24 C.F.R. § 902.79 Substantial default.
Title 24 - Housing and Urban Development
(a) Events or conditions that constitute substantial default. The following events or conditions shall constitute substantial default. (1) HUD may determine that events have occurred or that conditions exist that constitute a substantial default if a PHA is determined to be in violation of Federal statutes, including but not limited to, the Act, or in violation of regulations implementing such statutory requirements, whether or not such violations would constitute a substantial breach or default under provisions of the relevant ACC. (2) HUD may determine that a PHA's failure to satisfy the terms of a memorandum of agreement entered into in accordance with §902.75, or to make reasonable progress to execute or meet requirements included in a memorandum of agreement, are events or conditions that constitute a substantial default. (3) HUD shall determine that a PHA that has been designated as troubled and does not show substantial improvement, as defined in §902.75(g)(2), is in substantial default. (4) HUD may declare a substantial breach or default under the ACC, in accordance with its terms and conditions. (5) HUD may determine that the events or conditions constituting a substantial default are limited to a portion of a PHA's public housing operations, designated either by program, by operational area, or by development(s). (b) Notification of substantial default and response. If information from an annual assessment or audit, or any other credible source (including but not limited to the Office of Fair Housing Enforcement, the Office of the Inspector General, a judicial referral or a referral from a mayor or other official) indicates that there may exist events or conditions constituting a substantial breach or default, HUD shall advise a PHA of such information. HUD is authorized to protect the confidentiality of the source(s) of such information in appropriate cases. Before taking further action, except in cases of apparent fraud or criminality, and/or in cases where emergency conditions exist posing an imminent threat to the life, health, or safety of residents, HUD shall afford the PHA a timely opportunity to initiate corrective action, including the remedies and procedures available to PHAs designated as troubled PHAs, or to demonstrate that the information is incorrect. (1) Form of notification. Upon a determination or finding that events have occurred or that conditions exist that constitute a substantial default, the Assistant Secretary shall provide written notification of such determination or finding to the affected PHA. Written notification shall be transmitted to the Executive Director, the Chairperson of the Board, and the appointing authority(ies) of the Board, and shall include, but is not limited to: (i) Identification of the specific covenants, conditions, and/or agreements under which the PHA is determined to be in noncompliance; (ii) Identification of the specific events, occurrences, or conditions that constitute the determined noncompliance; (iii) Citation of the communications and opportunities to effect remedies afforded pursuant to paragraph (a) of this section; (iv) Notification to the PHA of a specific time period, to be not less than 10 calendar days, except in cases of apparent fraud or other criminal behavior, and/or under emergency conditions as described in paragraph (b)(4) of this section, nor more than 30 calendar days, during which the PHA shall be required to demonstrate that the determination or finding is not substantively accurate; and (v) Notification to the PHA that, absent a satisfactory response in accordance with paragraph (b) of this section, HUD will refer the PHA to the Enforcement Center, using any or all of the interventions specified in §902.83, and determined to be appropriate to remedy the noncompliance, citing §902.83, and any additional authority for such action. (2) Receipt of notification. Upon receipt of the notification described in paragraph (b)(1) of this section, the PHA must demonstrate, within the time period permitted in the notification, factual error in HUD's description of events, occurrences, or conditions, or show that the events, occurrences, or conditions do not constitute noncompliance with the statute, regulation, or covenants or conditions to which the PHA is cited in the notification. (3) Waiver of notification. A PHA may waive, in writing, receipt of explicit notice from HUD as to a finding of substantial default, and voluntarily consent to a determination of substantial default. The PHA must concur on the existence of substantial default conditions which can be remedied by technical assistance, and the PHA shall provide HUD with written assurances that all deficiencies will be addressed by the PHA. HUD will then immediately proceed with interventions as provided in §902.83. (4) Emergency situations. In any situation determined to be an emergency, or in any case where the events or conditions precipitating the intervention are determined to be the result of criminal or fraudulent activity, the Secretary or the Secretary's designee is authorized to intercede to protect the residents' and HUD's interests by causing the proposed interventions to be implemented without further appeals or delays. [65 FR 1738, Jan. 11, 2000, as amended at 65 FR 36046, June 6, 2000]
Title 24: Housing and Urban Development
PART 902—PUBLIC HOUSING ASSESSMENT SYSTEM
Subpart G—PHAS Incentives and Remedies
§ 902.79 Substantial default.
