# Homeless Emergency Assistance and Rapid Transition to Housing: Rural Housing Stability Assistance Program and Revisions to the Definition of “Chronically Homeless” > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2013-06521 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** March 27, 2013 - **Citation:** 78 FR 18726 ## Text DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Part 579 [Docket No. 5573-P-01] RIN 2506-AC33 Homeless Emergency Assistance and Rapid Transition to Housing: Rural Housing Stability Assistance Program and Revisions to the Definition of “Chronically Homeless” AGENCY: Office of the Assistant Secretary for Community Planning and Development, HUD. ACTION: Proposed rule. SUMMARY: The Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH Act), enacted into law on May 20, 2009, consolidates three of the separate homeless assistance programs administered by HUD under the McKinney-Vento Homeless Assistance Act into a single Continuum of Care program, revises the Emergency Shelter Grants program and renames this program the Emergency Solutions Grants program, and creates the Rural Housing Stability Assistance program to replace the Rural Homelessness Grant program. The HEARTH Act also directs HUD to promulgate regulations for these new programs and processes. This proposed rule would provide for the establishment of regulations to implement the new Rural Housing Stability Assistance program. In addition to proposing the regulatory framework for the new Rural Housing Stability Assistance program, this rule also proposes to establish a definition for “chronically homeless” that includes a definition of “homeless occasion” that better targets persons with the longest histories of homelessness and the highest level of need. DATES: Comment Due Date. May 28, 2013. ADDRESSES: Interested persons are invited to submit comments regarding this rule to the Regulations Division, Office of General Counsel, 451 7th Street SW., Room 10276, Department of Housing and Urban Development, Washington, DC 20410-0500. There are two methods for submitting public comments. All submissions must refer to the above docket number and title. 1. Submission of Comments by Mail. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. 2. Electronic Submission of Comments. Interested persons may submit comments electronically through the Federal eRulemaking Portal at www.regulations.gov . HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the www.regulations.gov Web site can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically. Note: To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule. No Facsimile Comments. Facsimile (FAX) comments are not acceptable. Public Inspection of Public Comments. All properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m., eastern time, weekdays at the above address. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number through TTY by calling the Federal Relay Service at 800-877-8339 (this is a toll-free number). Copies of all comments submitted are available for inspection and downloading at www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Ann Marie Oliva, Director, Office of Special Needs Assistance Programs, Office of Community Planning and Development, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410-7000; telephone number 202-708-4300 (this is not a toll-free number). Hearing- and speech-impaired persons may access this number through TTY by calling the Federal Relay Service at 800-877-8339 (this is a toll-free number). SUPPLEMENTARY INFORMATION: Executive Summary Purpose of and Legal Authority for This Proposed Rule This proposed rule would establish the regulations for the Rural Housing Stability Assistance program authorized by the Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH Act). Section 1504 of the HEARTH Act directs HUD to establish regulations for this program. (See 42 U.S.C. 11301.) The purpose of the Rural Housing Stability Assistance program is to rehouse or improve the housing situations of individuals and families who are homeless or in the worst housing situations in the geographic area; stabilize the housing of individuals and families who are in imminent danger of losing housing; and improve the ability of the lowest-income residents of the community to afford stable housing. Section 491 of the McKinney-Vento Act (42 U.S.C. 11408) establishes the new Rural Housing Stability Assistance program which replaces the Rural Homelessness Grant program, a program that was authorized but never implemented, and which expands the types of eligible activities available to recipients under the predecessor program. This new program provides grants competitively for rural counties in lieu of grants under the Continuum of Care program (42 U.S.C. 11408(a). The Rural Housing Stability Assistance program focuses on the homeless issues that are unique to rural areas. Grants under the Rural Housing Stability Assistance program may be used for items such as rent, mortgage, utility assistance; relocation assistance; short-term emergency lodging; new construction; acquisition; rehabilitation; emergency food and clothing; employment assistance and job training; health related services; housing search and counseling services; referrals to legal services; mental health services; substance abuse treatment services; and transportation. Summary of Major Provisions The major provisions of this proposed rule relate to how to establish and operate a Rural Housing Stability Assistance program, how to apply for funds under the program, and how to use the funds for projects approved by HUD. These provisions are summarized below. 1. General Provisions (Subpart A): This section proposes the key definitions for the Rural Housing Stability Assistance program. Of particular note, the terms “county” and “county equivalent” would be defined to mean organized local governments authorized in state constitutions and statutes and established to provide general government. This definition reflects the meaning of “county” used by the United States Census Bureau, and creates clear boundaries and coincides with existing programs that are generally defined by existing state and local government boundaries. In addition, “rural area” and “rural community” would be defined in terms of the geographical equivalent of a “county.” Although section 491(k)(2) of the McKinney-Vento Act provides a definition for the terms “rural area” and “rural community,” HUD determined that it is necessary to further define these terms in order to clarify the geographic areas eligible to receive assistance under this program, and to make the administration of the program more feasible. Under this program, the term “worst housing situation” would be defined to mean housing that has serious health and safety defects and at least one major system that has failed or is failing. HUD construes this category as meaning those individuals and families in housing situations who are in dire need of assistance due to the physical condition of their homes. In addition to defining these terms, in this proposed rule, HUD follows through on the commitment made in the Continuum of Care interim rule published on July 31, 2012, to submit for comment any proposed revision to the definition of “chronically homeless,” specifically defining in this definition what is meant by an “occasion of homelessness.” This proposed rule includes a further revised definition of chronically homeless. 2. Application (Subpart B): The section proposes that in order to be eligible for funds under the Rural Housing Stability Assistance program, an eligible applicant must be either a county government or a designee of the county government that agrees to represent the county. Units of local governments and private nonprofit entities may be selected as the designee by the county, based upon a written designation, and would be required to support the needs of the county. Under this proposed rule, this subpart provides that only one applicant per county may apply for program funds because HUD intends to award one lump sum award to an approved county, or its designee, with one grant per county. Funds awarded under this program are in lieu of grants awarded under the Continuum of Care program, and funds awarded to a county shall only be awarded under either the Continuum of Care program or the Rural Housing Stability Assistance program. A county may apply for funds under either program, but not both. Any county must make a determination before it submits an application whether it will submit a Rural Housing Stability Assistance program application or a Continuum of Care application; counties cannot submit both applications simultaneously. 3. Eligible Activities (Subpart C): Grant assistance under the Rural Housing Stability Assistance program is available for rent, mortgage, and utility assistance; relocation assistance; short-term emergency lodging; new construction; acquisition; rehabilitation; leasing; rental assistance; operating costs, rehabilitation, and repairs to make premises habitable; supportive services; use of Federal inventory property; capacity building; data collection costs; and administrative costs. HUD will issue notices and policy guidance to elaborate on specific activities that are eligible for funding. 4. Grant Selection and Award Process (Subpart D): HUD proposes to award funds to recipients through a national competition based on seven selection criteria, such as the participation of potential program beneficiaries of the grant in assessing the need for and importance of the grant in the county; the degree to which the grant addresses the worst housing situations present in the county; and the performance of the organization in improving housing situations, taking account of the severity of barriers of individuals and families served by the organization. Under this program, not less than 50 percent of the total funds awarded shall be for recipients serving communities with populations of less than 10,000. Within this set-aside, priority must be given to recipients serving counties with populations of less than 5,000. Priority will be given to eligible recipients serving communities not currently receiving significant Federal assistance under the McKinney-Vento Act. 5. Program Requirements (Subpart E): Under this proposed rule, all recipients of funding under the Rural Housing Stability Assistance program must comply with the program regulations and the requirements of the Notice of Funding Availability (NOFA) that HUD will issue each year. The HEARTH Act requires a minimum of 25 percent cash or in-kind match on all eligible funding costs except leasing. Recipients of grant funds must also abide by other applicable requirements, such as housing quality standards and suitable dwelling size; limitations on transitional housing; limitations on use of funds; initiating and completing approved activities and projects within certain timelines; and providing a formal process for termination of assistance to participants who violate program requirements or conditions of occupancy. 6. Grant Administration (Subpart F): Under this proposed rule, recipients of funding under the Rural Housing Stability Assistance program would be required to collect and report data using methods determined by HUD. These methods shall include, at a minimum, participation in a Homeless Management Information System (HMIS), a point-in-time count, and an annual housing inventory count. To effectively administer the grants, HUD will provide technical assistance through a variety of methods to assist recipients with complying with requirements under this program. After having been selected for funding, grant recipients must satisfy certain recordkeeping requirements so that HUD can assess compliance with the program requirements. For any amendments to grants after the funds have been awarded, HUD has established a separate amendment procedure. As appropriate, HUD has also established sanctions to strengthen its enforcement procedures. Benefits and Costs These proposed regulations are intended to work toward the goal of eliminating homelessness in rural communities, by providing the requirements for the new Rural Housing Stability Assistance program, which focuses on improving homeless assistance and prevention in rural areas. This program would fund eligible activities for the purpose of rehousing and improving the housing situations of individuals and families who are homeless or in the worst housing situations in the geographic area, stabilizing the housing of individuals and families who are at risk of becoming homeless, and improving the ability of the lowest-income residents of the community to afford stable housing. In addition, this proposed rule establishes a definition of “chronically homeless” that aids HUD and local jurisdictions in being able to better estimate the number of chronically homeless, and will aid HUD and local jurisdictions in targeting resources to strategies designed to reduce the number of chronically homeless. Congress appropriated a total of $1,593,000,000 for the Continuum of Care and Rural Housing Stability Assistance programs. (See Consolidated and Further Continuing Appropriations Act, 2012, Public Law 112-55, approved November 18, 2011.) With the Continuum of Care program as an established program, established first administratively by HUD and then statutorily by the HEARTH Act, the overwhelming majority of appropriated funds have been allocated to the Continuum of Care program. I. Background—HEARTH Act On May 20, 2009, the President signed into law legislation entitled “An Act to Prevent Mortgage Foreclosures and Enhance Mortgage Credit Availability,” which became Public Law 111-22. This new law implements a variety of measures directed toward keeping individuals and families from losing their homes. Division B of this new law is the HEARTH Act, which consolidates and amends three separate homeless assistance programs carried out under title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371 et seq. ) (McKinney-Vento Act) into a single Continuum of Care program that is designed to improve administrative efficiency and enhance response coordination and effectiveness in addressing the needs of homeless persons. The former Emergency Shelter Grants program is renamed the Emergency Solutions Grants program and revised to broaden the