[Federal Register Volume 59, Number 75 (Tuesday, April 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9319]


[[Page Unknown]]

[Federal Register: April 19, 1994]


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Part VI





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Public and Indian Housing



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24 CFR Parts 905, 913, 964, and 990



Tenant Participation and Tenant Opportunities in Public and Indian 
Housing; Proposed Rule
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Assistant Secretary for Public and Indian Housing

24 CFR Parts 905, 913, 964 and 990

[Docket No. R-94-1707; FR-3568-P-01]
RIN 2577-AB36

 

Public and Indian Housing Amendment to the Tenant Participation 
and Tenant Opportunities in Public and Indian Housing

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This document proposes to amend regulations on tenant 
participation in public and Indian housing to add new policies, 
procedures and guidelines for tenant participation, revise the Resident 
Management Program to Tenant Opportunities Programs, and add 
regulations to govern the Family Investment Centers (FIC) Program. 
These changes would be made to address several weaknesses in the 
existing regulations which have interferred with successful program 
implementation.

DATES: Comments due: May 19, 1994.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Office of General Counsel, Rules Docket 
Clerk, room 10276, Department of Housing and Urban Development, 451 
Seventh Street SW., Washington, DC 20410. Facsimile (FAX) are not 
acceptable. A copy of each communication submitted will be available 
for public inspection and copying on weekdays between 7:30 a.m. and 
5:30 p.m. at the above address.

FOR FURTHER INFORMATION CONTACT: For questions concerning the Public 
Housing rule contact Dorothy Walker or Marcia Martin, Office of 
Resident Initiatives, room 4112, telephone (202) 708-3611, or 708-0850. 
For Indian Housing, contact Dom Nessi, Director, Office of Native 
American Programs, room 4141, telephone (202) 708-1015 (these are not 
toll-free numbers). 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 (not a toll free number) for information on the program.
    The address for the above listed persons is: Department of Housing 
and Urban Development, 451 7th Street SW., Washington, DC 20410. (The 
telephone numbers listed above are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Information Collections

    The information collection requirements contained in this proposed 
rule have been submitted to the Office of Management and Budget (OMB) 
for review under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-
3520).
    The public reporting burden for each of these collections of 
information is estimated to 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. Information on the estimated public 
reporting burden is provided under the preamble heading, Other Matters. 
Send comments regarding this burden estimate or any other aspect of 
this collection of information, including suggestions for reducing this 
burden, to the Department of Housing and Urban Development, Rules 
Docket Clerk, 451 Seventh Street SW., room 10276, Washington, DC 20410; 
and to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, Attention Desk Officer for HUD, Washington, DC 
20503.

II. Background

    Section 20 of the United States Housing Act of 1937, as amended (42 
U.S.C. 1437r) (the ``1937 Act'') was enacted to encourage increased 
resident management of public housing projects * * * ``to promote 
formation and development of resident management entities.'' The 
Department implemented section 20 by regulations (24 CFR part 964 for 
Public Housing, and 24 CFR part 905, subpart O for Indian Housing), 
that governed tenant participation and resident management in public/
Indian housing under Section 20 of the 1937 Act.

III. Overview of Public Housing Changes

    Several weaknesses in the regulations have interfered with 
successful program implementation. The current regulations fail to 
establish clear and detailed policy on resident participation and 
guidance on the structure for public housing resident organizations. 
Additionally, the current regulations fail to establish specific 
requirements for resident involvement in public/Indian housing 
management, and a strong partnership between the PHAs/IHAs 
(thereinafter referred to as HAs) and resident councils. Internal 
conflict between competing resident councils in a development poses 
serious problems to HUD with respect to program eligibility and 
participation, as well as HA recognition. The Department is concerned 
about the need to provide more details on how resident councils/
resident management corporations should be structured and how to 
broaden tenant involvement in public housing.
    The Department recognizes the need to increase the amount of cash 
contributions for resident council activities, presently limited at 
three (3) dollars per unit per year, and to compensate resident council 
officers who are serving as volunteers in the public housing community.
    The Secretary asked a former top HUD official to develop policy 
recommendations on the role of residents in the management of public 
housing. Based on these recommendations, the Secretary established an 
Interim Resident Advisory Committee consisting of representatives of 
regional and state resident organizations who developed a Policy Paper 
on resident involvement in public housing. Public Housing Advocacy 
Groups: Public Housing Authorities Directors Association (PHADA), 
Council of Large Public Housing Authorities (CLPHA) and National 
Association of Housing Redevelopment Officials (NAHRO), were given an 
opportunity to review and comment on the Policy Paper.
    Section 20 authorizes funds for technical assistance and training 
to resident councils (RCs)/resident management corporations (RMCs) to 
promote increased resident management of public housing. HUD's 
experience in providing grants to RCs/RMCs under the Public Housing 
Resident Management Program has revealed that major changes were needed 
in the provisions of the program. RCs/RMCs and HAs across the country 
overwhelmingly requested revamping of the program to assist in meeting 
their residents' need for economic development, education, job training 
and development, social services, and opportunities for other self-help 
initiatives.
    Recommendations from the Interim Resident Advisory Committee on 
Tenant Involvement in Public Housing, and requests for changes in the 
Resident Management Technical Assistance Program resulted in the 
proposed comprehensive revision of 24 CFR part 964.
    The major changes in the proposed rule would allow for broader, 
more flexible programs aimed at increasing the capacity of resident 
entities to participate significantly in all aspects of public housing 
operations while simultaneously permitting further economic uplift 
opportunities, to the extent permitted under section 20 of the United 
States Housing Act of 1937. Section 20 requires that all activities 
funded under it be related to improved living conditions and public 
housing operations. (See Secs. 905.967 and 964.205.) The Department is 
now proposing amendments to section 20 to permit funding of a broader 
range of tenant development activities to include activities that are 
not necessarily related to resident management or housing authority 
operations.
    The current regulation on the Tenant Participation and Resident 
Management Program is proposed to be renamed ``Tenant Participation and 
Tenant Opportunities in the Public Housing Program.'' The proposed 
regulations would include the Tenant Opportunities Program (TOP), which 
replaces the Resident Management Program under subpart C in the current 
regulation.
    The revised program was created in response to requests from 
resident councils/resident management corporations and HAs across the 
country for a more flexible program to address the needs in their 
communities related to encouraging increased resident management 
activities as a means of improved living conditions and public housing 
operations. The revised program is designed to prepare residents to 
experience the dignity of meaningful work; to own and operate resident 
businesses; to move toward financial independence; to enable them to 
choose where they want to live; and to assure meaningful participation 
in the management of their housing developments. The authority for the 
TOP program comes from section 20 of the 1937 Act, which discusses 
resident management of public housing. Section 20(f) authorizes 
technical assistance and training. Financial assistance in the form of 
technical assistance grants is provided by the Secretary to RCs/RMCs to 
prepare for management activities in their housing development 
(hereinafter referred to as TOP technical assistance grants). Technical 
assistance grants are available for ``the development of resident 
managed entities, including the formation of such entities, the 
development of the management capability of newly formed or existing 
entities, the identification of the social support needs of residents 
of public housing projects and the securing of such support.'' TOP 
technical assistance grants can enable residents to manage their 
developments or portions of their developments. The results are 
significant and multifaceted. For example, resident managed activities 
have resulted in economic development, resident self-sufficiency, 
improved living conditions, and enhanced social services for residents 
(e.g., child care and other youth programs).
    The Resident Management Program would continue to be an option to 
resident councils/resident management corporations who are interested 
in performing management functions in one or more projects of a HA. 
None of the requirements for the resident management program will be 
changed. However, some of the provisions are being moved to other 
regulations, or HUD documents. For example, the requirements under 
subpart C (Sec. 964.39) governing the operating subsidy, budget, 
operating reserves, etc. are proposed to be moved to 24 CFR Part 990--
Annual Contributions for Operating Subsidy. The Department believes 
these provisions of Sec. 964.39 are more appropriately placed in that 
regulation. Also, the requirements for the RMC management contract 
contents are being removed from subpart C and are contained in HUD 
Notice PIH 93-56 (HA) which also includes a model management contract. 
This contract must be followed unless HUD approves a requested change.
    Subpart A would be expanded to add policies on partnerships between 
HAs and residents. For example, HAs are required to provide a duly 
elected resident council office space and meeting facilities, free of 
charge, for the purposes of conducting resident activities.
    Also, the section on definitions (Sec. 964.7) would be amended by 
removing terms such as ``resident council'' and ``resident management 
corporation'' and expanding the definition of these terms to provide 
clarity on the eligibility of a voting member of the resident council 
and establish the frequency of elections for resident management 
corporations. The definitions for other terms such as ``project'' and 
``tenant participation'' are eliminated.
    The current rule under subpart B would be expanded substantially to 
establish policies and procedures for HAs with respect to resident 
participation activities. For example, HAs shall provide any funds they 
receive for resident participation activities to the duly elected 
resident council. Parts 990 and 905, subpart J would be amended to 
require an ``add-on'' of $25 per unit per year to the HA's operating 
subsidy calculation, which would be paid to the HA only if 
appropriations were available for that purpose, to support activities 
of the duly elected resident council. The HUD Circular HM 7475.9 dated 
February 10, 1992, authorized funds not to exceed three ($3) dollars 
per unit per year. The Department believes that an increase of $22 per 
unit per year is reasonable and, if available, would guarantee the 
resources necessary to create a bonafide partnership among the duly 
elected resident council and the HA. Strong partnerships are critical 
for achieving mutual goals contained in this subpart.
    Also, HUD proposes to encourage HAs to provide stipends in an 
amount up to $200 per month/per officer to resident council officers 
who serve as volunteers in the public housing development to carry out 
these duties and functions as officers of the resident council. The 
Department believes that these volunteers should be reimbursed for 
their expenses related to volunteer efforts, such as child care, 
transportation, special equipment, clothing, etc.
    The current part 964 regulations lack specificity regarding 
resident elections and organizational policies, and have made it 
difficult to determine what is a duly elected resident council and that 
has caused conflicts among the residents.
    The proposed regulations would add new policies and procedures for 
resident councils by defining what is a duly elected resident council, 
detailing minimum standards for elections of resident councils and 
specifying the relationship between the resident councils and resident 
management corporations. Resident councils would be required to meet 
HUD's election standards in order to receive official recognition from 
the HA and HUD, as well as to receive funds in conjunction with the 
conduct of resident council business. The role of the jurisdiction-wide 
resident council would be established under the proposed rule. The rule 
also contains provisions that expand the resident participation 
requirements to strongly support resident participation in all aspects 
of a HA's management operations and that give rights to residents to 
freely organize and represent their interests.
    The proposed rule would add a new subpart D to implement the Family 
Investment Center (FIC) Program under section 22 of the 1937 Act (42 
U.S.C. 1437t) (added by section 515 of the Cranston-Gonzalez National 
Affordable Housing Act). The FIC program provides families living in 
public housing with better access to educational and employment 
opportunities. This new subpart will be added to part 964 to include 
FIC because it complements the Department's resident participation and 
self-sufficiency initiatives. The program was proposed by a national 
association on behalf of numerous housing authorities. Representatives 
from public/Indian housing authorities, resident councils/resident 
management corporations and nonprofit housing agencies were convened at 
the Department to discuss program provisions and provide policy 
recommendations during the initial program planning stage. Some HAs 
will combine their FIC and Family Self-Sufficiency (FSS) programs. This 
rule would provide that section 8 FSS Program participants are eligible 
to participate in the FIC program when it is combined with FSS, but 
that income exclusions that are provided to public housing residents 
participating in employment training and supportive service programs 
would not apply to Section 8 FSS families. The treatment of the FSS 
escrow account for public housing FIC/FSS families is not addressed in 
this proposed rule, but will be included in the final rulemaking.
    Proposed Sec. 964.320 provides HUD policy on training, employment 
and contracting of public/Indian housing residents under section 3 of 
the Housing and Community Development Act of 1968. Section 915 of the 
Housing and Community Development Act of 1992 made significant changes 
to section 3. HUD recently published a proposed rule implementing those 
changes (see 58 FR 52534, October 8, 1993). Section 3, as amended, 
requires that HAs make their best efforts, consistent with existing 
Federal, State, and local laws and regulations, to amend contracts for 
work to be performed in connection with development, operation and 
modernization assistance provided pursuant to sections 5, 9 and 14 of 
the U.S. Housing Act of 1937. As amended, section 3 establishes an 
order of priority to which the HA's efforts must be directed. Thus, the 
first level of priority is to residents of the housing development, for 
which the assistance is provided. This proposed rule includes 
provisions consistent with the proposed section 3 rule.
    The reader should note that combination terms such as ``tenant and 
resident'', ``tenant council,'' and ``resident council'', and ``tenant 
management corporation'' and ``resident management corporation'' are 
similar terms and may be used interchangeably. Hereafter, for ease of 
discussion, the proposed rule will use the terms resident, resident 
council and resident management corporation, as appropriate.

