[Federal Register Volume 64, Number 116 (Thursday, June 17, 1999)]
[Proposed Rules]
[Pages 32782-32786]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15430]
[[Page 32781]]
_______________________________________________________________________
Part XI
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 245
Tenant Participation in Multifamily Housing Projects; Proposed Rule
Federal Register / Vol. 64, No. 116 / Thursday, June 17, 1999 /
Proposed Rules
[[Page 32782]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 245
[Docket No. FR-4403-P-01]
RIN 2502-AH32
Tenant Participation in Multifamily Housing Projects
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would amend HUD's regulations for tenant
participation in multifamily housing projects. Specifically, the
proposed rule would expand the number of categories of multifamily
housing projects in which tenants have the right to establish and
operate tenant organizations. The proposed rule would clarify the
reasonable activities that the owner of a multifamily housing project,
covered under this proposed rule, must allow tenants and tenant
organizers to engage in while organizing their co-tenants and operating
a tenant organization. The proposed rule would also clarify the
requirements for establishing and operating a tenant organization.
DATES: Comments Due Date: August 16, 1999.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Rules Docket Clerk, Office of the General
Counsel, Room 10276, U.S. Department of Housing and Urban Development,
451 Seventh Street, SW, Washington, DC 20410-0500. Comments should
refer to the above docket number and title. A copy of each comment
submitted will be available for public inspection and copying between
7:30 a.m. and 5:30 p.m. weekdays at the above address. Facsimile (FAX)
comments will not be accepted.
FOR FURTHER INFORMATION CONTACT: Willie Spearmon, Director, Office of
Business Products, Multifamily Housing Programs, U.S. Department of
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC
20410-8000; telephone (202) 708-3000 (this is not a toll-free number).
Hearing- or speech-impaired individuals may access this number via TTY
by calling the toll-free Federal Information Relay Service at (800)
877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
a. Tenant Participation in Multifamily Housing Projects
HUD supports the active involvement of tenants in creating and
maintaining a suitable living environment and in contributing to the
successful operation of their multifamily housing projects. This
proposed rule would amend HUD's regulations at 24 CFR part 245
(entitled ``Tenant Participation in Multifamily Housing Projects'') to
increase the number of categories of multifamily housing projects
covered by part 245. The rule would also clarify the reasonable
activities that tenants and tenant organizations may engage in and the
requirements for establishing and operating a tenant organization. The
amendments proposed by this rule are discussed below.
b. Increased Number of Categories of Multifamily Housing Projects
Covered
The statutory authority for part 245 is section 202 of the Housing
and Community Development Amendments of 1978 (Pub. L. 95-557, 92 Stat.
2080, 12 U.S.C. 1715z-1b) (1978 HCD Amendments Act). The coverage of
section 202 was expanded by section 183 of the Housing and Community
Development Act of 1987 (Pub. L. 100-242, 101 Stat. 1815) (1987 HCD
Act). This amendment added multifamily housing projects ``eligible for
assistance as described in * * * section 202 of the Housing Act of
1959'' (1959 Housing Act).
The coverage of section 202 of the 1978 HCD Amendments Act was
expanded again in 1998 by section 599 of the Departments of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1999 (Pub. L. 105-276, 112 Stat. 2461). This
amendment added multifamily housing projects that receive:
project-based assistance under section 8 of the United States
Housing Act of 1937 (42 U.S.C. 1437f) or enhanced vouchers under the
Low-Income Housing Preservation and Resident Homeownership Act of
1990, the provisions of the Emergency Low Income Housing
Preservation Act of 1987, or the Multifamily Assisted Housing Reform
and Affordability Act of 1997.
The proposed rule would revise Sec. 245.10 (entitled
``Applicability of part'') to reflect these various statutory
amendments to section 202 of the 1978 HCD Amendments Act. The proposed
rule would make the following changes to Sec. 245.10:
1. Paragraph (a)(2) (entitled ``Section 202 project'') would be
removed along with the accompanying definition of ``Section 202 Loans
for the Elderly or Handicapped BMIR Program'' from paragraph (c). These
paragraphs limited the type of Section 202 project covered by part 245.
