99-27301. Public Housing Agency Organization; Required Resident Membership on Board of Directors or Similar Governing Body  

  • [Federal Register Volume 64, Number 203 (Thursday, October 21, 1999)]
    [Rules and Regulations]
    [Pages 56870-56880]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 99-27301]
    
    
    
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    _______________________________________________________________________
    
    Part III
    
    
    
    
    
    Department of Housing and Urban Development
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    24 CFR Part 964
    
    
    
    Public Housing Agency Organization; Required Resident Membership on 
    Board of Directors or Similar Governing Body; Final Rule
    
    Federal Register / Vol. 64, No. 203 / Thursday, October 21, 1999 / 
    Rules and Regulations
    
    [[Page 56870]]
    
    
    
    DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
    
    24 CFR Part 964
    
    [Docket No. FR-4502-F-02]
    RIN 2577-AC13
    
    
    Public Housing Agency Organization; Required Resident Membership 
    on Board of Directors or Similar Governing Body
    
    AGENCY: Office of the Assistant Secretary for Public and Indian 
    Housing, HUD.
    
    ACTION: Final rule.
    
    -----------------------------------------------------------------------
    
    SUMMARY: On June 23, 1999, HUD published a proposed rule to implement 
    section 2(b) of the United States Housing Act of 1937, which was added 
    by section 505 of the Quality Housing and Work Responsibility Act of 
    1998. Section 2(b) requires, with certain exceptions, that the 
    membership of the board of directors or similar governing body of a 
    public housing agency (PHA) must contain not less than one member who 
    is directly assisted by the PHA. This final rule makes effective the 
    policies and procedures described in the June 23, 1999 proposed rule 
    and takes into consideration the public comments received on the 
    proposed rule.
    
    DATES: Effective Date: November 22, 1999.
    
    FOR FURTHER INFORMATION CONTACT: Rod Solomon, Deputy Assistant 
    Secretary for Policy, Programs, and Legislative Initiatives, Room 4116, 
    U.S. Department of Housing and Urban Development, 451 Seventh Street, 
    SW, Washington, DC 20410-5000; telephone (202) 708-0713; or Paula 
    Blunt, Office of Public and Indian Housing, Room 4226, U.S. Department 
    of Housing and Urban Development, 451 Seventh Street, SW, Washington, 
    DC 20410-5000; telephone (202) 619-8201. Hearing- or speech-impaired 
    individuals may access these numbers via TTY by calling the Federal 
    Information Relay Service at (800) 877-8339. With the exception of the 
    ``800'' number, these are not toll-free telephone numbers.
    
    SUPPLEMENTARY INFORMATION:
    
    I. The June 23, 1999 Proposed Rule
    
        On June 23, 1999 (64 FR 33644), HUD published a proposed rule to 
    implement section 505 of the Quality Housing and Work Responsibility 
    Act of 1998 (Pub. L. 105-276, approved October 21, 1998; 112 Stat. 
    2461, 2522) (the ``Public Housing Reform Act''). The Public Housing 
    Reform Act constitutes a substantial overhaul of HUD's public housing 
    and Section 8 assistance programs. Among other goals, the changes made 
    by the Public Housing Reform Act are designed to provide for more 
    resident involvement, and to increase resident participation and 
    awareness in creating and maintaining a positive living environment.
        Section 505 of the Public Housing Reform Act amended section 2 of 
    the United States Housing Act of 1937 (42 U.S.C. 1437) (the ``1937 
    Act''). New section 2(b)(1) of the 1937 Act requires, except in certain 
    cases, that:
    
    the membership of the board of directors or similar governing body 
    of each public housing agency shall contain not less than 1 member--
    (A) who is directly assisted by the public housing agency; and (B) 
    who may, if provided for in the public housing agency plan, be 
    elected by the residents directly assisted by the public housing 
    agency.
    
        New section 2(b)(2) of the 1937 Act establishes two exceptions to 
    the resident board member requirement. First, public housing agencies 
    (PHAs) that are located in a State that requires the members of a board 
    of directors or similar governing body of a PHA to be salaried and to 
    serve on a full-time basis are excepted from the resident board member 
    requirement. Second, PHAs with less than 300 units are excepted from 
    the resident board member requirement if they meet two conditions:
        (1) The PHA must provide reasonable notice to the resident advisory 
    board of the opportunity for residents to serve on the PHA board of 
    directors or similar governing body; and
        (2) The PHA must wait a reasonable time after the resident advisory 
    board has received this notice.
        Resident advisory boards participate in the PHA planning process 
    and assist and make recommendations regarding the PHA Plan. The 
    membership of a resident advisory board is made up of individuals who 
    adequately reflect and represent the residents assisted by the PHA. 
    (See 24 CFR 903.13 for additional information regarding resident 
    advisory boards.) Part 903 of 24 CFR (entitled ``Public Housing Agency 
    Plans'') was established by interim rule published on February 18, 1999 
    (64 FR 8170).
        The June 23, 1999 rule proposed to implement section 2(b) in a new 
    subpart E to 24 CFR part 964, which contains HUD's regulations 
    concerning resident participation and resident opportunities in public 
    housing. The preamble to the June 23, 1999 proposed rule describes in 
    detail the proposed amendments to 24 CFR part 964.
    
    II. Significant Changes Between June 23, 1999 Proposed Rule and 
    This Final Rule
    
        This final rule makes effective the policies and procedures 
    contained in the June 23, 1999 proposed rule and takes into 
    consideration the public comments received on the proposed rule. The 
    major changes made by this final rule in response to public comment are 
    described below. The rationale for these changes are discussed in 
    greater detail in Section III of this preamble.
        1. Covered funding. The final rule clarifies that, subject to 
    certain exceptions, the statutory resident board member requirement 
    applies to any PHA that has a public housing annual contributions 
    contract with HUD or that administers Section 8 tenant-based rental 
    assistance. The requirement does not apply to any State financed 
    housing assistance or Section 8 project-based assistance.
        2. State and local procedures. Sections 964.435 (which describes 
    initial implementation of the resident board member requirement) and 
    964.440 (which describes the procedures for filling an open board 
    member seat) of the proposed rule are not included in this final rule. 
    These sections established specific board-level procedures that were 
    intended to assist PHAs in implementing the resident board member 
    requirement. HUD decided not to include these sections in the final 
    rule and instead leave the type of implementation details covered by 
    Secs. 964.435 and 964.440 to State and local governments to resolve. It 
    is important to note, however, that the exclusion of these sections 
    from the final rule does not relieve covered PHAs of the responsibility 
    to implement the resident board member requirement. The resident board 
    member requirement took effect beginning on October 1, 1999. HUD 
    believes that implementation of this new requirement should occur as 
    soon as possible after this date. All covered PHAs must take the steps 
    necessary to comply with this requirement if they have not done so 
    already.
        In addition, as a result of the decision to remove Secs. 964.435 
    and 964.440, the definitions of the terms ``elected board member'' and 
    ``related unit of general local government'' have not been included in 
    the final rule because they are no longer necessary.
        3. Exceptions to resident board member requirement. For purposes of 
    clarity, this final rule reorganizes the listing of the exceptions to 
    the statutory resident board member requirement.
    