IV. Amendments of the Tenant Participation and Tenant Opportunities 
Program in Public Housing

A. Regulatory Actions: 964

    Based on recommendations of the Interim Resident Advisory 
Committee, program experience, and comments from various Housing 
Interest Groups, the regulations are proposed to be revised to: (1) 
Expand tenant participation in various programs and involvement in 
public housing operations, and (2) change the Resident Management 
Program to the Tenant Opportunities Program (TOP), and (3) add a new 
subpart D to the 964 regulations which contains policies and procedures 
for the FIC Program.
    This section discusses each of the specific regulatory revisions.
    1. Subpart A would be amended as follows:
    a. Section 964.1 Purpose would be streamlined.
    b. Section 964.3 Applicability and scope would remain unchanged.
    c. Section 964.7 Definitions would be amended by removing several 
definitions such as project and tenant participation; by moving terms 
such as Resident Council and Resident Management Corporation to a more 
appropriate section under subpart B, and by expanding definitions; and 
by adding new terms which relate to the FIC program.
    d. Section 964.11 HUD policy on tenant participation would be 
amended to strongly support tenant participation in all the functions 
of a HA's management operations and give rights to residents to freely 
organize and represent their interests.
    e. Section 964.12 HUD policy on Tenant Opportunities Program (TOP) 
would provide HUD's policy on the Tenant Opportunities Program. Subpart 
C of the current regulation would be changed from ``Resident Management 
Program'' to ``Tenant Opportunities Program'' (TOP). The name is being 
changed to TOP because it reflects the evolution of the program over 
time, to enhance resident capacity in a variety of ways, including job 
training, economic development, and self-sufficiency activities carried 
out by resident councils/resident management corporations in public 
housing. Resident management is a component of TOP and resident 
councils/resident management corporations may continue to engage in 
activities relative to public housing management. Tenant opportunities 
programs are proven to be effective in facilitating economic uplift as 
well as in improving the overall conditions in public housing.
    f. Section 964.14 HUD policy on partnerships would be added to 
provide HUD policy on Partnerships between HAs and residents. Strong 
partnerships between HAs and resident councils/resident management 
corporations are key to the success of program objectives, and critical 
for achieving specific and mutual goals and creating positive change 
for residents in public housing.
    g. Section 964.15 HUD policy on resident management would remain 
unchanged. This section states HUD's support for resident councils/
resident management corporations who are interested in becoming 
resident managed entities in public housing.
    h. Section 964.16 HUD role in activities under this part--
Monitoring would be added to describe HUD's proactive responsibility 
for promoting tenant participation and tenant opportunities in public 
housing. It provides that HUD will monitor program progress to ensure 
efficient and effective operations pursuant to this rule.
    i. Section 964.18 HA role in activities under subparts B&C would 
establish a stronger HA role under this subpart. HAs shall, upon 
request, provide office space to a duly elected resident council and 
shall negotiate in good faith usage of community space for meetings and 
other activities for residents. HAs have a responsibility to negotiate 
such usage of space with the duly elected resident council.
    j. Section 964.24 HUD policy on FIC program would provide HUD's 
policy and support for the FIC program.
    2. Subpart B would be amended as follows:
    a. Section 964.100 Role of resident council which establishes the 
role of a resident council and Section 964.105 Role of the 
jurisdiction-wide resident council which establishes the role of a 
jurisdiction-wide resident council would be added to the rule.
    b. Section 964.110 Resident membership on HA Board of Commissioners 
would encourage resident membership on HA Board of Commissioners.
    c. Section 964.115 Resident council requirements would describe the 
provisions necessary for the Resident Council to receive official 
recognition from the HA and HUD. In the current rule, this provision 
was included in the definitions section, and in this proposed rule it 
becomes a separate section.
    d. Section 964.117 Resident council partnerships would be added to 
encourage and promote partnerships between the resident councils and 
public/private organizations. While the Department encourages 
partnerships to complement council activities, such organizations must 
not become the governing entity of the resident council.
    e. Section 964.120 Resident management corporation requirements 
would establish characteristics in order to receive formal recognition 
by the HA and HUD. In the current rule, this was included in the 
definitions sections and in this proposed rule, it becomes a separate 
section.
    f. Section 964.125 Eligibility for resident council membership 
would be added to provide guidance on eligibility for council 
membership. This section establishes that any member of a household, 
who is on the lease, may be a member of a resident council. However, in 
order to be a voting member of the resident council, a person's name 
must appear on the lease of a unit in the public housing development, 
and he/she must be: (1) A legal head of household (means the member of 
the family who is the head of the household for purposes of determining 
income eligibility and rent), or (2) 18 years of age or older.
    g. Section 964.130 Election procedures and standards would be added 
to provide minimum standards for resident council elections including 
the requirement for supervision by an independent third party. HAs 
shall monitor the resident council's elections to ensure compliance 
with HUD's minimum standards.
    h. Section 964.135 Resident involvement in HA management would be 
added to provide policy on resident involvement in HA management 
operations. Residents shall participate fully in the overall policy 
development and direction of a HA operations.
    i. Section 964.140 Resident training would be added to encourage 
HAs to take the lead in providing training opportunities for public 
housing residents. If residents are willing, they may receive training 
from the HA and become involved in implementing various Federal 
programs.
    j. Section 964.145 Conflict of interest would be added to provide 
policy on resident council officers serving as contractors or as 
employees of a HA.
    k. Section 964.150 Funding tenant participation would be added to 
establish policy on funding duly elected resident councils. Subject to 
appropriations, HAs shall provide funds to the duly elected resident 
council for tenant participation activities. This rule also proposes 
amendment to 24 CFR part 990 for tenant services to include up to $25 
per unit per year, subject to the availability of appropriations, as an 
add-on to the Performance Funding System (PFS).
    3. Subpart C would be amended as follows:
    a. Section 964.200 General would be added to provide information on 
the provisions of the TOP.
    b. Section 964.205 Eligibility would be added to define who is 
eligible to apply and receive a technical assistance grant, and would 
outline eligible activities under TOP.
    c. Section 964.210 Announcement of funding availability would be 
added to describe notification of funding availability for obtaining 
funds to participate in TOP.
    d. Section 964.215 Grant agreement would provide the terms of the 
grant agreement for the proposed activities under the TOP program.
    e. Section 964.220 Technical assistance would describe HUD's 
commitment to fund TOP activities.
    f. Section 964.225 Resident management requirements would provide 
minimal guidelines for HAs and residents for the performance of 
management functions.
    g. Section 964.230 Audit and administrative requirements would 
provide audit and administrative guidelines for recipients of TOP grant 
funds and resident management corporations contracting with a HA for 
management responsibilities.
    4. Subpart D would be added to the part 964 as follows:
    a. Section 964.300 General would provide the purpose and program 
provisions of the FIC program. FIC provides families living in public 
housing with better access to educational and employment opportunities 
to achieve self-sufficiency and independence.
    b. Section 964.305 Eligibility for FIC would provide eligible 
activities and requirements under the FIC program.
    c. Section 964.308 Supportive services requirements for FIC would 
provide supportive services requirements essential for families living 
with children in public housing.
    d. Section 964.310 Audit/Compliance Requirements for FIC would 
provide audit and compliance requirements governing the program.
    e. Section 964.315 HAs role in FIC activities under this part would 
provide the process required to assure that HA residents are informed 
about FIC.
    f. Section 964.320 HUD policy on training, employment, contracting 
and subcontracting of public/Indian housing residents under FIC would 
state HUD's policy on resident training, employment and contracting 
under FIC.
    g. Section 964.325 Announcement of funding availability for FIC 
would indicate that the Notice of Funding Availability (NOFA) will be 
published periodically and contain specific information regarding 
eligibility, funding criteria, etc.
    h. Section 964.330 Grant set-aside assistance for FIC would state 
HUD's policy of permitting up to five percent (5%) of amounts available 
in any fiscal year to augment grants previously awarded under this 
program.
    i. Section 964.335 Grant agreement for FIC would provide the grant 
agreement term.
    j. Section 964.340 Resident compensation for FIC would provide 
guidelines governing employment compensation under this program.
    k. Section 964.45 Treatment of income would provide provisions for 
income exclusions for any resident participating in the FIC program.
    l. Section 964.350 Administrative Requirements for FIC would 
provide administrative and reporting requirements governing the FIC 
program.

B. Indian Housing Changes--Part 905

    The proposed rule also revises 24 CFR part 905, subpart O, 
``Resident Participation and Opportunities''. The Indian housing 
section is similar to its public housing counterpart, but does not 
contain some of the provisions in 24 CFR part 964 in an effort to 
streamline the regulations and tailor them specifically to the 
generally smaller size of most Indian Housing Authorities (IHA). 
However, all activities, functions and benefits permitted under any 
public housing resident programs will remain eligible activities, 
functions and benefits for Indian housing resident programs.
    The major changes in the proposed rule will allow for broader, more 
flexible programs aimed at increasing the capacity of Indian housing 
resident organizations and resident management corporations to carry 
out their organizational functions in a more structured manner while 
simultaneously permitting further economic uplift opportunities.
    Within the subpart there is a general section; a Tenant 
Opportunities Program (TOP) section; and a Family Investment Centers 
Program section. The current Indian Housing Resident Management Program 
under existing regulations is viable and remains an option under TOP. 
None of the requirements for the resident management program will be 
changed; however, some sections are being moved to other sections of 
the 905 regulations or HUD handbooks.

C. Miscellaneous Conforming Changes

    Changes that have been made to other parts are the exclusion from 
income of stipends to RC officers and of training grants under the FIC 
program that would be added to 905 and 913; the provision for payments 
to duly elected resident council officers, and the inclusion of 
requirements governing the RMC Operating subsidy, budget, operating 
reserves, etc., that would be made to 990; and changes for the resident 
participation subpart that would be made in part 905 to parallel 
changes in part 964.

Other Matters

Justification for Shortened Comment Period

    It is the general practice of the Department to provide a 60-day 
comment period on all proposed rules. However, the Department is 
shortening its usual 60-day comment period to 30 days because it would 
be contrary to the public interest to delay the benefits of the rule 
another 30 days and because it is unnecessary to have a longer comment 
period. The policies contained in this proposed rule are the result of 
collaborative efforts with various housing interest groups, i.e., 
public housing resident leaders, Public/Indian Housing Authorities, 
Public Housing Advocacy Groups. This should decrease the need for the 
usual time period for comment, since consultation took place while the 
policy was being developed.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this proposed rule before publication and 
by approving it certifies that this proposed rule does not have a 
significant economic impact on a substantial number of small entities. 
The proposed rule provides substantial revisions to the regulations 
concerning Tenant Participation and Management in Public Housing under 
which resident councils/resident management corporations receive 
funding on a competitive basis. HUD does not anticipate a significant 
economic impact on small entities since resident councils/resident 
management corporations will continue to obtain by contract technical 
assistance to carry out program activities.

Environmental Impact

    A finding of no significant impact with respect to the environment 
has been made in accordance with HUD regulations in 24 CFR part 50 that 
implement section 102(2)(C) of the National Environmental Policy Act of 
1969 (42 U.S.C. 4332). The Finding of No Significant Impact is 
available for public inspection between 7:30 a.m. and 5:30 p.m. 
weekdays in the office of the Rules Docket Clerk at the above address.

Executive Order 12866

    This proposed rule was reviewed by the Office of Management and 
Budget under Executive Order 12866, Regulatory Planning and Review. Any 
changes made to the proposed rule as a result of that review are 
clearly identified in the docket file which is available for public 
inspection in the office of the Department's Rules Docket Clerk, room 
10276, 451 Seventh Street SW., Washington, DC.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this proposed rule will not have substantial direct 
effects on states or their political subdivisions, or the relationship 
between the federal government and the states, or on the distribution 
of power and responsibilities among the various levels of government. 
As a result, the proposed rule is not subject to review under the 
order. The revised proposed rule is consistent with federalism 
principles since it reduces unnecessary burdens on resident 
organizations. Since participation by resident organizations is 
discretionary, this proposed rule lacks the direct and substantial 
effects on resident organizations required for a policy with federalism 
implications under the Order.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this proposed rule has a 
beneficial effect on the family, and thus, does not require further 
review. No significant change in existing HUD policies or programs will 
result from promulgation of this proposed rule, as those policies and 
programs relate to family concerns.

Regulatory Agenda

    This proposed rule was listed as Item No. 1636 in the Department's 
Semiannual Agenda of Regulations published on October 25, 1993, (58 FR 
56402, 56448) in accordance with Executive Order 12291 and the 
Regulatory Flexibility Act.

Public Reporting Burden

    The information collection requirements contained in this proposed 
rule have been submitted to the Office of Management and Budget under 
the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520). The 
Department has determined that the following provisions contain 
information collection requirements.
    The Department has estimated the public reporting burden involved 
in the information collections contained in the proposed rule as shown 
below. The public reporting burden for each of these collections of 
information is estimated to 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. 

               Information Collection Burden of Top Rule                
------------------------------------------------------------------------
                                                 Est. avg.              
                         No. of      Freq. of     response   Est. annual
     Reference        respondents   responses       time        burden  
                                                  (hours)      (hours)  
------------------------------------------------------------------------
964.18 & 905.964....         1500            1            3         4500
964.115 & 964.130...         1500            1            3         4500
964.215.............          200            1            2          400
964.225 (b) &                                                           
 905.969............           25            1            3           75
964.230, 964.305 &                                                      
 905.982............          500            1            1          500
964.310.............          500            1            8         4000
964.335.............           75            1            2          150
964.350, 964.350(a)                                                     
 & 905.988..........           75            1            1           75
                                                                        
                     ---------------------------------------------------
    Total Reporting                                                     
     Burden.........  ...........  ...........  ...........       14,200
                                                                        
Recordkeeping                                                           
 Burden:                                                                
964.230(a)(2) &                                                         
 905.972............          200  ...........            1          200
                                                                        
                     ---------------------------------------------------
    Total                                                               
     Recordkeeping                                                      
     Burden.........  ...........  ...........  ...........         200 
------------------------------------------------------------------------

    The Catalog of Federal Domestic Assistance program number is 
14.853.

