Public and Indian Housing Amendment to the Tenant Participation and Tenant Opportunities in Public and Indian Housing

SUMMARY: This document proposes to amend regulations on tenant

participation in public and Indian housing to add new policies,

procedures and guidelines for tenant participation, revise the Resident

Management Program to Tenant Opportunities Programs, and add

regulations to govern the Family Investment Centers (FIC) Program.

These changes would be made to address several weaknesses in the

existing regulations which have interferred with successful program

implementation.

DATES: Comments due: May 19, 1994.

ADDRESSES: Interested persons are invited to submit comments regarding

this proposed rule to the Office of General Counsel, Rules Docket

Clerk, room 10276, Department of Housing and Urban Development, 451

Seventh Street SW., Washington, DC 20410. Facsimile (FAX) are not

acceptable. A copy of each communication submitted will be available

for public inspection and copying on weekdays between 7:30 a.m. and

5:30 p.m. at the above address.

FOR FURTHER INFORMATION CONTACT: For questions concerning the Public

Housing rule contact Dorothy Walker or Marcia Martin, Office of

Resident Initiatives, room 4112, telephone (202) 708-3611, or 708-0850.

For Indian Housing, contact Dom Nessi, Director, Office of Native

American Programs, room 4141, telephone (202) 708-1015 (these are not

toll-free numbers). Hearing- or speech-impaired persons may use the

Telecommunications Devices for the Deaf (TDD) by contacting the Federal

Information Relay Service on 1-800-877-TDDY (1-800-877-8339) or 202-

708-9300 (not a toll free number) for information on the program.

The address for the above listed persons is: Department of Housing

and Urban Development, 451 7th Street SW., Washington, DC 20410. (The

telephone numbers listed above are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Information Collections

The information collection requirements contained in this proposed

rule have been submitted to the Office of Management and Budget (OMB)

for review under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-

3520).

The public reporting burden for each of these collections of

information is estimated to include the time for reviewing the

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information. Information on the estimated public

reporting burden is provided under the preamble heading, Other Matters.

Send comments regarding this burden estimate or any other aspect of

this collection of information, including suggestions for reducing this

burden, to the Department of Housing and Urban Development, Rules

Docket Clerk, 451 Seventh Street SW., room 10276, Washington, DC 20410;

and to the Office of Information and Regulatory Affairs, Office of

Management and Budget, Attention Desk Officer for HUD, Washington, DC

20503.

II. Background

Section 20 of the United States Housing Act of 1937, as amended (42

U.S.C. 1437r) (the ``1937 Act'') was enacted to encourage increased

resident management of public housing projects * * * ``to promote

formation and development of resident management entities.'' The

Department implemented section 20 by regulations (24 CFR part 964 for

Public Housing, and 24 CFR part 905, subpart O for Indian Housing),

that governed tenant participation and resident management in public/

Indian housing under Section 20 of the 1937 Act.

III. Overview of Public Housing Changes

Several weaknesses in the regulations have interfered with

successful program implementation. The current regulations fail to

establish clear and detailed policy on resident participation and

guidance on the structure for public housing resident organizations.

Additionally, the current regulations fail to establish specific

requirements for resident involvement in public/Indian housing

management, and a strong partnership between the PHAs/IHAs

(thereinafter referred to as HAs) and resident councils. Internal

conflict between competing resident councils in a development poses

serious problems to HUD with respect to program eligibility and

participation, as well as HA recognition. The Department is concerned

about the need to provide more details on how resident councils/

resident management corporations should be structured and how to

broaden tenant involvement in public housing.

The Department recognizes the need to increase the amount of cash

contributions for resident council activities, presently limited at

three (3) dollars per unit per year, and to compensate resident council

officers who are serving as volunteers in the public housing community.

The Secretary asked a former top HUD official to develop policy

recommendations on the role of residents in the management of public

housing. Based on these recommendations, the Secretary established an

Interim Resident Advisory Committee consisting of representatives of

regional and state resident organizations who developed a Policy Paper

on resident involvement in public housing. Public Housing Advocacy

Groups: Public Housing Authorities Directors Association (PHADA),

Council of Large Public Housing Authorities (CLPHA) and National

Association of Housing Redevelopment Officials (NAHRO), were given an

opportunity to review and comment on the Policy Paper.

Section 20 authorizes funds for technical assistance and training

to resident councils (RCs)/resident management corporations (RMCs) to

promote increased resident management of public housing. HUD's

experience in providing grants to RCs/RMCs under the Public Housing

Resident Management Program has revealed that major changes were needed

in the provisions of the program. RCs/RMCs and HAs across the country

overwhelmingly requested revamping of the program to assist in meeting

their residents' need for economic development, education, job training

and development, social services, and opportunities for other self-help

initiatives.

Recommendations from the Interim Resident Advisory Committee on

Tenant Involvement in Public Housing, and requests for changes in the

Resident Management Technical Assistance Program resulted in the

proposed comprehensive revision of 24 CFR part 964.

The major changes in the proposed rule would allow for broader,

more flexible programs aimed at increasing the capacity of resident

entities to participate significantly in all aspects of public housing

operations while simultaneously permitting further economic uplift

opportunities, to the extent permitted under section 20 of the United

States Housing Act of 1937. Section 20 requires that all activities

funded under it be related to improved living conditions and public

housing operations. (See Secs. 905.967 and 964.205.) The Department is

now proposing amendments to section 20 to permit funding of a broader

range of tenant development activities to include activities that are

not necessarily related to resident management or housing authority

operations.

The current regulation on the Tenant Participation and Resident

Management Program is proposed to be renamed ``Tenant Participation and

Tenant Opportunities in the Public Housing Program.'' The proposed

regulations would include the Tenant Opportunities Program (TOP), which

replaces the Resident Management Program under subpart C in the current

regulation.

The revised program was created in response to requests from

resident councils/resident management corporations and HAs across the

country for a more flexible program to address the needs in their

communities related to encouraging increased resident management

activities as a means of improved living conditions and public housing

operations. The revised program is designed to prepare residents to

experience the dignity of meaningful work; to own and operate resident

businesses; to move toward financial independence; to enable them to

choose where they want to live; and to assure meaningful participation

in the management of their housing developments. The authority for the

TOP program comes from section 20 of the 1937 Act, which discusses

resident management of public housing. Section 20(f) authorizes

technical assistance and training. Financial assistance in the form of

technical assistance grants is provided by the Secretary to RCs/RMCs to

prepare for management activities in their housing development

(hereinafter referred to as TOP technical assistance grants). Technical

assistance grants are available for ``the development of resident

managed entities, including the formation of such entities, the

development of the management capability of newly formed or existing

entities, the identification of the social support needs of residents

of public housing projects and the securing of such support.'' TOP

technical assistance grants can enable residents to manage their

developments or portions of their developments. The results are

significant and multifaceted. For example, resident managed activities

have resulted in economic development, resident self-sufficiency,

improved living conditions, and enhanced social services for residents

(e.g., child care and other youth programs).

The Resident Management Program would continue to be an option to

resident councils/resident management corporations who are interested

in performing management functions in one or more projects of a HA.

None of the requirements for the resident management program will be

changed. However, some of the provisions are being moved to other

regulations, or HUD documents. For example, the requirements under

subpart C (Sec. 964.39) governing the operating subsidy, budget,

operating reserves, etc. are proposed to be moved to 24 CFR Part 990--

Annual Contributions for Operating Subsidy. The Department believes

these provisions of Sec. 964.39 are more appropriately placed in that

regulation. Also, the requirements for the RMC management contract

contents are being removed from subpart C and are contained in HUD

Notice PIH 93-56 (HA) which also includes a model management contract.

This contract must be followed unless HUD approves a requested change.

Subpart A would be expanded to add policies on partnerships between

HAs and residents. For example, HAs are required to provide a duly

elected resident council office space and meeting facilities, free of

charge, for the purposes of conducting resident activities.

Also, the section on definitions (Sec. 964.7) would be amended by

removing terms such as ``resident council'' and ``resident management

corporation'' and expanding the definition of these terms to provide

clarity on the eligibility of a voting member of the resident council

and establish the frequency of elections for resident management

corporations. The definitions for other terms such as ``project'' and

``tenant participation'' are eliminated.

The current rule under subpart B would be expanded substantially to

establish policies and procedures for HAs with respect to resident

participation activities. For example, HAs shall provide any funds they

receive for resident participation activities to the duly elected

resident council. Parts 990 and 905, subpart J would be amended to

require an ``add-on'' of $25 per unit per year to the HA's operating

subsidy calculation, which would be paid to the HA only if

appropriations were available for that purpose, to support activities

of the duly elected resident council. The HUD Circular HM 7475.9 dated

February 10, 1992, authorized funds not to exceed three ($3) dollars

per unit per year. The Department believes that an increase of $22 per

unit per year is reasonable and, if available, would guarantee the

resources necessary to create a bonafide partnership among the duly

elected resident council and the HA. Strong partnerships are critical

for achieving mutual goals contained in this subpart.

Also, HUD proposes to encourage HAs to provide stipends in an

amount up to $200 per month/per officer to resident council officers

who serve as volunteers in the public housing development to carry out

these duties and functions as officers of the resident council. The

Department believes that these volunteers should be reimbursed for

their expenses related to volunteer efforts, such as child care,

transportation, special equipment, clothing, etc.

The current part 964 regulations lack specificity regarding

resident elections and organizational policies, and have made it

difficult to determine what is a duly elected resident council and that

has caused conflicts among the residents.

The proposed regulations would add new policies and procedures for

resident councils by defining what is a duly elected resident council,

detailing minimum standards for elections of resident councils and

specifying the relationship between the resident councils and resident

management corporations. Resident councils would be required to meet

HUD's election standards in order to receive official recognition from

the HA and HUD, as well as to receive funds in conjunction with the

conduct of resident council business. The role of the jurisdiction-wide

resident council would be established under the proposed rule. The rule

also contains provisions that expand the resident participation

requirements to strongly support resident participation in all aspects

of a HA's management operations and that give rights to residents to

freely organize and represent their interests.

The proposed rule would add a new subpart D to implement the Family

Investment Center (FIC) Program under section 22 of the 1937 Act (42

U.S.C. 1437t) (added by section 515 of the Cranston-Gonzalez National

Affordable Housing Act). The FIC program provides families living in

public housing with better access to educational and employment

opportunities. This new subpart will be added to part 964 to include

FIC because it complements the Department's resident participation and

self-sufficiency initiatives. The program was proposed by a national

association on behalf of numerous housing authorities. Representatives

from public/Indian housing authorities, resident councils/resident

management corporations and nonprofit housing agencies were convened at

the Department to discuss program provisions and provide policy

recommendations during the initial program planning stage. Some HAs

will combine their FIC and Family Self-Sufficiency (FSS) programs. This

rule would provide that section 8 FSS Program participants are eligible

to participate in the FIC program when it is combined with FSS, but

that income exclusions that are provided to public housing residents

participating in employment training and supportive service programs

would not apply to Section 8 FSS families. The treatment of the FSS

escrow account for public housing FIC/FSS families is not addressed in

this proposed rule, but will be included in the final rulemaking.

Proposed Sec. 964.320 provides HUD policy on training, employment

and contracting of public/Indian housing residents under section 3 of

the Housing and Community Development Act of 1968. Section 915 of the

Housing and Community Development Act of 1992 made significant changes

to section 3. HUD recently published a proposed rule implementing those

changes (see 58 FR 52534, October 8, 1993). Section 3, as amended,

requires that HAs make their best efforts, consistent with existing

Federal, State, and local laws and regulations, to amend contracts for

work to be performed in connection with development, operation and

modernization assistance provided pursuant to sections 5, 9 and 14 of

the U.S. Housing Act of 1937. As amended, section 3 establishes an

order of priority to which the HA's efforts must be directed. Thus, the

first level of priority is to residents of the housing development, for

which the assistance is provided. This proposed rule includes

provisions consistent with the proposed section 3 rule.

The reader should note that combination terms such as ``tenant and

resident'', ``tenant council,'' and ``resident council'', and ``tenant

management corporation'' and ``resident management corporation'' are

similar terms and may be used interchangeably. Hereafter, for ease of

discussion, the proposed rule will use the terms resident, resident

council and resident management corporation, as appropriate.

IV. Amendments of the Tenant Participation and Tenant Opportunities

Program in Public Housing

A. Regulatory Actions: 964

Based on recommendations of the Interim Resident Advisory

Committee, program experience, and comments from various Housing

Interest Groups, the regulations are proposed to be revised to: (1)

Expand tenant participation in various programs and involvement in

public housing operations, and (2) change the Resident Management

Program to the Tenant Opportunities Program (TOP), and (3) add a new

subpart D to the 964 regulations which contains policies and procedures

for the FIC Program.

This section discusses each of the specific regulatory revisions.

