[Federal Register Volume 64, Number 32 (Thursday, February 18, 1999)]
[Rules and Regulations]
[Pages 8170-8185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3651]



[[Page 8169]]

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Part II





Department of Housing and Urban Development





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24 CFR Part 903



Public Housing Agency Plans; Interim Rule

  Federal Register / Vol. 64, No. 32 / Thursday, February 18, 1999 / 
Rules and Regulations  

[[Page 8170]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 903

[Docket No. FR-4420-I-01]
RIN 2577-AB89


Public Housing Agency Plans

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

ACTION: Interim rule.

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SUMMARY: This interim rule implements an important new component of 
public housing and tenant-based assistance operations--the public 
housing agency plans. Through these plans--a 5-year plan and an annual 
plan--a public housing agency (PHA) will advise HUD, its residents and 
members of the public of the PHA's mission for serving the needs of 
low-income and very low-income families, and the PHA's strategy for 
addressing those needs. The public housing agency plans constitute one 
of several public housing reforms made by the Quality Housing and Work 
Responsibility Act of 1998. This rule establishes initial procedures 
and requirements for development, submission and implementation of the 
plans.

DATES: Effective Date: March 22, 1999.
    Comment Due Date: April 19, 1999.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim rule to the Regulations Division, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC 20410. Communications should refer 
to the above docket number and title. Facsimile (FAX) comments are not 
acceptable. A copy of each communication submitted will be available 
for public inspection and copying between 7:30 a.m. and 5:30 p.m. 
weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: For further information contact Rod 
Solomon, Senior Director for Policy and Legislation, Office of Policy, 
Program and Legislative Initiatives, Office of Public and Indian 
Housing, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Room 4116, Washington, DC 20410; telephone (202) 708-0730 
(this is not a toll-free number). Persons with hearing or speech 
impairments may access that number via TTY by calling the Federal 
Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. This Rulemaking

    Section 511 of the Quality Housing and Work Responsibility Act of 
1998 (Pub. L. 105-276, 112 Stat. 2461, approved October 21, 1998) 
(QHWRA) requires that not later than 120 days after the date of 
enactment of the QHWRA HUD shall issue an interim rule to require the 
submission of an interim public housing agency plan. This interim rule 
is issued in accordance with section 511.
    Section 511, which added section 5A to the United States Housing 
Act of 1937 (USHA), (42 U.S.C. 1437 et seq.) also requires that before 
the final rule is issued, HUD will seek the recommendations on 
implementation of the public housing plans from organizations 
representing (1) State or local public housing agencies; (2) residents, 
including resident management corporations; and (3) other appropriate 
parties. Section 511 also requires HUD to convene not less than two 
public forums at which the persons or organizations making 
recommendations may express their views concerning the proposed 
disposition of their recommendations.
    In addition to the general solicitation of public comments on this 
interim rule, HUD specifically seeks through this rulemaking 
recommendations on implementation of the public housing agency plans 
from the three groups mentioned above: (1) State or local public 
housing agencies; (2) residents, including resident management 
corporations; and (3) other appropriate parties. HUD believes that 
other appropriate parties should include representatives of affected 
communities. HUD will notify the public of the dates, times and 
locations of the public forums. HUD therefore expects that this rule 
will be clarified and improved as the rulemaking process progresses.
    With the publication of this rule, however, PHAs should begin 
preparing their plans for Fiscal Year 2000 (PHA fiscal years commencing 
January 1, 2000 and thereafter).

II. Background

A. The Need for and Benefits of Comprehensive Planning by PHAs

    The recently enacted QHWRA makes important changes to the 
operations and programs of public housing and tenant-based assistance. 
These changes are designed to revitalize and improve HUD's public 
housing and tenant-based assistance programs. One of the most important 
changes made by the QHWRA is the introduction of the public housing 
agency plans--a 5-year plan and an annual plan. The 5-year plan 
describes the mission of the PHA and the PHA's long range goals and 
objectives for achieving its mission over the subsequent 5 years. The 
annual plan provides details about the PHA's immediate operations, 
program participants, programs and services, and the PHA's strategy for 
handling operational concerns, residents' concerns and needs, programs 
and services for the upcoming fiscal year. Both planning mechanisms 
(the 5-year plan and the annual plan) require PHAs to examine their 
existing operations and needs, and to design long-range and short-range 
strategies to address those needs. Through this planning mechanism, 
PHAs will make more efficient use of Federal assistance, more 
effectively operate their programs, and better serve their residents.
    Secretary Andrew Cuomo has long believed that greater efficiency 
and effectiveness in the use of HUD assistance can be achieved by HUD 
program participants when the participants engage in comprehensive 
planning activities that allow them to examine the needs of the 
individuals they serve, consult with interested and affected parties, 
and design strategies to address those needs. In 1994, Secretary Cuomo, 
then the Assistant Secretary for Community Planning and Development, 
established the consolidated plan for community planning and 
development programs (the ``Consolidated Plan'' was established by 
final rule published on January 5, 1995, 60 FR 1878). The Consolidated 
Plan combined the planning, application and reporting requirements of 
several HUD community planning and development programs. Through the 
Consolidated Plan, States and localities examine their needs and design 
their own strategies to address those needs. This planning process 
includes (1) the involvement of citizen participation in the planning 
process, (2) the creation of an action plan that provides the basis for 
the program participant to assess its performance; and (3) the 
consultation with public and private agencies, including those outside 
a single jurisdiction, to identify shared needs and solutions. (Note 
that the Consolidated Plan includes an Analysis of Impediments to Fair 
Housing Choice.) The Consolidated Plan establishes renewed partnerships 
among HUD, State and local governments, public and private agencies, 
tribal governments, and communities by empowering the entities and 
individuals to work with one another, to work with HUD field staff, and 
with other entities, to fashion

[[Page 8171]]

creative solutions to community problems.
    The public housing agency plans embody, in many respects, the 
concepts of HUD's Consolidated Plan. Like the Consolidated Plan for CPD 
Programs, the public housing agency plans provide a planning mechanism 
by which a PHA can examine its long-range needs and its short-range 
needs, specifically the needs of the families that it serves, and 
design both long-term strategies and short-term strategies for 
addressing those needs. Like the Consolidated Plan, the public housing 
agency plans involve consultation with affected groups in the 
development of the plan.
    The Consolidated Plan has been a highly successful mechanism for 
comprehensive planning for community needs. HUD believes that the 
public housing agency plans also will prove to be a successful 
mechanism for comprehensive planning for the needs of those served by 
PHAs.

B. Increased Flexibility, Local Accountability, Reduction in 
Submissions

    While the QHWRA contemplates a comprehensive planning process for 
public housing and tenant-based assistance, and while the elements 
listed for inclusion in the annual plan are extensive, the purposes of 
the QHWRA emphasize deregulation, consolidation and flexibility for 
PHAs. The QHWRA also authorizes HUD to allow submission of streamlined 
plans by high-performing PHAs and small PHAs that are not designated as 
troubled. The challenge for HUD and PHAs is how to fulfill these 
purposes and still assure adequate local accountability by the PHA. 
HUD's response to this challenge is that PHAs which are permitted to 
submit streamlined plans must provide a reasonable means by which the 
public can obtain any basic information that is not included in the 
plans. For PHAs that are not eligible to submit streamlined plans, HUD 
has strived in this first rule to keep the plan submission requirements 
complete but simple. HUD is accepting references to any plan materials 
that are already in existence and which already have been submitted to 
HUD rather than require resubmissions of these materials to HUD. HUD, 
however, also requires that while these materials need not be 
resubmitted to HUD, PHAs must ensure local availability of the required 
Plan components to their residents and members of the public.
    In addition to moving toward increased flexibility and local 
accountability, one of the goals of the PHA annual plan is to reduce 
the number of PHA submissions to HUD. To the extent practicable, the 
PHA annual plan will eventually consolidate all PHA information that is 
required to be submitted under existing HUD planning and reporting 
requirements into one document. The objective is for the PHA annual 
plan to eventually supersede submission requirements currently imposed 
on PHAs under various HUD programs. The elimination of all other 
currently required submissions cannot be accomplished with this interim 
rule. HUD is working, however, to phase out other submissions and 
consolidate them as part of the annual plan, and certain submissions 
will soon be folded into the annual plan submission, as described 
below.
    For example, HUD intends that the planning submissions required 
under HUD's modernization program will be superseded by this new PHA 
planning process commencing with modernization funds made available by 
Congress for Federal Fiscal Year 2000. HUD will issue a separate notice 
that provides PHAs with more information about how the modernization 
program submissions are superseded by this new PHA planning process. 
Another change brought about by the annual plan is in the submissions 
and approval process for site-based waiting lists. As further discussed 
below, PHAs will not need prior HUD approval to implement site-based 
waiting lists, other than the approval provided under the annual plan. 
Other submissions required of PHAs, for example those required under 
HUD's Drug Elimination Program, are expected to be folded into the PHA 
annual plan submission. Existing planning and reporting submissions 
remain applicable, however, until HUD notifies PHAs (through this 
interim rule or other means) that they have become part of the PHA 
annual plan, and HUD establishes the new submission procedures.
    In addition to consolidating other required submissions in the PHA 
annual plan, HUD intends that the new public housing agency planning 
process, to the extent practicable, will allow for a PHA to plan for 
all of its program needs based on the PHA's fiscal year. Allowing a PHA 
to plan for all of its programs based on a PHA's fiscal year will 
assist PHAs in planning in a comprehensive manner and will expedite the 
release of public housing funds. As discussed further below, HUD will 
require the PHA annual plan to be submitted 75 days in advance of a 
PHA's fiscal year. Since the first PHA fiscal years that will be funded 
with Federal Fiscal Year (FFY) 2000 funds begin on January 1, 2000, the 
first PHA annual plan (and 5-Year Plan) will be due 75 days before 
January 1, 2000. PHA plans will be due thereafter to match the 
commencement of PHA fiscal years, which are staggered on a quarterly 
basis. In addition to the benefits to PHAs of this scheduling, receipt 
of PHA plans on a quarterly schedule will assist HUD with its review 
process, and allow HUD the opportunity to provide better feedback to a 
PHA on its plan where such feedback is necessary.
    HUD intends for the planning currently required under the 
modernization program and Drug Elimination Grant Program to be placed 
on the submission schedule for the PHA plans. Funding for these 
programs will be provided by formula in the future. The QHWRA requires 
all capital funds to be distributed by formula. This formula funding is 
being developed through negotiated rulemaking. The QHWRA allows formula 
funding for drug elimination funds. (Note that elsewhere in today's 
Federal Register, HUD is publishing an Advance Notice of Proposed 
Rulemaking on HUD's proposal to provide formula funding for Drug 
Elimination Program grant funds.) To assure that capital funds are made 
available to PHAs in a timely fashion, PHAs that are scheduled to 
submit PHA plans in the second half of the Federal Fiscal Year (i.e., 
in April and July) may receive access to funds midway through the 
Federal Fiscal Year for which funds are being distributed. PHAs may 
receive access to these funds as long as they have submitted as part of 
the previous year's Annual Plan a multi-year capital plan covering 
activities to be undertaken in the coming year. To accommodate the 
expedited schedule for release of capital funds, once the new capital 
formula is established, HUD expects to determine formula shares based 
on formula characteristics of a PHA 90 days earlier than has been the 
case in the past (June 30 rather than September 30 of the preceding 
fiscal year).
    In addition to moving toward a reduction in administrative burden 
through the consolidation of PHA required submissions in the PHA plan, 
HUD, as part of the HUD 2020 Management Reform effort, is moving toward 
electronic reporting for all required submissions under its programs. 
HUD is aware that automated systems are being used more and more 
extensively nationwide, including more extensive use by PHAs and other 
entities that participate in HUD programs. Vice President Gore's Report 
of the National Performance Review has,