They are no longer applicable because of section 183 of the 1987 HCD
Act, which amended section 202 of the 1978 HCD Amendments Act to
include coverage of all Section 202 projects (note: the term ``Section
202 projects'' refers to section 202 of the 1959 Housing Act).
2. Paragraphs (a)(4)-(a)(7) would be added. Each paragraph would
add a new category of multifamily housing project as follows:
------------------------------------------------------------------------
Would add multifamily housing projects
Paragraph receiving
------------------------------------------------------------------------
(a)(4).......................... Project-based assistance under section
8 of the United States Housing Act of
1937.
(a)(5).......................... Enhanced vouchers under the Low-Income
Housing Preservation and Resident
Homeownership Act of 1990, the
provisions of the Emergency Low
Income Housing Preservation Act of
1987, or the Multifamily Assisted
Housing Reform and Affordability Act
of 1997.
(a)(6).......................... Section 202 Direct Loan program or the
Section 202 Supportive Housing for
the Elderly program.
(a)(7).......................... Section 811 Supportive Housing for
Persons with Disabilities program.
------------------------------------------------------------------------
Section 245.10(a)(7) of this proposed rule would add Section 811
multifamily housing projects even though these projects are not
explicitly mentioned in section 202 of the 1978 HCD Amendments Act. As
noted, section 183 of the 1987 HCD Act expanded the scope of section
202 of the 1978 HCD Amendments Act to include multifamily housing
projects described in section 202 of the 1959 Housing Act. At the time
of the 1987 amendments, section 202 of the 1959 Housing Act included
multifamily housing projects that are currently part of the Section 811
program. The Section 811 program was split out of section 202 of the
1959 Housing Act in 1990 by the Cranston-Gonzalez National Affordable
Housing Act (Public Law 101-625, 104 Stat. 4079). HUD does not believe
that Congress intended to narrow the coverage of section 202 of the
1978 HCD Amendments Act to limit the ability of Section 811 residents
to participate in tenant organization activities. HUD, therefore, is
proposing to revise part 245 to reflect the coverage of section 202 of
the 1959 Housing Act before its amendment in 1990.
[[Page 32783]]
c. Protected Activities
The role of the tenant organization is, among other things, to
increase tenant participation and awareness in creating and maintaining
a positive living environment. In order to achieve this goal, the
proposed rule would require that owners of multifamily housing
projects, covered under this proposed rule, allow tenants and tenant
organizers to conduct reasonable activities related to the
establishment and operation of a tenant organization.
The existing regulations preclude owners of multifamily housing
projects from impeding the reasonable efforts of tenants to organize,
but they are not specific with respect to what actions may constitute
reasonable efforts. This lack of specificity, in a number of cases, has
led to confusion. This confusion has contributed to disputes between
owners and tenants and between owners and those attempting to organize
tenants.
In an attempt to avoid this confusion, the proposed rule would
retain the current reasonableness standard while listing specific
activities that are protected. The list of activities is not
exhaustive, but provides specific examples that would assist tenants,
owners, and tenant organizers to determine what constitutes a protected
activity under the part 245 regulations. The proposed rule would still
require that owners of multifamily housing projects allow tenants and
tenant organizers to conduct reasonable activities related to the
establishment and operation of a tenant organization, in addition to
the specific activities listed in the proposed rule.
Protected activities listed in the proposed rule include the
distribution or posting of information regarding tenant organizations,
initiating contact with tenants, assisting tenants to participate in
tenant organization activities, convening regularly scheduled meetings
on site, and formulating responses to various owner proposals such as
rent increases, conversion from project-based paid utilities to tenant-
paid utilities, tenant utility allowance reductions, conversion of
residential units to non-residential use, cooperative housing, or
condominiums, and major capital additions.
d. Tenant Organizers
Under the proposed rule, a tenant organization must consist of the
tenants of a multifamily housing project covered under this proposed
rule. However, tenants may have the assistance of tenant organizers who
need not be tenants of the housing project. Where a tenant organizer is
not a tenant of the housing project and the owner of the housing
project has a consistently enforced policy against door-to-door
solicitation, the tenant organizer must be accompanied by a tenant
while conducting tenant organization related activities on the housing
project property.
