36272 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 245

[Docket No. FR–4403–F–02]

RIN 2502–AH32

Tenant Participation in Multifamily

Housing Projects

AGENCY: Office of the Assistant

Secretary for Housing-Federal Housing

Commissioner, HUD.

ACTION: Final rule.

SUMMARY: This rule enhances and

expands the rights of tenants in HUDinsured and assisted housing to organize

and participate in project operation.

Pursuant to statutory changes enacted in

1998, the rule expands the assistance

programs in which tenants have rights

to organize. The rule also defines

general characteristics of a legitimate

tenant organization, such as regularity

of meeting and democratic organization,

while leaving the specific organizational

structures and procedures to local

decisionmaking by the tenants

themselves. The rule outlines examples

of appropriate tenant organization

activities that housing owners and

managers must allow, and requires that

tenants have input on certain

management decisions. The rule sets

parameters as well for the conditions

under which tenant organizers may

operate. Finally, in response to public

comments, the rule clarifies that

existing administrative enforcement

mechanisms apply.

DATES: Effective Date: July 7, 2000.

FOR FURTHER INFORMATION CONTACT:

Willie Spearmon, Director, Office of

Housing Assistance and Grant

Administration, U.S. Department of

Housing and Urban Development, 451

Seventh Street, SW., Washington, DC

20410–8000; telephone (202) 708–3000

(this is not a toll-free number). Hearingor speech-impaired individuals may

access this number via TTY by calling

the toll-free Federal Information Relay

Service at (800) 877–8339.

SUPPLEMENTARY INFORMATION:

I. The June 17, 1999 Proposed Rule

The proposed rule of June 17, 1999

(see 64 FR 32782) amended the tenant

participation rules in 24 CFR part 245.

Implementing the statutory mandate of

section 599 of the Public Housing

Reform Act, Pub. L. 105–276 (approved

October 21, 1998), codified at 12 U.S.C.

1715z–1b, the proposed rule expanded

the categories of multifamily housing

projects covered by part 245. The

proposed rule sought to clarify the

reasonable tenant organizing activities

that the owner of a covered multifamily

housing project must allow, and set

forth extremely detailed requirements

for establishing, operating, and

structuring a tenant organization. In

addition, the proposed rule established

policies regarding outside tenant

organizers, the establishment of more

than one tenant organization, and the

right of tenants to replace the leadership

of existing tenant organizations. A

discussion of the specific provisions is

found in the preamble of the proposed

rule at 64 FR 32782–32783 (June 17,

1999).

II. This Final Rule

This final rule adopts certain of the

provisions of the proposed rule, while

adding certain provisions and

eliminating others in response to public

comments. Specifically, this final rule

significantly revises proposed § 245.110,

and eliminates proposed §§ 245.115—

245.135 (this final rule renumbers

proposed §§ 245.140–160 as

§§ 245.115—245.135). A large number of

commenters stated that these sections,

which proposed specific requirements

for the structure, voting procedures, and

governing boards of tenant

organizations, tended to be overly

prescriptive and that tenants should be

allowed to decide these matters for

themselves based on their particular

situations and the best arrangements for

their housing complexes. While HUD

would like tenant organizations to move

toward some sort of formal structures,

HUD has decided to adopt this

‘‘grassroots’’ approach in arriving at

those structures. Thus, rather than

defining in detail what constitutes a

properly established tenant

organization, the final rule establishes

basic general principles for legitimate

tenant organizations. For similar

reasons, the final rule eliminates

proposed § 245.160, related to

additional tenant organizations and

recall elections.

The final rule revises the purpose

statement in § 245.100 to more fully

implement the purpose of the statute. In

addition, the revision responds to

commenters who noted that the

proposed language defined the purpose

of tenant organizations too narrowly.

One of the basic principles is that a

tenant organization should be

independent of management. In order to

insure the independence of tenant

organizations from owners and

managers, the final rule revises

proposed § 245.140 (now § 245.115) to

clarify that management representatives

may not attend organization meetings

unless invited by the organization to

attend specific meetings to discuss

particular issues.

The final rule has made a change to

the provisions regarding non-tenants

who seek to organize the tenants at a

complex, in order to conform this rule

to the requirements of the mark-tomarket program. Specifically, persons

who have received HUD grants to

inform tenants regarding mark-tomarket, and who are acting pursuant to

the terms of such grant, may enter the

property and speak to tenants without

being accompanied.

In response to comments regarding

tenants with disabilities, the rule has

been slightly revised to take into

account the fact that, if a building, for

whatever reason, does not have or has

not been retrofitted with accessible

common areas, the tenant organization

may have to work with management to

find a cooperative solution so that

disabled tenants may attend.

Finally, numerous commenters stated

that HUD should include an

enforcement scheme. The rule adds a

new § 245.135 to clarify that the

administrative enforcement mechanisms

in 24 CFR part 24 apply.

The public comment period on this

proposed rule closed on August 16,

1999. HUD received 73 comments from

a wide variety of commenters, including

individual tenants, tenant organizations,

public housing authorities, legal aid

organizations, public interest advocacy

groups, building industry

representatives, multifamily

management representatives, and one

member of Congress. It should be noted

that a number of commenters were

organizations and associations whose

comments were supported by a large

number of other commenters. Because

the commenters commented on a wide

variety of topics related to the proposed

rule, the following summary groups the

comments by subject.

III. Summary of Public Comments

1. General Comments

Comment: The applicability of the

rule should be curtailed. Tenant

participation in rental housing is not

essential to the operation of housing,

and the final rule should not provide

tenants with day to day input into

management decisions.

Nonprofit elderly projects should be

excluded from the rule.

Response. The rule implements a

statutory requirement that project

owners not impede the reasonable

efforts of tenants to organize and

represent their members (see 12 U.S.C.

1715z–1b(b)(4)). In addition, elderly

projects are included in the tenant

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36273

management provisions of the statute,

and hence cannot be excluded from the

rule. Therefore, HUD has made no

change to the rule as a result of these

comments.

Comments: Certain technical changes

should be made. The term ‘‘resident’’

should be used in place of ‘‘tenant.’’

The final rule should include a

statement that it preempts local law

with respect to tenant organization,

because owners may claim that state

laws allow them to bar one or more

protected activities.

The regulations should be made

consistent with the public housing

tenant participation regulations at 24

CFR part 964.

Response. Regarding the use of the

term ‘‘tenant,’’ this is the appropriate

term based on the language in the

statute, which extends the right to

organize to ‘‘tenants’’ (see section 202(a)

of the Housing and Community

Development Amendments of 1978, 12

U.S.C. 1715z–1b(a)).

Regarding the suggestion that the

regulation contain an explicit statement

that it preempts State law, HUD has

concluded that regulatory preemption is

not necessary for HUD to fully

implement the tenant participation

statute.

Regarding consistency with the public

housing regulations, there are important

differences between public housing and

housing with mortgages insured or

assisted under other HUD programs. In

public housing, the operation of the

housing itself is much more pervasively

regulated than the private assisted

housing that this regulation affects. The

tenant participation guidelines in this

rule are designed to fit the

characteristics of assisted housing

programs other than public housing.

For these reasons, HUD has not made

any changes to this rule as a result of

these comments.

Comment: Sensitivity training is

necessary. HUD should provide

sensitivity training in tenants’ rights to

HUD field office staff and property

owners and management.

Response. Any sensitivity issues will

be addressed via handbook revisions,

rather than implementing sensitivity

training as part of this rule.

Comment: Cooperation by HUD field

offices is necessary. HUD’s Washington

Headquarters must enforce cooperation

from local HUD offices, since not all

local HUD offices support tenant

organization.

Response. All HUD offices will be

required to comply with this regulation.

No further change in this regulation is

required as a result of this comment.

