[Federal Register Volume 64, Number 203 (Thursday, October 21, 1999)]
[Rules and Regulations]
[Pages 56844-56867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27302]



[[Page 56843]]

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Part II





Department of Housing and Urban Development





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24 CFR Part 903



Public Housing Agency Plans; Final Rule

  Federal Register / Vol. 64, No. 203 / Thursday, October 21, 1999 / 
Rules and Regulations  

[[Page 56844]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 903

[Docket No. FR-4420-F-05]
RIN 2577-AB89


Public Housing Agency Plans

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

ACTION: Final rule.

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SUMMARY: On February 18, 1999, HUD published an interim rule 
implementing section 511 of the Quality Housing and Work Responsibility 
Act of 1998. Section 511 introduces the public housing agency (PHA) 
plans--a 5-Year Plan and an Annual Plan. Through these plans a 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. This rule 
makes final the policies and procedures described in the February 18, 
1999 interim rule, taking into consideration the public comments 
received on the interim rule.

DATES: Effective Date: November 22, 1999.

FOR FURTHER INFORMATION CONTACT: For further information contact Rod 
Solomon, Deputy Assistant Secretary, 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) 708-0713 (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. Background

A. The February 18, 1999 Interim Rule

    On February 18, 1999 (64 FR 8170), HUD published an interim rule to 
implement section 511 of the Quality Housing and Work Responsibility 
Act of 1998 (Public law 105-276, approved October 21, 1998; 112 Stat. 
2461) (referred to as the ``Public Housing Reform Act''). Section 511 
of the Public Housing Reform Act, which added a new section 5A to the 
U.S. Housing Act of 1937 Act (42 U.S.C. 1437 et seq; see 1437c-1), 
introduces the public housing agency (PHA) plans--a 5-Year Plan and an 
Annual Plan. Through these plans a 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 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 (particularly the 
needs of the families they serve) and to design long-range and short-
range strategies to address those needs.
    The February 18, 1999 interim rule established the initial 
procedures and requirements for development, submission and 
implementation of the PHA plans. The interim rule became effective on 
March 22, 1999, and is codified at 24 CFR part 903 (entitled ``Public 
Housing Agency Plans''). The preamble to the February 18, 1999 interim 
rule described in detail the provisions of 24 CFR part 903. This 
preamble to the final rule does not repeat that description.

B. Electronic Template for the PHA Plans

    In the preamble to the February 18, 1999 interim rule, HUD 
announced that it would develop software and eventually require 
electronic submission of the PHA Plan that would provide uniform 
formats and layouts. On July 30, 1999, HUD announced the availability 
of the PHA Plan Template, including instructions and supplemental 
guidance on preparation and submission of PHA Plans. The template is 
currently provided as a word processing document that will be 
downloaded by PHAs, completed, and submitted to HUD via the Internet. 
HUD's goal is to quickly transform the PHA Plans into an on-line 
submission system that will further facilitate streamlined PHA 
submissions to HUD. By using the electronic template, PHAs will provide 
responses to a number of structured questions designed to provide the 
most relevant data regarding local operations in a concise manner.
    The PHA Plan template also serves as a central reference point for 
very detailed information about the PHA's operations and activities. 
This is accomplished through the template's listing of required 
``supporting documents'' that must be available locally for public 
review and serve as a resource library for the community, while 
eliminating the need for extensive submissions to HUD. The PHA Plan 
template is available at HUD's homepage website at http://www.hud.gov/
pih/pha/plans/phaps-home.html. In keeping with HUD's move to an 
electronic government, the PHA Plan website will become the primary 
source of information and resources regarding the PHA Plans. In 
addition, this PHA Plans website will serve as the location from which 
agencies download the electronic PHA Plan template for their use in 
developing the Plans. Once completed and ready for submission, PHAs 
will transmit the electronic PHA Plans to HUD via the HUD internet 
site. After HUD approval, these Plans will be placed on display on this 
same webpage.

C. The September 21, 1999 Amendments to the Interim Rule

    On September 21, 1999 (64 FR 51045), HUD published a rule making 
two amendments to the February 18, 1999 interim rule. First, the 
September 21, 1999 rule amended Sec. 903.3 to extend the due date for 
initial PHA plan submissions made by PHAs with fiscal years beginning 
on January 1, 2000. Specifically, the September 21, 1999 rule provides 
that these PHAs must submit their first PHA plans to HUD by December 1, 
1999. Second, the September 21, 1999 rule amended Sec. 903.23 to add a 
new paragraph (c) which provides that, for purposes of the submission 
of the first PHA plans, the date on which the PHA submits its plan will 
be considered to be the submission due date. This final rule reflects 
the changes made by the September 21, 1999 document.
    Section II of this preamble highlights the significant changes made 
to the February 18, 1999 interim rule at this final rule stage. Section 
III of the preamble discusses the basic objectives of the PHA planning 
process. Section IV of the preamble discusses the participation of 
PHAs, residents, and other groups in this rulemaking through public 
forums held on this rule. Section V of the preamble discusses the 
issues raised on the rule by the groups that attended four public 
forums and the issues raised by the members of the public that 
commented on the rule during the 60-day public comment period.

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II. Significant Changes Between the February 18, 1999 Interim Rule 
and This Final Rule

    This rule makes final the policies and procedures contained in the 
February 18, 1999 interim rule, and takes into consideration the public 
comments received on the interim rule. The significant changes made to 
the interim rule are described below.
     In Sec. 903.1 (What are the Public Housing Agency Plans?) 
paragraph (c) is revised in this rule to note that HUD also may 
prescribe the format of certain required attachments to be submitted 
with the PHA Plan or documents to be made available locally, but not 
submitted.
     Section 903.3 (When Must a PHA Submit the Plans to HUD?) 
reflects the changes that were made by the September 21, 1999 rule, 
discussed in Section II.B of this preamble.
     In Sec. 903.7 (What Information Must a PHA Provide in the 
Annual Plan?), HUD removed the language in the introductory paragraph 
that lists the information that need not be included in the first 
Annual Plan. This paragraph is revised in this final rule to provide 
that HUD will advise PHAs by separate notice of the information that 
must be included in the first Annual Plan, as well as any special 
instructions or directions that may be applicable to first year filing 
of the Annual Plan.
    In this introductory paragraph, HUD also has added language to 
clarify that the Annual Plan must be consistent with the goals and 
objectives of the 5-Year Plan.
    In Sec. 903.7(a)(2), HUD added language to require PHAs to make 
reasonable efforts to identify the housing needs of each group listed 
in paragraph (a)(1) of this section based on information provided by 
the applicable Consolidated Plan, information provided by HUD, and 
generally available data.
    In Sec. 903.7(b) (statement of financial resources), HUD removed 
the word ``significant'' to describe resources that PHAs must list, and 
revised this language to provide that PHAs must list, by general 
categories, their resource commitments, such as PHA operating, capital, 
and other proposed resources.
    In Sec. 903.7(c) (statement of the PHA's policies that govern 
eligibility, selection and admissions), HUD has added language to 
paragraph (c)(2)(i) that simplifies and clarifies the provisions 
regarding deconcentration of poverty and income-mixing. Most 
importantly, HUD has clarified that the initiative applies to all 
family (general occupancy) developments; and that with respect to the 
identification of families, developments and buildings as higher income 
or lower income, PHAs that use a dividing line of the average income in 
these developments will be considered to be in compliance with the law.
    With respect to the actions then to be taken, PHAs may offer 
incentives to eligible families that would help accomplish the 
deconcentration and income mixing objectives. Skipping of a family on a 
waiting list to reach another family with a lower or higher income is 
required, provided that such skipping is uniformly applied. Such 
skipping must be adopted by a PHA to the extent necessary to implement 
the statute's requirements. Skipping families is consistent with site-
based and community-wide waiting lists. Admissions policies related to 
deconcentration do not impose specific quotas.
    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 Act. Of course, PHA policies must be in writing and 
followed consistently, and must affirmatively further fair housing.
    In Sec. 903.7(c)(1)(A), HUD has revised this paragraph to provide 
that the MTCS occupancy data upon which the PHA must assess changes in 
racial, ethnic or disability-related tenant composition, has been 
confirmed to be complete and accurate by an independent audit or is 
otherwise satisfactory to HUD.
    In Sec. 903.7(c)(1)(B), HUD revised this paragraph to provide that 
at least every three years (as opposed to biannually as required by the 
interim rule), PHAs must use independent testers or means satisfactory 
to HUD to assure that the site-based waiting list is not being 
implemented in a discriminatory manner.
    In Sec. 903.7(e) (statement of the PHA's operation and management), 
HUD revised paragraph (e)(1) to reflect that PHAs need only list (not 
describe) their rules, standards and policies that govern maintenance 
and management of their housing.
    In Sec. 903.7(g) (statement of the capital improvements needed), 
HUD revised the last sentence of this paragraph to state that PHAs 
receiving capital funding are required to include 5-year plans covering 
large capital items. This will both facilitate basic capital planning 
and asset management, and allow more flexible use of capital funds by 
increasing the number of items that have been subject to public review.
    In Sec. 903.7(h), (i), (j), and (k) which concern, respectively, 
statements pertaining to demolition and/or disposition, designated 
housing, required or voluntary conversion, and homeownership programs, 
HUD added language to each of these paragraphs to clarify that the 
application and approval processes discussed in these paragraphs are 
separate application and approval processes from the PHA Annual Plan 
submission and approval process.
    In Sec. 903.7(h), HUD has added a new paragraph concerning 
submission of an interim plan for demolition/disposition that was 
previously described in the preamble to the February 18, 1999 interim 
rule.
    In Sec. 903.7(l) (statement of the PHA's community service and 
self-sufficiency programs), HUD added language that requires the PHA to 
address any cooperation agreements, as described by section 12(d)(7) of 
the 1937 Act that the PHA has entered into or plans to enter into. This 
statutory section requires the PHA to make best efforts to enter into 
cooperation agreements with State, local, and other agencies that 
provide assistance to target supportive services to covered families 
and provide information to facilitate administration of requirements 
for community service and tying rents to welfare compliance.
    In Sec. 903.7(m), HUD revised paragraph (1)(iv) of this section to 
clarify that if a PHA expects to receive public housing drug 
elimination grant funds, the information required to be included by the 
Public Housing Drug Elimination Program regulations must be submitted 
with the PHA Plan.
    In Sec. 903.7(q) (statement of asset management), HUD clarifies 
that the PHA need not repeat information concerning asset management 
that is covered by other plan components.
    In Sec. 903.7(r) (additional information to be provided), HUD 
removed the requirement to submit a Table of Contents and Executive 
Summary. HUD's template eliminates the necessity of a separate 
requirement in the

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regulation for a table of contents or executive summary.
    In Sec. 903.7(r), HUD adds language to provide that a PHA must 
identify in the Annual Plan the basic criteria that a PHA will use to 
determine what constitutes a ``substantial deviation'' from the 5-Year 
Plan, and a ``significant amendment or modification'' to either the 5-
Year Plan or Annual Plan for purposes of Sec. 903.21. HUD also added 
language to provide that a PHA must include in the PHA plan such other 
information as HUD may request. HUD will advise PHAs of any additional 
information through advance notice.
     In Sec. 903.9 (Must a Troubled PHA Include Additional 
Information in its Annual Plan?), HUD has added a reference to the 
regulations of the Public Housing Management Assessment Program (PHMAP) 
(the predecessor to HUD's new assessment system, the Public Housing 
Assessment System (PHAS)) in recognition that some PHAs may have been 
designated as troubled under the PHMAP regulations (24 CFR part 901).
     In Sec. 903.11 (Are Certain PHAs Eligible to Submit a 
Streamlined Annual Plan?), HUD added, in paragraph (b)(2), a cross 
reference to section 6(j)(2) of the 1937 Act that addresses PHAs at 
risk of being troubled.
     In Sec. 903.13 (What Is a Resident Advisory Board and What 
Is Its Role in Development of the Annual Plan?), HUD revised paragraph 
(a)(1) to more closely track the statutory language. In paragraph 
(a)(2), HUD added language concerning the reasonable resources to be 
provided to Resident Advisory Boards by PHAs. In HUD's Capital Fund 
Formula proposed rule, published on September 14, 1999 (64 FR 49924), 
HUD advised in the preamble to this proposed rule that it would clarify 
in the PHA Plan final rule that reasonable resources for the Resident 
Advisory Boards must provide reasonable means for them to become 
informed on programs covered by the PHA Plan, to communicate in writing 
and by telephone with assisted families and hold meetings with those 
families, and to access information regarding covered programs on the 
internet, taking into account the size and resources of the PHA.
    In Sec. 903.13(b)(1), HUD provides an exception to the requirement 
to appoint a jurisdiction-wide resident council. This language as 
revised provides that if 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 the Resident Advisory Board, except that members 
shall be added or another Resident Advisory Board formed to provide for 
reasonable representation of families receiving tenant-based assistance 
where necessary.
    In Sec. 903.13(b)(2), HUD clarifies that a tenant-based assistance 
program of significant size is one that is 20% or more of the PHA's 
assisted households.
    In Sec. 903.13(c), HUD clarifies that the PHA must consider the 
recommendations of the Resident Advisory Board or Boards in preparing 
not only the final Annual Plan but also any significant amendment or 
modification to the Annual Plan. Section 511(g)(2) of the Public 
Housing Reform Act imposes this requirement.
     In Sec. 903.15 (What is the Relationship of the Public 
Housing Agency Plans to the Consolidated Plan), HUD has revised this 
section to allow PHAs, subject to HUD approval, to change their fiscal 
years to encourage coordination with local Consolidated Plans.
     For Sec. 903.17, HUD changed the title of this section to 
read ``What is the Process for Obtaining Public Comment on the Plans?'' 
In paragraph (b) of this section, HUD clarifies that not only the 
proposed PHA plans, but all attachments and documents related to the 
plans must be available for review by the public. HUD also added a new 
paragraph (c) to require PHAs to conduct reasonable outreach activities 
to encourage broad public participation in the PHA plans.
    In Sec. 903.21, HUD added a new paragraph (b) to clarify that any 
significant amendment or modification to a PHA Plan is subject to the 
requirements of Secs. 903.13, 903.15, and 903.17. As noted earlier, 
this requirement is consistent with section 511(g)(2) of the Public 
Housing Reform Act.
    In Sec. 903.23, HUD added a new paragraph (b)(4) to clarify that a 
plan deemed approved as a result of HUD's failure to respond by the 
75th day after the PHA's submission does not apply to the plan of a 
troubled PHA. This provision is consistent with section 511(i)(4)(A) of 
the Public Housing Reform Act. In paragraph (d) of this section, HUD 
added language to clarify that not only the approved PHA plan, but all 
attachments and documents related to the approved plan must be 
available for review by the public.
    In addition to these changes, HUD made editorial changes to certain 
provisions of the regulation.

