This rule makes final the interim rule which implemented section 121 of the Housing and Community Development Act of 1987. Section 121 amended section 18 of the United States Housing Act of 1937, which governs the demolition and disposition of public and Indian housing. Section 121 combined two of the previous demolition criteria, so that demolition may be approved if the project is obsolete due to its physical condition, location, or other factors which make it unusable for housing, and no reasonable program of modifications, such as rehabilitation, is feasible to return the project to useful life. Section 121 also provided that projects may not be demolished or disposed of unless the public housing agency (PHA) has developed a plan for the provision of a replacement unit for each unit involved. The plan must include a schedule for its completion (not to exceed six years); and HUD must agree, upon approving the plan, to commit the funds necessary to carry out the plan over the approved schedule, to the extent such funding is not provided from other sources (e.g., State or local programs or proceeds of disposition), and HUD's commitment is subject to the availability of future appropriations. Section 121 repealed a previous statutory provision which made section 18 inapplicable to conveyance of units under homeownership programs. This rule continues that inapplicability to units under certain established homeownership programs, including disposition of a public housing project in accordance with an approved homeownership program under title III of the United States Housing Act of 1937, as provided by section 412(b) of the National Affordable Housing Act (``NAHA''). Section 412(a) of NAHA amended section 18 of the U.S. Housing Act of 1937 to require that tenant councils, resident management corporation, and tenant cooperative, if any, be given appropriate opportunities to purchase the project or portion of the project covered by the demolition or disposition applicat