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Statement of Need: The Melville Act makes many important reforms and improvements to the Section 811 program. One of the most significant new features introduced by the Melville Act is the establishment of new project rental assistance authority (section 811(b)(3) of the Cranston-Gonzalez National Affordable Housing Act, as amended by the Melville Act) that is separate from the existing project rental assistance under the Section 811 program that is available to cover operating costs. Although the Melville Act establishes the prerequisite statutory framework, the full and successful implementation of the new project rental assistance authority requires rulemaking. This proposed rule addresses the need for rulemaking by establishing the necessary policies, procedures, and other requirements that will govern the eligibility and use of project rental assistance. HUD intends to implement other changes made by the Melville Act through separate rulemaking.

Summary of the Legal Basis: As noted, the Melville Act amended section 811 of the Cranston-Gonzalez National Affordable Housing Act to establish new project rental assistance authority. This rulemaking is undertaken pursuant to the general rulemaking authority granted to the Secretary under section 7(d) of the Department of HUD Act (42 U.S.C. 35335(d)), which authorizes the Secretary to make "such rules and regulations as may be necessary to carry out his functions, powers, and duties."

Alternatives: Rulemaking is required to ensure that the new requirements and procedures governing the eligibility and use of project rental assistance are generally applicable to participants in HUD's supportive housing program for persons with disabilities and enforceable by HUD.

Anticipated Costs and Benefits: The new project rental assistance authority offers another method of financing for supportive housing for persons with disabilities for projects that do not receive capital advances. The new authority is designed to promote and facilitate the creation of integrated supportive housing units, which is achieved by making funds available to State housing agencies and other appropriate entities. While there may be incremental costs associated with compliance with the new requirements, to the extent that program participants incur such costs, it will be as a result of their voluntary participation in the project rental assistance component of the Section 811 program. The benefits are increased affordability of providing housing for persons with disabilities.

Risks: This rule poses no risk to public health, safety, or the environment