Comment: Notices to tenants. The

rule should directly implement the

policies regarding tenant organizations

contained in the HUD publication

entitled ‘‘Tenants’ Rights and

Responsibilities.’’

Owners and managers should be

required to issue to tenants a notice

regarding tenants’ rights to organize.

Once a tenant organization has been

formed at a particular housing complex,

all local notices regarding building code

violations and all Federal notices

concerning programmatic regulations

should be formally transmitted to the

tenant organization.

Response. Regarding implementation

of the policies concerning tenant

organizations in the HUD publication

(which is entitled ‘‘Resident Rights and

Responsibilities’’), the publication

reiterates in a user-friendly manner the

policies relating to tenant organizations

that are incorporated in the rule itself.

Therefore, it is not necessary to

separately implement the policies stated

in the brochure as a rule.

Regarding the suggestion that project

owners be required to notify tenants of

their rights to organize, however, HUD

does plan to require affected property

owners and managers to provide

information on tenants’ rights to tenants

and tenant organizations through

changes to the model lease, Use

Agreement and Regulatory Agreement.

Regarding the formal transmission to

tenant organizations of notices of local

building code violations and all Federal

notices regarding new program

regulations, while HUD is sympathetic

to the need for information, HUD does

not believe that the best way to

accomplish this goal is through a

generally applicable regulation. Local

code violations are a matter governed by

local law, and individual tenant

organizations can negotiate information

sharing with management on this

subject, in accordance with procedures

and policies for their area. Certainly,

HUD expects assisted housing owners to

comply with HUD’s Uniform Physical

Conditions Standards as set forth in

regulations.

As to new program regulations, such

regulations are published in the Federal

Register, which is publicly accessible

(see HUD World Wide Web site

instructions in the following paragraph).

To the extent that HUD sends notices to

assisted housing providers regarding

HUD policies, these notices are also

available from HUD’s World Wide Web

site or by calling the local HUD field

office or HUD’s Multifamily Housing

Clearinghouse (800–685–8470).

Accessing HUD’s World Wide Web: if

you have a computer with Internet

access, you can access HUD notices and

rules. From the HUD home page - (http:/

/www.hud.gov) select ‘‘Reading Room’’

from the left hand side of the HUD

home page. On the next screen, select

‘‘Bookshelf 12: Legal Information.’’ On

the next screen, scroll down to ‘‘HUD

Handbooks, Regulations and Notices.’’

Click on that link. On the next page,

click on ‘‘Search HUDCLIPS databases.’’

Alternatively, you can go directly to

HUDCLIPS at http://www.hudclips.org.

HUDCLIPS provides tools to search or

browse through various HUD materials,

including Federal Register publications,

handbooks and notices (please keep in

mind that these instructions are current

as of this date, and WWW pages may

change from time to time).

2. Comments on Section 245.10, the

Applicability of Part 245

Comment: Exemption from coverage

should be omitted. The exception in

§ 245.10(a)(3), which exempts from the

coverage of ‘‘Subpart B ‘‘ Tenant

Organizations’’ all State or local housing

finance agency projects receiving

assistance under section 236 of the

National Housing Act (see 12 U.S.C.

1715z–1) but without FHA-insured or

HUD-held mortgages, should be

dropped.

Response: HUD is currently

investigating whether the exclusion of

the State-financed Section 236 projects

is appropriate, and is strongly

considering proposing a rule that would

reverse this exclusion. However, that

change will have to be part of a separate

rulemaking, as notice of coverage of

State-financed section 236 projects was

not given in the proposed rule.

Comment: ‘‘Enhanced’’ vouchers

should not be included. Projects

receiving enhanced vouchers should not

be included in the rule because doing so

would segregate tenants paying market

rent from those receiving rental

assistance, and also because it may deter

owners from accepting enhanced

vouchers.

Some commenters questioned how

the rule could be enforced as to

enhanced vouchers in the absence of a

regulatory agreement with HUD.

Other commenters took a contrary

view and asserted that the rule should

clearly state that it applies to housing

with ‘‘enhanced’’ or ‘‘preservation’’

vouchers.

Response. Section 599 of the Public

Housing Reform Act, Pub. L. 105–276

(approved October 21, 1998) expressly

includes in the coverage of section 202

‘‘* * * a project which receives * * *

enhanced vouchers under the LowIncome Housing Preservation and

Resident Homeownership Act of 1990,

36274 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

the provisions of the Emergency Low

Income Housing Preservation Act of

1987, or the Multifamily Assisted

Housing Reform and Affordability Act

of 1997.’’ Section 245.10(a)(5)

implements this express legal

requirement. Section 538 of the FY 2000

Department of Veteran’s Affairs and

Housing and Urban Development and

Independent Agencies Appropriations

Act (Pub. L. 106–74, approved October

20, 1999), unified the various enhanced

voucher authorities. This section is

codified at 42 U.S.C. 1437f(t).

As to the issue of enforcement,

payments of the non-tenant portion of

rent on enhanced vouchers are made to

the owner by the PHA via a Housing

Assistance Payment contract. Such a

contract is a lower-tier covered

transaction for the purposes of the

enforcement mechanisms at 24 CFR part

24, which include Limited Denials of

Participation, Suspension and

Debarment. Therefore, the enforceability

of this rule in the case of enhanced

vouchers is clear.

Comment: Definition of ‘‘project.’’.

The final rule should include a

definition of the term ‘‘project’’ to make

clear that an entire development or

complex is encompassed in the rule.

Response. The term ‘‘project’’ is

generally understood. For example, see

the definition of project under HUD’s

part 200 regulations at 24 CFR 200.3. A

further definition of ‘‘project’’ for part

245 is not required.

3. Comments on Section 245.100, the

Right of Tenants To Organize

Comment: Purpose clause is too

narrow. The proposed purpose for

organizing and operating a tenant

organization, that is, ‘‘for the purpose of

addressing the terms and conditions of

their tenancy,’’ is too narrow. Tenant

organizations can be involved in a

variety of community activities, such as

related to job training, neighborhood

improvements, Crime Watch, Meals on

Wheels, and other activities.

This section should be broadly

phrased to protect tenants’ First

Amendment right to organize for any

lawful purpose.

Response. The purpose of the

underlying legislation includes a

recognition of the benefits of tenant

participation in ‘‘creating a suitable

living environment in multifamily

housing projects’’ (see 12 U.S.C. 1715z1b(a)). Indeed, as commenters point out,

tenant organizations have been involved

in a variety of activities that enhance

their living environment beyond merely

the terms and conditions of their

tenancy, including the examples

mentioned by the commenters listed

above. Therefore, HUD agrees that the

purpose of addressing ‘‘terms and

conditions of tenancy’’ should be

revised. HUD has revised § 245.100 to

read: ‘‘The tenants of a multifamily

housing project covered under § 245.10

have the right to establish and operate

a tenant organization for the purpose of

addressing issues related to their living

environment, which includes the terms

and conditions of their tenancy as well

as activities related to housing and

community development.’’

Regarding the suggestion that the rule

should be as broad as the tenants’ First

Amendment right to organize for any

purpose, HUD strongly supports the

First Amendment rights of all assisted

housing tenants, and expects assisted

housing owners and managers to respect

those rights. This statute and rule,

however, are specifically addressed to

tenant organizing for the purpose of

enhancing the tenants’’ living

environment.

Comment: Clarify independence from

owners. Tenants have the right to

operate tenant organizations

independently of the owner and the

owner’s agents. To accomplish this, the

final rule should add a provision that

permits a tenant organization to exclude

from its governing board, its

membership, and its meetings any

employee or agent of the owner,

including one who is a tenant.

Response. HUD agrees that tenant

organizations should be independent of

owners and management. Therefore,

this final rule revises § 245.110 to state

in part that a legitimate tenant

organization ‘‘meets regularly, operates

democratically, is representative of all

residents in the development, and is

completely independent of owners,

management, and their representatives.’’

