304 Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Proposed Rules

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

Office of the Assistant Secretary for

Public and Indian Housing

24 CFR Ch. IX

[Docket No. N–94–3858; FR–3647–N–01]

RIN 2577–AB44

Vacancy Rule: Notice of Intent To

Establish a Negotiated Rulemaking

Advisory Committee and Notice of

First Meeting

AGENCY: Office of the Assistant

Secretary for Public and Indian

Housing, HUD.

ACTION: Notice of intent to establish

committee and of first meeting.

SUMMARY: The Department is

considering the establishment of a

Negotiated Rulemaking Advisory

Committee under the Federal Advisory

Committee Act (FACA). The purpose of

the Committee would be to discuss and

negotiate a proposed rule that would

change the current method of

determining the payment of operating

subsidies to vacant public housing

units. The Committee would consist of

representatives with a definable interest

in the outcome of a proposed rule. HUD

has prepared a charter and has initiated

the requisite consultation process

pursuant to the FACA, Executive Order

12838, and the implementing

regulations.

DATES: Comments must be received by

February 2, 1995.

If the charter is approved and a final

determination is made to form the

Committee, the first meeting will take

place March 7–9, 1995, at a location to

be announced in Washington, D.C.

ADDRESSES: Interested persons are

invited to submit comments regarding

the proposed Committee and

membership to the Rules Docket Clerk,

Office of General Counsel, Room 10276,

Department of Housing and Urban

Development, 451 Seventh Street, SW,

Washington, DC 20410–0500.

Comments or any other communications

submitted should consist of an original

and four copies and refer to the above

docket number and title. Facsimile

(FAX) comments are not acceptable. The

docket will be available for public

inspection and copying between 7:30

a.m. and 5:30 p.m. weekdays at the

above address.

The exact location of the first meeting

on March 7–9, 1995, in Washington,

D.C., will be announced in a subsequent

Federal Register notice. Interested

persons may also contact John

Comerford, at the telephone number

listed below, for this information.

FOR FURTHER INFORMATION CONTACT: John

T. Comerford, Director, Financial

Management Division, Public and

Indian Housing, Room 4212,

Department of Housing and Urban

Development, 451 Seventh Street, SW,

Washington, DC 20410–0500; telephone

(202) 708–1872, or (202) 708–0850

(TDD). (These telephone numbers are

not toll-free.)

SUPPLEMENTARY INFORMATION:

Background

HUD uses a formula approach called

the Performance Funding System (PFS)

to distribute operating subsidies to

public housing agencies (PHAs) and

Indian housing authorities (IHAs).

(NOTE: the term housing agency (HA) is

used by HUD to mean both PHAs and

IHAs.) A regulatory description of the

PFS can be found at 24 CFR 990.

Although somewhat oversimplified, the

amount of subsidy received by a HA is

the difference between projected

expenses and projected income, with

the PFS regulations detailing how these

projections will be made. HAs calculate

their PFS eligibility annually and

submit a request for funding as part of

their budget process. While the amount

varies, this subsidy can represent a

substantial amount of revenue to a HA.

In 1994, HUD distributed over $2.6

billion in operating subsidies to HAs.

The amount of dwelling rental income

expected to be received is an important

element in estimating subsidy

eligibility. If rental income increases, it

can generally be expected that operating

subsidy eligibility will decrease.

Likewise, if rental income decreases, an

HA may receive a greater amount of

subsidy. With some exceptions, HUD

expects that HAs will project an

occupancy level of 97 percent. This

standard of 97 percent has been part of

the PFS since its implementation in

1975.

That part of the PFS that deals with

the projection of occupancy levels is

known as the vacancy rule. The vacancy

rule was published as a final rule in

1986 (51 FR 16835, May 7, 1986) and

was intended to create incentives to

HAs to return vacant units to occupancy

and to maintain an occupancy level of

97 percent or higher. The rule provided

these incentives by defining the

conditions under which HUD would

approve the use of an occupancy level

of less than 97 percent; by specifying

that an HA need not use an occupancy

level higher than 97 percent; and, in

recognition that a low number of

vacancies may make it difficult for a

small HA to reach 97 percent, by finding

it acceptable to use an occupancy

percentage based on having five or

fewer vacant units.

