[Federal Register Volume 67, Number 117 (Tuesday, June 18, 2002)]
[Proposed Rules]
[Pages 41582-41583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15245]



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Part II





Department of Housing and Urban Development





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24 CFR Part 245



Tenant Participation in State-Financed, HUD-Assisted Housing 
Developments; Proposed Rule

  Federal Register / Vol. 67, No. 117 / Tuesday, June 18, 2002 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 245

[Docket No. FR-4611-P-01]
RIN 2502-AH55


Tenant Participation in State-Financed, HUD-Assisted Housing 
Developments

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Proposed rule.

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SUMMARY: HUD's current regulations protecting the statutory right of 
tenants in HUD-assisted and insured multifamily housing developments to 
organize and participate in the operation of the development do not 
currently cover State-financed housing developments that receive 
assistance under certain HUD programs. However, the statutory right of 
tenants to organize includes those State-financed housing developments. 
This proposed rule would extend the protection of tenant organizations 
to include State-financed developments assisted under certain HUD 
programs.
    This rulemaking also proposed to make a minor technical correction 
to a citation in the existing tenant participation regulation, and to 
correct a mistaken cross-reference.

DATES: Comment Due Date: August 19, 2002.

ADDRESS: Interested persons are invited to submit comments regarding 
this rule to the Rules Docket Clerk, 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: Willie Spearmon, Director, Office of 
Housing Assistance and Grant Administration, U.S. Department of Housing 
and Urban Development, 451 Seventh Street, SW, Washington, DC 20410-
8000; telephone (202) 708-3000 (this is not a toll-free number). 
Hearing- or speech-impaired individuals may access this number via TTY 
by calling the toll-free Federal Information Relay Service at (800) 
877-8339.

SUPPLEMENTARY INFORMATION:

I. The June 7, 2000, Final Rule

    The final rule on tenant participation in multifamily insured and 
assisted housing, 65 FR 36272-36282 (June 7, 2000), expands tenant 
participation into new categories of HUD assisted housing pursuant to 
statutory changes enacted in 1998. Section 599 of the Quality Housing 
and Work Responsibility Act, Public Law 105-276 (approved October 21, 
1998), codified at 12 U.S.C. 1715z-1b, extended the protection of 
tenant organizations to developments that receive project-based Section 
8 assistance and enhanced vouchers. The June 7, 2000, final rule 
implements these provisions. In addition, section 183(a) of the Housing 
and Community Development Act of 1987, Public Law 100-242, 101 Stat. 
1872, amended 12 U.S.C. 1715z-1b to expand tenant participation rights 
to include projects eligible for assistance under section 202 of the 
Housing Act of 1959, 12 U.S.C. 1701q. The June 7, 2000, regulation 
implements that change as well.
    In addition, the June 7, 2000, rule establishes some basic 
parameters for the structure and activities of tenant organizations. 
These include a basic list of protected organizational activities that 
owners of multifamily developments covered under the rule must allow, 
such as distributing leaflets, contacting tenants, holding meetings, 
and formulating responses for owners to consider to certain management 
actions that affect tenants. The rule also defines the characteristics 
of legitimate tenant organizations, regulates tenant organizers, and 
establishes an enforcement scheme. These changes are codified at 24 CFR 
part 245, subpart B.
    Section 245.10(a)(3) of the June 7, 2000, rule excludes State or 
local housing finance agency developments receiving assistance under 
section 236 of the National Housing Act or the Rent Supplement Program 
from the coverage of subpart B, which contains the specific protections 
and basic regulations for tenant organizations. The statutory language, 
however, gives HUD the authority to include these State-financed, HUD-
assisted developments within the coverage of this subpart of the tenant 
participation rule.
    Specifically, the governing law, section 202(a) of the Housing and 
Community Development Amendments of 1978, 12 U.S.C. 1715z-1b(a), 
provides that ``the term ``multifamily housing project'' means a 
project which is eligible for assistance as described in section 1715z-
1a(c)of this title * * *.'' The protection for tenant organizations, 
found in 12 U.S.C. 1715z-1b(b)(4), applies to multifamily housing 
projects as so defined. Developments eligible for assistance under 12 
U.S.C. 1715z-1a(c) include those assisted under section 236, 12 U.S.C. 
1715z-1, or section 101 of the Housing and Urban Development Act of 
1965, 12 U.S.C. 1701s (Rent Supplements). Section 12 U.S.C. 1715z-1a(b) 
explicitly states that projects eligible for assistance under section 
1715z-1a are eligible ``without regard to whether such projects are 
assisted under the National Housing Act.'' Thus, since eligibility for 
assistance is not based on federal insurance, and since tenant 
organization rights apply based on the eligibility for assistance, HUD 
has authority to apply the statutory protections for tenant 
organizations to developments financed by State agencies, so long as 
the developments receive one of the eligible forms of assistance.
    Through an oversight, HUD failed to apply tenant organizational 
rights to these State-financed developments in the 1999 proposed rule 
that was the basis of the June 7, 2000, final rule. One of the 
commenters on the proposed rule pointed out this issue and inquired 
regarding whether HUD would consider amending the rule to include 
State-financed, HUD assisted developments. HUD did not incorporate such 
a change in the June 7 rule because the proposed rule had not clearly 
given notice of this issue for general public comment. HUD believes 
that there should be express notice to the affected public and a full 
opportunity to comment specifically on this issue prior to making such 
a change, and therefore issues this new proposed rule regarding this 
matter.