The final rule also specifies that, in

order to preserve independence, tenant

organization meetings should take place

without the presence of management

representatives, unless the organization

has invited them to specific meetings to

discuss specific issues.

4. Section 245.105, Recognition of

Tenant Organizations

Comment: Preamble language

undercuts rule. One commenter stated

that language in the preamble that states

that ‘‘[w]hile HUD encourages owners to

take these responses into consideration,

the proposed rule would not require

that owners modify or abandon their

proposals based on the

recommendations made by the tenant

organization’’ weakens the assumption

that tenant opinions will be given any

reasonable consideration, and calls into

question the purpose of the rule.

Response. HUD believes that the rule

as crafted strikes the right balance

between the rights of tenants and project

owners and managers. The language in

the preamble does nothing more than

recognize, in the context of a discussion

of the impact of the rule on small

business, that the rule does not grant

tenant organizations the right to force

management to alter its proposals. On

the other hand, the rule requires

management ‘‘to give reasonable

consideration’’ to concerns raised by

tenant organizations and requires

multifamily housing owners to allow

tenants to formulate responses to

owners’ requests for rent increases,

partial payment of insurance claims,

reduction in tenant utility allowances,

and other matters stated in

§ 245.115(a)(9). HUD fully expects

owners to consider the comments and

input of tenant organizations. Since

HUD believes that the existing

regulatory language strikes the

appropriate balance, HUD has adopted

no change as a result of this comment.

Comment: Rights of individual

tenants. The proposed rule will

negatively affect the rights of individual

tenants outside of organizations. The

rule implies that the owner is not

required to give consideration to the

concerns of individual tenants.

The rule should clarify that it does

not supersede subparts D and E.

Response. HUD has carefully

reviewed the rule, and determined that

nothing in the rule purports to deprive

individual tenants of any existing legal

rights, or supersede subparts D and E

(indeed, the rule only purports to revise

a portion of subpart A, and subpart B).

Therefore, HUD concludes that no

further clarification of the regulation is

needed.

5. Section 245.110, ‘‘Properly

Established’’ Tenant Organization;

Cross-References to Sections 245.115

(Constitution or By-Laws); 245.120

(Governing Board); 245.125 (Qualified

Voting Member); 245.130 (Number of

Votes); 245.135 (Election Notices)

Comments: The proposed rule micromanages the structure of tenant

organizations. A ‘‘properly established’’

tenant organization should not be

defined in terms of its compliance with

proposed § 245.110 and the other

particular proposed organizational

requirements that section crossreferenced, but rather, HUD should use

the definition in its Management Agent

Handbook 4381.5 REV–2, which states

that legitimate tenant organizations are

groups that meet regularly, operate

democratically, are representative of all

residents in the development, and are

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36275

independent of non-resident owners

and management agents. In addition, a

legitimate tenant organization should be

completely independent of management

and the owner.

The ‘‘properly established’’ concept as

proposed undermines the right of

tenants to establish and operate tenant

organizations.

The following proposed sections

represent inappropriate and

unnecessary intrusions into the rights of

tenants to determine the structure of

their organizations: §§ 245.115(b),

115(c); 245.120(a)(2), 120(b)(2), 120(c);

125; 130; and 135.

Proposed §§ 245.110–245.135 may be

appropriate in the public housing

context, but for privately owned

housing, they are unreasonable,

unworkable, unduly burdensome, and

serve no useful purpose. HUD should

adopt the definition from the

Management Agent Handbook.

The proposed requirements would

interfere with existing functional tenant

organizations. Such organizations

should be allowed to continue operating

as they have.

A tenant organization’s legitimacy is

not derived from written by-laws,

staggered terms, and term limits. Rather,

it is derived from the respect tenants

accord the organization. The

organizational proposals are not based

on reality and should be dropped.

Response. While HUD believes that

tenant organizations should have formal

organizational structures, HUD

recognizes that, given the wide variety

of possible structures that tenant

organizations could use, depending on

their particular needs and membership,

it is appropriate to allow tenants to

determine their organizations’ structures

and procedures based on their needs.

Therefore, HUD has accepted the

suggestion of a number of commenters

to incorporate the guidance for tenant

organizations from the Management

Agent Handbook in place of the detailed

organizational requirements of proposed

§§ 245.110–245.135. Tenant

organizations will be able to establish

their procedures and structures within

those basic requirements of meeting

regularly, being democratically

operated, representing all the residents

of the development, and being

completely independent of owners and

management and their representatives.

6. Section 245.115, Constitution or ByLaws

Comment: Elections every three years.

The rule should require that elections be

held at least every three years. The rule

should require that an independent

third party oversee the elections.

Response. As stated above, given the

multiplicity of different types of tenant

organizations and the large number of

comments opposed to HUD imposing

specific organizational requirements by

regulation, HUD has revised the rule to

require that tenant organizations, inter

alia, operate democratically and

represent all the residents. Thus, tenant

organizations will have flexibility to set

their own election procedures within

those guidelines.

7. Section 245.120, Governing Board

Comment: Independence from

owners. The final rule should clarify

that owners and management employees

may not run for elected office or serve

on a tenant organization’s board of

directors.

Response. The provision in § 245.110

that tenant organizations are completely

independent of owners, management

and their representatives implies that

management personnel may not serve

on a tenant organization’s board of

directors or as officers, and adequately

addresses this issue.

Comment: Procedures for electing

governing board. The governing board

should be democratically elected by

qualified voting members.

The issue of staggered terms (see

proposed § 245.120(a)(2)) should be

decided by the tenant organization.

The proposed three year term limit for

members of the governing board should

be removed because it will undermine

the effectiveness of tenant organizations

by depriving them of their best leaders

after three years.

The requirement that governing board

members be in compliance with their

leases should be dropped. First, there

are tenant confidentiality concerns.

Secondly, the requirement gives the

owner too much control over the

membership of the governing board. The

appropriate sanction for lease

noncompliance is eviction.

Response. HUD agrees not to include

the governing board regulations in the

final rule, but rather, in accordance with

the approach taken regarding other

portions of the rule, to allow tenant

organizations to select their own

organizational structures. Any

governing boards would be covered by

the overall requirements that the tenant

organization must operate

democratically and be representative of

the residents.

8. Section 245.125, Qualified Voting

Member

Comment: Conformance with public

housing requirements. This section

should be revised to conform with 24

CFR 964.115(c), the public housing

resident council requirements.

Response. The requirements of the

public housing program are not

necessarily appropriate for other

assisted housing, which is privately

owned and operated. Furthermore,

considering the numerous comments

that HUD received that the proposed

rule was overly prescriptive as to the

nature of tenant organizations, HUD has

decided to allow the tenants themselves

to decide this issue rather than closely

regulating this area.

9. Section 245.130, Number of Votes

Comment: There should be more than

one vote per unit. Commenters stated

that there should be one vote per

resident rather than one vote per unit.

One suggestion was that each member of

a tenant family whose income is

counted toward rent should be allowed

to vote. Other commenters stated that

any resident who is at least 18 years of

age and whose name appears on the unit

lease should be allowed to vote, as in

public housing.

Response. Considering the numerous

comments that HUD received that the

proposed rule was overly prescriptive as

to the structure and procedures of

tenant organizations, HUD has decided

to allow the tenants themselves to

decide this issue.

10. Section 245.135, Election Notices

Comment: 30 day notice. This section

should require at least thirty days’

notice of nominations, as does 24 CFR

964.115(c), relating to public housing

resident councils.

Response. Considering this comment

along with other comments stating that

HUD’s proposals, including this section,

were too prescriptive in view of the

varying needs of different tenant

organizations, HUD has eliminated

proposed § 245.135. Tenant

organizations can establish their own

procedures within the parameters of

democratic operation.

