Opportunities for Youth: Youthbuild Program

Federal RegisterFeb 21, 1995

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SUMMARY: This is the final rule for the Youthbuild Program. The

Youthbuild Program provides funding assistance for a wide range of

multi-disciplinary activities and services to assist economically

disadvantaged young adults. The opportunities are designed to help

disadvantaged young adults who have dropped out of high school to

obtain the education and employment skills necessary to achieve

economic self-sufficiency and develop leadership skills and a

commitment to community development in low-income communities.

Implementation grant funds can be used to fund eligible educational and

supportive services and activities composed of basic skills instruction

and remedial education, employment skills and leadership development,

and counseling, referral and support services. Planning grant funds can

be used to develop a Youthbuild program that includes the activities of

an implementation grant.

Another important objective of the Youthbuild program is to expand

the supply of permanent affordable housing for homeless persons and

members of low- and very low-income families. By giving disadvantaged

young adults participating in the program meaningful on-site training

experiences constructing or rehabilitating housing as a community

service, they are helping to meet the housing needs of homeless and

low-income families in their community.

EFFECTIVE DATE: March 23, 1995.

FOR FURTHER INFORMATION CONTACT: The Office of Economic Development,

Department of Housing and Urban Development, Room 7136, 451 Seventh

Street, SW, Washington, DC 20410. Telephone (202) 708-2035; TDD (202)

708-1455. (These telephone numbers are not toll-free.)

SUPPLEMENTARY INFORMATION:

I. Information Collection Requirements

The information collection requirements contained in this rule have

been approved under the Paperwork Reduction Act of 1980 (44 U.S.C.

3501-3520) by the Office of Management and Budget (OMB) and have been

assigned OMB control number 2506-0142; expiration date August 31, 1996.

II. Background

Section 164 of the Housing and Community Development Act of 1992

(Pub.L. 102-550) authorized the Youthbuild program under subtitle D of

title IV of the National Affordable Housing Act (42 U.S.C. 8011). On

September 23, 1993, the Department published a proposed rule (58 FR

49830) and a Notice of Funds Availability (NOFA) (58 FR 49849) for this

program.

The Department is now publishing the final rule to be effective 30

days from the date of publication. This final rule does not contain the

detailed selection criteria and application processing steps contained

in the NOFA for Fiscal Year 1993. Information appropriate for a

specific funding competition will now be contained in the NOFA

published for the current competition and will not be part of the final

rule. The final rule published here is presented in its entirety to

reflect the addition of section numbers and all modifications made as a

result of public comments and as a result of the Department's

experience in running the first competition for Youthbuild grant fund.

III. Discussion of Public Comments on Proposed Rule

The Department received public comments from seven organizations

(one state agency, one local government agency, two housing authorities

and three nonprofit organizations) in response to the proposed rule

published on September 23, 1993, at 58 FR 49830. The following

discussion summarizes the comments and provides HUD's responses to

those comments.

Comment: Participant eligibility should be extended to include

juvenile offenders held in custody at state-operated training

facilities. These juveniles meet the qualifications of economically

disadvantaged young adults who have dropped out of high school and are

in need of assistance to obtain education and employment skills. [one

state agency]

Response: Such juvenile offenders would be eligible for a

Youthbuild program without any changes to the regulations.

Comment: The paragraph entitled ``Lease'' included in the

provisions on tenant protections under ``Project-related restrictions

applicable to Youthbuild residential rental housing'' [Sec. 585.309

(b)(1)] calls for a model lease to become an addendum to the grant

agreement, remaining in force for ten years. Housing authorities and

other owners may have to make changes in lease provisions as required

by HUD and state statutes. Provisions must be made to amend leases.

[one housing authority]

Response: For grants covered by the requirements of section

585.309(b)(1), if the provisions of the model lease change, such

changes will require approval by HUD. No change to the regulations is

needed.

Comment: There is a conflict between Sec. 585.309(b)(2) and 24 CFR

966.4(a)(1) and (3) relating to the rules to be followed by a Public

Housing Authority for termination of tenancy. [one housing authority]

Response: The provisions of 24 CFR part 966 take precedence for

public housing authorities.

Comment: Does the Youthbuild program require a justification of new

construction through market and/or feasibility studies? [one nonprofit

organization]

Response: No.

Comment: Is a mixed use project an eligible Youthbuild activity

and, and if so, are there specific criteria involved? [one nonprofit

organization]

Response: Mixed-use projects are eligible as long as the Youthbuild

dollars are only used in conjunction with the housing and housing

related facilities. See definition of ``related facilities'' in

Sec. 585.4.

Comment: Does the Youthbuild program require that one-third of the

housing units assisted be accessible to handicapped people? [one

nonprofit organization]

Response: Youthbuild applicants are required to certify that they

will comply with the requirements of Section 504 of the Rehabilitation

Act of 1973, which specifies the handicapped accessibility standards

for housing created with Federal funds.

Comment: Several sources questioned HUD's use of 10 years to define

``the remaining useful life'' of a Youthbuild assisted property. One

commenter thought that 10 years was too long and two thought it was too

short. [one housing authority and two nonprofit organizations.]

Response: HUD considered a longer period, but found that a 10-year

period [[Page 9735]] was consistent with similar HUD programs. Any

Youthbuild recipient organization that wishes to impose longer

restrictions on the use of a property could do so on its own.