List of Subjects

24 CFR Part 905

    Aged, Energy conservation, Grant programs--housing and community 
development, Grant programs--Indians, Indians, Individuals with 
disabilities, Lead poisoning, Loan programs--housing and community 
development, Loan programs--Indians, Low and moderate income housing, 
Public housing, Reporting and recordkeeping requirements.

24 CFR Part 913

    Grant programs--housing and community development, Public housing, 
Reporting and recordkeeping requirements.

24 CFR Part 964

    Grant programs--housing and community development, Public housing, 
Reporting and recordkeeping requirements.

24 CFR Part 990

    Grant programs--housing and community development, Public housing, 
Reporting and recordkeeping requirements.

    Accordingly, parts 905, 913, 964, and 990 of title 24 of the Code 
of Federal Regulations are proposed to be amended as follows:

PART 905--INDIAN HOUSING PROGRAMS

    1. The authority citation for part 905 would be revised to read as 
follows:

    Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437aa, 1437bb, 1437c, 
1437cc, 1437d(c)(4)(D), 1437ee and 3535(d).

    2. In Sec. 905.102, the definition of Annual income would be 
amended by removing the word ``or'' from paragraph (2)(viii)(B); by 
adding the word ``or'' at the end of paragraph (2)(viii)(C); by adding 
a new paragraph (2)(viii)(D); by removing the word ``or'' from 
paragraph (2)(x); by designating paragraph (2)(xi) as paragraph 
(2)(xii); and by adding a new paragraph (2)(xi) to read as follows:


Sec. 905.102.  Definitions.

* * * * *
    Annual income.
* * * * *
    (2) * * *
    (viii) * * *
    (D) A resident stipend, but only if the resident stipend does not 
exceed $200 per month per officer to resident council officers. 
Stipends are intended to cover costs related to officers volunteer 
efforts and include but are not limited to the following items: child 
care, transportation, special equipment and special clothing.
* * * * *
    (xi) The earnings and benefits to any resident resulting from the 
participation in a program providing employment training and supportive 
services in accordance with the Family Support Act of 1988, section 22 
of the U.S. Housing Act of 1937, or any comparable Federal, State, 
Tribal or local law during the exclusion period. For purposes of this 
paragraph, the following definitions apply:
    (A) Comparable Federal, State, Tribal or Local law means a program 
providing employment training and supportive services that--
    (1) is authorized by a Federal, State, Tribal or local law;
    (2) is funded by Federal, State, Tribal or local government;
    (3) is operated or administered by a public agency; and
    (4) has as its objective to assist participants in acquiring job 
skills.
    (B) Exclusion period means the period during which the resident 
participates in a program described in this section, plus 18 months 
from the date the resident begins the first job acquired by the 
resident after completion of such program that is not funded by public 
housing assistance under the U.S. Housing Act of 1937 or the date the 
resident is terminated from employment without good cause. If the 
resident is terminated from employment without good cause, the 
exclusion period shall end.
    (C) Earnings and Benefits means the incremental earnings and 
benefits resulting from a qualifying job training program or subsequent 
job; or
* * * * *
    3. In Sec. 905.720, a new paragraph (f) would be added, to read as 
follows:


Sec. 905.720  Other costs.

* * * * *
    (f) Funding for Resident Organization Expenses. In accordance with 
the provisions of 24 CFR part 905, subpart O and procedures determined 
by HUD, each HA with a duly elected resident organization shall include 
in the operating subsidy eligibility calculation, $25 per unit per year 
(subject to appropriations) in support of the duly elected resident 
organization's activities.
* * * * *
    4. Subpart O of part 905 would be revised to read as follows:

Subpart O--Resident Participation and Opportunities

General Provisions

Sec.
905.960  Purpose.
905.961  Applicability and scope.
905.962  Definitions.
905.963  HUD's role in activities under this subpart.
905.964  Resident participation requirements.
905.965  Funding Resident Participation.

Tenant Opportunities Program

905.966  General.
905.967  Eligible TOP Activities.
905.968  Technical assistance.
905.969  Resident management requirements.
905.970  Management specialist.
905.971  Operating subsidy, preparation of operating budget, 
operating reserves and retention of excess revenues.
905.972  TOP Audit and administrative requirements.

Family Investment Centers (FIC) Program

905.980  General.
905.982  Eligibility.
905.983  FIC Activities.
905.984  HA role in activities under this part.
905.985  HUD Policy on training, employment, contracting and 
subcontracting of Indian housing residents.
905.986  Grant set-aside assistance.
905.987  Resident compensation.
905.988  Administrative requirements. 
Subpart O--Resident Participation and Opportunities
General Provisions
Sec. 905.960  Purpose.

    The purpose of this subpart is to recognize the importance of 
involving residents in creating a positive living environment and in 
contributing to the successful operation of Indian housing. 
Sec. 905.961  Applicability and scope.

    (a) This subpart applies to any Indian housing authority (HA) that 
has an Annual Contributions Contract (ACC) with the Department. This 
subpart does not apply to housing assistance payments under section 8 
of the U.S. Housing Act of 1937.
    (b) This subpart contains HUD's policies, procedures, and 
requirements for the participation of Indian housing residents in 
Indian housing management.
    (c) This subpart is designed to encourage increased tenant 
participation in Indian housing.
    (d) This subpart is not intended to negate any pre-existing 
arrangements for resident management in Indian housing between a HA and 
a resident management corporation. On or after [insert effective date 
of the final rule], any new, renewed or renegotiated contracts must 
meet the requirements of this subpart, the ACC and all applicable laws 
and regulations.
    (e) This subpart includes requirements for the Family Investment 
Centers (FIC) Program, which was established by Section 515 of the 
Cranston-Gonzalez National Affordable Housing Act, which created a new 
section 22 of the Act. The FIC program is designed to provide families 
living in Indian housing with better access to educational and 
employment opportunities. 
Sec. 905.962  Definitions.

    Family Investment Center. A Facility in or near Indian housing 
which provides families living in Indian housing with better access to 
educational and employment opportunities to achieve self sufficiency 
and independence.
    Management. All activities for which the HA is responsible to HUD 
under the ACC, within the definition of ``operation'' under the Act and 
the ACC, including the development of resident programs and services.
    Management contract. A written agreement between a resident 
management corporation and a HA, as provided by Sec. 905.969. Project. 
For purposes of this subpart, the term includes any of the following:
    (1) One or more contiguous buildings.
    (2) An area of contiguous row houses.
    (3) Scattered site buildings.
    (4) Scattered site single-family units.
    Resident management. The performance of one or more management 
activities for one or more projects by a resident management 
corporation under a management contract with the HA.
    Resident Management Corporation (RMC). A Resident Management 
Corporation is an entity that proposes to enter into, or enters into, a 
contract to manage HA property. The corporation must have each of the 
following characteristics:
    (1) It must be a nonprofit organization that is incorporated under 
the laws of the State or Indian tribe in which it is located.
    (2) It may be established by more than one resident organization, 
so long as each such organization both approves the establishment of 
the corporation and has representation on the Board of Directors of the 
corporation.
    (3) It must have an elected Board of Directors.
    (4) Its by-laws must require the Board of Directors to include 
representatives of each resident organization involved in establishing 
the corporation.
    (5) Its voting members are required to be residents of the project 
or projects it manages.
    (6) It must be approved by the resident organization. If there is 
no organization, a majority of the households of the project or 
projects must approve the establishment of such an organization.
    Resident Organization (RO). A Resident Organization (or ``Resident 
Council'' as defined in section 20 of the Act) is an incorporated or 
unincorporated nonprofit organization or association that meets each of 
the following criteria:
    (1) It must consist of residents only, and only residents may vote.
    (2) If it represents residents in more than one development or in 
all of the developments of a HA, it must fairly represent residents 
from each development that it represents.
    (3) It must adopt written procedures providing for the election of 
specific officers on a regular basis.
    (4) It must have a democratically elected governing board. The 
voting membership of the board shall consist solely of the residents of 
the development or developments that the RO represents.
    Resident participation. A process of consultation between residents 
and the HA concerning matters affecting the management of Indian 
housing.
    Resident-owned business. A Business staffed by residents that is 
related to the management of the IHA development(s).


Sec. 905.963  HUD's role in activities under this subpart.

    (a) General. Subject to the requirements of this part and other 
requirements imposed on HAs by the ACC, statute or regulation, the form 
and extent of resident participation or resident management are local 
decisions to be made jointly by ROs and the HAs.
    (b) Duty to bargain in good faith. If a HA refuses to negotiate 
with a RMC in good faith or, after negotiations, refuses to enter into 
a contract, the corporation may file an informal appeal with HUD, 
setting out the circumstances and providing copies of relevant 
materials evidencing the corporation's efforts to negotiate a contract. 
HUD shall require the HA to respond with a report stating the HA's 
reasons for rejecting the corporation's contract offer or for refusing 
to negotiate. Thereafter, HUD shall require the parties (with or 
without direct HUD participation) to undertake or to resume 
negotiations on a contract providing for resident management, and shall 
take such other actions as are necessary to resolve the conflicts 
between the parties. If no resolution is achieved within 90 days from 
the date HUD required the parties to undertake or resume such 
negotiations, HUD shall serve notice on both parties that 
administrative remedies have been exhausted (except that, pursuant to 
mutual agreement of the parties, the time for negotiations may be 
extended by no more than an additional 30 days).


Sec. 905.964  Resident participation requirements.

    (a) HA responsibilities. (1) A HA must provide the residents or any 
resident organization with current information concerning the HA's 
policies on resident participation in management, including guidance on 
information and recognition of a RO, and, where appropriate, a RMC.
    (2) A HA must consult with residents or resident organizations (if 
they exist), to determine the extent to which residents desire to 
participate in the management of their housing and the specific methods 
that may be mutually agreeable to the HA and the residents.
    (3) When requested by residents, a HA must provide appropriate 
guidance to residents to assist them in establishing and maintaining a 
RO, and, where appropriate, a RMC.
    (b) Recognition. A resident organization may request that it be 
recognized as the official organization representing the residents in 
meetings with the HA or with other entities.
    (c) Written understanding. At a minimum, the HA and the RO shall 
put in writing their understanding concerning the elements of their 
relationship.


Sec. 905.965  Funding Resident Participation.

    Funding will be provided under subpart J, for the following:
    (a) Resident Organizations. Subject to appropriations, the HA shall 
provide funds to ROs for resident participation activities. Eligibility 
to receive operating subsidy for RO activities at $25 per unit per year 
is a separate cost item under the Performance Funding System. Of this 
amount, $15 per unit per year shall fund resident participation 
activities of the RO. Ten dollars per unit per year shall fund HA costs 
incurred in carrying out resident participation activities.
    (b) Stipends. HAs may provide stipends to officers of the RO. The 
stipend, which may be up to $200 per month per officer, shall be 
decided locally by the RO and HA. (See definition of annual income in 
Sec. 905.102 for exclusion for these stipends.)

Tenant Opportunities Program


Sec. 905.966  General.

    The Indian Tenant Opportunities Program (TOP) (which is the program 
similar to the public housing TOP for public housing residents) 
provides technical assistance for various activities including resident 
management for ROs/RMCs as authorized by Section 20 of the Act. The TOP 
provides opportunities for RO/RMCs to improve living conditions and 
resident satisfaction in Indian housing communities.


Sec. 905.967  Eligible TOP Activities.

    Activities to be funded and carried out by an eligible resident 
council or resident management corporation, as defined in subpart B, 
must improve the living conditions and public housing operations and 
may include any combination of, but are not limited to, the following:
    (a) Resident Capacity Building. (1) Training Board members in 
community organizing, Board development, and leadership training;
    (2) Determining the feasibility of resident management enablement 
for a specific project or projects; and
    (3) Assisting in the actual creation of an RMC, such as consulting 
and legal assistance to incorporate, preparing by-laws and drafting a 
corporate charter.
    (b) Resident Management. (1) Training residents, as potential 
employees of an RMC, in skills directly related to the operation, 
management, maintenance and financial systems of a project;
    (2) Training of residents with respect to fair housing 
requirements; and
    (3) Gaining assistance in negotiating management contracts, and 
designing a long-range planning system.
    (c) Resident Management Business Development.
    (1) Training related to resident-owned business development and 
technical assistance for job training and placement in RMC 
developments;
    (2) Technical assistance and training in resident managed business 
development through:
    (i) Feasibility and market studies;
    (ii) Development of business plans;
    (iii) Outreach activities; and
    (iv) Innovative financing methods including revolving loan funds.
    (3) Legal advice in establishing resident managed business entity.
    (d) Social Support Needs (such as self-sufficiency and youth 
initiatives). (1) Feasibility studies to determine training and social 
services needs;
    (2) Training in management-related trade skills, computer skills, 
etc;
    (3) Management-related employment training and counseling;
    (4) Coordination of support services;
    (5) Training for programs such as child care, early childhood 
development, parent involvement, volunteer services, parenting skills, 
before and after school programs; and
    (6) Training programs on health, nutrition and safety.
    (7) Training in the development of strategies to successfully 
implement a youth program. For example, assessing the needs and 
problems of the youth, improving youth initiatives that are currently 
active, and training youth, housing authority staff, resident 
management corporations and resident organizations on youth initiatives 
and program activities.
    (8) Workshops for youth services, child abuse and neglect 
prevention, tutorial services, in partnership with community-based 
organizations such as local Boys and Girls Clubs, YMCA/YWCA, Boy/Girl 
Scouts, Campfire and Big Brother/Big Sisters, etc. Other HUD programs 
such as the Youth Sports Program and the Public Housing Drug 
Elimination Programs also provide funding in these areas; and
    (e) General. (1) Required training on HUD regulations and policies 
governing the operation of low-income public and Indian housing, 
financial management, capacity building to develop the necessary skills 
to assume management responsibilities at the development and property 
management;
    (2) Purchasing hardware, i.e., computers and software, office 
furnishings and supplies, in connection with business development. 
Every effort must be made to acquire donated or discounted hardware;
    (3) Training in accessing other funding sources; and
    (4) Hiring trainers or other experts (RO/RMCs) must ensure that 
this training is provided by a qualified housing management specialist, 
a community organizer, the HA, or other sources knowledgeable about the 
program.


