Federally Assisted Low Income Housing Drug Elimination Program; Proposed Rule DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

SUMMARY: This proposed rule would implement the Assisted Housing Drug

Elimination Program, as authorized by section 581 of the National

Affordable Housing Act (NAHA) (approved November 28, 1990, Pub. L. 101-

625) and section 161 of the Housing and Community Development Act of

1992 (HCDA 1992) (Pub. L. 102-550, approved October 28, 1992). The

program authorizes HUD to make grants to owners of federally assisted

low income housing for use in eliminating drug-related crime and/or the

problems associated with it.

DATES: Comments due date: October 11, 1994.

ADDRESSES: Interested persons are invited to submit comments regarding

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

Counsel, Room 10276, Department of Housing and Urban Development, 451

Seventh Street, S.W., Washington, D.C. 20410. Communications should

refer to the above docket number and title. A copy of each

communication submitted will be available for public inspection and

copying between 7:30 a.m. and 5:30 p.m. weekdays at the above address.

Comments received by facsimile machine (FAX) will not be accepted.

FOR FURTHER INFORMATION CONTACT: Lessley Wiles, Office of Multifamily

Housing Management, Operations Division, (202) 708-0216 (voice) or

(202) 708-3938 (TDD for speech or hearing-impaired). (These are not

toll free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act Statement

The information collection requirements contained in this rule have

been approved by the Office of Management and Budget, under section

3504(h) of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520),

and assigned OMB control number 2502-0476.

I. Background

The Public Housing Drug Elimination Program was first authorized by

Chapter 2, Subtitle C, Title V of the Anti-Drug Abuse Act of 1988 (42

U.S.C. 11901-11908). Implementing regulations for this program were

issued by HUD and codified at 24 CFR 961. Applicants eligible to

receive grants under this program were public housing agencies (PHAs),

including Indian housing authorities (IHAs).

Section 581 of the National Affordable Housing Act (NAHA) (approved

November 28, 1990, Pub. L. 101-625) amended the Drug Elimination

Program in a number of ways, including the addition of authorization to

make grants to private, for-profit and nonprofit owners of federally

assisted low-income housing for use in eliminating drug-related crime.

The statutory program requirements for the Public and Indian Housing

Drug Elimination Program and the Assisted Housing Drug Elimination

Program are identical, although the Department is permitted to

establish other criteria, in addition to those applicable to public and

Indian housing, for the evaluation of funding applications submitted by

owners of federally assisted low-income housing. The statute provides

that such additional criteria shall be designed only to reflect--(1)

relevant differences between the financial resources and other

characteristics of public housing authorities and owners of federally

assisted low-income housing, or (2) relevant differences between the

problem of drug-related crime in public housing and the problem of

drug-related crime in federally assisted low-income housing. Comments

are specifically invited on what additional criteria consistent with

the guidance, cited above, provided by the statute would be appropriate

for selecting grant recipients.

This rule would implement the Assisted Housing Drug Elimination

Program. It follows the statute and the rule for the Public and Indian

Housing Drug Elimination Program very closely. The main difference from

the Public and Indian Housing Drug Elimination Program is in the level

of detail provided in the rule. To permit the Department to be more

responsive in the targeting of resources under this program, which have

generally been made available at a much lower level than for public and

Indian housing, this rule would provide for more flexibility in Notices

of Funding Availability (NOFAs) concerning the scope of submission

requirements and eligible activities for any particular funding round.

II. Other Matters

Environmental Impact

A Finding of No Significant Impact with respect to the environment

has been made in accordance with the Department's 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). The Finding of No Significant

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

p.m. weekdays at the Office of the Rules Docket Clerk, Room 10276,

Department of Housing and Urban Development, 451 Seventh Street, S.W.,

Washington, DC 20410.

Regulatory Flexibility Act

The Secretary, in accordance with the Regulatory Flexibility Act

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

approving it certifies that this rule does not have a significant

economic impact on a substantial number of small entities. The rule

would provide grants to eliminate drug-related crime in federally

assisted low-income housing. Although small entities in the form of

owners of federally assisted low-income housing could participate in

the program, the rule is not intended to and would not have a

significant economic impact on them.

