[Federal Register Volume 64, Number 203 (Thursday, October 21, 1999)]
[Proposed Rules]
[Pages 56890-56892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27303]



[[Page 56889]]

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Part V





Department of Housing and Urban Development





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24 CFR Part 964



Direct Funding of Public Housing Resident Management Corporations; 
Proposed Rule

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

[[Page 56890]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 964

[Docket No. FR-4501-P-01]
RIN 2577-AC12


Direct Funding of Public Housing Resident Management Corporations

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule revises HUD's regulations regarding 
resident participation and resident opportunities in public housing. 
Specifically, the rule would make conforming amendments to the HUD 
regulations to reflect recent statutory changes made by the Quality 
Housing and Work Responsibility Act of 1998. The proposed rule provides 
that a resident management corporation (RMC) may receive capital and 
operating funds from HUD if the RMC has primary management 
responsibility for the public housing project and HUD determines that 
the RMC has the capacity to effectively discharge such responsibility.

DATES: Comments Due Date: December 20, 1999.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Room 10276, Department of Housing and Urban Development, 451 
Seventh Street, SW, Washington, DC 20410-0500. Communications should 
refer to the above docket number and title. Facsimile (FAX) comments 
are not acceptable. A copy of each communication submitted will be 
available for public inspection and copying between 7:30 a.m. and 5:30 
p.m. weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: Paula Blunt, Director, Customer 
Services and Amenities Division, Department of Housing and Urban 
Development, Office of Public and Indian Housing, 451 Seventh Street, 
SW, Room 4228, Washington, DC 20410; telephone (202) 619-8201 (this is 
not a toll-free telephone number). Persons with hearing or speech 
disabilities may access this number via TTY by calling the free Federal 
Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 20 of the United States Housing Act of 1937 (42 U.S.C. 1437 
et seq.) (the ``1937 Act'') encourages resident management of public 
housing projects as a means of improving existing living conditions in 
public housing. HUD has implemented section 20 of the 1937 Act in its 
regulations at 24 CFR part 964 (captioned ``Tenant Participation and 
Tenant Opportunities in Public Housing''). Under section 20, and 24 CFR 
part 964, an RMC must be a nonprofit corporation organized under the 
laws of the State in which the public housing project is located, and 
the tenants of the project must be the sole voting members of the RMC.
    An eligible RMC enters into a management contract with the public 
housing agency (PHA) establishing the respective management rights and 
responsibilities of the RMC and the PHA. The contract must be 
consistent with the requirements of the 1937 Act and may provide for 
the RMC to perform any or all of the management functions for which the 
PHA is responsible to HUD. The management contract is treated as a 
contracting out of services and is subject to any provision of a 
collective bargaining agreement regarding the contracting out of 
services to which the PHA is subject. To assist and encourage resident 
management of public housing, HUD is developing a sample management 
contract for use by RMCs and PHAs. Once completed, the sample contract 
will be included as part of a broader HUD notice, which will also 
discuss other issues related to public housing management.
    The performance of the RMC is subject to periodic review by the PHA 
to ensure that the RMC complies with all applicable requirements and 
standards of performance.

II. Public Housing Reform

    On October 21, 1998, President Clinton signed into law HUD's fiscal 
year 1999 Appropriations Act, which includes the Quality Housing and 
Work Responsibility Act of 1998 (Pub. L. 105-276; 112 Stat. 2461, 2522) 
(the ``Public Housing Reform Act'' or ``Act''). The Public Housing 
Reform Act constitutes a substantial overhaul of HUD's public housing 
and Section 8 assistance programs. The changes made by the Public 
Housing Reform Act are directed at revitalizing and improving HUD's 
public housing and Section 8 tenant-based programs. These changes are 
also designed to provide for more resident involvement, and to increase 
resident participation and awareness in creating and maintaining a 
positive living environment.