1. Subpart A would be amended as follows:

a. Section 964.1 Purpose would be streamlined.

b. Section 964.3 Applicability and scope would remain unchanged.

c. Section 964.7 Definitions would be amended by removing several

definitions such as project and tenant participation; by moving terms

such as Resident Council and Resident Management Corporation to a more

appropriate section under subpart B, and by expanding definitions; and

by adding new terms which relate to the FIC program.

d. Section 964.11 HUD policy on tenant participation would be

amended to strongly support tenant participation in all the functions

of a HA's management operations and give rights to residents to freely

organize and represent their interests.

e. Section 964.12 HUD policy on Tenant Opportunities Program (TOP)

would provide HUD's policy on the Tenant Opportunities Program. Subpart

C of the current regulation would be changed from ``Resident Management

Program'' to ``Tenant Opportunities Program'' (TOP). The name is being

changed to TOP because it reflects the evolution of the program over

time, to enhance resident capacity in a variety of ways, including job

training, economic development, and self-sufficiency activities carried

out by resident councils/resident management corporations in public

housing. Resident management is a component of TOP and resident

councils/resident management corporations may continue to engage in

activities relative to public housing management. Tenant opportunities

programs are proven to be effective in facilitating economic uplift as

well as in improving the overall conditions in public housing.

f. Section 964.14 HUD policy on partnerships would be added to

provide HUD policy on Partnerships between HAs and residents. Strong

partnerships between HAs and resident councils/resident management

corporations are key to the success of program objectives, and critical

for achieving specific and mutual goals and creating positive change

for residents in public housing.

g. Section 964.15 HUD policy on resident management would remain

unchanged. This section states HUD's support for resident councils/

resident management corporations who are interested in becoming

resident managed entities in public housing.

h. Section 964.16 HUD role in activities under this part--

Monitoring would be added to describe HUD's proactive responsibility

for promoting tenant participation and tenant opportunities in public

housing. It provides that HUD will monitor program progress to ensure

efficient and effective operations pursuant to this rule.

i. Section 964.18 HA role in activities under subparts B&C would

establish a stronger HA role under this subpart. HAs shall, upon

request, provide office space to a duly elected resident council and

shall negotiate in good faith usage of community space for meetings and

other activities for residents. HAs have a responsibility to negotiate

such usage of space with the duly elected resident council.

j. Section 964.24 HUD policy on FIC program would provide HUD's

policy and support for the FIC program.

2. Subpart B would be amended as follows:

a. Section 964.100 Role of resident council which establishes the

role of a resident council and Section 964.105 Role of the

jurisdiction-wide resident council which establishes the role of a

jurisdiction-wide resident council would be added to the rule.

b. Section 964.110 Resident membership on HA Board of Commissioners

would encourage resident membership on HA Board of Commissioners.

c. Section 964.115 Resident council requirements would describe the

provisions necessary for the Resident Council to receive official

recognition from the HA and HUD. In the current rule, this provision

was included in the definitions section, and in this proposed rule it

becomes a separate section.

d. Section 964.117 Resident council partnerships would be added to

encourage and promote partnerships between the resident councils and

public/private organizations. While the Department encourages

partnerships to complement council activities, such organizations must

not become the governing entity of the resident council.

e. Section 964.120 Resident management corporation requirements

would establish characteristics in order to receive formal recognition

by the HA and HUD. In the current rule, this was included in the

definitions sections and in this proposed rule, it becomes a separate

section.

f. Section 964.125 Eligibility for resident council membership

would be added to provide guidance on eligibility for council

membership. This section establishes that any member of a household,

who is on the lease, may be a member of a resident council. However, in

order to be a voting member of the resident council, a person's name

must appear on the lease of a unit in the public housing development,

and he/she must be: (1) A legal head of household (means the member of

the family who is the head of the household for purposes of determining

income eligibility and rent), or (2) 18 years of age or older.

g. Section 964.130 Election procedures and standards would be added

to provide minimum standards for resident council elections including

the requirement for supervision by an independent third party. HAs

shall monitor the resident council's elections to ensure compliance

with HUD's minimum standards.

h. Section 964.135 Resident involvement in HA management would be

added to provide policy on resident involvement in HA management

operations. Residents shall participate fully in the overall policy

development and direction of a HA operations.

i. Section 964.140 Resident training would be added to encourage

HAs to take the lead in providing training opportunities for public

housing residents. If residents are willing, they may receive training

from the HA and become involved in implementing various Federal

programs.

j. Section 964.145 Conflict of interest would be added to provide

policy on resident council officers serving as contractors or as

employees of a HA.

k. Section 964.150 Funding tenant participation would be added to

establish policy on funding duly elected resident councils. Subject to

appropriations, HAs shall provide funds to the duly elected resident

council for tenant participation activities. This rule also proposes

amendment to 24 CFR part 990 for tenant services to include up to $25

per unit per year, subject to the availability of appropriations, as an

add-on to the Performance Funding System (PFS).

3. Subpart C would be amended as follows:

a. Section 964.200 General would be added to provide information on

the provisions of the TOP.

b. Section 964.205 Eligibility would be added to define who is

eligible to apply and receive a technical assistance grant, and would

outline eligible activities under TOP.

c. Section 964.210 Announcement of funding availability would be

added to describe notification of funding availability for obtaining

funds to participate in TOP.

d. Section 964.215 Grant agreement would provide the terms of the

grant agreement for the proposed activities under the TOP program.

e. Section 964.220 Technical assistance would describe HUD's

commitment to fund TOP activities.

f. Section 964.225 Resident management requirements would provide

minimal guidelines for HAs and residents for the performance of

management functions.

g. Section 964.230 Audit and administrative requirements would

provide audit and administrative guidelines for recipients of TOP grant

funds and resident management corporations contracting with a HA for

management responsibilities.

4. Subpart D would be added to the part 964 as follows:

a. Section 964.300 General would provide the purpose and program

provisions of the FIC program. FIC provides families living in public

housing with better access to educational and employment opportunities

to achieve self-sufficiency and independence.

b. Section 964.305 Eligibility for FIC would provide eligible

activities and requirements under the FIC program.

c. Section 964.308 Supportive services requirements for FIC would

provide supportive services requirements essential for families living

with children in public housing.

d. Section 964.310 Audit/Compliance Requirements for FIC would

provide audit and compliance requirements governing the program.

e. Section 964.315 HAs role in FIC activities under this part would

provide the process required to assure that HA residents are informed

about FIC.

f. Section 964.320 HUD policy on training, employment, contracting

and subcontracting of public/Indian housing residents under FIC would

state HUD's policy on resident training, employment and contracting

under FIC.

g. Section 964.325 Announcement of funding availability for FIC

would indicate that the Notice of Funding Availability (NOFA) will be

published periodically and contain specific information regarding

eligibility, funding criteria, etc.

h. Section 964.330 Grant set-aside assistance for FIC would state

HUD's policy of permitting up to five percent (5%) of amounts available

in any fiscal year to augment grants previously awarded under this

program.

i. Section 964.335 Grant agreement for FIC would provide the grant

agreement term.

j. Section 964.340 Resident compensation for FIC would provide

guidelines governing employment compensation under this program.

k. Section 964.45 Treatment of income would provide provisions for

income exclusions for any resident participating in the FIC program.

l. Section 964.350 Administrative Requirements for FIC would

provide administrative and reporting requirements governing the FIC

program.

B. Indian Housing Changes--Part 905

The proposed rule also revises 24 CFR part 905, subpart O,

``Resident Participation and Opportunities''. The Indian housing

section is similar to its public housing counterpart, but does not

contain some of the provisions in 24 CFR part 964 in an effort to

streamline the regulations and tailor them specifically to the

generally smaller size of most Indian Housing Authorities (IHA).

However, all activities, functions and benefits permitted under any

public housing resident programs will remain eligible activities,

functions and benefits for Indian housing resident programs.

The major changes in the proposed rule will allow for broader, more

flexible programs aimed at increasing the capacity of Indian housing

resident organizations and resident management corporations to carry

out their organizational functions in a more structured manner while

simultaneously permitting further economic uplift opportunities.

Within the subpart there is a general section; a Tenant

Opportunities Program (TOP) section; and a Family Investment Centers

Program section. The current Indian Housing Resident Management Program

under existing regulations is viable and remains an option under TOP.

None of the requirements for the resident management program will be

changed; however, some sections are being moved to other sections of

the 905 regulations or HUD handbooks.

C. Miscellaneous Conforming Changes

Changes that have been made to other parts are the exclusion from

income of stipends to RC officers and of training grants under the FIC

program that would be added to 905 and 913; the provision for payments

to duly elected resident council officers, and the inclusion of

requirements governing the RMC Operating subsidy, budget, operating

reserves, etc., that would be made to 990; and changes for the resident

participation subpart that would be made in part 905 to parallel

changes in part 964.

Other Matters

Justification for Shortened Comment Period

It is the general practice of the Department to provide a 60-day

comment period on all proposed rules. However, the Department is

shortening its usual 60-day comment period to 30 days because it would

be contrary to the public interest to delay the benefits of the rule

another 30 days and because it is unnecessary to have a longer comment

period. The policies contained in this proposed rule are the result of

collaborative efforts with various housing interest groups, i.e.,

public housing resident leaders, Public/Indian Housing Authorities,

Public Housing Advocacy Groups. This should decrease the need for the

usual time period for comment, since consultation took place while the

policy was being developed.

Regulatory Flexibility Act

The Secretary, in accordance with the Regulatory Flexibility Act (5

U.S.C. 605(b)), has reviewed this proposed rule before publication and

by approving it certifies that this proposed rule does not have a

significant economic impact on a substantial number of small entities.

The proposed rule provides substantial revisions to the regulations

concerning Tenant Participation and Management in Public Housing under

which resident councils/resident management corporations receive

funding on a competitive basis. HUD does not anticipate a significant

economic impact on small entities since resident councils/resident

management corporations will continue to obtain by contract technical

assistance to carry out program activities.

Environmental Impact

A finding of no significant impact with respect to the environment

has been made in accordance with HUD regulations in 24 CFR part 50 that

implement section 102(2)(C) of the National Environmental Policy Act of

1969 (42 U.S.C. 4332). The Finding of No Significant Impact is

available for public inspection between 7:30 a.m. and 5:30 p.m.

weekdays in the office of the Rules Docket Clerk at the above address.

Executive Order 12866

This proposed rule was reviewed by the Office of Management and

Budget under Executive Order 12866, Regulatory Planning and Review. Any

changes made to the proposed rule as a result of that review are

clearly identified in the docket file which is available for public

inspection in the office of the Department's Rules Docket Clerk, room

10276, 451 Seventh Street SW., Washington, DC.

Executive Order 12612, Federalism

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this proposed rule will not have substantial direct

effects on states or their political subdivisions, or the relationship

between the federal government and the states, or on the distribution

of power and responsibilities among the various levels of government.

As a result, the proposed rule is not subject to review under the

order. The revised proposed rule is consistent with federalism

principles since it reduces unnecessary burdens on resident

organizations. Since participation by resident organizations is

discretionary, this proposed rule lacks the direct and substantial

effects on resident organizations required for a policy with federalism

implications under the Order.

Executive Order 12606, The Family

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that this proposed rule has a

beneficial effect on the family, and thus, does not require further

review. No significant change in existing HUD policies or programs will

result from promulgation of this proposed rule, as those policies and

programs relate to family concerns.

Regulatory Agenda

This proposed rule was listed as Item No. 1636 in the Department's

Semiannual Agenda of Regulations published on October 25, 1993, (58 FR

56402, 56448) in accordance with Executive Order 12291 and the

Regulatory Flexibility Act.

Public Reporting Burden

The information collection requirements contained in this proposed

rule have been submitted to the Office of Management and Budget under

the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520). The

Department has determined that the following provisions contain

information collection requirements.

The Department has estimated the public reporting burden involved

in the information collections contained in the proposed rule as shown

below. The public reporting burden for each of these collections of

information is estimated to include the time for reviewing the

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Information Collection Burden of Top Rule

------------------------------------------------------------------------

Est. avg.

No. of Freq. of response Est. annual

Reference respondents responses time burden

(hours) (hours)

------------------------------------------------------------------------

964.18 & 905.964.... 1500 1 3 4500

964.115 & 964.130... 1500 1 3 4500

964.215............. 200 1 2 400

964.225 (b) &

905.969............ 25 1 3 75

964.230, 964.305 &

905.982............ 500 1 1 500

964.310............. 500 1 8 4000

964.335............. 75 1 2 150

964.350, 964.350(a)

& 905.988.......... 75 1 1 75

---------------------------------------------------

Total Reporting

Burden......... ........... ........... ........... 14,200

Recordkeeping

Burden:

964.230(a)(2) &

905.972............ 200 ........... 1 200

---------------------------------------------------

Total

Recordkeeping

Burden......... ........... ........... ........... 200

------------------------------------------------------------------------

The Catalog of Federal Domestic Assistance program number is

14.853.