Comment: HUD should not limit tenants with incomes between 60 and

80 percent of the area median income to only one year. This restriction

should be removed. [two public housing authorities]

Response: HUD agrees that the one year limit may be too restrictive

and has raised it to two years in Sec. 585.309(a).

Comment: When project-related restrictions apply to Youthbuild

residential rental housing, the requirement that units be advertised

for low-income people should be reduced from 90-day periods to 60-day

periods. [one housing authority]

Response: Because the maximum length of time that a tenant with an

income between 60 and 80 percent of the area median income is allowed

to rent a Youthbuild-assisted building has been raised from one to two

years (see above), HUD believes it is necessary to maintain the 90-day

requirement to ensure availability to lower-income tenants.

Comment: When a recipient has successfully completed the activities

of a planning grant, it would be rare for such an investment of time

and money to yield no workable program. HUD should guarantee that all

planning recipients be awarded an implementation grant in the next

funding cycle. [one public housing authority]

Response: While HUD agrees that a planning recipient will likely

have a viable project at the end of its planning grant term, it may

need additional time to be ready to implement a program that is

superior to those of other applicants that did not receive planning

grants. Further, given the number of planning grants awarded during the

first funding round, there are insufficient funds to award

implementation grants to each planning grant recipient. Each funding

round is statutorily required to be a competition for funds, and

fairness dictates that each application for funding be evaluated on its

merits, regardless of whether the applicant received a previous

planning grant. HUD also believes that the process of planning for a

Youthbuild implementation grant is a valuable exercise, whether or not

a HUD-funded Youthbuild implementation program is the result.

Comment: HUD should not require programs to channel participants

into programs leading to a high school diploma or post-secondary

education, because some participants may not be capable of reaching

those goals and such expectations may lead them to drop out of the

program. [one public housing authority]

Response: HUD believes that earning a high school diploma or its

equivalent is crucial to achieving self-sufficiency. However, the

educational component of the program does not require that participants

achieve a high school equivalency, but merely requires recipients to

provide services and activities designed to meet the basic education

needs of participants. This requirement is sufficiently flexible to

allow recipients to provide educational services that are appropriate

to their individual participants.

Comment: HUD should not require applicants for planning grants to

present information on the need for the program, considering that

feasibility studies are eligible activities under the planning grant.

[one public housing authority]

Response: Need, based on distress of the community, is a statutory

selection criterion and is fundamentally different from feasibility

studies. To present information on the degree of economic distress in a

community in response to the Need rating criterion, an applicant must

do research on the poverty, unemployment, dropout rate, and other

factors currently existing in the community. Feasibility studies are

eligible activities under the planning grant. Instead of assessing the

current level of economic distress of the community, a feasibility

study would focus on the physical environment, housing stock, and the

social, human, and financial resources available for a Youthbuild

program.

Comment: Given that HUD may approve more than the $1 million

maximum if the application proposes to serve a large number of

participants, HUD should indicate whether the number of participants is

a factor in the rating of an application, and, if so, should specify

the average expected number of participants. [one public housing

authority]

Response: HUD does not have strict participant enrollment

requirements but does consider the reasonableness of cost per student

in rating program quality and feasibility. HUD also recognizes that

costs may vary depending on the location of the program.

Comment: HUD should allow program recipients to make stipends high

enough to compete with illegal endeavors by participants. [one public

housing authority]

Response: HUD does not stipulate a stipend level, and leaves the

amount up to the individual applicants. Unreasonable and excessive

stipend levels will be considered in rating program quality and

feasibility.

Comment: HUD should state in the rule that stipends may not result

in a rent increase for program participants. [one public housing

authority]

Response: The enabling statute and rule state that the Youthbuild

program is subject to section 142 of the Job Training Partnership Act.

Section 142(b) of the JTPA states that such wages and stipends are not

considered as income for any Federal or Federally-assisted program

based on need, other than those under the Social Security Act.

Comment: HUD should strike the requirement that applicants may not

commit or expend State, local or other funds to undertake property

acquisition, rehabilitation or construction until a grant agreement is

executed by HUD. [one city housing agency]

Response: This provision only applies when Youthbuild funds have

been requested to acquire, rehabilitate, or newly construct a property.

The purpose is to allow HUD to conduct an environmental review on the

property, which the statute requires to be done before an application

can be approved. Applicants that expend their own or other funds on a

proposed property are in jeopardy of using their funds on a property

that could potentially be deemed ineligible as a result of the

environmental review. If an applicant proposes to fund the acquisition,

rehabilitation, or new construction entirely with non-Youthbuild funds,

there is no restriction on using those funds before notification of

grant award. Section 585.307(a)(3) has been changed to clarify this

distinction.

Comment: The provision that makes Davis-Bacon prevailing wage rates

not applicable to program participants should be expanded to include

state and local wage rate restrictions. [one city housing agency]

Response: The provision making Davis-Bacon wage rates inapplicable

to Youthbuild trainees is required by a specific statutory provision.

HUD has no authority to declare State and local wage regulations

inapplicable on the basis of an employee's status as a Youthbuild

trainee. However, in this final rule, the Department has revised the

provision in the proposed rule regarding the need to apply Davis-Bacon

prevailing wage rates to Youthbuild trainees where additional Federal

assistance is provided. Subsequent to the issuance of the proposed

rule, the Department's attention was drawn to a decision of the United

States Department of Labor's Wage Appeals Board in in the matter of

[[Page 9736]] 100 Court Ave. Street Project, Kurtz Building, UDAG Proj.