activities that are eligible for funding as emergency shelter and homelessness prevention activities and to add rapid rehousing activities as eligible activities. Section 491 of the McKinney-Vento Act (42 U.S.C. 11408) establishes the new Rural Housing Stability Assistance program (or RHSP), which replaces the Rural Homelessness Grant program, a program that was authorized but never implemented, and expands the types of eligible activities, which could not have been funded under the predecessor Rural Homelessness Grant program. This new program provides grants competitively for rural counties, in lieu of grants under the Continuum of Care program (or CoC program). While the emphasis of the Continuum of Care program is on promoting communitywide planning to end homelessness, and that of the Emergency Solutions Grants program is on improving the quantity and quality of emergency or transitional shelters and homelessness prevention, the RHSP focuses largely on the homeless issues that are unique to rural areas, including stabilizing the housing of individuals in imminent danger of losing housing, through rehabilitation of existing housing or construction of new transitional or permanent housing. HUD commenced the process to implement the HEARTH Act with a proposed rule, which published on April 20, 2010 (75 FR 20541) and titled “Defining Homeless.” That proposed rule sought to clarify and elaborate upon the new McKinney-Vento Act definitions for “homeless” and “homeless individual with a disability.” In addition, the proposed rule included recordkeeping requirements related to the “homeless” definition. The final rule, titled “Defining Homeless,” was published on December 5, 2011 (76 FR 75994). On December 5, 2011, HUD also published an interim rule, titled the “Emergency Solutions Grants Rule.” (See 76 FR 75954.) This interim rule established the program requirements for the Emergency Solutions Grants Program and contained corresponding amendments to the Consolidated Plan regulations. On December 9, 2011, at 76 FR 76917, HUD continued the process to implement the HEARTH Act with the publication of the proposed rule titled “Homeless Management Information Systems Requirements,” which proposed uniform technical requirements for HMIS to ensure proper data collection and maintenance of the database and protect the confidentiality of the information in the database. On July 31, 2012, at 77 FR 45422, HUD published an interim rule for a second HEARTH Act program, the Continuum of Care program. The rulemaking for the Rural Housing Stability Assistance program, which commences with this proposed rule, will conclude the initial stage of HUD's implementation of the HEARTH Act programs. II. Overview of Proposed RHSP Regulations This section of the preamble provides an overview of the proposed regulations for the RHSP that are proposed by this rule. General Provisions (Subpart A) This subpart sets out the general provisions applicable to RHSP. Purpose and Scope (§ 579.1) This section provides that the RHSP is designed to provide assistance for rural counties to rehouse or improve the housing situations of, individuals and families who are homeless or in the worst housing situations; stabilize the housing of individuals and families who are at risk of homelessness; and improve the ability of the lowest-income residents to afford stable housing. The language in the statute refers to stabilizing the housing of individuals and families who are “in imminent danger of losing housing.” Because HUD would define “in imminent danger of losing housing” the same way it defines “at risk of homelessness,” HUD has opted to use the term “at risk of homelessness” to maintain consistency with the CoC (77 FR 45422) and ESG (76 FR 75954) regulations, as implemented per the HEARTH Act. Definitions (§ 579.3) The definitions section of these proposed regulations also includes definitions for which public comment has already been solicited. The definitions of “homeless,” “homeless individual,” and “homeless person” were established by the December 5, 2011, Defining Homeless final rule (76 FR 75994). The December 5, 2011, final rule was preceded by an April 20, 2010, proposed rule (75 FR 20451), which sought public comment on these definitions. The final definitions of these terms took into consideration the public comment received on the proposed definitions as set out in the April 20, 2010, proposed rule. The definition of “at risk of homelessness” was established by the Emergency Solutions Grants program interim rule (76 FR 7954) published on December 5, 2011. The interim rule sought public comment on this definition and additional public comment is not sought through this proposed rule. HUD believes it is very important to have identical definitions of these terms across its programs addressing homelessness, to the extent feasible. The definitions section defines key terms used in this proposed rule. HUD solicits public comment on the following key terms. Abbreviated Consolidated Plan. An “abbreviated consolidated plan” is defined as an assessment of housing and homeless needs, resources, and planned activities that are appropriate for the type and amount of assistance sought from HUD. Community Development Block Grant (CDBG) entitlement communities, under 24 CFR part 570, subpart D, and participating jurisdictions in the HOME Investments Partnerships (HOME) program, under 24 CFR part 92, are required to submit consolidated plans to assess the housing needs of their areas. If a county does not have its own consolidated plan then it must create an abbreviated consolidated plan in order to perform the requisite need and resource assessment to qualify for funding under the RHSP. In almost all circumstances, an eligible applicant under RHSP is participating in a statewide consolidated plan and thus is not a CDBG or HOME entitlement community. Therefore, in most cases, eligible applicants under the RHSP program would be required to submit an abbreviated consolidated plan. In order to ensure that reasonable planning efforts specific to the county receiving funds are made, each county applying for funds, directly or through a designated applicant, will be required to prepare and submit an abbreviated consolidated plan, in accordance with 24 CFR 91.235, as part of the application process. Chronically homeless. As noted earlier in this preamble, HUD submits for public comment a further revised definition of “chronically homeless.” The definition of “chronically homeless” was first introduced in the corresponding amendments to the Consolidated Plan interim rule, published on December 5, 2011, at 76 FR 75954. The Consolidated Plan interim rule tracked the statutory definition of “chronically homeless,” but defined for the first time an “occasion of homelessness” or “homeless occasion” to mean a period of at least 15 days. Specifically, the definition of chronically homeless that includes the definition of homeless occasion, as provided in the Consolidated Plan interim rule, reads as follows: “An individual who * * * has been homeless and living or residing in a place not meant for human habitation, a safe haven, or in an emergency shelter continuously for at least one year or on at least four separate occasions in the last 3 years, where each homeless occasion was at least 15 days.” In the preamble to the Consolidated Plan interim rule, HUD explained the inclusion of the 15-day period as follows: “The regulatory definition of `chronically homeless' does not elaborate significantly on the statutory definition. However, HUD has determined that when an individual or family has not been continuously homeless for at least one year but has been homeless on at least four separate occasions in the last 3 years, each separate occasion must be at least 15 days in duration to ensure consistency for counting and eligibility purposes. HUD has determined that the 15-day minimum is an appropriate measure to distinguish the chronically homeless from the homeless population in general, so as to recognize chronically homeless people who have spent a significant amount of time as homeless.” In the development of the Continuum of Care (CoC) program interim rule, published on July 31, 2012, at 77 FR 45422, HUD already had received and commenced review of the public comments received on the ESG's rule definition of “chronically homeless,” and decided to address this definition in the CoC program rule. In the preamble to the CoC program rule, HUD stated as follows: HUD received valuable public comment on the definition of “chronically homeless,” through the public comment process on the Emergency Solutions Grants program interim rule. Based on public comment, this rule for the Continuum of Care program is not adopting the full definition of “chronically homeless” that was included in the conforming amendments to the Consolidated Plan that were published as a part of the Emergency Solutions Grants program rule. Commenters raised concerns with the meaning of the phrase “where each homeless occasion was at least 15 days.” The concerns raised about this phrase, used for the first time in a definition of “chronically homeless,” has caused HUD to reconsider proceeding to apply a definition that includes this phrase, without further consideration and opportunity for comment. In this rule, HUD therefore amends the definition of “chronically homeless” in the Consolidated Plan regulations to strike this phrase. The removal of this phrase returns the definition to one with which service providers are familiar. On May 30, 2012, HUD convened an informal gathering of nationally recognized experts involved in homelessness to seek individual views and suggestions on the definition of chronically homeless. The attendees at these meetings and a summary of the statements made are available at HUD's Web site at http://www.hudhre.info. In addition to the May 30, 2012, meeting, HUD reached out to the U.S. Interagency Council on Homelessness (USICH), and to several CoC leads for their views on a workable definition of chronically homeless. Based on this feedback, this proposed rule, submits for public comment a definition of “chronically homeless” that defines “homeless occasion in paragraph (1)(ii) of the definition as “has been homeless and living or residing in a place not meant for human habitation, a safe haven, or in an emergency shelter continuously for at least one year or on at least four separate occasions in the last 3 years, where the cumulative total of the four occasions is at least one year. Stays in institutions of 90 days or less will not constitute a break in homelessness, but rather such stays are included in the cumulative total; * * *” (The additional language is highlighted in bold.) HUD believes that this definition of “homeless occasion” in paragraph (1)(ii) better targets persons with the longest histories of homelessness and therefore the highest level of need. The definition of “homeless occasion” also allows for limited resources to be more effectively targeted and considers stays in institutions to be part of an episode of homelessness. HUD has chosen the duration of one year to be consistent with section 401(2)(A)(ii) of the HEARTH Act, which discusses a one year timeframe, and based on consensus from the participants in the expert convening on the “chronically homeless” definition. Additionally, HUD adopted the 90 day or less duration in institutions to be consistent with section 401(2)(B) of the HEARTH Act. Because the definition of “chronically homeless” applies to all of HUD's homeless assistance programs, at the conclusion of the public comment period of this proposed rule, HUD plans to review the public comments on the definition and incorporate a final definition of “chronically homeless” into the final rules for the Continuum of Care program, Emergency Solutions Grants program, and the corresponding amendments to the Consolidated Plan. Specific solicitation of comment. HUD specifically solicits comment on the definition of “homeless occasion” in the definition of “chronically homeless.” County and county equivalent. The terms “county” and “county equivalent” are defined to mean organized local governments authorized in State constitutions and statutes and established to provide general government. This includes governments designated as boroughs in Alaska, as parishes in Louisiana, and as counties in other States. This definition reflects the meaning of “county” used by the United States Census Bureau (see http://www.census.gov/geo/www/geo_defn.html#County ), and creates clear boundaries and coincides with existing programs that are generally defined by existing State and local government boundaries. Private nonprofit organization. A private nonprofit organization is defined as a secular or religious organization described in section 501(c) of the Internal Revenue Code (IRC) of 1986 (26 U.S.C. 501(c)), that is exempt from taxation under subtitle A of the IRC, has an accounting system and a voluntary board, and practices nondiscrimination in the provision of assistance. A private nonprofit organization does not include a governmental organization, such as a public housing agency or housing finance agency. Program participant. The definition for “program participant” covers the three categories of beneficiaries eligible to receive assistance under this program. Those categories of beneficiaries are individuals and families who are: (1) homeless (as defined by the Emergency Solutions Grants rule at 76 FR 75954), (2) at risk of homelessness (as defined by the Defining Homelessness rule at 76 FR 75994), or (3) in the worst housing situations (as proposed below in 24 CFR 579.3). Recipient. “Recipient” is defined as an applicant that signs a grant agreement with HUD. Unless otherwise stated, subrecipients are required to comply with all requirements that apply to recipients. Rural area and rural community. “Rural area” and “rural community” are defined in terms of the geographical equivalent of a “county.” The HEARTH Act authorizes grants to eligible recipients under this program to carry out activities in “rural areas.” Section 491(k)(2) of the McKinney-Vento Act defines the terms “rural area” and “rural community,” as: any area or community, respectively, no part of which is within an area designated as a standard metropolitan statistical area by the Office of Management and