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as a stated objective, the expanded use of new technologies and 
telecommunications to create an electronic government (September 7, 
1993, Report of the Vice President's National Performance Review, pp. 
113-117, Reg. 2) To meet the Vice President's objective and HUD's own 
objective to keep in step with modern technology, HUD already has 
converted several required reporting submissions in both its public 
housing programs and in its multifamily programs to electronic 
submission. In addition to making submissions easier for its program 
participants (paper reduction), electronic data assists HUD and its 
program partners to exchange information more easily and to monitor 
activity, note trends in programs and the performance of the program 
participants (weaknesses and strengths) and better serve the families 
and communities that HUD programs are designed to serve.
    HUD specifically invites comments from PHAs on suggestions to 
streamline or merge current information requirements already reported 
electronically to HUD with the additional requirements listed in this 
rule.
    For these two new plans required by QHWRA, HUD is developing as 
expeditiously as possible software that will allow for, and eventually 
require, electronic submission of the PHA annual plan and 5-year plan. 
This software will not be solely directed at facilitating electronic 
submissions, through the internet or other means, but is anticipated to 
provide recommended uniform formats and layouts for the submission of 
information required by the 5-year plan and annual plan. The uniformity 
of formats should make for easier reading by HUD, the PHAs, and most 
importantly the public housing residents and the public, generally. 
Until this software is developed and ready for use, PHAs should follow 
the guidance for submission of plan information as provided in this 
rule and through any additional guidance documents that HUD may issue.
    As stated earlier, HUD's objective is that the planning process 
contemplated by this new statutory requirement to develop Annual Plans 
and 5-Year Plans will prove to be as successful a planning mechanism as 
the Consolidated Plan. In this regard, HUD specifically solicits 
comments from PHAs on the feasibility and importance of additional 
steps to coordinate the 5-Year Plan and/or Annual Plan with the 
submission of the Consolidated Plan either in whole or in part.

III. The Public Housing Agency Plans

    Section 511 of the QHWRA provides for two types of plans to be 
submitted by a PHA--a long range 5-year plan (5-Year Plan) that 
describes the mission of the PHA and the PHA's goals and objectives for 
achieving its mission over the next 5 years, and an annual plan (Annual 
Plan) that provides more details about the PHA's current policies, 
operations, programs and services.
    As will be discussed further below, one of HUD's primary goals for 
public housing and tenant-based assistance is ensuring compliance with 
all applicable nondiscrimination requirements, such as the Fair Housing 
Act, title VI of the Civil Rights Act of 1964, section 504 of the 
Rehabilitation Act of 1937, and title II of the Americans with 
Disabilities Act, as well as affirmatively furthering fair housing. 
This goal remains and is more clearly specified by the QHWRA's PHA plan 
requirements as well as by other amendments made by the QHWRA to the 
USHA.

A. The 5-Year Plan

1. What the QHWRA Requires
    Section 511 of the QHWRA requires that a PHA must submit to HUD a 
5-year plan that provides a statement of:

--The PHA's mission for serving the needs of low-income and very low-
income families in the PHA's jurisdiction during the next 5 fiscal 
years; and
--The PHA's goals and objectives that will enable the PHA to serve the 
needs of the low-income and very low-income families as identified by 
the PHA for the next 5 fiscal years.

    Section 511 provides that the 5-Year Plan must cover a period of 5 
PHA fiscal years that follow the date that the PHA submits its 5-Year 
Plan to HUD. For example, if a PHA's fiscal year runs January 1st to 
December 31st, the due date for the submissions of the plans by the PHA 
is no later than 75 days before January 1st. For a PHA with a fiscal 
year beginning January 1st, the 5 years covered by the 5-Year Plan will 
be the 5 fiscal years beginning January 1, 2000, January 1, 2001, 
January 1, 2002, January 1, 2003, and January 1, 2004.
    The first 5-Year Plan will be due at the same time as the first PHA 
Annual Plan. Subsequent 5-Year Plans will be due to HUD once every 5 
years. PHAs will not be required to submit an annual update to the 5-
Year Plan, but PHAs will be required to explain any substantial 
deviations from the 5-Year Plan in their Annual Plans. After submission 
of the first 5-Year Plan, PHAs in their succeeding 5-Year Plans, in 
addition to addressing their mission, goals and objectives for the next 
5 years, must address the progress made by the PHA in meeting its goals 
and objectives described in the previous 5-Year Plan.
    With respect to substantial deviations, HUD believes that this 
refers to a change in a PHA's mission or change in a goal or objective 
to meet that mission. HUD specifically solicits comment on how 
``substantial deviations'' should be defined.
2. An Acceptable 5-Year Plan
    In reviewing a PHA's 5-Year Plans, HUD believes that a PHA's 
mission, goals and objectives should be consistent with and contribute 
to HUD's mission and goals and objectives, which also overlay almost 
all HUD programs. HUD's mission is to promote adequate and affordable 
housing, economic opportunity, and a suitable living environment 
without discrimination. HUD's strategic goals that are applicable to 
PHAs are (1) increasing the availability of decent, safe and affordable 
housing in American communities; (2) ensuring equal opportunity in 
housing for all Americans; (3) promoting self-sufficiency and asset 
development of families and individuals; and (4) improving community 
quality of life and economic vitality.
    In establishing goals and objectives, PHAs must set quantifiable 
ones, where possible. For example, a goal of providing decent, safe and 
sanitary housing can be measured partly by a PHA's physical inspection 
score under the Public Housing Assessment System. The goal of promoting 
economic self-sufficiency can be measured by PHA residents that no 
longer require assistance because of welfare-to-work or similar 
initiatives. Additional examples of quantifiable measures and more 
information on HUD's mission, goals and objectives can be found in HUD 
Fiscal Year 2000 Annual Performance Plan, located at HUD's web site 
(http//www.hud.gov).
    HUD specifically seeks comments on what constitutes an acceptable 
5-Year Plan.

B. The Annual Plan Pertaining to Section 8 Assistance, Capital Funds, 
and Annual Contributions for Operation of Lower Income Housing Projects

    The second plan required by Section 511 of the QHWRA is an Annual 
Plan that the PHA must submit for each year for which the PHA receives 
assistance under section 8(o) or section 9 of the USHA. Section 511 
provides for 18 components of the Annual Plan. The content of each 
component and HUD's

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permitted form of submission of each component is discussed in Section 
IV of this preamble, which follows.

IV. The Annual Plan

A. Statutory Contents of the Annual Plan, Generally, and HUD Guidance 
on Submissions

    Section 511 specifies the information that must be included in the 
Annual Plan for the fiscal year for which the PHA receives assistance 
under section 8(o) or section 9 of the USHA. The statutory components 
of the Annual Plan are fully provided in the regulatory text of this 
interim rule. This section of the preamble does not repeat the complete 
statutory language or the regulatory text language, but rather provides 
a brief summary of the statutorily required contents for each 
component. Therefore, it is important for the reader to review the 
regulatory text, as well as this preamble, for a full description of 
what is required for the Annual Plan. It is also important for the 
reader to note that the information that the PHA must submit for HUD 
approval under the Annual Plan are the discretionary policies of the 
various plan components or elements (for example, selection policies) 
and not the statutory or regulatory requirements that govern these 
components.
    This section of the preamble also includes HUD guidance on how the 
information for Annual Plan components may be compiled and submitted. 
HUD guidance includes using or referencing materials that PHAs already 
may have compiled or are in the process of compiling under current 
program planning and reporting requirements. Where these materials are 
used or referenced, the PHA must clearly identify the source of the 
materials, and must clearly identify for the public where these 
materials can be obtained or inspected. The submission guidance 
provided in this rulemaking is primarily for the first Annual Plan 
submission or at most for the first two years. HUD anticipates that the 
comments submitted on this rule, and the recommendations made at the 
public forums, will assist HUD in developing more long-term guidance on 
submissions to be made under the Annual Plan. At the final rule stage 
or in a future rulemaking, HUD may not only provide guidance but may 
prescribe the information that must be submitted to satisfy the 
statutory and regulatory requirements and may prescribe the format of 
submission. Before taking this action, HUD wants the benefit of public 
comment and the recommendations from the three groups identified in 
section 511 of the QHWRA.
    HUD specifically invites comment on the manner of submission of the 
information required under the Annual Plan.
    For those components of the Annual Plan for which the PHA has no 
submission (for example, if the PHA has no projects targeted for 
demolition or disposition), the PHA must state in its Annual Plan the 
reason that this component is not addressed (again, in the example 
provided, a simple statement that no projects are targeted for 
demolition/disposition). Each component of the Annual Plan that is 
required to be addressed must be addressed in some fashion. 
Additionally, HUD points out that certain PHA activities, such as 
demolition, disposition, conversion to vouchers, designation, and 
public housing homeownership programs, have separate submission and 
approval processes as well as specific HUD review and approval periods. 
These processes remain in place and are not superseded by the Annual 
Plan. As noted earlier, however, PHAs may submit relevant approval 
documents and other materials relating to these separate processes 
along with the Annual Plan if these materials are clearly identified as 
being part of one of these separate processes.
    In providing an overview of the statutory components of the Annual 
Plan as well as HUD's submission guidance in this section of the 
preamble, the reader should note that the components of the Annual Plan 
apply to both public housing and Section 8 tenant-based assistance, 
except where specifically stated otherwise.
    1. Housing Needs. What the QHWRA Requires. A statement of the 
housing needs of the low-income and very-low income families (including 
elderly families and families with disabilities) in the jurisdiction 
served by the PHA and on the PHA's waiting list.
    HUD notes that it has specified two categories of families--
extremely low-income families (i.e., families with incomes below 30 
percent of the area median) and households of various races and ethnic 
groups--within categories of families listed by the QHWRA. (Please see 
Sec. 903.7(a)(1) of regulatory text.) HUD added the extremely low-
income family category because (1) the needs of extremely low-income 
families are specifically addressed in the local consolidated plans 
with which PHA plans (5-Year and Annual) must be in compliance; and (2) 
the QHWRA targets housing assistance to extremely low-income families. 
HUD added the breakdown by racial and ethic groups because such 
breakdown is consistent with a PHA's civil rights obligations under 
section 511.
    Submission Guidance. PHAs may obtain this information from the 
Consolidated Plan for their jurisdiction if the Consolidated Plan 
accurately describes their housing needs. Rather than restate the 
Consolidated Plan's housing needs statement, the PHA may submit any 
applicable portions of the Consolidated Plan. The information about 
needs of families on waiting lists must of course come from the PHA's 
analysis of the waiting list.
    PHAs which are not in a city or county with its own Consolidated 
Plan may include in their submissions any applicable portions of the 
Consolidated Plan for the State. PHAs whose jurisdictions encompass 
more than one Consolidated Plan jurisdiction may include portions of 
all applicable Consolidated Plans. These PHAs also will need to examine 
their waiting lists to specify the housing needs arising from families 
on the waiting list.
    Whether or not a PHA includes an applicable portion of a 
Consolidated Plan for this component of the Annual Plan, the PHA's 
statement of housing needs must be consistent with the needs described 
in the Consolidated Plan for the jurisdictions served by the PHA. The 
statute requires consistency with the Consolidated Plan.
    2. Financial Resources. What the QHWRA Requires. A statement of the 
financial resources available to the PHA and the planned uses of those 
resources.
    Submission Guidance. PHAs should provide a statement of: (a) The 
estimated financial resources available for the support of the Federal 
public housing and tenant-based assistance programs administered by the 
PHA during the plan year; and (b) the planned use of available 
resources in support of these programs. The statement of resources 
available should include the sources of funds supporting each federal 
program, including current federal grants, prior year grant funds, 
dwelling rental income, any other sources of non-grant income 
(including donations, leveraged funds, entrepreneurial, program, or 
investment income), and reserves. The planned uses of these resources 
should be displayed by major category of activity including: public 
housing operations, public housing modernization and/or development, 
section 8 payments to owners, anti-crime and security activities; 
services to assisted families; and program administration.