List of Subjects

24 CFR Part 905

Aged, Energy conservation, Grant programs--housing and community

development, Grant programs--Indians, Indians, Individuals with

disabilities, Lead poisoning, Loan programs--housing and community

development, Loan programs--Indians, Low and moderate income housing,

Public housing, Reporting and recordkeeping requirements.

24 CFR Part 913

Grant programs--housing and community development, Public housing,

Reporting and recordkeeping requirements.

24 CFR Part 964

Grant programs--housing and community development, Public housing,

Reporting and recordkeeping requirements.

24 CFR Part 990

Grant programs--housing and community development, Public housing,

Reporting and recordkeeping requirements.

Accordingly, parts 905, 913, 964, and 990 of title 24 of the Code

of Federal Regulations are proposed to be amended as follows:

PART 905--INDIAN HOUSING PROGRAMS

1. The authority citation for part 905 would be revised to read as

follows:

Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437aa, 1437bb, 1437c,

1437cc, 1437d(c)(4)(D), 1437ee and 3535(d).

2. In Sec. 905.102, the definition of Annual income would be

amended by removing the word ``or'' from paragraph (2)(viii)(B); by

adding the word ``or'' at the end of paragraph (2)(viii)(C); by adding

a new paragraph (2)(viii)(D); by removing the word ``or'' from

paragraph (2)(x); by designating paragraph (2)(xi) as paragraph

(2)(xii); and by adding a new paragraph (2)(xi) to read as follows:

Sec. 905.102. Definitions.

* * * * *

Annual income.

* * * * *

(2) * * *

(viii) * * *

(D) A resident stipend, but only if the resident stipend does not

exceed $200 per month per officer to resident council officers.

Stipends are intended to cover costs related to officers volunteer

efforts and include but are not limited to the following items: child

care, transportation, special equipment and special clothing.

* * * * *

(xi) The earnings and benefits to any resident resulting from the

participation in a program providing employment training and supportive

services in accordance with the Family Support Act of 1988, section 22

of the U.S. Housing Act of 1937, or any comparable Federal, State,

Tribal or local law during the exclusion period. For purposes of this

paragraph, the following definitions apply:

(A) Comparable Federal, State, Tribal or Local law means a program

providing employment training and supportive services that--

(1) is authorized by a Federal, State, Tribal or local law;

(2) is funded by Federal, State, Tribal or local government;

(3) is operated or administered by a public agency; and

(4) has as its objective to assist participants in acquiring job

skills.

(B) Exclusion period means the period during which the resident

participates in a program described in this section, plus 18 months

from the date the resident begins the first job acquired by the

resident after completion of such program that is not funded by public

housing assistance under the U.S. Housing Act of 1937 or the date the

resident is terminated from employment without good cause. If the

resident is terminated from employment without good cause, the

exclusion period shall end.

(C) Earnings and Benefits means the incremental earnings and

benefits resulting from a qualifying job training program or subsequent

job; or

* * * * *

3. In Sec. 905.720, a new paragraph (f) would be added, to read as

follows:

Sec. 905.720 Other costs.

* * * * *

(f) Funding for Resident Organization Expenses. In accordance with

the provisions of 24 CFR part 905, subpart O and procedures determined

by HUD, each HA with a duly elected resident organization shall include

in the operating subsidy eligibility calculation, $25 per unit per year

(subject to appropriations) in support of the duly elected resident

organization's activities.

* * * * *

4. Subpart O of part 905 would be revised to read as follows:

Subpart O--Resident Participation and Opportunities

General Provisions

Sec.

905.960 Purpose.

905.961 Applicability and scope.

905.962 Definitions.

905.963 HUD's role in activities under this subpart.

905.964 Resident participation requirements.

905.965 Funding Resident Participation.

Tenant Opportunities Program

905.966 General.

905.967 Eligible TOP Activities.

905.968 Technical assistance.

905.969 Resident management requirements.

905.970 Management specialist.

905.971 Operating subsidy, preparation of operating budget,

operating reserves and retention of excess revenues.

905.972 TOP Audit and administrative requirements.

Family Investment Centers (FIC) Program

905.980 General.

905.982 Eligibility.

905.983 FIC Activities.

905.984 HA role in activities under this part.

905.985 HUD Policy on training, employment, contracting and

subcontracting of Indian housing residents.

905.986 Grant set-aside assistance.

905.987 Resident compensation.

905.988 Administrative requirements.

Subpart O--Resident Participation and Opportunities

General Provisions

Sec. 905.960 Purpose.

The purpose of this subpart is to recognize the importance of

involving residents in creating a positive living environment and in

contributing to the successful operation of Indian housing.

Sec. 905.961 Applicability and scope.

(a) This subpart applies to any Indian housing authority (HA) that

has an Annual Contributions Contract (ACC) with the Department. This

subpart does not apply to housing assistance payments under section 8

of the U.S. Housing Act of 1937.

(b) This subpart contains HUD's policies, procedures, and

requirements for the participation of Indian housing residents in

Indian housing management.

(c) This subpart is designed to encourage increased tenant

participation in Indian housing.

(d) This subpart is not intended to negate any pre-existing

arrangements for resident management in Indian housing between a HA and

a resident management corporation. On or after [insert effective date

of the final rule], any new, renewed or renegotiated contracts must

meet the requirements of this subpart, the ACC and all applicable laws

and regulations.

(e) This subpart includes requirements for the Family Investment

Centers (FIC) Program, which was established by Section 515 of the

Cranston-Gonzalez National Affordable Housing Act, which created a new

section 22 of the Act. The FIC program is designed to provide families

living in Indian housing with better access to educational and

employment opportunities.

Sec. 905.962 Definitions.

Family Investment Center. A Facility in or near Indian housing

which provides families living in Indian housing with better access to

educational and employment opportunities to achieve self sufficiency

and independence.

Management. All activities for which the HA is responsible to HUD

under the ACC, within the definition of ``operation'' under the Act and

the ACC, including the development of resident programs and services.

Management contract. A written agreement between a resident

management corporation and a HA, as provided by Sec. 905.969. Project.

For purposes of this subpart, the term includes any of the following:

(1) One or more contiguous buildings.

(2) An area of contiguous row houses.

(3) Scattered site buildings.

(4) Scattered site single-family units.

Resident management. The performance of one or more management

activities for one or more projects by a resident management

corporation under a management contract with the HA.

Resident Management Corporation (RMC). A Resident Management

Corporation is an entity that proposes to enter into, or enters into, a

contract to manage HA property. The corporation must have each of the

following characteristics:

(1) It must be a nonprofit organization that is incorporated under

the laws of the State or Indian tribe in which it is located.

(2) It may be established by more than one resident organization,

so long as each such organization both approves the establishment of

the corporation and has representation on the Board of Directors of the

corporation.

(3) It must have an elected Board of Directors.

(4) Its by-laws must require the Board of Directors to include

representatives of each resident organization involved in establishing

the corporation.

(5) Its voting members are required to be residents of the project

or projects it manages.

(6) It must be approved by the resident organization. If there is

no organization, a majority of the households of the project or

projects must approve the establishment of such an organization.

Resident Organization (RO). A Resident Organization (or ``Resident

Council'' as defined in section 20 of the Act) is an incorporated or

unincorporated nonprofit organization or association that meets each of

the following criteria:

(1) It must consist of residents only, and only residents may vote.

(2) If it represents residents in more than one development or in

all of the developments of a HA, it must fairly represent residents

from each development that it represents.

(3) It must adopt written procedures providing for the election of

specific officers on a regular basis.

(4) It must have a democratically elected governing board. The

voting membership of the board shall consist solely of the residents of

the development or developments that the RO represents.

Resident participation. A process of consultation between residents

and the HA concerning matters affecting the management of Indian

housing.

Resident-owned business. A Business staffed by residents that is

related to the management of the IHA development(s).

Sec. 905.963 HUD's role in activities under this subpart.

(a) General. Subject to the requirements of this part and other

requirements imposed on HAs by the ACC, statute or regulation, the form

and extent of resident participation or resident management are local

decisions to be made jointly by ROs and the HAs.

(b) Duty to bargain in good faith. If a HA refuses to negotiate

with a RMC in good faith or, after negotiations, refuses to enter into

a contract, the corporation may file an informal appeal with HUD,

setting out the circumstances and providing copies of relevant

materials evidencing the corporation's efforts to negotiate a contract.

HUD shall require the HA to respond with a report stating the HA's

reasons for rejecting the corporation's contract offer or for refusing

to negotiate. Thereafter, HUD shall require the parties (with or

without direct HUD participation) to undertake or to resume

negotiations on a contract providing for resident management, and shall

take such other actions as are necessary to resolve the conflicts

between the parties. If no resolution is achieved within 90 days from

the date HUD required the parties to undertake or resume such

negotiations, HUD shall serve notice on both parties that

administrative remedies have been exhausted (except that, pursuant to

mutual agreement of the parties, the time for negotiations may be

extended by no more than an additional 30 days).

Sec. 905.964 Resident participation requirements.

(a) HA responsibilities. (1) A HA must provide the residents or any

resident organization with current information concerning the HA's

policies on resident participation in management, including guidance on

information and recognition of a RO, and, where appropriate, a RMC.

(2) A HA must consult with residents or resident organizations (if

they exist), to determine the extent to which residents desire to

participate in the management of their housing and the specific methods

that may be mutually agreeable to the HA and the residents.

(3) When requested by residents, a HA must provide appropriate

guidance to residents to assist them in establishing and maintaining a

RO, and, where appropriate, a RMC.

(b) Recognition. A resident organization may request that it be

recognized as the official organization representing the residents in

meetings with the HA or with other entities.

(c) Written understanding. At a minimum, the HA and the RO shall

put in writing their understanding concerning the elements of their

relationship.

Sec. 905.965 Funding Resident Participation.

Funding will be provided under subpart J, for the following:

(a) Resident Organizations. Subject to appropriations, the HA shall

provide funds to ROs for resident participation activities. Eligibility

to receive operating subsidy for RO activities at $25 per unit per year

is a separate cost item under the Performance Funding System. Of this

amount, $15 per unit per year shall fund resident participation

activities of the RO. Ten dollars per unit per year shall fund HA costs

incurred in carrying out resident participation activities.

(b) Stipends. HAs may provide stipends to officers of the RO. The

stipend, which may be up to $200 per month per officer, shall be

decided locally by the RO and HA. (See definition of annual income in

Sec. 905.102 for exclusion for these stipends.)

Tenant Opportunities Program

Sec. 905.966 General.

The Indian Tenant Opportunities Program (TOP) (which is the program

similar to the public housing TOP for public housing residents)

provides technical assistance for various activities including resident

management for ROs/RMCs as authorized by Section 20 of the Act. The TOP

provides opportunities for RO/RMCs to improve living conditions and

resident satisfaction in Indian housing communities.

Sec. 905.967 Eligible TOP Activities.

Activities to be funded and carried out by an eligible resident

council or resident management corporation, as defined in subpart B,

must improve the living conditions and public housing operations and

may include any combination of, but are not limited to, the following:

(a) Resident Capacity Building. (1) Training Board members in

community organizing, Board development, and leadership training;

(2) Determining the feasibility of resident management enablement

for a specific project or projects; and

(3) Assisting in the actual creation of an RMC, such as consulting

and legal assistance to incorporate, preparing by-laws and drafting a

corporate charter.

(b) Resident Management. (1) Training residents, as potential

employees of an RMC, in skills directly related to the operation,

management, maintenance and financial systems of a project;

(2) Training of residents with respect to fair housing

requirements; and

(3) Gaining assistance in negotiating management contracts, and

designing a long-range planning system.

(c) Resident Management Business Development.

(1) Training related to resident-owned business development and

technical assistance for job training and placement in RMC

developments;

(2) Technical assistance and training in resident managed business

development through:

(i) Feasibility and market studies;

(ii) Development of business plans;

(iii) Outreach activities; and

(iv) Innovative financing methods including revolving loan funds.

(3) Legal advice in establishing resident managed business entity.

(d) Social Support Needs (such as self-sufficiency and youth

initiatives). (1) Feasibility studies to determine training and social

services needs;

(2) Training in management-related trade skills, computer skills,

etc;

(3) Management-related employment training and counseling;

(4) Coordination of support services;

(5) Training for programs such as child care, early childhood

development, parent involvement, volunteer services, parenting skills,

before and after school programs; and

(6) Training programs on health, nutrition and safety.

(7) Training in the development of strategies to successfully

implement a youth program. For example, assessing the needs and

problems of the youth, improving youth initiatives that are currently

active, and training youth, housing authority staff, resident

management corporations and resident organizations on youth initiatives

and program activities.

