[Federal Register Volume 68, Number 79 (Thursday, April 24, 2003)]
[Rules and Regulations]
[Pages 20324-20325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10093]



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Part IV





Department of Housing and Urban Development





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24 CFR 245



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

  Federal Register / Vol. 68, No. 79 / Thursday, April 24, 2003 / Rules 
and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 245

[Docket No. FR-4611-F-02]
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: Final 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. The statutory right of tenants 
to organize includes those state-financed housing developments. This 
final rule extends the protection of tenant organizations to include 
state-financed housing developments assisted under certain HUD 
programs.

DATES: Effective Date: May 27, 2003.

FOR FURTHER INFORMATION CONTACT: Willie Spearmon, Director, Office of 
Housing Assistance and Grant Administration, Department of Housing and 
Urban Development, 451 Seventh Street, SW., Washington, DC 20410-8000; 
telephone (202) 708-3000 (this is not a toll-free number). Hearing- or 
speech-impaired individuals may access this number via TTY by calling 
the toll-free Federal Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On June 18, 2002 (67 FR 41583), HUD published a proposed rule that 
would apply the same protections provided to tenant organizations in 
HUD-assisted and/or insured multifamily housing developments to tenant 
organizations in state-financed, HUD-assisted housing developments 
receiving assistance under the Rent Supplement Program (12 U.S.C. 
1701(s)) or under section 236 of the National Housing Act (12 U.S.C. 
1715z-1). 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 those HUD programs. This rule extends to state-
financed, HUD-assisted housing developments the organizational rights 
of tenants in other HUD-assisted and insured multifamily housing 
developments.
    Section 245.10(a)(3) of HUD's regulations 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 housing developments within the coverage of this subpart of 
the tenant participation rule.
    Specifically, 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.'' Therefore, because eligibility for 
assistance is not based on federal insurance, and because tenant 
organization rights apply based on the eligibility for assistance, HUD 
has authority to apply the statutory protections for tenant 
organizations to state-financed, HUD-assisted housing developments, so 
long as the developments receive one of the eligible forms of 
assistance. Given this authority, this rule extends coverage of 
protections of tenant organizations to state-financed, HUD-assisted 
housing developments.

II. The Proposed Rule

    On June 18, 2002 (67 FR 41582), HUD published a proposed rule that 
would amend 24 CFR 245.10(a)(3) to extend the protections for tenant 
organizations to state-financed, HUD-assisted housing developments that 
receive one of the covered forms of assistance, Rent Supplement or 
assistance under section 236. In addition, the proposed rule would 
correct an error in a legal citation in 24 CFR 245.135(a)(3), and 
correct a cross-reference to ``subpart D'' in 24 CFR 245.10(a)(3), 
replacing it with the correct reference to ``subpart E.''

III. Final Rule

    This final rule follows publication of the June 18, 2002, proposed 
rule and takes into consideration the public comments received on the 
proposed rule. This final rule adopts the proposed rule without change.

IV. Discussion of Public Comments on the June 18, 2002, Proposed Rule

    The public comment period for the proposed rule closed on August 
19, 2002. HUD received eight comments on the proposed rule, six from 
local tenant associations, one from a regional tenant advocacy 
corporation, and one from a national tenant association. All eight 
comments supported the rule.
    Six of the eight commenters wrote that tenants of State-financed, 
HUD-assisted housing developments should be afforded the same rights 
and protections to organize and participate in the operation of their 
developments as tenants in HUD-assisted housing that is not State-
financed. Three of the commenters added that tenant association 
independence from the development owners and management is a ``most 
important'' issue for their organizations. One commenter explained that 
experiential evidence demonstrated that once educated and empowered by 
their rights, tenants are ``effective in preserving affordable housing 
and maintaining this valuable resource for their communities.''
    Comment: Four commenters submitted comments on enforcement of this 
rule. The comments generally noted the importance of enforcing the 
rule. Two of these four commented more specifically that there ``must 
be an enforcement procedure, sanctions, and a listing of prohibited 
owner/management activities if these regulations are going to work.''
    HUD Response: HUD agrees that it is important that tenants' rights 
to organize be enforceable, however, HUD does not anticipate adding 
additional enforcement actions other than those that already exist in 
the overall final rule, ``Tenant Participation in Multifamily Housing 
Projects,'' published on June 7, 2000 (65 FR 36272). Therefore, the 
comments relating to enforcement procedures, sanctions, and a listing 
of prohibited owner/management activities have already been addressed 
and do not need to be added to this final rule including Housing 
Finance Agencies.

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V. 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 rule does 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 
was made at the proposed rule stage 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. 4332). The Finding of No 
Significant Impact remains applicable and is available for public 
inspection between the hours of 8 a.m. and 5 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 20410-0500.

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 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 rule permits 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 rule does not require that 
owners modify or abandon their proposals based on the recommendations 
made by the tenant organization.

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 rule under 
Executive Order 12866 (entitled ``Regulatory Planning and Review''). 
OMB determined that this 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 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.

0
For the reasons discussed in this preamble, HUD amends 24 CFR part 245 
as follows:

PART 245--TENANT PARTICIPATION IN MULTIFAMILY HOUSING PROJECTS

0
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).
0
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;
* * * * *

0
3. Make the following technical correction to Sec.  245.135:
0
a. Revise the authority citation at Sec.  245.135(a)(3) to read ``24 
CFR part 24, subpart G.''

    Dated: April 15, 2003.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 03-10093 Filed 4-23-03; 8:45 am]
BILLING CODE 4210-27-P