III. The Goals of the PHA Plans--Comprehensive Planning; Local 
Accountability; Reduction in Submissions; and Increased Flexibility

    The PHA plan concept is based on the highly successful consolidated 
planning process used for HUD's community planning and development 
programs. Like the Consolidated Plan for CPD programs, the PHA 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 
PHA plans involve consultation with affected groups in the development 
of the plan. Through this planning mechanism, PHAs will make more 
efficient use of Federal assistance, more effectively operate their 
programs, and better serve their residents.
    HUD has strived, in developing its PHA plan regulations, to keep 
the plan submission requirements complete but simple. A significant 
step in meeting this objective is HUD's issuance of the electronic 
template for the PHA Plans (as discussed earlier in this preamble). The 
electronic template with its ``question and answer'' format provides a 
comprehensive yet easy mechanism for PHAs to record and submit the 
information required for the PHA Plans.
    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. For 
example, see HUD's September 14, 1999 final rule regarding formula 
allocation for the Public Housing Drug Elimination Program (64 FR 
4990), which provides that PHAs must submit their drug elimination 
plans with their PHA Annual Plan. In addition, the process for 
distributing capital funds is being combined with the PHA Plan process. 
(HUD's proposed rule on the allocation of capital funds was published 
on September 14, 1999 at 64 FR 49924.) HUD intends that the new PHA 
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. This 
will assist PHAs in planning in a comprehensive manner and will 
expedite the release of public housing funds.
    Further, as part of the HUD 2020 Management Reform effort, HUD is

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moving toward electronic reporting for all required submissions under 
its programs. 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 believes 
that its electronic template for the PHA Plans is a significant first 
step in achieving these objectives.

IV. Public Participation in the Development of this Final Rule

    Section 511 of the Public Housing Reform Act requires that before 
issuance of a final rule, HUD seek the recommendations on 
implementation of the PHA 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 the February 18, 1999 interim rule, HUD specifically 
invited recommendations on implementation of the PHA plans from the 
three groups specified in the statute, and included under the third 
category, representatives of affected communities (See preamble 
discussion of the February 18, 1999 interim rule at 64 FR 8170).
    In order to ensure broad public participation in this rulemaking, 
HUD held four public forums to discuss implementation of the PHA plans. 
These forums were held in Atlanta, Georgia, on May 4, 1999; Omaha, 
Nebraska, on May 19, 1999; Syracuse, New York, on June 28, 1999; and 
Washington, DC, on July 28, 1999. The final forum in Washington, DC 
allowed persons to participate via telephone from 33 sites around the 
country. At each of the forums, helpful recommendations and suggestions 
were made by the forum participants, issues were discussed and ideas 
exchanged on the PHA planning process, specifically the requirements 
established by the February 18, 1999 interim rule. Consistent with the 
statutory requirements, HUD advised the forum participants of its 
proposed disposition of the participants' recommendations when HUD had 
formulated a proposed disposition of a specific view or recommendation 
offered. For certain issues, HUD was unable to offer the forum 
participants a proposed disposition, because the issues required 
further deliberation by HUD, but HUD discussed with the participants 
the considerations involved in HUD's decisionmaking process.
    Section V of this preamble, which immediately follows, provides a 
summary of the comments, issues and recommendations made on the 
February 18, 1999 interim rule, those made at the public forums, and 
those provided as written comments during the 60-day comment period on 
the rule.

V. Discussion of Public Comments Raised on the February 18, 1999 
Interim Rule

    The public comment period on the February 18, 1999 interim rule 
closed on April 19, 1999. Written comments were submitted by PHAs, 
organizations representing PHAs, legal services organizations, public 
interest/housing policy organizations, and various other organizations 
and individuals. In addition to the written comments, HUD also received 
comments and suggestions at the four public forums held throughout the 
country.
    This section of the preamble presents a summary of the significant 
issues raised by the public commenters on the February 18, 1999 interim 
rule, both through written submission of comments and at the forum. The 
heading ``Comment'' states the comment or comments made by the 
commenter or commenters, and the heading ``Response'' presents HUD's 
response to the issue or issues raised by the commenters.

1. General Comments

    Comment. HUD should view the planning process and the Plan itself 
as a mechanism for PHAs to express local choices. HUD should not use 
the Plan as a tool to impose substantive requirements on PHAs.
    Response. HUD's views of the PHA planning process are consistent 
with those of the commenters. HUD views the PHA planning process as a 
mechanism for PHAs to express local choices consistent, however, with 
Federal statutory requirements. The requirements imposed by HUD on PHAs 
with respect to the PHA planning process are those required to be 
imposed by statute. The substantive requirements imposed on PHAs are 
those imposed through the statutes and regulations that govern the 
various HUD programs in which PHAs participate. The statutory and 
regulatory requirements governing the PHA planning process are directed 
to compiling basic information about PHA operations, missions and 
goals, and making that information available to HUD and to the public.
    Comment. In order to ensure accuracy, HUD needs to work with PHAs 
to ensure software compatibility. HUD needs to address the problems 
with the MTCS and Community 2020 software packages, which are 
burdensome to use. HUD should provide PHAs with software early in the 
process. PHAs should be able to request local HUD offices to provide 
various MTCS printouts to help with preparation of the Plan.
    Response. HUD is cognizant of PHA concerns about problems with the 
MTCS software and Community 2020 software. HUD has been working with 
PHAs to minimize problems and increase MTCS reporting. Based on data 
received through the end of September 1999, MTCS reporting is as 
follows: tenant-based section 8 is reported at 95%; public housing at 
86%; and overall reporting at 88%. As with all new software products, 
problems will be uncovered and have been uncovered with respect to HUD 
2020 software and MTCS but HUD is working to eliminate these problems. 
With respect to local assistance, HUD's local Public and Indian Housing 
offices are available to offer all needed assistance to PHAs.
    Comment. It will be difficult to complete the Plan without 
additional funding.
    Response. The PHA Plans provide for compilation in one location 
information that PHAs already have been required to put together under 
various other program regulations. By requiring, however, that this 
information be put together one time annually in one source, the 
administrative burden placed on PHAs will be decreased rather than 
increased. While there may be increased burden during the first year of 
PHA Plan submissions, once the first Plans are submitted the subsequent 
submissions should be prepared and submitted with significantly less 
burden. Additionally, HUD believes that the electronic template for the 
PHA Plans issued July 30, 1999, helps to reduce administrative burden 
in the preparation and submission of the PHA Plans. As requested by 
commenters HUD has made (and plans to continue to make) the PHA Plan 
software available at no cost.
    Comment. HUD's decision to maintain separate submission and 
approval processes for activities such as demolition, disposition, 
conversion to

[[Page 56848]]

vouchers, designation, and public housing homeownership programs seems 
to contradict the Public Housing Reform Act's mandate to deregulate and 
consolidate. By creating the PHA Plan process, Congress intended to 
dramatically limit HUD's traditional discretionary powers to review and 
approve these specific programs. Maintaining submission and approval 
processes separate from the PHA Plan thwarts this intent.
    Response. The PHA Plan regulations reference separate submission 
and approval processes for various activities such as demolition, 
disposition, and conversion to vouchers because the Congress did not 
provide for a common approval process in its enactment of the PHA Plan, 
and in particular provided for different approval standards for these 
activities. PHAs are encouraged to coordinate public consultation 
processes for these applications and simultaneously submit such Plans, 
but the approval processes remain separate.
    Comment. The currently available census data is too old. Annual 
Plans should not be required until new census data is available in 
2002.
    Response. HUD has no statutory authority to defer submission of 
Annual Plans until the year 2002. HUD recognizes that the census data 
is not the optimum planning mechanism as the decade draws to a close; 
nevertheless it remains the official census data. To the extent that 
PHAs need to refer to census data, which is limited, PHAs can continue 
to use this data.
    Comment. ``One size fits all'' approach of the PHA Plan does not 
work well for PHAs because of differences in size, number, and type of 
programs.
    Response. HUD believes that the PHA planning mechanism provides 
sufficient flexibility for PHAs to make the necessary adjustments given 
the PHA's size, number and type of programs. This flexibility is also 
reflected in HUD's electronic template for the PHA Plans.
    Comment. HUD has added oversight in the rule that is beyond what 
the Public Housing Reform Act requires.
    Response. HUD's oversight of PHA programs and activities is 
consistent with the Public Housing Reform Act and the statutes and 
regulations governing the individual HUD programs covered by the PHA 
Plan.
    Comment. HUD should set parameters for who can sue a PHA over a 
Plan.
    Response. HUD has no authority to limit legal action in connection 
with a PHA Plan.
    Comment. Fair housing considerations should be addressed in all 
aspects of the Plan. The final rule should specifically direct PHAs to 
comply with fair housing laws when making choices related in the Plan.
    Response. Fair housing considerations are an important part of the 
PHA planning process and are addressed in the regulation. Please see 
Sec. 903.7(o) the PHA certification requirement and the PHA's 
obligation to affirmatively further fair housing.
    Comment. All policies should be in the Plan, not just discretionary 
ones. The purpose of the Plan is to provide a framework for local 
accountability. The Plan must be complete. All material must be 
included, even material already submitted to HUD. All rent policies 
should be included. Even with mandatory policies, PHAs have a lot of 
discretion.
    Response. HUD believes that the rule provides for a PHA Plan that 
presents the necessary framework for local accountability. In addition, 
the rule provides that PHAs must make HUD-specified documents (which 
includes documents covering all critical operations of a PHA) available 
locally to the public for inspection. Therefore, the public has a 
complete view of the PHA's operations.
    Comment. In the preamble to the interim rule, quantifiable goals 
are discussed. Where the Family Self-Sufficiency (FSS) Program is 
discussed, the goal should be determined by looking at how many 
families have replaced welfare income with earnings.
    Response. PHAs are welcome to frame an FSS goal as suggested by the 
commenter.

2. Comments Regarding Timing of the Rule

    Comment. The time frame for implementation in the interim rule is 
too short to do all the work and will create a serious burden for PHAs. 
This is particularly so given all the new changes required by the 
Public Housing Reform Act. HUD should allow for extensions and delay 
publication of the final rule to allow adequate time for enhanced 
rulemaking sessions. Additionally, HUD's estimate of time needed to 
complete the planning process does not take into account the lack of 
guidance and instructions provided by HUD. HUD should issue guidance, 
not prescriptive rules, and this help should be given early in the 
process, not later.
    Response. The Public Housing Reform Act does not permit HUD to 
delay issuance of this final rule. HUD recognized, however, that 
additional time was needed by PHAs for submission of their first PHA 
Plans and HUD has provided the additional time in the rule published on 
September 21, 1999, and discussed earlier in this preamble. In addition 
to allowing more time to prepare and submit the plans, HUD believes 
that the electronic template assists PHA's in significantly reducing 
the time for preparation and submission of the plan elements. Issuance 
of the electronic template was accompanied by additional HUD guidance 
on the PHA Plans. (See Notice PIH 99-33 (HA), issued July 30, 1999.)

3. Comments Regarding Small PHAs

    Comment. The rule will create a real hardship for small PHAs, who 
have limited staffs, budgets, and relatively few units. It is 
unrealistic to expect small PHAs to comply with the timelines 
established by the rule and the extra paperwork required by the rule. 
The requirement that Plans be submitted 75 days prior to end of FY 2000 
is a major burden for small PHAs, who need time to complete an in-depth 
analysis. Another commenter stated that the requirement is also a 
burden because small PHAs will need extra funds to complete the Plan 
and the commenter stated that ``CDBG funds'' will not be available 
until after the Plan is due. In addition, coordination with the State's 
Consolidated Plan and forming Resident Advisory Boards will take 
considerable time for small PHAs. Small PHAs are also already 
overburdened with paperwork. The final rule should be delayed until HUD 
works with PHAs to further streamline the rule.
    Response. As noted in responses to earlier comments, HUD has made 
considerable effort to reduce the administrative burden of the PHA 
planning process on all PHAs, and especially small PHAs. With respect 
to the timing, HUD provided through the September 21, 1999 final rule, 
the maximum additional time that it could provide in accordance with 
the statutory requirements. The statute itself is cognizant of the 
burden that uniform requirements can place on small entities, and 
allows HUD to provide streamlined PHA Plans for small PHAs which it has 
done. As HUD also has noted earlier, HUD believes that its electronic 
template considerably reduces the administrative burden on all PHAs 
especially small PHAs.
    Comment. Small PHAs should not have to submit homeownership 
statements. Most small PHAs will probably never implement a 
homeownership program because they do not have the personnel or 
resources to undertake such a program.

[[Page 56849]]

    Response. Under the streamlined submission for small PHAs, small 
PHAs are only required to provide statements for Section 8 
Homeownership programs that they plan to operate. Again, HUD believes 
that the statements required by the PHA Plan electronic template 
significantly reduce the PHA's administrative burden.
    Comment. Small PHAs should not be automatically required to address 
the crime prevention item because they have not had to address the 
security indicator in PHMAP.
    Response. Small PHAs are only required to address the crime 
prevention items if they receive funding under the Public Housing Drug 
Elimination Program (PHDEP).
    Comment. Numerous small PHAs have Federal expenditures of less than 
$300,000 per year. Since these PHAs are exempt from the Single Audit 
Act, they should only be required to submit audit information if HUD 
has approved the PHAs request for payment for a financial audit.
    Response. The PHA Plan regulations do not require the submission of 
any financial information inconsistent with the Single Audit Act (31 
U.S.C. 7501-7507) or OMB Circular A-133 (Audits of States, Local 
Governments and Non-Profit Organizations), and do not in themselves add 
audit requirements.
    Comment. Small PHAs have limited resources. One commenter 
specifically asked whether CIAP funds can be used to complete the Plan. 
Another commenter asked whether operating reserves be used and 
reimbursed from capital funds.
    Response. Capital and operating funds can be used to complete the 
Plan, consistent with the regulatory requirements of these programs.