II. This Proposed Rule

    This rulemaking proposes to apply the protections for tenant 
organizations to State-financed developments receiving one of the 
covered forms of assistance, Rent Supplement or assistance under 
section 236. To effect this change, this rule simply amends 24 CFR 
245.10(a)(3). In addition, this rule technically corrects an error in a 
legal citation in 24 CFR 245.135(a)(3), and corrects a mistaken cross-
reference to ``subpart D'' in 24 CFR 245.10(a)(3), replacing it with 
the correct reference to ``subpart E.''

III. Findings and Certifications

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538)(UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on State, local, and 
tribal governments and the private sector. This proposed rule does

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not impose any Federal mandates on any State, local, or tribal 
governments or the private sector within the meaning of the UMRA.

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 20410.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this rule and in so doing 
certifies that this rule would not have a significant economic impact 
on a substantial number of small entities.
    The proposed rule is exclusively concerned with the procedures 
governing tenant participation in multifamily housing projects and 
would have minimal economic impact on the owners of covered projects. 
Although the rule would require that owners permit tenants and tenant 
organizers to conduct reasonable activities related to the 
establishment or operation of tenant organizations, it would not impose 
any affirmative obligations on owners to assist tenant organizations in 
the conduct of these activities. For example, the owners of covered 
projects would not be required to contribute, economically or 
otherwise, to the preparation or distribution of leaflets and other 
informational materials developed by a tenant organization.
    The proposed rule would permit tenant organizations to develop 
responses to economic proposals made by owners, such as rent increases 
and major capital additions. While HUD encourages owners to take these 
responses into consideration, the proposed rule would not require that 
owners modify or abandon their proposals based on the recommendations 
made by the tenant organization.
    Although HUD has determined that this proposed rule would not have 
a significant economic impact on a substantial number of small 
entities, HUD welcomes comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Federalism Impact

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on State and local governments and 
is not required by statute, or preempts State law, unless the relevant 
requirements of section 6 of the Executive Order are met. This rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on State and local governments or preempt State 
law within the meaning of the Executive Order.

Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this proposed 
rule under Executive Order 12866 (entitled ``Regulatory Planning and 
Review''). OMB determined that this proposed rule is a ``significant 
regulatory action,'' as defined in section 3(f) of the Order (although 
not economically significant, as provided in section 3(f)(1) of the 
Order). Any changes made to the proposed rule subsequent to its 
submission to OMB are identified in the docket file, which is available 
for public inspection in the office of the Rules Docket Clerk, Room 
10276, U.S. Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC, 20410-0500.

List of Subjects in 24 CFR Part 245

    Condominiums, Cooperatives, Grant programs--housing and community 
development, Loan programs--housing and community development, Low and 
moderate income housing, Rent subsidies, Reporting and recordkeeping 
requirements, Utilities.
    For the reasons discussed in this preamble, HUD proposes to amend 
24 CFR part 245 as follows:

PART 245--TENANT PARTICIPATION IN MULTIFAMILY HOUSING PROJECTS

    1. The authority citation for 24 CFR part 245 continues to read as 
follows:

    Authority: 12 U.S.C. 1715z-1b; 42 U.S.C. 3535(d).

    2. Amend Sec. 245.10, paragraph (a)(3) as follows:


Sec. 245.10  Applicability of part.

    (a) * * *
    (3) State or local housing finance agency project. The project 
receives assistance under section 236 of the National Housing Act (12 
U.S.C. 1715z-1) or the Rent Supplement Program (12 U.S.C. 1701s) 
administered through a State or local housing finance agency, but does 
not have a mortgage insured under the National Housing Act or held by 
the Secretary. Subject to the further limitation in paragraph (b) of 
this section, only the provisions of subparts A, B and C of this part 
and of subpart E of this part for requests for approval of a conversion 
of a project from project-paid utilities to tenant-paid utilities or of 
a reduction in tenant utility allowances, apply to a mortgagor of such 
a project;
* * * * *
    3. Make the following technical correction to section 245.135:
    a. Revise the authority citation at section 245.135(a)(3) to read 
``24 CFR part 24, subpart G.''

    Dated: February 28, 2002.
John C. Weicher,
Assistant Secretary for Housing, Federal Housing Commissioner.
[FR Doc. 02-15245 Filed 6-17-02; 8:45 am]
BILLING CODE 4210-27-P