Where the tenant organizer is not a tenant of the housing project
and the owner of the housing project has a policy favoring
solicitation, the non-tenant tenant organizer must likewise be afforded
the same privileges and rights of access as other uninvited outside
parties would have in the normal course of operations. If the owner of
the housing project does not have a consistently enforced policy
against solicitation, the housing project shall, for purposes of the
tenant organizer's right to access, be treated as if it has a policy
favoring solicitation.
e. Properly Established Tenant Organizations
The proposed rule would require owners of multifamily housing
projects, covered under the proposed rule, to give reasonable
consideration to concerns raised by a properly established tenant
organization. Further, the owner must recognize the right of tenants to
establish or replace a tenant organization. Under the proposed rule, a
tenant organization has been properly established, if it has been
established by the tenants of a multifamily housing project covered
under 24 CFR 245.10 for the purpose of addressing the terms and
conditions of their tenancy, has adopted written procedures in
compliance with the proposed rule, and has elected a governing board in
compliance with the proposed rule.
f. Additional Tenant Organizations
While HUD believes that, generally, one established tenant
organization, elected by the tenants, presents the most effective means
of providing a voice for tenants in relations with multifamily housing
project owners, management agents, and HUD, HUD recognizes the fact
that the established organization may not always adequately represent
the concerns and opinions of all of the tenants.
To address this issue, the proposed rule requires owners and
management agents to recognize the rights of tenants to organize to
replace the leadership of an existing tenant organization through
recall elections, to establish issue-based organizations in response to
specific tenants' issues, or to establish additional tenant
organizations. A tenant organizer may assist tenants in organizing a
recall election or establishing additional tenant organizations.
g. Enforcement Through Regulatory Agreements
If an owner does not comply with the provisions of its regulatory
agreement with HUD, HUD has the right to declare a breach of the
agreement. Regulatory agreements for most current insured mortgages
mandate that owners adhere to HUD management requirements. The right of
tenants to organize is such a requirement.
Notwithstanding this existing general enforcement authority, in
order to provide greater clarity to owners, upon publication of a final
rule, HUD intends to revise regulatory agreements to include the right
of tenants to organize explicitly in the agreement itself. HUD will
have the opportunity to revise the regulatory agreements during the
development of new housing projects or whenever an owner seeks
assistance or relief that requires an amendment to an existing
regulatory agreement. For example, this might occur in a partial
payment of claim, a bond refunding, or transfer of physical assets
(sale of property). In addition to revising the regulatory agreements,
HUD expects to take other appropriate actions (such as updating its
handbooks and providing instructions to field office staff) to assist
tenants and owners in implementing this rule.
h. Public Comments on This Proposed Rule
In order to reach consensus on the issue of the rights of tenants
to organize multiple tenant organizations, and in the spirit of
partnership and cooperation, HUD invites comments on this proposed rule
from the public, particularly representatives of housing project
owners, management agents, tenants and tenant groups, and all other
interested parties. HUD will consider all of the comments in the
development of the final rule.
II. Findings and Certifications
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for Federal agencies to
assess the effects of their regulatory actions on State, local, and
tribal governments and the private sector. This proposed rule does not
impose any Federal mandates on any State, local, or tribal governments
or the private sector within the meaning of the UMRA.
[[Page 32784]]
Environmental Impact
In accordance with 24 CFR 50.19(c)(1) of HUD's regulations, this
proposed rule does not direct, provide for assistance or loan and
mortgage insurance for, or otherwise govern or regulate, real property
acquisition, disposition, leasing, rehabilitation, alteration,
demolition, or new construction, or establish, revise, or provide for
standards for construction or construction materials, manufactured
housing, or occupancy. Therefore, this proposed rule is categorically
excluded from the requirements of the National Environmental Policy Act
(42 U.S.C. 4321 et seq.).