4. Comments Regarding Section 8-Only PHAs

    Comment. Why are high performing and small PHAs exempt from 
submitting a grievance procedures section and not Section 8-only PHAs. 
This must be unintended.
    Response. Section 8-only PHAs are not exempt from the grievance 
procedures element of the PHA Plan. The template, however, basically 
requires that these PHAs make these procedures available locally.
    Comment. Section 8-only PHAs should not have to comply with 
anything in this rule. Use of Section 8 is in the hands of residents. 
The Consolidated Plan already covers Section 8 issues and public notice 
is already required for Section 8 Administrative Plans.
    Response. The statute includes PHAs that receive assistance under 
section 8(o) of the U.S. Housing Act of 1937. HUD has no authority to 
exclude these PHAs from the PHA planning process required under section 
5A of the 1937 Act.

5. Issues on Which HUD Specifically Sought Comment

    In the preamble to the February 18, 1999 interim rule, HUD 
specifically sought comment on certain issues (see 64 FR 8179). Those 
issues are listed here, as well as the comments received on these 
issues, and HUD's responses to the comments.
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
    Comment. In response to this issue, many commenters would like to 
see the Consolidated Plan and the Annual Plan combined so that the 
process is not so burdensome and duplication is kept at a minimum. Most 
of these commenters, however, requested that this be an option and not 
a requirement. The commenters stated that while combining the plans 
makes sense for ``joint agencies'' (by this it is understood to mean 
agencies administering both Consolidated Plan and PHA Plan programs), 
it makes no sense for independent PHAs. At the very least, combining 
the two types of plans should not be a requirement for the first few 
years of plan submissions.
    Response. PHAs have the option of submitting the Annual Plan 
simultaneously with the submission of the Consolidated Plan and 
coordinating public processes, provided that the statutory and 
regulatory requirements of both are met. Although the Congress provided 
for the Annual Plan to be consistent with the Consolidated Plan, it did 
not provide for the Annual Plan to be part of the Consolidated Plan. 
The Congress established separate requirements for development, 
submission and approval of the Annual Plan. Therefore the requirements 
of both plans must be met.
    Comment. For PHAs that want to combine the planning process, HUD 
should assist by offering guidance on how to combine the processes and 
allowing PHAs to change fiscal years to match localities. The plans 
should be due at the same time.
    Response. This rule allows PHAs, subject to HUD approval, to change 
fiscal years to match localities. HUD's July 30, 1999 Notice includes 
guidance that is helpful to PHAs interested in combining the PHA 
planning process with the Consolidated Planning process.
Ways to Streamline or Merge Current Information Requirements Already 
Reported Electronically by PHAs to HUD With the Additional Requirements 
Listed in This Rule
    Comment. In order to streamline reporting, HUD should increase the 
accuracy of reports on the HUD website and should standardize 
budgeting, requisitioning, and reporting requirements for all funding.
    Response. HUD believes that the electronic template is a 
significant step forward in meeting the commenter's concerns. HUD's 
Office of Public and Indian Housing, as well as other HUD offices, are 
working on standardization of required reports under HUD programs, and 
converting these to a simple electronic format that can be accessed 
through the internet.

Comment. PHAs should not have to include components that do not 
apply them.

    Response. The PHA Plan regulation includes only those components of 
the Plan that PHAs are required by statute to submit. PHAs are only 
required to make available information that pertains to programs and 
activities they actually conduct.
How Should the Term ``Substantial Deviation'' be Defined
    Comment. In the February 18, 1999 interim rule, HUD stated that a 
PHA would not be required to submit an annual update of the 5-Year 
Plan, but the PHA would be required to explain any substantial 
deviation from the 5-Year Plan in its Annual Plan. HUD solicited 
comment on how substantial deviation should be defined. Comments on how 
this term should be defined were as follows. Substantial deviation 
should be defined as any changes to a PHA's overall mission, any 
changes to the goals or objectives that affect services to residents, 
or significant changes to a PHA's financial situation. Substantial 
deviation should be defined as a complete revision or abandonment of 
one or more of the components in a PHA's 5-Year Plan. A substantial 
deviation should not include a delay in the implementation of any 
particular component caused by a PHA's business needs. Substantial 
deviation should apply only to the mission statement and not to goals 
or objectives. Community planning is not a static process, and goals 
and objectives must be able to be changed without requiring HUD 
approval each time. It should be sufficient that Resident Advisory 
Boards

[[Page 56850]]

and PHA Boards review and approve these changes. The definition of 
substantial deviation needs to take into account the social, political, 
and economic conditions of an area because if any of these factors 
changes, adjustments will need to be made in planning documents. 
Substantial deviation should mean a change in a PHA's mission statement 
or in the PHAs goals or objectives. Substantial deviation should not 
deal with meeting objectives, nor should it include deviations based on 
emergencies or circumstances out of a PHA's control. HUD should combine 
the 5-Year Plan and the Annual Plan. This would simplify the definition 
of substantial deviation because the issue would be covered by the term 
significant amendments. The definition of substantial deviation should 
be determined locally.
    Response. HUD appreciates all the suggestions on how this term 
should be defined. These comments convince HUD that the definition of 
substantial deviation should be defined at the local level, as 
suggested by some of the commenters. HUD believes that substantial 
deviation should be defined at the local level as part of the public 
participation in the PHA planning process. PHAs together with their 
residents, local partners and affected and interested members of the 
public are in a better position to define these terms. The definition 
of this term, as well as others defined locally, must be noted in the 
PHA Plan. The definition must be applied to the goals and objectives as 
well as the mission statement.
    With respect to combining the two plans, HUD notes that to a 
certain extent the 5-Year Plan and the Annual Plan are combined because 
they must be submitted at the same time, and the Annual Plan reflects 
the mission and long range goals of the PHA as provided in the 5-Year 
Plan. Additionally, HUD's electronic template for the PHA Plans 
provides for the submission to be made as one.
What Constitutes an Acceptable 5-Year Plan?
    Comment. An acceptable 5-Year Plan should be one that a PHA 
believes in. HUD will not be able to review all 5-Year Plans, so this 
requirement only matters to PHAs.
    Response. HUD is required to review all PHA Plans, 5-Year Plans and 
Annual Plans. A PHA's 5-Year Plan should provide for a mission and 
goals and objectives that a PHA believes in. HUD believes that these 
goals are likely to be consistent with the goals and objectives of the 
HUD programs under which the PHA receives funding.
    Comment. The February 18, 1999 preamble statement about what 
constitutes an acceptable 5-Year Plan is correct, but meeting any goals 
depends on annual appropriations. Any 5-Year Plan should have to 
preface any goal with this acknowledgement. HUD cannot expect PHAs to 
meet goals if funding is lower than expected. HUD should make specific 
allowances in 5-Year Plans for the fact that increasing housing supply 
is dependent on HUD and Congress.
    Response. PHAs may condition the achievement of goals on at least 
level annual appropriations where appropriate. PHAs should establish 
goals and objectives that are ambitious given current funding levels.
    Comment. The 5-Year Plan should be a strategic plan outlining goals 
and objectives, strategies to meet goals and objectives, and barriers 
and measurements of achievements.
    Response. HUD believes that this is exactly what the 5-Year Plan 
is, but to make the goals and objectives ones that can be practically 
achieved, they need to be described in terms of quantifiable goals and 
objectives.
    Comment. HUD should consider a 5-Year Plan that substantially meets 
or in good faith attempts to address the 18 components.
    Response. The 18 components constitute the substance of the Annual 
Plan. However, a 5-Year Plan that establishes quantifiable goals and 
objectives that substantially meet or show a reasonable good faith 
effort to address the purposes of the 18 components of the Annual Plan 
(which components describe the PHA's overall strategy for handling 
operations on an annual basis) will be considered acceptable.
The Manner of Submission of the Information Required Under the Annual 
Plan.
    Comment. The manner of submission should be as flexible as possible 
and include fax, email, postal service, and Internet.
    Response. With the introduction of the PHA Plan electronic 
template, HUD believes that it has provided a highly flexible manner of 
submission. Electronic submission provides for ease in preparation, 
revisions, and submission. For PHAs that do not have the capability to 
make electronic submission via the internet, HUD's local Offices of 
Public and Indian Housing will assist PHAs with electronic submission.
    Comment. Several commenters expressed concern about electronic 
submission of the plan. Their concerns were as follows. HUD should 
provide free software for submission of the Plan, but should not 
require electronic submission in initial years so PHAs can focus on 
formulating Plans and not have to fit parameters of preconceived 
format. This is especially important because PHAs do not know how 
difficult the software will be to master, what ``bugs'' the software 
will have, and whether it will be compatible with other PHA systems. 
The Plan should not be submitted electronically because the Plan has to 
be available for public view. HUD and the public should review 
identical copies of the Plan.
    Response. With respect to the Plan software, HUD has adopted an 
internet submission system that utilizes commonly-used office software. 
The electronic template for the Plan has been available free of charge. 
HUD has been testing the submission system before and after 
announcement of the template's availability on July 30, 1999. HUD 
believes that there should not be any delay in the use of the template 
for PHA Plan submissions. The template will significantly reduce the 
administrative burden on PHAs. HUD is ready to assist PHAs with its use 
and will respond rapidly to correct any ``bugs'' in the system.
    With respect to the capability of PHAs to submit information 
electronically, in today's environment, HUD believes that all PHAs have 
access to computers and therefore this type of electronic capability 
but may not have internet capability. HUD's local Offices of Public and 
Indian Housing will assist these PHAs with electronic submission of PHA 
Plans to HUD Headquarters via the internet.
    With respect to public review of the plan, electronic submission 
does not preclude a hard copy printout by the PHA of the information 
submitted electronically to HUD.
    Comment. The Plan software used for submission should allow for 
hyperlinked access to public information found in other electronic 
submissions or as part of the Consolidated Plan.
    Response. The PHA Plan is required to be submitted in electronic 
form, and HUD is working on quick and easy electronic access to public 
information found in other electronic submissions or as part of the 
Consolidated Plan.
    Comment. The rule offers a positive feature in providing that PHAs 
will not have to resubmit previously submitted items. HUD should, 
however, move expeditiously to consolidate all required

[[Page 56851]]

submissions. Do previously submitted items include previously submitted 
unfunded CIAP applications? What does HUD mean by the local 
availability of previously submitted items? Does this mean a file 
cabinet, specific building, city, town, or can a PHA identify the local 
HUD office?
    Response. With advancements in technology, HUD believes that 
eventually it as well as its program partners will be able to 
consolidate information (including items previously submitted in non-
electronic forms) into an easily downloadable electronic document. 
HUD's Office of Information Technology is working to move HUD closer to 
that objective for this program as well as others. With respect to the 
location of locally available information, the PHA will identify in the 
PHA Plan the location closest to its main offices (if not made 
available at its main office) that contains the information that must 
be made available locally, including items previously submitted to HUD.
    Comment. The final rule should clarify exactly where in HUD the 
Plan should be submitted.
    Response. The PHA Plans are to be submitted to HUD via the 
internet. Through this submission, HUD offices that need to review the 
plans or elements of the plans can do so simultaneously.
HUD's addition of items to the Annual Plan submission and whether 
commenters recommend any other items for inclusion.
    Comment. If HUD wants to add items to the Plan, they must do so by 
public notice and comment. HUD should not be allowed to add items not 
required by the Public Housing Reform Act.
    Response. To the extent that items added by HUD to the Plan are not 
reasonably within the Plan's scope and do not constitute clarifications 
of information that clearly the statute envisions to be submitted, HUD 
will provide the opportunity for notice and comment. HUD also notes 
that it may be required to add items to the Plan as a result of new 
statutory requirements and subsequently enacted statutes may provide 
for immediate implementation of new Plan components and preclude the 
opportunity for notice and comment.
    Comment. The regulation should require that PHAs state reasons for 
decisions made and any policy choices.
    Response. The PHA Plan electronic template requires PHAs to 
indicate the reasons they selected particular strategies for addressing 
housing needs.
    Comment. Several commenters offered suggestions on items that 
should or should not be part of the streamlined plans. PHAs that have 
been high performing for two consecutive years should only have to 
submit Plans with admissions, demolition/disposition, and fair housing 
certification. High performers and small PHAs should also be required 
to submit grievance policies, conversions, and community service 
programs because these programs directly affect residents. Streamlined 
Plans should include conversion, description of asset management, and 
Family Self-Sufficiency information because so many PHAs are either 
high performing or small.
    Response. HUD appreciates the suggestions made by the commenters. 
At this time, HUD is not making changes to the streamlined plans to be 
submitted by high performing PHAs or small PHAs that are not troubled. 
The PHA Plan electronic template makes the Plan submission 
significantly easier. With respect to submissions regarding 
conversions, the conversion submission and approval process is a 
separate process as HUD has noted earlier in this preamble. Other 
documents covered by the PHA Plan but that are not part of the Plan 
submission are required to be available locally for review. The 
addition of documents to be made available locally but not submitted to 
HUD also will facilitate the public review.

Comment. What should high performing PHAs who are also small PHAs 
submit (1)?