Family

The General Counsel, as the Designated Official for Executive Order

12606, the Family, has determined that the provisions of this rule have

the potential for a positive, although indirect, impact on family

formation, maintenance and general well-being within the meaning of the

Order. The proposed rule would implement a program that would encourage

owners of federally assisted low-income housing to develop a plan for

addressing the problem of drug-related crime, and to make available

grants to carry out this plan. As such, the program is intended to

improve the quality of life of federally assisted low-income housing

residents, including families, by reducing the incidence of drug-

related crime.

Federalism

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

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

contained in this rule will not have substantial direct effects on

States or their political subdivisions, or the relationship between the

Federal government and the States, or on the distribution of power and

responsibilities among the various levels of government and, therefore,

the provisions of this rule do not have ``federalism implications''

within the meaning of the Order. The rule implements a program that

encourages owners of federally assisted low-income housing to develop a

plan for addressing the problem of drug-related crime, and makes

available grants to help them carry out their plans. As such, the

program would help combat serious drug-related crime problems in their

housing. In addition, further review under the Order is unnecessary,

since the rule generally tracks the statute and involves little

implementing discretion.

This proposed rule was listed as Item No. 1562 in the Department's

Semiannual Agenda of Regulations published on April 25, 1994 (59 FR

20424, 20442) under Executive Order 12866 and the Regulatory

Flexibility Act.

The Assisted Housing Drug Elimination Program is listed in the

Catalog of Federal Domestic Assistance as number 14-854.

List of Subjects in 24 CFR Part 261

Drug abuse, Drug traffic control, Grant programs--housing and

community development, Grant programs--low and moderate income housing,

Reporting and recordkeeping requirements.

For the reasons set out in the preamble, title 24, chapter II, of

the Code of Federal Regulations is amended by adding part 261,

consisting of Sec. Sec. 261.1 through 261.29, to read as follows:

PART 261--ASSISTED HOUSING DRUG ELIMINATION PROGRAM

Subpart A--General

Sec.

261.1 Purpose and scope.

261.5 Definitions.

Subpart B--Use of Grant Funds

261.10 Applicants and activities.

Subpart C--Application and Selection

261.15 Application selection and requirements.

261.18 Resident comments on grant application.

Subpart D--Grant Administration

261.26 Grant administration.

261.28 Grantee reports.

261.29 Other Federal requirements.

Authority: 42 U.S.C. 3535(d) and 11901 et seq.

Subpart A--General

Sec. 261.1 Purpose and scope.

The purposes of the Assisted Housing Drug Elimination Program are

to:

(a) Eliminate drug-related crime and the problems associated with

it in and around the premises of federally assisted, low-income

housing;

(b) Encourage owners of federally assisted, low-income housing to

develop a plan that includes initiatives that can be sustained over a

period of several years for addressing drug-related crime and/or the

problems associated with it in and around the premises of assisted

housing proposed for funding under this part; and

(c) Make available federal grants to help owners of federally

assisted, low-income housing carry out their plans.

Sec. 961.5 Definitions.

Act means The United States Housing Act of 1937 (42 U.S.C. 1437 et

seq.)

Chief executive officer of a State or a unit of general local

government means the elected official, or the legally designated

official, who has the primary responsibility for the conduct of that

entity's governmental affairs. Examples of the ``chief executive

officer'' of a unit of general local government are: the elected mayor

of a municipality; the elected county executive of a county; the

chairperson of a county commission or board in a county that has no

elected county executive; or the official designated pursuant to law by

the governing body of the unit of general local government. The chief

executive officer of an Indian tribe is the tribal governing official.

Controlled substance means a drug or other substance or immediate

precursor included in schedule I, II, III, IV, or V of section 102 of

the Controlled Substances Act (21 U.S.C. 802). The term does not

include distilled spirits, wine, malt beverages or tobacco as those

terms are defined in Subtitle E of the Internal Revenue Code of 1954.

Drug intervention means a process to identify assisted housing

resident drug users and assist them in modifying their behavior and/or

refer them to drug treatment to eliminate drug abuse.

Drug prevention means a process to provide goods and services

designed to alter factors, including activities, environmental

influences, risks and expectations, that lead to drug abuse.