(8) Workshops for youth services, child abuse and neglect

prevention, tutorial services, in partnership with community-based

organizations such as local Boys and Girls Clubs, YMCA/YWCA, Boy/Girl

Scouts, Campfire and Big Brother/Big Sisters, etc. Other HUD programs

such as the Youth Sports Program and the Public Housing Drug

Elimination Programs also provide funding in these areas; and

(e) General. (1) Required training on HUD regulations and policies

governing the operation of low-income public and Indian housing,

financial management, capacity building to develop the necessary skills

to assume management responsibilities at the development and property

management;

(2) Purchasing hardware, i.e., computers and software, office

furnishings and supplies, in connection with business development.

Every effort must be made to acquire donated or discounted hardware;

(3) Training in accessing other funding sources; and

(4) Hiring trainers or other experts (RO/RMCs) must ensure that

this training is provided by a qualified housing management specialist,

a community organizer, the HA, or other sources knowledgeable about the

program.

Sec. 905.968 Technical assistance.

To the extent that grant authority is available, HUD shall provide

financial assistance to ROs or RMCs that obtain, by contract or

otherwise, technical assistance for the development of resident

management entities, including the formation of these entities; the

development of the management capabilities of newly formed or existing

entities; the identification of the social support needs of residents

of projects, and the securing of this support; and a wide range of

activities to further the purposes of this subpart.

Sec. 905.969 Resident management requirements.

The following requirements apply when a HA and its residents are

interested in providing for resident performance of management

functions in one or more projects under this subpart.

(a) Resident management corporation. Residents interested in

contracting with a HA must establish a RMC that meets the requirements

for such a corporation, as specified in this subpart.

(b) Management Contract. (1) A management contract between the HA

and a RMC is required for resident management. The HA and the

corporation may agree to the performance by the corporation of any or

all management functions for which the HA is responsible to HUD under

the ACC, and any other functions not inconsistent with the ACC and

applicable laws and regulations. The management contract must be in

conformance with the minimum requirements established by HUD.

(2) The management contract may include specific provisions

governing management personnel; compensation for maintenance laborers

and mechanics and administrative employees employed in the operation of

the project, except that the amount of this compensation must meet

applicable labor standard requirements of Federal law; rent collection

procedures; resident income verification; resident eligibility

determinations; resident eviction; the acquisition of supplies and

materials; and such other matters as the HA and the corporation

determine to be appropriate, and as HUD may specify in administrative

instructions.

(3) The management contract shall be treated as a contracting out

of services, and must be subject to any provision of a collective

bargaining agreement regarding the contracting out of services to which

the HA is subject.

(4) Provisions on competitive bidding and requirements of prior

written HUD approval of contracts contained in the ACC do not apply to

the decision of a HA to contract with a RMC.

(c) Prohibited activities. A HA may not contract for assumption by

the RMC of the HA's underlying responsibilities to HUD under the ACC.

(d) Bonding and insurance. Before assuming any management

responsibility under its contract, the RMC must provide fidelity

bonding and insurance, or equivalent protection that is adequate (as

determined by HUD and the HA) to protect HUD and the HA against loss,

theft, embezzlement, or fraudulent acts on the part of the corporation

or its employees.

Sec. 905.970 Management specialist.

The RO must select, in consultation with the HA, a qualified Indian

housing management specialist to assist in determining the feasibility

of, and to help establish, a RMC and to provide training and other

duties in connection with operating the TOP project. The Housing

Management Specialist (Trainer) can be a non-profit organization, the

HA or a consultant.

Sec. 905.971 Operating subsidy, preparation of operating budget,

operating reserves and retention of excess revenues.

(a) Calculation of operating subsidy. Operating subsidy will be

calculated separately for any project managed by a resident management

corporation. This subsidy computation will be the same as the separate

computation made for the balance of the projects in the HA in

accordance with subpart J of this part, with the following exceptions:

(1) The project managed by a resident management corporation will have

an Allowable Expense Level based on the actual expenses for the project

in the fiscal year immediately preceding management under this subpart.

These expenditures will include the project's share of any expenses

which are overhead or centralized HA expenditures. The expenses must

represent a normal year's expenditures for the project, and must

exclude all expenditures which are not normal fiscal year expenditures

as to amount or as to the purpose for which expended. Documentation of

this expense level must be presented with the project budget and

approved by HUD. Any project expenditures funded from a source of

income other than operating subsidies or income generated by the

locally owned Indian housing program will be excluded from the subsidy

calculation. For budget years after the first budget year under

management by the resident management corporation, the Allowable

Expense Level will be calculated as it is for all other projects, in

accordance with subpart J of this part.

(2) The resident management corporation project will estimate

dwelling rental income based on the rent roll of the project

immediately preceding the assumption of management responsibility under

this subpart, increased by the estimate of inflation of resident income

used in calculating PFS subsidy.

(3) The resident management corporation will exclude, from its

estimate of other income, any increased income directly generated by

activities of the corporation or facilities operated by the

corporation.

(4) Any reduction in the subsidy of a HA that occurs as a result of

fraud, waste, or mismanagement by the HA shall not affect the subsidy

calculation for the resident management corporation project.

(b) Calculation of total income and preparation of operating

budget.--No reduction. (1) Subject to paragraph (c) of this section,

the amount of funds provided by a HA to a project managed by a resident

management corporation under this subpart may not be reduced during the

three-year period beginning on the date a resident management

corporation first assumes management responsibility for the project.

(2) Treatment of technical assistance. For purposes of determining

the amount of funds provided to a project under paragraph (b)(1) of

this section, the provision of technical assistance by the HA to the

resident management corporation will not be included.

(3) Operating budget. The resident management corporation and the

HA shall submit a separate operating budget, including the calculation

of operating subsidy eligibility in accordance with paragraph (a) of

this section, for the project managed by a resident management

corporation to HUD for approval. This budget will reflect all project

expenditures and will identify which expenditures are related to the

responsibilities of the resident management corporation and which are

related to functions which will continue to be performed by the HA.

(4) Operating reserves. (i) Each project or part of a project that

is operating in accordance with the ACC amendment relating to this

subpart and in accordance with a contract vesting maintenance

responsibilities in the resident management corporation will have

transferred, into a sub-account of the operating reserve of the host

HA, an operating reserve. Where all maintenance responsibilities for

the resident-managed project are the responsibility of the corporation,

the amount of the reserve made available to projects under this subpart

will be the per unit cost amount available in the HA operating reserve,

exclusive of all inventories, prepaids and receivables (at the end of

the HA fiscal year preceding implementation), multiplied by the number

of units in the project operated in accordance with the provisions of

this subpart. Where some, but not all, maintenance responsibilities are

vested in the resident management corporation, the contract may provide

for an appropriately reduced portion of the operating reserve to be

transferred into the corporation's sub-account.

(ii) The use of the reserve will be subject to all administrative

procedures generally applicable to the Indian housing program. Any

expenditure of funds from the reserve will be for eligible expenditures

which are incorporated into an operating budget subject to approval by

HUD.

(iii) Investment of funds held in the reserve will be in accordance

with the provisions of chapter 4 of the Financial Management Handbook,

7475.1 REV, and interest generated will be included in the calculation

of operating subsidy in accordance with subpart J of this part.

(c) Adjustments to total income. (1) Operating subsidy will reflect

changes in inflation, utility rates and consumption, and changes in the

number of units in the project.

(2) In addition to the amount of income derived from the project

(from sources such as rents and charges) and the operating subsidy

calculated in accordance with paragraph (a) of this section, the

contract may specify that income be provided to the project from other

sources of income of the HA.

(3) The following conditions may not affect the amounts to be

provided to a project managed by a resident management corporation

under this subpart:

(i) Any reduction in the total income of a HA that occurs as a

result of fraud, waste, or mismanagement by the HA; or

(ii) Any change in the total income of a HA that occurs as a result

of project-specific characteristics that are not shared by the project

managed by the corporation under this subpart.

(d) Retention of excess revenues. Any income generated by a

resident management corporation that exceeds the income estimated for

the income category involved must be excluded in subsequent years in

calculating: (1) The operating subsidy provided to a HA under subpart J

of this part; and

(2) The funds provided by the HA to the resident management

corporation.

(e) Use of retained revenues. Any revenues retained by a resident

management corporation under paragraph (d) of this section may only be

used for purposes of improving the maintenance and operation of the

project, establishing business enterprises that employ residents of

Indian housing, or acquiring additional dwelling units for low-income

families. Units acquired by the resident management corporation will

not be eligible for payment of operating subsidy.

Sec. 905.972 TOP Audit and administrative requirements.

(a) Annual audit of books and records. The financial statements of

a RMC managing a project under this subpart must be audited annually by

a licensed certified public accountant, designated by the RMC, in

accordance with generally accepted government audit standards. A

written report of each audit must be forwarded to HUD and the HA within

30 days of issuance.

(b) Relationship to other authorities. The requirements of

paragraph (a) of this section are in addition to any other Federal law

or other requirement that would apply to the availability and audit of

books and records of RMCs under this part.

(c) General administrative requirements. Except as modified by this

part, RMCs must comply with the requirements of OMB Circulars A-110 and

A-122, as applicable.

Family Investment Centers (FIC) Program

Sec. 905.980 General.

(a) The Family Investment Centers (FIC) Program. This program

provides families living in Indian housing with better access to

educational and employment opportunities by:

(1) developing facilities in or near Indian housing for training

and support services;

(2) mobilizing public and private resources to expand and improve

the delivery of such services;

(3) providing funding for such essential training and support

services that cannot otherwise be funded; and

(4) improving the capacity of management to assess the training and

service needs of families, coordinating the provision of training and

services that meet such needs, and ensuring the long-term provision of

such training and services.

(b) Supportive Services. New or significantly expanded services

essential to providing families in Indian housing with better access to

educational and employment opportunities to achieve self-sufficiency

and independence. HAs applying for funds to provide supportive services

must demonstrate that the services will be provided at a higher level

than currently provided. Supportive services may include:

(1) Child care;

(2) Employment training and counseling;

(3) Computer skills training;

(4) Education including remedial education; literacy training;

completion of secondary or post secondary education and assistance in

the attainment of certificates of high school equivalency;

(5) Business, entrepreneurial training and counseling;

(6) Transportation necessary to enable any participating family

member to receive available services or to commute to his/her place of

employment;

(7) Personal welfare (e.g. substance/alcohol abuse treatment and

counseling, self-development counseling, etc.);

(8) Supportive Health Care Services (e.g., outreach and referral

services; and

(9) Any other services and resources, including case management,

determined to be appropriate in assisting eligible residents.

(c) FIC Service Coordinator. Any person who is responsible for:

(1) determining the eligibility and assessing needs of families to

be serviced by the FIC;

(2) assessing training and service needs of eligible residents;

(3) working with service providers to coordinate the provision of

services and to tailor the services to the needs and characteristics of

eligible residents;

(4) mobilizing public and private resources to ensure that the

supportive services identified can be funded over the five-year period,

at least, following the initial receipt of funding;

(5) monitoring and evaluating the delivery, impact and

effectiveness of any supportive service funded with capital or

operating assistance under the FIC program.

(6) coordinating the development and implementation of the FIC

Program with other self-sufficiency, educational and employment

programs; and

(7) performing other duties and functions that are appropriate for

providing eligible residents with better access to educational and

employment opportunities.

Sec. 905.982 Eligibility.

A HA may apply to establish one or more FICs for more than one

Indian housing development. A HA must demonstrate a firm commitment of

assistance from one or more sources ensuring that supportive services

will be provided for not less than one year following the completion of

activities.

Sec. 905.983 FIC Activities.

Activities that may be funded and carried out by an eligible HA may

include: (a) The renovation, conversion, or combination of vacant

dwelling units to create common areas to accommodate the provision of

supportive services;

(b) The renovation of existing common areas to accommodate the

provision of supportive services;

(c) The renovation of facilities located near the premises of one

or more HA developments to accommodate the provision of supportive

services;

(d) The provision of not more than 15 percent of the total cost of

supportive services (which may be provided directly to eligible

residents by the HA or by contract or lease through other appropriate

agencies or providers), but only if the HA demonstrates that:

(1) The supportive services are appropriate to improve the access

of eligible residents to employment and educational opportunities; and

(2) The HA has made diligent efforts to use or obtain other

available resources to fund or provide such services; and

(e) The employment of service coordinators.

Sec. 905.984 HA role in activities under this part.

A HA shall develop a process that ensures that RO/RMC

representatives and residents are fully informed of, and have an

opportunity to comment on, the contents of the application and

activities at all stages of the application and grant award process.

The HA shall give full and fair consideration to the comments and

concerns of the residents.

Sec. 905.985 HUD Policy on training, employment, contracting and

subcontracting of Indian housing residents.