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    The description of the exception for small PHAs is still located in 
    Sec. 964.425 (which has been re-designated as ``Small public housing 
    agencies''). The other two exceptions--for PHA boards with full-time 
    salaried members and for PHAs with no governing boards--have been 
    relocated to Sec. 964.405 (which describes the scope of the 
    applicability of the resident board member requirement).
        4. PHAs that only administer Section 8 assistance. The final rule 
    clarifies that PHAs that only administer Section 8 assistance qualify 
    for the ``small PHA'' (i.e., those with less than 300 public housing 
    units) exception to the resident board member requirement regardless of 
    the number of Section 8 vouchers they administer.
        5. Eligibility for ``small PHA'' exception. The final rule 
    clarifies that, in order to qualify for the ``small PHA'' exception, 
    the PHA must satisfy all of the conditions described in Sec. 964.425. 
    Specifically, the PHA must: (a) have less than 300 public housing units 
    (or no public housing units); (b) provide reasonable notice to the 
    resident advisory board of the opportunity for residents to serve on 
    the governing board; (c) not be notified of the intention of any 
    resident to participate on the governing board within a reasonable 
    time; and (d) repeat notification to the resident advisory board at 
    least once every year. If any of these conditions are not satisfied, 
    the PHA is subject to the resident board member requirements. For 
    example, if a small PHA (after providing the required notice to the 
    resident advisory board) is notified of a resident's intention to serve 
    on the governing board, the PHA must comply with the requirements of 
    new 24 CFR part 964, subpart E.
        6. ``Reasonable time'' must not be less than 30 days. The final 
    rule provides that, in order to qualify for the ``small PHA'' 
    exception, the PHA must provide residents with at least 30 days to 
    express their interest in serving on the PHA governing board.
        7. Resident participation on the board must include matters 
    regarding covered assistance. The final rule clarifies that a resident 
    board member must be allowed to take part in PHA board decisions 
    related to the administration, operation, and management of Federal 
    public housing programs and Section 8 tenant-based assistance programs. 
    This rule does not extend to matters that: (a) Exclusively relate to 
    other types of housing assistance (such as State financed housing 
    assistance); or (b) do not involve housing assistance (as may occur 
    where the city or county governing body also serves as the PHA board).
        However, a PHA may choose to expand the scope of resident member 
    involvement to matters not covered by this rule.
        8. Eligible resident. The final rule provides that, in order for a 
    resident to be eligible for board membership, the resident's name must 
    appear on the lease and the resident must be at least 18 years of age.
        9. Resident board member no longer directly assisted. The final 
    rule clarifies that a resident board member who is no longer directly 
    assisted by the PHA may be removed for that cause from the PHA board, 
    where such action is permitted under State or local law. Alternatively, 
    the board member may be allowed to complete his/her current term as a 
    member of the PHA governing board. However, the board member may not be 
    re-appointed (or re-elected) to the governing board for purposes of 
    serving as the statutorily required resident board member.
        10. Minimum qualifications for board membership. The final rule 
    provides that any generally applicable qualifications for board 
    membership also apply to residents, unless the application of the 
    requirements would result in the governing board not containing at 
    least one eligible resident as a member. Further, PHAs and localities 
    may not establish eligibility requirements for board membership that 
    are solely applicable to residents.
        11. Election procedures. The final rule adopts several of the 
    relevant election procedures described in Sec. 964.130. This section 
    establishes the requirements governing the election of public housing 
    resident councils. Further, any election procedures devised by the PHA 
    must facilitate fair elections.
        12. Conflicts of interest. The final rule clarifies that a resident 
    board member may take part in any matters before the board so long as 
    that matter is not applicable to that resident in a personal capacity. 
    A resident board member may only be excluded from participation in a 
    matter that uniquely applies to that resident, and the resident may be 
    involved in any matter that is generally applicable to residents. The 
    final rule also makes clear that having a lease with the PHA does not 
    constitute a conflict of interest for the resident board member. 
    Further, the rule clarifies that a board member's status as a public 
    housing resident or recipient of Section 8 tenant-based assistance does 
    not constitute a conflict of interest.
        13. Conforming change. The final rule also makes a technical, non-
    substantive change to 24 CFR part 964. Specifically, the rule removes 
    outdated Sec. 964.110, which describes HUD's policy regarding resident 
    membership on the PHA governing board. These provisions have been 
    incorporated in new subpart E.
    
    III. Discussion of Public Comments Received on the June 23, 1999 
    Proposed Rule
    
        The public comment period on the June 23, 1999 proposed rule closed 
    on August 23, 1999. HUD received 71 comments on the proposed rule. 
    Comments were submitted by PHAs; the three main organizations 
    representing PHAs; legal services organizations; resident 
    organizations; low-income housing advocates; and various other 
    organizations and individuals.
        This section of the preamble presents a summary of the significant 
    issues raised by the public commenters on the May 29, 1998 proposed 
    rule and HUD's responses to these comments.
    
    A. Support for Proposed Rule
    
        Several commenters supported the proposed amendments to 24 CFR part 
    964. One of the commenters wrote to express his strong support for the 
    rule based on his experience as the executive director of a PHA that 
    has had a resident board member for 25 years. However, the majority of 
    the commenters writing in support also expressed concerns regarding the 
    implementation of the resident board membership requirements.
    
    B. Opposition to Resident Board Member
    
        Several commenters opposed the resident board membership 
    requirement. Although these commenters provided a variety of reasons 
    for their opposition, they all agreed that a PHA board should not be 
    required to include a public housing resident as a member.
        Comment: Residents are not qualified to serve on PHA board. Several 
    of the commenters wrote that public housing residents lack the 
    necessary experience and expertise to serve on a PHA board. One of 
    these commenters wrote that resident board members, many of whom have 
    never owned property or managed a bank account, will be required to 
    make sound financial and management decisions. Another commenter wrote 
    that most of the qualified residents are elderly or caring for families 
    and, therefore, unable to serve on a PHA board. The commenters feared 
    that resident board members would lower the standard for PHA board 
    membership and weaken the PHA's ability to garner local support. The 
    commenters also worried that the requirement would
    
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    discourage qualified persons from serving on the PHA board.
        Comment: Requirement will endanger confidentiality of board 
    deliberations and create conflicts of interest. Several commenters 
    wrote that resident members would endanger the confidentiality of board 
    deliberations. Other commenters wrote that the requirement may pose a 
    conflict of interest for a resident required to make decisions that 
    will financially impact the resident's family. Several commenters 
    worried about the potential for abuse of power by a resident board 
    member.
        Comment: Requirement presents logistical difficulties. Several 
    commenters wrote about the logistical difficulties presented by the PHA 
    board membership requirement. For example, one commenter wrote that in 
    rural areas PHAs will have difficulty ensuring that a resident board 
    member travels the necessary distance to attend PHA board meetings. The 
    commenter also wrote that board meetings are often held during working 
    hours, which makes it difficult for employed residents to attend.
        Comment: Residents are not interested in serving on PHA boards. 
    Other commenters wrote that PHAs often have difficulty attracting 
    resident participation. According to the commenters, this could result 
    in a resident board member who does not fully or enthusiastically 
    participate in decisionmaking. One commenter wrote that the lack of 
    resident interest indicates that public housing residents do not have 
    the necessary responsibility or dedication to serve on a PHA board.
        Comment: Requirement is unnecessary--residents already have input 
    in PHA management and operations. Several commenters wrote that the PHA 
    board membership requirement is unnecessary. These commenters noted 
    that residents currently have the right to provide input in public 
    housing management and operations through the resident advisory board 
    and other forums.
        HUD Response. (This response applies to all of the comments 
    discussed in this section III.B.) HUD's part 964 regulations have 
    always encouraged active resident participation in PHAs, including 
    involvement in management and operation (Sec. 964.15) and resident 
    membership on PHA governing boards (Sec. 964.110). HUD understands that 
    these commenters have concerns regarding the effectiveness of requiring 
    a resident board member. HUD is not in a position, however, to revise 
    or rescind this requirement because it is a statutorily mandated 
    requirement. As noted in the preamble to the July 2, 1999 proposed rule 
    and the preamble to this rule, section 2(b) of the 1937 Act requires 
    that each PHA governing board contain at least one member who is 
    directly assisted by the PHA. Congress enacted new section 2(b) because 
    Congress viewed the resident board member requirement as necessary to 
    promote a better understanding of resident concerns and to foster 
    better relations and communication between residents and PHAs (S. Rep. 
    No. 105-21, at 7 (1998)).
    