Budget; any area or community, respectively, that is (i) within an area designated as a metropolitan statistical area or considered as part of a metropolitan statistical area; and (ii) located in a county where at least 75 percent of the population is rural; or any area or community, respectively, located in a State that has population density of less than 30 persons per square mile (as reported in the most recent decennial census), and of which at least 1.25 percent of the total acreage of such State is under Federal jurisdiction, provided that no metropolitan city (as such term is defined in section 5302 of this title) in such State is the sole beneficiary of the grant amounts awarded under this section. However, HUD determined that it is necessary to further define these terms in order to clarify the geographic areas eligible to receive assistance under this program, and to make the administration of the program more feasible. HUD concluded that defining the terms “rural area” and “rural community” as rural “counties” would achieve these goals. Using the definition in the McKinney-Vento Act and substituting “county” for “area” and “community” allows HUD to more efficiently administer the program because HUD geographic codes are based on metropolitan cities, urban counties, and nonurban counties. The definition allows for a clear and consistent geographic area to be used, and eliminates ambiguities regarding what areas could qualify for assistance under the program. Further, HUD determined that this definition is consistent with Congressional intent in that it ensures the feasible administration of the program while also ensuring that assistance is provided to rural areas. More importantly, this approach would not unfairly limit participation in the program. Using this definition, HUD's Office of Policy Development and Research found that more than 2,000 counties or county equivalents in the United States would qualify as “rural.” HUD's Office of Policy Development and Research will run a report of eligible counties each year, which HUD will use to establish the list of eligible applicants annually. Worst housing situation. The term “worst housing situation” is defined to mean housing that has serious health and safety defects and at least one major system that has failed or is failing. HUD construes this category as meaning those individuals and families in housing situations that are in dire need of assistance due to the physical condition of their homes. Individuals and families eligible for assistance because they are in the worst housing situations may be renting, or may be households that are residing in their own participant-owned housing, as further described in this rule. Application (Subpart B) This subpart sets forth the requirements for applicants that are eligible to apply for assistance under the RHSP to serve rural counties and outlines the grant application process, including requirements related to the submission of an abbreviated consolidated plan. Eligible Applicants (§ 579.100) Section 491(e) of the McKinney-Vento Act provides that organizations eligible to receive a RHSP grant are private nonprofit entities, and county and local governments. Because recipients under this program will be serving rural counties that meet the definition of a rural area, which HUD proposed to define as the same as a rural county, § 579.100 would require that the eligible applicant must either be a county government or a designee of the county government that agrees to represent the county. Units of local governments and private nonprofit entities may be selected as the designee by the county, based upon a written designation, and would be required to support the needs of the county. Section 579.100 would provide that only one applicant per county may apply for program funds. HUD proposes to impose this limitation because HUD intends to award one lump sum award to an approved county, or its designee, with one grant per county. By awarding one grant per county, HUD will be able to impact a greater number of rural counties and more efficiently use its funds. This will impact a greater number of rural counties because each county will be limited to a certain dollar amount. Creating a ceiling for each county allows more counties to receive funding. Limiting a county to one application would ensure that HUD funds are used more efficiently because a county would be required to carefully determine its needs and articulate in the application how the funding will best serve those needs. The county, or its designee, may choose subrecipients to carry out the approved activities in the grant, once awarded. Every county government must submit an abbreviated consolidated plan that is applicable to the RHSP, in accordance with 24 CFR 91.235. However, a county government that is a CDBG entitlement community under 24 CFR 570, subpart D, or that is expected to be a participating jurisdiction in the HOME program under 24 CFR part 92 and has established a consolidated plan for its county, may submit the consolidated plan instead of an abbreviated consolidated plan. An abbreviated consolidated plan includes information that would be required by a grant application; including an assessment of housing and homeless needs, obstacles to meeting underserved need, available resources, and planned activities. Other information that may be required in the plan are the funding priorities, how awarded funds will be used to address identified needs, and the goals and measurable objectives that will be initiated and completed within the time period covered by the plan. HUD is adopting this requirement as part of the application process in order to ensure that reasonable planning efforts specific to the county benefiting from grant funds have been made. The required elements would be further identified in a NOFA. Section 579.100 also addresses exclusions that apply to the application process for the RHSP. Sections 491(a) and 491(m) of the McKinney-Vento Act provide that funds awarded under the RHSP are in lieu of grants awarded under subtitle C, which is the Continuum of Care (CoC) program; funds awarded to a county shall only be awarded under either the CoC program or the RHSP. Section 579.100 would implement this requirement by establishing that a county may apply for funds under either the CoC program or the RHSP, but not both. To apply for funds, a rural county that has previously been claimed by a CoC must withdraw from that CoC and cannot be included in the CoC's application for funds. This also means that the county's preliminary pro rata need (PPRN) amount cannot be included in the CoC's Final Pro Rata Need, even if the PPRN was included in previous years. If at least one CoC-funded project is currently operating within the county, the county, either directly or through a designee such as a private nonprofit organization, would be ineligible to apply for funds under the RHSP program until that grant has expired, been reallocated, or transferred to a new recipient in a different jurisdiction within the CoC. Further, this exclusion would apply to the county as well as all metropolitan cities located within the county. For example, Clark County, Nevada, meets the qualifying criteria as a rural county because it is located in a State that has population density of less than 30 persons per square mile and of which at least 1.25 percent of the total acreage of such State is under Federal jurisdiction. Las Vegas, North Las Vegas, and Henderson are all metropolitan cities located within Clark County that have unique geo codes and could be claimed as separate entities under the CoC. However, if Clark County chose to apply for funds through the RHSP in a given year, Clark County, Las Vegas, North Las Vegas, and Henderson would all be required to withdraw from the CoC. If a project is currently operating in any of those areas, Clark County would not be eligible to apply for RHSP funds in a given year. The purpose of awarding RSHP funds in lieu of CoC funds is not to encourage counties that are active within a CoC to disengage from a process that is working. Instead, the RHSP is intended to reach those counties that may or may not have been claimed by a CoC in the past, and the counties' needs have not been met through that program. Rural counties that withdraw from a CoC in order to apply for RHSP funds are encouraged to continue coordination and collaboration efforts when appropriate. However, recipients of funds under the RHSP are not eligible to receive funding under the CoC program nor can funds from the two programs be combined in any other way. Application Process (§ 579.102) Funds awarded under RHSP will be awarded through an annual application process in response to issuance of a NOFA. HUD will issue a list of counties eligible to apply for funds in a particular fiscal year. HUD's NOFA will outline the selection criteria specified in section 491(g) of the McKinney-Vento Act, as well as other criteria that HUD may deem necessary in a given year. Formula calculation. One criterion for selection of applicants is the need for RHSP funds as determined by the formula established under section 427(b)(2) of the McKinney-Vento Act. The formula establishes PPRN amounts that reflect the needs of geographic areas. Section 579.102 defines PPRN as the dollar expression of the relative need assigned to metropolitan cities, urban counties, and all other counties, determined by HUD in accordance with HUD's regulations for the CoC program at 24 CFR 578.17. 1 The formula uses nationally available data, including the following factors as used in the CDBG formula and Emergency Solutions Grant formula on poverty, housing overcrowding, population, age of housing, and growth lag. 1 HUD has proposed to codify the regulations for the CoC program in a new part 578 in HUD's regulations in title 24 of the Code of Federal Regulations. Section 578.17 addresses the calculation of the PPRN. To determine a rural county's PPRN, HUD will calculate the sum of the PPRN amount for the rural county as well as any metropolitan cities therein. HUD will announce the PPRN amounts prior to issuance of the NOFA on its Web site. The cumulative PPRN amount for the rural county will be the basis for determining the maximum award amount for which the county may apply. The maximum award amount for which an eligible county may apply will be provided in the NOFA. Applicants are encouraged to use this information to determine whether to apply for funding under the RHSP. Subsidy Layering (§ 579.104) Applicants must conform to the subsidy layering requirements, in section 102 of the Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545), and the regulations in 24 CFR part 4, subpart A. Subsidy layering occurs when a project receives funds from more than one governmental jurisdiction. A subsidy layering analysis is required to assure that Federal resources are not duplicative or wasteful. In accordance with the statutory requirement, § 579.104 provides for applicants to submit information regarding other governmental assistance to help HUD determine whether excessive public assistance is being provided to an interim project or activities by combining (layering) assistance under this program with other governmental housing assistance from Federal, State, or local agencies, including assistance such as tax concessions or tax credits. Environmental Review (§ 579.106) HUD will perform an environmental review for each property as required under HUD's regulations in 24 CFR part 50. All recipients of RHSP funding must supply all available, relevant information necessary to HUD and carry out mitigating measures required by HUD. The recipient, its project partners, and their contractors may not perform any eligible activity for a project under the RHSP, or commit or expend HUD or local funds for such activities until HUD has performed an environmental review and the recipient has received HUD approval of the property. Eligible Activities (Subpart C) Subpart C addresses the eligible activities under RHSP. Section 430 of the McKinney-Vento imposes a requirement for a 25 percent match; however the requirement is applied to the project as a whole, rather than by individual activities. Types of Assistance (§ 579.200) Grant assistance is available for rent, mortgage, and utility assistance; relocation assistance, short-term emergency lodging; new construction; acquisition; rehabilitation; leasing; rental assistance; operating costs, rehabilitation and repairs to make premises habitable; supportive services; use of Federal inventory property; capacity building; data collection costs, and administrative costs. Section 579.200 provides the eligible uses of grant assistance under subpart C, but HUD will issue notices and policy guidance to elaborate, through examples and frequently asked questions on specific activities that are eligible for RHSP funding. Structures used to provide housing or supportive services may also be used for other purposes, but RHSP assistance will be available only in proportion to the use of the structure for supportive housing or supportive services. Rent, Mortgage, and Utility Assistance (§ 579.202) The McKinney-Vento Act authorizes the provision of rent, mortgage, and utility assistance after 2 months of nonpayment, in order to prevent eviction, foreclosure, or loss of utility service as an eligible activity. The 2 months of nonpayment period required under § 579.202 is established by section 491(b)(1)(A) of the McKinney-Vento Act. Under § 579.202, this assistance can be provided to a program participant for a period of up to 12 months, including payments for arrears. The 12-month period is separate for each activity, so a household could receive a cumulative amount of 12 months of both rent and utility assistance. This 12-month time period was established as a reasonable period of time to stabilize individuals and families at risk of homelessness. Following the 12-month period of assistance, program participants who still need assistance may qualify for rental assistance for transitional or permanent rental housing. Relocation Assistance (§ 579.204) Section 579.204 provides that security deposits, rent for the first month at a new location, and relocation assistance are costs eligible for funding. Relocation assistance under § 579.204 differs from moving services under § 579.222(b)(12) because