Drug-related crime means the illegal manufacture, sale,

distribution, use, or possession with intent to manufacture, sell,

distribute, or use, a controlled substance.

Drug treatment means a program for the residents of an applicant's

development that strives to end drug abuse and to eliminate its

negative effects through rehabilitation and relapse prevention.

Federally assisted, low-income housing (includes the term

``assisted housing'' as used in this rule) means housing assisted

under:

(1) Section 221(d)(3), section 221(d)(4) or 236 of the National

Housing Act (12 U.S.C. 1701 et seq.). (Note: However, section 221(d)(4)

and section 221(d)(3) market rate projects without project-based

assistance contracts are not considered federally assisted low-income

housing. Therefore, section 221(d)(4) and section 221(d)(3) market rate

projects with tenant-based assistance contracts are not considered

federally assisted low-income housing and are not eligible for

funding.);

(2) Section 101 of the Housing and Urban Development Act of 1965

(12 U.S.C. 1701s); or

(3) Section 8 of the United States Housing Act of 1937 (42 U.S.C.

1437f note) (not including tenant-based assistance).

Governmental jurisdiction means the unit of general local

government, State, or area of operation of an Indian tribe in which the

housing development administered by the applicant is located.

HUD or Department means the United States Department of Housing and

Urban Development.

In and around means within, or adjacent to, the physical boundaries

of a housing development.

Local law enforcement agency means a police department, sheriff's

office, or other entity of the governmental jurisdiction that has law

enforcement responsibilities for the community at large, including the

housing developments owned by the applicant.

Problems associated with drug-related crime means the negative

physical, social, educational and economic impact of drug-related crime

on assisted housing residents, and the deterioration of the assisted

housing environment because of drug-related crime.

Resident Organization (RO) means an incorporated or unincorporated

nonprofit organization or association that meets each of the following

requirements:

(1) It must be representative of the residents it purports to

represent;

(2) It may represent residents in more than one housing

development, but it must fairly represent residents from each

development that it represents;

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

specific officers on a regular basis (but at least once every three

years);

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

voting membership of the board must consist of residents of the

development or developments that the resident organization represents.

Single State Agency means an agency responsible for licensing and

monitoring State or tribal drug abuse programs.

State means any of the several States of the United States, the

District of Columbia, the Commonwealth of Puerto Rico, any territory or

possession of the United States, or any agency or instrumentality of a

State exclusive of local governments. The term does not include any

public or Indian housing agency under the United States Housing Act of

1937 (42 U.S.C. 1437 et seq.)

Unit of general local government means any city, county, town,

municipality, township, parish, village, local public authority or

other general purpose political subdivision of a State.

Subpart B--Use of Grant Funds

Sec. 261.10 Applicants and activities.

Applicants and activities eligible for funding under the Assisted

Housing Drug Elimination Program are listed in this section. The

applicants and activities eligible under any particular funding round

may be limited in a Notice of Funding Availability (NOFA) published in

the Federal Register. Additional details concerning eligible and

ineligible applicants and activities will also be published in the

NOFAs for this program.

(a) Eligible applicants. The applicant must be the owner of a

federally assisted low-income housing project under: (1) Section

221(d)(3), section 221(d)(4) or 236 of the National Housing Act (12

U.S.C. 1701 et seq.). (Note: However, section 221(d)(4) and section

221(d)(3) market rate projects without project-based assistance

contracts are not considered federally assisted low-income housing.

Therefore, section 221(d)(4) and section 221(d)(3) market rate projects

with tenant-based assistance contracts are not considered federally

assisted low-income housing and are not eligible for funding.);

(2) Section 101 of the Housing and Urban Development Act of 1965

(12 U.S.C. 1701s); or

(3) Section 8 of the United States Housing Act of 1937 (42 U.S.C.

1437f note) (not including tenant-based assistance).

(b) Eligible activities. An application for funding under this

program may be for one or more of the following eligible activities, as

further specified in program NOFAs:

(1) Employment of security personnel.

(2) Reimbursement of local law enforcement agencies for additional

security and protective services.

(3) Physical improvements to enhance security.

(4) Employment of one or more individuals:

(i) To investigate drug-related crime, and the problems associated

with it, on or about the real property comprising any federally

assisted, low-income housing project; and

(ii) To provide evidence relating to such crime in any

administrative or judicial proceeding.