Sec. 905.968  Technical assistance.

    To the extent that grant authority is available, HUD shall provide 
financial assistance to ROs or RMCs that obtain, by contract or 
otherwise, technical assistance for the development of resident 
management entities, including the formation of these entities; the 
development of the management capabilities of newly formed or existing 
entities; the identification of the social support needs of residents 
of projects, and the securing of this support; and a wide range of 
activities to further the purposes of this subpart.


Sec. 905.969  Resident management requirements.

    The following requirements apply when a HA and its residents are 
interested in providing for resident performance of management 
functions in one or more projects under this subpart.
    (a) Resident management corporation. Residents interested in 
contracting with a HA must establish a RMC that meets the requirements 
for such a corporation, as specified in this subpart.
    (b) Management Contract. (1) A management contract between the HA 
and a RMC is required for resident management. The HA and the 
corporation may agree to the performance by the corporation of any or 
all management functions for which the HA is responsible to HUD under 
the ACC, and any other functions not inconsistent with the ACC and 
applicable laws and regulations. The management contract must be in 
conformance with the minimum requirements established by HUD.
    (2) The management contract may include specific provisions 
governing management personnel; compensation for maintenance laborers 
and mechanics and administrative employees employed in the operation of 
the project, except that the amount of this compensation must meet 
applicable labor standard requirements of Federal law; rent collection 
procedures; resident income verification; resident eligibility 
determinations; resident eviction; the acquisition of supplies and 
materials; and such other matters as the HA and the corporation 
determine to be appropriate, and as HUD may specify in administrative 
instructions.
    (3) The management contract shall be treated as a contracting out 
of services, and must be subject to any provision of a collective 
bargaining agreement regarding the contracting out of services to which 
the HA is subject.
    (4) Provisions on competitive bidding and requirements of prior 
written HUD approval of contracts contained in the ACC do not apply to 
the decision of a HA to contract with a RMC.
    (c) Prohibited activities. A HA may not contract for assumption by 
the RMC of the HA's underlying responsibilities to HUD under the ACC.
    (d) Bonding and insurance. Before assuming any management 
responsibility under its contract, the RMC must provide fidelity 
bonding and insurance, or equivalent protection that is adequate (as 
determined by HUD and the HA) to protect HUD and the HA against loss, 
theft, embezzlement, or fraudulent acts on the part of the corporation 
or its employees.


Sec. 905.970  Management specialist.

    The RO must select, in consultation with the HA, a qualified Indian 
housing management specialist to assist in determining the feasibility 
of, and to help establish, a RMC and to provide training and other 
duties in connection with operating the TOP project. The Housing 
Management Specialist (Trainer) can be a non-profit organization, the 
HA or a consultant.


Sec. 905.971  Operating subsidy, preparation of operating budget, 
operating reserves and retention of excess revenues.

    (a) Calculation of operating subsidy. Operating subsidy will be 
calculated separately for any project managed by a resident management 
corporation. This subsidy computation will be the same as the separate 
computation made for the balance of the projects in the HA in 
accordance with subpart J of this part, with the following exceptions: 
(1) The project managed by a resident management corporation will have 
an Allowable Expense Level based on the actual expenses for the project 
in the fiscal year immediately preceding management under this subpart. 
These expenditures will include the project's share of any expenses 
which are overhead or centralized HA expenditures. The expenses must 
represent a normal year's expenditures for the project, and must 
exclude all expenditures which are not normal fiscal year expenditures 
as to amount or as to the purpose for which expended. Documentation of 
this expense level must be presented with the project budget and 
approved by HUD. Any project expenditures funded from a source of 
income other than operating subsidies or income generated by the 
locally owned Indian housing program will be excluded from the subsidy 
calculation. For budget years after the first budget year under 
management by the resident management corporation, the Allowable 
Expense Level will be calculated as it is for all other projects, in 
accordance with subpart J of this part.
    (2) The resident management corporation project will estimate 
dwelling rental income based on the rent roll of the project 
immediately preceding the assumption of management responsibility under 
this subpart, increased by the estimate of inflation of resident income 
used in calculating PFS subsidy.
    (3) The resident management corporation will exclude, from its 
estimate of other income, any increased income directly generated by 
activities of the corporation or facilities operated by the 
corporation.
    (4) Any reduction in the subsidy of a HA that occurs as a result of 
fraud, waste, or mismanagement by the HA shall not affect the subsidy 
calculation for the resident management corporation project.
    (b) Calculation of total income and preparation of operating 
budget.--No reduction. (1) Subject to paragraph (c) of this section, 
the amount of funds provided by a HA to a project managed by a resident 
management corporation under this subpart may not be reduced during the 
three-year period beginning on the date a resident management 
corporation first assumes management responsibility for the project.
    (2) Treatment of technical assistance. For purposes of determining 
the amount of funds provided to a project under paragraph (b)(1) of 
this section, the provision of technical assistance by the HA to the 
resident management corporation will not be included.
    (3) Operating budget. The resident management corporation and the 
HA shall submit a separate operating budget, including the calculation 
of operating subsidy eligibility in accordance with paragraph (a) of 
this section, for the project managed by a resident management 
corporation to HUD for approval. This budget will reflect all project 
expenditures and will identify which expenditures are related to the 
responsibilities of the resident management corporation and which are 
related to functions which will continue to be performed by the HA.
    (4) Operating reserves. (i) Each project or part of a project that 
is operating in accordance with the ACC amendment relating to this 
subpart and in accordance with a contract vesting maintenance 
responsibilities in the resident management corporation will have 
transferred, into a sub-account of the operating reserve of the host 
HA, an operating reserve. Where all maintenance responsibilities for 
the resident-managed project are the responsibility of the corporation, 
the amount of the reserve made available to projects under this subpart 
will be the per unit cost amount available in the HA operating reserve, 
exclusive of all inventories, prepaids and receivables (at the end of 
the HA fiscal year preceding implementation), multiplied by the number 
of units in the project operated in accordance with the provisions of 
this subpart. Where some, but not all, maintenance responsibilities are 
vested in the resident management corporation, the contract may provide 
for an appropriately reduced portion of the operating reserve to be 
transferred into the corporation's sub-account.
    (ii) The use of the reserve will be subject to all administrative 
procedures generally applicable to the Indian housing program. Any 
expenditure of funds from the reserve will be for eligible expenditures 
which are incorporated into an operating budget subject to approval by 
HUD.
    (iii) Investment of funds held in the reserve will be in accordance 
with the provisions of chapter 4 of the Financial Management Handbook, 
7475.1 REV, and interest generated will be included in the calculation 
of operating subsidy in accordance with subpart J of this part.
    (c) Adjustments to total income. (1) Operating subsidy will reflect 
changes in inflation, utility rates and consumption, and changes in the 
number of units in the project.
    (2) In addition to the amount of income derived from the project 
(from sources such as rents and charges) and the operating subsidy 
calculated in accordance with paragraph (a) of this section, the 
contract may specify that income be provided to the project from other 
sources of income of the HA.
    (3) The following conditions may not affect the amounts to be 
provided to a project managed by a resident management corporation 
under this subpart:
    (i) Any reduction in the total income of a HA that occurs as a 
result of fraud, waste, or mismanagement by the HA; or
    (ii) Any change in the total income of a HA that occurs as a result 
of project-specific characteristics that are not shared by the project 
managed by the corporation under this subpart.
    (d) Retention of excess revenues. Any income generated by a 
resident management corporation that exceeds the income estimated for 
the income category involved must be excluded in subsequent years in 
calculating: (1) The operating subsidy provided to a HA under subpart J 
of this part; and
    (2) The funds provided by the HA to the resident management 
corporation.
    (e) Use of retained revenues. Any revenues retained by a resident 
management corporation under paragraph (d) of this section may only be 
used for purposes of improving the maintenance and operation of the 
project, establishing business enterprises that employ residents of 
Indian housing, or acquiring additional dwelling units for low-income 
families. Units acquired by the resident management corporation will 
not be eligible for payment of operating subsidy.


Sec. 905.972  TOP Audit and administrative requirements.

    (a) Annual audit of books and records. The financial statements of 
a RMC managing a project under this subpart must be audited annually by 
a licensed certified public accountant, designated by the RMC, in 
accordance with generally accepted government audit standards. A 
written report of each audit must be forwarded to HUD and the HA within 
30 days of issuance.
    (b) Relationship to other authorities. The requirements of 
paragraph (a) of this section are in addition to any other Federal law 
or other requirement that would apply to the availability and audit of 
books and records of RMCs under this part.
    (c) General administrative requirements. Except as modified by this 
part, RMCs must comply with the requirements of OMB Circulars A-110 and 
A-122, as applicable.

Family Investment Centers (FIC) Program


Sec. 905.980  General.

    (a) The Family Investment Centers (FIC) Program. This program 
provides families living in Indian housing with better access to 
educational and employment opportunities by:
    (1) developing facilities in or near Indian housing for training 
and support services;
    (2) mobilizing public and private resources to expand and improve 
the delivery of such services;
    (3) providing funding for such essential training and support 
services that cannot otherwise be funded; and
    (4) improving the capacity of management to assess the training and 
service needs of families, coordinating the provision of training and 
services that meet such needs, and ensuring the long-term provision of 
such training and services.
    (b) Supportive Services. New or significantly expanded services 
essential to providing families in Indian housing with better access to 
educational and employment opportunities to achieve self-sufficiency 
and independence. HAs applying for funds to provide supportive services 
must demonstrate that the services will be provided at a higher level 
than currently provided. Supportive services may include:
    (1) Child care;
    (2) Employment training and counseling;
    (3) Computer skills training;
    (4) Education including remedial education; literacy training; 
completion of secondary or post secondary education and assistance in 
the attainment of certificates of high school equivalency;
    (5) Business, entrepreneurial training and counseling;
    (6) Transportation necessary to enable any participating family 
member to receive available services or to commute to his/her place of 
employment;
    (7) Personal welfare (e.g. substance/alcohol abuse treatment and 
counseling, self-development counseling, etc.);
    (8) Supportive Health Care Services (e.g., outreach and referral 
services; and
    (9) Any other services and resources, including case management, 
determined to be appropriate in assisting eligible residents.
    (c) FIC Service Coordinator. Any person who is responsible for:
    (1) determining the eligibility and assessing needs of families to 
be serviced by the FIC;
    (2) assessing training and service needs of eligible residents;
    (3) working with service providers to coordinate the provision of 
services and to tailor the services to the needs and characteristics of 
eligible residents;
    (4) mobilizing public and private resources to ensure that the 
supportive services identified can be funded over the five-year period, 
at least, following the initial receipt of funding;
    (5) monitoring and evaluating the delivery, impact and 
effectiveness of any supportive service funded with capital or 
operating assistance under the FIC program.
    (6) coordinating the development and implementation of the FIC 
Program with other self-sufficiency, educational and employment 
programs; and
    (7) performing other duties and functions that are appropriate for 
providing eligible residents with better access to educational and 
employment opportunities.


Sec. 905.982  Eligibility.

    A HA may apply to establish one or more FICs for more than one 
Indian housing development. A HA must demonstrate a firm commitment of 
assistance from one or more sources ensuring that supportive services 
will be provided for not less than one year following the completion of 
activities.


Sec. 905.983  FIC Activities.

    Activities that may be funded and carried out by an eligible HA may 
include: (a) The renovation, conversion, or combination of vacant 
dwelling units to create common areas to accommodate the provision of 
supportive services;
    (b) The renovation of existing common areas to accommodate the 
provision of supportive services;
    (c) The renovation of facilities located near the premises of one 
or more HA developments to accommodate the provision of supportive 
services;
    (d) The provision of not more than 15 percent of the total cost of 
supportive services (which may be provided directly to eligible 
residents by the HA or by contract or lease through other appropriate 
agencies or providers), but only if the HA demonstrates that:
    (1) The supportive services are appropriate to improve the access 
of eligible residents to employment and educational opportunities; and
    (2) The HA has made diligent efforts to use or obtain other 
available resources to fund or provide such services; and
    (e) The employment of service coordinators.


Sec. 905.984  HA role in activities under this part.

    A HA shall develop a process that ensures that RO/RMC 
representatives and residents are fully informed of, and have an 
opportunity to comment on, the contents of the application and 
activities at all stages of the application and grant award process. 
The HA shall give full and fair consideration to the comments and 
concerns of the residents.