relocation assistance allows funds to be used to move a participant out of the county for employment, education, or family reunification purposes, whereas moving services are limited to moving costs of moves within the rural county. The intent of this activity is not to provide assistance to recipients to encourage persons to move out of a county. Instead, HUD recognizes that many of these communities lack job opportunities and other resources that would otherwise enable eligible program participants to improve their ability to afford stable housing. Accordingly, recipients must also ensure that, upon relocation, program participants have access to supportive services that may be necessary to continue the program participant's movement towards self-sufficiency. Recipients may assist program participants with expenses associated with moving outside of the county when one of the following criteria applies: Employment has been secured, an educational opportunity has been offered, or the program participant would be able to reunite with family members, but the program participant lacks the resources to move on their own. Recipients may not provide relocation assistance unless employment, an educational opportunity, or family reunification can be verified. Short-Term Emergency Lodging (§ 579.206) Section 579.206 provides that recipients may provide short-term emergency lodging to program participants in either hotels, motels, or an existing emergency shelter. HUD defines “short-term” for this activity as 3 months to maintain consistency with the other homeless assistance and homeless prevention programs under this title of the McKinney-Vento Act. However, recipients may extend this assistance on a month-to-month basis when, upon re-assessment at the end of the 3 month period, it is determined that additional assistance is required because there are no other housing resources available to the program participant, and the program participant is still considered either at risk of homelessness or in a worst housing situation. When a program participant is first assessed, if it is determined that more long-term housing would be necessary, a recipient must make all efforts to secure permanent housing before serving the program participant under this activity. HUD notes that under no circumstances should program funds be used to replace or substitute existing resources of a facility to pay for beds that are already in place. Instead, funds under this activity may be used only to increase the capacity of the shelter by adding new, temporary beds that will be removed once the household being served leaves. It should also be noted that program funds should only be used to increase the number of beds in an existing shelter when doing so does not violate any local codes or laws. Section 579.206 provides an exception to the limit on duration, and program participants may request that HUD apply the exception. Specifically, § 579.206 provides that an exception to the limit on duration may be available when there are more than 25 percent of program participants receiving short-term emergency lodging beyond the 3 month limit, but the recipient must submit a request to HUD apply the exception. The request must describe the conditions that justify an exception, including an assessment of alternative housing sources and the particular needs of the program participants. New Construction (§ 579.208) Section 491(b)(1)(D) of the McKinney-Vento Act also authorizes the new construction of housing units to provide transitional or permanent housing as an eligible activity. New construction is available to assist participants that are either homeless or at risk of homelessness, but is not available to those in the worst housing situations. Under § 579.208, recipients are required to demonstrate that costs of new construction of a building or structure are substantially less than the costs of rehabilitation of an existing building or structure or to demonstrate that there is a lack of available appropriate units that could be rehabilitated at a cost less than new construction. The intent of this requirement is to ensure that funds are used in an effective manner and are not expended on new construction unless the recipient demonstrates that doing so is financially feasible. Eligible new construction costs include the site improvement costs, staff and overhead costs, and related reasonable and necessary soft costs such as architectural, engineering, or professional services; permitting; and environmental review requirements under 24 CFR part 50. The eligible costs are intended to cover the costs for planning the new construction, as well as the actual costs of construction. However, new construction funds may not be used to fund leased property. Acquisition (§ 579.210) Section 579.210 provides that funds may be used to pay up to 100 percent of the costs of acquisition of real property to provide supportive services, or transitional or permanent rental housing, for program participants who are homeless or at risk of homelessness, but is not available to those in the worst housing situations. Eligible costs include staff and overhead costs and related reasonable and necessary soft costs, such as architectural, engineering, or professional services; permitting; and environmental review requirement costs under 24 CFR part 50. Rehabilitation (§ 579.212) Section 579.212 provides that funds may be used to pay up to 100 percent of the costs of rehabilitation of structures to provide supportive services or transitional or permanent rental housing for program participants who are homeless or at risk of homelessness, but is not available to those in the worst housing situations. Eligible costs include, cost-effective energy measure installation, State and local government health and safety standard compliance costs, staff and overhead costs, and related reasonable and necessary soft costs, but exclude rehabilitation costs on leased property. Leasing (§ 579.214) Section 579.214 provides that funds may be used to pay for 100 percent of the costs of leasing a property, or portions of a property, to provide individuals and families who are homeless or at risk of homelessness with transitional housing, permanent housing, or supportive services. While recipients generally may not use funds to lease units or structures owned by the recipient, subrecipients, parent organizations, related organizations, or partnerships in which the recipient is a member, HUD may grant an exception if the recipient demonstrates that doing so is in the best interest of the program, that leasing charges to be paid by grant funds are reasonable, and that it has written policies and procedures in place governing recusals and disputes between landlords and tenants. Funds used for leasing may be used to pay rent reasonable in relation to rent being charged for comparable space in the area, not to exceed HUD-determined fair market rents; utilities such as gas, electricity, and water; security deposits; and an advance of first and last months' rents. In addition, recipients and subrecipients are not required to make program participants pay an occupancy charge. If occupancy charges are imposed, the amounts charged may not exceed the highest of 30 percent of a family's monthly adjusted income, 10 percent of a family's monthly income, or the portion of welfare assistance from a public agency specifically designated for housing costs. Consistent with the Continuum of Care program, this proposed rule provides that income must be calculated in accordance with HUD's regulations in 24 CFR 5.609, which address annual income, and 24 CFR 5.611(a), which address adjusted income. Section 579.214 specifies that recipients and subrecipients may not charge program fees for housing or supportive services in excess of the income limitations set forth in the aforementioned regulations. Further, recipients must avoid leasing buildings that do not comply with Federal physical accessibility requirements. Rental Assistance (§ 579.216) Section 579.216 provides that rental assistance is an eligible cost for permanent and transitional housing, and this rule clarifies that short-term, medium-term, and long-term rental assistance are eligible costs under the RHSP. Short-term includes rental assistance up to 3 months; medium-term includes rental assistance for 3 to 24 months; and long-term includes rental assistance for longer than 24 months of rent. The durations for short-term, medium-term, and long-term rental assistance were established to maintain consistency with the other homeless assistance and homeless prevention programs under this title of the McKinney-Vento Act. This section also provides that rental assistance may include tenant-based or project-based rental assistance. Eligible rental assistance costs also include security deposits, in an amount not to exceed 2 months of rent, and rental application fees. Tenant-based rental assistance allows the program participant (individuals or families) to choose rental housing of an appropriate size in which to reside. Section 579.216 would limit this retention to within the county boundaries. Under § 579.216, the only exception to the limitation for retention of tenant-based rental assistance is for program participants who are victims of domestic violence, dating violence, sexual assault, or stalking. These participants must have complied with all other obligations of the program and reasonably believe that he or she is imminently threatened by harm from further violence if he or she remains in the assisted dwelling unit. In § 579.216, HUD clarifies that the imminent threat of harm must be from further domestic violence, dating violence, sexual assault, or stalking, which would include threats from a third party, such as a friend or family member of the perpetrator of the violence. HUD would require that the program participant provide appropriate documentation of the original incident of domestic violence, dating violence, sexual assault, or stalking, and any evidence of the current imminent threat of harm. Examples of appropriate documentation of the original incident of domestic violence, dating violence, sexual assault, or stalking include written observation by the housing or service provider; a letter or other documentation from a victim services provider, social worker, legal assistance provider, pastoral counselor, mental health provider, or other professional from whom the victim has sought assistance; medical or dental records; court records; or law enforcement records. Documentation of reasonable belief of further domestic violence, dating violence, sexual assault, or stalking may be done by written observation by the housing or service provider; a letter or other documentation from a victim service provider, social worker, legal assistance provider, pastoral counselor, mental health provider, or other professional from whom the victim has requested assistance; medical or dental records; current restraining order, recent court order or other court records; or law enforcement reports or records. The housing or service provider may also consider other documentation such as emails, voicemails, text messages, social media posts, and other communication from the perpetrator. Because of the particular safety concerns surrounding victims of domestic violence, the proposed rule would provide that acceptable evidence for both the original violence and the reasonable belief include an oral statement. This oral statement does not need to be verified, but it must be documented by a written certification by the individual or head of household. This provision is specific to victims of domestic violence, dating violence, sexual assault, and stalking who are receiving tenant-based rental assistance in permanent housing. This proposed rule contains other policies for moving program participants receiving any type of assistance under this rule, including tenant-based rental assistance, within the rural county required by the provider to coordinate service delivery. Moving program participants outside of the geographic area where providers can coordinate service delivery is administratively difficult for providers and makes it difficult to monitor that program participants have access to, and are receiving, appropriate supportive services; therefore, moves outside of the geographic area where the provider can effectively deliver and monitor service coordination are allowed only in exceptional circumstances. HUD has established these provisions to provide an exception and to address the challenges that are associated with such a move. Project-based rental assistance provides grants for rental assistance to recipients who will make payments to the owner of an existing structure, where the owner agrees to lease subsidized units to program participants. Under the proposed RHSP regulations, HUD would only provide rental assistance for a unit if the rent is reasonable in relation to rents being charged for comparable unassisted units, considering the location, size, type, quality, amenities, facilities, management, and maintenance of each unit, and not exceeding rents currently charged by the same owner for comparable unassisted units. Section 579.216 specifies that if a unit that is assisted under this program is vacated prior to the expiration of a lease, assistance for the unit may continue for a maximum period of 30 days from the end of the month in which the unit is vacated unless the unit is occupied by another person in the meantime. Assistance may resume once the unit is occupied by an eligible program participant. To be consistent with the Continuum of Care program rule and longstanding policy with the Shelter Plus Care program, in particular, periods of stay in institutions that are less than a period of 90 days for each occurrence are not considered vacancies for purposes of this section of the rule. This section retains available rental assistance for program participants who enter institutions for short periods of time. Operating Costs (§ 579.218) Under § 579.218, recipients may use grant funds to pay the costs of day-to-day operation of transitional and permanent rental housing. Recipients may not use grant funds to pay for the operating costs of a project that is receiving funds under this program for rental assistance at the same time. Grant funds may not be used for