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this rule and in so doing
certifies that this rule would not have a significant economic impact
on a substantial number of small entities.
The proposed rule is exclusively concerned with the procedures
governing tenant participation in multifamily housing projects and
would have minimal economic impact on the owners of covered projects.
Although the rule would require that owners permit tenants and tenant
organizers to conduct reasonable activities related to the
establishment or operation of tenant organizations, it would not impose
any affirmative obligations on owners to assist tenant organizations in
the conduct of these activities. For example, the owners of covered
projects would not be required to contribute, economically or
otherwise, to the preparation or distribution of leaflets and other
informational materials developed by a tenant organization.
The proposed rule would permit tenant organizations to develop
responses to economic proposals made by owners, such as rent increases
and major capital additions. While HUD encourages owners to take these
responses into consideration, the proposed rule would not require that
owners modify or abandon their proposals based on the recommendations
made by the tenant organization.
Although HUD has determined that this proposed rule would not have
a significant economic impact on a substantial number of small
entities, HUD welcomes comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
in this preamble.
Federalism Impact
The General Counsel, as the Designated Official for HUD under
Section 6(a) of Executive Order 12612 (entitled ``Federalism''), has
determined that this rule would not have federalism implications
concerning the division of local, State, and Federal responsibilities.
The rule is exclusively concerned with the procedures governing tenant
participation in multifamily housing projects. Specifically, this
proposed rule would expand the categories of multifamily housing
projects in which tenants have the right to establish and operate
tenant organizations. The proposed rule would also clarify the
requirements for establishing and operating a tenant organization and
the activities that owners of multifamily housing projects must allow
tenant organizations to engage in. No programmatic or policy changes
will result from this rule that would affect the relationship between
the Federal government and State and local governments.
Executive Order 12866, Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this proposed
rule under Executive Order 12866 (entitled ``Regulatory Planning and
Review''). OMB determined that this proposed rule is a ``significant
regulatory action,'' as defined in section 3(f) of the Order (although
not economically significant, as provided in section 3(f)(1) of the
Order). Any changes made to the proposed rule subsequent to its
submission to OMB are identified in the docket file, which is available
for public inspection in the office of the Rules Docket Clerk, Room
10276, U.S. Department of Housing and Urban Development, 451 Seventh
Street, SW, Washington, DC 20410-0500.
List of Subjects in 24 CFR Part 245
Condominiums, Cooperatives, Grant programs--housing and community
development, Loan programs--housing and community development, Low and
moderate income housing, Rent subsidies, Reporting and recordkeeping
requirements, Utilities.
For the reasons discussed in this preamble, HUD proposes to amend
24 CFR part 245 as follows:
PART 245--TENANT PARTICIPATION IN MULTIFAMILY HOUSING PROJECTS
1. The authority citation for 24 CFR part 245 continues to read as
follows:
Authority: 12 U.S.C. 1715z-1b; 42 U.S.C. 3535(d).
2. Amend Sec. 245.10 as follows:
a. Remove paragraph (a)(2);
b. Remove from paragraph (c) the definition of ``Section 202 Loans
for the Elderly or Handicapped BMIR Program'';
c. Redesignate paragraphs (a)(3) and (a)(4) as paragraphs (a)(2)
and (a)(3), respectively;
d. Revise redesignated paragraphs (a)(2)(ii) and (a)(3); and
e. Add paragraphs (a)(4)-(7) to read as follows:
Sec. 245.10 Applicability of part.
(a) * * *
(2) * * *
(ii) Was sold by the Secretary subject to a mortgage insured or
held by the Secretary and an agreement to maintain the low-and
moderate-income character of the project;
(3) State or local housing finance agency project. The project
receives assistance under section 236 of the National Housing Act (12
U.S.C. 1715z-1) or the Rent Supplement Program administered through a
State or local housing finance agency, but does not have a mortgage
insured under the National Housing Act or held by the Secretary.