No. B-83-AA-19-0020, Des Moines, Iowa (WAB Case No. 88-9, March 16,

1990). That case concerned a project involving training under the Job

Training Partnership Act (JTPA), which excludes trainees from Davis-

Bacon requirements, as well as assistance under the Urban Development

Action Grant (UDAG) program, which has its own Davis-Bacon provisions.

The Wage Appeals Board determined that JTPA's statutory Davis-Bacon

exclusion for trainees applied to exclude a JTPA trainee from Davis-

Bacon rate requirements even where the trainee was employed on the UDAG

project. Since the Housing and Community Development Act of 1992

applies the JTPA Davis-Bacon provision (and its exclusion of trainees

from Davis-Bacon rates) to the Youthbuild program, the Department has

concluded that the Wage Appeals Board's ruling is applicable to the

Youthbuild program. Accordingly, the final rule provides that Davis-

Bacon wage rates are not applicable to Youthbuild trainees, regardless

of whether other Federal assistance is involved. However, neither the

JTPA provision nor the Wage Appeals Board decision excludes trainees

from wage rates other than Davis-Bacon wage rates. Therefore, the rule

notes that Youthbuild trainees must be paid HUD-determined wage rates

on public and Indian housing work where those rates would be applicable

to trainees under the United States Housing Act of 1937 (e.g., on work

such as ``non-routine maintenance''). However, where HUD wage rates are

applicable to trainees, the rates determined by HUD to apply to

Youthbuild trainees will be trainee wage rates rather than

journeyperson rates.

Comment: Limitations on profit imposed on housing should not apply

to projects which are owned by governmental agencies. [one city housing

agency]

Response: This is a statutory restriction, that has been

interpreted to apply only when construction is financed, in whole or in

part, with Youthbuild funds. (See Sec. 585.309)

Comment: The rule should include all of the essential purposes of

the program that were stated in the legislation. [one nonprofit

organization]

Response: The purpose of the Youthbuild program in Sec. 585.2 has

been revised accordingly.

Comment: HUD should state that construction site supervisors

essential for the training of the participants are not considered

construction or rehabilitation costs. [one nonprofit organization]

Response: Section 585.306 has been added to make that

clarification.

Comment: Related facilities which stand alone should be considered

appropriate construction sites for trainees. [one nonprofit

organization]

Response: HUD construes the term ``housing and related facilities''

to mean residential property, which does not include stand-alone

facilities that do not include housing.

Comment: The definition of the term ``self-sufficiency'' should be

providing for oneself and one's immediate ``dependents,'' not

``family.'' [one nonprofit organization]

Response: The definition of ``self-sufficiency'' has been deleted

from the final rule.

Comment: In the list of ``Other activities'' as delineated in the

discussion of program components, ``short-term placement with private

contractors as internships to enhance the participant's preparation for

unsubsidized employment'' should be added. [one nonprofit organization]

Response: The list of ``other activities'' is not exclusive, and a

variety of other activities can be done under this heading.

Comment: The Corporation for National and Community Service should

be added to the list of other Federal entities from which applicants

are encouraged to enlist support. [one nonprofit organization]

Response: The list of potential resources in Sec. 585.105 comes

from the statute, and is not intended to be a comprehensive list or

limitation of all possible resources that can be used in the program.

Comment: The requirements for the Performance Evaluation Report and

Quarterly Progress Report should include additional information. [one

nonprofit organization]

Response: All specific reporting elements of the required reports

have been deleted from the Rule and are now contained in Youthbuild

Program Reports (HUD-40201).

Comment: Additional points should be given for counseling and

leadership development services; the points for housing resources and

the housing priority points seem excessive; the requirements for public

support are not realistic. [one nonprofit organization]

Response: The rule has been amended to state only the statutory

rating criteria. The point awards and subcategories of statutory and

administratively imposed criteria will be announced for each

competition in the NOFA for that fiscal year.

Comment: The discussion of Geographic Diversity provides that lower

ranked applications will be selected if any of the 10 HUD Regions

receive substantially fewer awards; this language does not reflect the

differences in need and interest between the HUD regions. [one

nonprofit organization]

Response: HUD regions have been abolished under the Department's

recent reorganization. HUD reserves the right to invoke this provision

to ensure fairness and meet the needs of distressed communities.

Other Matters

a. Environmental Impact. A Finding of No Significant Impact with

respect to the environment for this rule 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. The Finding

of No Significant Impact is available for public inspection between

7:30 a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket

Clerk, Office of the General Counsel, Department of Housing and Urban

Development, Room 10276, 451 Seventh Street, S.W., Washington, D.C.

20410.

b. 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

would not have a significant economic impact on a substantial number of

small entities because the Youthbuild program affects primarily

economically disadvantaged young adults by providing assistance for a

wide range of multi-disciplinary activities to assist those young

adults. The opportunities are designed to help disadvantaged young

adults who have dropped out of high school to obtain the education and

employment skills necessary to achieve economic self-sufficiency and

develop leadership skills and a commitment to community development in

low-income communities. A related objective of the program is to add to

the supply of permanent affordable housing for homeless persons and

members of low- and very low-income families by giving young adults

participating in the program meaningful on-site training experiences in

construction and rehabilitation of housing. It is anticipated that

fewer than 120 projects will receive assistance under this program.

c. Executive Order 12612, Federalism. The General Counsel, as the

Designated Official under section 6(a) of Executive Order 12612,

Federalism, has determined that this rule does not have ``federalism

implications'' because it [[Page 9737]] does not have substantial

direct effects on the States (including their political subdivisions),

or on the distribution of power and responsibilities among the various

levels of government.