[[Page 8174]]

    3. Policies Governing Eligibility, Selection, Admissions. What the 
QHWRA Requires. A statement of: (a) the PHA's policies governing 
eligibility, selection and admission (including any admission 
preferences), assignment, and occupancy policies with respect to public 
housing and Section 8 tenant-based assistance, as applicable, and (b) 
procedures for maintaining waiting lists, including the public housing 
admissions policy for deconcentration of lower-income families and any 
public housing site-based waiting list procedures.
    Submission Guidance. PHA admissions policies, occupancy policies, 
and waiting lists policies are currently required by existing 
regulations and the requirements to adopt and maintain these policies 
have not been repealed. With respect to the information required by 
this component of the Annual Plan, PHAs need not submit these policies 
with their Annual Plan if they already have been submitted and approved 
by HUD (for example, the Tenant Selection and Assignment Plan). In this 
case, however, PHAs must identify in the Annual Plan the policies that 
have been submitted and approved. Additionally, if there have been any 
changes or additions to these policies since HUD approval of these 
policies, the PHA must submit the changes or additions. Where the 
changed or additional policies are contained in existing PHA documents, 
the PHA may excerpt and include relevant portions of those documents as 
part of this component. For tenant-based assistance, PHAs must include 
those applicable portions of the Section 8 Administrative Plan. Please 
see discussion in Section IV.C of this preamble for submission guidance 
regarding admissions policies related to deconcentration of poverty and 
site-based waiting lists.
    Applicability. The policies governing eligibility, selection and 
admissions and waiting list administration is applicable to public 
housing and tenant-based assistance, except for the information 
requested on site-based waiting lists and deconcentration. This 
information is applicable only to public housing.
    4. Rent Determination. What the QHWRA Requires. A statement of the 
discretionary policies of the PHA that govern rents charged for public 
housing units, including flat rents, and rental contributions of 
families assisted under section 8(o) of the USHA.
    Submission Guidance. For this component of the Annual Plan, PHAs 
should submit the listing of minimum rents, flat rents and any 
discretionary rent policies not mandated by statute. For tenant-based 
assistance, PHAs should submit minimum rent and payment standard 
policies.
    5. Operation and Management. What the QHWRA Requires. A statement 
of the PHA's rules, standards, and policies governing maintenance and 
management of the housing owned, assisted, or operated by the PHA, and 
management of the agency and programs of the agency.
    Submission Guidance. PHAs should submit a list of their basic 
rules, standards and policies governing maintenance and management of 
public housing, and management of the PHA and the programs administered 
by the PHA. PHAs also should identify where the rules, standards and 
policies are maintained and may be reviewed, specifically including 
measures necessary for the prevention or eradication of pest 
infestation. With respect to tenant-based assistance programs, PHAs 
should list the programs, the number of households assisted, and the 
estimated number of units becoming available annually.
    Applicability. The list of PHA rules, standards and policies 
regarding management and maintenance of housing applies only to public 
housing. Information about PHA management, standards and policies, and 
the programs administered by the agency, however, applies to public 
housing and tenant-based assistance.
    6. Grievance Procedures. What the QHWRA Requires. A statement of 
the grievance procedures that the PHA makes available to their 
residents.
    Submission Guidance. PHA grievance procedures and informal review 
and hearing procedures for tenant-based assistance are currently 
required by existing regulations and the regulatory requirements to 
provide these policies have not been repealed. Submission of these 
procedures (including any procedures affecting public housing and 
tenant-based assistance applicants) satisfies this component of the 
Annual Plan.
    7. Capital Improvements. What the QHWRA Requires. With respect to 
public housing projects owned, assisted, or operated by the PHA, the 
PHA's plan describing the capital improvements necessary to ensure 
long-term physical and social viability of the projects.
    Submission Guidance. PHAs should submit a list of its capital 
projects and the estimates of costs. Alternatively, in at least the 
first year of implementation, an update of the Comprehensive Grant Plan 
forms will satisfy this component of the Annual Plan. With respect to 
the capital improvement plans, PHAs may submit 5-Year Plans and update 
them annually. This is good management practice and this will allow 
PHAs to have HUD-approved spending items for future years, as is the 
case now under the annual statements for the Comprehensive Grant 
Program.
    Applicability. This section is applicable only to public housing.
    8. Demolition and/or Disposition. What the QHWRA Requires. A 
description of any public housing project owned by the PHA for which 
the PHA will apply for demolition and/or disposition approval and the 
timetable for demolition and/or disposition.
    Submission Guidance. PHAs that already have submitted or have 
prepared demolition or disposition requests in accordance with the 
applicable law, regulations or notices may submit these requests, if 
not already submitted, or may reference a request already submitted. If 
already submitted, the PHA should advise of the date of submission. If 
no request has been prepared or submitted, the PHA should identify any 
project or portion of a project targeted for demolition/disposition and 
the PHA's estimated timetable for this activity. The description of 
targeted demolition/disposition in the Annual Plan should include the 
timetable for submission of the demolition/disposition application.
    Applicability. This section is applicable only to public housing.
    9. Designation of Public Housing for Elderly Families or Families 
with Disabilities or Elderly Families and Families with Disabilities. 
What the QHWRA Requires. Identification of any public housing projects 
owned, assisted, or operated by the PHA, or any portion of these 
projects, that the PHA has designated, or plans to designate, for 
occupancy only by elderly families, or only by families with 
disabilities, or for elderly families and families with disabilities.
    Submission Guidance. The option to designate public housing for 
elderly families, or families with disabilities, or for elderly 
families and families with disabilities was authorized by section 
622(a) of the Housing and Community Development Act of 1992 (Pub. L. 
102-550, approved October 28, 1992, 106 Stat. 3672, 3813), which 
amended section 7 of the USHA. Section 7 was amended a second time by 
section 10 of the Housing Opportunity Program Extension Act of 1996 
(Pub. L. 104-120, approved March 28, 1996), and this more recent 
statute establishes the current requirements for designation. These 
requirements are provided in PIH Notice 98-24.
    For this component of the Annual Plan, the PHA should follow the 
same

[[Page 8175]]

submission procedure allowed for the demolition/disposition component 
of the Annual Plan. PHAs that already have submitted or have prepared 
designation plans in accordance with current HUD procedures, may submit 
their designations plans, if not already submitted, or may reference a 
plan already submitted. If a designation plan already has been 
submitted, the PHA should advise of the date of submission. If no 
designation plan has been prepared or submitted, the PHA should 
identify any project or portion of a project targeted for designation 
and the PHA's estimated timetable for this activity.
    Applicability. This section is only applicable to public housing.
    10. Conversion of Public Housing. What the QHWRA Requires. A 
description of any building or buildings that the PHA is required to 
convert, or voluntarily plans to convert to tenant-based assistance, 
and both an analysis of the projects or buildings required to be 
converted and a statement of the amount of assistance received that is 
to be used for rental assistance or other housing assistance in 
connection with the conversion.
    Submission Guidance. HUD will be issuing a rule in the near future 
on voluntary conversions. Until that rule has been issued for effect, 
PHAs are not required to address the subject of voluntary conversions. 
For mandatory conversions, until a rule is issued on changes under the 
QHWRA, PHAs should submit a list of projects or portions of projects 
identified by the PHA or HUD as covered by section 202 of the FY 1996 
HUD Appropriations Act (42 U.S.C. 14371 note) and the status of such 
projects or portions of projects covered by section 202.
    Applicability. This section is applicable to public housing and 
only that tenant-based assistance which is to be included in a 
conversion plan.
    11. Homeownership. What the QHWRA Requires. A description of any 
homeownership programs administered by the PHA under section 8(y) of 
the USHA, or any homeownership programs for which the PHA has applied 
or will apply to administer under new section 32 of the USHA (added by 
section 536 of the QHWRA), once that section is implemented.
    Submission Guidance. PHAs should describe any homeownership 
programs previously approved or proposed for approval under the Public 
Housing 5(h) Ownership program, or the HOPE I Homeownership Program, or 
section 32, or which they will administer under the section 8(y) 
voucher homeownership program and should describe the basic elements of 
these homeownership programs.
    12. Community Service and Self-Sufficiency. What the QHWRA 
Requires. A description of any community service and self-sufficiency 
programs of the PHA, any policies or programs for the enhancement of 
economic and social self-sufficiency of assisted families, and how the 
PHA will comply with the requirements of section 12(c) and (d) of the 
USHA, as added by the QHWRA.
    Submission Guidance. PHAs should list and briefly describe any 
programs coordinated, promoted, or provided, including program size and 
means of allocating assistance to households. This includes any 
activities under programs such as Family Self-Sufficiency (including 
required and actual program size), Section 3 (Section 3 of the Housing 
and Urban Development Act of 1968), activities funded by HUD under the 
Economic Development Supportive Services Program (EDSS) and other 
similar programs. In addition, PHAs must address how they will comply 
with section 12(d) of the USHA which addresses treatment of income 
changes resulting from welfare program requirements. Until rulemaking 
is completed for section 12(c) the USHA (which relates to community 
service), PHAs are not required to address this aspect of the community 
service and self-sufficiency component.
    Applicability. This section is applicable to both public housing 
and tenant-based assistance except that the information regarding the 
PHA's compliance with the community service requirement applies only to 
public housing.
    13. Safety and Crime Prevention. What the QHWRA Requires. The PHA's 
plan for safety and crime prevention to ensure the safety of the 
residents that it serves, that is developed in consultation with local 
law enforcement.
    Submission Guidance. For this component, PHAs may describe any 
plans or measures directed toward safety and crime prevention of a 
PHA's residents as required by the QHWRA, and include any materials 
required to be included for participation in the Public Housing Drug 
Elimination Program (once new regulations for the program are issued). 
Please see Section IV.F. of this preamble for further discussion about 
forthcoming HUD regulations to implement section 586 of the QHWRA which 
makes changes to HUD's Public Housing Drug Elimination Program.
    Applicability. This section only applies to public housing.
    14. Ownership of Pets in Public Housing. What the QHWRA Requires. A 
statement of the PHA's policies and requirements pertaining to the 
ownership of pets in public housing issued in accordance with section 
31 of the USHA.
    Submission Guidance. HUD's regulations in 24 CFR part 5, subpart C, 
specify the current statutory requirements governing household pets in 
public and assisted housing for elderly families and families with 
disabilities, and allow PHAs to establish rules governing the keeping 
of household pets in these projects. The existing statute and 
regulations, however, are limited to projects for elderly families and 
families with disabilities. Additionally, the existing regulations are 
not applicable to animals that are used to assist persons with 
disabilities.
    Section 526 of the QHWRA amends the USHA to add a new section 31 
that provides conditions for ownership of household pets in public 
housing projects other than those for elderly families and families 
with disabilities. Section 526, however, requires HUD to implement this 
new section through proposed and final rulemaking. Until HUD issues 
these new regulations for effect, PHAs are not required to submit this 
component of the Annual Plan.
    Applicability. This section only applies to public housing.
    15. Civil Rights Certification. What the QHWRA requires. A 
certification by the PHA that it will carry out its plan in conformity 
with all applicable civil rights requirements and will affirmatively 
further fair housing.
    Submission Guidance. The civil rights certification of the QHWRA is 
a critical component of the Annual Plan and must be submitted. The 
certification is twofold: that the PHA will carry out its plan in 
compliance with all applicable civil rights requirements and that the 
PHA will affirmatively further fair housing. Additionally, the 
certification is not only applicable to a PHA's Annual Plan but also to 
its 5-Year Plan.
    16. Most Recent Fiscal Year Audit. What the QHWRA Requires. The 
results of the most recent fiscal year audit of the PHA conducted under 
section 5(h)(2) of the USHA.
    Submission Guidance. This information will be obtained by HUD's 
Real Estate Assessment Center (REAC) beginning June 30, 2000 (for PHAs 
with fiscal years ending September 30, 1999 and after) through its 
financial assessment subsystem (FASS). For audits prior to June 30, 
2000, HUD Field Offices will either have a copy of a PHA's most recent 
audit, or will obtain a copy from the OMB Clearinghouse. Accordingly, 
since this information is