    Response. PHAs that are small PHAs and also designated high 
performing PHAs should submit the Plan elements described for high 
performing PHAs.
    Comment. The final rule should clarify the definition of high 
performing PHA by adding the following language ``as of the last annual 
or interim assessment of the PHA before the submission of the 5-Year or 
Annual Plan''.
    Response. HUD agrees with this comment and has added clarification 
language to the regulation.
What Should Constitute ``Significant'' Amendments or Modifications to 
Either the 5-Year Plan or Annual Plan?
    Comment. Comments on what constitutes significant amendments or 
modifications were as follows. The final rule must clarify what a 
significant amendment is and when HUD needs to approve it. PHAs should 
be able to correct errors or omissions without having to restart the 
entire process. The final rule should define significant amendments as 
anything that substantively alters the policies as originally proposed 
or that might result in a different outcome for or treatment of 
tenants, participants, or applicants. Any amendment should be subject 
to a fair housing analysis. The definition of significant amendments 
should exclude any changes that are made as a result of new HUD 
regulations not in effect when the Plan was developed.
    Response. HUD appreciates these comments and has decided that the 
changes that constitute significant amendment or modification should be 
defined at the local level. As noted earlier in this preamble (under 
the section which highlights changes made at the final rule stage), HUD 
has amended Sec. 903.7(r) to provide that a PHA must include in the PHA 
Plan a brief statement identifying the basic criteria it will use for 
determining what constitutes a significant amendment or modification of 
its plan for purposes of Sec. 903.21.
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.
    Comment. The final rule should adopt a requirement that PHAs should 
post a notice in a newspaper of general circulation that the Plan has 
been approved and information about its availability for review. The 
final rule should require that notices be posted at all developments 
and that copies of pending and final plans should be made available at 
all developments, not just the principal office of the PHA. In 
addition, residents should be able to view these plans in the evening 
and not just during normal business hours. The final rule should not 
require posting and publication of notice after the Plan is completed 
and approved.
    Response. HUD appreciates the comments in response to this issue. 
HUD has decided not to change the rule at this time. HUD, however 
encourages PHAs to adopt these suggestions. Additionally, as part of 
the public input on the plans, the PHAs and the public may wish to 
adopt such a requirement as part of their local process.
Is the rule organized in a manner that is helpful and should the rule 
include a definition section?
    Comment. The final rule should not adopt the conversational tone 
and question-and-answer format used in the

[[Page 56852]]

interim rule. This format is best reserved for supporting documents 
that are designed to provide additional guidance for complying with HUD 
regulations. The conversational tone and question-and-answer format 
detracts from the ability of governed entities to easily ascertain what 
is required of them and to locate provisions that govern specific 
questions with optimal speed and efficiency.
    Response. The question-and-answer format is strongly encouraged by 
the Administration's Plain Language initiative. The concern is that too 
many regulations are incomprehensible because they are written using 
terms that are too legalistic and too entrenched in the language of 
Federal bureaucracy. The majority of HUD's regulations are now being 
written in this format, and without complaint from HUD's constituents. 
HUD notes that only one commenter made this comment. HUD notes that the 
PHA Plan template provides for consolidated, easily referenced 
information.
    Comment. The final rule should contain a definition section.
    Response. Many of the terms that HUD would generally define are 
already defined in regulations governing HUD programs in which PHAs are 
participants. HUD declines to repeat these definitions in this part. 
For other terms, HUD declines to be overly prescriptive and prefers to 
give PHAs greater flexibility by allowing them to define terms at the 
local level given local considerations.

6. Comments on Specific Provisions of the Interim Rule

Section 903.1 What are the Public Housing Agency Plans?

    Comment. As the following comments indicate, several commenters 
were concerned about the format of the plans. Comments were as follows. 
HUD should not require PHAs to submit Plans when HUD has not specified 
the format for the Plan nor given guidance to PHAs on all issues. HUD 
should delay publication of the final rule until the rule can be 
clarified. HUD needs to define the format, substance, and length of the 
Plan. If HUD does not specify a format by July 1, 1999, initial Plans 
should be accepted in any format. PHAs should be able to simply 
reference other documents in the Plan and insert only brief summaries 
of those documents.
    Response. As noted earlier in this preamble, HUD has addressed 
these concerns through its July 30, 1999 issuance of the PHA Plan 
electronic template and accompanying guidance, and HUD's decision to 
delay the date for the first submissions to December 1, 1999.

Section 903.3 When Must a PHA Submit the Plans to HUD?

    Comment. HUD needs to clarify when the 75-day process starts and 
stops. The interim rule is not clear about when PHAs are required to 
submit their Plans.
    Response. HUD's rule published on September 21, 1999, clarifies 
this process, and this language is included in this final rule.
    Comment. Large PHAs should be able to submit separate Annual Plans 
for different jurisdictions or be allowed to submit Plans in phases.
    Response. The statute does not allow for this type of submission. 
HUD believes that the framework for the Annual Plan adopted by the 
Congress is similar to that of the Consolidated Plan, and the objective 
of this framework is to consolidate information and present a single 
unifying plan that crosses jurisdictional lines where there are more 
than one jurisdiction. The additional objective is to provide for one 
annual submission by a PHA, not staggered submissions.

Section 903.5 What Information Must a PHA Provide in the 5-Year Plan?

    Comment. Why is HUD requiring a 5-Year Plan when PHAs only get 
funding on a yearly basis?
    Response. The 5-Year Plan is a statutory requirement. Even if PHAs 
only receive funding annually, it is funding that is assured annually 
at some level, and therefore the PHA should plan for its uses on a 
long-term basis.
    Comment. The 5-Year Plan guidance needs further development. The 
guidance appears to be a vision statement and not actual work items to 
implement long range strategy. The required statements for the 5-Year 
Plan should be combined into the Annual Plan (as part of the Executive 
Summary) because the Annual Plan has to contain changes in the 5-Year 
Plan anyway.
    Response. The guidance and PHA Plan template issued on July 30, 
1999, provides additional guidance to PHAs on development and 
preparation of the 5-Year Plan, and on the format. PHAs are welcome to 
develop more detailed plans than that provided by the template.
    Comment. The 5-Year Plan should be subject to only cursory HUD 
review.
    Response. HUD's review must be consistent with the statutory 
mandate imposed on HUD.

Section 903.7 What Information Must a PHA Provide in the Annual Plan?

    This section of the rule describes the information that the PHA 
must provide as part of the Annual Plan. There were a number of 
comments praising HUD's approach to not require the submission of 
certain items. There was also praise for elements of the Plan that high 
performing PHAs and small PHAs were not required to submit. The 
following presents the questions and concerns raised about the Plan 
elements.
    Comment. The final rule needs to contain more detailed descriptions 
of what information is required under each section of the Plan so that 
PHA submissions are more consistent. For example, under Sec. 903.7(b) 
(financial resources) how is funding to be broken down for Section 8; 
Sec. 903.7(c) (eligibility, selection, and admissions) should state 
exactly what information is required; Sec. 903.7(e) (operation and 
management) needs a clear list of what will satisfy a ``description of 
the management organization''; Sec. 903.7(l) (community service and 
self-sufficiency) is unclear about what information is to be submitted.
    Response. These comments were submitted before HUD issued its July 
30, 1999 guidance and the PHA Plan electronic template. The PHA Plan 
template and guidance address these concerns.
    Comment. The PHA Annual Plan should only include the information 
necessary to reach the strategies and goals described in the PHA 5-Year 
Plan. The final rule should not expand the list of items that are 
required, under section 511 of the Public Housing Reform Act, to be 
included in the Annual Plan. This will bring certainty to the PHA 
planning process and allow PHAs to steadfastly pursue the goals 
outlined in the 5-Year Plan.
    Response. HUD believes that the PHA Plan regulation closely adheres 
to the statutory requirements and does not go beyond these 
requirements.
    Comment. The February 18, 1999 interim rule provides that, before 
submission of the first PHA Annual Plan, PHAs may submit an interim PHA 
Annual Plan solely with respect to demolition and disposition. However, 
the interim Annual Plan must 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. (See the preamble discussion at 64 FR 8177-8178.) HUD should 
extend the interim plan provision to cover: (1) The new voucher payment 
standard; (2)

[[Page 56853]]

deconcentration and rent choice policies; and (3) any voluntary changes 
in admission preferences prior to the submission of the complete 
initial annual plan. This will help to ensure that residents 
participate in the development of these important policies, and that 
the policies are consistent with the Consolidated Plan.
    Response. The interim plans for demolition or disposition addressed 
a particular issue in the statute and legislative history, to allow 
continued submission of applications for demolition or disposition 
prior to submission of the first annual PHA Plans. Interim plans are 
unnecessary for the other plan elements raised by the commenter.
Comments Regarding the Statement of Housing Needs
    Comment. The provision of this data will be difficult for PHAs that 
do not collect the required waiting list information. It would be 
easier for the PHAs to provide the required information for families 
admitted during the PHA's last fiscal year.
    Response. The statutory language is clear that the information that 
must be submitted under this Annual Plan element is waiting list 
information. The guidance to the template makes clear that PHAs are not 
being required to change their procedures regarding data verification 
to supply this data.
    Comment. It is unclear what information PHAs are being requested to 
provide or what constitutes ``housing need.'' The final rule should 
clarify terms such as: ``affordable,'' ``supply,'' ``quality,'' 
``accessibility,'' ``location,'' and ``size of units.'' Further, the 
rule is ambiguous as to what income groups should be considered for 
purposes of determining housing need. This must also be clarified.
    Response. These terms are addressed in the guidance accompanying 
the PHA Plan template.
    Comment. PHAs should not be required to assess housing needs based 
on the race or ethnicity of applicants for assisted housing. The 
interim rule is unclear whether a threshold number of applicants 
belonging to a certain racial/ethnic group triggers the need 
assessment, or whether a single applicant from that group is 
sufficient. Further, it is unclear how the information will help the 
PHA meet its obligation to serve low, very-low, and extremely low-
income families. The rule is ambiguous regarding the ethnic/racial 
groups a PHA must identify. The collection of this data may also 
conflict with civil rights and fair housing requirements.
    Response. The assessment of housing needs as provided in the 
regulation is consistent with HUD's obligation to affirmatively further 
fair housing. The guidance accompanying the PHA Plan template also 
addresses this issue.
    Comment. PHAs should be able to use the ``Housing Needs and Market 
Analysis'' section of Consolidated Plan as their plan statement of 
housing needs. However, the terms used in the PHA plan interim rule 
differ from that used in the Consolidated Plan. HUD should provide 
guidance to assist PHAs in using the relevant provisions of the 
Consolidated Plan in preparing the annual plan statement of housing 
needs. Another commenter expressed the opposite viewpoint. The 
Consolidated Plan should not be used to develop the statement of 
housing needs. The Consolidated Plan is based on outdated 1990 census 
data. Further, the Consolidated Plan is rarely prepared by the PHA. PHA 
waiting list data is the most accurate indicator of the potential 
resident base. Accordingly, the PHA waiting list should be used to 
develop the annual plan statement of housing needs. Another commenter 
expressed opposition to use of waiting list data. The commenter stated 
that gathering waiting list data will create significant administrative 
burden for PHAs.
    Response. The Consolidated Plan can serve as the basic source of 
the PHA's housing needs statement. The PHA, however, needs to complete 
the statement of housing needs as provided in the PHA Plan regulation. 
The PHA Plan template significantly simplifies this task. The use of 
waiting list data is a statutory requirement and HUD has no authority 
to remove this requirement.
Comments Regarding the Statement of Financial Resources
    Comment. The interim rule is overly prescriptive when it asks PHAs 
to identify the planned uses of the financial resources by major 
category (i.e., operations, modernization and or development, etc.). 
This is addressed elsewhere in the Annual Plan and, therefore, it is 
redundant to require PHAs to address them in this portion of the plan.
    Response. The financial information required by the rule is 
consistent with statutory intent and is the minimum necessary to allow 
public housing residents, local representatives, taxpayers, and other 
interested members of the public to sufficiently determine a PHA's 
planned uses of its financial resources. The PHA Plan template reduces 
the administrative burden of compiling and submitting this information.
    Comment. HUD should clarify what financial data is required in the 
statement of financial resources. Are PHAs required to provide end data 
from the most recent calendar year, or from the most current fiscal 
year?
    Response. The PHA Plan template clarifies that the financial data 
required to be included in the Plan concerns funds anticipated to be 
available during the upcoming fiscal year.
    Comment. The statement of financial resources should include 
detailed PHA budgets with information regarding the operating and 
modernization of the public housing, as well as personnel, consultant 
and other contractors, equipment, supplies, utilities, and travel. With 
fully disclosed information, residents and the public will better be 
able to participate and reach the goals of the Public Housing Reform 
Act.
    Response. Current operating and modernization budgets are required 
to be made available locally for review by the public.
Comments Regarding the Statement of Eligibility, Selection, and 
Admission Polices

1. Transfers

    Comment. The PHA Annual Plan should include specific policies for 
the transfer of public housing residents to other public housing units 
within the PHA. Transfer policies and practices are of critical concern 
to residents and Resident Advisory Boards. Accordingly, all PHAs should 
have written policies and procedures governing transfers, which should 
be included in the PHA Annual Plan.
    Response. Transfer policies are covered by the PHA Plan template. 
These policies typically also will be in the PHA's admissions and 
continued occupancy policies, which are required to be made available 
to the public locally.