    C. Federalism Concerns
    
        Many commenters raised concerns regarding the Federalism 
    implications of the proposed rule. The comments reflect the belief that 
    the proposed rule infringes on the rights of PHAs, as well as the 
    rights of States and localities. The commenters wrote that 
    accomplishing the statutory goal of including a resident member on each 
    PHA board will be much more difficult than the proposed rule 
    contemplates. A large portion of the comments point out that section 
    2(b) conflicts with many State laws governing PHA board membership. 
    Several of the commenters wrote that adding an additional seat to an 
    elected board would conflict with the State election laws and infringe 
    on the rights of States. Many of the commenters asked HUD to seek a 
    change to the law where the organization of the board is not conducive 
    to resident participation, such as where the board is the city council.
        One of the commenters wrote that section 2(b) may be 
    unconstitutional. According to the commenter, section 2(b) would 
    unconstitutionally ``rewrite State housing authority laws,'' and 
    ``prescribe the manner in which appointing authorities will exercise 
    the prerogative of appointment, which derives from State statute.'' The 
    commenter wrote that the ``Federal government may neither issue 
    directives requiring the States to address particular problems, nor 
    command the State's officers, or those of their political subdivisions, 
    to administer or enforce a Federal regulatory program'' (quoting the 
    United States Supreme Court decision in Printz v. United States, 521 
    U.S. 98 (1997)). The commenter also noted that many PHAs operate 
    programs that ``have nothing to do with the Federal government.'' 
    However, the ``Federal mandate contained in (section 2(b) and the 
    proposed rule) necessarily affects the nonfederal activities of'' PHAs.
        The commenter acknowledged that the Federal government may attach 
    conditions to the receipt of Federal funding. However, the commenter 
    wrote that ``the mandates involved here are directed, not to the [PHA] 
    that is party to the (Annual Contributions Contract (ACC)), but to the 
    appointing authority, which is not.'' The commenter also acknowledged 
    that the Federal government can preempt State law, but did not believe 
    that preemption was justified in this context. Specifically, the 
    commenter did not find explicit statutory language authorizing 
    peremption, nor the existence of ``a regulatory scheme so pervasive as 
    to imply (a Federal) intent to occupy a particular field.'' Neither did 
    the commenter believe that preemption would be justified due to a 
    conflict between State law and section 2(b).
        HUD Response. HUD agrees that this rulemaking, which seeks to 
    implement the explicit statutory directive of section 2(b), may have 
    direct effects on States and localities. The Federalism implications of 
    the rulemaking, however, derive solely from the statutory text and 
    substance of section 2(b). The scope of the rule is exclusively 
    concerned with implementation of the statutory resident board 
    membership requirement.
        HUD believes that this rulemaking is necessary to: (1) Provide 
    guidance to PHAs in fulfilling this requirement; (2) minimize the 
    potential burdens on States and local governments in carrying out the 
    statutory mandate; and (3) ensure that the Federal objective of 
    increasing resident involvement in public housing is achieved. In most 
    instances where section 2(b) provides HUD with the flexibility to leave 
    a matter to the discretion of a State or locality, HUD has elected to 
    do so. As is noted in the summary of comments below, many commenters 
    requested additional regulatory guidance on a variety of matters 
    related to the statutory resident board membership requirement. In most 
    of these instances, HUD has declined to adopt the suggestion made by 
    the commenters on the basis that States and localities should have 
    flexibility in implementing the requirements of section 2(b). In one 
    instance, HUD decided not to include two sections of the proposed rule 
    (Secs. 964.435 and 964.440) specifically to provide States and 
    localities with the flexibility to reconfigure their PHA governing 
    boards to comply with the requirements of section 2(b) in a manner best 
    suited to local conditions.
        HUD is not in a position to determine the Constitutionality of 
    section 2(b). However, HUD has concluded that section 2(b) preempts any 
    conflicting State laws regarding PHA board membership. This final rule 
    reflects this
    
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    statutory preemption, and does not constitute a decision on HUD's part 
    to preempt State law through its rulemaking authority.
        Executive Order 12612, Federalism, was issued on October 30, 1987 
    (52 FR 41685). The Order requires that executive branch agencies take 
    Federalism concerns into account when developing and implementing 
    agency policy initiatives that have substantial, direct effects on 
    States or their political subdivisions, or on the relationship or 
    distribution of power among the various levels of government. Section 4 
    of Executive Order 12612 contains special provisions governing the 
    preemption of State law by Federal statutes and regulations. 
    Specifically, section 4 of the Order provides that:
    
        To the extent permitted by law, Executive departments and 
    agencies shall construe, in regulations and otherwise, a federal 
    statute to preempt State law only when the statute contains an 
    express preemption provision or there is some other firm and 
    palpable evidence compelling the conclusion that the Congress 
    intended preemption of State law, or when the exercise of State 
    authority directly conflicts with the exercise of Federal authority 
    under the Federal statute.
    
        Although section 2(b) does not expressly provide for the preemption 
    of State laws governing PHA board membership, HUD has concluded that 
    ``firm and palpable'' evidence exists for concluding that the Congress 
    intended the preemption of State law in those cases where the ``State 
    authority directly conflicts'' with the Federal resident board 
    membership requirement.
        The first reason for HUD's conclusion is the statutory language of 
    section 2(b). The statutory resident board membership requirement is 
    explicit:
    
        Except as provided * * * the membership of the board of 
    directors or similar governing body of each (PHA) shall contain not 
    less than 1 member * * * who is directly assisted by the (PHA).
    
        The exceptions referred to are: (1) For small PHAs with less than 
    300 units; and (2) for PHAs in States that require that PHA board 
    members be full-time salaried employees. The two statutory exceptions 
    reflect Congressional awareness that the resident board membership 
    requirement may be burdensome for small PHAs or conflict with certain 
    State requirements. Nevertheless, the Congress elected to provide 
    exceptions only for the two narrow situations described above. 
    Accordingly, HUD has concluded that the statutory language of section 
    2(b) contains firm and palpable evidence that the Congress intended the 
    resident board membership requirement to be broadly applicable, 
    regardless of conflicting State law.
        HUD's second reason for its conclusion is based on the dominant 
    Federal interest in the public and assisted housing programs 
    administered under the 1937 Act. HUD's August 22, 1988 (53 FR 31926) 
    notice implementing Executive Order 12612 provides that HUD will infer 
    preemption where ``the field is one in which Federal interest is 
    sufficiently dominant to provide firm and palpable evidence that 
    Congress intended to preclude enforcement of State laws on the same 
    subject.'' HUD believes, for the following reasons, that the section 
    2(b) requirements satisfy this test.
        The 1937 Act, a Federal statute, establishes the basic framework 
    for most of the public and assisted housing programs operated by PHAs 
    throughout the country. HUD is the Federal agency responsible for 
    establishing and enforcing the regulatory and contractual requirements 
    necessary to carrying out the purposes of the 1937 Act. With few 
    exceptions, HUD is the primary source of funding for public housing 
    developments assisted under the 1937 Act. Given this dominant Federal 
    role in the administration of 1937 Act programs, HUD has concluded that 
    section 2(b) preempts any conflicting State laws governing PHA board 
    membership.
        Further, as one of the commenters acknowledges, the Federal 
    government may establish conditions on the receipt of Federal funds. 
    For the recipients of the Federal funds, these conditions preempt any 
    conflicting State or local requirements. As this final rule makes 
    clear, the resident board member requirement is a condition to the 
    receipt of funding under the 1937 Act. For example, the requirements of 
    section 2(b) apply solely to PHAs that have an ACC with HUD or that 
    administer tenant-based rental assistance under section 8 of the 1937 
    Act (see Sec. 964.405). Additionally, resident participation is 
    required only for those PHA board decisions related to Federally funded 
    public housing and Section 8 tenant-based assistance programs. The 
    requirements of section 2(b) do not extend to PHA board decisions that 
    exclusively affect other types of housing assistance, or that do not 
    regard housing assistance. (See Sec. 964.430(a)(2).) As a condition of 
    1937 Act funding, the statutory resident board member requirement 
    supersedes any conflicting State or local requirements regarding PHA 
    board membership for those PHAs receiving assistance under the 1937 
    Act.
    