[[Page 8176]]

already in HUD's possession, PHAs are not required to make a separate 
submission of this component of the Annual Plan. As with any other 
Annual Plan component for which information is in the possession of the 
PHA (as well as HUD) but which is not required to be submitted to HUD 
as part of the Annual Plan, PHAs must provide a reasonable means by 
which the public may obtain or review this information.
    17. Asset Management. What the QHWRA Requires. A statement of how 
the PHA will carry out its asset management functions with respect to 
the PHA's public housing inventory, including how the PHA will plan for 
long-term operating, capital investment, rehabilitation, modernization, 
disposition and other needs for such inventory. This statement also 
should address the PHA's strategy for managing its assets with respect 
to tenant-based assistance.
    Submission Guidance. PHAs should submit a general statement 
explaining how they will deploy physical, financial and other assets to 
fulfill their mission, goals and objectives, to the extent that this 
information is not already addressed in other components of the Annual 
or 5-Year Plan.
    18. Other Information--Table of Contents, Executive Summary and 
Progress Report. The QHWRA authorizes HUD to require submission of any 
other relevant information. The rule provides for three specific 
submissions.
    First, a table of contents that corresponds to the Annual Plan's 
components in the order listed in the rule must be submitted. The table 
of contents also must identify the location of any materials that are 
not being submitted with the Annual Plan (for example, if REAC has the 
financial information required, the table of contents would note this 
and the date submitted to REAC.)
    Second, an executive summary must be submitted which provides a 
brief overview of the information that the PHA is submitting in its 
Annual Plan and relates the Annual Plan programs and activities to the 
PHA's mission and the goals, as described in the 5-Year Plan. The 
executive summary also must explain any substantial deviation of these 
activities from the 5-Year Plan.
    Third, for all Annual Plans following submission of the first 
Annual Plan, a brief summary must be included of the PHA's progress in 
meeting the mission and goals described in the 5-Year Plan.
    HUD specifically solicits comments on these items that HUD has 
added to the Annual Plan submission and seeks recommendations on any 
other items that should be included.

B. What Constitute Acceptable Plans

    An acceptable and approvable Annual Plan or 5-Year Plan is one that 
addresses all subjects required to be addressed by the statute and 
regulations, and contains all required information and meets the 
applicable statutory and regulatory requirements. Failure to submit a 
plan by the deadline, failure to submit information required by the 
plan, or failure of the information provided to meet the Plan 
requirements may result in HUD's disapproval of plan, in whole or in 
part, and may result in action by HUD that it determines to be an 
appropriate response to the PHA's failure to submit the plan or 
information required by the plan. This action may include withholding 
of funding.

C. Certain Components of the Admissions Policy Submission

1. Deconcentration of Poverty and Income-Mixing in Public Housing
    Section 513 of the QHWRA makes several amendments to section 16 
with respect to deconcentration of poverty and income targeting, 
effective immediately. HUD's Notice of Initial Guidance on the QHWRA, 
published elsewhere in today's Federal Register, and which addresses 
those provisions of the QHWRA which are effective immediately, provides 
further guidance on the initial requirements for the new 
deconcentration provisions.
    The Annual Plan's required submission on the PHA's policies 
governing eligibility, selection and admissions includes the PHA's 
description of its admissions policy. This admissions policy must be 
designed to provide for deconcentration of poverty and income-mixing by 
bringing higher income tenants into lower income projects and lower 
income tenants into higher income projects.
    A PHA may offer incentives to eligible families that would help 
accomplish the deconcentration and income-mixing objectives. In 
addition, skipping of a family on a waiting list specifically to reach 
another family with a lower or higher income is permissible, provided 
that such skipping is uniformly applied. Skipping families is 
consistent with site-based waiting lists. Such skipping must be adopted 
by a PHA if necessary to implement an admissions policy that 
effectively meets the statute's requirements. Admissions policies 
relating to deconcentration do not impose specific quotas. In adopting 
deconcentration and income-targeting provisions, Congress recognized 
that significant income disparities may occur both in the income levels 
of public housing developments and in the income levels of the 
neighborhoods in which the public housing developments are located 
(income levels for neighborhoods are approximate income levels based on 
census tract information).
    To effectively develop an admissions policy that encourages 
deconcentration of poverty and income-mixing, PHAs should analyze 
expeditiously their public housing stock and tenant incomes. PHAs must: 
(1) determine and compare the relative tenant incomes of each 
development and the incomes of census tracts in which the developments 
are located, and (2) consider what policies, measures or incentives are 
necessary to bring higher income families into lower income 
developments (or, if appropriate to achieve the deconcentration of 
poverty, into developments in lower income census tracts) and lower-
income families into higher-income projects (or if appropriate to 
achieve the deconcentration of poverty, into developments in higher 
income census tracts). PHA policies must devote appropriate attention 
to both of these goals.
    PHAs may consider a number of approaches as they examine designing 
an admissions policy to achieve the goals of deconcentration and 
income-mixing, such as the use of skipping over certain families on 
waiting lists based on incomes; the establishment of certain 
preferences such as worker preferences; appropriate affirmative 
marketing efforts; additional applicant consultation and information; 
provision of additional supportive services and amenities; and rent 
incentives authorized by the QHWRA. PHAs with relatively few units or 
projects should comply with deconcentration and income-mixing 
requirements by adopting any necessary changes in their admissions 
policies based on their circumstances, taking into account current 
tenant populations, applicant populations and housing resources. Of 
course, PHA policies must be in writing and followed consistently, and 
must affirmatively further fair housing. It is not permissible to 
achieve deconcentration and income-mixing for developments as a whole, 
but with unacceptable disparities between areas or buildings within 
developments.
2. Site-Based Waiting Lists
    This interim rule implements the QHWRA's authorization for PHAs to 
adopt and implement site-based waiting

[[Page 8177]]

lists under certain conditions (as specified in section 525 of the 
QHWRA) and the statute's directive that PHAs can do this 
notwithstanding any law, regulation, notice or handbook to the 
contrary, except that applicable civil rights laws apply. In addition, 
the QHWRA states that each applicant shall benefit from full disclosure 
by the PHA of any options available to the applicant with respect to 
the selection of developments.
    The Senate Committee Report on the QHWRA, which provides, with 
respect to legislative history, the most detailed statement on site-
based waiting lists, cites several of the possible benefits of site-
based waiting lists, but also acknowledges that past HUD limitations on 
site-based waiting lists were based on concern about racial steering 
and a desire to prevent housing discrimination. The Senate Committee 
anticipated that PHAs will assure that all applicants are aware of 
their rights under fair housing and civil rights laws, and encouraged 
HUD to monitor implementation so that steering does not occur.
    HUD interprets this legislative history to mean that PHAs should be 
allowed to implement site-based waiting lists once PHA Annual Plans 
proposing site-based lists are approved by HUD, and that every 
reasonable action should be taken by PHAs to assure that applicants can 
make informed choices and that the programs are carefully monitored. 
This interim rule allows for implementation of site-based waiting lists 
in this fashion and specifies the necessary protections. All PHAs that 
request a site-based waiting list as part of their PHA Plan admissions 
policies (including those PHAs presently using site-based waiting lists 
and which wish to continue to do so) must meet the thresholds described 
in the regulation. To ensure that a plan proposing a site-based waiting 
list is consistent with the civil rights laws, regulations and 
certifications, HUD will determine whether any significant changes in 
the levels of racial and ethnic composition occur as a result of the 
implementation of the site-based waiting list, and whether any pattern 
or practice of discrimination exists.
    Some PHAs may wish to implement site-based waiting lists before 
approval of their initial PHA Annual Plans, as an integral part of the 
implementation of admissions policies to promote deconcentration of 
poverty in public housing or to achieve other plan objectives. If so, 
PHAs may follow current procedures for requesting HUD approval. HUD 
will take into account the standards established by this interim rule 
when reviewing any such request for approval.
3. Admissions Policy and Civil Rights Requirements
    The QHWRA includes a statutory requirement that PHA annual plans 
include civil rights certifications and these responsibilities are a 
fundamental objective of the annual plan. To do so, PHAs should develop 
admissions policies to achieve greater housing choice and opportunity 
on a non-discriminatory basis at each of their sites, for both tenants 
and applicants, and annually conduct the analysis to satisfy the 
elements of their civil rights certifications.

D. Additional Plan Information for Troubled PHAs and PHAs at Risk of 
Being Designated Troubled

    Section 511 of the QHWRA provides that the Secretary may require 
any additional information in the PHA's Annual Plan that the Secretary 
determines to be appropriate for each PHA that (1) is at risk of being 
designated as troubled under section 6(j)(2) of the USHA, or (2) is 
designated as troubled under section 6(j)(2). To these categories, HUD 
includes a PHA that is at risk of being designated as troubled or is 
designated as troubled under HUD's new Public Housing Assessment System 
(24 CFR part 901).
    Certain additional information that is important to the PHA's 
progress in recovery from troubled status or near-troubled status will 
be available through HUD's Troubled Agency Recovery Center (TARC). The 
TARCs, part of the HUD 2020 Management Reform effort, were established 
to assist PHAs designated as troubled to reach improved performance 
through the development and implementation of sustainable solutions. 
The TARC works with a PHA to develop and implement an intervention 
strategy to help raise the PHA's level of performance. The PHA reports 
to the TARC and the TARC monitors the PHA's performance. To the extent 
that HUD can obtain additional information on troubled PHAs through the 
TARC it will do so to reduce duplication of submissions. HUD, however, 
retains the authority provided by the QHWRA to request any additional 
information from a troubled PHA for the PHA Annual Plan that HUD 
determines is appropriate, and may not be available at the TARC. A 
troubled PHA must make available locally (to its residents and members 
of the public) its memorandum of agreement and operating budgets in 
addition to other materials required by this interim rule. For PHAs at 
risk of being designated troubled and that are not being monitored by 
the TARC, HUD may request additional information for the PHA Annual 
Plan similar to that information which is required of troubled PHAs by 
the TARC.

E. Streamlined Annual Plan for Certain PHAs

    Section 511 also provides that the Secretary may establish a 
streamlined plan for:

--PHAs that are determined to be high performing PHAs;
--PHAs with less than 250 public housing units (small PHAs) and that 
have not been designated as troubled under section 6(j)(2) of the USHA; 
and
--PHAs that only administer tenant-based assistance and that do not own 
or operate public housing.