III. This Proposed Rule

    This proposed rule would amend 24 CFR part 964 to reflect recent 
statutory changes made to section 20 of the 1937 Act by section 532 of 
the Public Housing Reform Act. Section 532 of the Public Housing Reform 
Act provides for the direct provision of capital and operating 
assistance to an RMC if: (1) The RMC petitions HUD for the release of 
the funds; (2) the management contract between the RMC and the PHA 
provides for the RMC to assume the primary management responsibilities 
of the PHA; and (3) HUD determines that the RMC has the capability to 
effectively discharge such responsibilities. In all other cases, 
operating and capital funding will be provided to the RMC by the PHA.
    The proposed rule provides that HUD will consider this third 
requirement to be satisfied if the RMC is designated at least a 
``standard performer'' under the Public Housing Assessment System 
(PHAS) (see 24 CFR part 902); and the RMC is not in violation of any 
financial, accounting, procurement, civil rights, fair housing, or 
other program requirements that HUD determines call into question the 
capability of the RMC to effectively discharge its responsibilities 
under the contract.
    The standard that HUD will use to determine RMC eligibility for 
direct assistance does not impose any new requirements on RMCs. The 
proposed rule reflects existing performance measures and program 
requirements that RMCs must already comply with. For example, RMCs are 
already subject to the PHAS performance measures described in 24 CFR 
part 902. Further, RMCs are currently required to comply with all 
applicable program, civil rights, and financial requirements as a 
condition of assistance under HUD's public housing programs. HUD 
believes that the use of existing measures will allow HUD to accurately 
determine RMC management capability, while minimizing the burdens 
imposed on RMCs.
    The Annual Contributions Contract between HUD and the PHA will 
provide for the direct allocation of operating and capital assistance 
to RMCs that meet the requirements described above. Any direct capital 
or operating assistance provided to the RMC must be used for purposes 
of operating the public housing developments of the PHA and for 
performing other eligible activities with respect to public housing. If 
HUD provides direct funding to an RMC, the PHA is not responsible for 
the actions of the RMC.

[[Page 56891]]

    In addition to implementing section 532 of the Public Housing 
Reform Act, this proposed rule would also make one clarifying change to 
24 CFR part 964. Specifically, this rule would revise Sec. 964.225 
(entitled ``Resident management requirements'') to clarify that an RMC 
must be in compliance with any local licensing requirement, or other 
local requirement, governing the qualifications or operations of a 
property manager.

IV. Other Changes Made by the Public Housing Reform Act to Public 
Housing Resident Requirements

    In addition to the changes described above, the Public Housing 
Reform Act makes various other amendments to the statutory requirements 
regarding resident participation and resident opportunities in public 
housing. For example, the Public Housing Reform Act requires the 
participation of residents on the governing board of a PHA (section 505 
of the Act) and provides for grant funding of services for public 
housing residents (section 538 of the Act).
    The resident board membership requirements established by section 
505 of the Act are being implemented through a separate proposed 
rulemaking published on June 23, 1999 (64 FR 33644). The June 23, 1999 
proposed rule would create a new subpart E to 24 CFR part 964 
describing these requirements. The other changes made by the Public 
Housing Reform Act affecting the part 964 requirements will be the 
subject of a separate proposed rulemaking. HUD is committed to the 
development of this proposed rule with the active participation of 
public housing residents (see Section V of this preamble below).

V. HUD's Ongoing Efforts To Promote Effective Resident 
Participation

    To further promote effective resident participation in public 
housing, HUD is taking various steps to promote resident involvement in 
creating and maintaining a positive living environment. As discussed 
above, HUD is developing a proposed rule that will implement the 
resident related amendments made by the Public Housing Reform Act. HUD 
is committed to developing this proposed rule with the active 
participation of public housing residents. HUD will solicit resident 
input through the scheduling of public forums, solicitations for 
written comments, and/or other appropriate means.
    HUD's goal in undertaking this rulemaking is to develop a set of 
easy-to-understand regulations that reflect the meaningful 
contributions of public housing residents. Accordingly, the proposed 
rule will not only implement statutory amendments made by the Public 
Housing Reform Act, but will also streamline and reorganize 24 CFR part 
964 to simplify and improve the clarity of HUD's resident participation 
requirements.
    HUD is taking several other steps to increase resident 
participation in public housing. For example, HUD will conduct training 
for resident organizations and PHAs on the new Public Housing Reform 
Act. HUD will also clarify in the PHA Plan regulation 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.