(5) The provision of training, communications equipment, and other

related equipment for use by voluntary tenant patrols acting in

cooperation with local law enforcement officials.

(6) Drug-abuse prevention, intervention and treatment programs to

reduce the use of drugs.

(7) Continuation of current program activities. Current or previous

Assisted Housing Drug Elimination Program grant recipients may apply,

on the same basis as other applicants, for grants to continue their

grant activities or implement other program activities. The Department

will evaluate an applicant's performance under any previous Drug

Elimination Program grants within the past five years. Subject to

evaluation and review are the applicant's financial and program

performance; reporting and special condition compliance; accomplishment

of stated goals and objectives under the previous grant; and program

adjustments made in response to previous ineffective performance. If

the evaluation discloses a pattern under past grants of ineffective

performances with no corrective measures attempted, it will result in a

deduction of points from the current application. Since this is a

competitive program, HUD does not guarantee continued funding of any

previously funded Drug Elimination Program Grant.

Subpart C--Application and Selection

Sec. 261.15 Application selection and requirements.

(a) Selection criteria. HUD will review each application that it

determines meets the requirements of this part and assign points in

accordance with the selection criteria. The number of points that an

application receives will depend on the extent to which the application

is responsive to the information requested in Notices of Funding

Availability (NOFAs) published for this program. Each application

submitted for a grant under this part will be evaluated on the basis of

the following selection criteria:

(1) First criterion: the extent of the drug-related crime problem

in the applicant's development or developments proposed for assistance.

(2) Second criterion: the quality of the plan to address the crime

problem in the developments proposed for assistance, including the

extent to which the plan includes initiatives that can be sustained

over a period of several years.

(3) Third criterion: the capability of the applicant to carry out

the plan.

(4) Fourth criterion: the extent to which tenants, the local

government and the local community support and participate in the

design and implementation of the activities proposed to be funded under

the application.

(b) Plan requirement. Each application must include a plan for

addressing the problem of drug-related crime and/or the problems

associated with drug-related crime on the premises of the housing for

which the application is being submitted. For applications that cover

more than one housing development, the plan does not have to address

each development separately if the same activities will apply to each

development. Only where program activities will differ from one

development to another must the plan address each development

separately.

(c) Notice of Funding Availability. HUD will publish Notices of

Funding Availability (NOFAs) in the Federal Register, as appropriate,

to inform the public of the availability of grant amounts under this

part. NOFAs will provide specific guidance with respect to the grant

process, including the deadlines for the submission of grant

applications; the limits (if any) on maximum grant amounts; the

eligible applicants and activities; the information that must be

submitted to permit HUD to score each of the selection criteria; the

maximum number of points to be awarded for each selection criterion;

the contents of the plan for addressing the problem of drug-related

crime that must be included with the application; the listing of any

certifications and assurances that must be submitted with the

application; and the process for ranking and selecting applicants.

NOFAs will also include any additional information, factors, and

requirements that the Department has determined to be necessary and

appropriate to provide for the implementation and administration of the

program under this part.

(Approved by the Office of Management and Budget under control number

2502-0476).

(d) Environmental review. Grants under this part are categorically

excluded from review under the National Environmental Policy Act of

1969 (NEPA) (42 U.S.C. 4321), in accordance with 24 CFR 50.20(p).

However, prior to an award of grant funds under this part, HUD will

perform an environmental review to the extent required by HUD's

environmental regulations at 24 CFR part 50, including the applicable

related authorities at 24 CFR 50.4.

Sec. 261.18 Resident comments on grant application.

The applicant must provide the residents of developments proposed

for funding under this part, as well as any resident organizations that

represent those residents, with a reasonable opportunity to comment on

its application for funding under this program. The applicant must give

these comments careful consideration in developing its plan and

application as well as in the implementation of funded programs. Copies

of all written comments submitted must be maintained by the grantee for

three years.

Subpart D--Grant Administration

Sec. 261.26 Grant administration.

(a) General. Each grantee is responsible for ensuring that grant

funds are administered in accordance with the requirements of this

part, any Notice of Funding Availability (NOFA) issued for this

program, 24 CFR part 85, applicable laws and regulations, applicable

OMB circulars, HUD fiscal and audit controls, grant agreements, grant

special conditions, the grantee's approved budget (SF-424A), budget

narrative, plan, and activity timetable.