In September 1991, HUD published a

proposed rule (56 FR 45814, September

6, 1991) that would have made

significant changes to the way in which

vacant units would be considered

eligible for operating subsidy. These

changes included:

1. Increasing the occupancy standard

from 97 percent to 98 percent;

2. Eliminating HUD-approved

Comprehensive Occupancy Plans

(COPs) as a means to justify using less

than the occupancy standard;

3. Limiting the amount of subsidy

paid for vacant units greater than 2

percent of the total number of units

available for occupancy; and

4. Instituting a year-end review to

compare the actual occupancy achieved

with the projected occupancy

percentage.

HUD argued that the changes were

needed in order to correct what it

perceived to be a situation in which full

operating subsidies (100 percent of the

Allowable Expense Level) being paid for

vacant units in modernization programs

or in COPs were greater than the direct

operating expenses incurred by the HA.

With regard to COPs, HUD stated that

HAs with the most extensive and

difficult vacancy problems were

expected to develop five year COPs in

1986 and that most of these would soon

expire.

Before the comment period on the

proposed rule expired, Congress

inserted language in HUD’s

Appropriation Act for 1992 (105 Stat.

757) that prohibited HUD from using

appropriated funds to implement the

proposed rule. Later, Congress included

a provision in the Housing and

Community Development Act of 1992

(section 114(b), Pub. L. 102–550;

approved October 28, 1992) to require

that any changes to the PFS relating to

the payment of operating subsidies to

vacant public housing units be

accomplished only through the use of

negotiated rulemaking procedures.

Regulatory Negotiation

Negotiated rulemaking, or ‘‘reg-neg’’,

is a relatively new process for the

Federal government and this will be the

first use of the process at HUD. The

basic concept of reg-neg is to have the

agency that is considering drafting a

rule bring together representatives of

affected interests for face-to-face

negotiations that are open to the public.

The give-and-take of the negotiation

process is expected to foster
Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Proposed Rules 305

constructive, creative, and acceptable

solutions to difficult problems.

In July 1994, HUD entered into an

Interagency Agreement with the Federal

Mediation and Conciliation Service

(FMCS) for convening services that

would assist HUD in assessing the

feasibility of assembling a balanced

committee willing and able to work

towards the goal of consensus on a

proposed rule that is within HUD’s

statutory authority and addresses the

issues of the interested parties. If HUD

proceeded with the formation of a

negotiated rulemaking committee, the

Interagency Agreement called for FMCS

to provide facilitating services.

The final convening report was

provided to HUD in September 1994

and concludes that ‘‘there is sufficient

support to re-examine the vacancy rule

through a regulatory negotiations

process.’’ A copy of the report titled

Convening Report for RegulatoryNegotiations on HUD’s Vacancy Rule is

available in the office of the Rules

Docket Clerk at the above address.

Chartering of Reg-Neg Committee

As a general rule, an agency of the

Federal Government is required to

comply with the requirements of the

Federal Advisory Committee Act

(FACA) when it establishes or uses a

group of non-Federal members as a

source of advice. Under FACA, HUD

must receive a charter for this reg-neg

committee. HUD has prepared a charter

and sent it to the Office of Management

and Budget for approval. If the charter

is approved and schedule changes are

not necessary as a result of public

comments, the Committee will be

convened in accordance with this

notice.

Substantive Issues for Negotiation

The convening report identified the

following issues to be addressed by the

Committee:

• What constitutes an acceptable

level of vacancies for housing

authorities of various size

classifications?

• What criteria should be used for

providing less than full subsidy?

• What criteria should be used for

providing full subsidy despite less than

full occupancy?

Committee Membership

The FMCS conveners consulted and

interviewed over 30 officials of various

organizations interested and affected by

the vacancy rule. Three national HA

associations—the Council of Large

Public Housing Authorities (CLPHA),

the National Association of Housing and

Redevelopment Officials (NAHRO), and

the Public Housing Authority Directors

Association (PHADA)—worked together

to suggest executive directors of HAs for

committee membership that would

reflect a balance among HAs in terms of

size and number of vacant units. The

national associations committed

themselves to serving as staff support to

the HAs selected for membership.