Subject to the further limitation in paragraph (b) of this section,
only the provisions of subparts A and C of this part and of subpart D
of this part for requests for approval of a conversion of a project
from project-paid utilities to tenant-paid utilities or of a reduction
in tenant utility allowances, apply to a mortgagor of such a project;
(4) The project receives project-based assistance under section 8
of the United States Housing Act of 1937;
(5) The project receives enhanced vouchers under the Low-Income
Housing Preservation and Resident Homeownership Act of 1990, the
provisions of the Emergency Low Income Housing Preservation Act of
1987, or the Multifamily Assisted Housing Reform and Affordability Act
of 1997;
(6) The project receives assistance under the Section 202 Direct
Loan program or the Section 202 Supportive Housing for the Elderly
program; or
(7) The project receives assistance under the Section 811
Supportive Housing for Persons with Disabilities program.
* * * * *
Subpart B--Tenant Organizations
3. Add Sec. 245.100 to read as follows:
Sec. 245.100 Right of tenants to organize.
The tenants of a multifamily housing project covered under
Sec. 245.10 have the
[[Page 32785]]
right to establish and operate a tenant organization for the purpose of
addressing the terms and conditions of their tenancy.
4. Revise Secs. 245.105 and 245.110 to read as follows:
Sec. 245.105 Recognition of tenant organizations.
Owners of multifamily housing projects covered under Sec. 245.10,
and their agents, must:
(a) Recognize properly established tenant organizations; and
(b) Give reasonable consideration to concerns raised by properly
established tenant organizations.
Sec. 245.110 Properly established tenant organizations.
A tenant organization has been properly established if it has:
(a) Been established by the tenants of a multifamily housing
project covered under Sec. 245.10 for the purpose of addressing the
terms and conditions of their tenancy;
(b) Adopted written procedures in compliance with Sec. 245.115; and
(c) Elected a governing board in compliance with Sec. 245.120.
5. Add Secs. 245.115, 245.120, 245.125, 245.130, 245.135, 245.140,
245.145, 245.150, 245.155, and 245.160 to read as follows:
Sec. 245.115 Constitution or by-laws.
A tenant organization must adopt written procedures either in the
form of a constitution or in the form of by-laws. A tenant organization
may determine the contents and structure of its constitution or by-
laws, however, the constitution or by-laws must, at a minimum, contain:
(a) Procedures for the election of a governing board, which assure
fair elections;
(b) Procedures for instituting a recall election to remove a
governing board or board member;
(c) The percentage of qualified voting members needed to hold a
recall election, which may not be less than ten percent;
(d) The frequency of elections;
(e) The qualifications needed to run for a seat on the governing
board; and
(f) The structure of the governing board.
Sec. 245.120 Governing board.
(a) Structure. A tenant organization may determine the structure of
its governing board, however, the governing board must, at a minimum:
(1) Be democratically elected; and
(2) Consist of at least five members whose terms are staggered.
(b) Qualification to serve on governing board. A tenant
organization may determine the qualifications required to serve on its
governing board, however, a candidate for a seat on the governing board
must, at a minimum be:
(1) A qualified voting member; and
(2) In compliance with the lease.
(c) Term length and term limits. A tenant organization may
determine the length of a term for seats on the governing board,
however, a seat on a governing board may not be held for more than
three consecutive years. A tenant organization may determine whether a
person serving on the governing board may be limited in the number of
terms served.
Sec. 245.125 Qualified voting member.
(a) A person is a qualified voting member and may vote in any
election involving the activities of a tenant organization, if the
person is:
(1) Eighteen years of age or older; and
(2) Named in the lease for an apartment unit in the multifamily
housing project represented by the tenant organization.
(b) A qualified voting member may designate another person to vote
in an election, if that person is:
(1) Eighteen years of age or older; and
(2) Resides in the same apartment unit as the qualified voting
member.
Sec. 245.130 Number of votes.
Each apartment unit in a multifamily housing project receives one
vote per election, regardless of the number of occupants of that
apartment unit.
Sec. 245.135 Election notices.