    In this interim rule, HUD exercises this authority to allow 
streamlined plans for high performing PHAs, nontroubled small PHAs, and 
PHAs that only administer Section 8 tenant-based assistance. HUD 
generally will exempt these categories of PHAs from submitting elements 
of the Annual Plan which (1) simply reflect good management practice, 
or compliance with regulatory requirements and therefore not 
discretionary policies (for example, operation and management 
practices; grievance procedures); (2) are inapplicable to a PHA's 
operations (notably with respect to a PHA's administration of Section 8 
tenant-based assistance); or (3) require HUD approval before the PHA 
may take action and also require Board of Commissioners approval (for 
example, designation plans, public housing homeownership programs, and 
conversion to vouchers). As noted above, PHAs are urged to fully inform 
their assistance recipients and the public generally, of PHA policies 
that exist but are exempt from submission, and must indicate how the 
public may receive more information about these policies in a 
reasonable fashion.

F. Interim Plan for Demolition/Disposition

    Interim Plan for Demolition/Disposition. Before submission of the 
first Annual Plan, PHAs may submit an interim PHA Annual Plan solely 
with respect to demolition/disposition. The interim plan must provide 
the required description of the action to be taken, include a 
certification of consistency with the Consolidated Plan, and confirm 
that a public hearing was held on the proposed action and that the 
resident advisory board was consulted. If a resident advisory board has 
not yet been

[[Page 8178]]

formed, the PHA may seek a waiver of the requirement to consult with 
the resident advisory board on the grounds that organizations that 
adequately represent residents for this purpose were consulted. The 
actual application for demolition or disposition could be submitted at 
the same time or at a later date.

G. The Resident Advisory Board: Establishment and Consultation

    To assist PHAs in the development of their annual plans, section 
511 of the QHWRA provides for the establishment of a Resident Advisory 
Board. The QHWRA provides that each PHA must establish one or more 
Resident Advisory Boards, and the membership on the board or boards 
must adequately reflect and represent the residents assisted by the 
PHA.
    The purpose of the Resident Advisory Board is to assist the PHA and 
make recommendations regarding the development of the Annual Plan. The 
PHA must consider the recommendations of the Resident Advisory Board or 
Boards in preparing the final Annual Plan, and, in submitting the final 
plan to HUD for approval, the PHA must include a copy of the 
recommendations made by the Resident Advisory Board or Boards and a 
description of the manner in which the PHA addressed these 
recommendations.
    HUD specifically will require PHAs to appoint as Resident Advisory 
Boards jurisdiction-wide resident councils where they exist, or local 
resident councils, that are in compliance with tenant participation 
regulations (see 24 CFR part 964). PHAs will be required to encourage 
tenants that are not represented by such resident councils to seek 
representation on these councils in accordance with any applicable 
tenant participation regulations. Section 8 tenant-based assistance 
recipients also must be represented on resident councils because their 
interests may be very different from those of public housing residents. 
Although the QHWRA allows HUD to waive the resident advisory board 
requirement where current organizations adequately represent residents, 
HUD's strong preference is that PHAs appoint those organizations as 
Resident Advisory Boards rather than seek waivers.

H. Consistency With the Consolidated Plan

    Section 511 of the QHWRA provides that the PHA must ensure that its 
Annual Plan is consistent with the Consolidated Plan for the 
jurisdiction in which the PHA is located. PHAs whose jurisdictions 
encompass more than one Consolidated Plan jurisdiction must ensure 
consistency with any applicable Consolidated Plans. The Annual Plan 
must contain a certification by the appropriate State or local 
officials that the plan is consistent with the Consolidated Plan and 
provide a description of the manner in which the applicable contents of 
the Annual Plan are consistent with the Consolidated Plan. This 
consistency requirement is applicable to both the 5-Year Plan and the 
Annual Plan.
    As part of fulfilling this requirement, the Annual Plan should also 
be consistent with the local jurisdiction's Analysis of Impediments to 
Fair Housing Choice (AI), which describes barriers to fair housing 
choice and opportunity that affect, among others, public housing and 
Section 8 tenants and applicants, and outlines actions to be taken to 
address the impediments. Where impediments have been identified 
relating to the administration of public housing and Section 8 tenant-
based assistance programs, the impediments must be addressed in the 
PHA's Annual Plan, including any appropriate actions to be taken to 
remove them.

V. Adoption, Submission, Amendments, and Review of the Plans

A. Public Information and Notice About the Plans

    Section 511 of the QHWRA requires the board of directors or similar 
governing body of the PHA to conduct a public hearing to discuss the 
PHA plans and to invite public comment regarding the plans. The hearing 
is to be conducted at a location that is convenient to the residents 
served by the PHA. Section 511 also requires that not later than 45 
days before the public hearing is to take place, the PHA must:

--Make the proposed PHA plan (either the 5-Year Plan or Annual Plan, or 
both, as applicable) and all information relevant to the public hearing 
to be conducted, available for inspection by the public at the 
principal office of the PHA during normal business hours; and
--Publish a notice informing the public that the information is 
available for review and inspection, and that a public hearing will 
take place on the plan, and the date, time and location of the hearing.

    Where practical, a PHA notice to the public should include 
electronic posting on the internet. A PHA also should contact all 
organizations and groups that the PHA believes are interested in the 
operations, programs and services of the PHA (for example, 
organizations that the PHA is aware have previously expressed interest) 
and specifically seek their comments and recommendations on the Annual 
Plan or 5-Year Plan or both, as applicable.

B. When 5-Year Plan and/or Annual Plan Are Ready for Submission to HUD

    Section 511 of the QHWRA provides that a PHA may adopt its 5-Year 
Plan and Annual Plan and submit the plans to HUD only after:

--The PHA has conducted the public hearing;
--The PHA has considered all public comments received on the plans;
--The PHA has made any changes to the plans, based on comments, in 
consultation with the Resident Advisory Board or other resident 
organization.

C. Submission of the 5-Year Plan and Annual Plan to HUD

    Section 511 of the QHWRA provides that the first 5-Year Plan and 
Annual Plan are to be submitted by the PHA beginning with the PHA 
fiscal year in which the PHA first will receive Federal fiscal year 
2000 funding under sections 8(o) or 9 of the USHA. After the first 
Annual Plan is submitted, section 511 requires that not later than 75 
days before the start of each succeeding fiscal year of the PHA, the 
PHA shall annually submit to HUD a plan which may be an update, 
including any amendments or modifications to any previous year's Annual 
Plan.

D. Amendments and Modifications to the 5-Year Plan and Annual Plan

    Section 511 of the QHWRA also provides that a PHA, after submitting 
its 5-Year Plan or Annual Plan to HUD, may amend or modify any PHA 
policy, rule, regulation or other aspect of the plans but provides that 
significant amendments or modifications:

--May not be adopted until the PHA has duly called a meeting of its 
board of directors (or similar governing body), the meeting is open to 
the public, and the plan is adopted at the meeting; and
--May not be implemented until notification of the amendment or 
modification is provided to HUD and approved by HUD in accordance with 
HUD's plan review procedures, discussed in Section E below.

    With respect to the 5-Year Plan, HUD believes that significant 
amendments or modifications are those that make a change to the PHA's 
mission, or the goals and objectives to enable the PHA to meet the 
needs of the families that it

[[Page 8179]]

serves, or both. With respect to the Annual Plan, HUD believes that 
significant amendments or modifications are those that make significant 
changes to information provided by the PHA in its Annual Plan. For 
example, the PHA's housing needs or its strategies for meeting those 
needs has changed substantially, or the PHA has made substantial 
changes to its planned use of financial resources.
    HUD specifically seeks comments on what should constitute 
``significant'' amendments or modifications to either the 5-Year Plan 
or Annual Plan.

E. HUD's Review of the 5-Year Plan and Annual Plan, Determination of 
Compliance and Approval and Disapproval

    Review of the Plans. Upon submission by the PHA to HUD of the PHA's 
plans, and any amendment or modification to the plans, HUD shall review 
the plans and determine whether the contents of the plan:

--Provide the information that is required to be included;
--Are consistent with the information and data available to HUD and 
with the Consolidated Plan for the jurisdiction in which the PHA is 
located; and
--Are not prohibited by or inconsistent with the USHA or any other 
applicable Federal law.

    Disapproval. HUD may disapprove a PHA plan (5-Year Plan or Annual 
Plan), in its entirety or in part, or may disapprove any amendment or 
modification to the plan, only if HUD determines that the plan, or any 
amendment or modification to the plan:

--Does not provide all the information that is required to be included 
in the plan;
--Is not consistent with the information and data available to HUD or 
with any applicable Consolidated Plan for the jurisdiction in which the 
PHA is located; and
--Is not consistent with the USHA or other applicable Federal law.

    Not later than 75 days after the date on which the PHA submits its 
plan, or the date on which the PHA submits its amendment or 
modification to the plan, HUD shall issue written notice to the PHA if 
the plan or any part of the plan has been disapproved. The notice must 
state with specificity the reasons for the disapproval. If HUD fails to 
issue the notice of disapproval on or before the 75th day after the PHA 
submits the plan, HUD shall be considered to have determined that all 
components of the plan required to be submitted and that were 
submitted, and reviewed by HUD were in compliance with applicable 
requirements and the plan has been approved.
    Public Availability of the Approved Plan. Once a PHA's plan has 
been approved, a PHA must make its approved plan available for review 
and inspection, at the principal office of the PHA during normal 
business hours.
    HUD specifically seeks comments on whether the final rule should 
provide that a PHA must post notice in the developments owned, operated 
or administered by the PHA that the plan has been approved and 
information on where the plan may be inspected, and also whether the 
PHA should post notice in a newspaper of general circulation that the 
plan has been approved and information about where it may be inspected.

F. PHA's Compliance With the Plan

    A PHA must comply with the policies, rules, and standards adopted 
in the plan as approved by HUD. To ensure that a PHA is in compliance 
with its plan, HUD shall respond appropriately to any complaint 
concerning PHA noncompliance with its plan. HUD also may be informed of 
a PHA's compliance with its plan through PHA reports on progress, 
results of audits, performance evaluation scores and other means. If 
HUD determines that a PHA is not in compliance with its plan, HUD will 
take necessary and appropriate action to ensure compliance by the PHA.

G. The PHA Annual Plan as It Relates to Existing Regulations and the 
Necessity for Conforming Regulatory Amendments

    HUD also is aware that conforming amendments must be made to 
existing regulations as a result of the changes made to the USHA by the 
requirements of the PHA Plans as well as changes made to the USHA by 
other QHWRA amendments. HUD anticipates making these conforming changes 
at the final rule stage or through other rulemakings. HUD also may 
decide that matters now covered by this preamble should be part of the 
regulatory text. For example, an item that HUD recommended should be 
submitted in the preamble submission guidance provided for a particular 
component may be a required submission item at the final rule stage.
    With this in mind, HUD specifically welcomes comments on whether 
various described items in the submission guidance provided should or 
should not be required submission items at the final rule stage.