2. Deconcentration

    Comment. Several commenters raised concern about the 
deconcentration policies. Their concerns are as follows. 
Deconcentration requirements will lower occupancy rates, make waiting 
lists longer, and increase PHA administrative costs. HUD therefore 
should not expand on the statutory language and impose a 
deconcentration requirement on PHAs. HUD should accept the good faith, 
best efforts made by a PHA to achieve deconcentration. HUD should 
permit deconcentration to be addressed at a local level, and not 
establish prescriptive Federally mandated requirements. There are 
differences between rural, urban and

[[Page 56854]]

suburban agencies and individual reason for which families move. Any 
Federal requirements should acknowledge variations in local conditions, 
and provide PHAs with the flexibility to address those local issues. 
HUD should provide additional guidance on what constitutes an 
acceptable deconcentration policy. The final rule should provide that 
PHA deconcentration policies must affirmatively further fair housing 
and not discriminate against a protected class. Further, the final rule 
should explicitly prohibit PHAs from establishing or enforcing racial 
or financial quotas. The rule should also require that PHAs perform an 
Analysis of Impediments as part of their PHA plan process. (The 
Consolidated Plan includes a certification that requires the 
preparation of an Analysis of Impediments to Fair Housing Choice).
    Response. Section II of this preamble addresses the changes that 
HUD has made with respect to deconcentration. HUD believes that these 
changes address and balance the concerns of the commenters.
    Comment. There is a conflict between the mission of the PHA to 
serve low-income families and the deconcentration requirements of the 
interim rule. If the PHA is supposed to focus on the needs of low 
income families, how can it also be expected to undertake efforts to 
attract higher-income families?
    Response. HUD understands that these two objectives may appear in 
conflict with each other. HUD's focus and the PHA's focus remain on 
addressing the needs of low income families, but these needs are often 
best served and best addressed by housing that provides for a mix of 
family incomes--families that need HUD assistance but are not all in 
the same income range.
    Comment. The deconcentration requirements should not apply if the 
PHA's developments all have similar average incomes. In such a 
situation there is no income concentration. Deconcentration should only 
be required if the difference hits a specific threshold, e.g. a 25% 
disparity.
    Response. HUD declines to adopt a threshold disparity as 
recommended by the commenter. However, the new provisions added to the 
final rule on deconcentration provide a measurement for compliance. The 
rule provides that PHAs shall be considered to be in compliance with 
the deconcentration requirements if they determine the average 
household income in such developments and define higher-income families 
as those with incomes over 115% of this average, higher-income 
developments as those where the average family income is over 115% of 
this average, lower-income families as those with incomes under 115% of 
this average and lower-income developments as those where the average 
family income is under 115% of this average.
    Comment. The deconcentration requirements should only be applicable 
to ``traditional'' public housing developments occupied entirely by 
households eligible for public housing. Mixed income developments, Jobs 
Plus sites, Welfare-to-Work sites, and other housing developments 
hosting other demonstration programs should not be subject to the 
deconcentration rules. These developments have special work incentives, 
different rent structures and other factors that attract or retain 
special subpopulations of public housing residents. Accordingly, they 
are not suitable for deconcentration efforts.
    Response. The statute does not limit applicability of the 
deconcentration requirements to traditional public housing 
developments. Generally, HUD has no authority to set such limitations.
    Comment. In order to realize deconcentration, FMRs must be 
increased in cities where the cost of housing is constantly increasing. 
This is one of the most critical methods that will allow housing 
residents a choice and an opportunity to lease in higher-income 
neighborhoods.
    Response. HUD believes that its system for setting fair market 
rents generally meets this objective, but can be improved. HUD 
currently is reviewing this system.
    Comment. HUD should not require a PHA to perform an analysis of 
household incomes until the MTCS data system can facilitate this type 
of analysis.
    Response. The analysis is not dependent upon the MTCS data system 
but HUD recognizes that this system may facilitate the PHA's analysis. 
HUD has worked to correct problems with MTCS, and is working with PHAs 
to increase the level of reporting, as noted earlier in this preamble. 
HUD believes that PHAs should be able to utilize this system in 
performing their analysis.
    Comment. The interim rule requires that PHAs use census tracts for 
purposes of developing their deconcentration policies. The use of 
census tracts for comparison of relative income does not work for many 
scattered-site developments as they are in multiple census tracks. The 
final rule should accommodate this problem by exempting scattered-site 
projects from the deconcentration plan requirements.
    Response. The final rule does not require an analysis based on 
census tract data.
    Comment. PHAs should be able to identify other factors (such as the 
size of units) that play a role in relative income in order to 
distinguish developments.
    Response. The rule provides a safe harbor for defining lower income 
and higher income which is simple, then leaves substantial flexibility 
for implementation.

3. Targeting

    Comment. The final rule should state that admissions policies must 
include income targeting policies and must specify that local 
preferences are subordinate to Congressional directive of targeting. 
HUD needs to publish regulations covering how targeting must work soon.
    Response. These policies were first addressed in HUD's proposed 
rule on ``Changes to Admission and Occupancy Requirements in Public 
Housing and Section 8 Housing Assistance Programs'' published on April 
30, 1999 (64 FR 23460). The final rule on this subject is expected to 
be published soon.
    Comment. HUD should provide clear guidance about the interaction 
between targeting, deconcentration, and site-based waiting lists. Which 
takes precedence? How will HUD monitor or evaluate PHA success?
    Response. Full compliance with both the specific income targeting 
minimum percentages of extremely low-income households and with 
deconcentration and income mixing provisions is required.

4. Site-Based Waiting Lists

    Various proposals were made to modify the February 18, 1999 interim 
rule's treatment of site-based waiting lists. As the preamble to the 
interim rule discussed, the Senate Committee Report on the Senate 
version of the Public Housing Reform Act (Congressional Record of 
October 8, 1998, p. S11840) provides the most detailed statement on 
site-based waiting lists. That report cites several of the possible 
benefits of site-based waiting lists, but also acknowledges that past 
HUD limitations were based on concern about racial steering and a 
desire to prevent housing discrimination. HUD believes that the 
approach proposed in the February 18, 1999 interim rule is 
appropriately balanced in view of that legislative history. The 
approach generally allows adoption of site-based waiting lists, with 
protections to assure that applicants are aware of their choices and 
rights, but also calls for careful monitoring of

[[Page 56855]]

implementation. This final rule therefore generally retains these 
provisions, except that the requirement that MTCS data be confirmed by 
independent audit is supplemented by other means of verification 
acceptable to HUD and testing or other HUD-approved means of verifying 
appropriate implementation are required at least every three years 
rather than two years.
    Comment. PHAs should not be required to use testers biannually. The 
requirement is excessive if there is no indication of possible civil 
rights violations. Testers should only be used to confirm problems 
where there is an indication of steering or other illegal activities. 
Other requirements such as the review of MTCS, absence of court orders, 
PHA certifications, ongoing review of policies and HUD's monitoring 
through FHEO are sufficient safeguards. HUD, and not PHAs, should 
provide testers.
    Response. As noted in Section II of the preamble and in the 
introduction to this section of the public comments, HUD has revised 
this requirement on the frequency of the use of testers. The final rule 
provides that testers are to be used every three years. HUD believes 
that the role of testers is not only to confirm problems but to 
determine if problems exist that have not yet been raised.
    Comment. Language in Sec. 903.7(c)(1)(v)(C) (any steps necessary) 
is too broad and will result in a large burden for PHAs. The final rule 
should be revised to state, ``any reasonable or business practicable 
steps necessary.'' Additionally, site-based waiting lists should be 
subject to no more scrutiny than review of the Plan.
    Response. HUD believes that the additional language recommended by 
the commenter is not necessary. ``Any steps necessary'' would include 
business practicable steps. With respect to review of site-based 
waiting lists, site-based waiting lists are part of the PHA Plan 
approval process; that is the only approval necessary.
    Comment. Additional concerns raised about site-based waiting lists 
included the following. The final rule should ensure that site-based 
waiting lists increase housing choice and options for minorities. 
Policies should require that public housing applicants are advised of 
all subsidized housing in the area. PHAs should supply applicants with 
a list of every assisted housing development in the market area, 
including tax credit properties, and HUD should give this list to PHAs. 
HUD should design a standardized pre-application so that applicants 
could copy the form and submit to various projects. PHAs should be 
required to do a preliminary racial impact analysis. Requiring testers 
is a good idea. For projects going into initial occupancy, HUD should 
require a lottery system.
    Response. HUD appreciates these comments, but declines to adopt up-
front the recommendations for additional procedures to be imposed on 
PHAs. HUD believes that the rule takes the appropriate approach to 
site-based waiting lists, which is to provide the necessary direction 
and guidance to PHAs on the establishment of site-based waiting lists 
and describe the circumstances in which a PHA may adopt a site-based 
waiting list and provide for careful monitoring of implementation.

E. Rent Determination Policies

    Comment. Does the statement of rents charged include the exception 
procedures for minimum rents?
    Response. Yes, this statement includes the exception procedures for 
minimum rents.
    Comment. Several comments on this rule were directed to the changes 
in rent policies made by the Public Housing Reform Act. These comments 
raised the following issues and questions. Since PHAs have to give 
residents 90 days to prove they have a long term hardship and cannot 
evict for nonpayment of rent, what effect will uncollected minimum 
rents have on PHMAP indicator? Can PHAs submit a modification request? 
Flat rents are based on rental value of units. What if rental value is 
more than the actual monthly cost to provide and operate? The final 
rule should clarify that PHAs can evict for nonpayment families on 
minimum rent who fail to request hardship exemption or on the 91st day 
for families who are denied hardship exemptions. PHAs will be at a 
disadvantage if residents can set their maximum rent payments. How can 
PHAs set a year-long budget when residents can change their rent 
payments at will? HUD should limit rent payment changes to once per 
year. The final rule should clarify minimum rent is discretionary for 
PHAs and can be between $0 and $50.
    Response. All these issues will be addressed in HUD's final rule on 
Changes to Admission and Occupancy, expected to be published soon.
    Comment. All rent policies should be in Plans, including mandatory 
policies.
    Response. It is an unnecessary administrative burden imposed on 
PHAs to have them include in the Plan those PHA policies that only 
repeat statutory or regulatory requirements. Additionally, the addition 
of these policies would make the PHA Plan unwieldy.

F. Operations and Management

    Comment. The Administrative Plan should be incorporated into the 
Annual Plan. HUD should provide guidance on what information from the 
Administrative Plan must be included in the Annual Plan.
    Response. The PHA template provides guidance on information in the 
Administrative Plan that must be included in the Annual Plan. The PHA 
Plan regulation requires the Administrative Plan to be made available 
for review by the public locally.
    Comment. The preamble to the interim rule states that this section 
is required for public housing and Section 8. The rule text only 
mentions public housing. The final rule should clarify the 
applicability of this requirement. Limiting the requirement to public 
housing is not allowed by the Public Housing Reform Act. Congress did 
not limit the statement to public housing. PHAs must be required to 
submit Section 8 Administrative Plans.
    Response. The regulatory text mentions both public housing and 
Section 8 tenant-based assistance. Section 903.7(e) which addresses the 
statement of a PHA's operation and management provides in paragraph 
(e)(2) that the information pertaining to the PHA's rules, standards 
and policies regarding management and maintenance of housing applies 
only to public housing. This is the only portion of this subsection 
that applies only to public housing. The rest of Sec. 903.7(e) applies 
to both public housing and Section 8 tenant-based assistance.

G. Grievance Procedures

    No significant issues were raised on this element of the plan.

H. Capital Improvements

    Comment. The final rule should be revised to state that 
Comprehensive Grant Program (CGP) updates will continue to satisfy this 
requirement. HUD must distribute CGP formula amounts in a timely 
fashion to ensure inclusion in the Plan. Additionally, Annual Plans are 
due before CGP planning process would normally take place. Unless a 
separate notice is issued that describes how modernization program 
submission will be satisfied by Plans, PHAs should be able to reference 
existing submissions.
    Response. HUD's Comprehensive Grant Program is being replaced by 
the Capital Fund Program. Accordingly, all

[[Page 56856]]

forms are being updated to reflect the new program. Guidance on the PHA 
Plan template, issued July 30, 1999, addresses how PHAs may satisfy 
Capital Fund planning requirements. As a transitional phase, PHAs will 
be permitted to use properly updated CGP forms.

I. Demolition/Disposition

    Comment. This section should be incorporated in the Asset 
Management section.
    Response. The statute provides for separate statements to be 
submitted on demolition/disposition and asset management. (See section 
511(d)(8) and (d)(17)). However, HUD's PHA Plan template includes an 
optional chart by which the PHA can combine these and other plan 
sections.
    Comment. The final rule should require that the PHA Annual Plans 
include: Reasons for demolition; a description of how the planned 
demolition meets statutory criteria for demolition or sale; 
identification of any studies relied upon that support the demolition 
(and the studies should be available to Resident Advisory Boards); a 
statement of specific requirements if consolidation of vacancies is 
planned; relocation plans; and an evaluation in light of the 
Consolidated Plan. The final rule also should require that the 
application for demolition and any supporting documents be available at 
PHA office.
    Response. The PHA Plan regulation requires that demolition and/or 
disposition applications must be made available locally for review by 
members of the public. Affected or interested parties therefore have 
the opportunity to review and comment to the PHA on these applications 
if they so choose. As noted earlier in this preamble, demolition and/or 
disposition activities are subject, by statute, to a submission and 
approval process separate from the PHA Plan submission and approval 
process. It would be an unnecessary administrative burden to have a PHA 
duplicate in the PHA Annual Plan extensive information on planned 
demolition and/or disposition that the PHA must provide under the 
separate demolition/disposition approval process.
    Comment. The interim demolition/disposition plan is unauthorized by 
law and is inconsistent with deregulation and streamlining goals the 
Public Housing Reform Act. HUD is prohibited from enacting early any 
piece of the Plan.
    Response. The Public Housing Reform Act provisions concerning 
demolition/disposition were effective upon the statute's enactment. The 
interim plan fulfills Congressional intent that demolition/disposition 
activities not be interrupted or halted and that HUD continue to 
process demolition/disposition applications before, if necessary, 
approval of the first PHA plans.
    Comment. The rule needs to clarify the contents of the interim 
demolition/disposition plan. Is the submission a statement or does the 
PHA have to submit all components of the Annual Plan.
    Response. As noted earlier in this preamble, HUD has added language 
at the final rule stage to address submission of an interim demolition/
disposition plan. Also, HUD's notice to PHAs on demolition/disposition 
processing requirements under the Public Housing Reform Act, PIH Notice 
99-19, issued April 20, 1999, describes the information to be submitted 
in the interim demolition/disposition plan.

J. Designated Housing

    Comment. PHAs that submit streamlined Plans should have to submit 
this information. The final rule needs to address how currently 
approved designated housing plans meet the requirements of the Public 
Housing Reform Act.
    Response. Designated housing is subject to a separate application 
and approval process, and designated housing is subject to separate 
regulations. A streamlined plan does not need to repeat information 
that is already required to be submitted under a separate approval 
process, and the PHA Plan regulation does not need to duplicate 
information addressed in other regulations. Designated housing 
applications, however, are required to be made available locally for 
review by members of the public.

K. Conversion

    Comment. The final rule should require an evaluation of conversion 
in relation to the Consolidated Plan, include certification from local 
officials, describe any demolition/disposition plan for units, set 
forth time table, and provide for certification of resident 
consultation.
    Response. Demolition/disposition and conversion plans are subject 
to a submission and approval process separate from the PHA plan 
submission and approval process. These applications, however, are 
required to be made available locally for review by members of the 
public.