In accordance with section 3 of the Housing and Urban Development

Act of 1968 and the implementing regulations at 24 CFR part 135, HAs,

their contractors and subcontractors shall use best efforts, consistent

with existing Federal, State, Tribal and local laws and regulations

(including section 7(b) of the Indian Self-Determination and Education

Assistance Act, to give low and very low-income persons the training

and employment opportunities generated by section 3 covered assistance

(as this term is defined in 24 CFR 135.7) to give section 3 business

concerns the contracting opportunities generated by section 3 covered

assistance.

Sec. 905.986 Grant set-aside assistance.

HUD may set-aside five percent of any amounts available in each

fiscal year (subsequent to the first funding cycle) to supplement

grants previously awarded under this program. These supplemental grants

would be awarded to HAs that demonstrate that funds cannot otherwise be

obtained and are needed to provide adequate service levels to

residents.

Sec. 905.987 Resident compensation.

Residents employed pursuant to a FIC grant shall be paid at a rate

not less than the highest of:

(a) The minimum wage that would be applicable to the employee under

the Fair Labor Standards Act of 1938 (FLSA), if section 6(a)(1) of the

FLSA applied to the resident and if the resident was not exempt under

section 13 of the FLSA;

(b) The State, local or Tribal minimum wage for the most nearly

comparable covered employment; or

(c) The prevailing rate of pay for persons employed in similar

public occupations by the same employer.

Sec. 905.988 Administrative requirements.

Each HA receiving a grant shall submit to the HUD Field Office an

annual progress report describing and evaluating the use of grant

amounts received under this program.

PART 913--DEFINITION OF INCOME, INCOME LIMITS, RENT AND

REEXAMINATION OF FAMILY INCOME FOR THE PUBLIC HOUSING PROGRAM

5. The authority citation for part 913 would continue to read as

follows:

Authority: 42 U.S.C. 1437a, 1437d, 1437n and 3535(d).

6. In Sec. 913.106, paragraph (c) would be amended by removing the

word ``or'' from paragraph (c)(8)(ii); by adding the word ``or'' at the

end of paragraph (c)(8)(iii); by adding a new paragraph (c)(8)(iv); by

removing the word ``or'' from paragraph (c)(10); by redesignating

paragraph (c)(11) as paragraph (c)(12); and by adding a new paragraph

(c)(11), to read as follows:

Sec. 913.106 Annual income.

* * * * *

(c) * * *

(8) * * *

(iv) A resident service stipend, but only if the resident service

stipend does not exceed $200 per month/per officer to resident council

officers. Stipends are intended to cover costs related to officer's

volunteer efforts and include but are not limited to the following

items: Child care, transportation, special equipment and special

clothing.

* * * * *

(11) The earnings and benefits to any resident resulting from the

participation in a program providing employment training and supportive

services in accordance with the Family Support Act of 1988, section 22

of the U.S. Housing Act of 1937, or any comparable Federal, State, or

local law during the exclusion period. For purposes of this paragraph,

the following definitions apply.

(i) Comparable Federal, State or Local law means a program

providing employment training and supportive services that--

(A) is authorized by a federal, state or local law;

(B) is funded by federal, state or local government;

(C) is operated or administered by a public agency; and

(D) has as its objective to assist participants in acquiring job

skills.

(ii) Exclusion period means the period during which the resident

participates in a program described in this section, plus 18 months

from the date the resident begins the first job acquired by the

resident after completion of such program that is not funded by public

housing assistance under the U.S. Housing Act of 1937. If the resident

is terminated from employment without good cause, the exclusion period

shall end.

(iii) Earnings and Benefits means the incremental earnings and

benefits resulting from a qualifying job training program or subsequent

job;

* * * * *

7. Part 964, would be revised to read as follows:

PART 964--TENANT PARTICIPATION AND TENANT OPPORTUNITIES IN PUBLIC

HOUSING

Subpart A--General Provisions

Sec.

964.1 Purpose.

964.3 Applicability and scope.

964.7 Definitions.

964.11 HUD policy on tenant participation.

964.12 HUD policy on the Tenant Opportunities Program (TOP).

964.14 HUD policy on partnerships.

964.15 HUD policy on resident management.

964.16 HUD role in activities under this rule.

964.18 HA role in activities under subpart B & C.

964.24 HUD policy on FIC Program.

Subpart B--Tenant Participation

964.100 Role of resident council.

964.105 Role of the Jurisdiction-Wide Resident Council.

964.110 Resident membership on HA board of Commissioners.

964.115 Resident council requirements.

964.117 Resident council partnerships.

964.120 Resident management corporation requirements.

964.125 Eligibility for resident council membership.

964.130 Election procedures and standards.

964.135 Resident Involvement in HA Management Operations.

964.140 Resident training.

964.145 Conflict of interest.

964.150 Funding tenant participation.

Subpart C--Tenant Opportunities Program

964.200 General.

964.205 Eligibility.

964.210 Announcement of Funding Availability.

964.215 Grant agreement.

964.220 Technical Assistance.

964.225 Resident management requirements.

964.230 Audit and administrative requirements.

Subpart D--Family Investment Centers (FIC) Program

964.300 General.

964.305 Eligibility.

964.308 Supportive services requirements.

964.310 Audit/Compliance Requirements.

964.315 HAs role in activities under this part.

964.320 HUD Policy on training, employment, contracting and

subcontracting of public housing residents.

964.325 Announcement of funding availability.

964.330 Grant Set-Aside Assistance.

964.335 Grant agreement.

964.340 Resident compensation.

964.345 Treatment of income.

964.350 Administrative requirements.

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

Subpart A--General Provisions

Sec. 964.1 Purpose.

The purpose of this part is to recognize the importance of resident

involvement in creating a positive living environment and in actively

participating in the overall mission of public housing.

Sec. 964.3 Applicability and scope.

(a) The policies and procedures contained in this part apply to any

HA that has a Public Housing Annual Contributions Contract (ACC) with

HUD. This part does not apply to PHAs with housing assistance payments

contracts with HUD under section 8 of the U. S. Housing Act of 1937.

(b) Subpart B of this part contains HUD policies, procedures, and

requirements for the participation of residents in public housing

operations. These policies, procedures, and requirements apply to all

residents participating under this part.

(c)(1) Subpart C of this part contains HUD policies, procedures,

and requirements for residents participating in the Tenant

Opportunities Program (TOP) (replaces the Resident Management Program

under section 20 of the United States Housing Act of 1937). Resident

management in public housing is viable and remains an option under TOP.

(2) Subpart C of this part is not intended to negate any pre-

existing arrangements for resident management in public housing between

a PHA and a resident management corporation. On or after [insert

effective date of this regulation], any new, renewed or renegotiated

contracts must meet the requirements of this part, the ACC and all

applicable laws and regulations.

(d) Subpart D of this part includes requirements for the Family

Investment Centers (FIC) Program which was established by section 22 of

the United States Housing Act of 1937 (42 U.S.C. 1437t) to provide

families living in public housing and Indian housing with better access

to educational and employment opportunities.

(e) The term ``resident,'' as used throughout this part, is

interchangeable with the term ``tenant,'' to reflect the fact that

local resident organizations have differing preferences for the terms.

Terms such as ``resident council'' and ``tenant council'' and

``resident management'' and ``tenant management'' are interchangeable.

Hereafter, for ease of discussion, the proposed rule will use the terms

resident, resident council and resident management corporation, as

appropriate.

Sec. 964.7 Definitions.

Annual Contributions Contract (ACC). A contract (in the form

prescribed by HUD) under which HUD agrees to provide financial

assistance, and the HA agrees to comply with HUD requirements for the

development and operation of the public housing project.

Eligible Residents for FIC. A participating resident of a

participating HA. If the HA is combining FIC with the Family Self-

Sufficiency (FSS) program, the term also means Public Housing FSS and

Section 8 families participating in the FSS program. Although Section 8

FSS families are eligible residents for FIC, they do not qualify for

income exclusions that are provided for public housing residents

participating in employment and supportive service programs.

Family Investment Centers (FIC). A facility on or near public

housing which provides families living in public housing with better

access to educational and employment opportunities to achieve self-

sufficiency and independence.

FIC Service Coordinator. Any person who is responsible for:

(1) Determining the eligibility and assessing needs of families to

be served by the FIC;

(2) Assessing training and service needs of eligible residents;

(3) Working with service providers to coordinate the provision of

services on a HA-wide or less than HA-wide basis, and to tailor the

services to the needs and characteristics of eligible residents;

(4) Mobilizing public and private resources to ensure that the

supportive services identified can be funded over the five-year period,

at least, following the initial receipt of funding.

(5) Monitoring and evaluating the delivery, impact, and

effectiveness of any supportive service funded with capital or

operating assistance under FIC program;

(6) Coordinating the development and implementation of the FIC

program with other self-sufficiency programs, and other education and

employment programs; and

(7) Performing other duties and functions that are appropriate for

providing eligible residents with better access to educational and

employment opportunities.

Management. All activities for which the HA is responsible to HUD

under the ACC, within the definition of ``operation'' under the Act and

the ACC, including the development of resident programs and services.

Management contract. A written agreement between a resident

management corporation and a HA, as provided by subpart C.

Public Housing Agency (HA). Any State, county, municipality, or

other governmental entity or public body (or agency or instrumentality

thereof) which is authorized to engage in or assist in the development

and operation of low-income housing.

Public Housing Development (Development). Any conventional housing

project that is owned and operated by a HA, including the authorities

of Guam, Puerto Rico, Alaska and the Virgin Islands, for which it

receives operating subsidy from HUD under the Performance Funding

System (PFS) to engage in the operation of low-income housing.

Resident Management. The performance of one or more management

activities for one or more projects by a resident management

corporation under a management contract with the HA.

Resident Management Corporation. An entity that proposes to enter

into, or enters into, a contract to manage one or more management

activities of a HA.

Resident-owned business. A Business staffed by residents that is

related to the management of the HA development(s).

Supportive Services for FIC. New or significantly expanded services

that are essential to providing families living with children in public

housing with better access to educational and employment opportunities

to achieve self-sufficiency and independence.

Tenant Opportunities Program (TOP). The TOP program is designed to

prepare residents to experience the dignity of meaningful work, to own

and operate resident businesses, to move toward financial independence,

and to enable them to choose where they want to live and engage in

meaningful participation in the management of housing developments in

which they live. Financial assistance in the form of technical

assistance grants are available to RCs/RMCs to prepare to manage

activities in their public housing developments. TOP will include

components such as economic development, self-sufficiency initiatives,

and social services for public housing residents.

Vacant Unit under FIC. A dwelling unit that is not under an

effective lease to an eligible family. An effective lease is a lease

under which an eligible family has a right to possession of the unit

and is being charged rent, even if the amount of any utility allowance

equals or exceeds the amount of a total resident payment that is based

on income and, as a result, the amount paid by the family to the HA is

zero.

Sec. 964.11 HUD policy on tenant participation.

HUD promotes resident participation and the active involvement of

residents in all aspects of a HA's overall mission and operation.

Residents have a right to organize and elect a resident council to

represent their interests. As long as proper procedures are followed,

the HA shall recognize the duly elected resident council to participate

fully through a working relationship with the HA. HUD encourages HAs

and residents to work together to determine the most appropriate ways

to foster constructive relationships, particularly through duly-elected

resident organizations.

Sec. 964.12 HUD policy on the Tenant Opportunities Program (TOP).

HUD promotes TOP programs to support activities that enable

residents to improve the quality of life and resident satisfaction, and

obtain other social and economic benefits for residents and their

families. Tenant opportunity programs are proven to be effective in

facilitating economic uplift, as well as in improving the overall

conditions of the public housing communities.

Sec. 964.14 HUD policy on partnerships.

HUD promotes partnerships between residents and HAs which are an

essential component to building, strengthening and improving public

housing. Strong partnerships are critical for creating positive changes

in lifestyles thus improving the quality of life for public housing

residents, and the surrounding community.

Sec. 964.15 HUD policy on resident management.

It is HUD's policy to encourage resident management. HUD encourages

HAs, resident councils and resident management corporations to explore

the various functions involved in management to identify appropriate

opportunities for contracting with a resident management corporation.

Potential benefits of resident-managed entities include improved

quality of life, experiencing the dignity of meaningful work, enabling

residents to choose where they want to live, and meaningful

participation in the management of the housing development.

Sec. 964.16 HUD role in activities under this rule.

(a) General. Subject to the requirements of this part and other

requirements imposed on HAs by the ACC, statute or regulation, the form

and extent of resident participation including resident management are

local decisions to be made jointly by resident councils/resident

management corporations and their HAs. HUD will promote tenant

participation and tenant opportunities programs, and will provide

additional guidance, as necessary and appropriate. In addition, HUD

will endeavor to provide technical assistance in connection with these

initiatives.