    D. Other General Comments Regarding the Proposed Rule
    
        Comment: Stipends and Per Diems Should be Excluded from Income. Two 
    commenters wrote that stipends and per-diem expenses are common for PHA 
    board members. The commenters suggested that HUD exclude these items 
    from the income of the resident board member. Otherwise, the board 
    member would risk an increase in rent, which is calculated based on 
    resident income.
        HUD Response. HUD agrees that counting such stipends as ``income'' 
    for the purposes of determining rent could serve as a deterrent to 
    residents who would otherwise be interested in serving on the PHA 
    Board. HUD is addressing this issue in the final rule on Admission and 
    Occupancy to reflect that stipends for services rendered as a resident 
    board member are to be treated as resident services stipends, which are 
    exempted from a resident's income to the extent other such stipends are 
    exempt. (For additional details regarding the Admission and Occupancy 
    rule, see the proposed rule published on April 30, 1999 (64 FR 23460).)
        Comment: What happens to a resident board member who is no longer 
    ``directly assisted'' by the PHA? Several commenters asked whether a 
    resident who is no longer directly assisted by the PHA (due to 
    eviction, etc.) could continue to serve on the PHA board. Some of the 
    commenters wrote that requiring the resident to leave the board might 
    conflict with State or local requirements governing the selection and 
    removal of board members. Other commenters asked whether the resident 
    who replaces the removed board member would complete the original board 
    membership term or start a new term.
        HUD Response. A resident board member who ceases to be directly 
    assisted by the PHA is no longer an ``eligible resident'' as defined in 
    Sec. 964.410. Such a board member may be removed from the PHA board for 
    that cause, where such action is permitted under State or local law. 
    State laws and PHA policies should be changed, where necessary, to 
    reflect that resident board members who cease to be directly assisted 
    by the PHA may be removed from the board for cause. Alternatively, the 
    board member may be allowed to complete his/her current term as a 
    member of the PHA governing board. However, the board member may not be 
    re-appointed (or re-elected) to the governing board for purposes of 
    serving as the statutorily required resident board member.
    
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        Comment: Final rule should provide for the removal of disruptive 
    resident board members. One commenter suggested that HUD revise the 
    proposed rule to provide for the removal of unruly or disruptive 
    resident PHA board members.
        HUD Response. As previously noted, section 2(b) of the 1937 Act and 
    Sec. 964.430 of this final rule, provide that a resident board member 
    is a full member of the governing board. As a full member, the resident 
    board member is subject to the same rules regarding behavior as any 
    other board member. HUD does not see any need to impose additional 
    procedures regulating the behavior of resident board members. Moreover, 
    the imposition of such procedures specific to resident board members 
    would undermine the resident board member's position as a full member 
    of the governing board and would run counter to Congress' intent in 
    enacting the resident board member requirement.
        Comment: Final rule should contain a mechanism for resident 
    complaints, investigation, and consequences of PHA noncompliance. One 
    commenter made this suggestion.
        HUD Response. HUD has not adopted the change suggested by this 
    commenter. PHAs that fail to comply with the requirements of this final 
    rule are subject to the same noncompliance and enforcement procedures 
    that apply to other 1937 Act requirements. Consequently, HUD does not 
    see the need to implement additional compliance procedures.
        Comment: Rule should provide for training and provision of 
    resources to resident board member. Two commenters wrote that the final 
    rule should provide for the training of resident board members by an 
    independent training entity on all aspects of PHA operations. The 
    commenters also suggested that resident board members should be 
    provided with adequate resources (office space, phone, photocopier, 
    etc.) to carry out their duties.
        HUD Response. HUD has not changed the rule to reflect this request. 
    Resident board members are to be treated as any other member of the 
    governing board. If all board members are provided with resources, such 
    as office space and office equipment, these must also be made available 
    to the resident board member. HUD will not, however, require that PHAs 
    supply additional resources to the resident board member. HUD continues 
    to encourage PHAs to maintain partnerships to provide training to 
    residents consistent with Sec. 964.140.
        Comment: What happens if there is only one resident who expresses 
    interest in serving on the board? Several commenters posed this 
    question.
        HUD Response. Appointing authorities are not required to appoint 
    any specific member to the board of directors. If there is limited 
    interest among residents so that the PHA or appointing authority 
    believes there is no real choice in who becomes a board member, the PHA 
    or appointing authority may undertake outreach efforts to identify a 
    pool of interested residents. However, a PHA is required to have a 
    resident on its board, regardless of the number of residents who are 
    interested.
    
    E. Comments Regarding Sec. 964.405--Applicability
    
        Proposed Sec. 964.404 identifies the types of assistance to which 
    the resident board membership requirement applies. The proposed rule 
    provides that new subpart E is applicable to ``any [PHA] that has a 
    public housing annual contributions contract with HUD or a housing 
    assistance payments contract with HUD under section 8 of the United 
    States Housing Act of 1937 (42 U.S.C. 1437f).''
        Comment: Does the resident board membership requirement apply to 
    PHAs that only administer Section 8 assistance? Several commenters 
    asked whether the resident board membership requirements are applicable 
    to PHAs that do not administer public housing programs, but do 
    administer Section 8 assistance. One of the commenters wrote that the 
    wording of proposed Sec. 964.405 is confusing because it refers to a 
    Section 8 ``housing assistance payment [HAP] contract with HUD.'' The 
    commenter noted that under the tenant-based Section 8 program, there is 
    no HAP contract with HUD. Another commenter noted that section 2(b) 
    establishes an exception for small PHAs based on the number of ``public 
    housing units'' operated by the PHA. According to the commenter, this 
    statutory language implies that PHAs that do not operate any ``public 
    housing units'' are totally exempt from the resident board membership 
    requirements.
        HUD Response. PHAs that only administer Section 8 assistance are 
    subject to the resident board membership requirement. However, they 
    fall within the category of PHAs with less than 300 public housing 
    units, regardless of the number of Section 8 vouchers they administer. 
    This means that these PHAs are exempt from the resident board member 
    requirement, provided: (1) They have given adequate prior notice to the 
    resident advisory board of the opportunity for a resident to become a 
    resident board member, and (2) that within a reasonable time of such 
    notice, the PHA has not been notified of any residents who are 
    interested in such participation. This rule makes the necessary 
    qualification to Sec. 964.425, which describes the ``small PHA'' 
    exception to the resident board member requirement.
        The final rule also clarifies that the resident board membership 
    requirement applies to PHAs that ``administer tenant-based rental 
    assistance under Section 8 of'' the 1937 Act. The change is in response 
    to the commenter who noted that under the tenant-based Section 8 
    program there is no HAP contract with HUD.
        HUD also notes that, under the interim rule on PHA Plans published 
    in the Federal Register on February 18, 1998 (64 FR 8170), all PHAs 
    (including those that only administer Section 8 assistance) are 
    required to establish a resident advisory board. (The PHA Plan interim 
    rule is codified at 24 CFR part 903.)
    
    F. Comment Regarding Sec. 964.410--Additional Definitions
    
        Proposed Sec. 964.410 defines various terms that are applicable to 
    the resident board membership requirements described in new 24 CFR part 
    964, subpart E.
        Comment: Definition of ``directly assisted'' should be narrowed/
    broadened. Proposed Sec. 964.410 defines ``directly assisted'' to mean 
    ``a public housing resident or a participant in the tenant-based 
    section 8 program.'' Two commenters objected to this definition. One of 
    the commenters suggested that the scope of the definition be narrowed 
    to only include Federal programs. The commenter noted that many PHAs 
    administer State housing programs that should not be subject to Federal 
    requirements. However, the second commenter suggested that the 
    definition include all persons assisted by the PHA, including those 
    assisted under Department of Agriculture Rural Development projects.
        HUD Response. The final rule clarifies that ``directly assisted'' 
    means residing in public housing or receiving Section 8 tenant-based 
    assistance. Direct assistance does not include any State-financed 
    housing assistance programs, section 8 project-based assistance, or 
    Section 8 new construction assistance.
        Comment: Definition of ``elected board member'' should exclude 
    residents who serve on PHA board as a result of being elected to 
    another office. The proposed rule defines ``elected board member'' to 
    mean ``either a
    