All qualified voting members of a tenant organization must be given
at least thirty days notice of any elections relating to the activities
of the tenant organization. This notice must include:
(a) A description of the tenant organization's election procedures;
(b) A description of the election eligibility requirements; and
(c) The dates of nominations and elections.
Sec. 245.140 Protected activities.
(a) Owners of multifamily housing projects covered under
Sec. 245.10, and their agents, must allow tenants and tenant organizers
to conduct the following activities related to the establishment or
operation of a tenant organization:
(1) Distributing leaflets in lobby areas;
(2) Placing leaflets at or under tenants' doors;
(3) Distributing leaflets in common areas;
(4) Initiating contact with tenants;
(5) Conducting an initial door-to-door survey of tenants to solicit
interest in establishing a tenant organization and to offer information
about tenant organizations;
(6) Posting information on bulletin boards;
(7) Assisting tenants to participate in tenant organization
activities;
(8) Convening regularly scheduled tenant organization meetings in a
space on site and accessible to tenants; and
(9) Formulating responses to owner's requests for:
(i) Rent increases;
(ii) Partial payment of claims;
(iii) The conversion from project-based paid utilities to tenant-
paid utilities;
(iv) A reduction in tenant utility allowances;
(v) Converting residential units to non-residential use,
cooperative housing, or condominiums;
(vi) Major capital additions; and
(vii) Prepayment of loans.
(b) In addition to the activities listed in paragraph (a) of this
section, owners of multifamily housing projects covered under
Sec. 245.10, and their agents, must allow tenants and tenant organizers
to conduct other reasonable activities related to the establishment or
operation of a tenant organization.
Sec. 245.145 Meeting space.
(a) Owners of multifamily housing projects covered under
Sec. 245.10, and their agents, must reasonably make available the use
of any community room or other available space appropriate for meetings
that is part of the multifamily housing project when requested by:
(1) Tenants or a tenant organization and used for activities
related to the operation of the tenant organization; or
(2) Tenants seeking to establish a tenant organization or
collectively address the terms and conditions of their tenancy.
(b) Tenant and tenant organization meetings must be accessible to
persons with disabilities.
(c) Fees. An owner of a multifamily housing project covered under
Sec. 245.10 may charge a fee, approved by the Secretary as may normally
be imposed for the use of such facilities in accordance with procedures
prescribed by the Secretary, for the use of meeting space. An owner may
waive this fee.
Sec. 245.150 Tenant organizers.
(a) A tenant organizer is a tenant or non-tenant who assists
tenants in establishing and operating a tenant organization.
(b) Owners of multifamily housing projects covered under
Sec. 245.10, and their agents, must allow tenant
[[Page 32786]]
organizers to assist tenants in establishing and operating tenant
organizations.
(c) Non-tenant tenant organizers. (1) If a multifamily housing
project covered under Sec. 245.10 has a consistently enforced policy
against solicitation, then a non-tenant tenant organizer must be
accompanied by a tenant while on the property of the multifamily
housing project.
(2) If a multifamily housing project covered under Sec. 245.10 has
a policy favoring solicitation, any non-tenant tenant organizer must be
afforded the same privileges and rights of access as other uninvited
outside parties in the normal course of operations. If the project does
not have a consistently enforced policy against solicitation, the
project shall be treated as if it has a policy favoring solicitation.
Sec. 245.155 Tenant's right not to be re-solicited.
A tenant has the right to not be re-solicited regarding
participation in a tenant organization.
Sec. 245.160 Additional tenant organizations.
(a) There may be more than one tenant organization for each
multifamily housing project covered under Sec. 245.10.
(b) Owners of multifamily housing projects covered under
Sec. 245.10, and their agents, must recognize the rights of tenants to
organize to replace the leadership of an existing tenant organization
through recall elections, to establish issue-based organizations in
response to specific tenants' issues, and to establish additional
tenant organizations. A tenant organizer may assist tenants in
organizing a recall election or establishing additional tenant
organizations.
Dated: March 25, 1999.
William C. Apgar,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 99-15430 Filed 6-16-99; 8:45 am]
BILLING CODE 4210-27-P