VI. Issues on Which HUD Specifically Seeks Comment

    HUD seeks comments on all aspects of this rulemaking. However, 
throughout this preamble, HUD has specifically requested comment on 
certain issues and questions. For the convenience of the reader, the 
following restates those issues and questions, and adds an additional 
question on the rule's organization.
    1. The feasibility of combining the 5-Year Plan and/or Annual Plan 
with the submission of the Consolidated Plan either in whole or in 
part.
    2. Ways to streamline or merge current information requirements 
already reported electronically by PHAs to HUD with the additional 
requirements listed in this rule.
    3. How should the term ``substantial deviation'' be defined.
    4. What constitutes an acceptable 5-Year Plan?
    5. The manner of submission of the information required under the 
Annual Plan.
    6. HUD's addition of items to the Annual Plan submission and 
whether commenters recommend any other items for inclusion.
    7. What should constitute ``significant'' amendments or 
modifications to either the 5-Year Plan or Annual Plan?
    8. What methods should HUD use to encourage PHAs to utilize 
metropolitan-wide strategies to increase the success of deconcentration 
approaches.
    9. Whether the final rule should provide that a PHA must post 
notice in the projects owned, operated or administered by the PHA that 
the plan has been approved and provide information on where the plan 
may be inspected, and also whether the PHA should post notice in a 
newspaper of general circulation that the plan has been approved and 
information about its availability for review.
    10. Whether any items in the submission guidance provided for the 
Annual Plan should or should not remain required submission items at 
the final rule stage.
    11. Is the rule organized in a manner that is helpful and should 
the rule include a definition section?

VII. Findings and Certifications

Justification for Interim Rule

    It is the general practice of HUD to publish a rule for public 
comment before issuing a rule for effect, in accordance with its 
regulations in 24 CFR part 10. Section 511 of the Quality Housing and 
Work Responsibility Act of 1998, however, specifically directs that

[[Page 8180]]

HUD issue this regulation as an interim rule.

Paperwork Reduction Act

    The information collection requirements in this interim rule have 
been submitted to the Office of Management and Budget (OMB) for review, 
under section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35).
    In accordance with 5 CFR 1320.5(a)(1)(iv), HUD estimates the total 
reporting and recordkeeping burden that will result from the PHA Plans 
are as provided under the caption ``Reporting Burden.'' As the preamble 
to this rule has discussed, many of the PHA Plan items represent 
existing reporting and recordkeeping requirements. Therefore the 
reporting burden does not an entirely new reporting burden but instead 
reflects the existing reporting burden which has been modified by the 
PHA Plan requirements.

                                                Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                                   Freq. of        Est. time
                    Number of respondents                          response         (hours)        Total (hrs.)
----------------------------------------------------------------------------------------------------------------
3,400........................................................               1          104 hrs          353,600
    Total Reporting Burden: 353,600.
----------------------------------------------------------------------------------------------------------------

    In accordance with 5 CFR 1320.8(d)(1), the Department is soliciting 
comments from members of the public and affected agencies concerning 
the collection of information to:
    (1) Evaluate whether the collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond; including through the use of appropriate automated 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this rule. Under the provisions 
of 5 CFR part 1320, OMB is required to make a decision concerning this 
collection of information between 30 and 60 days after today's 
publication date. Therefore, a comment on the information collection 
requirements is best assured of having its full effect if OMB receives 
the comment within 30 days of today's publication. This time frame does 
not affect the deadline for comments to the agency on the rule, 
however. Comments must refer to the rule by name and docket number (FR-
4420) and must be sent to:

Joseph F. Lackey, Jr., HUD Desk Officer, Office of Management and 
Budget, New Executive Office Building, Washington, DC 20503
    and
Mildred Hamman, Reports Liaison Officer, Department of Housing & Urban 
Development, Office of Public and Indian Housing, Room 4238, 451 
Seventh Street, SW, Washington, DC 20410

Executive Order 12866

    This interim rule was reviewed by the Office of Management and 
Budget (OMB) under Executive Order 12866, Regulatory Planning and 
Review. OMB determined that this interim rule is a ``significant 
regulatory action,'' as defined in section 3(f) of the Order (although 
not economically significant under section (3)(f)(1) of the Order). Any 
changes made to the interim rule subsequent to its submission to OMB 
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, 20410.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this interim rule, and in so 
doing certifies that this rule does not have a significant economic 
impact on a substantial number of small entities. This interim rule 
implements, by statutory directive, a comprehensive planning system for 
public housing agencies which also provides for consolidated statement 
of PHA policies on various PHA operations and also provides a 
consolidated reporting mechanism. The public housing agency plans 
ultimately should minimize administrative burden on all PHAs, including 
small PHAs, consistent with reasonable accountability. HUD is sensitive 
to the fact, however, that the uniform application of requirements on 
entities of differing sizes may place a disproportionate burden on 
small entities. In this regard, the interim rule provides for 
submission of a streamlined plan by small entities. HUD is soliciting 
additional recommendations on how small PHAs might fulfill the purposes 
of the rule (and the statutory requirements) in a way that is less 
burdensome to them.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that this interim 
rule would 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. This rule 
pertains solely to Federal assistance and no programmatic or policy 
changes would result from this interim rule that affect the 
relationship between the Federal Government and State and local 
governments.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
was 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. 4223). The Finding is available for public inspection 
between 7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules 
Docket Clerk, Office of General Counsel, Room 10276, Department of 
Housing and Urban Development, 451 7th Street, SW, Washington, DC 
20410.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for Federal 
agencies to assess the effects of their regulatory actions on State, 
local, and tribal governments, and on the private sector. This rule 
does not impose any Federal mandates on any State, local, or tribal 
governments, or on the private

[[Page 8181]]

sector, within the meaning of the UMRA.

List of Subjects in 24 CFR Part 903

    Administrative practice and procedure, Public housing, Reporting 
and recordkeeping requirements.

    Accordingly, for the reasons stated in the preamble, title 24 of 
the CFR is amended by adding part 903 to read as follows:

PART 903--PUBLIC HOUSING AGENCY PLANS

Sec.
903.1  What are the public housing agency plans?
903.3  When must a PHA submit the plans to HUD?
903.5  What information must a PHA provide in the 5-Year Plan?
903.7  What information must a PHA provide in the Annual Plan?
903.9  Must a troubled PHA include additional information in its 
Annual Plan?
903.11  Are certain PHAs eligible to submit a streamlined Annual 
Plan?
903.13  What is a Resident Advisory Board and what is its role in 
development of the Annual Plan?
903.15  What is the relationship of the public housing agency plans 
to the Consolidated Plan?
903.17  Must the PHA make public the contents of the plans?
903.19  When is the 5-Year Plan or Annual Plan ready for submission 
to HUD?
903.21  May the PHA amend or modify a plan?
903.23  What is the process by which HUD reviews, approves, or 
disapproves an Annual Plan?
903.25  How does HUD ensure PHA compliance with its plans?

    Authority: 42 U.S.C. 1437c; 42 U.S.C. 3535(d).


Sec. 903.1  What are the public housing agency plans?

    (a) There are two public housing agency plans. They are:
    (1) The 5-year plan (the 5-Year Plan) that a public housing agency 
(PHA) must submit to HUD once every 5 PHA fiscal years; and
    (2) The annual plan (Annual Plan) that the PHA must submit to HUD 
for each fiscal year for which the PHA receives:
    (i) Section 8 tenant-based assistance (section 8(o) of the U.S. 
Housing Act of 1937, 42 U.S.C. 1437f(o)) (tenant-based assistance); or
    (ii) Public housing operating subsidy or capital fund (section 9 of 
the U.S. Housing Act of 1937 (42 U.S.C. 1437g) (public housing)).
    (b) The purpose of the plans is to provide a framework for local 
accountability and an easily identifiable source by which public 
housing residents, participants in the tenant-based assistance program, 
and other members of the public may locate basic PHA policies, rules 
and requirements concerning its operations, programs and services.
    (c) HUD may prescribe the format of submission (including 
electronic format submission) of the plans. PHAs will receive 
appropriate notice of any prescribed format.
    (d) The requirements of this part only apply to a PHA that receives 
the type of assistance described in paragraph (a) of this section.
    (e) In addition to the waiver authority provided in 24 CFR 5.110, 
the Secretary may, subject to statutory limitations, waive any 
provision of this title on a program-wide basis, and delegate this 
authority in accordance with section 106 of the Department of Housing 
and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)) where the 
Secretary determines that such waiver is necessary for the effective 
implementation of this part.


Sec. 903.3  When must a PHA submit the plans to HUD?

    (a) 5-Year Plan. (1) The first PHA fiscal year that is covered by 
the requirements of this part is the PHA fiscal year that begins 
January 1, 2000. The first 5-Year Plan submitted by a PHA must be 
submitted for the 5-year period beginning January 1, 2000. The first 5-
Year Plans will be due no later than 75 days before January 1, 2000. 
For PHAs whose fiscal years begin after January 1, 2000, their 5-Year 
Plans are due no later than 75 days before the commencement of their 
fiscal year. For all PHAs, after submission of their first 5-Year Plan, 
all subsequent 5-Year Plans must be submitted once every 5 PHA fiscal 
years, no later than 75 days before the commencement of the PHA's 
fiscal year.
    (2) PHAs may choose to update their 5-Year Plans every year as good 
management practice. PHAs must explain any substantial deviation from 
their 5-Year Plans in their Annual Plans.
    (b) The Annual Plan. The first Annual Plan submitted by a PHA must 
be submitted 75 days in advance of the first PHA fiscal year in which 
the PHA receives Federal fiscal year 2000 funds. Since the first PHA 
fiscal year funded with Federal Fiscal Year 2000 funds will commence 
January 1, 2000, the first Annual Plan will be due 75 days in advance 
of that date or October 15, 1999. PHAs with later fiscal year 
commencement dates must submit their Annual Plans 75 days in advance of 
their fiscal year commencement date. Subsequent Annual Plans will be 
due 75 days in advance of the commencement of a PHA's fiscal year.


Sec. 903.5  What information must a PHA provide in the 5-Year Plan?

    (a) A PHA must include in its 5-Year Plan for the 5 PHA fiscal 
years immediately following the date on which the 5-Year Plan is due to 
HUD, a statement of:
    (1) The PHA's mission for serving the needs of low-income, very 
low-income and extremely low-income families in the PHA's jurisdiction; 
and
    (2) The PHA's goals and objectives that enable the PHA to serve the 
needs of the families identified in the PHA's Annual Plan. For HUD, the 
PHA and the public to better measure the success of the PHA in meeting 
its goals and objectives, PHAs must adopt quantifiable goals and 
objectives for serving those needs wherever possible.
    (b) After submission of the first 5-Year Plan, a PHA in their 
succeeding 5-Year Plans, in addition to addressing their mission, goals 
and objectives for the next 5 years, must address the progress made by 
the PHA in meeting its goals and objectives described in the previous 
5-Year Plan.


Sec. 903.7  What information must a PHA provide in the Annual Plan?