11. 24 CFR 245.140, Protected Activities

Comment: Prior permission not

required. The final rule should include

additional language that makes it clear

that no prior notice to or permission

from owners and managers of a project

is needed prior to the tenant

organization undertaking the activities

permitted by this section.

Response. Upon consideration of this

comment, HUD agrees that a

management requirement of prior

permission before conducting activities

permitted by the regulation could

constitute a significant impediment to

tenants’ enjoyment of the right to

36276 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

organize and to the organization’s

independence, contrary to the purpose

of the underlying statute. Therefore,

HUD has revised the final rule to clarify

this point. However, HUD believes that

it is good practice for tenant

organizations to communicate with

management about their activities, and

doing so supports a spirit of partnership

in maintaining a positive living

environment.

Comment: Certain permitted tenant

activities should be omitted. HUD

should remove from the list of permitted

activities certain matters under

§ 245.140(a)(9) (§ 245.115(a)(9) in this

final rule), including partial payment of

claims; conversion from project-based

paid utilities to tenant paid utilities;

converting residential units to nonresidential use, cooperative housing, or

condominiums; major capital

improvements; and prepayment of

loans. Including these items in the list

may give a false impression that an

owner must do what the tenant

organization recommends. These

decisions are best determined by

individuals who have specialized

training, not tenants.

Requiring an owner to receive tenant

comments on proposed capital

improvements is unreasonable and

unwarranted. Similarly, it is

inappropriate for tenants to be involved

in property financing decisions, such as

prepayment of loans.

Response. The commenters’ concern

that the list of examples of permitted

activities may give a false impression

that owners have to comply with tenant

recommendations is not supported by

the text of the rule, which only requires

that owners and their agents give

‘‘reasonable consideration’’ to concerns

that tenant organizations raise.

Therefore, HUD does not believe that

the commenters’ fears in this regard

warrant a revision of the proposed rule.

Furthermore, the list of areas on which

tenant organizations may comment can

affect the living conditions of tenants.

Thus, permitting tenant comment in

these areas is both reasonable and

within the parameters of the underlying

statute.

Comment: Permitting leaflets will

permit offensive materials. Giving

blanket protection to leaflet and post

information on bulletin boards would

strip the owners of the ability to control

offensive materials, particularly in

culturally diverse environments.

Response. Tenant activities, including

distributing leaflets and posting on

bulletin boards, are protected by this

rule insofar as they are ‘‘related to the

establishment or operation of a tenant

organization’’ (see proposed

§ 245.140(a)). The purpose of a tenant

organization is to address matters

relating to the tenants’ living

environment. Activities outside of those

parameters are not protected by this rule

(although there may be other general

legal protections, such as broader First

Amendment rights). For this reason,

HUD does not adopt the suggestion to

eliminate leaflets and posting from the

tenant organizations’ permitted

activities.

Comment: Additional facilities. One

commenter asked whether the rule

would require the installation of

additional facilities, such as a bulletin

board if the housing complex had none.

Response. The rule does not require

housing complexes to add additional

facilities.

Comment: The list of permitted

activities is not exhaustive. The rule

should make clear that the list of

permitted activities in proposed

§ 245.140(a) is not exhaustive.

Response. Section 245.115(b)

(proposed as § 245.140(b)) makes

sufficiently clear that the list is not

exhaustive.

Comment: Right of tenants to conduct

door to door contact. The right of

tenants to contact other tenants door to

door should not be limited to an initial

survey to solicit interest (see proposed

§ 245.140(a)(5)).

Response. While the list in proposed

§ 245.140(a) does not purport to be

exhaustive, HUD agrees, for the sake of

improved clarity, to amend proposed

§ 245.140(a)(5) as suggested (see

§ 245.115(a)(5) of this final rule). In

accordance with the comment below

regarding use of the word ‘‘solicit,’’

HUD is substituting other language for

that term in this section as well.

Comment: Remove the term ‘‘solicit’’

from the rule. Use of the term ‘‘solicit’’

inaccurately describes the work done by

tenant organizers and will support

attempts by management to prevent

tenant organizers from conducting

legitimate outreach activities.

Response. HUD agrees that the term

‘‘solicit’’ has negative connotations

unrelated to tenant organizing, and will

use other terms in the final rule.

Comment: The term ‘‘reasonable’’

should be removed from proposed

§ 245.140(b). Section 245.140(b)

provides that tenant organizations may

conduct other ‘‘reasonable’’ activities

related to the establishment or operation

of a tenant organization. Owners could

use this language to attempt to

intimidate tenants or tenant organizers

by claiming they are not acting

‘‘reasonably.’’ Alternatively, the rule

could alter the wording to ‘‘activities

reasonably related * * *’’.

Response. ‘‘Reasonableness’’ is a

common, generally understood legal

principle, which is also used in the

underlying statute. The list of activities

in proposed § 245.140(a) (§ 245.115(a) in

this final rule) provides examples of the

sorts of activities that might be

considered ‘‘reasonable.’’ Since the

activities of tenant organizations do, in

fact, have to be reasonable, HUD has

made no changes to the rule as a result

of this comment.

Comment: Support for proposed

§ 245.140. Proposed § 245.140 should

not be ‘‘watered down.’’

Response: HUD is not making any

change to § 245.140 that would ‘‘water

it down.’’

Comment: There should be specific

instructions regarding leaflets. Placing

leaflets at tenants’ doors creates a

potential safety hazard. The rule should

require that leaflets either be placed

under doors, attached to doors, or

placed in an orderly fashion in a public

location.

Response. HUD has considered this

comment, but does not believe that a

rule concerned with general policies

regarding tenant organizations is the

appropriate venue for instructions on

distributing leaflets. If HUD were to

provide any such guidance, it would

most likely be in the form of handbook

revisions or informational brochures.

12. Section 245.145, Meeting Space

Comment: The rule should clarify that

tenants have a right to meet without

representatives of owners and

management. A new paragraph should

be added to this section clarifying this

principle and further stating that tenants

who are not management

representatives should have the option

to exclude tenants who are management

representatives from their meetings.

Response. The final rule provides that

legitimate tenant organizations are

‘‘completely independent of owners,

management, and their representatives’’

(see § 245.110). In order to preserve this

independence, while organizations can

certainly choose to invite management

representatives to attend specific

meetings on specific issues, as a general

practice, absent such invitation,

meetings should be without the

presence of management representatives

or agents. This rule makes a clarifying

change to § 245.115(a)(8) (redesignated

from proposed § 245.140(a)(8)).

Comment: Persons with disabilities.

The rule should require tenant

organizations only to make ‘‘reasonable

efforts’’ to make their meetings

accessible to persons with disabilities.

Under the proposed rule, a tenant

organization may be effectively

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36277

prohibited from holding meetings if the

only reasonable place to hold a meeting

is in a project’s community room and

the room is inaccessible to persons with

disabilities.

Response. Under section 804(f)(3)(C)

of the Fair Housing Amendments Act of

1988, 42 U.S.C. 3604(f)(3)(C),

multifamily dwellings built for initial

occupancy after March 13, 1991 are

generally required to have accessible

common areas. In addition, section 504

of the Rehabilitation Act of 1973, 29

U.S.C. 794, prohibits discrimination

against disabled individuals by

recipients of federal financial assistance,

which includes housing complexes

receiving HUD assistance through the

Section 8 and other programs. Pursuant

to these legal requirements, HUD

expects that many of the complexes at

which tenant organizations have been or

will be formed under this regulation

would have accessible common areas,

including meeting rooms. For those

complexes which do not have accessible

common areas, because, for example,

they predate the legal requirement to

have them and have not been retrofitted,

HUD expects tenant organizations and

management to work together to find a

solution so that all tenants who wish to

do so may participate in organizational

meetings.