(b) Monitoring. HUD shall ensure that the requirements under this

rule are operating efficiently and effectively.

Sec. 964.18 HA role in activities under subparts B & C.

(a) HAs with 100 units or more. (1) A HA shall officially recognize

a duly elected resident council as the sole representative of the

residents it purports to represent, and support its tenant

participation activities.

(2) When requested by residents, a HA shall provide appropriate

guidance to residents to assist them in establishing and maintaining a

resident council.

(3) A HA may consult with residents, or resident councils (if they

exist), to determine the extent to which residents desire to

participate in activities involving their community, including the

management of specific functions of a public housing development that

may be mutually agreeable to the HA and the resident council/resident

management corporation.

(4) A HA shall provide the residents or any resident council with

current information concerning the HA's policies on tenant

participation in management.

(5) If requested, a HA shall provide a duly recognized resident

council office space and meeting facilities, free of charge, preferably

within the development it represents.

(6) If requested, a HA shall negotiate with the duly elected

resident council on all uses of community space for meetings,

recreation and social services and other resident participation

activities pursuant to HUD guidelines. Such agreements shall be put

into a written document to be signed by the HA and the resident

council. If a HA fails to negotiate with a resident council in good

faith or, after negotiations, refuses to permit such usage of community

space, the resident council may file an informal appeal with HUD,

setting out the circumstances and providing copies of relevant

materials evidencing the resident council's efforts to negotiate a

written agreement. HUD shall require the HA to respond with a report

stating the HA's reasons for rejecting the request or for refusing to

negotiate. HUD shall require the parties (with or without direct HUD

participation) to undertake or to resume negotiations on an agreement.

HUD shall take other actions as are necessary to resolve the conflicts

between the parties.

(7) In no event shall HUD or a HA recognize a competing resident

council once a duly elected resident council has been established. Any

funding of resident activities and resident input into decisions

concerning public housing operations shall be made only through the

officially recognized resident council.

(8) The HA shall ensure open communication and frequent meetings

between HA management and resident councils and shall encourage the

formation of joint HA management-resident committees to work on issues

and planning.

(9) The resident council shall hold frequent meetings with the

residents to ensure that residents have input, and are aware and

actively involved in HA management-resident council decisions and

activities.

(10) The HA and resident council shall put in writing in the form

of a Memorandum of Understanding the elements of their partnership

agreement and it shall be updated at least once every three (3) years.

(11) The HA, in collaboration with the resident councils, shall

assume the lead role for assuring maximum opportunities for skills

training for public housing residents. To the extent possible, the

training resources should be local to ensure maximum benefit and on-

going access.

(b) HAs with fewer than 100 units. (1) HAs with fewer than 100

units of public housing have the option of participating in programs

under this rule.

(2) HAs shall not deny residents the opportunity to organize. If

the residents decide to organize and form a resident council, the HA

shall comply with the following:

(i) A HA shall officially recognize a duly elected resident council

as the sole representative of the residents it purports to represent,

and support its tenant participation activities.

(ii) When requested by residents, a HA shall provide appropriate

guidance to residents to assist them in establishing and maintaining a

resident council.

(iii) A HA shall provide the residents or any resident council with

current information concerning the HA's policies on tenant

participation in management.

(iv) In no event shall HUD or a HA officially recognize a competing

resident council once a duly elected resident council has been

established. If a duly elected resident council has been formed, any

input into changes concerning public housing operations shall be made

only through the officially recognized resident council.

Sec. 964.24 HUD policy on FIC Program.

HUD promotes Family Investment Centers which provide better access

to educational and employment opportunities for residents living in

public housing. HUD encourages resident involvement in the FIC Program

and promotes resident-HA partnerships to achieve mutual goals.

Subpart B--Tenant Participation

Sec. 964.100 Role of resident council.

The role of a resident council is to improve the quality of life

and resident satisfaction and participate in self-help initiatives to

enable residents to create a positive living environment for families

living in public housing. Resident councils may actively participate

through a working partnership with the HA to advise and assist in all

aspects of public housing operations.

Sec. 964.105 Role of the Jurisdiction-Wide Resident Council.

(a) Jurisdiction-Wide Resident Council. Resident councils may come

together to form an organization which can represent the interest of

residents residing in units under a HA's jurisdiction. This can be

accomplished by the presidents of duly elected resident councils

forming an organization, by resident councils electing a representative

to the organization, or through jurisdiction-wide elections. If duly

elected resident councils form such an organization, the HA shall

recognize it as the voice of authority-wide residents for input into

housing authority policy making.

(b) Function. The jurisdiction-wide council may advise the Board of

Commissioners and executive director in all areas of HA operations,

including but not limited to occupancy, general management,

maintenance, security, resident training, resident employment, social

services and modernization priorities.

(c) Cooperation with other groups. There shall be regularly

scheduled meetings between the HA and the local duly elected resident

council, and the jurisdiction-wide resident council to discuss

problems, plan activities and review progress.

Sec. 964.110 Resident membership on HA Board of Commissioners.

HUD encourages to the maximum extent possible resident membership

on HA Board of Commissioners, for the purpose of having maximum input

into HA policy and decision-making on matters concerning public

housing.

Sec. 964.115 Resident council requirements.

A resident council shall consist of residents residing in public

housing and must meet each of the following requirements in order to

receive official recognition from the HA/HUD, and be eligible to

receive funds for resident council activities, and stipends for their

related costs for volunteer work in public housing: (a) It may

represent residents residing in scattered site buildings, in areas of

contiguous row houses; or in one or more contiguous buildings; in a

development; or in a combination of these buildings or developments;

(b) It must adopt written procedures such as by-laws, or a

constitution which provides for the election of residents to the

governing board by the voting membership of the residents residing in

public housing, described in paragraph (b) of this section, on a

regular basis but at least once every three (3) years. The written

procedures must provide for the recall of the resident board by

approval of at least 51 percent of the voting membership; and

(c) It must have a democratically elected governing board that is

elected by the voting membership. The voting membership must consist of

residents at least 18 years of age and whose name appears on a lease

for the unit in the public housing that the resident council

represents.

Sec. 964.117 Resident council partnerships.

A resident council may form partnerships with outside

organizations, provided that such relationships are complementary to

the resident council in its duty to represent the residents, and

provided that such outside organizations do not become the governing

entity of the resident council.

Sec. 964.120 Resident management corporation requirements.

A resident management corporation must consist of residents

residing in public housing and have each of the following

characteristics in order to receive official recognition by the HA and

HUD: (a) It shall be a non-profit organization that is validly

incorporated under the laws of the State in which it is located;

(b) It may be established by more than one resident council, so

long as each such council:

(1) Approves the establishment of the corporation, and

(2) Has representation on the Board of Directors of the

corporation;

(c) It shall have an elected Board of Directors, and elections must

be held at least once every three (3) years;

(d) Its by-laws shall require the Board of Directors to include

resident representatives of each resident council involved in

establishing the corporation;

(e) Its voting members shall be residents at least 18 years of age

and whose name appears on the lease of a unit in the public housing

represented by the resident management corporation;

(f) Where a resident council already exists for the development, or

a portion of the development, the resident management corporation shall

be approved by the resident council board and a majority of the

residents. If there is no resident council, a majority of the residents

of the public housing development it will represent must approve the

establishment of such a corporation for the purposes of managing the

project; and

(g) It may serve as both the resident management corporation and

the resident council, so long as the corporation meets the requirements

of this part for a resident council.

Sec. 964.125 Eligibility for resident council membership.

(a) Any member of a public housing household who is on the lease of

a unit in the public housing development and meets the requirements of

the by-laws is eligible to be a member of a resident council. The

resident council may establish additional criteria that are non-

discriminatory and do not infringe on rights of other residents in the

development. Such criteria must be stated in the by-laws or

constitution as appropriate.

(b) The right to vote for resident council board shall be limited

to designated heads of households and other members of the household

who are 18 years or older whose name appears on the lease of a unit in

the public housing development represented by the resident council.

(c) Any qualified voting member of a resident council who meets the

requirements described in the by-laws and is in compliance with the

lease may seek office and serve on the resident council governing

board.

Sec. 964.130 Election procedures and standards.

At a minimum, a resident council may use local election boards/

commissions or if none exists, or is unwilling, an independent third-

party to oversee elections and recall procedures.

(a) Resident councils shall adhere to the following minimum

standards regarding election procedures:

(1) All procedures must assure fair and frequent elections of

resident council members--at least once every three years for each

member.

(2) Staggered terms for resident council governing board members

and term limits shall be discretionary with the resident council.

(3) Each resident council shall adopt and issue election and recall

procedures in their by-laws.

(4) The election procedures shall include qualifications to run for

office, frequency of elections, procedures for recall, and term limits

if desired.

(5) Sufficient notice of nomination and election, minimally 30

days, describing election procedures, eligibility requirements and

dates of nominations/elections must be given to all voting members

prior to the date of the nominations/elections.

(b) If a resident council fails to satisfy HUD minimum standards

for fair and frequent elections, or fails to follow its own election

procedures as adopted, HUD shall require the HA to withdraw recognition

of the resident council and to withhold resident services funds as well

as funds provided in conjunction with services rendered for resident

participation in public housing.

(c) HAs shall monitor the resident council election process and

shall establish a procedure to appeal any adverse decision relating to

failure to satisfy HUD minimum standards. Such appeal shall be

submitted to a jointly selected third-party arbitrator at the local

level. If costs are incurred by using a third-party arbitrator, then

such costs should be paid from the HAs resident services funds pursuant

to Sec. 964.150.

Sec. 964.135 Resident involvement in HA management operations.

Residents shall be involved and participate in the overall policy

development and direction of Public Housing operations.

(a) Resident management corporations (RMCs) may contract with HAs

to perform one or more management functions provided the resident

entity has received sufficient training and/or has staff with the

necessary expertise to perform the management functions and provided

the RMC meets bonding and licensing requirements.

(b) Residents shall be actively involved in a HA's decision-making

process and give advice on matters such as modernization, security,

maintenance, resident screening and selection, and recreation.

(c) While a HA has responsibility for management operations, it

shall ensure strong resident participation in all issues and facets of

its operations through the duly elected resident councils at public

housing developments, and with jurisdiction-wide resident councils.

(d) A HA shall work in partnership with the duly elected resident

councils.

(e) HAs, upon request from the duly elected resident council, shall

ensure that the duly elected resident council officers as defined in

subpart B of this rule, and other residents in the development are

fully trained and involved in developing and implementing Federal

programs including but not limited to Comprehensive Improvement

Assistance Program (CIAP), Comprehensive Grant Program, Urban

Revitalization Demonstration, Drug Elimination, and FIC.

(f) HAs shall involve resident council officers and other

interested residents at the development through education and direct

participation in all phases of the budgetary process.

(g) Resident council officers shall be encouraged to become

involved in the resident screening and selection process for

prospective residents at the development. Those selected to perform

resident screening and selection functions must be trained by the HA in

resident screening and selection and must sign a legal document

committing to confidentiality.

Sec. 964.140 Resident training.

(a) Resident training opportunities. HUD encourages a partnership

between the residents, the HA and HUD, as well as with the public and

non-profit sectors to provide training opportunities for public housing

residents. The categories in which training could occur include, but

are not limited to:

(1) Community organization and leadership training;

(2) Organizational development training for Resident Management

Corporations and duly elected Resident Councils;

(3) Public housing policies, programs, rights and responsibilities

training; and

(4) Business entrepreneurial training, planning and job skills.

(b) Local training resources. HUD encourages the use of local

training resources to ensure the ongoing accessibility and availability

of persons to provide training and technical assistance. Possible

training resources may include:

(1) Resident organizations;

(2) Housing authorities;

(3) Local community colleges, vocational schools; and

(4) HUD and other Federal agencies and other local public, private

and non-profit organizations.

Sec. 964.145 Conflict of interest.

Resident council officers cannot serve as contractors or employees

at the HA.

Sec. 964.150 Funding tenant participation. '

(a) Funding duly elected resident councils. (1) The HA shall

provide funds it receives for this purpose to the duly elected resident

council to use for resident participation activities. This shall be an

add-on to the Performance Funding System (PFS), as provided by 24 CFR

part 990, to permit HAs to fund $25 per unit per year for resident

services, subject to the availability of appropriations. Of this

amount, $15 per unit per year would be provided to fund appropriate

activities for duly elected resident councils, and $10 per unit per

year would be used by the HA to pay for costs incurred in carrying out

tenant participation activities under subpart B of this rule, including

the expenses for an arbitrator required under subpart B Sec. 964.130.

This will guarantee the resources necessary to create a bonafide

partnership among the duly elected resident council, the HA and HUD.