operating costs of emergency shelters and of supportive service-only facilities because operating costs for such facilities are not authorized for this program under the McKinney-Vento Act, as amended by the HEARTH Act. Rehabilitation and Repairs of Participant-Owned Housing (§ 579.220) Section 491(b)(1)(I) of the McKinney-Vento Act provides that funds may be used for rehabilitation and repairs to make premises habitable. As rehabilitation and operating costs for rental housing are already eligible under other activities, § 579.220 clarifies that this activity is intended to assist those eligible individuals and families who are in the worst housing situations, which is defined as housing that has serious health and safety defects and has at least one major system that has failed or is failing, including: structural support, roofing, cladding, weatherproofing, plumbing, electrical, heating, ventilation, and air conditioning. Eligible costs include costs of repairing, rehabilitating, or replacing major systems that have failed or are failing, and such repairs must meet all applicable laws, ordinances, and codes for the county. HUD recognizes the importance of preserving existing housing stock as well as increasing new permanent housing opportunities. In many rural counties, the existing housing stock is old and often uninhabitable. To ensure that this activity is only used to assist households living in the worst housing situations, as defined, § 579.220 further clarifies that in order to receive assistance through this activity, a household must have a total household income at 50 percent area median income (AMI) or below. A household must also own the housing and must reside in it as their primary place of residence. Section 579.220 also specifies that a program participant that receives assistance under this activity would be required to enter into a written repayment agreement with the recipients or subrecipient that requires the program participant to remain in the residence for a period of no less than 3 years. Should the program participants move prior to the 3-year period, they may be required to repay the amount of grant funds used for the improvements, in accordance with the repayment agreement. The purpose of this requirement is to ensure that grant funds are not misused and that funds used for this activity will benefit program participants for a period of at least 3 years. Supportive Services (§ 579.222) Section 491(b)(1)(J) of the McKinney-Vento Act allows for funds to be used to pay for the development and delivery of comprehensive and coordinated supportive services that use and supplement, as needed, community networks of services. Under § 579.222, the supportive service activities listed in the statute are clarified, defined, and in some cases, consolidated where appropriate. All eligible costs are eligible to the same extent for program participants who are unaccompanied homeless youth, persons living with Human Immunodeficiency Virus (HIV)/Acquired Immune Deficiency Syndrome (AIDS) (HIV/AIDS), and victims of domestic violence, dating violence, sexual assault, or stalking, as they are for other program participants. The supportive service activities named as eligible costs in the proposed rule are budgeting, case management, child care, education services, emergency food and clothing, employment assistance and job training, health related services, housing search and counseling services, referrals to legal services, life skills training, mental health services, moving services, outreach services, substance abuse treatment services, and transportation. Specifically, the following supportive service activities do not appear in the proposed RHSP regulations in the supportive services section: victim services, entitlement assistance, and referrals to veterans' services. Each of these activities is covered under the case management activity and therefore does not need to be listed separately. It should also be noted, that the eligible costs of each supportive service activity are not all-inclusive. Instead, under § 579.222, the activities are intended to be examples of the types of services that will be eligible. Further guidance on these costs will be issued in notices or guidance materials. Use of Federal Inventory Property (§ 579.224) Section 579.224 addresses using former Federally-owned property, obtained through two property disposition programs, in connection with this program. Title V of the McKinney-Vento Act makes excess and surplus Federal real property available to State and local governments and private nonprofit organizations at no cost for use to assist the homeless. The Single Family Property Disposition Program (section 204(g) of the National Housing Act, 12 U.S.C. 1710(g)) makes properties acquired by the Federal Housing Administration (FHA) through foreclosure of an insured or Secretary-held mortgage or loan under the National Housing Act available to government entities and nonprofit organizations at a discount through a lottery system. Section 579.224 would make eligible costs that HUD has determined are not covered in other sections of subpart C and are unique to using property formerly owned by the Federal Government and made available through one of the two programs listed in the McKinney-Vento Act. Specific Solicitation of Comment. HUD is especially interested in receiving comments from entities with experience developing property obtained through these disposition programs as to other unique costs encountered when using this former Federally owned property to assist homeless persons. Capacity Building (§ 579.226) Section 491(b)(2) of the McKinney-Vento Act allows for up to 20 percent of grant funds to be used to pay for capacity building activities. Under § 579.226, capacity building activities are defined as those activities that assist recipient personnel to maintain or improve the skills necessary to strengthen the capability of recipients to deliver housing and supportive services to program participants and to administer grants under this program. Eligible capacity building activities may include costs such as salaries, wages, other employee compensation and benefits, employee education, training, travel, and staff retention. Data Collection Costs (§ 579.228) Section 579.228 proposes the data collection requirements of the RHSP. The data collection system can be through an existing Homeless Management Information System (HMIS) or a comparable data collection system. The data collection system, whether an HMIS or a comparable data collection system, must still conform with HUD's data collection requirements as established by notice. Data collection costs of participating in a HMIS are eligible, but a recipient is not required to create and implement a new HMIS. However, recipients will be required to choose an existing HMIS, in a CoC in the recipient's State that voluntarily accepts the recipient's participation in which to participate and contribute data. Where a recipient or subrecipient cannot obtain approval from a CoC to contribute data to an existing HMIS, a recipient or subrecipient may use program funds to pay the cost of establishing their own comparable data collection system that meets minimum standards established by HUD in Notice. Eligible costs of contributing data to an HMIS include purchasing or leasing computer hardware, purchasing software, purchasing equipment, obtaining technical support, leasing office space, and paying other costs of operating HMIS, including salaries, travel, and participation fees. If a recipient or subrecipient elects to use HMIS, victim service providers will not enter their data into the HMIS but must still collect data in a comparable database and be able to provide the aggregated data to the recipient for the purpose of reporting. In addition, under § 579.228, during the grant period, all recipients must participate in or plan for and conduct a point-in-time count of sheltered and unsheltered homeless persons within the county within the last 10 days of January, or as otherwise determined by HUD. Recipients may choose to participate with an adjacent Continuum of Care for their point-in-time process in order to take advantage of an adjacent Continuum of Care's planning and evaluation process. Recipients must also conduct an annual housing inventory survey and report their data in accordance with a manner prescribed by HUD, during the grant period. Actual costs of conducting the count and the survey are allowable administrative costs. Recipients may also choose to participate with an adjacent Continuum of Care for their housing inventory count process in order to take advantage of an adjacent Continuum of Care's planning and evaluation process. If recipients are participating in an adjacent Continuum of Care's point-in-time count and the recipient wants to participate with a Continuum of Care to conduct its housing inventory count, it must participate with the same Continuum of Care for both the point-in-time and the housing inventory count. Administrative Costs (§ 579.230) Section 579.230 authorizes the use of funds for administrative costs. Recipients will be permitted to use up to 7.5 percent of funds awarded for administrative costs. If the recipient is using a subrecipient to operate a project, the recipient must provide at least 50 percent of administrative funds to the subrecipient(s). It is HUD's experience that subrecipients historically incur costs at the same rate as recipients and therefore should receive funds. Administrative costs are costs that are associated with carrying out the grant, such as accounting for the use of funds, preparing an abbreviated consolidated plan, and preparing reports related to the grant. These are not capacity building activities as these costs are specific to administering the grant. HUD has determined that the 7.5 percent cap is reasonable because it ensures that recipients have some flexibility to use grant funds to pay for costs incurred as a result of administering a grant under this program. Indirect Costs (§ 579.232) Section 579.232 provides that program funds may be used to pay indirect costs in accordance with Office of Management and Budget (OMB) Circulars A-87 or A-122, as applicable. These circulars are referred to as grant management circulars. Circular A-87 is entitled “Cost Principles for States, Local, and Indian Tribal Governments.” Circular A-122 is entitled “Cost Principles for Non-Profit Organizations.” The provisions of these cost principle circulars are codified in the government wide regulations found at 2 CFR part 225, and 2 CFR part 230, respectively. Grant Selection and Award Process (Subpart D) Subpart D sets forth the selection criteria that HUD will use to make awards under this program. It also outlines the funding priorities that HUD will give when making awards, and describes the grant award process. Selection Criteria (§ 579.300) Section 579.300 provides that HUD will award funds to recipients through a national competition based on seven selection criteria, including the participation of potential program beneficiaries of the grant in assessing the need for, and importance of, the grant in the county; the degree to which the grant addresses the worst housing situations present in the county; the degree of collaboration with others in the county to meet the goals described in § 579.1; the performance of the applicant in improving housing situations, taking account of the severity of the barriers of individuals and families served by the applicant; for applicants that have previously received funding under this part, the extent in which the county has successfully demonstrated high levels of performance since such funding began, as determined by HUD; the need for such funds, as determined by the formula established under section 427(b)(2) of the McKinney-Vento Act; and any other relevant criteria as determined by HUD. Selection Priorities (§ 579.302) HUD will make selection of awards according to section 491(c) of the McKinney-Vento Act. The McKinney-Vento Act sets forth that not less than 50 percent of the total funds awarded shall be for recipients serving communities with populations of less than 10,000. As discussed earlier in this preamble, the RHSP regulations define “rural area” and “rural community” as a “county.” Therefore, the total population of an eligible county would have to be less than 10,000 in order to benefit from this funding priority. Further, within this set-aside, priority must be given to recipients serving counties with populations of less than 5,000. An eligible county would need to have a total population of less than 5,000 in order to benefit from this funding priority. The McKinney-Vento Act also requires that priority be given to eligible recipients serving communities not currently receiving significant Federal assistance under the McKinney-Vento Act. Section 579.302 interprets this as giving priority to eligible counties that are not currently receiving any grants under 24 CFR part 576 (the regulations for the Emergency Solutions Grant program) and part 578 (the regulations for the Continuum of Care program). This is consistent with HUD's desire to use this program to reach those rural counties that may not be receiving assistance under the Emergency Solutions Grants program and the Continuum of Care program. Finally, the McKinney-Vento Act limits the total percentage of program funds awarded in a fiscal year to recipients within a single State to 10 percent of the total funds awarded under this program. Grant Award Process (§ 579.304) Section 579.304 provides that a recipient of a conditionally awarded grant must satisfy all requirements for obligation of funds or HUD will withdraw its offer of the award. However, HUD may execute a grant agreement before the recipient meets all conditions precedent but the funds may only be spent on capacity building, supportive services to sites not operated by the recipient or subrecipient, or HMIS eligible costs, until the conditions are met. If an applicant expends funds for capacity building, supportive services to sites not operated by the recipient or subrecipient, or HMIS and fails to subsequently meet the conditions precedent for the other activities, HUD may recapture the applicant's grant funds. The recipient's requirements for obligation of funds are satisfied through the initial provision