d. Executive Order 12606, the Family. The General Counsel, as the

Designated Official under Executive Order 12606, the Family, has

determined that some of the policies of this rule would have a

potential significant impact on family formation, maintenance, and

general well-being. The expected expansion of the housing supply for

homeless and low- and very-low income persons and the provision of

opportunities to economically disadvantaged young adults to enhance

their education and employment skills will provide a positive impact on

the family maintenance and general well-being. However since the impact

on the family is beneficial and the rule involves very little HUD

discretion, no further review is necessary.

e. Semi-Annual Agenda of Regulations. This rule was listed as item

number 1843 in the Department's Semiannual Agenda of Regulations

published on November 14, 1994 (59 FR 57632, 57663) in accordance with

Executive Order 12866 and the Regulatory Flexibility Act.

f. Catalog of Federal Domestic Assistance. The Catalog of Federal

Domestic Assistance Program number assigned to this program is 14.243.

List of Subjects in 24 CFR Part 585

Grant programs--housing and community development, Homeless, Low-

and very low-income families, Reporting and record keeping

requirements.

Accordingly, Subchapter C of Chapter V of Title 24 of the Code of

Federal Regulations is amended to add a new part 585, consisting of

subparts A through F, to read as follows:

PART 585--YOUTHBUILD PROGRAM

Subpart A--General

Sec.

585.1 Authority.

585.2 Program purpose.

585.3 Program components.

585.4 Definitions.

Subpart B--Application and Grant Award Process

585.100 Notice of funds availability.

585.101 Emergency funds.

585.102 Application requirements.

585.103 Combined planning and implementation applications.

585.104 Selection criteria.

585.105 Support of other Federal, State, local or private entities.

585.106 Selection process.

585.107 Prohibition of disclosure.

Subpart C--Youthbuild Planning Grants

585.201 Purpose.

585.202 Award limits.

585.203 Grant term.

585.204 Locational considerations.

585.205 Eligible activities.

Subpart D--Youthbuild Implementation Grants

585.301 Purpose.

585.302 Award limits.

585.303 Grant term.

585.304 Locational considerations.

585.305 Eligible activities.

585.306 Designation of costs.

585.307 Environmental procedures and standards.

585.308 Relocation assistance and real property acquisition.

585.309 Project-related restrictions applicable to Youthbuild

residential rental housing.

585.310 Project-related restrictions applicable to Youthbuild

transitional housing for the homeless.

585.311 Project-related restrictions applicable to Youthbuild

homeownership housing.

585.312 Wages, labor standards, and nondiscrimination.

585.313 Labor standards.

Subpart E--Administration

585.401 Recordkeeping by recipients.

585.402 Grant agreement.

585.403 Reporting requirements.

585.404 Program changes.

585.405 Obligation and deobligation of funds.

585.406 Primarily religious organizations.

Subpart F--Applicability of Other Federal Requirements

585.501 Application of OMB Circulars.

585.502 Certifications.

585.503 Conflict of interest.

585.504 Use of debarred, suspended, or ineligible contractors.

Authority: 42 U.S.C. 3535(d) and 8011.

Subpart A--General

Sec. 585.1 Authority.

(a) General. The Youthbuild program is authorized under subtitle D

of title IV of the National Affordable Housing Act (42 U.S.C. 8011), as

added by section 164 of the Housing and Community Development Act of

1992 (Pub. L. 102-550).

(b) Authority restriction. No provision of the Youthbuild program

may be construed to authorize any agency, officer, or employee of the

United States to exercise any direction, supervision, or control over

the curriculum, program of instruction, administration, or personnel of

any educational institution, school, or school system, or over the

selection of library resources, textbooks, or other printed or

published instructional materials used by any educational institution

or school system participating in a Youthbuild program.

Sec. 585.2 Program purpose.

The purposes of the Youthbuild program are:

(a) To provide economically disadvantaged young adults with

opportunities to obtain education, employment skills and meaningful on-

site work experience as a service to their communities and a means to

achieve self-sufficiency;

(b) To foster the development of leadership skills and commitment

to community; and

homeless and low- and very low-income persons by providing planning

grants for program design and implementation grants for carrying out a

Youthbuild Program.

Sec. 585.3 Program components.

A Youthbuild implementation program uses comprehensive and multi-

disciplinary approaches designed to prepare young adults who have

dropped out of high school for educational and employment opportunities

by employing them as construction trainees on work sites for housing

designated for homeless persons and low- and very low-income families.

A Youthbuild planning grant is designed to give recipients sufficient

time and financial resources to develop a comprehensive Youthbuild

program that can be effectively implemented. Youthbuild programs must

contain the three components described in paragraphs (a), (b) and (d)

of this section. Other activities described in paragraph (c) of this

section are optional:

(a) Educational Services, including:

(1) Services and activities designed to meet the basic educational

needs of participants. For example, a Youthbuild program may include

basic skills instruction and remedial education, bilingual education

for individuals with limited English proficiency, secondary educational

services and activities designed to lead to the attainment of a high

school diploma or its equivalency (GED), or counseling and assistance

in attaining post-secondary education and required financial aid;

(2) Vocational classroom courses geared to construction terminology

and concepts; and

(3) Strategies to coordinate with local trade unions and

apprenticeship programs where possible.