L. Homeownership

    Comment. PHAs should be allowed to propose creative ways to 
increase homeownership opportunities.
    Response. The PHA Plan rule reflects the statutory requirement with 
respect to the information that must be part of the PHA Plan. The 
statute requires a description of any homeownership programs of the 
agency under section 8(y) or for which the public housing agency has 
applied or will apply for approval under section 32 of the U.S. Housing 
Act of 1937. The fact, however, that the statute requires this 
information, and the rule reflects the statutory requirement, does not 
preclude PHAs from proposing creative ways to increase homeownership 
opportunities and these proposals can be part of the PHA's 5-Year Plan 
or other information that it may choose to provide in its Annual Plan.
    Comment. PHAs should be required to establish measures to increase 
accessibility to homeownership programs for persons who have 
successfully participated in the Continuum of Care Program.
    Response. HUD believes that establishing such a requirement exceeds 
HUD's statutory authority with respect to the PHA planning process.

M. Community Service and Self-Sufficiency

    Comment. Several commenters addressed concerns not about 
information required to be included in the PHA Annual Plan with respect 
to community service and self-sufficiency, but implementation of these 
requirements. The comments raised the following concerns. Eviction for 
noncompliance with this requirement will be difficult to uphold in 
courts. PHAs will need additional insurance protection to cover 
increased number of volunteers. Residents who volunteer at a church/
temple should be exempt from community service requirements. Does 
service on a Resident Advisory Board count towards community service. 
PHAs should not have to monitor community service unless they have an 
FSS program. Welfare agencies should conduct monitoring. The final rule 
should list the exemptions to the community service requirement listed 
in section 512(a)(2) of the Public Housing Reform Act. This requirement 
will create a huge burden with limited benefit. Residents should be 
able to self-certify compliance with this requirement.
    Response. These issues will be addressed in HUD's final rule on 
``Changes to Admissions and

[[Page 56857]]

Occupancy Requirements in Public Housing and Section 8 Housing 
Assistance Programs,'' which expected to be published soon.
    Comment. Rulemaking for this requirement is incomplete. Will PHAs 
be required to submit an amendment to their Plans when the final rules 
are published. The community service requirement should not be 
implemented before January 1, 2001.
    Response. HUD has completed the rulemaking for this requirement. 
HUD's final rule on Changes to Admission and Occupancy Requirements, 
which is expected to be published soon, addresses this requirement. HUD 
has informed the PHAs with fiscal years commencing January 1, 2000, 
that community service need not be a part of their PHA Plans for that 
fiscal year.

N. Safety/Crime Prevention

    Comment. The requirement to check for lifetime registration for sex 
offenders is an unfunded mandate. Such checks undertaken by the Federal 
Bureau of Investigation (FBI) cost $27 and take 30-90 days. HUD should 
arrange for PHAs to obtain this data at no charge.
    Response. This issue is not relevant to this rule, but pertains to 
HUD's rule on ``One Strike Screening and Eviction for Drug Abuse and 
Other Criminal Activity.'' The proposed rule for this subject was 
published on July 23, 1999 (64 FR 40262). HUD is developing the final 
rule.
    Comment. The submission requirements should be modified to require 
submission of Public Housing Drug Elimination Program (PHDEP) grants 
only.
    Response. For high performing and small PHAs, the final rule limits 
the submission to PHDEP grant information only.
    Comment. Until HUD issues a separate notice how PHDEP will be 
satisfied by Plans, PHAs should be able to reference existing 
submissions.
    Response. HUD issued its final rule on PHDEP formula allocation on 
September 14, 1999 (64 FR 49900).

O. Pets

    Note: A number of commenters made substantive suggestions 
regarding how pet policies should be structured (as opposed to 
comments about the structuring of the PHA Plans). These comments 
will be responded to in the final rule concerning pet ownership in 
public housing.

    Comment. The final rule should clarify when this submission is 
required. The February 18, 1999 interim rule states that this 
submission is not required until HUD issues its pet regulations, but 
there are already pet rules covering elderly and people with 
disabilities projects. In addition, the final rule should clarify 
whether PHAs must make a submission if they have their own pet policy 
in effect.
    Response. The regulations governing pets in housing for the elderly 
or persons with disabilities are not required to be covered by the PHA 
Annual Plan. The Public Housing Reform Act requires a statement 
concerning the PHA's policies and requirements pertaining to the 
ownership of pets in public housing issued in accordance with section 
31 of the 1937 Act. HUD's proposed rule to implement section 31 of the 
1937 Act was published on June 23, 1999 (64 FR 33640). Approximately 
4,000 timely public comments were received on this rule, and 
approximately 3,000 public comments continued to be submitted to HUD 
well past the August 23, 1999 comment deadline. HUD is developing the 
final rule.

P. Civil Rights

    Comment. The deconcentration policies contradict the affirmatively 
furthering fair housing policies.
    Response. HUD disagrees. Both policies work to improve housing 
options for low-income families.
    Comment. HUD needs to issue further guidance regarding the 
maintenance of records to reflect analysis of programs and impediments. 
The guidance needs to address which programs will be analyzed, how the 
analysis is to be documented, and how often must the analysis be done?
    Response. This final rule provides guidance concerning these 
analyses.

Q. Asset Management

    Comment. This requirement is confusing and redundant. Much of this 
area is covered in other areas of the Plan.
    Response. As noted earlier in this preamble, the statute requires a 
separate submission on asset management. However, the PHA Plan 
regulation (and the PHA Plan template) clarify that information related 
to asset management addressed under other Plan elements is not to be 
repeated in the asset management section.
    Comment. This requirement is unclear, especially with regards to 
Section 8. More guidance is needed in the final rule.
    Response. The electronic template issued by HUD on July 30, 1999, 
provides the additional guidance that is needed to satisfactorily 
respond to this element of the PHA Annual Plan.

Section 903.13 What is a Resident Advisory Board and What is its Role 
in Development of the Annual Plan?

    Comment. When a Resident Advisory Board files a written request 
with HUD claiming that a PHA has failed to provide adequate notice and 
opportunity for comment, HUD's 75-day review limit should be tolled so 
that the PHA may respond to the claim.
    Response. Section 903.13(c)(2) of the PHA Plan regulation addresses 
the commenter's concern.
    Comment. It is very difficult and even impossible in some projects 
to obtain resident participation. In those cases where PHAs are 
unsuccessful in forming Resident Advisory Boards because of a lack of 
resident interest, the Resident Advisory Board requirement should be 
considered satisfied if the PHA has made adequate efforts to establish 
a Board. PHAs can only make resident participation opportunities 
available, they cannot require participation. Additionally, 
confidentiality is very important to section 8 participants and results 
in less of a desire to participate. If HUD wants to ensure residents 
participation, they should make such participation part of the lease 
requirement.
    Response. HUD believes that the cases in which PHAs were unable to 
form Resident Advisory Boards will be few. If, however, PHAs have been 
unsuccessful in forming Resident Advisory Boards, they should notify 
HUD immediately and advise the efforts undertaken to establish Resident 
Advisory Boards. HUD will determine at that time what additional action 
may be necessary.
    Comment. Resident Advisory Boards should be involved in the 
preparation of the 5-Year Plan as well as the Annual Plan.
    Response. Section 903.19 of the rule permits the PHA to adopt its 
5-Year Plan only after, among other things, the PHA has consulted with 
the Resident Advisory Board or other resident organizations about any 
changes made to the plan. Additionally, the 5-Year Plan is subject to 
public input and through this process, Resident Advisory Boards have 
the opportunity to be involved in the preparation of the 5-Year Plan.
    Comment. The interim rule is unclear about whether Resident 
Advisory Boards can contact HUD directly to protest the 5-Year Plan in 
addition to the Annual Plan. The final rule should protect PHAs by 
providing only a restricted right of protest.
    Response. Any party may complain to HUD concerning a PHA's

[[Page 56858]]

noncompliance with its plan or with the PHA Plan regulations.
    Comment. The final rule should identify how Resident Advisory 
Boards will be financially supported, what funds are available, and 
what funds PHAs will provide. For example, can a PHA give stipends to 
residents and exclude them from rent calculations, or can the PHA use 
CIAP, CGP, or Capital funds? The final rule should make clear that the 
resources for Resident Advisory Boards include technical assistance. 
HUD should provide sufficient resources to Resident Advisory Boards to 
ensure that residents are effectively represented.
    Response. The funds available to Resident Advisory Boards, resident 
organizations and for resident activities are generally the funds 
appropriated for HUD's public housing funded programs. For example, in 
the preamble to HUD's Capital Fund formula proposed rule published on 
September 14, 1999 (64 FR 49924), HUD noted that various funds 
allocated to Resident Advisory Boards, other resident organizations and 
for resident participation are eligible Capital Fund management 
expenses if the activities engaged in by these groups are directly 
related to Capital Fund activities. Funds are available to Resident 
Advisory Boards and other resident organizations from the public 
housing Operating Fund, and other HUD funded programs.
    Comment. PHAs should be allowed to self-certify to compliance with 
Resident Advisory Board requirement.
    Response. Section 903.13 only requires that PHAs, in submitting 
their final plans to HUD for approval, 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. If the Resident Advisory Board did not provide 
recommendations, the PHA need only note that in its plan submission.
    Comment. The final rule should require broader collaboration 
between PHAs and Resident Advisory Boards. The final rule should 
require PHAs to: produce a Plan development time-line before the Plan 
development process begins and share this time-line with Resident 
Advisory Boards; give Resident Advisory Boards early notice of when 
Plan development process begins and provide copies of drafts to 
Resident Advisory Boards; hold joint meetings with Resident Advisory 
Boards throughout the Plan development process; and give Resident 
Advisory Boards written notice of their right to seek recourse from 
HUD, the mechanisms to seek this recourse, and HUD contact information 
.
    Response. The final rule clarifies that Resident Advisory Boards 
are to assist and make recommendations to PHAs regarding the 
development of the PHA plan, and any significant amendment or 
modification to the PHA plan. HUD declines to impose, by regulation, 
requirements beyond those required by statute. HUD, however, encourages 
PHAs to involve Resident Advisory Boards as early in the plan 
development process as possible. Since PHAs must, by statute, involve 
Resident Advisory Boards in the PHA Planning process, PHAs should find 
it advantageous to consult with these Boards as early as possible.
    Comment. Section 903.13 is confusing. HUD should add some 
discussion of the different scenarios a PHA may face forming a Resident 
Advisory Board and ensuring adequate Section 8 representation.
    Response. A discussion of different scenarios that a PHA may face 
in forming a Resident Advisory Board is not appropriate for regulatory 
text. HUD will provide guidance on this issue through direct notices to 
PHAs and through the Office of Public and Indian Housing website at 
HUD's homepage.
    Comment. Several comments were directed to the rule's requirement 
that where a 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. The comments raised the following issues. The definition of 
significant size for a Section 8 program should be 1,250 or more 
certificates. The definition of significant size should not be based on 
the ratio of public housing to Section 8 units. A Section 8-only PHA 
should be required to form an Resident Advisory Board regardless of the 
size of the program. The Resident Advisory Board requirement should be 
satisfied for Section 8-only PHAs if the PHA has an Family Self-
Sufficiency (FSS) coordinating committee with resident participation.
    Response. HUD continues to believe that only PHAs with a tenant-
based assistance program of significant size should be subject to the 
Resident Advisory Board requirement. HUD has defined significant size 
to mean at least 20 percent of assisted households receive tenant-based 
assistance.
    Comment. Any waiver of this requirement should be granted only 
after notice of waiver is given to all residents.
    Response. The waiver of this requirement can only occur, in 
accordance with the statute, if the PHA demonstrates to the 
satisfaction of HUD that there exist resident councils or other 
organizations that adequately represent the interests of the residents 
of the public housing agency, and have the ability to perform the 
functions of a Resident Advisory Board. Since this requirement can only 
be waived if the residents are represented through some other 
organization, notification of the waiver of this requirement to all 
residents is unnecessary.
    Comment. The final rule needs to provide criteria and guidelines 
for what constitutes adequate representation and what is an appropriate 
size for an Resident Advisory Board. The final rule should require that 
Resident Advisory Board composition take into account representation 
based on geographic neighborhood location and reflect the racial/ethnic 
makeup of resident households. In addition, all Resident Advisory 
Boards should be required to meet the requirements concerning the 
structure and selection of authority-wide resident councils contained 
in 24 CFR part 964.
    Response. Resident Advisory Boards should not be viewed as a 
totally new concept. Both PHAs and public housing residents have 
experience with similar boards through resident councils. One of the 
responsibilities of resident councils is to advise PHAs in all aspect 
of public housing operations. Given the experience to date between PHAs 
and resident councils, HUD declines to provide more specific guidelines 
regarding representation. It is important to note, however, that the 
final rule provides for appointment of a jurisdiction-wide resident 
council that complies with HUD's regulations in 24 CFR part 964, or its 
representatives as the Resident Advisory Board. If a jurisdiction-wide 
resident council does not exist, local resident councils that are in 
compliance with part 964 shall be appointed, provided that the PHA may 
require the local council to choose a limited number of 
representatives. The PHA may appoint other members only to cover public 
housing or section 8 families not represented by a tenant council that 
complies with 24 CFR part 964.
    Comment. It will take time for PHAs to include Section 8 
participants in Resident Advisory Boards. PHAs should be required to 
address how they will address Section 8 participation in the Plan, but 
actual participation should not be required for the initial submission.
    Response. HUD does not believe that the inclusion of Section 8 
participants

[[Page 56859]]

in Resident Advisory Boards will take such time that PHAs will be 
unable to rely on this type of resident involvement in its first plans, 
especially considering that the first plan submission dates have been 
delayed by HUD.
    Comment. The final rule should not require PHAs that already have 
resident councils to form Resident Advisory Boards. The final rule 
should specify, however, that any resident councils that are appointed 
as Resident Advisory Boards can be expanded and that PHAs can use both 
resident councils and Resident Advisory Boards.
    Response. The statute provides for formation of Resident Advisory 
Boards. HUD's PHA Plan regulation, however, requires PHAs to appoint 
existing resident councils as Resident Advisory Boards when these 
councils meet the statutory and regulatory requirements.
    Comment. There should be no automatic appointments to Resident 
Advisory Boards. The interim rule places too great a burden on PHAs to 
ensure compliance with 24 CFR part 964 and may lead to perception that 
PHAs are intruding into the internal workings of resident councils. 
Using resident councils as Resident Advisory Boards is unwieldy--a 
resident council could consist of as many as 50 residents. The Public 
Housing Reform Act does not require that any particular group have an 
absolute right to serve. HUD should leave it up to PHAs to design their 
own Resident Advisory Boards.
    Response. HUD believes that the rule is clear on the appointment of 
Resident Advisory Boards. The rule provides that if 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 the Resident Advisory 
Board, except that members shall be added or another Resident Advisory 
Board formed to provide for reasonable representation of families 
receiving tenant-based assistance where necessary. 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. The PHA would 
appoint other representatives of families not represented by qualifying 
resident councils. HUD believes that this best supports the purposes 
and administration of part 964, which is the only regulation 
specifically protected by the Public Housing Reform Act.
    Comment. Participation by Section 8 participants is not required by 
Public Housing Reform Act. Section 8 participants have little 
significant relationship with a PHA after initial lease up, and Section 
8 program lacks the communication structure of public housing. Section 
8 participants should not be included in Resident Advisory Board 
requirement.
    Response. Section 8 tenant-based assistance is covered by the PHA 
planning process. HUD believes that it is important that Section 8 
participants are therefore included in this process as well.
    Comment. A PHA's city-wide resident council is an appropriate 
entity to discuss the Plan. Why does HUD require the group to change 
its name when it is discussing the Plan? It will only serve to confuse.
    Response. There is no requirement for a resident council to change 
its name. The statute uses the term Resident Advisory Board and 
describes specific functions that the Resident Advisory Board must 
perform. The city-wide council need not change its name to Resident 
Advisory Board, but it should be clear to the residents that the 
council has been appointed the Resident Advisory Board as provided by 
the statute.