of housing and services to eligible program participants and/or executing a contract with a subrecipient to provide housing and services under the grant. Consistent with section 491(l) of the McKinney-Vento Act, recipients will have 2 years to obligate the grant funds. A recipient's grant funds awarded in a recipient's fiscal year that remain unobligated at the end of the recipient's fiscal year shall remain available to the recipient, for the purposes for which the funds were awarded, for the recipient's next fiscal year. All grant funds must be obligated by the recipient by the end of the recipient's second fiscal year. Any funds that remain unobligated after the recipient's second fiscal year will be recaptured by HUD. All funds must be spent by recipients by the end of the grant term. A conditional grant must document match requirements, comply with environmental review under § 579.106, document financial feasibility, and correct any and all issues and conditions that may have been attached to the grant award. Recipients of grant funds must comply with the timeliness standards established in § 579.414. HUD would require the recipient to enter into the agreement described in § 579.304. Under this agreement, the grant recipient must agree to ensure that the operation of the project will be in accordance with the McKinney-Vento Act and the requirements of this program. In addition, the grant recipient must monitor and report the progress of the grant to HUD. The grant recipient must comply with requirements of section 491(d)(6) of the McKinney-Vento Act, maintain confidentiality of program participants, monitor compliance, and submit performance reports to HUD annually. Program Requirements (Subpart E) Subpart E sets forth the program requirements applicable to RHSP. All recipients of RHSP funding must comply with the program regulations under this subpart and the requirements of the NOFA issued annually by HUD. Assessment of Program Participant Eligibility and Needs (§ 579.400) Section 579.400 would require recipients and subrecipients to conduct an initial evaluation to determine a program participant's eligibility for participation in the program, and to determine the amount and types of assistance available to the participant. HUD proposes to adopt this requirement to ensure that recipients and subrecipients only provide assistance to eligible families. In order to ensure fair and consistent standards for determining the amount and types of assistance made available to program participants, § 579.400 would also require recipients to have written standards for the provision of assistance, which must address any limits on the amount of assistance that may be received by a program participant, in addition to standards for determining and prioritizing assistance to eligible individuals and families. To assess the annual income of the program participants, HUD proposes that recipients follow the standards outlined in 24 CFR 5.609, with one exception. HUD will not include in its annual income determination the value of a program participant's principal residence when providing rehabilitation or repair for that housing. This exception would allow HUD to afford maximum flexibility for rural communities in addressing homelessness and worst case housing needs in underserved communities. The RHSP is unique because it allows funds to be used to repair homes. It would not be logical to count assets, including housing, when that is the very reason the participant is requesting the funding. Matching (§ 579.402) Section 430 of the McKinney-Vento Act imposes a minimum of 25 percent cash or in-kind match on all eligible funding costs except leasing. Section 579.402 would also exclude data collection and administrative costs from this requirement. For in-kind match, the government-wide grant requirements of HUD's regulations in 24 CFR 84.23 (for nonprofit organizations) and 85.24 (for governments) apply. The 25 percent match requirement is calculated on the total grant amount. All match funds must be spent on eligible activities under this program. Match funds from cash resources must be provided to the project by the recipient, the Federal government, State and local government, or private resources. A recipient may use funds from any source, including any other Federal sources (excluding RHSP funding), as well as State, local, and private sources, provided that funds from the source are not statutorily prohibited to be used as a match. For match funds from in-kind contributions, before grant execution, services to be provided by a third party must be documented by a memorandum of understanding (MOU) or a memorandum of agreement (MOA) between the recipient or subrecipient and the third party who will provide the services. General Operation (§ 579.404) Section 579.404 would provide that recipients of grant funds must provide housing or services that comply with all applicable State and local housing codes, Federal physical accessibility requirements, licensing requirements, and any other requirements in the project's jurisdiction. For leasing, rental assistance, and operating costs, if a unit fails the housing quality standards (HQS) inspection, the owner must correct all failed items within 30 days from the date of the lease agreement to receive assistance under this part. In addition, § 579.404 would clarify that recipients must abide by housing quality standards and suitable dwelling standards. Recipients must also assess supportive services on an ongoing basis and abide by confidentiality standards. Calculating Occupancy Charges and Rent (§ 579.406) Section 579.406 would provide that occupancy charges collected from program participants are considered program income under the RHSP regulations and must be retained by the recipient and added to funds committed by HUD to fulfill project and program objectives under this part. Additionally, the amount of rental assistance awarded will be based on the number and size of units proposed by the applicant to be assisted over the grant period. Limitation on Transitional Housing (§ 579.408) Section 579.408 specifies that program participants may remain in transitional housing for a period longer than 24 months if permanent housing cannot be located, or if the participant requires additional time to prepare for independent living. This would allow program participants in these circumstances to continue to receive assistance while they seek permanent housing. HUD reserves the authority to discontinue assistance to transitional housing projects where more than half of program participants remain in a project for a period longer than 24 months. Term of Commitment; Repayment of Grants; Prevention of Undue Benefits (§ 579.410) Section 579.410 would require that recipients and subrecipients receiving grant funds for acquisition, rehabilitation, or new construction for rental housing or a facility must operate the housing, or provide supportive services in accordance with programmatic requirements, for a term of at least 15 years. When applying for funds, applicants seeking funding for acquisition, rehabilitation, or new construction of permanent housing must also provide a sustainability plan that outlines how a proposed project will continue to operate after the expiration of the grant term. Section 579.410 would also establish repayment requirements when recipients fail to comply with these requirements. While grant terms under this program will expire, HUD has determined that it is in the best interest of the program to ensure that recipients develop a plan to continue to operate an assisted project in accordance with the requirements of this part for a period of time beyond the expiration of a grant period. Where funds are used for acquisition, rehabilitation, or new construction, HUD expects recipients to ensure the continued operation or support of projects, for the benefit of program participants, beyond the grant period. Displacement, Relocation, and Acquisition (§ 579.412) Section 579.412 would provide that recipients and subrecipients must assure that they have taken all reasonable steps to minimize the displacement of persons as a result of housing assisted under this part. This section provides a definition of “displaced person” and provides that a displaced person must be provided relocation assistance in accordance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655) and implementing regulations at 49 CFR part 24. This section further provides that a displaced person must be advised of his or her rights under the Fair Housing Act and, if the comparable replacement dwelling used to establish the amount of replacement housing payment to be provided to a minority person is located in an area of minority concentration, the minority person must be given, if possible, referrals to decent, safe, and sanitary replacement dwellings not located in such areas that are within their financial means. (See 49 CFR 24.205(c)(2)(ii)(D)). This section also addresses the process of initiating negotiations where the displacement is a result of privately undertaken rehabilitation, demolition, or acquisition of real property. This section also provides that a person may appeal a determination by the recipient or subrecipient regarding whether a person qualifies as a displaced person. Timeliness Standards (§ 579.414) Under § 579.414, recipients would be required to adhere to all timeliness standards pertaining to obligation of funds. All funds must be obligated by the end of a recipient's second fiscal year. HUD reserves the authority to withdraw grant awards if an applicant fails to correct all issues, or comply with conditions attached to an award, within a certain period of time. Limitations on Use of Funds (§ 579.416) Section 579.416 would provide that no assistance provided under the RHSP or by any State or local government funds used to supplement this assistance will be awarded for, or may be used to replace State or local funds previously used, or designated for use, to assist persons who are homeless, at risk of homelessness, or in the worst housing situations. This limitation is consistent with the Continuum of Care program and prevents RHSP funds from supplanting existing funds. Additionally, this regulatory section would provide that recipients and subrecipients may not charge fees to program participants. The limitation on the use of funds also addresses limitation on uses where religious activities may be concerned. It is HUD's position that faith-based organizations are able to compete for HUD funds and participate in HUD programs on an equal footing with other organizations; that no group of applicants completing for HUD funds should be subject, as a matter of discretion, to greater or fewer requirements than other organizations solely because of their religious character or affiliation, or, alternatively, the absence of religious character or affiliation. HUD's general principles regarding the equal participation of such organizations in its programs are codified at 24 CFR 5.109. Program specific requirements governing faith-based activities are codified in the regulations for the individual HUD programs. (See, for example, 24 CFR 574.300(c), 24 CFR 582.115(c), 24 CFR 583.150(b).) HUD's equal participation regulations were prompted by Executive Order 13279, Equal Protection of the Laws for Faith-Based and Community Organizations, issued by President Bush on December 12, 2002, and published in the Federal Register on December 16, 2002 (67 FR 77141). Executive Order 13279 set forth principles and policymaking criteria to guide Federal agencies in ensuring the equal protection of the laws for faith-based and community organizations. Executive Order 13279 was amended by Executive Order 13559 (Fundamental Principles and Policymaking Criteria for Partnerships With Faith-Based and Other Neighborhood Organizations), issued by President Obama on November 17, 2010, and published in the Federal Register on November 22, 2010 (75 FR 71319). Executive Order 13559 expands on the equal participation principles provided in Executive Order 13279 to strengthen the capacity of faith-based and other neighborhood organizations to deliver services effectively and ensure the equal treatment of program beneficiaries. Executive Order 13559 reiterates a key principle underlying participation of faith-based organizations in federally funded activities and that is that faith-based organizations be eligible to compete for Federal financial assistance used to support social service programs and to participate fully in social service programs supported with Federal financial assistance without impairing their independence, autonomy, expression outside the programs in question, or religious character. With respect to program beneficiaries, the Executive Order states that organizations, in providing services supported in whole or in part with Federal financial assistance, and in their outreach activities related to such services, should not be allowed to discriminate against current or prospective program beneficiaries on the basis of religion, a religious belief, a refusal to hold a religious belief, or a refusal to attend or participate in a religious practice. The Executive Order directs that organizations that engage in explicitly religious activities (including activities that involve overt religious content such as worship, religious instruction, or proselytization) must perform such activities and offer such services outside of programs that are supported with direct Federal financial assistance (including through prime awards or subawards), separately in time or location from any such programs or services supported with direct Federal financial assistance, and participation in any such explicitly religious activities must be voluntary for the beneficiaries of the social service program supported with such Federal financial assistance. For purposes of greater clarity and comprehensibility, the Executive Order uses the term “explicitly religious” in lieu of “inherently religious.” The Executive Order further directs that if a beneficiary or prospective beneficiary of a social service program supported by Federal financial assistance objects to the religious character of an organization that provides services under the program, that organization, within a reasonable time after the date of the objection, shall refer