(b) Grant term extensions. (1) Grant term. Terms of the grant

agreement may not exceed 12 months, unless an extension is approved by

the local HUD Office. The maximum extension allowable for any grant is

6 months. Any funds not expended at the end of the grant term shall be

remitted to HUD.

(2) Extension. Grantees may be granted an extension of the grant

term in response to a written request for an extension stating the need

for the extension and indicating the additional time required.

(3) Receipt. The request must be received by the local HUD Office

before the termination of the grant, and requires approval by the local

HUD Office with jurisdiction over the grantee.

(4) Term. The maximum extension allowable for any program period is

6 months. Requests for retroactive extension of program periods will

not be considered. Only one extension will be permitted. Extensions

will only be considered if the extension criteria of paragraph (5) of

this section are met by the grantee at the time the request for the

extension of the deadline is submitted for approval.

(5) Extension criteria. The following criteria must be met by the

grantee when submitting a request to extend the expenditure deadline

for a program or set of programs.

(i) Financial status reports. There must be on file with the local

HUD Office current and acceptable Financial Status Reports, SF-269As.

(ii) Grant agreement special conditions. All grant agreement

special conditions must be satisfied except those conditions that must

be fulfilled in the remaining period of the grant. This also includes

the performance and resolution of audit findings in a timely manner.

(iii) Justification. A narrative justification must be submitted

with the program extension request. Complete details must be provided,

including the circumstances which require the proposed extension, and

explanation of the impact of denying the request.

(6) HUD action. The local HUD Office will take action on an

extension request within 15 working days after receipt of the request.

(c) Duplication of funds. To prevent duplicate funding of any

activity, the grantee must establish controls to assure that an

activity or program that is funded by other HUD programs, or programs

of other Federal agencies, shall not also be funded by the Drug

Elimination Program. The grantee must establish an auditable system to

provide adequate accountability for funds that it has been awarded. The

grantee is responsible for ensuring that there is no duplication of

funds.

(d) Insurance. Each grantee is required to obtain adequate

insurance coverage to protect itself against any potential liability

arising out of the eligible activities under this part. In particular,

applicants are required to assess their potential liability arising out

of the employment or contracting of security personnel, law enforcement

personnel, investigators, and drug treatment providers, and the

establishment of voluntary tenant patrols; to evaluate the

qualifications and training of the individuals or firms undertaking

these functions; and to consider any limitations on liability under

State or local law. Grantees are required to obtain liability insurance

to protect the members of the voluntary tenant patrol against potential

liability as a result of the patrol's activities under

Sec. 261.10(b)(5). Voluntary tenant patrol liability insurance costs

are eligible program expenses. Subgrantees are required to obtain their

own liability insurance.

(e) Failure to implement program. If the grant plan, approved

budget and timetable, as described in the approved application, are not

operational within 60 days of the grant agreement date, the grantee

must report by letter to the local HUD Office the steps being taken to

initiate the plan and timetable, the reason for the delay, and the

expected starting date. Any timetable revisions which resulted from the

delay must be included. The local HUD Office will determine if the

delay is acceptable, approve/disapprove the revised plan and timetable,

and take any additional appropriate action.

(f) Sanctions. (1) HUD may impose sanctions if the grantee:

(i) Is not complying with the requirements of 24 CFR part 261 or of

other applicable Federal law;

(ii) Fails to make satisfactory progress toward its drug

elimination goals, as specified in its plan and as reflected in its

performance and financial status reports under Sec. 261.28;

(iii) Does not establish procedures that will minimize the time

elapsing between drawdowns and disbursements;

(iv) Does not adhere to grant agreement requirements or special

conditions;

(v) Proposes substantial plan changes to the extent that, if

originally submitted, would have resulted in the application not being

selected for funding;

(vi) Engages in the improper award or administration of grant

subcontracts;

(vii) Does not submit reports; or

(viii) Files a false certification.