Comment: Owners should not be

allowed to charge fees for meeting

space. Through the charging of fees,

deposits or amounts to cover additional

insurance, owners could effectively

deny tenants the right to use community

rooms. As an alternative, the regulation

could provide that the costs of

providing meeting space are eligible

project expenses.

Response. The proposed rule simply

continues HUD’s current policy of

allowing reasonable, customary and

usual fees, as approved by HUD, that

owners would normally charge for the

use of such facilities. Under this

approach, owners may not charge fees

for tenant organizations to use meeting

space where they do not charge such

fees for other uses of the space, and they

may not single out tenant groups for

higher fees. HUD believes that this

approach reasonably balances the tenant

organizations’ needs against the owner’s

costs.

The alternative suggestion of charging

the fees to project costs does not

necessarily resolve the issue of owner’s

costs. While some owners may be

willing to waive fees altogether and use

their project accounts to defray the

costs, others may not be in a financial

position to do so because of other costs

of operating the project.

13. Section 245.150, Tenant Organizers

Comment: Independence from

owners. The rule should make clear that

tenant organizers cannot be affiliated

with current or prospective owners or

management.

Response. In order to further the

intent of the rule that tenant

organizations be independent from

owners and management, HUD has

revised proposed § 245.150 as

suggested. That section is renumbered

as § 245.125 in this final rule.

Comment: Tenant organizers should

be held to standards. Tenant organizers

should be held to the same standards as

agents and owners. Outside organizers

should be required to disclose

background qualifications, experience

and potential conflicts of interest.

The final rule should establish

qualifications for non-resident tenant

organizers, who otherwise could

potentially serve as agents for outside

influences with no stake in the ultimate

impact on the tenant community.

Response. HUD believes that the

proposed disclosures and requirements

would overly restrict tenant organizing

activity. It should be up to the tenants

themselves to assess whether to speak to

tenant organizers and make their own

judgments about the organizers’

presentation and potential agenda.

Comment: Advance notification.

Owners should be notified in advance

when a non-resident tenant organizer

plans to visit a property, and be

permitted to have a representative

monitor the organizer while he or she

conducts organizing activities.

Response. While HUD believes it is

good practice for tenants to provide

information to owners regarding their

organizing activities, the intent of this

regulation is to ensure that tenant

organizations are independent from

owners and management. Thus, for

example, § 245.115 (proposed § 245.140)

does not require permission from

owners to conduct organizing activities.

Requiring advance notice of a nonresident tenant organizer would make

such independence more difficult and

could have the effect of impeding

organizational efforts, contrary to

section 202(b)(4) of the Housing and

Community Development Amendments

of 1978, 12 U.S.C. 1715z-1b. Therefore,

HUD has adopted no change to the rule

as a result of this comment.

Comment: Owner’s policies regarding

door to door canvassing. With respect to

non-resident tenant organizers, the

proposed rule differentiates between a

situation where the owner has a

‘‘consistently enforced’’ policy against

door to door canvassing, and where the

owner does not have such a policy. One

comment inquires who will make the

determination of whether the owner has

such a policy. A number of comments

stated that the policy should be required

to be in writing to avoid disputes.

Response. In order to avoid disputes

and selective enforcement of anticanvassing rules, HUD has revised the

proposed regulation to require that

policies be in writing, in addition to

being consistently enforced as the

proposed rule stated. HUD hopes that

these criteria are sufficiently objective

so as to avoid most disputes, but in the

event disputes arise the HUD field office

can assist in resolving the issue.

Comment: New policies. The final

rule should clarify that owners and

management may not initiate a new

policy against contacting residents door

to door in response to, or to prevent

tenant organizing.

Response. Under the system set forth

in the rule, a policy against door to door

canvassing would not serve to prevent

tenant organizing. Rather, it would

simply require non-resident tenant

organizers to be accompanied by a

tenant. Furthermore, the rule requires

the policy to be both ‘‘consistently

enforced’’ and ‘‘written.’’ A written

policy solely applied against tenant

organizers and not other door to door

canvassers would not meet the

standards of the rule for a consistently

enforced policy. Also, it is contrary to

law and regulation for an owner to

impede the reasonable efforts of tenants

to organize. HUD can enforce this

regulation by proceedings under 24 CFR

part 24, including Limited Denials of

Participation, suspension, and

debarment. Thus, HUD believes there

are sufficient protections in the rule and

statute to guard against contrived or bad

faith uses of anti-canvassing policies.

Comment: There should be no

restrictions on tenant organizers.

Tenants should not be required to

accompany non-tenant organizers

because tenants are often not willing to

take on this role because of fears of

retaliation by management.

The rule requiring that organizers be

accompanied by a tenant when

canvassing door to door if management

has a consistently enforced policy

against canvassing will likely lead to a

proliferation of non-solicitation policies.

It will be difficult to prove if the

policies have been consistently

enforced. There is a long tradition in

this country of door to door outreach of

this kind in buildings that are not

subsidized by the Federal government.

Supreme Court decisions have

supported the right of organizers to go

door to door.

36278 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

The final rule should provide that

organizers may contact tenants door to

door if either accompanied by a resident

or acting at the request of one.

It would be preferable to omit any

limitation on non-resident tenant

organizers from the rule. However, if

retained, § 245.150(c) should be revised

as follows:

§ 245.150(c)(1): ‘‘If a multifamily

project covered under § 245.10 has a

consistently enforced pre-existing,

written policy against contacting

residents door-to-door that is not

otherwise prohibited by law, then a

non-tenant tenant organizer conducting

door-to-door contact while on any

property or building of the project may

do so if either accompanied by or acting

at the request of a tenant of the

property.’’

§ 245.150(c)(2): Change the word

‘‘solicitation’’ to ‘‘door-to-door contact.’’

§ 245.150(c)(3): ‘‘Where a pre-existing,

written policy against contacting residents

door-to-door does not exist as of the date of

publication of these regulations, an owner or

management agent may not initiate a new

policy against contacting residents door-todoor in response to or to prevent tenant

organization activities.’’

§ 245.150(c)(4): ‘‘The limitation on door-todoor contact by non-tenant tenant organizers

in paragraph (c)(1) shall not be construed to

prohibit or limit any other protected

activities by non-tenant tenant organizers

enumerated in § 245.140 or to prohibit or

limit the right of tenant of the covered project

to contact other residents door-to-door or

otherwise assert their rights under

§ 245.140.’’

§ 245.150(c)(5): ‘‘Where a pre-existing,

written policy against contacting residents

door-to-door already exists, a non-tenant

tenant organizer may conduct an initial doorto-door contact without an invitation by a

resident.’’

§ 245.150(c)(6:) ‘‘Non-tenant tenant

organizers funded through HUD’s Outreach

and Training Grant or Intermediary

Technical Assistant Grant program or

through VISTA Volunteer positions provided

by the Corporation for National Service

(CNS) and funded by HUD through a contract

with CNS to provide outreach and training

assistance to residents of covered projects

may conduct initial or on-going door-to-door

contact with residents without an invitation

by a resident.’’

Response. HUD believes that the issue

of non-resident tenant organizers

requires balancing of an owner’s

property rights with tenants’ right to

organize. There are a variety of forums

by which non-residents can contact

residents, including mail or meeting

them in a public area outside the project

property. In addition, HUD agrees that

in cases where management has a bona

fide policy against contacting residents

door-to-door, it is reasonable to require

outside organizers to be accompanied by

a tenant to ensure that at least one

tenant has invited the organizer onto the

property. However, HUD also agrees

that the activities of certain grant

recipients whose purpose is to provide

education and outreach to tenants

concerning restructuring of assistance

under the mark-to-market program,

should not be so conditioned. HUD has

therefore made a change to the proposed

rule at § 245.150(c), codified in this final

rule as § 245.125(c).