Sec. 905.985  HUD Policy on training, employment, contracting and 
subcontracting of Indian housing residents.

    In accordance with section 3 of the Housing and Urban Development 
Act of 1968 and the implementing regulations at 24 CFR part 135, HAs, 
their contractors and subcontractors shall use best efforts, consistent 
with existing Federal, State, Tribal and local laws and regulations 
(including section 7(b) of the Indian Self-Determination and Education 
Assistance Act, to give low and very low-income persons the training 
and employment opportunities generated by section 3 covered assistance 
(as this term is defined in 24 CFR 135.7) to give section 3 business 
concerns the contracting opportunities generated by section 3 covered 
assistance.


Sec. 905.986  Grant set-aside assistance.

    HUD may set-aside five percent of any amounts available in each 
fiscal year (subsequent to the first funding cycle) to supplement 
grants previously awarded under this program. These supplemental grants 
would be awarded to HAs that demonstrate that funds cannot otherwise be 
obtained and are needed to provide adequate service levels to 
residents.


Sec. 905.987  Resident compensation.

    Residents employed pursuant to a FIC grant shall be paid at a rate 
not less than the highest of:
    (a) The minimum wage that would be applicable to the employee under 
the Fair Labor Standards Act of 1938 (FLSA), if section 6(a)(1) of the 
FLSA applied to the resident and if the resident was not exempt under 
section 13 of the FLSA;
    (b) The State, local or Tribal minimum wage for the most nearly 
comparable covered employment; or
    (c) The prevailing rate of pay for persons employed in similar 
public occupations by the same employer.


Sec. 905.988  Administrative requirements.

    Each HA receiving a grant shall submit to the HUD Field Office an 
annual progress report describing and evaluating the use of grant 
amounts received under this program.

PART 913--DEFINITION OF INCOME, INCOME LIMITS, RENT AND 
REEXAMINATION OF FAMILY INCOME FOR THE PUBLIC HOUSING PROGRAM

    5. The authority citation for part 913 would continue to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437d, 1437n and 3535(d).

    6. In Sec. 913.106, paragraph (c) would be amended by removing the 
word ``or'' from paragraph (c)(8)(ii); by adding the word ``or'' at the 
end of paragraph (c)(8)(iii); by adding a new paragraph (c)(8)(iv); by 
removing the word ``or'' from paragraph (c)(10); by redesignating 
paragraph (c)(11) as paragraph (c)(12); and by adding a new paragraph 
(c)(11), to read as follows:


Sec. 913.106  Annual income.

* * * * *
    (c) * * *
    (8) * * *
    (iv) A resident service stipend, but only if the resident service 
stipend does not exceed $200 per month/per officer to resident council 
officers. Stipends are intended to cover costs related to officer's 
volunteer efforts and include but are not limited to the following 
items: Child care, transportation, special equipment and special 
clothing.
* * * * *
    (11) The earnings and benefits to any resident resulting from the 
participation in a program providing employment training and supportive 
services in accordance with the Family Support Act of 1988, section 22 
of the U.S. Housing Act of 1937, or any comparable Federal, State, or 
local law during the exclusion period. For purposes of this paragraph, 
the following definitions apply.
    (i) Comparable Federal, State or Local law means a program 
providing employment training and supportive services that--
    (A) is authorized by a federal, state or local law;
    (B) is funded by federal, state or local government;
    (C) is operated or administered by a public agency; and
    (D) has as its objective to assist participants in acquiring job 
skills.
    (ii) Exclusion period means the period during which the resident 
participates in a program described in this section, plus 18 months 
from the date the resident begins the first job acquired by the 
resident after completion of such program that is not funded by public 
housing assistance under the U.S. Housing Act of 1937. If the resident 
is terminated from employment without good cause, the exclusion period 
shall end.
    (iii) Earnings and Benefits means the incremental earnings and 
benefits resulting from a qualifying job training program or subsequent 
job;
* * * * *
    7. Part 964, would be revised to read as follows:

PART 964--TENANT PARTICIPATION AND TENANT OPPORTUNITIES IN PUBLIC 
HOUSING

Subpart A--General Provisions

Sec.
964.1   Purpose.
964.3  Applicability and scope.
964.7  Definitions.
964.11  HUD policy on tenant participation.
964.12  HUD policy on the Tenant Opportunities Program (TOP).
964.14  HUD policy on partnerships.
964.15  HUD policy on resident management.
964.16  HUD role in activities under this rule.
964.18  HA role in activities under subpart B & C.
964.24  HUD policy on FIC Program.

Subpart B--Tenant Participation

964.100  Role of resident council.
964.105  Role of the Jurisdiction-Wide Resident Council.
964.110  Resident membership on HA board of Commissioners.
964.115  Resident council requirements.
964.117  Resident council partnerships.
964.120  Resident management corporation requirements.
964.125  Eligibility for resident council membership.
964.130  Election procedures and standards.
964.135  Resident Involvement in HA Management Operations.
964.140  Resident training.
964.145  Conflict of interest.
964.150  Funding tenant participation.

Subpart C--Tenant Opportunities Program

964.200  General.
964.205  Eligibility.
964.210  Announcement of Funding Availability.
964.215  Grant agreement.
964.220  Technical Assistance.
964.225  Resident management requirements.
964.230  Audit and administrative requirements.

Subpart D--Family Investment Centers (FIC) Program

964.300  General.
964.305  Eligibility.
964.308  Supportive services requirements.
964.310  Audit/Compliance Requirements.
964.315  HAs role in activities under this part.
964.320   HUD Policy on training, employment, contracting and 
subcontracting of public housing residents.
964.325  Announcement of funding availability.
964.330  Grant Set-Aside Assistance.
964.335  Grant agreement.
964.340  Resident compensation.
964.345  Treatment of income.
964.350  Administrative requirements.

    Authority: 42 U.S.C. 1437d, 1437g, 1437l, 1437r, 1437t, 3535(d).

Subpart A--General Provisions


Sec. 964.1  Purpose.

    The purpose of this part is to recognize the importance of resident 
involvement in creating a positive living environment and in actively 
participating in the overall mission of public housing.


Sec. 964.3  Applicability and scope.

    (a) The policies and procedures contained in this part apply to any 
HA that has a Public Housing Annual Contributions Contract (ACC) with 
HUD. This part does not apply to PHAs with housing assistance payments 
contracts with HUD under section 8 of the U. S. Housing Act of 1937.
    (b) Subpart B of this part contains HUD policies, procedures, and 
requirements for the participation of residents in public housing 
operations. These policies, procedures, and requirements apply to all 
residents participating under this part.
    (c)(1) Subpart C of this part contains HUD policies, procedures, 
and requirements for residents participating in the Tenant 
Opportunities Program (TOP) (replaces the Resident Management Program 
under section 20 of the United States Housing Act of 1937). Resident 
management in public housing is viable and remains an option under TOP.
    (2) Subpart C of this part is not intended to negate any pre-
existing arrangements for resident management in public housing between 
a PHA and a resident management corporation. On or after [insert 
effective date of this regulation], any new, renewed or renegotiated 
contracts must meet the requirements of this part, the ACC and all 
applicable laws and regulations.
    (d) Subpart D of this part includes requirements for the Family 
Investment Centers (FIC) Program which was established by section 22 of 
the United States Housing Act of 1937 (42 U.S.C. 1437t) to provide 
families living in public housing and Indian housing with better access 
to educational and employment opportunities.
    (e) The term ``resident,'' as used throughout this part, is 
interchangeable with the term ``tenant,'' to reflect the fact that 
local resident organizations have differing preferences for the terms. 
Terms such as ``resident council'' and ``tenant council'' and 
``resident management'' and ``tenant management'' are interchangeable. 
Hereafter, for ease of discussion, the proposed rule will use the terms 
resident, resident council and resident management corporation, as 
appropriate.


Sec. 964.7  Definitions.

    Annual Contributions Contract (ACC). A contract (in the form 
prescribed by HUD) under which HUD agrees to provide financial 
assistance, and the HA agrees to comply with HUD requirements for the 
development and operation of the public housing project.
    Eligible Residents for FIC. A participating resident of a 
participating HA. If the HA is combining FIC with the Family Self-
Sufficiency (FSS) program, the term also means Public Housing FSS and 
Section 8 families participating in the FSS program. Although Section 8 
FSS families are eligible residents for FIC, they do not qualify for 
income exclusions that are provided for public housing residents 
participating in employment and supportive service programs.
    Family Investment Centers (FIC). A facility on or near public 
housing which provides families living in public housing with better 
access to educational and employment opportunities to achieve self-
sufficiency and independence.
    FIC Service Coordinator. Any person who is responsible for:
    (1) Determining the eligibility and assessing needs of families to 
be served by the FIC;
    (2) Assessing training and service needs of eligible residents;
    (3) Working with service providers to coordinate the provision of 
services on a HA-wide or less than HA-wide basis, and to tailor the 
services to the needs and characteristics of eligible residents;
    (4) Mobilizing public and private resources to ensure that the 
supportive services identified can be funded over the five-year period, 
at least, following the initial receipt of funding.
    (5) Monitoring and evaluating the delivery, impact, and 
effectiveness of any supportive service funded with capital or 
operating assistance under FIC program;
    (6) Coordinating the development and implementation of the FIC 
program with other self-sufficiency programs, and other education and 
employment programs; and
    (7) Performing other duties and functions that are appropriate for 
providing eligible residents with better access to educational and 
employment opportunities.
    Management. All activities for which the HA is responsible to HUD 
under the ACC, within the definition of ``operation'' under the Act and 
the ACC, including the development of resident programs and services.
    Management contract. A written agreement between a resident 
management corporation and a HA, as provided by subpart C.
    Public Housing Agency (HA). Any State, county, municipality, or 
other governmental entity or public body (or agency or instrumentality 
thereof) which is authorized to engage in or assist in the development 
and operation of low-income housing.
    Public Housing Development (Development). Any conventional housing 
project that is owned and operated by a HA, including the authorities 
of Guam, Puerto Rico, Alaska and the Virgin Islands, for which it 
receives operating subsidy from HUD under the Performance Funding 
System (PFS) to engage in the operation of low-income housing.
    Resident Management. The performance of one or more management 
activities for one or more projects by a resident management 
corporation under a management contract with the HA.
    Resident Management Corporation. An entity that proposes to enter 
into, or enters into, a contract to manage one or more management 
activities of a HA.
    Resident-owned business. A Business staffed by residents that is 
related to the management of the HA development(s).
    Supportive Services for FIC. New or significantly expanded services 
that are essential to providing families living with children in public 
housing with better access to educational and employment opportunities 
to achieve self-sufficiency and independence.
    Tenant Opportunities Program (TOP). The TOP program is designed to 
prepare residents to experience the dignity of meaningful work, to own 
and operate resident businesses, to move toward financial independence, 
and to enable them to choose where they want to live and engage in 
meaningful participation in the management of housing developments in 
which they live. Financial assistance in the form of technical 
assistance grants are available to RCs/RMCs to prepare to manage 
activities in their public housing developments. TOP will include 
components such as economic development, self-sufficiency initiatives, 
and social services for public housing residents.
    Vacant Unit under FIC. A dwelling unit that is not under an 
effective lease to an eligible family. An effective lease is a lease 
under which an eligible family has a right to possession of the unit 
and is being charged rent, even if the amount of any utility allowance 
equals or exceeds the amount of a total resident payment that is based 
on income and, as a result, the amount paid by the family to the HA is 
zero.


Sec. 964.11  HUD policy on tenant participation.

    HUD promotes resident participation and the active involvement of 
residents in all aspects of a HA's overall mission and operation. 
Residents have a right to organize and elect a resident council to 
represent their interests. As long as proper procedures are followed, 
the HA shall recognize the duly elected resident council to participate 
fully through a working relationship with the HA. HUD encourages HAs 
and residents to work together to determine the most appropriate ways 
to foster constructive relationships, particularly through duly-elected 
resident organizations.


Sec. 964.12  HUD policy on the Tenant Opportunities Program (TOP).

    HUD promotes TOP programs to support activities that enable 
residents to improve the quality of life and resident satisfaction, and 
obtain other social and economic benefits for residents and their 
families. Tenant opportunity programs are proven to be effective in 
facilitating economic uplift, as well as in improving the overall 
conditions of the public housing communities.


Sec. 964.14  HUD policy on partnerships.

    HUD promotes partnerships between residents and HAs which are an 
essential component to building, strengthening and improving public 
housing. Strong partnerships are critical for creating positive changes 
in lifestyles thus improving the quality of life for public housing 
residents, and the surrounding community.


Sec. 964.15  HUD policy on resident management.

    It is HUD's policy to encourage resident management. HUD encourages 
HAs, resident councils and resident management corporations to explore 
the various functions involved in management to identify appropriate 
opportunities for contracting with a resident management corporation. 
Potential benefits of resident-managed entities include improved 
quality of life, experiencing the dignity of meaningful work, enabling 
residents to choose where they want to live, and meaningful 
participation in the management of the housing development.


Sec. 964.16  HUD role in activities under this rule.

    (a) General. Subject to the requirements of this part and other 
requirements imposed on HAs by the ACC, statute or regulation, the form 
and extent of resident participation including resident management are 
local decisions to be made jointly by resident councils/resident 
management corporations and their HAs. HUD will promote tenant 
participation and tenant opportunities programs, and will provide 
additional guidance, as necessary and appropriate. In addition, HUD 
will endeavor to provide technical assistance in connection with these 
initiatives.
    (b) Monitoring. HUD shall ensure that the requirements under this 
rule are operating efficiently and effectively.