    The Annual Plan must include the information provided in this 
section, except that for the first Annual Plan, the following 
information need not be submitted: the information required by 
paragraph (l) of this section that pertains to section 12 of the U.S. 
Housing Act of 1937 (42 U.S.C. 1437j(c)); the information required by 
paragraph (m) of this section that relates to drug elimination 
policies; and the information required by paragraph (n) of this 
section. Additionally, the information described in this section 
applies to both public housing and tenant-based assistance, except 
where specifically stated otherwise, and the information that the PHA 
must submit for HUD approval under the Annual Plan are the 
discretionary policies of the various plan components or elements (for 
example, selection policies) and not the statutory or regulatory 
requirements that govern these components.
    (a) A statement of housing needs. (1) This statement must address 
the housing needs of the low-income and very low-income families who 
reside in the jurisdiction served by the PHA, and families who are on 
the public housing and Section 8 tenant-based assistance waiting lists, 
including:

[[Page 8182]]

    (i) Families with incomes below 30 percent of area median 
(extremely low-income families);
    (ii) Elderly families and families with disabilities;
    (iii) Households of various races and ethnic groups residing in the 
jurisdiction or on the waiting list.
    (2) The housing needs of each of these groups must be identified 
separately. The identification of housing needs should address issues 
of affordability, supply, quality, accessibility, size of units and 
location. The statement of housing needs also must describe the ways in 
which the PHA intends, to the maximum extent practicable, to address 
those needs, and the PHA's reasons for choosing its strategy.
    (b) A statement of financial resources. This statement must address 
the financial resources that are available to the PHA for the support 
of Federal public housing and tenant-based assistance programs 
administered by the PHA during the plan year. The statement must 
include a listing of the significant PHA operating, capital and other 
proposed Federal resource commitments available to the PHA, as well as 
tenant rents and other income available to support public housing or 
tenant-based assistance. The statement also should include the non-
Federal sources of funds supporting each federal program. In this 
statement, the PHA also must describe the planned uses for the 
resources.
    (c) A statement of the PHA's policies that govern eligibility, 
selection, and admissions. This statement must describe the PHA's 
policies governing resident or tenant eligibility, selection and 
admission. This statement also must describe any PHA admission 
preferences, assignment and any occupancy policies that pertain to 
public housing units and housing units assisted under section 8(o) of 
the U.S. Housing Act of 1937. The requirement to submit PHA policies 
governing assignment only applies to public housing. This statement 
also must include the following information:
    (1) The PHA's procedures for maintaining waiting lists for 
admission to the PHA's public housing projects. These procedures must 
include any site-based waiting lists, as provided by section 6(s) of 
the U.S. Housing Act of 1937. This section permits PHAs to establish a 
system of site-based waiting lists that are consistent with all 
applicable civil rights and fair housing laws and regulations. 
Notwithstanding any other regulations, a PHA may adopt site-based 
waiting lists where:
    (i) The PHA regularly submits required occupancy data to HUD's 
Multifamily Tenant Characteristics Systems (MTCS) in an accurate, 
complete and timely manner;
    (ii) The system of site-based waiting lists provides for full 
disclosure to each applicant of any option available to the applicant 
in the selection of the development in which to reside, including basic 
information about available sites (location, occupancy, number and size 
of accessible units, amenities such as day care, security, 
transportation and training programs) and an estimate of the period of 
time the applicant would likely have to wait to be admitted to units of 
different sizes and types (e.g., regular or accessible) at each site;
    (iii) Adoption of site-based waiting lists would not violate any 
court order or settlement agreement, or be inconsistent with a pending 
complaint brought by HUD;
    (iv) The PHA includes reasonable measures to assure that such 
adoption is consistent with affirmatively furthering fair housing, such 
as reasonable marketing activities;
    (v) The PHA provides for review of its site-based waiting list 
policy to determine if it is consistent with civil rights laws and 
certifications through the following steps:
    (A) As part of the submission of the Annual Plan, the PHA shall 
assess changes in racial, ethnic or disability-related tenant 
composition at each PHA site that may have occurred during the 
implementation of the site-based waiting list, based upon MTCS 
occupancy data that has been confirmed to be complete and accurate by 
an independent audit (which may be the annual independent audit);
    (B) At least biannually use independent testers or other means 
satisfactory to HUD, to assure that the site-based waiting list is not 
being implemented in a discriminatory manner, and that no patterns or 
practices of discrimination exist, and providing the results to HUD; 
and
    (C) Taking any steps necessary to remedy the problems surfaced 
during the review and the steps necessary to affirmatively further fair 
housing.
    (2) The PHA's admissions policy with respect to deconcentration of 
very low-income families and income-mixing. Deconcentration and income-
mixing is required by section 16 of the U.S. Housing Act of 1937 (42 
U.S.C. 1437n). To implement the requirement, which is applicable 
specifically to public housing, PHAs must:
    (i) Determine and compare the relative tenant incomes of each 
development, as well as the household incomes of census tracts in which 
the developments are located; and
    (ii) Consider what admissions policy measures or incentives, if 
any, will be needed to bring higher-income families into lower-income 
developments (or if appropriate to achieve deconcentration of poverty, 
into developments in lower income census tracts) and lower-income 
families into higher income developments (or if appropriate to achieve 
deconcentration of poverty, into developments in higher income census 
tracts). PHA policies must devote appropriate attention to both of 
these goals. PHA policies must affirmatively further fair housing; and
    (i) Make any appropriate changes in their admissions policies.
    (3) The policies governing eligibility, selection and admissions 
are applicable to public housing and tenant-based assistance, except 
for the information requested on site-based waiting lists and 
deconcentration. This information is applicable only to public housing.
    (d) A statement of the PHA's rent determination policies. This 
statement must describe the PHA's basic discretionary policies that 
pertain to rents charged for public housing units, including applicable 
flat rents, and the rental contributions of families receiving tenant-
based assistance. For tenant-based assistance, this statement shall 
cover any discretionary minimum tenant rents and payment standard 
policies.
    (e) A statement of the PHA's operation and management. (1) This 
statement must describe the PHA's rules, standards, and policies that 
govern maintenance and management of housing owned, assisted, or 
operated by the PHA. This statement also must include a description of 
any measures necessary for the prevention or eradication of pest 
infestation which includes cockroach infestation. Additionally, this 
statement must include a description of PHA management organization, 
and a listing of the programs administered by the PHA.
    (2) The information pertaining to PHA's rules, standards and 
policies regarding management and maintenance of housing applies only 
to public housing. The information pertaining to program management 
applies to public housing and tenant-based assistance.
    (f) A statement of the PHA grievance procedures. This statement 
describes the grievance and informal hearing and review procedures that 
the PHA makes available to its residents and applicants. This includes 
public housing grievance procedures and tenant-based assistance 
informal review procedures for

[[Page 8183]]

applicants and hearing procedures for participants.
    (g) A statement of capital improvements needed. With respect to 
public housing only (public housing projects owned, assisted or 
operated by the PHA), this statement describes the capital improvements 
necessary to ensure long-term physical and social viability of the 
public housing projects, including the capital improvements to be 
undertaken in the year in question and their estimated costs. PHAs are 
encouraged to include 5-Year Plans covering large capital items.
    (h) A statement of any demolition and/or disposition. With respect 
to public housing only, a description of any public housing project, or 
portion of a public housing project, owned by the PHA for which the PHA 
has applied or will apply for demolition and/or disposition approval 
under section 18 of the U.S. Housing Act of 1937 (42 U.S.C. 1437p), and 
the timetable for demolition and/or disposition.
    (i) A statement of the public housing projects designated as 
housing for elderly families or families with disabilities or elderly 
families and families with disabilities. With respect to public housing 
only, this statement identifies any public housing projects owned, 
assisted, or operated by the PHA, or any portion of these projects, 
that the PHA has designated for occupancy only by the elderly families 
or only by families with disabilities, or by elderly families and 
families with disabilities or will apply for designation for occupancy 
by only elderly families or only families with disabilities, or by 
elderly families and families with disabilities as provided by section 
7 of the U.S. Housing Act of 1937 (42 U.S.C. 1437e).
    (j) A statement of the conversion of public housing to tenant-based 
assistance. (1) This statement describes any building or buildings that 
the PHA is required to convert to tenant-based assistance under section 
33 of the U.S. Housing Act of 1937 (42 U.S.C. 1437z-5), or that the PHA 
plans to voluntarily convert under section 22 of the U.S. Housing Act 
of 1937 (42 U.S.C. 1437t). The statement also must include an analysis 
of the projects or buildings required to be converted under section 33, 
and the amount of assistance received commencing in Federal Fiscal 1999 
to be used for rental assistance or other housing assistance in 
connection with such conversion.
    (2) The information required under this paragraph (j) of this 
section is applicable to public housing and only that tenant-based 
assistance which is to be included in the conversion plan.
    (k) A statement of homeownership programs administered by the PHA. 
This statement describes any homeownership programs administered by the 
PHA under section 8(y) of the U.S. Housing Act of 1937 (42 U.S.C. 
1437f(y)), or under an approved section 5(h) homeownership program (42 
U.S.C. 1437c(h)), or an approved HOPE I program (42 U.S.C. 1437aaa) or 
for any homeownership programs for which the PHA has applied to 
administer or will apply to administer under section 5(h), the HOPE I 
program, or section 32 of the U.S. Housing Act of 1937 (42 U.S.C. 
1437z-4).
    (l) A statement of the PHA's community service and self-sufficiency 
programs. (1) This statement describes:
    (i) Any PHA programs relating to services and amenities 
coordinated, promoted or provided by the PHA for assisted families, 
including programs provided or offered as a result of the PHA's 
partnership with other entities;
    (ii) Any PHA programs coordinated, promoted or provided by the PHA 
for the enhancement of the economic and social self-sufficiency of 
assisted families, including programs provided or offered as a result 
of the PHA's partnerships with other entities, and activities under 
section 3 of the Housing and Community Development Act of 1968 and 
under requirements for the Family Self-Sufficiency Program and others. 
The description of programs offered shall include the program's size 
(including required and actual size of the Family Self-Sufficiency 
program) and means of allocating assistance to households.
    (iii) How the PHA will comply with the requirements of section 
12(c) and (d) of the U.S. Housing Act of 1937 (42 U.S.C. 1437j(c) and 
(d)). These statutory provisions relate to community service by public 
housing residents and treatment of income changes in public housing and 
tenant-based assistance recipients resulting from welfare program 
requirements.
    (2) The information required by paragraph (l) of this section is 
applicable to both public housing and tenant-based assistance except 
that the information regarding the PHA's compliance with the community 
service requirement applies only to public housing.
    (m) A statement of the PHA's safety and crime prevention measures. 
With respect to public housing only, this statement describes the PHA's 
plan for safety and crime prevention to ensure the safety of the public 
housing residents that it serves. The plan for safety and crime 
prevention must be established in consultation with the police officer 
or officers in command of the appropriate precinct or police 
departments, and the plan must provide, on a project-by-project or 
jurisdiction wide-basis, the measures necessary to ensure the safety of 
public housing residents.
    (1) The statement regarding the PHA's safety and crime prevention 
plan must include the following information:
    (i) A description of the need for measures to ensure the safety of 
public housing residents;
    (ii) A description of any crime prevention activities conducted or 
to be conducted by the PHA;
    (iii) A description of the coordination between the PHA and the 
appropriate police precincts for carrying out crime prevention measures 
and activities;
    (iv) The information required to be included by the Public Housing 
Drug Elimination Program regulations if the PHA expects to receive drug 
elimination program grant funds.
    (2) If HUD determines at any time that the security needs of a 
public housing project are not being adequately addressed by the PHA's 
plan, or that the local police precinct is not assisting the PHA with 
compliance with its crime prevention measures as described in the 
Annual Plan, HUD may mediate between the PHA and the local precinct to 
resolve any issues of conflict.
    (n) A statement of the PHA's policies and rules regarding ownership 
of pets in public housing. This statement describes the PHA's policies 
and requirements pertaining to the ownership of pets in public housing 
issued in accordance with section 31 of the U.S. Housing Act of 1937 
(42 U.S.C. 1437a-3).
    (o) Civil rights certification. (1) The PHA must certify that it 
will carry out its plan in conformity with title VI of the Civil Rights 
Act of 1964 (42 U.S.C. 2000d-2000d-4), the Fair Housing Act (42 U.S.C. 
3601-19), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
794), and title II of the Americans with Disabilities Act of 1990 (42 
U.S.C. 12101 et seq.), and also certify that it will affirmatively 
further fair housing. The certification is applicable to both the 5-
Year Plan and the Annual Plan.
    (2) PHAs shall be considered in compliance with the obligation to 
affirmatively further fair housing if they examine their programs or 
proposed programs, identify any impediments to fair housing choice 
within those programs, address those impediments in a reasonable 
fashion in view of the resources available, and work with local 
jurisdictions to implement any of the jurisdiction's initiatives to 
affirmatively further fair housing that require the