the beneficiary to an alternative provider. Executive Order 13559 provides for the establishment of an Interagency Working Group on Faith-Based and Other Neighborhood Partnerships (Working Group) to review and evaluate existing regulations, guidance documents, and policies, and directs the OMB to issue guidance to agencies on uniform implementation following receipt of the Working Group's report. On April 27, 2012, the Working Group issued its report, recommending a model set of regulations and guidance for agencies to adopt. HUD intends to wait for OMB guidance before initiating any rulemaking directed to broader changes to HUD's existing faith-based regulations to ensure consistency with faith-based regulations of other Federal agencies. However, in this rule, HUD has proposed revisions to its regulatory provisions governing faith-based activities to incorporate the principles of Executive Order 13559 pertaining to equal treatment of program beneficiaries and to adopt terminology, such as “explicitly religious” and “overt religious content,” that offers greater clarity to the limitations placed on faith-based organizations when using Federal funds for their supportive services. Executive Order 13559 also provides that if a beneficiary or prospective beneficiary of a social service program supported by Federal financial assistance objects to the religious character of an organization that provides services under the program, that organization, shall, within a reasonable time after the date of the objection, refer the beneficiary to an alternative provider. HUD has proposed language in the rule to reflect the option of referral to an alternative provider. As to how this option specifically will be implemented in rural America, HUD anticipates that based on public comment, as well as forthcoming OMB guidance and the recommendations of the Working Group, HUD will be able to fully address and implement this provision at the final rule stage. Termination of Assistance to Participants (§ 579.418) Section 579.418 would provide that a recipient may terminate assistance to a program participant who violates program requirements or conditions of occupancy. The recipient must provide a formal process that affords program participants due process of law. As recipients develop their formal due process policies they should consider the specific conditions and needs of the project's target subpopulation and develop policies and procedures accordingly. Recipients may resume assistance to a participant whose assistance has been terminated. For example, recipients that target persons fleeing or attempting to flee domestic violence, dating violence, sexual assault, or stalking should consider the unique needs of this subpopulation, including safety risks that might arise as a result of terminating assistance and what violations are serious enough to warrant such risks. Additionally, recipients should consider including in the formal due process policies a requirement that recipients make the appropriate referrals or take other measures to ensure the safety of the program participants who are being terminated from the program. Recipients that are providing permanent housing for hard-to-house populations of homeless persons (e.g., persons with multiple disabling conditions) must exercise judgment and examine all circumstances in determining whether termination is appropriate. Under § 579.418, HUD has determined that a participant's assistance should be terminated only in the most severe cases. Conflicts of Interest (§ 579.420) Section 579.420 addresses organizational and individual conflicts of interest. With respect to organizational conflicts of interest, this section would provide that the provision of any type or amount of assistance under the RHSP may not be conditioned on an individual's or family's acceptance or occupancy of housing owned by the recipient, subrecipient, or a parent or subsidiary of the subrecipient. This section further provides that no subrecipient, or parent or subsidiary of a subrecipient, may, with respect to individuals or families occupying housing that the subrecipient, or any parent or subsidiary of the subrecipient, owns, carry out the intake assessment. With respect to individual conflicts of interest, this section provides that for the procurement of goods and services, the recipient and its subrecipients must comply with the codes of conduct and conflict of interest requirements under 24 CFR 85.36 (for governments) and 24 CFR 84.42 (for private nonprofit organizations), and sets out the requirements for all other transactions and activities. Program Income (§ 579.422) Section 579.422 defines program income as income received by the recipient or subrecipient directly from a grant-supported activity or earned as a result of the grant agreement. Program income would be allowable to further eligible project and RHSP activities. Applicability of Other Federal Requirements (§ 579.424) Section 579.424 would provide the cross-cutting Federal requirements to which recipients and subrecipients of RHSP funding must comply. These requirements would include compliance with such Federal requirements as the Coastal Barriers Resources Act, applicable OMB Circulars, Lead-Based Paint regulations, audit requirements, and nondiscrimination and civil rights requirements. This section also would provide that all recipients of RHSP funds must abide by the limitation of use of the funds, such as use of funds for required religious activities. Grant Administration (Subpart F) Data Collection Requirements (§ 579.500) Section 579.500 would provide that recipients of RHSP funding must collect and report data using methods used by HUD. These methods shall include, at a minimum, participation in an HMIS, a point-in-time count, and an annual housing inventory count. These data collection methods are not required by the McKinney-Vento Act, however they have proven successful in HUD's other homeless assistance programs. Although RHSP is not exclusively targeting homeless persons, these tools can be used to count all program participants. HUD will issue guidance for recipients on how to implement these methods in their counties. Technical Assistance (§ 579.502) The purpose of technical assistance provided under the RHSP is to increase the effectiveness with which eligible recipients develop projects that effectively assist program participants; improve their capacity to prepare funding applications; and gain access to other Federal resources that may be used to assist individuals and families who are homeless, at risk of homelessness, or are in the worst housing situations in rural areas. As appropriate, HUD will provide technical assistance through a variety of methods to assist recipients with complying with requirements under this program. Recordkeeping Requirements (§ 579.504) Section 579.504 would require each recipient receiving RHSP funds to provide timely reports to HUD. Each recipient would be required to adhere to recordkeeping requirements outlined under § 579.504. These requirements include maintaining financial records, documenting eligibility status, and maintaining records concerning other Federal requirements. Grant Changes (§ 579.506) Section 579.506 would provide that recipients of RHSP funds may not make any significant changes to the use of the funds without prior HUD approval, evidenced by a grant amendment signed by HUD and the recipient. Significant changes would include a shift in a single year of more than ten percent of the total amount awarded under the grant for one approved eligible activity to another activity. Approval of shifting funds between activities and changing subpopulations must be necessary to better serve eligible persons within the geographic area and ensure that the priorities established under the NOFA in which the grant was originally awarded continue to be met. In addition, to be approved, a change to the grant agreement must also be consistent with the recipient's HUD-approved consolidated plan or abbreviated consolidated plan. If an amendment would adversely impact the score the application received on any selection criterion used in the year in which the grant was awarded, HUD will disapprove the amendment. Any other changes to an approved grant must be fully documented in the recipient's or subrecipient's records. Enforcement (§ 579.508) Through § 579.50, HUD proposes to adopt enforcement procedures and an array of remedial actions and sanctions that draw from the requirements at 24 CFR 85.43 (Enforcement) and other HUD program regulations. HUD believes that these procedures afford recipients and subrecipients due process while also protecting against the misuse of Federal funds. Closeout (§ 579.510) Section 579.510 would provide that grants must be closed out at the end of their grant term. This regulatory section specifies the actions that must be taken after the closeout, including recipient submission of financial, final performance, or other reports required by HUD within 90 days of the end of the grant term. HUD will prepare a closeout agreement in consultation with the recipient that will govern the terms of the closeout. Any unused funds must be deobligated and returned to HUD. III. Findings and Certifications Regulatory Review—Executive Orders 12866 and 13563 Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Under Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and, therefore, subject to review by the OMB in accordance with the requirements of the order. This rule was determined to be a “significant regulatory action” as defined in section 3(f) of the Executive Order (although not an economically significant regulatory action, as provided under section 3(f)(1) of the Executive Order). As has been discussed in this preamble, this rule proposes to establish the regulations for the Rural Housing Stability Assistance program. These proposed regulations are intended to work towards the goal of eliminating homelessness in rural communities, by providing the requirements for the new Rural Housing Stability Assistance program, which focuses on improving homeless assistance and prevention in rural areas. The funds awarded under the program would go towards rehousing and improving the housing situations of individuals and families who are homeless or in the worst housing situations in the geographic area, stabilizing the housing of individuals and families who are at risk of becoming homeless, and improving the ability of the lowest-income residents of the community to afford stable housing. In addition to establishing the regulatory framework for the new Rural Housing Stability Assistance program, this rule also proposes to establish a definition for chronically homeless that includes a definition of homeless occasion that HUD believes better targets persons with the longest histories of homelessness and therefore the highest level of need. The definition of homeless occasion also allows for limited resources to be more effectively targeted, and considers stays in institutions of 90 days or less to be part of an episode of homelessness. The goal of ending chronic homelessness is not only a goal of HUD but of the Administration. On April 5, 2012, the U.S. Interagency Council on Homelessness met to review progress and challenges toward the goal of ending chronic homelessness. As reported at that meeting, based on HUD's 2011 Point-in-Time estimates for chronic homelessness, there has a been a 2.4 percent decline in the number of persons experiencing chronic homelessness. The USICH acknowledged that the accuracy of the count is limited by the difficulty of determining chronic homelessness. The USICH report, based on recent research on chronic homelessness in the city of Philadelphia, suggests that between 60 and 70 percent of all persons experiencing chronic homelessness meet the definition via episodes as opposed to being homeless continuously for one year or longer. 2 2 See http://www.usich.gov/population/chronic/in_focus/. Congress appropriated a total of $1,593,000,000 for the Continuum of Care and Rural Housing Stability Assistance programs. (See Consolidated and Further Continuing Appropriations Act, 2012, Public Law 112-55, approved November 18, 2011). As noted earlier, the overwhelming majority of such funding is allocated to the Continuum of Care program as it is an established program. The RHSP proposed regulations are based on and consistent with the regulations that are familiar to recipients that receive funding under other McKinney-Vento Act programs, thereby limiting burden associated with start-up administration of a new program. As provided under the “Reporting and Recordkeeping Burden” below, HUD has estimated the total annual hours for all grantees to comply with the reporting and recordkeeping requirements of the RHSP as 202,677 hours. HUD submits that the limited burden is due to the fact that HUD is providing RHSP requirements with which HUD's homeless assistance grantees are already familiar. The docket file is available for public inspection in the Regulations Division, Office of the General Counsel, Room 10276, 451 7th Street SW., Washington, DC 20410-0500. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the docket file by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the, Federal Relay Service at 800-877-8339 (this is a toll-free number). Environmental Impact A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is available for public inspection between the hours of 8 a.m. and 5 p.m., eastern time, weekdays in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the FONSI by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Relay Service at 800-877-8339 (this is a toll-free number). Unfunded Mandates Reform Act 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 on the private sector. This proposed rule does not impose a Federal mandate on any State, local, or tribal government, or on the private sector, within the meaning of UMRA. Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule solely addresses the allocation and use of grant funds under the new McKinney-Vento Act Rural Housing Stability Assistance program, as provided by the HEARTH Act amendments to the McKinney-Vento Act. The program is a voluntary grant program. The proposed regulations established by this rule track closely with the statutory requirements, which HUD has no discretion to alter, and, where HUD is provided discretion to establish requirements administratively, HUD has modeled the RHSP regulations on the regulations of the other HEARTH Act programs, to the extent consistent with the statutory requirements governing the Rural Housing Stability Assistance program. By modeling regulations on the regulations of the other HEARTH Act programs, HUD proposed to establish requirements, practices and procedures with which grantees are familiar, thereby minimizing time to become knowledgeable with the RHSP program. Additionally, as is the case with all the HEARTH Act programs, funding is provided under the RHSP for administrative costs, which minimizes impact for all grantees. Given the regulatory framework established for this program, based on statute and other HEARTH Act regulations, HUD has determined that this rule would not have a significant economic impact on a substantial number of small entities. Notwithstanding HUD's determination that this rule would not have a significant effect on a substantial number of small entities, HUD specifically invites comments regarding any less burdensome alternatives to this rule that will meet HUD's objectives as described in this preamble. Executive Order 13132, Federalism Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either (1) imposes substantial direct compliance costs on State and local governments and is not required by statute, or (2) preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This proposed rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments nor preempt State law within the meaning of the Executive Order. Paperwork Reduction Act The information collection requirements contained in this proposed rule have been submitted to the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In accordance with the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number. The burden of the information collections in this proposed rule is estimated as follows: Reporting and Recordkeeping Burden Information collection Number of respondents Response frequency (average) Total annual responses Burden hours per response Total annual hours § 579.102(a) Application process 230 1 230 75 17,250 § 579.104 Subsidy layering 230 1 230 1 230 § 579.106 Environmental review 135 1 135 2 270 § 579.208(b) New construction cost comparison 5 1 5 1.0 5 § 579.214 Signed leases/occupancy agreements 1,302 2 2,604 1.0 2,604 § 579.216(e) Calculating rental assistance amount 155 16 2,480 0.75 1,860 § 579.216(f) Calculating rent reasonableness 651 65 42,315 0.75 31,736 § 579.216(k) Signed leases 155 1 155 1.0 155 § 579.220 Income determination for rehabilitation and repairs of participant-owned housing 655 65 42,315 0.75 31,736 § 579.222 Supportive services needs assessment 6,927 1 6,927 1.5 10,390 § 579.228(c) and (d) Point-in-time and housing inventory count participation 230 1 230 50 11,500 § 579.304 Grant agreement preparation and execution 50 1 50 5.0 250 § 579.400(b) Establish written standards for amount and types of assistance 230 1 230 3.0 690 § 579.402 Documenting match 230 1 230 1.0 230 § 579.404(a) State and local requirements—housing codes 5 1 5 3.0 15 § 579.404(b) Property standards 1,302 2 2,604 1.0 2,604 § 579.406(b) Calculating occupancy charges 456 46 59,317 0.75 44,488 § 579.406(c) Calculating income 651 65 42,315 0.75 31,736 § 579.406(d) Calculating resident rent 155 16 2,480 0.75 1,860 § 579.418 Termination of assistance to participants 30 1 30 4.0 120 § 579.424(g)(3) Affirmatively marketing housing and supportive services 230 4 920 0.5 460 § 579.504(b) Documenting homelessness 309 1 309 0.25 77 § 579.504(c) Documenting at risk of homelessness 4,751 1 4,751 0.25 1,188 § 579.504(d) Documenting worst housing situation 1,866 1 1,866 0.25 467 § 579.504(f) Documenting imminent threat of harm 17 1 17 0.5 9 § 579.504(g) Documenting program participant records 6,927 6 41,562 0.25 10,391 § 579.504(k) Documenting faith-based activities 346 1 346 1.0 346 § 579.506 Grant changes 5 1 5 2.0 10 Total 202,677 Total Estimated Burden Hours In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments from members of the public and affected agencies concerning this collection of information to: (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated collection techniques or other forms of information technology, for example, permitting electronic submission of responses. Interested persons are invited to submit comments regarding the information collection requirements in this rule. Comments must refer to the proposed rule by name and docket number (FR-5573-P-01) and must be sent to: HUD Desk Officer, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Washington, DC 20503, Email: oira_submissions@omb.eop.gov , Fax: 202-395-6947 and Reports Liaison Officer, Office of the Assistant Secretary for Community Planning and Development, Department of Housing and Urban Development, 451 Seventh Street SW., Room 7233, Washington, DC 20410-7000. Interested persons may submit comments regarding the information collection requirements electronically through the Federal eRulemaking Portal at http://www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the http://www.regulations.gov Web site can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically. List of Subjects in 24 CFR Part 579 Grant programs—housing and community development, rural housing, Homeless, Reporting and recordkeeping requirements. Accordingly, for the reasons stated in the preamble, HUD proposes to add 24 CFR part 579 to read as follows: PART 579—RURAL HOUSING STABILITY ASSISTANCE PROGRAM Subpart A—General Sec. 579.1 Purpose and scope. 579.3 Definitions. Subpart B—Application 579.100 Eligible applicants. 579.102 Application process. 579.104 Subsidy layering. 579.106 Environmental review. Subpart C—Eligible Activities 579.200 Types and uses of assistance. 579.202 Rent, mortgage, and utility assistance. 579.204 Relocation assistance. 579.206 Short-term emergency lodging. 579.208 New construction. 579.210 Acquisition. 579.212 Rehabilitation. 579.214 Leasing. 579.216 Rental assistance. 579.218 Operating costs. 579.220 Rehabilitation and repairs of participant-owned housing. 579.222 Supportive services. 579.224 Use of Federal inventory property. 579.226 Capacity building. 579.228 Data collection costs. 579.230 Administrative costs. 579.232 Indirect costs. Subpart D—Grant Award Process 579.300 Selection process. 579.302 Selection priorities. 579.304 Grant award process. Subpart E—Program Requirements 579.400 Assessment of program participant eligibility and needs. 579.402 Match. 579.404 General operation. 579.406 Calculating occupancy charges and rent. 579.408 Limitation of stay in transitional housing. 579.410 Term of commitment; Repayment of grants; Prevention of undue benefits. 579.412 Displacement, relocation, and acquisition. 579.414 Timeliness standards. 579.416 Limitation on use of funds. 579.418 Termination of assistance to participants. 579.420 Conflicts of interest. 579.422 Program income. 579.424 Applicability of other Federal requirements. Subpart F—Grant Administration 579.500 Data collection requirements. 579.502 Technical assistance. 579.504 Recordkeeping requirements. 579.506 Grant changes. 579.508 Enforcement. 579.510 Closeout. Authority: 42 U.S.C. 3535(d) and 11408 et seq. Subpart A—General § 579.1 Purpose and scope. (a) In general. This part establishes the regulations that govern assistance provided under the Rural Housing Stability Assistance Program, authorized by subtitle G of title IV of the McKinney-Vento Homeless Assistance Act (the McKinney-Vento Act) (42 U.S.C. 11408). The Rural Housing Stability Assistance Program is designed to rehouse or improve the housing situations of individuals and families who are homeless or in the worst housing situations in the county receiving funds under this program, stabilize the housing of individuals and families who are at risk of homelessness, and improve the ability of the lowest-income residents of the county to afford stable housing. Funds awarded under this part are in lieu of funds awarded under the Continuum of Care program, for which the regulations are found in 24 CFR part 578. Recipients of funds under the Rural Housing Stability Assistance Program are not eligible to receive funding under the Continuum of Care program nor can funds from the two programs be combined in any other way. § 579.3 Definitions. Abbreviated Consolidated Plan means an assessment of housing and homeless needs, resources, and planned activities. An abbreviated plan must contain sufficient information about: (1) Needs; (2) Strategies to: (i) Provide safe and decent housing; and (ii) Assist homeless persons, persons at risk of homelessness, and persons living in the worst housing situations by increasing the affordable housing stock and the availability of permanent housing; (3) Resources that will be used to address identified needs; and (4) Planned activities to address the needs to cover the type and amount of assistance anticipated to be funded by HUD, in accordance with 24 CFR 91.235. At risk of homelessness means an individual or family defined as being at risk of homelessness in 24 CFR 576.2. Chronically homeless means: (1) An individual who: (i) Is homeless and lives in a place not meant for human habitation, a safe haven, or in an emergency shelter; and (ii) Has been homeless and living or residing in a place not meant for human habitation, a safe haven, or in an emergency shelter continuously for at least one year or on at least four separate occasions in the last 3 years, where the cumulative total of the four occasions is at least one year. Stays in institutions of 90 days or less will not constitute a break in homelessness, but rather such stays are included in the cumulative total; and (iii) Can be diagnosed with one or more of the following conditions: substance use disorder, serious mental illness, developmental disability (as defined in section 102 of the Developmental Disabilities Assistance Bill of Rights Act of 2000 (42 U.S.C. 15002)), post-traumatic stress disorder, cognitive impairments resulting from brain injury, or chronic physical illness or disability; (2) An individual who has been residing in an institutional care facility, including a jail, substance abuse or mental health treatment facility, hospital, or other similar facility, for fewer than 90 days and met all of the criteria in paragraph (1) of this definition, before entering that facility; or (3) A family with an adult head of household (or if there is no adult in the family, a minor head of household) who meets all of the criteria in paragraph (1) of this definition, including a family whose composition has fluctuated while the head of this definition, including a family whose composition has fluctuated while the head of household has been homeless. Consolidated plan means the HUD-approved plan developed in accordance with 24 CFR 91. Continuum of Care and Continuum mean the group organized to carry out the responsibilities set forth in HUD's Continuum of Care program regulations in 24 CFR part 578. These organizations can include nonprofit homeless providers, victim service providers, faith-based organizations, governments, businesses, advocates, public housing agencies, school districts, social service providers, mental health agencies, hospitals, universities, affordable housing developers, law enforcement, organizations that serve homeless and formerly homeless veterans and their families, and homeless and formerly homeless persons and families to the extent these groups are represented within the geographic area and are available to participate. County and county equivalent means organized local governments authorized in State constitutions and statutes and established to provide general government; including those governments designated as boroughs in Alaska, as parishes in Louisiana, and as counties in other States. Emergency shelter is defined in 24 CFR part 576. Fair Market Rent (FMR) means the fair market rents determined by HUD and published in the Federal Register annually by HUD in accordance with HUD's FMR regulations in 24 CFR part 888. Homeless, homeless individual, and homeless person are defined in 24 CFR 576.2. Homeless Management Information System (HMIS) means the information system designated by a Continuum of Care to comply with HUD's data collection, management, and reporting standards and used to collect client-level data and data on the provision of housing and services to program participants. Permanent housing means community-based housing without a designated length of stay, and includes permanent supportive housing and permanent housing without supportive services. To be permanent housing, the program participant must be the tenant on a lease for a term of at least one year that is renewable and is terminable only for cause. Point-in-time count means the count of sheltered and unsheltered homeless persons carried out on one night in the last 10 calendar days of January or at such other time as required by HUD, in accordance with 24 CFR 578.7. Preliminary Pro Rata Need Amount means the dollar expression of the relative need assigned to metropolitan cities, urban counties, and all other counties determined by HUD in accordance with the calculation of preliminary pro rata need amount in HUD's Continuum of Care regulations in 24 CFR 578.17. Private nonprofit organization means a private nonprofit organization which is a secular or religious organization described in section 501(c) of the Internal Revenue Code (IRC) of 1986 (26 U.S.C. 501(c)), that is exempt from taxation under subtitle A of the IRC, has an accounting system and a voluntary board, and practices nondiscrimination in the provision of assistance. A private nonprofit organization does not include a governmental organization, such as a public housing agency or housing finance agency. Program means the Rural Housing Stability Assistance Program established under this part. Program participant means individuals and families who are assisted with Rural Housing Stability Assistance Program funds. Recipient means an applicant that signs a grant agreement with HUD to use Rural Housing Stability Assistance Program funds. Rural area and rural community mean any county that: (1) Has no part of it wi [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2013-06521. Public record. Not legal advice.