(b) Leadership Training, Counseling and Other Support Activities,

including:

(1) Activities designed to develop employment and leadership

skills, including support for youth councils; [[Page 9738]]

(2) Counseling services to assist trainees in personal, health,

housing, child care, family or legal problems and/or referral services

to appropriate social service resources;

(3) Support services and stipends necessary to enable individuals

to participate in the program and, for a period not to exceed 12 months

after completion of training, to assist participants through continued

support services;

(4) Job development and placement activities and post-graduation

follow-up assistance; and

(5) Pre-employment training plan aimed at developing job seeking

skills.

other, special activities such as:

(1) Entrepreneurial training and courses in small business

development;

(2) Assistance to correct learning disabilities; or

(3) Drivers' education courses.

(d) On-site training, through actual housing rehabilitation and/or

construction work. This component must include:

(1) Access to housing sites where construction/ rehabilitation work

is being carried out;

(2) Work site training plan for a closely supervised construction

site;

(3) Construction or rehabilitation plan and timetable; and

(4) Approaches to work site safety.

(e) The Youthbuild implementation program must be structured so

that 50 percent of each full-time participant's time is spent in

educational services and activities [paragraphs (a), (b), and (c) of

this section] and 50 percent is spent in on-site training [paragraph

(d) of this section]. Youthbuild planning grant applications must

contain strategies, plans and approaches to be used during the planning

process to ultimately implement these program requirements.

Sec. 585.4 Definitions.

As used in this part:

1937 Act means the United States Housing Act of 1937.

1992 Act means the Housing and Community Development Act of 1992.

Access to housing applies to Youthbuild implementation grants

required to document that the program has access to the housing

project(s) for young adult on-site training, e.g. program participants

have permission to work on the housing site.

Adjusted income has the meaning given the term ``adjusted income''

in section 3(b) of the United States Housing Act of 1937.

Applicable residential rental housing quality standards shall mean

those standards of the applicable HUD or other Federal, State or local

program providing assistance for residential rental housing involved in

a Youthbuild implementation grant as used under section 455(a),

Youthbuild Program Requirements, of the Act.

Applicant means a public or private nonprofit agency, including:

(1) A community-based organization;

(2) An administrative entity designated under section 103(b)(1)(B)

of the Job Training Partnership Act;

(3) A community action agency;

(4) A State or local housing development agency;

(5) A community development corporation;

(6) A public and/or Indian housing authority and resident

management corporations, resident councils and resident organizations;

(7) A State or local youth service or conservation corps; and

(8) Any other entity (including States, units of general local

government, and Indian Tribes) eligible to provide education and

employment training.

Combined Youthbuild application means the submission by an

applicant of a single application to HUD for a planning and

implementation grant request for one Youthbuild program.

Community Based Organization means a private nonprofit organization

that:

(1) Maintains, through significant representation on the

organization's governing board or otherwise, accountability to low-

income community residents and, to the extent practicable, low-income

beneficiaries of programs receiving assistance under this subtitle; and

(2) Has a history of serving the local community or communities

where a program receiving assistance under this subtitle is located.

Consolidated Plan means the document that is submitted to HUD that

serves as the planning documents (comprehensive housing affordability

strategy and community development plan) of the jurisdiction and an

application for funding under any of the Community Planning and

Development formula grant programs which is prepared in accordance with

the process described in 24 CFR part 91.

Full-Time Participation for program eligible participants is

limited to not less than 6 months and not more than 24 months.

Graduates are those participants who have completed the full-time

education/on-site training components of a Youthbuild program and who

are eligible to take advantage of meaningful opportunities in continued

education, in owning their own businesses, in meaningful employment or

in other means by which the participant can attain economic self-

sufficiency.

Homeless Act means the Stewart B. McKinney Homeless Assistance Act,

as amended, (42 U.S.C. 11301 et seq.).

Homeless individual has the meaning given the term in section 103

of the Stewart B. McKinney Homeless Assistance Act.

Housing development agency means any agency of a State or local

government, or any private nonprofit organization that provides housing

for homeless or low-income families.

Indian Tribe has the same meaning given such term in section

102(a)(17) of the Housing and Community Development Act of 1974 [42

U.S.C. 5302(a)(17)].

Individual who has dropped out of high school means an individual

who is neither attending any school nor subject to a compulsory

attendance law and who has not received a secondary school diploma or a

certificate of equivalency for such diploma.

Institution of Higher Education has the meaning given the term in

section 120(a) of the Higher Education Act of 1965.

JTPA means the Job Training Partnership Act (P.L. 102-235), as

amended.

Limited-English proficiency has the meaning given the term in

section 7003 of the Bilingual Education Act.

Low-income Family has the meaning given the term in section 3(b) of

the United States Housing Act of 1937.

Offender means any adult or juvenile with a record of arrest or

conviction for a criminal offense.

Participant means:

(1) An individual who is:

(i) 16 to 24 years of age, inclusive, at time of enrollment;

(ii) A very low-income individual or a member of a very low-income

family; and

(iii) An individual who has dropped out of high school.

(2) An exception of not more than 25 percent of all full-time

participants is permitted for young adults who do not meet the

program's income or educational requirements but who have educational

needs despite attainment of a high school diploma or its equivalent.

Private Nonprofit Organization means any private nonprofit

organization that:

(1) Is organized and exists under Federal, State, local, or tribal

law;

(2) Has no part of its earnings inuring to the benefit of any

individual, corporation, or other entity;

(3) Has a voluntary board;

(4) Has an accounting system or has designated a fiscal agent in

accordance [[Page 9739]] with requirements established by HUD; and

(5) Practices nondiscrimination in the provision of assistance.