[[Page 8184]]

PHA's involvement, and maintain records reflecting these analyses and 
actions.
    (p) Recent results of PHA's fiscal year audit. The PHA's plan must 
include the results of the most recent fiscal year audit of the PHA 
conducted under section 5(h)(2) of the U.S. Housing Act of 1937 (42 U 
S.C. 1437c(h)).
    (q) A statement of asset management. This statement describes how 
the PHA will carry out its asset management functions with respect to 
the PHA's public housing inventory, including how the PHA will plan for 
long-term operating, capital investment, rehabilitation, modernization, 
disposition, and other needs for such inventory.
    (r) Additional information to be provided. PHAs also must include 
in their Annual Plan:
    (1) A table of contents that corresponds to the Annual Plan's 
components in the order listed in this section. The table of contents 
also must identify the location of any materials that are not being 
submitted with the Annual Plan;
    (2) An executive summary that provides a brief overview of the 
information that the PHA is submitting in its Annual Plan and relates 
the Annual Plan programs and activities to the PHA's mission and goals 
as described in the 5-Year Plan, and explains any substantial 
deviations of these activities from the 5-Year Plan; and
    (3) For all Annual Plans following submission of the first Annual 
Plan, a brief summary of the PHA's progress in meeting the mission and 
goals described in the 5-Year Plan.


Sec. 903.9  Must a troubled PHA include additional information in its 
Annual Plan?

    Yes. A PHA that is at risk of being designated as troubled or is 
designated as troubled under section 6(j)(2) of the U.S. Housing Act of 
1937 (42 U.S.C. 1437d(j)(2)) or under the Public Housing Assessment 
System (24 CFR part 901) must include its operating budget, and include 
or reference any applicable memorandum of agreement with HUD or other 
plan to improve performance and such other material as HUD may 
prescribe.


Sec. 903.11  Are certain PHAs eligible to submit a streamlined Annual 
Plan?

    (a) Yes, the following PHAs may submit a streamlined Annual Plan, 
as described in paragraph (b) of this section:
    (1) PHAs that are determined to be high performing PHAs;
    (2) PHAs with less than 250 public housing units (small PHAs) and 
that have not been designated as troubled under section 6(j)(2); and
    (3) PHAs that only administer tenant-based assistance and that do 
not own or operate public housing.
    (b) All streamlined plans must provide information on how the 
public may reasonably obtain additional information on the PHA policies 
contained in the standard Annual Plan, but excluded from their 
streamlined submissions. A streamlined plan must included the following 
information:
    (1) For high-performing PHAs, the streamlined Annual Plan must 
include the information required by Sec. 903.7(a), (b), (c), (d), (g), 
(h), (m), (n), (o), (p) and (r). The information required by 
Sec. 903.7(m) must be included only to the extent this information is 
required for PHA's participation in the public housing drug elimination 
program and the PHA anticipates participating in this program in the 
upcoming year.
    (2) For small PHAs that are not designated as troubled or that are 
not at risk of being designated as troubled, the streamlined Annual 
Plan must include the information required by Sec. 903.7(a), (b), (c), 
(d), (g), (h), (k), (m), (n), (o), (p) and (r). The information 
required by Sec. 903.7(k) must be include only to the extent that the 
PHA participates in homeownership programs under section 8(y). The 
information required by Sec. 903.7(m) must be included only to the 
extent this information is required for the PHA's participation in the 
public housing drug elimination program and the PHA anticipates 
participating in this program in the upcoming year.
    (3) For PHA's that administer only tenant-based assistance, the 
streamlined Annual Plan must include the information required by 
Sec. 903.7(a), (b), (c), (d), (f), (k), (l), (o), (p) and (r). The 
information required by Sec. 903.7(b) (financial resources) can be a 
statement of the programs the PHA administers and the estimated number 
of new families to be assisted and total families to be assisted in 
each program.


Sec. 903.13  What is a Resident Advisory Board and what is its role in 
development of the Annual Plan?

    (a) A Resident Advisory Board is a board whose membership is made 
up of individuals who adequately reflect and represent the residents 
assisted by the PHA. The role of the Resident Advisory Board (or 
Resident Advisory Boards) is to participate in the PHA planning process 
and to assist and make recommendations regarding the PHA plan. The PHA 
shall allocate reasonable resources to assure the effective functioning 
of Resident Advisory Boards.
    (b) Each PHA must establish one or more Resident Advisory Boards, 
and the membership on the board must adequately reflect and represent 
the residents assisted by the PHA.
    (1) To the extent a jurisdiction-wide resident council exists that 
complies with the tenant participation regulations in 24 CFR part 964, 
the PHA shall appoint the jurisdiction-wide resident council or its 
representatives as a Resident Advisory Board. If a jurisdiction-wide 
resident council does not exist but resident councils exist that comply 
with the tenant participation regulations, the PHA shall appoint such 
resident councils or their representatives to serve on Resident 
Advisory Boards, provided that the PHA may require that the resident 
councils choose a limited number of representatives.
    (2) Where the PHA has a tenant-based assistance program of 
significant size, the PHA shall assure that the Resident Advisory Board 
or Boards has reasonable representation of families receiving tenant-
based assistance and that a reasonable process is undertaken to choose 
this representation. Where resident councils do not exist which would 
adequately reflect and represent the residents assisted by the PHA, the 
PHA may appoint additional Resident Advisory Boards or Board members, 
provided that the PHA shall provide reasonable notice to residents and 
urge that they form resident councils that comply with the tenant 
participation regulations.
    (c) The PHA must consider the recommendations of the Resident 
Advisory Board or Boards in preparing the final Annual Plan. In 
submitting the final plan to HUD for approval, the PHA must include a 
copy of the recommendations made by the Resident Advisory Board or 
Boards and a description of the manner in which the PHA addressed these 
recommendations. Notwithstanding the 75-day limitation on HUD review, 
in response to a written request from a Resident Advisory Board 
claiming that the PHA failed to provide adequate notice and opportunity 
for comment, HUD may make a finding of good cause during the required 
time period and require the PHA to remedy the failure before final 
approval of the plan.


Sec. 903.15  What is the relationship of the public housing agency 
plans to the Consolidated Plan?

    The PHA must ensure that the Annual Plan is consistent with any 
applicable Consolidated Plan to the jurisdiction in which the PHA is 
located. The Consolidated Plan includes the Analysis

[[Page 8185]]

of Impediments to Fair Housing Choice. The PHA must submit a 
certification by the appropriate State or local officials that the 
Annual Plan is consistent with the Consolidated Plan and include a 
description of the manner in which the applicable plan contents are 
consistent with the Consolidated Plans.


Sec. 903.17  Must the PHA make public the contents of the plans?

    (a) Yes. The PHA's board of directors or similar governing body 
must conduct a public hearing to discuss the PHA plan (either the 5-
Year Plan or Annual Plan, or both as applicable) and invite public 
comment on the plan(s). The hearing must be conducted at a location 
that is convenient to the residents served by the PHA.
    (b) Not later than 45 days before the public hearing is to take 
place, the PHA must:
    (1) Make the proposed PHA plan(s) and all information relevant to 
the public hearing to be conducted, available for inspection by the 
public at the principal office of the PHA during normal business hours; 
and
    (2) Publish a notice informing the public that the information is 
available for review and inspection, and that a public hearing will 
take place on the plan, and the date, time and location of the hearing.


Sec. 903.19  When is the 5-Year Plan or Annual Plan ready for 
submission to HUD?

    A PHA may adopt its 5-Year Plan or its Annual Plan and submit the 
plan to HUD for approval only after:
    (a) The PHA has conducted the public hearing;
    (b) The PHA has considered all public comments received on the 
plan;
    (c) The PHA has made any changes to the plan, based on comments, 
after consultation with the Resident Advisory Board or other resident 
organization.


Sec. 903.21  May the PHA amend or modify a plan?

    A PHA, after submitting its 5-Year Plan or Annual Plan to HUD, may 
amend or modify any PHA policy, rule, regulation or other aspect of the 
plan. If the amendment or modification is a significant amendment or 
modification, the PHA:
    (a) May not adopt the amendment or modification until the PHA has 
duly called a meeting of its board of directors (or similar governing 
body) and the meeting, at which the amendment or modification is 
adopted, is open to the public; and
    (b) May not implement the amendment or modification, until 
notification of the amendment or modification is provided to HUD and 
approved by HUD in accordance with HUD's plan review procedures, as 
provided in Sec. 903.23.


Sec. 903.23  What is the process by which HUD reviews, approves, or 
disapproves an Annual Plan?

    (a) Review of the plan. When the PHA submits its Annual Plan to 
HUD, including any amendment or modification to the plan, HUD reviews 
the plan to determine whether:
    (1) The plan provides all the information that is required to be 
included in the plan;
    (2) The plan is consistent with the information and data available 
to HUD and with any applicable Consolidated Plan for the jurisdiction 
in which the PHA is located; and
    (3) The plan is not prohibited or inconsistent with the U.S. 
Housing Act of 1937 or any other applicable Federal law.
    (b) Disapproval of the plan. (1) HUD may disapprove a PHA plan, in 
its entirety or with respect to any part, or disapprove any amendment 
or modification to the plan, only if HUD determines that the plan, or 
one of its components or elements, or any amendment or modification to 
the plan:
    (i) Does not provide all the information that is required to be 
included in the plan;
    (ii) Is not consistent with the information and data available to 
HUD or with any applicable Consolidated Plan for the jurisdiction in 
which the PHA is located; and
    (iii) Is not consistent with all applicable laws and regulations.
    (2) Not later than 75 days after the date on which the PHA submits 
its plan, or the date on which the PHA submits its amendment or 
modification to the plan, HUD will issue written notice to the PHA if 
the plan has been disapproved. The notice that HUD issues to the PHA 
must state with specificity the reasons for the disapproval. HUD may 
not state as a reason for disapproval the lack of time to review the 
plan.
    (3) If HUD fails to issue the notice of disapproval on or before 
the 75th day after the PHA submits the plan, HUD shall be considered to 
have determined that all elements or components of the plan required to 
be submitted and that were submitted, and reviewed by HUD were in 
compliance with applicable requirements and the plan has been approved.
    (d) Public availability of the approved plan. Once a PHA's plan has 
been approved, a PHA must make its approved plan available for review 
and inspection, at the principal office of the PHA during normal 
business hours.


Sec. 903.25  How does HUD ensure PHA compliance with its plan?

    A PHA must comply with the rules, standards and policies 
established in the plans. To ensure that a PHA is in compliance with 
all policies, rules, and standards adopted in the plan approved by HUD, 
HUD shall respond appropriately to any complaint concerning PHA 
noncompliance with its plan. If HUD determines that a PHA is not in 
compliance with its plan, HUD will take necessary and appropriate 
action to ensure compliance by the PHA.

    Dated: February 1, 1999.
Harold Lucas,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-3651 Filed 2-17-99; 8:45 am]
BILLING CODE 4210-33-P