(2) A duly elected resident council shall receive tenant services

funding regardless of the HA's financial status. The resident council

funds shall not be impacted or restricted by the HA financial status

and all said funds must be used for the purpose set forth in subparts B

& C under this rule.

(b) Stipends. (1) HUD encourages HAs to provide stipends to

resident council officers who serve as volunteers in their public

housing developments. The amount of the stipend, up to $200 per month/

per officer, shall be decided locally by the resident council and the

HA. Pursuant to Sec. 913.106, stipends are excluded from income for

rent purposes.

(2) Stipends are not to be construed as salaries and should not be

included as income for calculation of rents, and are not subject to

conflict of interest requirements.

(3) Funding provided by a HA to a duly elected resident council may

be made only under a written agreement between the HA and a resident

council, which includes a resident council budget and assurance that

all resident council expenditures will not contravene provisions of law

and will promote serviceability, efficiency, economy and stability in

the operation of the local development. The agreement must require the

local resident council to account to the HA for the use of the funds

and permit the HA to inspect and audit the resident council's financial

records related to the agreement.

Subpart C--Tenant Opportunities Program

Sec. 964.200 General.

(a) The Tenant Opportunities Program (TOP) provides technical

assistance for various activities including resident management for

resident councils/resident management corporations as authorized by

section 20 of the U.S. Housing Act of 1937. The TOP provides

opportunities for resident organizations to improve living conditions

and resident satisfaction in public housing communities.

(b) This subpart establishes the policies, procedures and

requirements for participating in the TOP with respect to applications

for funding for programs identified in this subpart.

(c) This subpart contains the policies, procedures and requirements

for the resident management program as authorized by section 20 of the

U.S. Housing Act of 1937.

Sec. 964.205 Eligibility.

(a) Resident councils/resident management corporations. Any

eligible resident council/resident management corporation as defined in

subpart B is eligible to participate in a program administered under

this subpart.

(b) Activities. Activities to be funded and carried out by an

eligible resident council or resident management corporation, as

defined in subpart B, must improve the living conditions and public

housing operations and may include any combination of, but are not

limited to, the following: (1) Resident Capacity Building. (i) Training

Board members in community organizing, Board development, and

leadership training;

(ii) Determining the feasibility of resident management enablement

for a specific project or projects; and

(iii) Assisting in the actual creation of an RMC, such as

consulting and legal assistance to incorporate, preparing by-laws and

drafting a corporate charter.

(2) Resident Management. (i) Training residents, as potential

employees of an RMC, in skills directly related to the operation,

management, maintenance and financial systems of a project;

(ii) Training of residents with respect to fair housing

requirements; and

(iii) Gaining assistance in negotiating management contracts, and

designing a long-range planning system.

(3) Resident Management Business Development. (i) Training related

to resident-owned business development and technical assistance for job

training and placement in RMC developments;

(ii) Technical assistance and training in resident managed business

development through:

(A) Feasibility and market studies;

(B) Development of business plans;

(C) Outreach activities; and

(D) Innovative financing methods including revolving loan funds;

and

(iii) Legal advice in establishing resident managed business

entity.

(4) Social Support Needs (such as self-sufficiency and youth

initiatives). (i) Feasibility studies to determine training and social

services needs;

(ii) Training in management-related trade skills, computer skills,

etc.;

(iii) Management-related employment training and counseling;

(iv) Coordination of support services;

(v) Training for programs such as child care, early childhood

development, parent involvement, volunteer services, parenting skills,

before and after school programs;

(vi) Training programs on health, nutrition and safety;

(vii) Workshops for youth services, child abuse and neglect

prevention, tutorial services, in partnership with community-based

organizations such as local Boys and Girls Clubs, YMCA/YWCA, Boy/Girl

Scouts, Campfire and Big Brother/Big Sisters, etc. Other HUD programs

such as the Youth Sports Program and the Public Housing Drug

Elimination Programs also provide funding in these areas; and

(viii) Training in the development of strategies to successfully

implement a youth program. For example, assessing the needs and

problems of the youth, improving youth initiatives that are currently

active, and training youth, housing authority staff, resident

management corporations and resident councils on youth initiatives and

program activities.

(5) General. (i) Required training on HUD regulations and policies

governing the operation of low-income public housing, financial

management, capacity building to develop the necessary skills to assume

management responsibilities at the project and property management;

(ii) Purchasing hardware, i.e., computers and software, office

furnishings and supplies, in connection with business development.

Every effort must be made to acquire donated or discounted hardware;

(iii) Training in accessing other funding sources; and

(iv) Hiring trainers or other experts (RCs/RMCs must ensure that

this training is provided by a qualified housing management specialist,

a community organizer, the HA, or other sources knowledgeable about the

program).

Sec. 964.210 Announcement of funding availability.

A Notice of Funding Availability shall be published periodically in

the Federal Register containing the amounts of funds available, funding

criteria, where to obtain and submit applications, the deadline for

submissions, and further explanation of the selection criteria.

Sec. 964.215 Grant agreement.

(a) General. HUD shall enter into a grant agreement with the

recipient of a technical assistance grant which defines the legal

framework for the relationship between HUD and a resident council or

resident management corporation for the proposed funding.

(b) Term of grant agreement. A grant shall be for a term of three

to five years (3-5 years), and renewable at the expiration of the term.

Sec. 964.220 Technical assistance.

(a) Financial assistance. HUD will provide financial assistance, to

the extent available, to resident councils or resident management

corporations for technical assistance and training to further the

activities under this subpart.

(b) Requirements for a management specialist. If a resident council

or resident management corporation seeks to manage a development, it

must select, in consultation with the HA, a qualified housing

management specialist to assist in determining the feasibility of, and

to help establish, a resident management corporation and to provide

training and other duties in connection with the daily operations of

the project.

Sec. 964.225 Resident management requirements.

The following requirements apply when a HA and its residents are

interested in providing for resident performance of several management

functions in one or more projects.

(a) Resident management corporation. Resident councils interested

in contracting with a HA must establish a resident management

corporation that meets the requirements for such a corporation, as

specified in subpart B. The RMC and its employees must demonstrate

their ability and skill to perform in the particular areas of

management pursuant to the management contract.

(b) HA responsibilities. HAs shall give full and serious

consideration to resident management corporations seeking to enter into

a management contract with the HA. A HA shall enter into good-faith

negotiations with a corporation seeking to contract to provide

management services.

(c) Duty to bargain in good faith. If a HA refuses to negotiate

with a resident management corporation in good faith or, after

negotiations, refuses to enter into a contract, the corporation may

file an informal appeal with HUD, setting out the circumstances and

providing copies of relevant materials evidencing the corporation's

efforts to negotiate a contract. HUD shall require the HA to respond

with a report stating the HA's reasons for rejecting the corporation's

contract offer or for refusing to negotiate. Thereafter, HUD shall

require the parties (with or without the direct HUD participation) to

undertake or to resume negotiations on a contract providing for

resident management, and shall take such other actions as are necessary

to resolve the conflicts between the parties. If no resolution is

achieved within 90 days from the date HUD required the parties to

undertake or resume such negotiations, HUD shall serve notice on both

parties that administrative remedies have been exhausted (except that,

pursuant to mutual agreement of the parties, the time for negotiations

may be extended by no more than an additional 30 days).

(d) Management contract. A management contract between the HA and a

resident management corporation is required for property management.

The HA and the resident management corporation may agree to the

performance by the corporation of any or all management functions for

which the HA is responsible to HUD under the ACC and any other

functions not inconsistent with the ACC and applicable state and local

laws, regulations and licensing requirements.

(e) Procurement requirements. The management contract shall be

treated as a contracting out of services, and must be subject to any

provision of a collective bargaining agreement regarding the

contracting out of services to which the HA is subject. Provisions on

competitive bidding and requirements of prior written HUD approval of

contracts contained in the ACC do not apply to the decision of a HA to

contract with a RMC.

(f) Prohibited activities. A HA may not contract for assumption by

the resident management corporation of the HA's underlying

responsibilities to HUD under the ACC.

(g) Bonding and insurance. Before assuming any management

responsibility under its contract, the RMC must provide fidelity

bonding and insurance, or equivalent protection that is adequate (as

determined by HUD and the HA) to protect HUD and the HA against loss,

theft, embezzlement, or fraudulent acts on the part of the resident

management corporation or its employees.

(h) Waiver of HUD requirements. Upon the joint request of a

resident management corporation and the HA, HUD may waive any

requirement that HUD has established and that is not required by law,

if HUD determines, after consultation with the resident management

corporation and the HA, that the requirement unnecessarily increases

the costs to the project or restricts the income of the project; and

that the waiver would be consistent with the management contract and

any applicable collective bargaining agreement. Any waiver granted to a

resident management corporation under this section will apply as well

to the HA to the extent the waiver affects the HA's remaining

responsibilities relating to the resident management corporation's

project.

Sec. 964.230 Audit and administrative requirements.

(a) TOP grant recipients. The HUD Inspector General, the

Comptroller General of the United States, or any duly authorized

representative shall have access to all records required to be retained

by this subpart or by any agreement with HUD for the purpose of audit

or other examinations.

(1) Grant recipients must comply with the requirements of OMB

Circulars A-110 and A-122, as applicable.

(2) A final audit shall be required for the activities and

expenditures made pursuant to this subpart by a Certified Public

Accountant (CPA), in accordance with generally accepted government

audit standards. A written report of the audit must be forwarded to HUD

within 60 days of issuance.

(b) Resident management corporations. Resident management

corporations who have entered into a contract with a HA with respect to

management of a development(s) must comply with the requirements of OMB

Circulars A-110 and A-122, as applicable. Resident management

corporations managing a development(s) must be audited annually by a

licensed certified public accountant, designated by the corporation, in

accordance with generally accepted government audit standards.

Subpart D--Family Investment Centers (FIC) Program

Sec. 964.300 General.

The Family Investment Centers Program provides families living in

public housing with better access to educational and employment

opportunities by:

(a) Developing facilities in or near public housing for training

and support services;

(b) Mobilizing public and private resources to expand and improve

the delivery of such services;

(c) Providing funding for such essential training and support

services that cannot otherwise be funded; and

(d) Improving the capacity of management to assess the training and

service needs of families, coordinate the provision of training and

services that meet such needs, and ensure the long-term provision of

such training and services. FIC provides funding to HAs to access

educational, housing, or other social service programs to assist public

housing residents toward self-sufficiency.

Sec. 964.305 Eligibility.

(a) Public Housing Authorities. HAs may apply to establish one or

more FICs for more than one public housing development.

(b) FIC Activities. Activities that may be funded and carried out

by eligible HAs, as defined in 964.305(a) and 964.310 (a) may include:

(1) The renovation, conversion, or combination of vacant dwelling

units in a HA development to create common areas to accommodate the

provision of supportive services;

(2) The renovation of existing common areas in a HA development to

accommodate the provision of supportive services;

(3) The renovation of facilities located near the premises of one

or more HA developments to accommodate the provision of supportive

services;

(4) The provision of not more than 15 percent of the total cost of

supportive services (which may be provided directly to eligible

residents by the HA or by contract or lease through other appropriate

agencies or providers), but only if the HA demonstrates that:

(i) The supportive services are appropriate to improve the access

of eligible residents to employment and educational opportunities; and

(ii) The HA has made diligent efforts to use or obtain other

available resources to fund or provide such services; and

(5) The employment of service coordinators.

(c) Follow up. A HA must demonstrate a firm commitment of

assistance from one or more sources ensuring that supportive services

will be provided for not less than one year following the completion of

activities.

(d) Environmental Review. Any environmental impact regarding

eligible activities will be addressed through an environmental review

of that activity as required by 24 CFR part 50, including the

applicable related laws and authorities under section 50.4, to be

completed by HUD, to ensure that any environmental impact will be

addressed before assistance is provided to the HA. Grantees will be

expected to adhere to all assurances applicable to environmental

concerns.

Sec. 964.308 Supportive services requirements.

HAs shall provide new or significantly expanded services essential

to providing families in public housing with better access to

educational and employment opportunities to achieve self-sufficiency

and independence. HAs applying for funds to provide supportive services

must demonstrate that the services will be provided at a higher level

than currently provided. Supportive services may include:

(a) Child care, of a type that provides sufficient hours of

operation and serves appropriate ages as needed to facilitate parental

access to education and job opportunities;

(b) Employment training and counseling (e.g., job training,

preparation and counseling, job development and placement, and follow-

up assistance after job placement);

(c) Computer skills training;

(d) Education (e.g., remedial education, literacy training,

completion of secondary or post-secondary education, and assistance in

the attainment of certificates of high school equivalency;

(e) Business entrepreneurial training and counseling;

(f) Transportation, as necessary to enable any participating family

member to receive available services or to commute to his or her place

of employment;

(g) Personal welfare (e.g., substance/alcohol abuse treatment and

counseling, self-development counseling, etc.);

(h) Supportive Health Care Services (e.g., outreach and referral

services; and

(i) Any other services and resources, including case management,

that are determined to be appropriate in assisting eligible residents.