Project-related restrictions mean Youthbuild housing restrictions

applicable only in cases where a Youthbuild implementation grant is

providing assistance to residential rental, transitional or

homeownership housing projects for specific costs relating to property

acquisition, architectural and engineering fees, construction,

rehabilitation, operating costs, or replacement reserves.

Recipient means any entity that receives assistance under this

part.

Related facilities include cafeterias or dining halls, community

rooms or buildings, child care centers, appropriate recreation

facilities, and other essential service facilities that are physically

attached to the housing to be constructed or rehabilitated. Related

facilities which stand alone are not appropriate construction sites for

trainees.

Secretary means the Secretary of Housing and Urban Development.

State means any of the several States, the District of Columbia,

the Commonwealth of Puerto Rico, the Commonwealth of the Northern

Mariana Islands, the Virgin Islands, Guam, American Samoa, the Trust

Territories of the Pacific Islands, or any other territory or

possession of the United States.

Title IV means title IV of the National Affordable Housing Act, as

amended (42 U.S.C. 1437).

Transitional housing means a project that has as its purpose

facilitating the movement of homeless individuals and families to

permanent housing within a reasonable amount of time (usually 24

months). Transitional housing includes housing primarily designed to

serve deinstitutionalized homeless individuals and other homeless

individuals with mental or physical disabilities and homeless families

with children.

Useful life shall mean a period of 10 years upon construction

completion and issuance of an occupancy permit applicable to a

residential rental, transitional or homeownership property acquired,

constructed or rehabilitated (including architectural and engineering

fees), or maintained (i.e., operating costs or replacement reserves),

in whole or in part, with Youthbuild implementation grant funds (as

used in section 455(a), Youthbuild Program Requirements, of the Act).

Very low-income family has the meaning given the term in section

3(b) of the United States Housing Act of 1937.

Subpart B--Application and Grant Award Process

Sec. 585.100 Notice of funds availability.

When funds are made available for assistance, HUD will publish a

notice of funds availability (NOFA) in the Federal Register in

accordance with the requirements of 24 CFR part 12. The notice will:

(a) Give the location for obtaining application packages, which

will provide the application requirements and specify the application

deadline for the competition;

(b) State the amount of funding available and the kind of grants to

be funded under the notice;

the weight or relative importance given to each criteria as they will

be applied to the competition announced in the notice; and

(d) Provide other appropriate program information and guidance.

Sec. 585.101 Emergency funds.

(a) The Secretary may reserve up to five percent of each Fiscal

Year's program funds for implementation grants for emergency purposes

to respond quickly to vital needs to stimulate the provision of

services to disadvantaged young adults and to expand the supply of

affordable housing for the homeless and low- and very low-income

persons.

(b) Unforeseen emergency needs may result from natural and other

disasters including hurricanes, tornadoes, earthquakes, fires, floods,

etc. Other unpredictable and sudden circumstances, such as civil

disturbances, may affect the provision of services to young adults or

result in housing deprivation and increased demand for housing for low-

income persons and the homeless. The Secretary will determine whether

the emergency is of sufficient severity to warrant use of Youthbuild

funds.

to award funds for emergency purposes. Specific instructions governing

the use of these funds may be published by notice in the Federal

emergency purposes by the time that awards for each fiscal year's funds

are to be announced, these funds will be made available for the general

implementation grant competition for that year.

Sec. 585.102 Application requirements.

Applications for grants must be submitted in the form prescribed by

HUD in the application kit, must meet the requirements of this part,

and must be submitted within the time period established by HUD in the

NOFA or application kit. HUD reserves the right to reject applications

from any applicant with an outstanding obligation to HUD that is in

arrears or for which a payment schedule has not been agreed to, or

whose response to an audit finding is overdue or unsatisfactory.

Applicants should refer to the Youthbuild application package for

further instructions.

(Approved by the Office of Management and Budget under control

number 2506-0142)

Sec. 585.103 Combined planning and implementation applications.

(a) If permitted in the NOFA, applicants may apply for both types

of grants using one application. In such competitions, the application

package will provide instructions on submitting a combined Youthbuild

application. Combined planning and implementation grant applications

will compete separately during the competition, based on the criteria

defined in the NOFA. In such cases, an implementation grant request

will be disqualified from the implementation grant competition if its

companion planning grant request is not selected for the planning grant

competition. However, any implementation grant request failing to be

selected under the implementation grant competition will not cause its

companion planning grant application to be disqualified from the

planning grant competition provided the planning grant qualifies and

HUD has determined that the activities proposed in the planning grant

request stand alone and are not contingent upon activities proposed in

the implementation grant request.

(b) When both parts of a combined application are approved, the

receipt of the implementation grant award is conditioned upon the

successful completion of the eligible activities funded by the planning

grant and submission of the recipient's plan and performance evaluation

report to HUD for approval. Upon HUD approval, reserved implementation

grant funds would be released to the recipient in accordance with the

grant agreement.

(Approved by the Office of Management and Budget under control

number 2506-0142)

Sec. 585.104 Selection criteria.

HUD will review applications and assign rating scores based upon

the following criteria, which will be [[Page 9740]] described in more

detail in the notice published in the Federal Register for each funding

competition:

(a) Capability.

(b) Need.

(d) Program resources.

(e) Housing program priority points (Implementation only).

(f) Other factors: HUD may use additional factors to rate an

application as defined in the NOFA for an individual competition.

