposal and 2) govern the development and operation of a project by the partnership.
Priority: Ensure Homeownership Opportunities for all Americans
Regulatory Action: Consolidation of Title I and Title II Regulations
This rule represents an important component of FHA's risk management effort to minimize loss to the insurance funds while giving lenders and mortgagees more flexibility to provide increased homeownership opportunities to low- and moderate-income homebuyers. The regulations provide consistent standards that are less subject to interpretation and that are understood by all approved lenders and the general public. The regulations also provide a strong enforceable basis for evaluating the financial and operational soundness of lenders.
This rule will serve to eliminate the differences which presently exist between the title I and the title II lender approval requirements. With many lending institutions seeking to participate in both programs, these differences have caused confusion and, in some instances, additional reporting burdens. Additionally, the rule seeks to secure added protection to the title I insurance fund by assuring that those lenders actively participating in the program have the increased financial capacity necessary to maintain a trained, competent staff; implement an adequate quality control plan; and reimburse the Department in the event fraudulent loan origination activities are detected. Q04
Regulatory Action: Fair Housing Planning Performance Standard
This rule will assist communities in complying with the legal requirement to certify that they are affirmatively furthering fair housing. It will provide a performance standard rather than prescribing precisely what a community should do. Thus, communities will have a clear idea of what is expected of them and the standards HUD will use in reviewing their certification.
Other Priority Regulations
The following rule supports a specific legislative initiative.
Regulatory Action: Homeless Assistance Fund Regulation
This rule would implement legislation that consolidates McKinney Act homeless assistance funding into a formula-based flexible program as proposed in the President's FY 1997 Budget. The proposed legislation would totally reorganize the currently fragmented approach to HUD's homeless assistance efforts by streamlining program requirements and application processes. Cities and States, in partnership with non-profit homeless providers and others, would be empowered to design and implement community-based continuum of care systems in their jurisdictions.