Section 903.15 What is the Relationship of the Public Housing Agency 
Plan to the Consolidated Plan?

    Comment. Several comments were directed to the requirement that the 
PHA plan be consistent with the Consolidated Plan. These comments 
raised the following issues. Consistency should be defined as broadly 
as possible and should be worked out at the local level. HUD official 
who approves Consolidated Plan should be the same official who 
determines consistency. HUD should give examples of what it considers 
to be consistent Plans. Thirty days should be adequate for local 
government review Plan and certify that it is consistent with 
Consolidated Plan. HUD should work with States to ensure a workable 
process of determining consistency with Consolidated Plan.
    Response. HUD appreciates these comments and agrees that 
consistency should be worked out at the local level. HUD, therefore, 
declines to include a definition in the rule.
    Comment. HUD should devise an appeals process or a waiver of 
certification process to resolve disputes between Consolidated Plans 
and PHA Plans. There are several concerns about the Consolidated Plan 
process. For example, what if PHAs are not given adequate notice of the 
State process and Consolidated Plan does not adequately cover housing 
needs? What if the PHA Plan has to be consistent with various 
Consolidated Plans? What if the Consolidated Plans are themselves not 
consistent? What if a city's goals are not consistent with a PHA's 
goals and the PHA's goal are more consistent with national goals?
    Response. HUD will take these comments into consideration but HUD 
is not adopting these concerns in this final rule. HUD notes that the 
statute requires a PHA Plan to be consistent with the consolidated plan 
and does not provide for exceptions. HUD believes that any 
inconsistencies between a PHA's plan and the Consolidated Plan would 
probably surface during the public hearing process. HUD also notes that 
the Consolidated Plan process is subject to HUD's regulations in 24 CFR 
part 91, which require public participation and consultation. Before 
adopting regulatory measures to address possible inconsistencies, HUD 
would like experience with the PHA planning process first to determine 
if there are these problems as suggested by the commenters, and these 
problems would not be resolved by either of the public participation 
and consultation processes that govern the Consolidated Plan and the 
PHA Plan.
    Comment. The interim rule is not clear about what happens if the 
Consolidated Plan has expired. HUD should allow PHAs to certify that 
there is no active Consolidated Plan.
    Response. Once a Consolidated Plan, once approved, continues in 
existence until a new or updated Consolidated Plan is submitted and 
approved.
    Comment. If a deconcentration plan is inconsistent with 
Consolidated Plan's identified needs, PHAs should be required to 
explain steps taken to address this impact.
    Response. PHAs are required to indicate why they chose the strategy 
they did for addressing housing needs.

Section 903.17 Must the PHA Make Public the Contents of the Plans?

    Comment. Notices should be given to other organizations and 
agencies, such as legal services organizations, welfare agencies, local 
governments, and non-profit housing providers. Copies of Plans should 
be available at no cost to those who cannot afford to pay.
    Response. With respect to notification about the plan to other 
organizations and agencies, the final rule requires PHAs to undertake 
reasonable outreach to encourage participation. With respect to copies 
of the plan, the final rule is

[[Page 56860]]

clear that this information must be available for public review.
    Comment. The final rule should specify that notices must be in 
compliance with State public meeting laws.
    Response. HUD need not adopt this requirement in the rule. PHAs 
must operate in accordance with applicable State laws.
    Comment. The final rule should provide PHAs with alternate ways to 
provide residents with notice.
    Response. The rule tracks the statutory requirement, and makes 
clear the extent of the public's opportunity for participation in the 
PHA Plan process. PHAs are encouraged to contact residents about the 
PHA plan and the public hearing process in ways that the PHA believes 
will provide for wide dissemination of this information and better 
solicit interest.
    Comment. The final rule should require that the notice list the 
components of the Plan so that the public is clear as to the purpose of 
the Plan. The notice should also make clear that this is the public's 
only opportunity to comment.
    Response. HUD declines to adopt such a requirement in the final 
rule. PHAs are welcome to list the Plan's components in the notice and 
are also encouraged to emphasize to the public that the hearing is the 
opportunity for the public to provide comments and have input before 
the plan's adoption.
    Comment. The final rule should require a PHA Board to wait 30 days 
after the public hearing before it can approve the Plan).
    Response. HUD declines to adopt this requirement. The 30-day wait 
may be a delay that is unnecessary given local circumstances. The 
public housing residents, the public and local officials may be totally 
supportive of the plan, and under these circumstances a 30-day delay 
for submission of the plan would serve no clear purpose.
    Comment. The final rule should provide for public participation 
during the development of the Plan, not just when the Plan is ready to 
be adopted.
    Response. The rule reflects the statutory requirement. HUD declines 
to impose a public participation requirement beyond that established by 
statute. PHAs, however, are free to involve the public in the 
development of the plan beyond the requirements imposed by the statute.
    Comment. Some commenters suggested that the 45-day notice 
requirement should be reduced to 15 days. One commenter suggested that 
the requirement should be increased to 60 days.
    Response. The 45-day notice requirement is set by statute. While 
HUD could extend the time period, HUD cannot reduce this period. The 
final rule reflects HUD's decision to adhere to the minimum statutory 
time period.
    Comment. Items submitted in advance of the Plan, such as 
deconcentration policies and new preferences, should not be accepted 
without input from Resident Advisory Boards and public comment.
    Response. All items that are part of the PHA Plan, regardless of 
whether submitted in advance, are subject to Resident Advisory Board 
input and the public hearing process.

Section 903.21 May the PHA Amend or Modify the Plan?

    Comment. Several concerns were raised about the PHA's amendment or 
modification of the plan. Concerns were as follows. Section 903.21(a) 
may strip a PHA's executive director of the authority to reasonably 
modify certain policies, rules, or regulations without formal Board 
approval. Further, the final rule should clarify that a ``duly called'' 
meeting is not subject to the 45-day notice requirement. Section 
903.21(b) will significantly slow implementation of changes by giving 
HUD 75 days to review amendments or modifications to the Plan. The 
final rule should delete this provision and, instead, require PHAs to 
submit significant changes as part of next Annual Plan. The final rule 
should require that only modifications to the mission statement be 
provided to HUD for approval. HUD should not be allowed more than 30 
days to approve/disapprove amendments. The final rule should provide 
that when PHAs amend or modify a Plan, the public should be given 45 
days notice of the meeting to discuss the change. The notice should 
include a description of any proposed changes.
    Response. These requirements and time period with which the 
commenters are concerned derive directly from the statute, and track 
the statutory language.
    Comment. Section 903.21 does not track all the required statutory 
language. In particular, Sec. 903.21 does not include the requirements 
to meet with Resident Advisory Boards and to conduct a public hearing 
process.
    Response. Consultation with the Resident Advisory Board is covered 
in Sec. 903.13, and the public hearing process is covered in 
Sec. 903.17.
    Comment. Amendments should not be necessary for any changes made in 
response to HUD actions or decisions.
    Response. Depending upon HUD's actions or decisions regarding its 
review of the PHA Plan, a PHA's failure to amend its Plan in response 
to HUD actions or decisions may mean that the PHA does not have an 
approved plan. If HUD's action requires no discretionary PHA action, no 
amendment would be required. Section 903.23 addresses these issues.
    Comment. PHAs should be able to inform HUD of any modifications in 
the yearly progress report.
    Response. PHAs are free to inform HUD of any modifications in its 
yearly progress report, but PHAs must comply with the provisions of the 
PHA Plan regulation for significant amendments and modifications.
    Comment. The amendment process should not interfere with the day-
to-day operations of a PHA.
    Response. None of the PHA planning process should disrupt the day-
to-day operations of a PHA. The PHA plan should contribute to more 
effective operations.
    Comment. The final rule should require that Resident Advisory 
Boards be included in the amendment or modification process.
    Response. The statute provides for this and the rule reflects this 
requirement.

Section 903.23 What is the Process by Which HUD Reviews, Approves, or 
Disapproves an Annual Plan?

    Comment. HUD should indicate that any provisions of the Public 
Housing Reform Act that are not yet fully implemented by HUD and are 
components of the Plan will not be considered in the approval process.
    Response. The PHA Plan template addresses what is currently 
required to be included in the PHA Plan. As provisions of the Public 
Housing Reform Act become implemented and are required by statute to be 
included in the PHA Plan, the template will be updated to reflect these 
provisions, and PHAs will be notified.
    Comment. HUD should use a checklist to conduct reviews of Plans, 
and this checklist should be distributed to PHAs.
    Response. The PHA Plan template serves as the checklist that will 
guide HUD in reviewing PHAs plans.
    Comment. Troubled PHAs should not be ``deemed approved'' if HUD 
does not respond in 75 days. Section 511 contains exceptions for 
troubled PHAs. HUD needs to add language to Sec. 903.23 to address this 
issue.
    Response. The PHA Plan final rule reflects the exceptions for 
troubled PHAs provided in section 511(i)(4)(A).

[[Page 56861]]

    Comment. In the initial year, HUD should not penalize PHAs for late 
or incomplete Plans. Generally, HUD should not penalize PHAs for late 
or incomplete Plans who make a good faith effort to comply.
    Response. For the initial PHA plans, HUD has delayed the date of 
first submission as provided in the September 21, 1999 rule. 
Additionally, the PHA Plan template makes preparation and submission of 
the Plan much easier. With the template and additional time to prepare 
and submit plans, HUD does not believe that PHAs will be late or plans 
will be incomplete.
    Comment. The final rule should clarify what the process is when HUD 
does not approve a Plan.
    Response. HUD's notice to the PHA disapproving the plan will not 
only advise the PHA of the reasons for the disapproval but what action 
the PHA needs to take to obtain approval.
    Comment. Based on experiences with MTCS and the physical inspection 
process, HUD has problems improving the accuracy of its information 
about PHAs. HUD should provide a mechanism for resolving disputes over 
inconsistencies in information contained in HUD databases. HUD should 
be required to identify the specific information it says is 
inconsistent and give PHAs the opportunity to corroborate or correct 
the information.
    Response. The relevancy of this comment to the PHA Plan rule is not 
totally clear. HUD notes, however, that its physical inspection process 
has a mechanism for resolving disagreements over claims that 
information in HUD databases is inaccurate. This process is part of the 
Public Housing Assessment System. HUD has similar systems for 
correcting inaccurate information in other programs.
    Comment. The final rule should provide a means for technical 
corrections, re-submission, and conditional approval if HUD review 
shows a need for minor changes.
    Response. For minor changes, HUD believes that a formal process 
mandated by regulation is not necessary. HUD and PHAs should be able to 
easily address technical corrections and any necessity for minor 
changes.
    Comment. Complaints about PHA non-compliance with the Plan should 
have to pass a materiality test before disrupting the HUD approval 
process.
    Response. The regulation does not provide that any complaint about 
a PHA's non-compliance with the Plan will disrupt the HUD approval 
process. Whether a complaint is filed with HUD during the review 
process or after HUD approval has been given, HUD will investigate, but 
this investigation will not interfere with HUD's responsibilities to 
PHAs either as part of the PHA plan review and approval process or in 
other areas. When the investigation is complete, and a finding made, 
HUD will take appropriate action if action is required.
    Comment. The final rule should make clear that a PHA will not need 
HUD approval for anything the PHA does not currently need HUD approval 
for.
    Response. This is a broad statement but HUD believes that with 
respect to the PHA plans, the rule is clear on what requires HUD 
approval. This rule, however, only addresses the PHA Plan requirements.

Section 903.25 How Does HUD Ensure PHA Compliance With its Plan?

    Comment. The final rule needs to contain more detail on how HUD 
will measure PHA compliance and what actions will be taken if a PHA is 
not in compliance.
    Response. For the majority, if not all, of the elements that 
constitute the PHA Plan, compliance is measured by a PHA's compliance 
with existing program regulations. The PHA Plan brings together in one 
source, the PHA's policies, financial information, operating 
procedures, grievance procedures, and similar information, but a PHA's 
compliance with these policies or procedures is covered by other 
program regulations. Therefore, assuming that a PHA has an approved PHA 
Plan and follows it, a PHA's compliance will be measured by the PHA's 
compliance with existing program regulations.
    Comment. HUD should refrain from taking enforcement actions against 
PHAs and should use the Plan for monitoring purposes only. The final 
rule should provide a process, similar to the one at 24 CFR part 135, 
subpart D, for receiving complaints against non-complying PHAs.
    Response. HUD believes that its response to the preceding comments 
covers these issues as well. HUD's enforcement actions will largely be 
based on a PHA's compliance with existing program regulations.