Sec. 585.105 Support of other Federal, State, local or private

entities.

Applicants are encouraged to use existing housing programs

administered by HUD or other Federal, State, local or private housing

programs as part of their Youthbuild programs. Use of other Federal,

State, local or private funds for vocational, adult and bilingual

education programs or for job training under the JTPA Act and the

Family Support Act of 1988 is also encouraged. The selection process

for Youthbuild grants described in a NOFA provides for applicants to

receive points where grant applications contain evidence of proposed

plans to finance, in whole or in part, Youthbuild activities from other

Federal, State, local, or private sources.

Sec. 585.106 Selection process.

(a) Clarification of Application Information: Procedures for

clarifying application information or curing deficiencies in technical

information that does not affect an applications's score will be

explained in the notice of funds availability. For implementation

applications such deficiencies include, but are not limited to:

(1) Failure to structure the proposed Youthbuild program so that

fifty percent of the time spent by program participants is devoted to

educational services and activities and fifty percent to on-site

training;

(2) Failure to target the outreach and recruitment efforts to be

used by the program to disadvantaged young adults between the ages of

16 and 24 years;

(3) Failure to identify the housing to be used for the on-site

training;

(4) Incomplete documentation showing that the applicant has

obtained access to the housing site(s) if the applicant does not own

the site(s).

(5) Failure to designate the housing to be produced in conjunction

with the program for the use of the homeless and low- and very low-

income families.

(b) Potential environmental disqualification: HUD reserves the

right to disqualify an implementation application where one or more

environmental thresholds are exceeded and it is determined that the

environmental review cannot be conducted and satisfactorily completed

by HUD within the HUD review period. (Refer to Sec. 585.307,

Environmental procedures and standards, for further information.)

total points assigned. Applications will be selected for funding from

the rank order. However, HUD reserves the right to select lower rated

applications if necessary to achieve geographic diversity.

(d) Breaking tie scores. The NOFA for the funding round will

indicate which selection criteria will be used to break a tie if two or

more applications receive the same number of points and sufficient

funds are not available to fund all such applications.

(e) Reduction in requested grant amount. HUD will approve an

application for an amount lower than the amount requested or adjust

line items in the proposed budget within the amount requested (or both)

if it determines that:

(1) The amount requested for one or more eligible activities is not

supported in the application or is unreasonable related to the service

or activity proposed for the population to be served or the housing to

be provided;

(2) An activity proposed for funding does not qualify as an

eligible activity;

(3) The amount requested exceeds the cost limitation established

for a Youthbuild grant; or

(4) There are insufficient funds remaining to fund the applicant's

original grant request.

(f) Notification of approval or disapproval. After completion of

the ranking and selection of applications, but no later than four

months after the date applications are due under the applicable NOFA,

HUD will notify the selected applicants and the applicants that have

not been selected. HUD's notification to the applicant of the grant

award amount, based on the approved application, will constitute a

preliminary approval by HUD, subject to HUD and recipient execution of

a grant agreement to initiate program activities.

Sec. 585.107 Prohibition of disclosure.

The selection process for assistance under this part is subject to

the prohibition of disclosure of covered information regarding the

selection process, as described in 24 CFR part 4. Applicants for or

recipients of assistance who have received covered selection

information may be subject to appropriate sanctions.

Subpart C--Youthbuild Planning Grants.

Sec. 585.201 Purpose.

HUD will award Youthbuild planning grants to eligible applicants

for the purpose of developing Youthbuild programs in accordance with

subtitle D of title IV of the National Affordable Housing Act.

Applications will be selected in a national competition in accordance

with the selection process described in the current NOFA.

Sec. 585.202 Award limits.

Maximum awards. The maximum amount of a Youthbuild planning grant

is $150,000 unless a lower amount is established in the NOFA. HUD may

for good cause approve a grant in a higher amount.

Sec. 585.203 Grant term.

Funds awarded for planning grants are expected to be used within 12

months of the effective date of the planning grant agreement. The award

of a Youthbuild planning grant does not obligate HUD to fund the

implementation of the program upon completion of the approved planning

activities (unless the companion implementation grant was submitted as

a combined application and funded in the implementation grant

competition).

Sec. 585.204 Locational considerations.

HUD will not approve multiple applications for planning grants in

the same jurisdiction unless it determines that the jurisdiction is

sufficiently large to justify approval of more than one application.

Sec. 585.205 Eligible activities.

Planning grant activities to develop a Youthbuild program may

include:

(a) The undertaking of studies and research efforts to determine

the feasibility and need for a Youthbuild program in a selected

location including whether a proposed program can meet the education

and training needs of young adults, aid in the expansion of affordable

housing to meet the needs of the community, and achieve financial

feasibility;

(b) The formation and establishment of a consortium among Federal,

State, or local training and education programs, service providers,

housing programs and providers including but not limited to homeless

providers, housing owners, developers, and other organizations

necessary for the establishment of a Youthbuild program;

housing for the Youthbuild program including an assessment of the type

of housing [[Page 9741]] program to be used and the method by which

program participants will have access to the housing project;

(d) The planning and identification of resources required for basic

skills instruction and education, job training and job development,

leadership and employment skills development, counseling, referral, and

other related support services that will be provided as part of the

Youthbuild program;

(e) The preparation of an application for an implementation grant.