    [[Page 56875]]
    
    member of the governing board who is elected directly to the governing 
    board or who serves on the board as a result of being elected to 
    another office'' (emphasis supplied). One commenter wrote that the 
    definition should be revised to exclude resident board members who 
    serve on the board as a result of being elected to another office. 
    According to the commenter, including such members in the definition 
    frustrates the democratic electoral process contemplated by section 
    2(b).
        HUD Response. As a result of the decision to remove Sec. 964.435 
    from the final rule, the definition of the term ``elected board 
    member'' is no longer necessary and has also been removed from the 
    final rule. This comment and the following discussion are included in 
    the final rule, however, because the situation where a resident board 
    member may serve on a governing board as a result of being elected to 
    another office may still occur.
        There are a number of jurisdictions in which certain local elected 
    officials may also act, by virtue of their elected office, as members 
    of the PHA governing board. For example, a city council may also act as 
    the local PHA governing board. In cases like these, when a person is 
    elected to the city council they are also, automatically, ``elected'' 
    to the PHA governing board. These members have dual roles. The 
    definition of ``elected board member'' in the proposed rule makes clear 
    that these elected officials are elected board members. If a PHA 
    resident is elected to such a ``dual-purpose'' local office, then that 
    resident may also serve as the statutorily required resident board 
    member under section 2(b).
        The comment suggests that this creates a conflict if the PHA Plan 
    provides for the resident board member to be ``elected by the residents 
    directly assisted by the (PHA).'' The conflict appears to stem from the 
    fact that the resident board member has not been directly elected by 
    the residents, as provided for in the PHA Plan. In this case, however, 
    there is no conflict.
        The requirement to have at least one resident board member is 
    mandatory, while provision for direct elections is merely permissive. 
    If provided for in the PHA Plan, section 2(b) states that a resident 
    may be directly elected by residents. Even if it is provided for in the 
    PHA Plan, section 2(b) does not require the direct election by 
    residents. Therefore, if a resident becomes a board member by virtue of 
    holding some other elected office, that resident may also qualify as 
    the statutorily required board member under section 2(b), even though 
    the resident was not directly elected by residents. However, the 
    locality is free to decide that the ``dual purpose'' resident should 
    not also serve as the statutorily required resident board member. The 
    locality could then hold the election provided for in the PHA Plan, and 
    have the resident board member directly elected by the public housing 
    residents.
        Comment: Definition of ``eligible resident'' should include 
    additional criteria. Proposed Sec. 964.410 provides that a resident is 
    eligible to serve on a PHA board if the resident ``is directly assisted 
    by a [PHA] and is eighteen years of age or older.'' Several commenters 
    requested that the definition provide additional eligibility criteria. 
    For example, one of the commenters suggested that the criteria for 
    board membership should be the same as for membership in a public 
    housing Resident Council. However, the commenter also suggested that 
    the Resident Council eligibility requirements at Sec. 964.125 should be 
    revised so that residents whose names do not appear on the lease are 
    eligible for board membership. Other commenters recommended that only 
    residents in good standing should be eligible for PHA board membership. 
    One commenter suggested that any minimum qualifications for PHA board 
    members should also apply to residents. Another commenter requested 
    clarification on whether Section 8 Existing or New Construction 
    residents are eligible to serve on a PHA board.
        HUD Response. In response to these comments, HUD reevaluated the 
    requirements contained in the definition of the term ``eligible 
    resident'' to make sure that the definition was appropriate and capable 
    of being implemented in a fair and consistent manner. HUD is concerned 
    about implementation of the resident board member requirement being 
    delayed because of conflicts over secondary issues such as the 
    definition of an eligible resident. Accordingly, HUD has made the 
    following changes to the definition of ``eligible resident.''
        HUD has decided to include in the definition that to be eligible, a 
    resident must be named in the lease. The reason for this change is to 
    make clear exactly who may become a resident board member and to avoid 
    any possible conflicts about who is a resident directly assisted by a 
    PHA. A person is a resident directly assisted if he or she is are 
    listed on the lease.
        HUD agrees with the commenters who wrote that any general minimum 
    qualifications for board membership should also apply to residents. HUD 
    has revised the proposed rule to adopt this suggestion. However, these 
    requirements cannot excuse a PHA's failure to comply with the 
    requirements of section 2(b). A PHA must have at least one resident 
    board member despite these minimum qualifications. Further, PHAs and 
    localities may not establish eligibility requirements for board 
    membership that are solely applicable to residents.
        HUD has decided not to include a requirement that a resident be in 
    good standing. HUD believes that the term ``good standing'' may be 
    defined in different ways by each PHA and could be used to exclude a 
    resident from participation without good cause. Other than the 
    requirement that a resident must be named in the lease, the definition 
    of ``eligible resident'' remains the same as in the proposed rule.
    
    G. Comments Regarding Sec. 964.420--Election of Resident Board Member
    
        Proposed Sec. 964.420 provides that residents directly assisted by 
    a PHA may elect a resident board member, if provided for in the PHA 
    Plan.
        Comment: PHA should be required to advise residents of election 
    procedures. One commenter suggested that a PHA should be required to 
    advise all residents of the election procedures in writing. Another 
    commenter recommended that the a PHA should be required to certify that 
    it has advised the PHA resident advisory board that resident board 
    members may be elected.
        HUD Response. HUD believes that most decisions regarding election 
    procedure should be determined locally. However, HUD agrees that some 
    minimal standards must be met. Accordingly, HUD has revised the 
    proposed rule to adopt several of the relevant provisions of 24 CFR 
    964.130, which describes the election procedures for public housing 
    resident councils. Specifically, the final rule requires that the PHA 
    must provide residents with at least 30 days advance notice for 
    nominations and elections. The notice should include a description of 
    the election procedures, eligibility requirements, and dates of 
    nominations and elections. Further, any election procedures devised by 
    the PHA must facilitate fair elections.
        Comment: Resident council election procedures should be 
    incorporated in final rule. One commenter suggested that the resident 
    council election procedures described in Sec. 964.130 should be 
    incorporated in new subpart E. According to the commenter, this will 
    ensure that sufficient notice is provided to residents before 
    elections, and that election are held on a fair and frequent basis.
    
    [[Page 56876]]
    
        HUD Response. As noted in the response to the previous comment, HUD 
    has revised the proposed rule to adopt several of the relevant 
    provisions of 24 CFR 964.130, which describes the election procedures 
    for public housing resident councils.
        Comment: Final rule should require the election of resident board 
    members. Several commenters wrote that the final rule should require 
    that resident board members be elected. According to the commenters, 
    this will ensure that the board membership process is fair and 
    democratic.
        HUD Response. The statute provides that the decision to allow an 
    elected resident board member is to be made locally. Section 2(b) does 
    not establish a right to an elected resident board member, it merely 
    allows for the possibility and requires that this choice become part of 
    the PHA Plan. The purpose of informing residents of the fact that a 
    resident board member may be elected is to allow residents to petition 
    their PHAs to allow elected resident board members. In the end, 
    however, the decision to allow elected resident board members is a 
    local one.
    