VI. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4223). The Finding of No Significant Impact is 
available for public inspection between the hours of 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 Seventh Street, SW, Washington, DC.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) (the RFA), has reviewed and approved this proposed rule 
and in so doing certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. The reasons 
for HUD's determination are as follows:
    (1) A Substantial Number of Small Entities Will Not be Affected. 
The proposed rule is exclusively concerned with public housing agencies 
that contract with RMCs for the management and operation of specific 
public housing projects. Specifically, the rule would make various 
conforming amendments to 24 CFR part 964 (captioned ``Tenant 
Participation and Tenant Opportunities in Public Housing'') to reflect 
recent statutory changes made by the Public Housing Reform Act. Under 
the definition of ``Small governmental jurisdiction'' in section 601(5) 
of the RFA, the provisions of the RFA are applicable only to those few 
public housing agencies that are part of a political jurisdiction with 
a population of under 50,000 persons. The number of entities 
potentially affected by this rule is therefore not substantial.
    (2) No Significant Economic Impact. The Public Housing Reform Act 
improves and simplifies the way in which PHAs and RMCs are funded. 
Specifically, section 519 of the Public Housing Reform replaces funding 
under the existing Performance Funding System (PFS) with formula 
funding under the new Operating Fund and the Capital Improvement 
Assistance Program (CIAP) and the Comprehensive Grant Program with 
formula allocations under the new Capital Fund. The implementation of 
section 519 is beyond the scope of this proposed rule, and is the 
subject of separate negotiated rulemakings that HUD is currently 
undertaking. Accordingly, the economic impact of this proposed rule 
will not be significant, and it will not affect a substantial number of 
small entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) requires Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and on 
the private sector. This proposed rule would not impose, within the 
meaning of the UMRA, any Federal mandates on any State, local, or 
tribal governments or on the private sector.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official for HUD under 
section 6(a) of Executive Order 12612, Federalism, has determined that 
this rule will not have federalism implications concerning the division 
of local, State, and Federal responsibilities. This proposed rule would 
revise 24 CFR part 964 to reflect recent statutory changes made to 
section 20 of the 1937 Act by section 532 of the Public Housing Act. 
The proposed rule would also make several clarifying and technical 
changes to the part 964. No

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programmatic or policy change will result from this rule that will 
affect the relationship between the Federal government and State and 
local governments.

Regulatory Planning and Review

    The Office of Management and Budget has reviewed this rule under 
Executive Order 12866 (captioned ``Regulatory Planning and Review'') 
and determined that this rule is a ``significant regulatory action'' as 
defined in section 3(f) of the Order (although not an economically 
significant regulatory action under the Order). Any changes made to 
this rule as a result of that review are identified in the docket file, 
which is available for public inspection during regular business hours 
(7:30 a.m. to 5:30 p.m.) at the Office of the General Counsel, Rules 
Docket Clerk, Room 10276, U.S. Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410-0500.

List of Subjects in 24 CFR Part 964

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

    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR part 964 as follows:

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

    1. The authority citation for part 964 is revised to read as 
follows:

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

    2. Amend Sec. 964.225 as follows:
    a. Redesignate paragraphs (h), (i), (j), and (k) as paragraphs (i), 
(j), (k), and (l), respectively;
    b. Add new paragraph (h); and
    c. Revise newly designated paragraph (j).
    The addition and revision to Sec. 964.225 read as follows:


Sec. 964.225  Resident management requirements.

* * * * *
    (h) Direct provision of operating and capital assistance to RMC.--
(1) Direct provision of assistance to RMC. The ACC shall provide for 
the direct provision of operating and capital assistance by HUD to an 
RMC if:
    (i) The RMC petitions HUD for the release of funds;
    (ii) The contract provides for the RMC to assume the primary 
management responsibilities of the PHA;
    (iii) The RMC has been designated as at least a ``standard 
performer'' under the Public Housing Assessment System (PHAS) (see 24 
CFR part 902); and
    (iv) The RMC is not in violation of any financial, accounting, 
procurement, civil rights, fair housing or other program requirements 
that HUD determines call into question the capability of the RMC to 
effectively discharge its responsibilities under the contract.
    (2) Use of assistance. Any direct capital or operating assistance 
provided to the RMC must be used for purposes of performing eligible 
activities with respect to public housing as may be provided under the 
contract.
    (3) Responsibilities of PHA. If HUD provides direct funding to a 
RMC under paragraph (h)(1) of this section, the PHA is not responsible 
for the actions of the RMC.
* * * * *
    (j) Bonding, insurance, and licensing. (1) Bonding and insurance.--
Before assuming any management responsibility under its contract, the 
RMC must provide fidelity bonding and insurance, or equivalent 
protection that is adequate (as determined by HUD and the PHA) to 
protect HUD and the PHA against loss, theft, embezzlement, or 
fraudulent acts on the part of the RMC or its employees.
    (2) Licensing and other local requirements. An RMC must be in 
compliance with any local licensing, or other local requirement, 
governing the qualifications or operations of a property manager.
* * * * *
    Dated: October 13, 1999.
Deborah Vincent,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 99-27303 Filed 10-20-99; 8:45 am]
BILLING CODE 4210-33-P