After reviewing the recommendations

of the FMCS conveners, HUD has

tentatively identified the following list

of possible interests and parties:

Housing Agencies

• Housing Authority of the City Of

Houston, TX

• Cuyahoga Metropolitan Housing

Authority, Cleveland, OH

• New York City, NY Housing

Authority

• Newark, NJ Housing Authority

• Reno, NV Housing Authority

• Littleton, CO Housing Authority

• Housing Authority of the City of

South Bend, IN

Tenant Organizations and Public

Interest Groups

• National Tenants Organization, Ft.

Pierce, FL

• Bromley Heath Tenant Management

Corporation, Jamaica Plains, MA

• New Jersey Association of Public

and Subsidized Housing Residents,

Newark, NJ

• National Housing Law Project,

Washington, DC

• Housing and Development Law

Institute, Washington, DC

• Illinois Association of Housing

Authorities

Federal Government

• U.S. Department of Housing and

Urban Development

Comments and suggestions on this

tentative list of committee members are

invited. HUD does not believe that each

potentially affected organization or

individual must necessarily have its

own representative. However, HUD

must be satisfied that the group as a

whole reflects a proper balance and mix

of interests. Negotiation sessions will be

open to members of the public, so

individuals and organizations that are

not members of the committee may

attend all sessions and communicate

informally with members of the

committee.

Requests for Representation

If in response to this Notice, an

additional individual or representative

of an interest requests membership or

representation on the committee, HUD,

in consultation with the FMCS

conveners, will determine whether that

individual or representative will be

added to the committee. Each additional

nomination for membership on the

committee must include the name of the

nominee and a description of the

interests the nominee would represent,

evidence that the nominee is authorized

to represent relevant parties, a written

commitment that the nominee shall

participate in good faith, and the

reasons that the members proposed in

this notice do not adequately represent

the interests of the person submitting

the nomination. HUD will make the

decision on membership based on

whether the individual or interest

would be substantially affected by the

proposed rule and whether the

individual or interest is already

adequately represented on the

committee.

Final Notice Regarding Committee

Establishment

After reviewing any comments on this

Notice and any requests for

representation, HUD will issue a final

notice. That notice will announce the

establishment of a Negotiated

Rulemaking Advisory Committee,

unless HUD’s charter request is

disapproved or HUD decides, based on

comments and other relevant

considerations, that such action is

inappropriate.

Tentative Schedule

If the final determination is that the

committee should be formed and

negotiations started, HUD plans to hold

the first meeting of the committee on

March 7–9, 1995. On March 7, the

meeting will start at 10:00 a.m. and run

until completion; on March 8, the

meeting will start at 9:00 a.m. and run

until completion; and on March 9, the

meeting will start at 9:00 a.m. and run

until approximately 1:00 p.m. The exact

location of the meeting in Washington,

D.C., will be announced in a subsequent

Federal Register notice. Interested

persons may also contact John

Comerford, at the telephone number

listed above, for this information. The

purpose of the meeting is to orient

members to the reg-neg process,

establish a basic set of understandings

and ground rules (protocols) regarding

the process that will be followed in

seeking a consensus, and begin to

address the issues. This meeting is open

to the public.

Decisions with respect to future

meetings will be made at the first

meeting and from time to time

thereafter. Notices of future meetings

will be published in the Federal

Register if time permits.
306 Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Proposed Rules

To prevent delays that might

postpone timely issuance of a proposed

rule, HUD intends to terminate the

committee’s activities if it does not

reach consensus within 5 months of the

first meeting. The process may end

earlier if the FMCS conveners/

facilitators believe that sufficient

progress cannot be made or that an

impasse has developed that cannot be

resolved.

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

Dated: December 20, 1994.

Joseph Shuldiner,

Assistant Secretary for Public and Indian

Housing.

[FR Doc. 94–32309 Filed 12–30–94; 8:45 am]

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