Sec. 964.18  HA role in activities under subparts B & C.

    (a) HAs with 100 units or more. (1) A HA shall officially recognize 
a duly elected resident council as the sole representative of the 
residents it purports to represent, and support its tenant 
participation activities.
    (2) When requested by residents, a HA shall provide appropriate 
guidance to residents to assist them in establishing and maintaining a 
resident council.
    (3) A HA may consult with residents, or resident councils (if they 
exist), to determine the extent to which residents desire to 
participate in activities involving their community, including the 
management of specific functions of a public housing development that 
may be mutually agreeable to the HA and the resident council/resident 
management corporation.
    (4) A HA shall provide the residents or any resident council with 
current information concerning the HA's policies on tenant 
participation in management.
    (5) If requested, a HA shall provide a duly recognized resident 
council office space and meeting facilities, free of charge, preferably 
within the development it represents.
    (6) If requested, a HA shall negotiate with the duly elected 
resident council on all uses of community space for meetings, 
recreation and social services and other resident participation 
activities pursuant to HUD guidelines. Such agreements shall be put 
into a written document to be signed by the HA and the resident 
council. If a HA fails to negotiate with a resident council in good 
faith or, after negotiations, refuses to permit such usage of community 
space, the resident council may file an informal appeal with HUD, 
setting out the circumstances and providing copies of relevant 
materials evidencing the resident council's efforts to negotiate a 
written agreement. HUD shall require the HA to respond with a report 
stating the HA's reasons for rejecting the request or for refusing to 
negotiate. HUD shall require the parties (with or without direct HUD 
participation) to undertake or to resume negotiations on an agreement. 
HUD shall take other actions as are necessary to resolve the conflicts 
between the parties.
    (7) In no event shall HUD or a HA recognize a competing resident 
council once a duly elected resident council has been established. Any 
funding of resident activities and resident input into decisions 
concerning public housing operations shall be made only through the 
officially recognized resident council.
    (8) The HA shall ensure open communication and frequent meetings 
between HA management and resident councils and shall encourage the 
formation of joint HA management-resident committees to work on issues 
and planning.
    (9) The resident council shall hold frequent meetings with the 
residents to ensure that residents have input, and are aware and 
actively involved in HA management-resident council decisions and 
activities.
    (10) The HA and resident council shall put in writing in the form 
of a Memorandum of Understanding the elements of their partnership 
agreement and it shall be updated at least once every three (3) years.
    (11) The HA, in collaboration with the resident councils, shall 
assume the lead role for assuring maximum opportunities for skills 
training for public housing residents. To the extent possible, the 
training resources should be local to ensure maximum benefit and on-
going access.
    (b) HAs with fewer than 100 units. (1) HAs with fewer than 100 
units of public housing have the option of participating in programs 
under this rule.
    (2) HAs shall not deny residents the opportunity to organize. If 
the residents decide to organize and form a resident council, the HA 
shall comply with the following:
    (i) A HA shall officially recognize a duly elected resident council 
as the sole representative of the residents it purports to represent, 
and support its tenant participation activities.
    (ii) When requested by residents, a HA shall provide appropriate 
guidance to residents to assist them in establishing and maintaining a 
resident council.
    (iii) A HA shall provide the residents or any resident council with 
current information concerning the HA's policies on tenant 
participation in management.
    (iv) In no event shall HUD or a HA officially recognize a competing 
resident council once a duly elected resident council has been 
established. If a duly elected resident council has been formed, any 
input into changes concerning public housing operations shall be made 
only through the officially recognized resident council.


Sec. 964.24  HUD policy on FIC Program.

    HUD promotes Family Investment Centers which provide better access 
to educational and employment opportunities for residents living in 
public housing. HUD encourages resident involvement in the FIC Program 
and promotes resident-HA partnerships to achieve mutual goals.

Subpart B--Tenant Participation


Sec. 964.100  Role of resident council.

    The role of a resident council is to improve the quality of life 
and resident satisfaction and participate in self-help initiatives to 
enable residents to create a positive living environment for families 
living in public housing. Resident councils may actively participate 
through a working partnership with the HA to advise and assist in all 
aspects of public housing operations.


Sec. 964.105  Role of the Jurisdiction-Wide Resident Council.

    (a) Jurisdiction-Wide Resident Council. Resident councils may come 
together to form an organization which can represent the interest of 
residents residing in units under a HA's jurisdiction. This can be 
accomplished by the presidents of duly elected resident councils 
forming an organization, by resident councils electing a representative 
to the organization, or through jurisdiction-wide elections. If duly 
elected resident councils form such an organization, the HA shall 
recognize it as the voice of authority-wide residents for input into 
housing authority policy making.
    (b) Function. The jurisdiction-wide council may advise the Board of 
Commissioners and executive director in all areas of HA operations, 
including but not limited to occupancy, general management, 
maintenance, security, resident training, resident employment, social 
services and modernization priorities.
    (c) Cooperation with other groups. There shall be regularly 
scheduled meetings between the HA and the local duly elected resident 
council, and the jurisdiction-wide resident council to discuss 
problems, plan activities and review progress.


Sec. 964.110  Resident membership on HA Board of Commissioners.

    HUD encourages to the maximum extent possible resident membership 
on HA Board of Commissioners, for the purpose of having maximum input 
into HA policy and decision-making on matters concerning public 
housing.


Sec. 964.115  Resident council requirements.

    A resident council shall consist of residents residing in public 
housing and must meet each of the following requirements in order to 
receive official recognition from the HA/HUD, and be eligible to 
receive funds for resident council activities, and stipends for their 
related costs for volunteer work in public housing: (a) It may 
represent residents residing in scattered site buildings, in areas of 
contiguous row houses; or in one or more contiguous buildings; in a 
development; or in a combination of these buildings or developments;
    (b) It must adopt written procedures such as by-laws, or a 
constitution which provides for the election of residents to the 
governing board by the voting membership of the residents residing in 
public housing, described in paragraph (b) of this section, on a 
regular basis but at least once every three (3) years. The written 
procedures must provide for the recall of the resident board by 
approval of at least 51 percent of the voting membership; and
    (c) It must have a democratically elected governing board that is 
elected by the voting membership. The voting membership must consist of 
residents at least 18 years of age and whose name appears on a lease 
for the unit in the public housing that the resident council 
represents.


Sec. 964.117  Resident council partnerships.

    A resident council may form partnerships with outside 
organizations, provided that such relationships are complementary to 
the resident council in its duty to represent the residents, and 
provided that such outside organizations do not become the governing 
entity of the resident council.


Sec. 964.120  Resident management corporation requirements.

    A resident management corporation must consist of residents 
residing in public housing and have each of the following 
characteristics in order to receive official recognition by the HA and 
HUD: (a) It shall be a non-profit organization that is validly 
incorporated under the laws of the State in which it is located;
    (b) It may be established by more than one resident council, so 
long as each such council:
    (1) Approves the establishment of the corporation, and
    (2) Has representation on the Board of Directors of the 
corporation;
    (c) It shall have an elected Board of Directors, and elections must 
be held at least once every three (3) years;
    (d) Its by-laws shall require the Board of Directors to include 
resident representatives of each resident council involved in 
establishing the corporation;
    (e) Its voting members shall be residents at least 18 years of age 
and whose name appears on the lease of a unit in the public housing 
represented by the resident management corporation;
    (f) Where a resident council already exists for the development, or 
a portion of the development, the resident management corporation shall 
be approved by the resident council board and a majority of the 
residents. If there is no resident council, a majority of the residents 
of the public housing development it will represent must approve the 
establishment of such a corporation for the purposes of managing the 
project; and
    (g) It may serve as both the resident management corporation and 
the resident council, so long as the corporation meets the requirements 
of this part for a resident council.


Sec. 964.125  Eligibility for resident council membership.

    (a) Any member of a public housing household who is on the lease of 
a unit in the public housing development and meets the requirements of 
the by-laws is eligible to be a member of a resident council. The 
resident council may establish additional criteria that are non-
discriminatory and do not infringe on rights of other residents in the 
development. Such criteria must be stated in the by-laws or 
constitution as appropriate.
    (b) The right to vote for resident council board shall be limited 
to designated heads of households and other members of the household 
who are 18 years or older whose name appears on the lease of a unit in 
the public housing development represented by the resident council.
    (c) Any qualified voting member of a resident council who meets the 
requirements described in the by-laws and is in compliance with the 
lease may seek office and serve on the resident council governing 
board.


Sec. 964.130  Election procedures and standards.

    At a minimum, a resident council may use local election boards/
commissions or if none exists, or is unwilling, an independent third-
party to oversee elections and recall procedures.
    (a) Resident councils shall adhere to the following minimum 
standards regarding election procedures:
    (1) All procedures must assure fair and frequent elections of 
resident council members--at least once every three years for each 
member.
    (2) Staggered terms for resident council governing board members 
and term limits shall be discretionary with the resident council.
    (3) Each resident council shall adopt and issue election and recall 
procedures in their by-laws.
    (4) The election procedures shall include qualifications to run for 
office, frequency of elections, procedures for recall, and term limits 
if desired.
    (5) Sufficient notice of nomination and election, minimally 30 
days, describing election procedures, eligibility requirements and 
dates of nominations/elections must be given to all voting members 
prior to the date of the nominations/elections.
    (b) If a resident council fails to satisfy HUD minimum standards 
for fair and frequent elections, or fails to follow its own election 
procedures as adopted, HUD shall require the HA to withdraw recognition 
of the resident council and to withhold resident services funds as well 
as funds provided in conjunction with services rendered for resident 
participation in public housing.
    (c) HAs shall monitor the resident council election process and 
shall establish a procedure to appeal any adverse decision relating to 
failure to satisfy HUD minimum standards. Such appeal shall be 
submitted to a jointly selected third-party arbitrator at the local 
level. If costs are incurred by using a third-party arbitrator, then 
such costs should be paid from the HAs resident services funds pursuant 
to Sec. 964.150.


Sec. 964.135  Resident involvement in HA management operations.

    Residents shall be involved and participate in the overall policy 
development and direction of Public Housing operations.
    (a) Resident management corporations (RMCs) may contract with HAs 
to perform one or more management functions provided the resident 
entity has received sufficient training and/or has staff with the 
necessary expertise to perform the management functions and provided 
the RMC meets bonding and licensing requirements.
    (b) Residents shall be actively involved in a HA's decision-making 
process and give advice on matters such as modernization, security, 
maintenance, resident screening and selection, and recreation.
    (c) While a HA has responsibility for management operations, it 
shall ensure strong resident participation in all issues and facets of 
its operations through the duly elected resident councils at public 
housing developments, and with jurisdiction-wide resident councils.
    (d) A HA shall work in partnership with the duly elected resident 
councils.
    (e) HAs, upon request from the duly elected resident council, shall 
ensure that the duly elected resident council officers as defined in 
subpart B of this rule, and other residents in the development are 
fully trained and involved in developing and implementing Federal 
programs including but not limited to Comprehensive Improvement 
Assistance Program (CIAP), Comprehensive Grant Program, Urban 
Revitalization Demonstration, Drug Elimination, and FIC.
    (f) HAs shall involve resident council officers and other 
interested residents at the development through education and direct 
participation in all phases of the budgetary process.
    (g) Resident council officers shall be encouraged to become 
involved in the resident screening and selection process for 
prospective residents at the development. Those selected to perform 
resident screening and selection functions must be trained by the HA in 
resident screening and selection and must sign a legal document 
committing to confidentiality.


Sec. 964.140  Resident training.

    (a) Resident training opportunities. HUD encourages a partnership 
between the residents, the HA and HUD, as well as with the public and 
non-profit sectors to provide training opportunities for public housing 
residents. The categories in which training could occur include, but 
are not limited to:
    (1) Community organization and leadership training;
    (2) Organizational development training for Resident Management 
Corporations and duly elected Resident Councils;
    (3) Public housing policies, programs, rights and responsibilities 
training; and
    (4) Business entrepreneurial training, planning and job skills.
    (b) Local training resources. HUD encourages the use of local 
training resources to ensure the ongoing accessibility and availability 
of persons to provide training and technical assistance. Possible 
training resources may include:
    (1) Resident organizations;
    (2) Housing authorities;
    (3) Local community colleges, vocational schools; and
    (4) HUD and other Federal agencies and other local public, private 
and non-profit organizations.


Sec. 964.145  Conflict of interest.

    Resident council officers cannot serve as contractors or employees 
at the HA.