    H. Comments Regarding Sec. 964.425--Exceptions
    
        Proposed Sec. 964.425 describes the exceptions to the resident 
    board membership requirements. Specifically, the proposed rule exempts 
    PHAs that are not governed by a PHA board, or are located in a State 
    that requires board members to serve on a full-time salaried basis. The 
    proposed rule also provides that PHAs with less than 300 public housing 
    units are exempted from the resident board member requirement, provided 
    the PHA has: (1) Provided reasonable notice to the resident advisory 
    board of the opportunity for residents to serve on the governing board; 
    and (2) not been notified of the intention of any resident to 
    participate on the governing board within a reasonable time of the 
    resident advisory board receiving the notice.
        As noted in Section II of this preamble, this final rule 
    reorganizes the listing of the exceptions to the statutory resident 
    board member requirement. The description of the exception for small 
    PHAs is still located in Sec. 964.425. The other two exceptions--for 
    PHA boards with full-time salaried members and for PHAs with no 
    governing boards--have been relocated to Sec. 964.405 (which describes 
    the scope of the applicability of the resident board member 
    requirement).
        Comment: Reasonable notice should be provided to all residents. 
    Several commenters wrote that a PHA should be required to provide 
    reasonable notice to all residents, not just the resident advisory 
    board. One commenter wrote that the notice could accompany the monthly 
    rent notifications, or the mailings regarding the PHA Plan process. 
    Another commenter suggested that the notice could be posted at each 
    public housing site and rental office.
        Several commenters were concerned that PHAs that do not administer 
    public housing programs under the 1937 Act (but do administer Section 8 
    assistance) might not be able to comply with the notification 
    requirement. According to these commenters, such agencies do not have 
    resident advisory boards.
        HUD Response. HUD has not incorporated this request into the final 
    rule. Section 2(b) of the 1937 Act specifies that notice must be given 
    to the resident advisory board. Section 2(b) does not require or 
    provide for the notification of all public housing residents. The 
    procedures for ensuring that residents are made aware of the 
    opportunity to participate on the PHA board should be determined 
    locally (including how the resident advisory board will notify the 
    residents of such opportunities, and when that notice needs to be 
    given).
        In response to the commenters concerned about the ability of PHAs 
    that do not administer 1937 Act public housing programs to comply with 
    the notification requirements, HUD again notes that its interim rule on 
    PHA Plans (February 18, 1999; 64 FR 8170) requires that all PHAs 
    establish resident advisory boards (see Sec. 901.13(b) of the interim 
    rule).
        Comment: Final rule should specify what constitutes a ``reasonable 
    time''. To qualify for exemption, small PHAs must also provide 
    residents with a ``reasonable time'' to express their intention to 
    participate on the governing board. Several commenters suggested that 
    the final rule should specify what constitutes a ``reasonable time.'' 
    Two commenters recommended that the rule provide for a 45-day period. 
    Another commenter suggested a 120-day period. One of the commenters 
    suggested that PHAs provide residents with written procedures for 
    indicating their interest in serving on the governing board.
        HUD Response. In developing this final rule (and the June 23, 1999 
    proposed rule), HUD wished to provide PHAs with flexibility in 
    implementing the resident board member requirement. The language of 
    this final rule tracks the statutory language of section 2(b) and 
    requires that PHAs must provide residents with a reasonable time to 
    express their interest in serving on the PHA governing board. HUD does 
    not believe it would be appropriate to dictate by regulation exactly 
    how much time is ``reasonable,'' nor what procedures should govern 
    resident expressions of interest. HUD defers to PHAs to make these 
    determinations on a local basis. However, HUD agrees that a minimum 
    time period should be established to ensure that residents have 
    adequate time to indicate their interest. Accordingly, this final rule 
    provides that the ``reasonable time'' provided by PHAs must not be less 
    than 30 days.
        Comment: HUD should establish additional exemptions. Several 
    commenters advocated that HUD expand the list of exceptions to the 
    resident board membership requirement. For example, one commenter 
    recommended that HUD should exempt PHAs with less than 500 public 
    housing units. Two commenters suggested that the final rule exempt PHAs 
    already subject to State or local resident board membership 
    requirements. Another commenter wrote that HUD should extend the 
    exemption for full-time salaried PHA boards to include part-time board 
    members. Several commenters advocated the exemption of PHAs that do not 
    administer public housing or Section 8 programs as their principal 
    means of providing housing assistance.
        Several commenters wrote that PHA boards consisting of elected 
    officials (such as city council members or county commissioners) should 
    not be subject to the resident board membership requirements. These 
    commenters noted that these officials often take oaths of office and 
    are, therefore, subject to a different standard of accountability than 
    a public housing resident. Other commenters advocated an exemption for 
    elected PHA boards.
        HUD Response. Section 2(b) provides clear and narrow exceptions to 
    the resident board member requirement. The statute does not provide HUD 
    with the authority to establish additional exceptions.
        Comment: Small PHAs should be required to comply with resident 
    board membership requirement. One commenter wrote that all PHAs, even 
    those with under 300 units, should be required to include a resident 
    member on the governing board. Another commenter urged that HUD not 
    revise the proposed rule to expand the list of exceptions.
        HUD Response. The statutory language of section 2(b) explicitly 
    exempts small PHAs with less than 300 units from the resident board 
    membership requirement if they follow certain procedures. Accordingly, 
    HUD does not have the statutory authority to
    
    [[Page 56877]]
    
    adopt the suggestion made by the commenter.
    
    I. Comments Regarding Sec. 964.430--Nondiscrimination
    
        Proposed Sec. 964.430 provides that a ``resident board member is a 
    full member of the governing board.'' Further, proposed Sec. 964.430(c) 
    provides that a PHA board ``may not exclude any resident board member 
    from participating in any matter before the governing board on the 
    grounds that the resident board member's lease with the [PHA] either 
    results or may result in a conflict of interest, unless the matter is 
    clearly applicable to the resident board member only in a personal 
    capacity.''
        Comment: State or local conflict of interest requirements should be 
    applicable to resident board members. Several commenters objected to 
    the proposed conflict of interest language quoted above. According to 
    these commenters, the proposed rule is not strict enough, and would 
    allow residents to unfairly benefit from their policy making position. 
    The commenters suggested that State and local conflict of interest 
    requirements, which apply to the other members of the PHA board, should 
    also be applicable to resident board members.
        HUD Response. Section 2(b) of the 1937 Act makes clear that 
    resident board members must be treated as full members of the PHA 
    governing board. In implementing this requirement, HUD has attempted to 
    address possible conflicts of interest issues by providing a resident 
    may not take part in any decisions or activities that relate 
    specifically to that resident in a personal capacity. However, section 
    2(b) is clear that a resident must not be precluded from board 
    membership and activities based on his or her status as a resident of 
    public housing or a recipient of Section 8 tenant-based assistance.
        Comment: Suggested clarification to conflict of interest provision. 
    One commenter suggested that the language of proposed Sec. 964.430(c) 
    be clarified to provide that a resident may vote on all matters of 
    general applicability, including issues regarding rents. The commenter 
    recommended the following addition to the proposed regulatory language: 
    ``* * * unless the matter is clearly applicable to the resident board 
    member only in a personal capacity which applies uniquely to that 
    member and not generally to residents or to a subcategory of 
    residents'' (emphasis supplied to indicate additional language). 
    Another commenter suggested that HUD issue additional guidance 
    regarding the conflict of interest governing resident participation on 
    a PHA board. The commenter wrote that such guidance would prevent 
    misinterpretation of the conflict of interest provisions and facilitate 
    compliance with these requirements.
        HUD Response. HUD has revised the rule generally to adopt the 
    language suggested by the first commenter. HUD agrees with the 
    commenter that the addition of this language clarifies the conflict of 
    interest requirements, and will assist PHAs and residents to comply 
    with these provisions. HUD believes that the regulatory language of 
    revised Sec. 964.430(c) makes clear that a resident board member may 
    take part in any matters before the board so long as that matter is not 
    applicable to that resident in a personal capacity. A resident board 
    member may only be excluded from participation in a matter that 
    uniquely applies to that resident, and the resident may be involved in 
    any matter that is generally applicable to residents.
        HUD wishes to reiterate that having a lease with the PHA does not 
    constitute a conflict of interest for the resident board member. If 
    such a lease could be viewed as constituting a conflict of interest, 
    the intent of section 2(b) would be frustrated. Under such an 
    interpretation, no resident with a lease with the PHA would be able to 
    serve on its governing board. HUD also wishes to clarify that, for 
    similar reasons, the board member's status as a public housing resident 
    or recipient of Section 8 tenant-based assistance does not constitute a 
    conflict of interest. Such an interpretation would prevent residents 
    directly assisted by the PHA from serving on the governing board.
        In response to the second commenter, HUD may issue additional 
    guidance regarding the conflict of interest provisions (or other 
    provisions of this final rule) as necessary. Such guidance may be 
    issued in a handbook, Federal Register notice, or other appropriate 
    means.
        Comment: Resident participation should be limited to Federal 
    programs. Several commenters noted that PHAs administer non-Federal 
    housing programs. These commenters recommended that the final rule 
    limit the participation of the resident board members to those 
    decisions regarding Federal assistance.
        HUD Response. This final rule clarifies that a resident board 
    member must be allowed to take part in decisions related to the 
    administration, operation, and management of Federal public housing 
    programs and Section 8 tenant-based rental assistance programs. This 
    rule does not extend to matters that: (1) Exclusively relate to other 
    types of housing assistance (such as State financed housing 
    assistance); or (2) do not involve housing assistance (as may occur 
    where the city or county governing body also serves as the PHA board). 
    However, a PHA may choose to expand the scope of resident member 
    involvement to matters not covered by this rule.
    