Comment: Section 245.150(c) violates

the First Amendment. This section will

have a chilling effect on tenants’ rights

of association, and as such is

unconstitutional under Laird v. Tatum,

408 U.S. 1, 11 (1972). Therefore, the

section should be omitted entirely.

Response. The proposed regulation

permitting outside organizers to canvass

on private property despite nonsoliciting policies serves to protect

tenants’ organizational rights as well as

the property interests of owners. HUD

disagrees that this regulatory

accommodation violates the holding of

Laird v. Tatum or any case law

concerning First Amendment rights that

applies in this situation.

14. Section 245.155, Re-solicitation

Comment: Proposed § 245.155 should

be omitted from rule. The section is not

necessary, because any tenant can

simply refuse to speak to tenant

organizers and choose not to attend

meetings of the tenant organization. On

the other hand, the section can be used

by owners to keep tenant organizers

from the property. Owners can seek out

dissenters as a means to undermine

legitimate tenant organizations.

Response. HUD has considered this

comment and believes that the rule

should respect the wishes of tenants,

having been made aware of their rights,

not to be repeatedly solicited. Since the

right not to be re-solicited only applies

to ‘‘a tenant,’’ that is, on an individual

basis, HUD does not believe

management can use this section as a

mechanism to keep tenant organizers

from talking to tenants who have not

asserted this right. Proposed § 245.155 is

renumbered as § 245.130 in this final

rule.

15. Section 245.160, Additional Tenant

Organizations

Comment: The rule should not allow

more than one tenant organization at a

project. Allowing more than one tenant

organization could cause legal and

administrative difficulties.

Allowing multiple tenant

organizations would make it unclear

who speaks for the community.

From management’s perspective,

multiple tenant organizations would be

burdensome for management to

accommodate. From the tenants’

perspective, they would be better served

by a single, strong organization that a

multitude of fragmented organizations.

At a minimum, the rule should provide

that a tenant organization must

represent at least 10% of all a project’s

residents, and not less than five

residents in any case.

Allowing multiple tenant

organizations could encourage

confusion and dissension among tenants

when a minority of tenants decide to

form their own organization.

Allowing additional tenant

organizations would create schisms,

issue-based factions, and animosity

among tenants and effectively destroy

the effectiveness of the rule, and

provide no means to establish an

effective consensus among tenants in

representing issues to management.

Response. The final rule omits the

proposed language explicitly providing

for multiple tenant organizations, in

favor of the general definition in

§ 245.110. HUD believes that this

general definition supplies sufficient

guidance.

Comment: Management control. The

rule should not permit the creation of a

second organization under management

control.

Response. HUD believes that the

provision for complete independence of

the tenant organization in § 245.110

adequately addresses this concern.

Comment: Proposed section

245.160(b), replacement of leadership.

The final rule should only require

owners to recognize the right of tenants

to replace their leadership if the

replacement is done according to the

written procedures contained in the

tenant organizations’ by-laws, that meet

the standards of proposed § 245.115.

Response. HUD also received

numerous comments generally on

proposed §§ 245.110—245.135, to the

effect that these sections sought to

excessively micro-manage tenant

organizations, and would eliminate or

hamper many effective organizations

that follow different procedures.

Therefore, HUD has decided to allow

tenants to choose their organizational

procedures and structures within the

general guidelines of § 245.110. For this

reason, the final rule omits proposed

§ 245.160(b).

16. Enforcement

Comment: Final rule should expressly

provide tenants with the right to enforce

the regulations. The rule will only be

meaningful if it can be enforced by

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36279

tenants and tenant organizations in

addition to HUD. In addition to

providing by regulation tenant

enforcement rights, HUD should

explicitly make the tenants third party

beneficiaries of the regulatory agreement

between HUD and the owners. HUD

should make tenants partners in the

enforcement of HUD requirements.

The final rule should explicitly state

enforcement procedures and penalties

for violations.

The following should be added as

new enforcement sections to the final

rule:

Section 245.170 Enforcement.

(a) HUD staff shall utilize the

procedures prescribed in the

Management Agent Handbook 4381.5

REV–2 to identify, assess, and respond

to resident complaints regarding owner

agent conduct or omissions, including

harassment of residents or resident

associations who attempt to exercise

their rights, lease violations, failure to

maintain HQS requirements, or failure

by the owner/agent to properly carry out

its management responsibilities.

(b) HUD field staff shall assess

resident complaints regarding

harassment and owner/agent responses

on these matters as part of field

Management Reviews.

(c) If the owner/agent fails to

adequately respond to outstanding

resident complaints within a reasonable

time period set by the HUD field office,

HUD staff shall implement sanctions

against the agent and/or owner.

(d) HUD staff shall classify the

property as ‘‘troubled’’ due to persistent,

validated resident complaints of a

serious nature, including but not limited

to harassment of the residents

association or individual tenants for

asserting their rights.

(e) Upon publication of a final rule,

HUD shall revise regulatory agreements

and contracts with owners and their

agents to include the rights of tenants to

organize and assert their individual

rights explicitly in the agreements and

contracts themselves, including but not

limited to the renewal of expiring

project-based or Preservation Voucher

Section 8 contracts, amendments to

existing regulatory agreements (which

might occur in a partial payment of

claim, bond refinancing, transfer of

physical assets, or sale of the property),

new regulatory agreements, and a

revision to HUD’s Model Lease as

published in the Handbook 4350.3,

Occupancy Standards for HUD Assisted

Housing.

Section 245.180 Sanctions and

Penalties.

(a) HUD shall pursue removal of the

agent or appropriate civil and/or

criminal penalties as sanctions for

violations of residents rights to organize

or assert their individual rights as

tenants, including but not limited to:

(1) Removal of an agent under a HUD

regulatory agreement, if any;

(2) Civil penalties up to $25,000 for

violations of residents’ right to organize

or their individual rights as tenants;

(3) A fine of not more than $10,000,

imprisonment of not more than five

years or both for knowingly and

willingly falsifying, concealing, or

making any false, fictitious or

fraudulent statement regarding

harassment or interference with

residents asserting their right to

organize or their individual rights as

tenants;

(4) Referral to the Attorney General

and/or HUD’s Enforcement Center with

a recommendation for civil action,

including mandatory or injunctive

relief, to enjoin against owner/agent

actions violating residents’ right to

organize or assert their individual rights

as tenants.

(b) In cases of extended

noncompliance affecting a property, or

widespread noncompliance affecting

more than one property, HUD will

consider taking the following

enforcement actions, without further

notice to the owner/agent:

(1) Debarment from or limited denial

of participation in HUD programs;

(2) Initiate legal action to place the

property in receivership;

(3) Partially abate the project’s

assistance contracts;

(4) Take steps to have the property

declared in default of the mortgage and

initiate foreclosure proceedings.

(c) HUD shall otherwise follow the

procedures prescribed in the

Management Agent Handbook (4381.5,

REV–2) in assessing these penalties.

Response. HUD agrees that it is

important that tenants’ rights to

organize be enforceable. HUD can

enforce the provisions of this tenant

participation rule under the procedures

of 24 CFR part 24, which provides for

Limited Denials of Participation

(‘‘LDP’’), debarment, and suspension in

the case of such violations. These are

powerful sanctions, and HUD will use

them as necessary to address

interference with tenants’ right to

organize. HUD has made an amendment

to the rule to clarify that this existing

authority applies with respect to this

regulation.

Regarding tenant enforcement of the

right to organize, HUD expects to

consider whether to require prospective

changes to the model lease, Regulatory

Agreement and Use Agreement

memorializing the right to tenant

participation, and making tenants thirdparty beneficiaries of the Regulatory

and/or Use Agreement. Such changes

could strengthen the ability of tenants to

enforce their rights to organize, if

necessary.