Sec. 964.150  Funding tenant participation. '

    (a) Funding duly elected resident councils. (1) The HA shall 
provide funds it receives for this purpose to the duly elected resident 
council to use for resident participation activities. This shall be an 
add-on to the Performance Funding System (PFS), as provided by 24 CFR 
part 990, to permit HAs to fund $25 per unit per year for resident 
services, subject to the availability of appropriations. Of this 
amount, $15 per unit per year would be provided to fund appropriate 
activities for duly elected resident councils, and $10 per unit per 
year would be used by the HA to pay for costs incurred in carrying out 
tenant participation activities under subpart B of this rule, including 
the expenses for an arbitrator required under subpart B Sec. 964.130. 
This will guarantee the resources necessary to create a bonafide 
partnership among the duly elected resident council, the HA and HUD.
    (2) A duly elected resident council shall receive tenant services 
funding regardless of the HA's financial status. The resident council 
funds shall not be impacted or restricted by the HA financial status 
and all said funds must be used for the purpose set forth in subparts B 
& C under this rule.
    (b) Stipends. (1) HUD encourages HAs to provide stipends to 
resident council officers who serve as volunteers in their public 
housing developments. The amount of the stipend, up to $200 per month/
per officer, shall be decided locally by the resident council and the 
HA. Pursuant to Sec. 913.106, stipends are excluded from income for 
rent purposes.
    (2) Stipends are not to be construed as salaries and should not be 
included as income for calculation of rents, and are not subject to 
conflict of interest requirements.
    (3) Funding provided by a HA to a duly elected resident council may 
be made only under a written agreement between the HA and a resident 
council, which includes a resident council budget and assurance that 
all resident council expenditures will not contravene provisions of law 
and will promote serviceability, efficiency, economy and stability in 
the operation of the local development. The agreement must require the 
local resident council to account to the HA for the use of the funds 
and permit the HA to inspect and audit the resident council's financial 
records related to the agreement.

Subpart C--Tenant Opportunities Program


Sec. 964.200   General.

    (a) The Tenant Opportunities Program (TOP) provides technical 
assistance for various activities including resident management for 
resident councils/resident management corporations as authorized by 
section 20 of the U.S. Housing Act of 1937. The TOP provides 
opportunities for resident organizations to improve living conditions 
and resident satisfaction in public housing communities.
    (b) This subpart establishes the policies, procedures and 
requirements for participating in the TOP with respect to applications 
for funding for programs identified in this subpart.
    (c) This subpart contains the policies, procedures and requirements 
for the resident management program as authorized by section 20 of the 
U.S. Housing Act of 1937.


Sec. 964.205   Eligibility.

    (a) Resident councils/resident management corporations. Any 
eligible resident council/resident management corporation as defined in 
subpart B is eligible to participate in a program administered under 
this subpart.
    (b) Activities. Activities to be funded and carried out by an 
eligible resident council or resident management corporation, as 
defined in subpart B, must improve the living conditions and public 
housing operations and may include any combination of, but are not 
limited to, the following: (1) Resident Capacity Building. (i) Training 
Board members in community organizing, Board development, and 
leadership training;
    (ii) Determining the feasibility of resident management enablement 
for a specific project or projects; and
    (iii) Assisting in the actual creation of an RMC, such as 
consulting and legal assistance to incorporate, preparing by-laws and 
drafting a corporate charter.
    (2) Resident Management. (i) Training residents, as potential 
employees of an RMC, in skills directly related to the operation, 
management, maintenance and financial systems of a project;
    (ii) Training of residents with respect to fair housing 
requirements; and
    (iii) Gaining assistance in negotiating management contracts, and 
designing a long-range planning system.
    (3) Resident Management Business Development. (i) Training related 
to resident-owned business development and technical assistance for job 
training and placement in RMC developments;
    (ii) Technical assistance and training in resident managed business 
development through:
    (A) Feasibility and market studies;
    (B) Development of business plans;
    (C) Outreach activities; and
    (D) Innovative financing methods including revolving loan funds; 
and
    (iii) Legal advice in establishing resident managed business 
entity.
    (4) Social Support Needs (such as self-sufficiency and youth 
initiatives). (i) Feasibility studies to determine training and social 
services needs;
    (ii) Training in management-related trade skills, computer skills, 
etc.;
    (iii) Management-related employment training and counseling;
    (iv) Coordination of support services;
    (v) Training for programs such as child care, early childhood 
development, parent involvement, volunteer services, parenting skills, 
before and after school programs;
    (vi) Training programs on health, nutrition and safety;
    (vii) Workshops for youth services, child abuse and neglect 
prevention, tutorial services, in partnership with community-based 
organizations such as local Boys and Girls Clubs, YMCA/YWCA, Boy/Girl 
Scouts, Campfire and Big Brother/Big Sisters, etc. Other HUD programs 
such as the Youth Sports Program and the Public Housing Drug 
Elimination Programs also provide funding in these areas; and
    (viii) Training in the development of strategies to successfully 
implement a youth program. For example, assessing the needs and 
problems of the youth, improving youth initiatives that are currently 
active, and training youth, housing authority staff, resident 
management corporations and resident councils on youth initiatives and 
program activities.
    (5) General. (i) Required training on HUD regulations and policies 
governing the operation of low-income public housing, financial 
management, capacity building to develop the necessary skills to assume 
management responsibilities at the project and property management;
    (ii) Purchasing hardware, i.e., computers and software, office 
furnishings and supplies, in connection with business development. 
Every effort must be made to acquire donated or discounted hardware;
    (iii) Training in accessing other funding sources; and
    (iv) Hiring trainers or other experts (RCs/RMCs must ensure that 
this training is provided by a qualified housing management specialist, 
a community organizer, the HA, or other sources knowledgeable about the 
program).


Sec. 964.210   Announcement of funding availability.

    A Notice of Funding Availability shall be published periodically in 
the Federal Register containing the amounts of funds available, funding 
criteria, where to obtain and submit applications, the deadline for 
submissions, and further explanation of the selection criteria.


Sec. 964.215   Grant agreement.

    (a) General. HUD shall enter into a grant agreement with the 
recipient of a technical assistance grant which defines the legal 
framework for the relationship between HUD and a resident council or 
resident management corporation for the proposed funding.
    (b) Term of grant agreement. A grant shall be for a term of three 
to five years (3-5 years), and renewable at the expiration of the term.


Sec. 964.220  Technical assistance.

    (a) Financial assistance. HUD will provide financial assistance, to 
the extent available, to resident councils or resident management 
corporations for technical assistance and training to further the 
activities under this subpart.
    (b) Requirements for a management specialist. If a resident council 
or resident management corporation seeks to manage a development, it 
must select, in consultation with the HA, a qualified housing 
management specialist to assist in determining the feasibility of, and 
to help establish, a resident management corporation and to provide 
training and other duties in connection with the daily operations of 
the project.


Sec. 964.225  Resident management requirements.

    The following requirements apply when a HA and its residents are 
interested in providing for resident performance of several management 
functions in one or more projects.
    (a) Resident management corporation. Resident councils interested 
in contracting with a HA must establish a resident management 
corporation that meets the requirements for such a corporation, as 
specified in subpart B. The RMC and its employees must demonstrate 
their ability and skill to perform in the particular areas of 
management pursuant to the management contract.
    (b) HA responsibilities. HAs shall give full and serious 
consideration to resident management corporations seeking to enter into 
a management contract with the HA. A HA shall enter into good-faith 
negotiations with a corporation seeking to contract to provide 
management services.
    (c) Duty to bargain in good faith. If a HA refuses to negotiate 
with a resident management corporation in good faith or, after 
negotiations, refuses to enter into a contract, the corporation may 
file an informal appeal with HUD, setting out the circumstances and 
providing copies of relevant materials evidencing the corporation's 
efforts to negotiate a contract. HUD shall require the HA to respond 
with a report stating the HA's reasons for rejecting the corporation's 
contract offer or for refusing to negotiate. Thereafter, HUD shall 
require the parties (with or without the direct HUD participation) to 
undertake or to resume negotiations on a contract providing for 
resident management, and shall take such other actions as are necessary 
to resolve the conflicts between the parties. If no resolution is 
achieved within 90 days from the date HUD required the parties to 
undertake or resume such negotiations, HUD shall serve notice on both 
parties that administrative remedies have been exhausted (except that, 
pursuant to mutual agreement of the parties, the time for negotiations 
may be extended by no more than an additional 30 days).
    (d) Management contract. A management contract between the HA and a 
resident management corporation is required for property management. 
The HA and the resident management corporation may agree to the 
performance by the corporation of any or all management functions for 
which the HA is responsible to HUD under the ACC and any other 
functions not inconsistent with the ACC and applicable state and local 
laws, regulations and licensing requirements.
    (e) Procurement requirements. The management contract shall be 
treated as a contracting out of services, and must be subject to any 
provision of a collective bargaining agreement regarding the 
contracting out of services to which the HA is subject. Provisions on 
competitive bidding and requirements of prior written HUD approval of 
contracts contained in the ACC do not apply to the decision of a HA to 
contract with a RMC.
    (f) Prohibited activities. A HA may not contract for assumption by 
the resident management corporation of the HA's underlying 
responsibilities to HUD under the ACC.
    (g) Bonding and insurance. Before assuming any management 
responsibility under its contract, the RMC must provide fidelity 
bonding and insurance, or equivalent protection that is adequate (as 
determined by HUD and the HA) to protect HUD and the HA against loss, 
theft, embezzlement, or fraudulent acts on the part of the resident 
management corporation or its employees.
    (h) Waiver of HUD requirements. Upon the joint request of a 
resident management corporation and the HA, HUD may waive any 
requirement that HUD has established and that is not required by law, 
if HUD determines, after consultation with the resident management 
corporation and the HA, that the requirement unnecessarily increases 
the costs to the project or restricts the income of the project; and 
that the waiver would be consistent with the management contract and 
any applicable collective bargaining agreement. Any waiver granted to a 
resident management corporation under this section will apply as well 
to the HA to the extent the waiver affects the HA's remaining 
responsibilities relating to the resident management corporation's 
project.


Sec. 964.230   Audit and administrative requirements.

    (a) TOP grant recipients. The HUD Inspector General, the 
Comptroller General of the United States, or any duly authorized 
representative shall have access to all records required to be retained 
by this subpart or by any agreement with HUD for the purpose of audit 
or other examinations.
    (1) Grant recipients must comply with the requirements of OMB 
Circulars A-110 and A-122, as applicable.
    (2) A final audit shall be required for the activities and 
expenditures made pursuant to this subpart by a Certified Public 
Accountant (CPA), in accordance with generally accepted government 
audit standards. A written report of the audit must be forwarded to HUD 
within 60 days of issuance.
    (b) Resident management corporations. Resident management 
corporations who have entered into a contract with a HA with respect to 
management of a development(s) must comply with the requirements of OMB 
Circulars A-110 and A-122, as applicable. Resident management 
corporations managing a development(s) must be audited annually by a 
licensed certified public accountant, designated by the corporation, in 
accordance with generally accepted government audit standards.

Subpart D--Family Investment Centers (FIC) Program


Sec. 964.300  General.

    The Family Investment Centers Program provides families living in 
public housing with better access to educational and employment 
opportunities by:
    (a) Developing facilities in or near public housing for training 
and support services;
    (b) Mobilizing public and private resources to expand and improve 
the delivery of such services;
    (c) Providing funding for such essential training and support 
services that cannot otherwise be funded; and
    (d) Improving the capacity of management to assess the training and 
service needs of families, coordinate the provision of training and 
services that meet such needs, and ensure the long-term provision of 
such training and services. FIC provides funding to HAs to access 
educational, housing, or other social service programs to assist public 
housing residents toward self-sufficiency.


Sec. 964.305  Eligibility.

    (a) Public Housing Authorities. HAs may apply to establish one or 
more FICs for more than one public housing development.
    (b) FIC Activities. Activities that may be funded and carried out 
by eligible HAs, as defined in 964.305(a) and 964.310 (a) may include:
    (1) The renovation, conversion, or combination of vacant dwelling 
units in a HA development to create common areas to accommodate the 
provision of supportive services;
    (2) The renovation of existing common areas in a HA development to 
accommodate the provision of supportive services;
    (3) The renovation of facilities located near the premises of one 
or more HA developments to accommodate the provision of supportive 
services;
    (4) The provision of not more than 15 percent of the total cost of 
supportive services (which may be provided directly to eligible 
residents by the HA or by contract or lease through other appropriate 
agencies or providers), but only if the HA demonstrates that:
    (i) The supportive services are appropriate to improve the access 
of eligible residents to employment and educational opportunities; and
    (ii) The HA has made diligent efforts to use or obtain other 
available resources to fund or provide such services; and
    (5) The employment of service coordinators.
    (c) Follow up. A HA must demonstrate a firm commitment of 
assistance from one or more sources ensuring that supportive services 
will be provided for not less than one year following the completion of 
activities.
    (d) Environmental Review. Any environmental impact regarding 
eligible activities will be addressed through an environmental review 
of that activity as required by 24 CFR part 50, including the 
applicable related laws and authorities under section 50.4, to be 
completed by HUD, to ensure that any environmental impact will be 
addressed before assistance is provided to the HA. Grantees will be 
expected to adhere to all assurances applicable to environmental 
concerns.


Sec. 964.308  Supportive services requirements.

    HAs shall provide new or significantly expanded services essential 
to providing families in public housing with better access to 
educational and employment opportunities to achieve self-sufficiency 
and independence. HAs applying for funds to provide supportive services 
must demonstrate that the services will be provided at a higher level 
than currently provided. Supportive services may include:
    (a) Child care, of a type that provides sufficient hours of 
operation and serves appropriate ages as needed to facilitate parental 
access to education and job opportunities;
    (b) Employment training and counseling (e.g., job training, 
preparation and counseling, job development and placement, and follow-
up assistance after job placement);
    (c) Computer skills training;
    (d) Education (e.g., remedial education, literacy training, 
completion of secondary or post-secondary education, and assistance in 
the attainment of certificates of high school equivalency;
    (e) Business entrepreneurial training and counseling;
    (f) Transportation, as necessary to enable any participating family 
member to receive available services or to commute to his or her place 
of employment;
    (g) Personal welfare (e.g., substance/alcohol abuse treatment and 
counseling, self-development counseling, etc.);
    (h) Supportive Health Care Services (e.g., outreach and referral 
services; and
    (i) Any other services and resources, including case management, 
that are determined to be appropriate in assisting eligible residents.