    J. Comments Regarding Sec. 964.435--Initial Implementation of Resident 
    Board Member Requirement
    
        Proposed Sec. 964.435 provides that if the PHA board consists of 
    appointed board members, the first seat on the board that becomes open 
    on or after October 1, 1999, would have to be filled by an eligible 
    resident. If the board consists of elected board members, the chief 
    executive officer of the unit of general local government whose 
    jurisdiction coincides most directly with the jurisdiction of the PHA 
    would have to create at least one additional seat on the board, by 
    December 31, 1999, and would have to fill that seat with an eligible 
    resident. In the case of multi-jurisdictional PHAs, the chief executive 
    officers of each unit of general local government that comprises the 
    jurisdiction of the PHA would be jointly responsible for creating and 
    filling any additional seats.
        HUD received a number of public comments on the initial 
    implementation procedures described in proposed Sec. 964.435. Several 
    of these commenters raised the Federalism concerns summarized in 
    section III.C of this preamble. As noted, HUD has responded to these 
    concerns by not including Sec. 964.435 in the final rule. In developing 
    the regulations implementing section 2(b), HUD wished to grant PHAs and 
    localities flexibility in complying with the resident board member 
    requirement. Rather than specifying regulatory procedures for the 
    appointment of residents to a PHA board, HUD has decided to leave these 
    procedures to each locality. HUD is mindful of the implementation 
    difficulties presented by the statutory resident board member 
    requirement, and encourages the development of local solutions to these 
    problems.
        Several commenters raised questions or issues about the specific 
    procedures described in proposed Sec. 964.435. As a result of the 
    decision not to include Sec. 964.435 in the final rule, these public 
    comments are no longer applicable to this final rule and are not 
    discussed in the summary below.
        Comment: May a PHA choose to elect a resident board member in a 
    jurisdiction where PHA board members
    
    [[Page 56878]]
    
    are typically appointed? One commenter posed this question.
        HUD Response. The statutory language of section 2(b) is clear--
    residents directly assisted by the a PHA may elect a resident board 
    member, if provided for in the PHA Plan. A PHA could, therefore, choose 
    to elect a resident board member in a jurisdiction where PHA board 
    members are usually appointed. The winner of the election would then be 
    appointed and serve as the statutorily required board member under 
    section 2(b). However, the choice to hold such an election would need 
    to be provided for in the PHA Plan.
        Comment: HUD should postpone implementation date until July 1, 
    2000. Several commenters wrote that the implementation dates provided 
    in the proposed rule are unrealistic. The commenters noted that many 
    jurisdiction will have to revise their local laws in order to permit 
    the appointment of a resident board member. The commenters suggested 
    that HUD delay the implementation dates to permit localities to conform 
    their laws governing the selection and appointment of board members to 
    the requirements of section 2(b). Several commenters proposed an 
    implementation date of July 1, 2000, which reflects the probable 
    effective date of the necessary legislation.
        HUD Response. While HUD has decided not to include Sec. 964.435 in 
    the final rule, section 503 of the Public Housing Reform Act is clear 
    that the amendments made by the statute, including the resident board 
    member requirement, will take effect beginning on October 1, 1999. HUD 
    believes that implementation of section 2(b) should occur as soon as 
    possible after this date if a PHA is not already in compliance. 
    Congress provided a one year period from enactment to implementation to 
    provide PHAs and localities with adequate notice of the resident board 
    member requirements.
        Comment: Implementation should be ``phased-in''. Many commenters 
    suggested that HUD ``phase-in'' implementation of the board membership 
    requirement. These commenters wrote that the final rule should allow 
    PHAs to implement the new requirement at some point during a specified 
    period (the next 5 board vacancies, 2 years, etc.) These commenters 
    feared that the proposed implementation schedule might force the 
    removal of the most knowledgeable PHA board member, in order to make 
    room for a resident.
        HUD Response. HUD has not adopted the change suggested by these 
    commenters. As noted in the response to the previous comment, the 
    resident board member requirement becomes effective beginning October 
    1, 1999. HUD believes that implementation of section 2(b) should occur 
    as soon as possible after this date. All covered PHAs must take the 
    steps necessary to comply with this requirement if they have not done 
    so already. It has been one year since section 2(b) became law, 
    providing States and PHAs time to address the concerns this provision 
    raises and to determine how best to implement this statutory 
    requirement.
        Comment: Implementation date should not be postponed. One commenter 
    advocated that HUD adopt the proposed implementation schedule without 
    change. The commenter wrote that implementation should not be delayed.
        HUD Response. HUD agrees with this commenter that implementation of 
    the resident board member requirement should occur as soon as possible 
    after October 1, 1999. All covered PHAs must take the steps necessary 
    to comply with this requirement if they have not done so already. As 
    noted above, States and PHAs have had time to address the concerns 
    raised by section 2(b) and to determine how best to implement this 
    statutory requirement.
    
    K. Comments Regarding Sec. 964.440--Filling an Open Board Member Seat
    
        Proposed Sec. 964.440 describes the procedures governing the 
    filling of an open board seat by a resident. HUD received a number of 
    public comments on proposed Sec. 964.440. Several of these commenters 
    raised the Federalism concerns summarized in Section III.C of this 
    preamble, above. As noted, HUD has responded to these concerns by not 
    including Sec. 964.440 in the final rule. In developing the regulations 
    implementing section 2(b), HUD wished to grant PHAs and localities with 
    flexibility in complying with the resident board member requirement. 
    Rather than specifying regulatory procedures for the appointment of 
    residents to a PHA board, HUD has decided to leave these procedures to 
    each locality. HUD is mindful of the implementation difficulties 
    presented by the statutory resident board member requirement, and 
    encourages the development of local solutions to these problems.
        Several commenters raised questions or issues about the specific 
    procedures described in proposed Sec. 964.440. As a result of the 
    decision not to include Sec. 964.440 in the final rule, these public 
    comments are no longer applicable to this final rule and are not 
    discussed in this summary.
    
    IV. Findings and Certifications
    
    Environmental Impact
    
        This final rule does not direct, provide for assistance or loan and 
    mortgage insurance for, or otherwise govern or regulate, real property 
    acquisition, disposition, leasing, rehabilitation, alteration, 
    demolition, or new construction, or establish, revise, or provide for 
    standards for construction or construction materials, manufactured 
    housing, or occupancy. Therefore, under HUD's regulations at 24 CFR 
    50.19(c)(1), this rule is categorically excluded from environmental 
    review under the National Environmental Policy Act of 1969 (42 U.S.C. 
    4321).
    
    Regulatory Flexibility Act
    
        The Secretary has reviewed this final rule before publication and 
    by approving it certifies, in accordance with the Regulatory 
    Flexibility Act (5 U.S.C. 605(b)), that this final rule will not have a 
    significant economic impact on a substantial number of small entities. 
    The final rule implements section 505 of the Public Housing Reform Act 
    (42 U.S.C. 1437), which requires with certain exceptions, that the 
    board of directors or similar governing body of a PHA contain not less 
    than one member who is directly assisted by the PHA. Section 505 and 
    this final rule provide flexibility for smaller PHAs through an 
    exception for PHAs that have less than 300 public housing units. 
    Consequently, HUD does not believe that this final rule will have a 
    significant economic impact on a substantial number of small entities.
    
    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 final rule does not impose, within the meaning 
    of the UMRA, any Federal mandates on any State, local, or tribal 
    governments or on the private sector.
    
    Federalism Impact
    
        The General Counsel, as the Designated Official under section 6(a) 
    of Executive Order 12612 (captioned ``Federalism''), has determined 
    that the policies contained in this final rule will have federalism 
    implications. Specifically, the requirement that the membership of the 
    board of directors or similar governing body of a PHA must contain not 
    less than one member who is directly assisted by the PHA will have 
    direct effects on any State or local laws that govern the organization 
    of PHAs.
    
    [[Page 56879]]
    
    HUD provided copies of the June 23, 1999 proposed rule to each of the 
    50 State Attorney Generals and specifically invited their comments on 
    the proposed regulatory requirements. HUD has also prepared and 
    submitted to the Office of Management and Budget a Federalism 
    Assessment that addresses the Federalism implications raised by this 
    rulemaking.
    
    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.
    
        For the reasons discussed in the preamble, HUD amends 24 CFR part 
    964 as follows:
    
    PART 964--TENANT PARTICIPATION AND TENANT OPPORTUNITIES IN PUBLIC 
    HOUSING
    
        1. The authority citation for 24 CFR part 964 is revised to read as 
    follows:
    
        Authority: 42 U.S.C. 1437, 1437d, 1437g, 1437l, 1437r, 1437t, 
    and 3535(d).
    