On the issues of civil money penalties

and criminal sanctions, HUD’s statutes

provide specific instances in which civil

money penalties are applicable. HUD

does not believe it can expand those

instances to include tenant

organizational rights without a statutory

change. Likewise, HUD does not have

statutory authority to impose criminal

penalties such as imprisonment.

However, HUD can use the existing

administrative enforcement system.

Because of the availability of the

sanctions of LDP, suspension and

debarment, HUD believes it currently

has sufficient enforcement authority to

address violations of this regulation.

Comment: The final rule should

expressly prohibit harassment. Because

of the lack of enforcement actions by

HUD, the final rule should state that

HUD will no longer tolerate harassment

of tenants and tenant organizations

asserting their protected rights.

The prohibited harassment tactics

listed in chapter 7 of HUD’s

Management Agent Handbook should be

included in the final rule, along with

the listed sanctions available.

Response. The rule states that: tenants

have a right to organize (§ 245.100);

owners and their agents must recognize

legitimate tenant organizations and give

reasonable consideration to their

concerns; and owners and their agents

must allow tenants to conduct

reasonable activities related to the

establishment and operation of a tenant

organization. These provisions suffice to

require owners and their agents to allow

tenant organizations to function.

Violations of these regulatory provisions

can be addressed through administrative

means, as set forth in new § 245.135. A

provision specifically on harassment

would not add significantly to these

existing protections, which apply to any

interference with tenants’ organizational

rights.

Comment: The rule should include a

list of prohibited activities. The rule

should contain the following additional

section:

Section 245.170 Impediments to

residents or resident associations

attempting to exercise their rights.

(a) Actions by owners/agents that

constitute impediments to resident or

36280 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

resident associations attempting to

exercise their rights include, but are not

limited to, the following:

(1) Unreasonable denial of accessible

meeting space to residents;

(2) Sending management

representatives (including residents

who are management employees or who

receive rent concessions in exchange for

management services) to resident

meeting when residents have not

invited these representatives to attend;

(3) Evicting, threatening to evict,

withholding entitlements, or otherwise

penalizing tenants for organizing or

asserting their rights;

(4) Attempting to adversely influence

resident leaders by offering individual

inducements such as employment,

preferential transfers, rent abatements,

favored repairs, or other benefits not

available to all residents in the

development;

(5) Attempting to form a competing

resident organization under the control

of the management company or the

owner;

(6) Sexual harassment of residents by

owners/agents;

(7) Interfering with or obstructing

residents or non-tenant tenant

organizers from engaging in any

protected activities set forth in § 245.140

of these regulations; and

(8) Engaging in any activity designed

to intimidate, harass, or retaliate against

tenant or non-tenant tenant organizers

exercising their right to organize or

assert their rights.

(b) Owner or management employees

may not run for elected office or serve

on the board of directors of the residents

organization.

(c) HUD considers any of the above

action taken by owner/agents to be a

violation of residents’ rights to organize

and assert individual rights.

Response. The rule as proposed

contains a list exemplifying protected

activities (see § 245.115(a)), and also

protects other reasonable activities

related to establishing and operating a

tenant organization (see § 245.115(b)).

Therefore, actions that interfere with

these activities are prohibited.

Additionally, some of the suggested

additions are simply beyond the scope

of this rulemaking in any case; the

prohibition on sexual harassment of

residents, for example, is enforced

through the Fair Housing Act, 42 U.S.C.

§ 3601 et seq., and the regulations

promulgated pursuant thereto.

Therefore, HUD makes no change to the

final rule as a result of this comment.

IV. Findings and Certifications

E.O. 12866 Statement

The Office of Management and Budget

(OMB) reviewed this rule under

Executive Order 12866 (entitled

‘‘Regulatory Planning and Review’’).

OMB determined that this final rule is

a ‘‘significant regulatory action,’’ as

defined in section 3(f) of the Order

(although not economically significant,

as provided in section 3(f)(1) of the

Order). Any changes made to the rule

subsequent to its submission to OMB

are identified in the docket file, which

is available for public inspection in the

office of the Rules Docket Clerk, Room

10276, U.S. Department of Housing and

Urban Development, 451 Seventh Street,

SW, Washington, DC, 20410–0500.

Impact on Small Entities

The Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.

605(b)), has reviewed this rule before

publication and by approving it certifies

that this rule does not have a significant

economic impact on a substantial

number of small entities. The rule,

while it requires owners and their

agents to permit reasonable tenant

organizing activities, does not impose

any affirmative obligation on owners to

give financial or other assistance to

tenant organizations in the conduct of

these activities.

The rule would permit tenant

organizations to develop responses to

economic proposals made by owners

that could affect the living environment

of the tenants, such as rent increases

and major capital additions, and

requires owners of give reasonable

consideration to such responses.

However, it does not require owners to

adopt such proposals.

Environmental Impact

In accordance with 24 CFR 50.19(c)(1)

of HUD’s regulations, this rule does not

direct, provide for assistance or loan

and mortgage insurance for, or

otherwise govern or regulate, real

property acquisition, disposition,

leasing, rehabilitation, alteration,

demolition, or new construction, or

establish, revise, or provide for

standards for construction or

construction materials, manufactured

housing, or occupancy. Therefore, this

rule is categorically excluded from

review under the National

Environmental Policy Act (42 U.S.C.

4321 et seq.).

Federalism Impact

Executive Order 13132 (entitled

‘‘Federalism’’) prohibits, to the extent

practicable and permitted by law, an

agency from promulgating a regulation

that has federalism implications and

either imposes substantial direct

compliance costs on State and local

governments and is not required by

statute, or preempts State law, unless

the relevant requirements of section 6 of

the Executive Order are met. This rule

does not have federalism implications

and does not impose substantial direct

compliance costs on State and local

governments or preempt State law

within the meaning of the Executive

Order.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates

Reform Act of 1995 (2 U.S.C. 1531–

1538)(UMRA) establishes requirements

for Federal agencies to assess the effects

of their regulatory actions on State,

local, and tribal governments and the

private sector. This final rule does not

impose any Federal mandates on any

State, local, or tribal governments or the

private sector within the meaning of the

UMRA.

List of Subjects in 24 CFR Part 245

Condominiums, Cooperatives, Grant

programs—housing and community

development, Loan programs—housing

and community development, Low and

moderate income housing, Rent

subsidies, Reporting and recordkeeping

requirements, Utilities.

For the reasons stated in the

preamble, HUD amends part 245 as

follows:

PART 245—TENANT PARTICIPATION

IN MULTIFAMILY HOUSING PROJECTS

1. The authority citation for 24 CFR

part 245 continues to read as follows:

Authority: 12 U.S.C. 1715z–1b; 42 U.S.C.

3535(d).

Subpart A—General Provisions

§ 245.10 [Amended]

2. Amend 24 CFR 245.10 as follows:

a. Remove paragraph (a)(2);

b. Remove from paragraph (c) the

definition of ‘‘Section 202 Loans for the

Elderly or Handicapped BMIR

Program’’;

c. Redesignate paragraphs (a)(3) and

(a)(4) as paragraphs (a)(2) and (a)(3),

respectively;

d. Revise redesignated paragraphs

(a)(2)(ii) and (a)(3); and

e. Add paragraphs (a)(4)–(7) to read as

follows:

§ 245.10 Applicability of part.