(2) HUD may impose the following sanctions:

(i) Temporarily withhold cash payments pending correction of the

deficiency by the grantee or subgrantee;

(ii) Disallow all or part of the cost of the activity or action not

in compliance;

(iii) Wholly or partly suspend or terminate the current award for

the grantee's or subgrantee's program;

(iv) Require that some or all of the grant amounts be remitted to

HUD;

(v) Condition a future grant and elect not to provide future grant

funds to the grantee until appropriate actions are taken to ensure

compliance;

(vi) Withhold further awards for the program or

(vii) Take other remedies that may be legally available.

Sec. 261.28 Grantee reports.

Grantees are responsible for managing the day-to-day operations of

grant and subgrant supported activities. Grantees must monitor grant

and subgrant supported activities to assure compliance with applicable

Federal requirements and that performance goals are being achieved.

Grantee monitoring must cover each program, function or activity of the

grant.

(a) Final performance report. (1) Evaluation. Grantees are required

to provide the local HUD Office with a final cumulative performance

report that evaluates the grantee's overall performance against its

plan. This report shall include in summary form (but is not limited to)

the following: any change or lack of change in crime statistics or

other indicators drawn from the applicant's plan assessment (such as

vandalism, etc.) and an explanation of any difference; successful

completion of any of the strategy components identified in the

applicant's plan; a discussion of any problems encountered in

implementing the plan and how they were addressed; an evaluation of

whether the rate of progress meets expectations; a discussion of the

grantee's efforts in encouraging resident participation; a description

of any other programs that may have been initiated, expanded or deleted

as a result of the plan, with an identification of the resources and

the number of people involved in the programs and their relation to the

plan.

(2) Reporting period. The final performance report shall cover the

period from the date of the grant agreement to the termination date of

the grant agreement. The report is due to the local HUD Office within

90 days after termination of the grant agreement.

(b) Semi-annual financial status reporting requirements.

(1) Form. The grantee shall provide a semi-annual financial status

report. The grantee shall use the SF-269A, Financial Status Report-Long

Form, to report the status of funds for non-construction programs. The

grantee shall use SF-269A, Block 12, ``Remarks,'' to report on the

status of programs, functions or activities within the program.

(2) Reporting period. Semi-annual financial status reports (SF-

269A) covering the first 180 days of funded activities must be

submitted to the local HUD Office between 190 and 210 days after the

date of the grant agreement. If the SF-269A is not received on or

before the due date (210 days after the date of the grant agreement) by

the local HUD Office, grant funds will not be advanced until the

reports are received.

(c) Final financial status report (SF-269A).

(1) Cumulative summary. The final report will be a cumulative

summary of expenditures to date and must indicate the exact balance of

unexpended funds. The grantee must remit all Drug Elimination Program

funds (including any unexpended funds) owed to HUD within 90 days after

the termination of the grant agreement.

(2) Reporting period. The final financial status report shall cover

the period from the date of the grant agreement to the termination date

of the grant agreement. The report is due to the local HUD Office

within 90 days after the termination of the grant agreement.

(d) Report submission. The grantee shall submit all required

reports to the local HUD Office.

Sec. 261.29 Other Federal requirements.

Use of grant funds requires compliance with the following

additional Federal requirements:

(a) Nondiscrimination and equal opportunity. The following

nondiscrimination and equal opportunity requirements apply to this

program:

(1) The requirements of The Fair Housing Act (42 U.S.C. 3601-19)

and implementing regulations issued at 24 CFR part 100; Executive Order

11063 (Equal Opportunity in Housing) and implementing regulations at 24

CFR Part 107; and Title VI of the Civil Rights Act of 1964 (42 U.S.C.

2000d-2000d-4) (Nondiscrimination in Federally Assisted Programs) and

implementing regulations issued at 24 CFR part 1;

(2) The prohibitions against discrimination on the basis of age

under the Age Discrimination Act of 1975 (42 U.S.C. 6101-07) and

implementing regulations at 24 CFR part 146, and the prohibitions

against discrimination against handicapped individuals under section

504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing

regulations at 24 CFR part 8;

(3) The requirements of Executive Order 11246 (Equal Employment

Opportunity) and the regulations issued under the Order at 41 CFR

chapter 60;

(4) The requirements of section 3 of the Housing and Urban

Development Act of 1968 (12 U.S.C. 1701u), (Employment Opportunities

for Lower Income Persons in Connection with Assisted Projects); and

(5) The requirements of Executive Orders 11625, 12432, and 12138.