Sec. 964.310  Audit/Compliance Requirements.

    HAs cannot have serious unaddressed, outstanding Inspector General 
audit findings or fair housing and equal opportunity monitoring review 
findings or Field Office management review findings. In addition, the 
HA must be in compliance with civil rights laws and equal opportunity 
requirements. A HA will be considered to be in compliance if:
    (a) As a result of formal administrative proceedings, there are no 
outstanding findings of noncompliance with civil rights laws unless the 
HA is operating in compliance with HUD-approved compliance agreement 
designed to correct the area(s) of noncompliance;
    (b) There is no adjudication of a civil rights violation in a civil 
action brought against it by a private individual, unless the HA 
demonstrates that it is operating in compliance with a court order, or 
implementing a HUD-approved resident selection and assignment plan or 
compliance agreement, designed to correct the area(s) of noncompliance;
    (c) There is no deferral of Federal funding based upon civil rights 
violations;
    (d) HUD has not deferred application processing by HUD under Title 
VI of the Civil Rights Act of 1964, the Attorney General's Guidelines 
(28 CFR 50.3) and HUD's Title VI regulations (24 CFR 1.8) and 
procedures (HUD Handbook 8040.1) [HAs only] or under Section 504 of the 
Rehabilitation Act of 1973 and HUD regulations (24 CFR 8.57) [HAs and 
IHAs];
    (e) There is no pending civil rights suit brought against the HA by 
the Department of Justice; and
    (f) There is no unresolved charge of discrimination against the HA 
issued by the Secretary under Section 810(g) of the Fair Housing Act, 
as implemented by 24 CFR 103.400.


Sec. 964.315  HAs role in activities under this part.

    The HAs shall develop a process that assures that RC/RMC 
representatives and residents are fully briefed and have an opportunity 
to comment on the proposed content of the HA's application for funding. 
The HA shall give full and fair consideration to the comments and 
concerns of the residents. The process shall include:
    (a) Informing residents of the selected developments regarding the 
preparation of the application, and providing for residents to assist 
in the development of the application.
    (b) Once a draft application has been prepared, the HA shall make a 
copy available for reading in the management office; provide copies of 
the draft to any resident organization representing the residents of 
the development(s) involved; and provide adequate opportunity for 
comment by the residents of the development and their representative 
organizations prior to making the application final.
    (c) After HUD approval of a grant, notify the duly elected resident 
organization and if none exists, notify the residents of the 
development of the approval of the grant; provide notification of the 
availability of the HUD-approved implementation schedule in the 
management office for reading; and develop a system to facilitate a 
regular resident role in all aspects of program implementation.


Sec. 964.320   HUD Policy on training, employment, contracting and 
subcontracting of public housing residents.

    In accordance with section 3 of the Housing and Urban Development 
Act of 1968 and the implementing regulations at 24 CFR part 135, PHAs, 
their contractors and subcontractors shall make best efforts, 
consistent with existing Federal, State, and local laws and 
regulations, to give low and very low-income persons the training and 
employment opportunities generated by section 3 covered assistance (as 
this term is defined in 24 CFR 135.7) and to give section 3 business 
concerns the contracting opportunities generated by section 3 covered 
assistance.


Sec. 964.325   Announcement of funding availability.

    A Notice of Funding Availability will be published periodically in 
the Federal Register containing the amounts of funds available, funding 
criteria, where to obtain and submit applications, the deadline for the 
submissions, and further explanation of the selection criteria.


Sec. 964.330   Grant Set-Aside Assistance.

    The Department may make available five percent (5%) of any amounts 
available in each fiscal year (subsequent to the first funding cycle) 
available to eligible HAs to supplement grants previously awarded under 
this program. These supplemental grants would be awarded if the HA 
demonstrates that the funds cannot otherwise be obtained and are needed 
to maintain adequate levels of services to residents.


Sec. 964.335   Grant agreement.

    (a) General. HUD will enter into a grant agreement with the 
recipients of a Family Investment Centers grant, which defines the 
legal framework for the relationship between HUD and a HA.
    (b) Term of grant agreement. A grant will be for a term of three to 
five years depending upon the tasks undertaken, as defined under this 
subpart.


Sec. 964.340   Resident compensation.

    Residents employed to provide services or renovation or conversion 
work funded under this program shall be paid at a rate not less than 
the highest of:

    (a) The minimum wage that would be applicable to the employees 
under the Fair Labor Standards Act of 1938 (FLSA), if section 6(a)(1) 
of the FLSA applied to the resident and if the resident were not exempt 
under section 13 of the FLSA;

    (b) The State or local minimum wage for the most nearly comparable 
covered employment; or

    (c) The prevailing rate of pay for persons employed in similar 
public occupations by the same employer.

Sec. 964.345   Treatment of income.

    Program participation shall begin on the first day the resident 
enters training or begins to receive services. Furthermore, the 
earnings of and benefits to any HA resident resulting from 
participation in the FIC program shall not be considered as income in 
computing the resident's total annual income that is used to determine 
the resident rental payment during:

    (a) The period that the resident participates in the program; and

    (b) The period that begins with the commencement of employment of 
the resident in the first job acquired by the resident after completion 
of the program that is not funded by assistance under the 1937 Act, and 
ends on the earlier of:

    (1) The date the resident ceases to continue employment without 
good cause; or

    (2) The expiration of the 18-month period beginning on the date of 
commencement of employment in the first job not funded by assistance 
under this program. (See Sec. 913.106, Annual Income.)

Sec. 964.350   Administrative requirements.

    The HUD Inspector General, the Comptroller General of the United 
States, or any duly authorized representative shall have access to all 
records required to be retained by this subpart or by any agreements 
with HUD for the purpose of audit or other examinations.

    (a) Each HA receiving a grant shall submit to HUD an annual 
progress report, participant evaluation and assessment data and other 
information, as needed, regarding the effectiveness of FIC in achieving 
self-sufficiency.

    (b) The policies, guidelines, and requirements of OMB Circular Nos. 
A-110 and A-122 are applicable with respect to the acceptance and use 
of assistance by private nonprofit organizations.

PART 990--ANNUAL CONTRIBUTIONS FOR OPERATING SUBSIDY

    8. The authority citation for part 990 would continue to read as 
follows:

    Authority: 42 U.S.C. 1437g and 3535(d).

    9. In Sec. 990.108, a new paragraph (f) would be added, to read as 
follows:

Sec. 990.108  Other costs.

* * * * *

    (f) Funding for Resident Council Expenses. In accordance with the 
provisions of 24 CFR part 964 and procedures determined by HUD, each HA 
with a duly elected resident council shall include in the operating 
subsidy eligibility calculation, $25 per unit per year in support of 
the duly elected resident council's activities.

* * * * *

    9. A new subpart D, consisting of Secs. 990.401 through 990.405, 
would be added to read as follows:

Subpart D--Resident Management Corporations Operating Subsidy

Sec.

990.401  Calculation of operating subsidy.

990.402  Calculation of total income and preparation of operating 
budget.

990.403  Adjustments to total income.

990.404  Retention of excess revenues.

990.405  Use of retained revenues.

Subpart D--Resident Management Corporations Operating Subsidy

Sec. 990.401  Calculation of operating subsidy.

    Operating subsidy will be calculated separately for any project 
managed by a resident management corporation. This subsidy computation 
will be the same as the separate computation made for the balance of 
the projects in the PHA in accordance with this part, with the 
following exceptions:

    (a) The project managed by a resident management corporation will 
have an Allowable Expense Level based on the actual expenses for the 
project in the fiscal year immediately preceding management under this 
subpart. These expenditures will include the project's share of any 
expenses which are overhead or centralized PHA expenditures. The 
expenses must represent a normal year's expenditures for the project, 
and must exclude all expenditures which are not normal fiscal year 
expenditures as to amount or as to the purpose for which expended. 
Documentation of this expense level must be presented with the project 
budget and approved by HUD. Any project expenditures funded from a 
source of income other than operating subsidies or income generated by 
the locally owned public housing program will be excluded from the 
subsidy calculation. For budget years after the first budget year under 
management by the resident management corporation, the Allowable 
Expense Level will be calculated as it is for all other projects in 
accordance with Sec. 990.105(e)(5).

    (b) The resident management corporation project will estimate 
dwelling rental income based on the rent roll of the project 
immediately preceding the assumption of management responsibility under 
this subpart, increased by the estimate of inflation of tenant income 
used in calculating PFS subsidy.

    (c) The resident management corporation will exclude, from its 
estimate of other income, any increased income directly generated by 
activities by the corporation or facilities operated by the 
corporation.

    (d) Any reduction in the subsidy of a PHA that occurs as a result 
of fraud, waste, or mismanagement by the PHA shall not affect the 
subsidy calculation for the resident management corporation project.

Sec. 990.402  Calculation of total income and preparation of operating 
budget.

    (a) Subject to Sec. 990.403 of this section, the amount of funds 
provided by a PHA to a project managed by a resident management 
corporation under this subpart may not be reduced during the three-year 
period beginning on February 5, 1988 or on such later date as a 
resident management corporation first assumes management responsibility 
for the project.

    (b) For purposes of determining the amount of funds provided to a 
project under Sec. 990.402(a) of this section, the provision of 
technical assistance by the PHA to the resident management corporation 
will not be included.

    (c) The resident management corporation and the PHA shall submit a 
separate operating budget, including the calculation of operating 
subsidy eligibility in accordance with Sec. 990.401 of this section, 
for the project managed by a resident management corporation to HUD for 
approval. This budget will reflect all project expenditures and will 
identify which expenditures are related to the responsibilities of the 
resident management corporation and which are related to the functions 
which will continue to be performed by the PHA.
    (d) Each project or part of a project that is operating in 
accordance with the ACC amendment relating to this subpart and in 
accordance with a contract vesting maintenance responsibilities in the 
resident management corporation will have transferred, into a sub-
account of the operating reserve of the host PHA, an operating reserve. 
Where all maintenance responsibilities for the resident-managed project 
are the responsibility of the corporation, the amount of the reserve 
made available to projects under this subpart will be the per unit cost 
amount available to the PHA operating reserve, exclusive of all 
inventories, prepaids and receivables (at the end of the PHA fiscal 
year preceding implementation), multiplied by the number of units in 
the project operated in accordance with the provision of this subpart. 
Where some, but not all, maintenance responsibilities are vested in the 
resident management corporation, the contract may provide for an 
appropriately reduced portion of the operating reserve to be 
transferred into the corporation's sub-account.
    (e) The use of the reserve will be subject to all administrative 
procedures applicable to the conventionally owned public housing 
program. Any expenditure of funds from the reserve will be for eligible 
expenditures which are incorporated into an operating budget subject to 
approval by HUD.
    (f) Investment of funds held in the reserve will be in accordance 
with the provisions of Chapter 4 of the Financial Management Handbook, 
7476.1 REV.1 and interest generated will be included in the calculation 
of operating subsidy in accordance with this part.


Sec. 990.403  Adjustments to total income.

    (a) Operating subsidy calculated in accordance with Sec. 964.401 
will reflect changes in inflation, utility rates and consumption, and 
changes in the number of units in the resident management project.
    (b) In addition to the amount of income derived from the project 
(from sources such as rents and charges) and the operating subsidy 
calculated in accordance with Sec. 990.401 of this subpart, the 
contract may specify that income be provided to the project from other 
sources of income of the PHA.
    (c) The following conditions may not affect the amounts to be 
provided to a project managed by a resident management corporation 
under this subpart:
    (1) Any reduction in the total income of a PHA that occurs as a 
result of fraud, waste, or mismanagement by the PHA.
    (2) Any change in the total income of a PHA that occurs as a result 
of project-specific characteristics that are not shared by the project 
managed by the corporation under this subpart.


Sec. 990.404  Retention of excess revenues.

    (a) Any income generated by a resident management corporation that 
exceeds the income estimated for the income category involved as 
specified in the RMC's management contract must be excluded in 
subsequent years in calculating: (1) The operating subsidy provided to 
a PHA under part 990 subpart A of this chapter.
    (2) The funds provided by the PHA to the resident management 
corporation.
    (b) The management contract must specify the amount of income 
expected to be derived from the project (from sources such as rents and 
charges) and the amount of income to be provided to the project from 
the other sources of income of the PHA (such as operating subsidy under 
part 990 subpart A of this chapter, interest income, administrative 
fees, and rents). These income estimates must be calculated on a PHA-
wide basis, as well as for each category of income on which the PHA and 
the resident management corporation agree, consistent with HUD's 
administrative instructions. Income estimates may provide for proration 
of anticipated project income between the corporation and the PHA, 
based upon the management and other project-associated responsibilities 
(if any) that are to be retained by the PHA under the contract.


Sec. 990.405  Use of retained revenues.

    Any revenues retained by a resident management corporation under 
Sec. 990.404 of this subpart may only be used for purposes of improving 
the maintenance and operation of the project, establishing businesses 
enterprises that employ residents of public housing, or acquiring 
additional dwelling units for lower income families. Units acquired by 
the resident management corporation will not be eligible for payment of 
operating subsidy.

    Dated: April 11, 1994.
Joseph Shuldiner,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 94-9319 Filed 4-18-94; 8:45 am]
BILLING CODE 4210-33-P