VI. Findings and Certifications

Paperwork Reduction Act

    The information collection requirements for the interim rule were 
approved by the Office of Management and Budget (OMB) in accordance 
with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520) and have been assigned OMB Control Number 2577-0226. Changes 
made to the information collection requirements at the final rule stage 
are not yet approved. The approval when recieved will be announced by 
separate notice. An agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless the 
collection displays a valid control number.

Executive Order 12866

    This final rule was reviewed by the Office of Management and Budget 
(OMB) under Executive Order 12866, Regulatory Planning and Review. OMB 
determined that this final 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 final 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 final rule, and in so 
doing certifies that this rule does not have a significant economic 
impact on a substantial number of small entities. This final rule 
implements, by statutory directive, a comprehensive planning system for 
PHAs (which also provides for a consolidated statement of PHA policies 
on various PHA operations) and also provides a consolidated reporting 
mechanism. The PHA 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 final 
rule provides for submission of a streamlined plan by small entities. 
For all PHAs, HUD's PHA plan electronic template, issued July 30, 1999, 
significantly reduces the burden of preparation and submission of the 
PHA Plan.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that this final 
rule will not have substantial direct effects on States or their 
political subdivisions, or the relationship between the Federal

[[Page 56862]]

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 final 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 prepared at the interim rule stage, 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). That 
Finding remains applicable to this final rule, and 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 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
    For the reasons stated in the preamble, HUD adopts as final, the 
interim rule published on February 18, 1999 (64 FR 8170), by revising 
24 CFR part 903 to read as follows:

PART 903--PUBLIC HOUSING AGENCY PLANS

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  May HUD request additional information in the Annual Plan of 
a troubled PHA?
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  What is the process for obtaining public comment on 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 (under section 8(o) of the 
U.S. Housing Act of 1937, 42 U.S.C. 1437f(o)) (tenant-based 
assistance); or
    (ii) Amounts from the public housing operating fund or capital fund 
(under 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, as well as the format of 
attachments to the plans and documents related to the plan that the PHA 
does not submit but may be required to make available locally. 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.
    (f) References to the ``1937 Act'' in this part refer to the U.S. 
Housing Act of 1937 (42 U.S.C. 1437 et seq.)


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 for such PHAs are due on December 1, 1999. For PHAs whose 
fiscal years begin after January 1, 2000, the 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 fiscal year that is covered by the 
requirements of this part is the PHA fiscal year that begins January 1, 
2000. The first Annual Plans for such PHAs are due December 1, 1999. 
For PHAs whose fiscal years begin after January 1, 2000, the first 
Annual Plans are due 75 days in advance of PHAs fiscal year 
commencement dates. For all PHAs, after submission of the first Annual 
Plan, all 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 submitting its first 5-Year Plan, a PHA in its succeeding 
5-Year

[[Page 56863]]

Plans, in addition to addressing its mission, goals and objectives for 
the next 5 years, must address the progress it has made in meeting the 
goals and objectives described in its previous 5-Year Plan.


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

    With the exception of the first Annual Plan submitted by a PHA, the 
Annual Plan must include the information provided in this section. HUD 
will advise PHAs by separate notice, sufficiently in advance of the 
first Annual Plan submission date, of the information, described in 
this section that must be included in the first Annual Plan, and any 
additional instructions or directions that may be necessary with 
respect to preparation and submission of the first Annual Plan. The 
information described in this section applies to both public housing 
and tenant-based assistance, except where specifically stated 
otherwise. Additionally, 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, rent policies) 
and not the statutory or regulatory requirements that govern these 
components. The PHA's Annual Plan also must be consistent with the 
goals and objectives of the PHA's 5-Year Plan.
    (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 other families who 
are on the public housing and Section 8 tenant-based assistance waiting 
lists, including:
    (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) A PHA must make reasonable efforts to identify the housing 
needs of each of the groups listed in paragraph (a)(1) on this section 
based on information provided by the applicable Consolidated Plan, 
information provided by HUD, and other generally available data. 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, by general categories, of the PHA's anticipated 
resources, such as PHA operating, capital and other anticipated Federal 
resources 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, and state 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, and any assignment and occupancy policies that pertain to 
public housing units and housing units assisted under section 8(o) of 
the 1937 Act. 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. The statement must 
address any site-based waiting lists, as authorized by section 6(s) of 
the 1937 Act. This section permits PHAs to establish a system of site-
based waiting lists that is 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 to attract applicants regardless of 
race or ethnicity;
    (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) or is 
otherwise satisfactory to HUD;
    (B) At least every three years the PHA uses 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, as required by section 
16(a)(3)(B) of the 1937 Act (42 U.S.C. 1437n). To implement this 
requirement, which is only applicable to public housing, PHAs must:
    (i) Determine and compare the relative tenant incomes of each 
development occupied predominately by families with children. PHAs 
shall be considered to be in compliance with these requirements if they 
determine the average household income in all such developments 
combined and define higher-income families as those with incomes over 
this average, higher-income developments and buildings as those where 
the average family income is over this average, lower-income families 
as those with incomes under this average and lower-income developments 
and buildings as those where the average family income is under this 
average;

[[Page 56864]]

    (ii) Consider what admissions policy measures or incentives, if 
any, will be needed to bring higher-income families into lower-income 
and buildings developments and lower-income families into higher income 
developments and buildings. PHA policies must devote appropriate 
attention to both of these goals. PHA policies must affirmatively 
further fair housing; and
    (iii) 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 
that the information requested on site-based waiting lists and 
deconcentration, which 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, applicable flat 
rents, and the rental contributions of families receiving tenant-based 
assistance. For tenant-based assistance, this statement also 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 list the PHA's rules, standards, and policies that 
govern maintenance and management of housing owned, assisted, or 
operated by the PHA. The policies listed in this statement 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 PHA and program 
management and listing of administered programs 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 applicants and hearing procedures for 
participants.
    (g) A statement of capital improvements needed. With respect to 
public housing only, 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, and any 
other information required for participation in the Capital Fund. PHAs 
also are required to include 5-Year Plans covering large capital items.
    (h) A statement of any demolition and/or disposition. (1) Plan for 
Demolition/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 1937 Act (42 U.S.C. 1437p), and the timetable for demolition and/or 
disposition. The application and approval process for demolition and/or 
disposition is a separate process. Approval of the PHA Plan does not 
constitute approval of these activities.
    (2) 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 
description of how the plan is consistent with the Consolidated Plan, 
and confirm that a public hearing was held on the proposed action and 
that the resident advisory board was consulted. Interim plans for 
demolition/disposition are subject to PHA Plan procedural requirements 
in this part (see Secs. 903.13, 903.15, 903.17, 903.19, 903.21, 903.23, 
903.25) except that if a resident advisory board has not yet been 
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.
    (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 1937 Act (42 U.S.C. 1437e). The designated housing application 
and approval process is a separate process. Approval of the PHA Plan 
does not constitute approval of these activities.
    (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 1937 Act (42 U.S.C. 1437z-5), or the status of any building 
or buildings that the PHA may be required to convert to tenant-based 
assistance under section 202 of the Fiscal Year 1996 HUD Appropriations 
Act (42 U.S.C. 14371 note), or describes that the PHA plans to 
voluntarily convert under section 22 of the 1937 Act (42 U.S.C. 1437t). 
The statement also must include an analysis of the projects or 
buildings required to be converted under section 33. For both voluntary 
and mandatory conversions, the statement must include the amount of 
assistance received commencing in Federal Fiscal Year 1999 to be used 
for rental assistance or other housing assistance in connection with 
such conversion. The application and approval processes for required or 
voluntary conversions are separate approval processes. Approval of the 
PHA Plan does not constitute approval of these activities.
    (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 1937 Act (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 
1937 Act (42 U.S.C. 1437z-4). The application and approval process for 
homeownership under the programs described in paragraph (k) of this 
section, with the exception of the section 8(y) homeownership program, 
are separate processes. Approval of the PHA Plan does not constitute 
approval of these activities.
    (l) A statement of the PHA's community service and self-sufficiency 
programs. (1) This statement describes:

[[Page 56865]]

    (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 1937 Act (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. PHAs must address any cooperation agreements, as 
described in section 12(d)(7) of the 1937 Act (42 U.S.C. 1437j(d)(7)), 
that the PHA has entered into or plans to enter into.
    (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 development-by-development 
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; and
    (iii) A description of the coordination between the PHA and the 
appropriate police precincts for carrying out crime prevention measures 
and activities.
    (2) If the PHA expects to receive drug elimination program grant 
funds, the PHA must submit, in addition to the information required by 
paragraph (m)(1) of this section, the plan required by HUD's Public 
Housing Drug Elimination Program regulations (see 24 CFR part 761).
    (3) 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 1937 Act (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 certification 
requirement 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, work with local 
jurisdictions to implement any of the jurisdiction's initiatives to 
affirmatively further fair housing that require the 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 1937 Act (42 U.S.C. 1437c(h)).
    (q) A statement of asset management. To the extent not covered by 
other components of the PHA Annual Plan, 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. (1) For all Annual Plans 
following submission of the first Annual Plan, a PHA must include a 
brief statement of the PHA's progress in meeting the mission and goals 
described in the 5-Year Plan;
    (2) A PHA must identify the basic criteria the PHA will use for 
determining:
    (i) A substantial deviation from its 5-Year Plan; and
    (ii) A significant amendment or modification to its 5-Year Plan and 
Annual Plan.
    (3) A PHA must include such other information as HUD may request of 
PHAs, either on an individual or across-the-board basis. HUD will 
advise the PHA or PHAs of this additional information through advance 
notice.


Sec. 903.9  May HUD request additional information in the Annual Plan 
of a troubled PHA?

    HUD may request that a PHA that is at risk of being designated as 
troubled or is designated as troubled under section 6(j)(2) of the 1937 
Act (42 U.S.C. 1437d(j)(2)), under the Public Housing Management 
Assessment Program (24 CFR part 901) or under the Public Housing 
Assessment System (24 CFR part 902) 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 as of the 
last annual or interim assessment of the PHA before the submission of 
the 5-Year or Annual Plan;
    (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

[[Page 56866]]

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 include 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 under section 6(j)(2) of 
the 1937 Act 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 included 
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), (e), (f), (k), (l), (o), (p) and (r).


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 or boards, as provided in 
paragraph (b) of this section, whose membership consists of individuals 
who adequately reflect and represent the residents assisted by the PHA.
    (1) The role of the Resident Advisory Board (or Resident Advisory 
Boards) is to assist and make recommendations regarding the development 
of the PHA plan, and any significant amendment or modification to the 
PHA plan.
    (2) The PHA shall allocate reasonable resources to assure the 
effective functioning of Resident Advisory Boards. Reasonable resources 
for the Resident Advisory Boards must provide reasonable means for them 
to become informed on programs covered by the PHA Plan, to communicate 
in writing and by telephone with assisted families and hold meetings 
with those families, and to access information regarding covered 
programs on the internet, taking into account the size and resources of 
the PHA.
    (b) Each PHA must establish one or more Resident Advisory Boards, 
as provided in paragraph (b) of this section.
    (1) If 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 the Resident Advisory Board, except that members 
shall be added or another Resident Advisory Board formed to provide for 
reasonable representation of families receiving tenant-based assistance 
where such representation is required under paragraph (b)(2) of this 
section. 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 or more 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 (where tenant-based assistance is 20% or more of 
assisted households), 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.
    (3) Where or to the extent that resident councils that comply with 
the tenant participation regulations do not exist, the PHA shall 
appoint Resident Advisory Boards or Board members as needed to 
adequately reflect and represent the interests of residents of such 
developments; provided that the PHA shall provide reasonable notice to 
such residents and urge that they form resident councils 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, and any 
significant amendment or modification to the Annual Plan, as provided 
in Sec. 903.21.
    (1) In submitting the final plan to HUD for approval, or any 
significant amendment or modification to the 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.
    (2) 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?

    (a) The PHA must ensure that the Annual Plan is consistent with any 
applicable Consolidated Plan for the jurisdiction in which the PHA is 
located. The Consolidated Plan includes a certification that requires 
the preparation of an Analysis of Impediments to Fair Housing Choice.
    (1) 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.
    (2) For State agencies that are PHAs, the applicable Consolidated 
Plan is the State Consolidated Plan.
    (b) A PHA may request to change its fiscal year to better 
coordinate its planning with the planning done under the Consolidated 
Plan process, by the State or local officials, as applicable.


Sec. 903.17  What is the process for obtaining public comment on the 
plans?

    (a) 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 and/or Annual Plan, 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), the required attachments and 
documents related to the plans, 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.
    (c) PHAs shall conduct reasonable outreach activities to encourage 
broad public participation in the PHA plans.

[[Page 56867]]

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) 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, as defined in Sec. 903.7(r)(2), the PHA:
    (1) 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
    (2) 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.
    (b) Each significant amendment or modification to a PHA Plan 
submitted to HUD is subject to the requirements of Secs. 903.13, 
903.15, and 903.17.


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 significant 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 1937 Act 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 significant 
amendment or modification to the plan, only if HUD determines that the 
plan, or one of its components or elements, or any significant 
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; or
    (iii) Is not consistent with applicable Federal 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 significant 
amendment or modification to the plan, HUD will issue written notice to 
the PHA if the plan or a significant amendment or modification 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 to be reviewed by HUD were in 
compliance with applicable requirements and the plan has been approved.
    (4) The provisions of paragraph (b)(3) of this section do not apply 
to troubled PHAs. The plan of a troubled PHA must be approved or 
disapproved by HUD through written notice.
    (c) Designation of due date as submission date for initial plan 
submissions. For purposes of the 75-day period described in paragraph 
(b) of this section, the first 5-year and Annual Plans submitted by a 
PHA will be considered to have been submitted on their due date 
(December 1, 1999 or 75 days before the start of the PHA fiscal year, 
as appropriate; see Sec. 903.3).
    (d) Public availability of the approved plan. Once a PHA's plan has 
been approved, a PHA must make its approved plan and the required 
attachments and documents related to the 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, as it deems appropriate, respond to any complaint concerning 
PHA noncompliance with its plan. If HUD should determine that a PHA is 
not in compliance with its plan, HUD will take whatever action it deems 
necessary and appropriate.

    Dated: October 14, 1999.
Harold Lucas,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-27302 Filed 10-20-99; 8:45 am]
BILLING CODE 4210-33-P