Consistent with HUD's responsibilities under these Orders, recipients

must make efforts to encourage the use of minority and women's business

enterprises in connection with funded activities.

(b) Use of debarred, suspended or ineligible contractors. Use of

grant funds under this program requires compliance with the provisions

of 24 CFR part 24 relating to the employment, engagement of services,

awarding of contracts, or funding of any contractors or subcontractors

during any period of debarment, suspension, or placement in

ineligibility status.

(c) Flood insurance. Grants will not be awarded for proposed

activities that involve acquisition, construction, reconstruction,

repair or improvement of a building or mobile home located in an area

that has been identified by the Federal Emergency Management Agency

(FEMA) as having special flood hazards unless:

(1) The community in which the area is situated is participating in

the National Flood Insurance Program in accordance with 44 CFR parts

59-79; or

(2) Less than a year has passed since FEMA notification to the

community regarding such hazards; and

(3) Flood insurance on the structure is obtained in accordance with

section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C.

4001).

(d) Lead-based paint. (1) Scope. The provisions of section 302 of

the Lead-Based Paint Poisoning Prevention Act, 42 U.S.C. 4821-4846, and

implementing regulations apply to all housing constructed or

substantially rehabilitated before January 1, 1978, and for which

assistance under this part is being used for physical improvements to

enhance security under Sec. 261.10(b)(3).

(2) Exceptions. The following activities are not covered by this

section:

(i) Installation of security devices;

(ii) Other similar types of single-purpose programs that do not

involve physical repairs or remodeling of applicable surfaces of

residential structures; or

(iii) Any non-single purpose rehabilitation that does not involve

applicable surfaces and that does not exceed $3,000 per unit.

(e) Conflicts of interest. No person, as described in paragraphs

(1) and (2) of this section, may obtain a personal or financial

interest or benefit from an activity funded under this program, or have

an interest in any contract, subcontract, or agreement with respect

thereto, or the proceeds thereunder, either for him or herself or for

those with whom he or she has family or business ties, during his or

her tenure, or for one year thereafter:

(1) Who is an employee, agent, consultant, officer, or elected or

appointed official of the grantee that receives assistance under the

program and who exercises or has exercised any functions or

responsibilities with respect to assisted activities; or

(2) Who is in a position to participate in a decision making

process or gain inside information with regard to such activities.

(f) Drug Free Workplace Act of 1988. The requirements of the Drug-

Free Workplace Act of 1988 at 24 CFR part 24, subpart F apply to this

program.

(g) Anti-lobbying provisions under section 319. The use of funds

under this part is subject to the disclosure requirements and

prohibitions of section 319 of the Department of the Interior and

Related Agencies Appropriations Act for Fiscal Year 1990 (31 U.S.C.

1352), and implementing regulations at 24 CFR part 87. These

authorities prohibit recipients and subrecipients of Federal contracts,

grants, cooperative agreements and loans from using appropriated funds

for lobbying the Executive or Legislative Branches of the Federal

Government in connection with a specific, contract, grant, or loan. The

prohibition also covers the awarding of contracts, grants, cooperative

agreements, or loans unless the recipient has made an acceptable

certification regarding lobbying. Under 24 CFR part 87, applicants,

recipients, and subrecipients of assistance exceeding $100,000 must

certify that no Federal funds have been or will be spent on lobbying

activities in connection with the assistance. However, since grantees

sometimes may expect to receive additional grant funds through

reallocations, all potential grantees are required to submit the

certification, and to make the required disclosure if the grant amount

exceeds $100,000. The law provides substantial monetary penalties for

failure to file the required certification or disclosure.

(h) Intergovernmental review. The requirements of Executive Order

12372 and the regulations issued under the order at 24 CFR part 52, to

the extent provided by Federal Register notice in accordance with 24

CFR 52.3 apply to this program.

Dated: June 30, 1994.

Nicolas P. Retsinas,

Assistant Secretary for Housing--Federal Housing Commissioner.

[FR Doc. 94-19229 Filed 8-8-94; 8:45 am]

BILLING CODE 4210-27-P