(a) * * *

(2) * * *

(ii) Was sold by the Secretary subject

to a mortgage insured or held by the

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36281

Secretary and an agreement to maintain

the low- and moderate-income character

of the project;

(3) State or local housing finance

agency project. The project receives

assistance under section 236 of the

National Housing Act (12 U.S.C. 1715z–

1) or the Rent Supplement Program

administered through a State or local

housing finance agency, but does not

have a mortgage insured under the

National Housing Act or held by the

Secretary. Subject to the further

limitation in paragraph (b) of this

section, only the provisions of subparts

A and C of this part and of subpart D

of this part for requests for approval of

a conversion of a project from projectpaid utilities to tenant-paid utilities or

of a reduction in tenant utility

allowances, apply to a mortgagor of

such a project;

(4) The project receives project-based

assistance under section 8 of the United

States Housing Act of 1937 (this

regulation does not cover tenant

participation in PHAs that administer

such project-based assistance);

(5) The project receives enhanced

vouchers under the Low-Income

Housing Preservation and Resident

Homeownership Act of 1990, the

provisions of the Emergency Low

Income Housing Preservation Act of

1987, or the Multifamily Assisted

Housing Reform and Affordability Act

of 1997, as amended;

(6) The project receives assistance

under the Section 202 Direct Loan

program or the Section 202 Supportive

Housing for the Elderly program; or

(7) The project receives assistance

under the Section 811 Supportive

Housing for Persons with Disabilities

program.

* * * * *

3. Subpart B is revised to read as

follows:

Subpart B—Tenant Organizations

Sec.

245.100 Right of tenants to organize.

245.105 Recognition of tenant

organizations.

245.110 Legitimate tenant organizations.

245.115 Protected activities.

245.120 Meeting space.

245.125 Tenant organizers.

245.130 Tenants’ rights not to be recanvassed.

245.135 Enforcement.

Subpart B—Tenant Organizations

§ 245.100 Right of tenants to organize.

The tenants of a multifamily housing

project covered under § 245.10 have the

right to establish and operate a tenant

organization for the purpose of

addressing issues related to their living

environment, which includes the terms

and conditions of their tenancy as well

as activities related to housing and

community development.

§ 245.105 Recognition of tenant

organizations.

Owners of multifamily housing

projects covered under § 245.10, and

their agents, must:

(a) Recognize legitimate tenant

organizations; and (b) Give reasonable

consideration to concerns raised by

legitimate tenant organizations.

§ 245.110 Legitimate tenant organizations.

A tenant organization is legitimate if

it has been established by the tenants of

a multifamily housing project covered

under § 245.10 for the purpose

described in § 245.100, and meets

regularly, operates democratically, is

representative of all residents in the

development, and is completely

independent of owners, management,

and their representatives.

§ 245.115 Protected activities.

(a) Owners of multifamily housing

projects covered under § 245.10, and

their agents, must allow tenants and

tenant organizers to conduct the

following activities related to the

establishment or operation of a tenant

organization:

(1) Distributing leaflets in lobby areas;

(2) Placing leaflets at or under tenants’

doors;

(3) Distributing leaflets in common

areas;

(4) Initiating contact with tenants;

(5) Conducting door-to-door surveys

of tenants to ascertain interest in

establishing a tenant organization and to

offer information about tenant

organizations;

(6) Posting information on bulletin

boards;

(7) Assisting tenants to participate in

tenant organization activities;

(8) Convening regularly scheduled

tenant organization meetings in a space

on site and accessible to tenants, in a

manner that is fully independent of

management representatives. In order to

preserve the independence of tenant

organizations, management

representatives may not attend such

meetings unless invited by the tenant

organization to specific meetings to

discuss a specific issue or issues; and

(9) Formulating responses to owner’s

requests for:

(i) Rent increases;

(ii) Partial payment of claims;

(iii) The conversion from projectbased paid utilities to tenant-paid

utilities;

(iv) A reduction in tenant utility

allowances;

(v) Converting residential units to

non-residential use, cooperative

housing, or condominiums;

(vi) Major capital additions; and

(vii) Prepayment of loans.

(b) In addition to the activities listed

in paragraph (a) of this section, owners

of multifamily housing projects covered

under § 245.10, and their agents, must

allow tenants and tenant organizers to

conduct other reasonable activities

related to the establishment or operation

of a tenant organization.

(c) Owners of multifamily housing

projects and their agents shall not

require tenants and tenant organizers to

obtain prior permission before engaging

in the activities permitted under

paragraphs (a) and (b) of this section.

§ 245.120 Meeting space.

(a) Owners of multifamily housing

projects covered under § 245.10, and

their agents, must reasonably make

available the use of any community

room or other available space

appropriate for meetings that is part of

the multifamily housing project when

requested by:

(1) Tenants or a tenant organization

and used for activities related to the

operation of the tenant organization; or

(2) Tenants seeking to establish a

tenant organization or collectively

address issues related to their living

environment.

(b) Tenant and tenant organization

meetings must be accessible to persons

with disabilities, unless this is

impractical for reasons beyond the

organization’s control. If the complex

has an accessible common area or areas,

it will not be impractical to make

organizational meetings accessible to

persons with disabilities.

(c) Fees. An owner of a multifamily

housing project covered under § 245.10

may charge a reasonable, customary and

usual fee, approved by the Secretary as

may normally be imposed for the use of

such facilities in accordance with

procedures prescribed by the Secretary,

for the use of meeting space. An owner

may waive this fee.

§ 245.125 Tenant organizers.

(a) A tenant organizer is a tenant or

non-tenant who assists tenants in

establishing and operating a tenant

organization, and who is not an

employee or representative of current or

prospective owners, managers, or their

agents.

(b) Owners of multifamily housing

projects covered under § 245.10, and

their agents, must allow tenant

organizers to assist tenants in

36282 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

establishing and operating tenant

organizations.

(c) Non-tenant tenant organizers. (1) If

a multifamily housing project covered

under § 245.10 has a consistently

enforced, written policy against

canvassing, then a non-tenant tenant

organizer must be accompanied by a

tenant while on the property of the

multifamily housing project, except in

the case of recipients of HUD Outreach

and Assistance Training Grants

(‘‘OTAG’’) or other direct HUD grants

designed to enable recipients to provide

education and outreach to tenants

concerning HUD’s mark-to-market

program (see 24 CFR parts 401 and 402),

who are conducting eligible activities as

defined in the applicable Notice of

Funding Availability for the grant or

other effective grant document.

(2) If a multifamily housing project

covered under § 245.10 has a written

policy favoring canvassing, any nontenant tenant organizer must be afforded

the same privileges and rights of access

as other uninvited outside parties in the

normal course of operations. If the

project does not have a consistently

enforced, written policy against

canvassing, the project shall be treated

as if it has a policy favoring canvassing.

§ 245.130 Tenants’ rights not to be recanvassed.

A tenant has the right not to be recanvassed against his or her wishes

regarding participation in a tenant

organization.

§ 245.135 Enforcement

(a) Owners of housing identified in

§ 245.10, and their agents, as well as any

principals thereof (as defined in 24 CFR

24.105), who violate any provision of

this subpart so as to interfere with the

organizational and participatory rights

of tenants, may be liable for sanctions

under 24 CFR part 24. Such sanctions

may include:

(1) Debarment. A person who is

debarred is prohibited from future

participation in Federal programs for a

period of time. The specific rules and

regulations relating to debarment are

found at 24 CFR part 24, subpart C.

(2) Suspension. Suspension is a

temporary action with the same effect as

debarment, to be taken when there is

adequate evidence that a cause for

debarment may exist and immediate

action is needed to protect the public

interest. The specific rules and

regulations relating to suspension are

found at 24 CFR part 24, subpart D.

(3) Limited Denial of Participation.

An LDP generally excludes a person

from future participation in the Federal

program under which the cause arose.

The duration of an LDP is generally up

to 12 months. The specific rules and

regulations relating to LDPs are found at

24 CFR subpart G.

(b) These sanctions may also apply to

affiliates (as defined in 24 CFR part 24)

of these persons or entities.

(c) The procedures in 24 CFR part 24

shall apply to actions under this

subpart.

Dated: June 1, 2000.

William C. Apgar,

Assistant Secretary for Housing-Federal

Housing Commissioner.

[FR Doc. 00–14217 Filed 6–2–00; 2:57 pm]

BILLING CODE 4210–33–P