        2. Amend Sec. 964.3 as follows:
        a. Revise paragraph (a);
        b. Redesignate paragraph (e) as paragraph (f); and
        c. Add new paragraph (e).
        The addition and revision to Sec. 964.3 read as follows:
    
    
    Sec. 964.3  Applicability and scope.
    
        (a) The policies and procedures contained in this part apply to any 
    PHA that has a Public Housing Annual Contributions Contract (ACC) with 
    HUD. This part, except for subpart E, does not apply to PHAs with 
    housing assistance payments contracts with HUD under section 8 of the 
    U.S. Housing Act of 1937.
    * * * * *
        (e) Subpart E of this part implements section 2(b) of the United 
    States Housing Act of 1937 (42 U.S.C. 1437), which provides for 
    resident membership on the board of directors or similar governing body 
    of a PHA. Subpart E applies to any public housing agency that has a 
    public housing annual contributions contract with HUD or administers 
    tenant-based rental under section 8 of the United States Housing Act of 
    1937 (42 U.S.C. 1437f).
    * * * * *
    
    
    Sec. 964.110  [Removed]
    
        2. Remove Sec. 964.110.
        3. Add subpart E to read as follows:
    
    Subpart E--Resident Board Members
    
    Sec.
    964.400  Purpose.
    964.405  Applicability.
    964.410  Additional definitions.
    964.415  Resident board members.
    964.420  Resident board member may be elected.
    964.425  Small public housing agencies.
    964.430  Nondiscrimination.
    
    Subpart E--Resident Board Members
    
    
    Sec. 964.400  Purpose.
    
        The purpose of this subpart is to implement section 2(b) of the 
    United States Housing Act of 1937 (42 U.S.C. 1437).
    
    
    Sec. 964.405  Applicability.
    
        (a) General. Except as described in paragraph (b) of this section, 
    this subpart applies to any public housing agency that has a public 
    housing annual contributions contract with HUD or administers tenant-
    based rental assistance under section 8 of the United States Housing 
    Act of 1937 (42 U.S.C. 1437f).
        (b) Exceptions. The requirements of this subpart do not apply to a 
    public housing agency that is:
        (1) Located in a State that requires the members of a governing 
    board to be salaried and to serve on a full-time basis; or
        (2) Not governed by a governing board.
    
    
    Sec. 964.410  Additional definitions.
    
        The following additional definitions apply to this subpart only:
        Directly assisted. Directly assisted means a public housing 
    resident or a recipient of housing assistance in the tenant-based 
    section 8 program. Direct assistance does not include any State 
    financed housing assistance or Section 8 project-based assistance.
        Eligible resident. An eligible resident is a person:
        (1) Who is directly assisted by a public housing agency;
        (2) Whose name appears on the lease; and
        (3) Is eighteen years of age or older.
        Governing board. Governing board means the board of directors or 
    similar governing body of a public housing agency.
        Resident board member. A resident board member is a member of the 
    governing board who is directly assisted by that public housing agency.
    
    
    Sec. 964.415  Resident board members.
    
        (a) General. Except as provided in Secs. 964.405(b) and 964.425, 
    the membership of the governing board of each public housing agency 
    must contain not less than one eligible resident board member.
        (b) Resident board member no longer directly assisted. (1) A 
    resident board member who ceases to be directly assisted by the public 
    housing agency is no longer an ``eligible resident'' as defined in 
    Sec. 964.410.
        (2) Such a board member may be removed from the PHA board for that 
    cause, where such action is permitted under State or local law.
        (3) Alternatively, the board member may be allowed to complete his/
    her current term as a member of the governing board. However, the board 
    member may not be re-appointed (or re-elected) to the governing board 
    for purposes of serving as the statutorily required resident board 
    member.
        (c) Minimum qualifications for board membership. Any generally 
    applicable qualifications for board membership also apply to residents, 
    unless the application of the requirements would result in the 
    governing board not containing at least one eligible resident as a 
    member. Further, PHAs and localities may not establish eligibility 
    requirements for board membership that are solely applicable to 
    residents.
    
    
    Sec. 964.420  Resident board member may be elected.
    
        (a) General. Residents directly assisted by a public housing agency 
    may elect a resident board member if provided for in the public housing 
    agency plan, adopted in accordance with 24 CFR part 903.
        (b) Notice to residents. The public housing agency must provide 
    residents with at least 30 days advance notice for nominations and 
    elections. The notice should include a description of the election 
    procedures, eligibility requirements, and dates of nominations and 
    elections. Any election procedures devised by the public housing agency 
    must facilitate fair elections.
    
    
    Sec. 964.425  Small public housing agencies.
    
        (a) General. The requirements of this subpart do not apply to any 
    public housing agency that:
    
    [[Page 56880]]
    
        (1) Has less than 300 public housing units (or has no public 
    housing units):
        (2) Has provided reasonable notice to the resident advisory board 
    of the opportunity for residents to serve on the governing board;
        (3) Has not been notified of the intention of any resident to 
    participate on the governing board within a reasonable time (which 
    shall not be less than 30 days) of the resident advisory board 
    receiving the notice described in paragraph (a)(3) of this section; and
        (4) Repeats the requirements of paragraphs (a)(2) and (a)(3) of 
    this section at least once every year.
        (b) Public housing agencies that only administer Section 8 
    assistance. A public housing agency that has no public housing units, 
    but administers Section 8 tenant-based assistance, is eligible for the 
    exception described in paragraph (a) of this section, regardless of the 
    number of Section 8 vouchers it administers.
        (c) Failure to meet requirements for exception. A public housing 
    agency that is otherwise eligible for the exception described in 
    paragraphs (a) and (b) of this section, but does not meet the three 
    conditions described in paragraphs (a)(2) through (a)(4) of this 
    section, must comply with the requirements of this subpart.
    
    
    Sec. 964.430  Nondiscrimination.
    
        (a) Membership status.--(1) General. A resident board member is a 
    full member of the governing board.
        (2) Resident participation must include matters regarding Federal 
    public housing and Section 8 tenant-based assistance. A resident board 
    member must be allowed to take part in decisions related to the 
    administration, operation, and management of Federal public housing 
    programs and Section 8 tenant-based rental assistance programs. This 
    rule does not extend to matters that:
        (i) Exclusively relate to other types of housing assistance (such 
    as State financed housing assistance); or
        (ii) Do not involve housing assistance (as may occur where the city 
    or county governing body also serves as the PHA board).
        (3) Public housing agency may expand scope of resident 
    participation. A public housing agency may choose to expand the scope 
    of resident member involvement to matters not required under paragraph 
    (a)(2) of this section.
        (b) Residence status. A governing board may not prohibit any person 
    from serving on the governing board because that person is a resident 
    of a public housing project or is assisted under section 8 of the 
    United States Housing Act of 1937 (42 U.S.C. 1437f).
        (c) Conflict of interest. A governing board may not exclude any 
    resident board member from participating in any matter before the 
    governing board on the grounds that the resident board member's lease 
    with the public housing agency, or the resident board member's status 
    as a public housing resident or recipient of Section 8 tenant-based 
    assistance, either results or may result in a conflict of interest, 
    unless the matter is clearly applicable to the resident board member 
    only in a personal capacity and applies uniquely to that member and not 
    generally to residents or to a subcategory of residents.
    
        Dated: October 14, 1999.
    Harold Lucas,
    Assistant Secretary for Public and Indian Housing.
    [FR Doc. 99-27301 Filed 10-20-99; 8:45 am]
    BILLING CODE 4210-33-P
    
    
    

Document Information

Published:
10/21/1999
Department:
Housing and Urban Development Department
Entry Type:
Rule
Action:
Final rule.
Document Number:
99-27301
Pages:
56870-56880 (11 pages)
Docket Numbers:
Docket No. FR-4502-F-02
RINs:
2577-AC13
PDF File:
99-27301.pdf
CFR: (9)
24 CFR 964.3
24 CFR 964.110
24 CFR 964.400
24 CFR 964.405
24 CFR 964.410
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