Sec. 964.310 Audit/Compliance Requirements.

HAs cannot have serious unaddressed, outstanding Inspector General

audit findings or fair housing and equal opportunity monitoring review

findings or Field Office management review findings. In addition, the

HA must be in compliance with civil rights laws and equal opportunity

requirements. A HA will be considered to be in compliance if:

(a) As a result of formal administrative proceedings, there are no

outstanding findings of noncompliance with civil rights laws unless the

HA is operating in compliance with HUD-approved compliance agreement

designed to correct the area(s) of noncompliance;

(b) There is no adjudication of a civil rights violation in a civil

action brought against it by a private individual, unless the HA

demonstrates that it is operating in compliance with a court order, or

implementing a HUD-approved resident selection and assignment plan or

compliance agreement, designed to correct the area(s) of noncompliance;

(c) There is no deferral of Federal funding based upon civil rights

violations;

(d) HUD has not deferred application processing by HUD under Title

VI of the Civil Rights Act of 1964, the Attorney General's Guidelines

(28 CFR 50.3) and HUD's Title VI regulations (24 CFR 1.8) and

procedures (HUD Handbook 8040.1) [HAs only] or under Section 504 of the

Rehabilitation Act of 1973 and HUD regulations (24 CFR 8.57) [HAs and

IHAs];

(e) There is no pending civil rights suit brought against the HA by

the Department of Justice; and

(f) There is no unresolved charge of discrimination against the HA

issued by the Secretary under Section 810(g) of the Fair Housing Act,

as implemented by 24 CFR 103.400.

Sec. 964.315 HAs role in activities under this part.

The HAs shall develop a process that assures that RC/RMC

representatives and residents are fully briefed and have an opportunity

to comment on the proposed content of the HA's application for funding.

The HA shall give full and fair consideration to the comments and

concerns of the residents. The process shall include:

(a) Informing residents of the selected developments regarding the

preparation of the application, and providing for residents to assist

in the development of the application.

(b) Once a draft application has been prepared, the HA shall make a

copy available for reading in the management office; provide copies of

the draft to any resident organization representing the residents of

the development(s) involved; and provide adequate opportunity for

comment by the residents of the development and their representative

organizations prior to making the application final.

(c) After HUD approval of a grant, notify the duly elected resident

organization and if none exists, notify the residents of the

development of the approval of the grant; provide notification of the

availability of the HUD-approved implementation schedule in the

management office for reading; and develop a system to facilitate a

regular resident role in all aspects of program implementation.

Sec. 964.320 HUD Policy on training, employment, contracting and

subcontracting of public housing residents.

In accordance with section 3 of the Housing and Urban Development

Act of 1968 and the implementing regulations at 24 CFR part 135, PHAs,

their contractors and subcontractors shall make best efforts,

consistent with existing Federal, State, and local laws and

regulations, to give low and very low-income persons the training and

employment opportunities generated by section 3 covered assistance (as

this term is defined in 24 CFR 135.7) and to give section 3 business

concerns the contracting opportunities generated by section 3 covered

assistance.

Sec. 964.325 Announcement of funding availability.

A Notice of Funding Availability will be published periodically in

the Federal Register containing the amounts of funds available, funding

criteria, where to obtain and submit applications, the deadline for the

submissions, and further explanation of the selection criteria.

Sec. 964.330 Grant Set-Aside Assistance.

The Department may make available five percent (5%) of any amounts

available in each fiscal year (subsequent to the first funding cycle)

available to eligible HAs to supplement grants previously awarded under

this program. These supplemental grants would be awarded if the HA

demonstrates that the funds cannot otherwise be obtained and are needed

to maintain adequate levels of services to residents.

Sec. 964.335 Grant agreement.

(a) General. HUD will enter into a grant agreement with the

recipients of a Family Investment Centers grant, which defines the

legal framework for the relationship between HUD and a HA.

(b) Term of grant agreement. A grant will be for a term of three to

five years depending upon the tasks undertaken, as defined under this

subpart.

Sec. 964.340 Resident compensation.

Residents employed to provide services or renovation or conversion

work funded under this program shall be paid at a rate not less than

the highest of:

(a) The minimum wage that would be applicable to the employees

under the Fair Labor Standards Act of 1938 (FLSA), if section 6(a)(1)

of the FLSA applied to the resident and if the resident were not exempt

under section 13 of the FLSA;

(b) The State or local minimum wage for the most nearly comparable

covered employment; or

(c) The prevailing rate of pay for persons employed in similar

public occupations by the same employer.

Sec. 964.345 Treatment of income.

Program participation shall begin on the first day the resident

enters training or begins to receive services. Furthermore, the

earnings of and benefits to any HA resident resulting from

participation in the FIC program shall not be considered as income in

computing the resident's total annual income that is used to determine

the resident rental payment during:

(a) The period that the resident participates in the program; and

(b) The period that begins with the commencement of employment of

the resident in the first job acquired by the resident after completion

of the program that is not funded by assistance under the 1937 Act, and

ends on the earlier of:

(1) The date the resident ceases to continue employment without

good cause; or

(2) The expiration of the 18-month period beginning on the date of

commencement of employment in the first job not funded by assistance

under this program. (See Sec. 913.106, Annual Income.)

Sec. 964.350 Administrative requirements.

The HUD Inspector General, the Comptroller General of the United

States, or any duly authorized representative shall have access to all

records required to be retained by this subpart or by any agreements

with HUD for the purpose of audit or other examinations.

(a) Each HA receiving a grant shall submit to HUD an annual

progress report, participant evaluation and assessment data and other

information, as needed, regarding the effectiveness of FIC in achieving

self-sufficiency.

(b) The policies, guidelines, and requirements of OMB Circular Nos.

A-110 and A-122 are applicable with respect to the acceptance and use

of assistance by private nonprofit organizations.

PART 990--ANNUAL CONTRIBUTIONS FOR OPERATING SUBSIDY

8. The authority citation for part 990 would continue to read as

follows:

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

9. In Sec. 990.108, a new paragraph (f) would be added, to read as

follows:

Sec. 990.108 Other costs.

* * * * *

(f) Funding for Resident Council Expenses. In accordance with the

provisions of 24 CFR part 964 and procedures determined by HUD, each HA

with a duly elected resident council shall include in the operating

subsidy eligibility calculation, $25 per unit per year in support of

the duly elected resident council's activities.

* * * * *

9. A new subpart D, consisting of Secs. 990.401 through 990.405,

would be added to read as follows:

Subpart D--Resident Management Corporations Operating Subsidy

Sec.

990.401 Calculation of operating subsidy.

990.402 Calculation of total income and preparation of operating

budget.

990.403 Adjustments to total income.

990.404 Retention of excess revenues.

990.405 Use of retained revenues.

Subpart D--Resident Management Corporations Operating Subsidy

Sec. 990.401 Calculation of operating subsidy.

Operating subsidy will be calculated separately for any project

managed by a resident management corporation. This subsidy computation

will be the same as the separate computation made for the balance of

the projects in the PHA in accordance with this part, with the

following exceptions:

(a) The project managed by a resident management corporation will

have an Allowable Expense Level based on the actual expenses for the

project in the fiscal year immediately preceding management under this

subpart. These expenditures will include the project's share of any

expenses which are overhead or centralized PHA expenditures. The

expenses must represent a normal year's expenditures for the project,

and must exclude all expenditures which are not normal fiscal year

expenditures as to amount or as to the purpose for which expended.

Documentation of this expense level must be presented with the project

budget and approved by HUD. Any project expenditures funded from a

source of income other than operating subsidies or income generated by

the locally owned public housing program will be excluded from the

subsidy calculation. For budget years after the first budget year under

management by the resident management corporation, the Allowable

Expense Level will be calculated as it is for all other projects in

accordance with Sec. 990.105(e)(5).

(b) The resident management corporation project will estimate

dwelling rental income based on the rent roll of the project

immediately preceding the assumption of management responsibility under

this subpart, increased by the estimate of inflation of tenant income

used in calculating PFS subsidy.

(c) The resident management corporation will exclude, from its

estimate of other income, any increased income directly generated by

activities by the corporation or facilities operated by the

corporation.

(d) Any reduction in the subsidy of a PHA that occurs as a result

of fraud, waste, or mismanagement by the PHA shall not affect the

subsidy calculation for the resident management corporation project.

Sec. 990.402 Calculation of total income and preparation of operating

budget.

(a) Subject to Sec. 990.403 of this section, the amount of funds

provided by a PHA to a project managed by a resident management

corporation under this subpart may not be reduced during the three-year

period beginning on February 5, 1988 or on such later date as a

resident management corporation first assumes management responsibility

for the project.

(b) For purposes of determining the amount of funds provided to a

project under Sec. 990.402(a) of this section, the provision of

technical assistance by the PHA to the resident management corporation

will not be included.

(c) The resident management corporation and the PHA shall submit a

separate operating budget, including the calculation of operating

subsidy eligibility in accordance with Sec. 990.401 of this section,

for the project managed by a resident management corporation to HUD for

approval. This budget will reflect all project expenditures and will

identify which expenditures are related to the responsibilities of the

resident management corporation and which are related to the functions

which will continue to be performed by the PHA.

(d) Each project or part of a project that is operating in

accordance with the ACC amendment relating to this subpart and in

accordance with a contract vesting maintenance responsibilities in the

resident management corporation will have transferred, into a sub-

account of the operating reserve of the host PHA, an operating reserve.

Where all maintenance responsibilities for the resident-managed project

are the responsibility of the corporation, the amount of the reserve

made available to projects under this subpart will be the per unit cost

amount available to the PHA operating reserve, exclusive of all

inventories, prepaids and receivables (at the end of the PHA fiscal

year preceding implementation), multiplied by the number of units in

the project operated in accordance with the provision of this subpart.

Where some, but not all, maintenance responsibilities are vested in the

resident management corporation, the contract may provide for an

appropriately reduced portion of the operating reserve to be

transferred into the corporation's sub-account.

(e) The use of the reserve will be subject to all administrative

procedures applicable to the conventionally owned public housing

program. Any expenditure of funds from the reserve will be for eligible

expenditures which are incorporated into an operating budget subject to

approval by HUD.

(f) Investment of funds held in the reserve will be in accordance

with the provisions of Chapter 4 of the Financial Management Handbook,

7476.1 REV.1 and interest generated will be included in the calculation

of operating subsidy in accordance with this part.

Sec. 990.403 Adjustments to total income.

(a) Operating subsidy calculated in accordance with Sec. 964.401

will reflect changes in inflation, utility rates and consumption, and

changes in the number of units in the resident management project.

(b) In addition to the amount of income derived from the project

(from sources such as rents and charges) and the operating subsidy

calculated in accordance with Sec. 990.401 of this subpart, the

contract may specify that income be provided to the project from other

sources of income of the PHA.

(c) The following conditions may not affect the amounts to be

provided to a project managed by a resident management corporation

under this subpart:

(1) Any reduction in the total income of a PHA that occurs as a

result of fraud, waste, or mismanagement by the PHA.

(2) Any change in the total income of a PHA that occurs as a result

of project-specific characteristics that are not shared by the project

managed by the corporation under this subpart.

Sec. 990.404 Retention of excess revenues.

(a) Any income generated by a resident management corporation that

exceeds the income estimated for the income category involved as

specified in the RMC's management contract must be excluded in

subsequent years in calculating: (1) The operating subsidy provided to

a PHA under part 990 subpart A of this chapter.

(2) The funds provided by the PHA to the resident management

corporation.

(b) The management contract must specify the amount of income

expected to be derived from the project (from sources such as rents and

charges) and the amount of income to be provided to the project from

the other sources of income of the PHA (such as operating subsidy under

part 990 subpart A of this chapter, interest income, administrative

fees, and rents). These income estimates must be calculated on a PHA-

wide basis, as well as for each category of income on which the PHA and

the resident management corporation agree, consistent with HUD's

administrative instructions. Income estimates may provide for proration

of anticipated project income between the corporation and the PHA,

based upon the management and other project-associated responsibilities

(if any) that are to be retained by the PHA under the contract.

Sec. 990.405 Use of retained revenues.

Any revenues retained by a resident management corporation under

Sec. 990.404 of this subpart may only be used for purposes of improving

the maintenance and operation of the project, establishing businesses

enterprises that employ residents of public housing, or acquiring

additional dwelling units for lower income families. Units acquired by

the resident management corporation will not be eligible for payment of

operating subsidy.

Dated: April 11, 1994.

Joseph Shuldiner,

Assistant Secretary for Public and Indian Housing.

[FR Doc. 94-9319 Filed 4-18-94; 8:45 am]

BILLING CODE 4210-33-P