(f) Preliminary architectural and engineering (A & E) work for the

Youthbuild proposed housing including:

(1) The development of cost and time estimates associated with the

amount of work to be done through new construction or the

rehabilitation of existing housing;

(2) Technical studies to evaluate environmental problems and to

determine whether mitigation is feasible on the potential site; and

(3) The identification and initiation of the permit process

required to commence work on the selected site;

(g) The planning and development of multi-disciplinary educational

and employment training curricula, leadership development training,

counseling, and other supportive services and activities for the

Youthbuild program including the identification and training of staff

assigned to each program component;

(h) The identification and establishment of relationships with

local unions, apprenticeship programs, housing owners, local employers

and public or private community organizations for job training,

development, and placement opportunities;

(i) Administration. Youthbuild funds for administrative costs may

not exceed 15 percent of the total amount of Youthbuild program and

project costs or such higher percentage as HUD determines is necessary

to support capacity development by a private nonprofit organization.

Subpart D--Youthbuild Implementation Grants

Sec. 585.301 Purpose.

HUD will award Youthbuild implementation grants to eligible

applicants for the purpose of carrying out Youthbuild programs in

accordance with subtitle D of title IV of the National Affordable

Housing Act. Applications will be selected in a national competition in

accordance with the selection process described in the current NOFA.

Sec. 585.302 Award limits.

Maximum awards. The maximum award for a Youthbuild implementation

grant will be defined in the NOFA for each competition and may vary by

competition. HUD may for good cause approve a grant in a higher amount

than the specified limit.

Sec. 585.303 Grant term.

Funds awarded for implementation grants are expected to be used

within 30 months of the effective date of the implementation grant

agreement.

Sec. 585.304 Locational considerations.

Each application for an implementation grant may only include

activities to carry out one Youthbuild program, i.e., to start a new

Youthbuild program or to fund new classes of Youthbuild participants

for an existing program. The same applicant organization may submit

more than one application in the current competition if the proposed

programs are in different jurisdictions. HUD will not approve multiple

applications for implementation grants in the same jurisdiction unless

it determines that the jurisdiction is sufficiently large to justify

approval of more than one application.

Sec. 585.305 Eligible activities.

Implementation grant activities to conduct a Youthbuild program may

include:

(a) Acquisition of housing and related facilities to be used for

the purposes of providing homeownership, residential rental housing, or

transitional housing for the homeless and low- and very low-income

persons and families;

(b) Architectural and engineering work associated with Youthbuild

housing;

the purposes of providing homeownership, residential rental housing, or

transitional housing for the homeless and low- and very low-income

persons and families;

(d) Rehabilitation of housing and related facilities to be used for

the purposes of providing homeownership, residential rental housing, or

transitional housing for the homeless and low- and very low-income

persons and families;

(e) Operating expenses and replacement reserves for the housing

assisted in the Youthbuild program;

(f) Relocation payments and other assistance required to comply

with Sec. 585.308, legal fees, and construction management;

(g) Outreach and recruitment activities, emphasizing special

outreach efforts to be undertaken to recruit eligible young women

(including young women with dependent children);

(h) Education and job training services and activities including

work experience, basic skills instruction and remedial education,

bilingual education; secondary education leading to the attainment of a

high school diploma or its equivalent; counseling and assistance in

attaining post-secondary education and required financial aid;

(i) Wages, benefits and need-based stipends provided to

participants;

(j) Leadership development, counseling, support services, and

development of employment skills;

(k) Defraying costs for the ongoing training and technical

assistance needs of the recipient that are related to developing and

carrying out a Youthbuild program;

(l) Job placement (including entrepreneurial training and business

development), counseling, and support services for a period not to

exceed 12 months after completion of training to assist participants;

and

(m) Administration. Youthbuild funds for administrative costs may

not exceed 15 percent of the total amount of Youthbuild program and

project costs or such higher percentage as HUD determines is necessary

to support capacity development by a private nonprofit organization.

Sec. 585.306 Designation of costs.

The following budget items are to be considered training or other

costs under the Youthbuild implementation grant and should not be

considered costs associated with acquisition, rehabilitation, or new

construction for the purposes of Secs. 585.307, 585.309, 585.310, and

585.311.

(a) Trainees' tools and clothing.

(b) Participant stipends and wages.

(d) Construction management.

(e) Relocation costs.

(f) Legal fees.

(g) Clearance and demolition.

Sec. 585.307 Environmental procedures and standards.

(a) Environmental procedures. Applicants are encouraged to select

hazard-free and problem-free properties for their Youthbuild projects.

Environmental procedures apply to HUD approval of implementation grants

when the applicant proposes to use Youthbuild funds to cover any costs

for the lease, acquisition, rehabilitation, or new construction of real

property that is proposed for housing project development.

Environmental procedures do not apply to HUD [[Page 9742]] approval of

implementation grants when applicants propose to use their Youthbuild

funds solely to cover any costs for classroom and/or on-the-job

construction training and supportive services. For those applicants

that propose to use their Youthbuild funds to cover any costs of the

lease, acquisition, rehabilitation, or new construction of real

property, the applicant shall submit all relevant environmental

information in its application to support HUD decision-making in

accordance with the following environmental procedures and standards.

(1) Before any Youthbuild implementation application that requests

funds for acquisition, rehabilitation, or construction can be selected

for funding, HUD shall determine whether any environmental thresholds

are exceeded in accordance with 24 CFR part 50, which implements the

National Environmental Policy Act (NEPA) and the related Federal

environmental laws and authorities listed under 24 CFR 50.4.

(i) If HUD determines that one or more of the thresholds are

exceeded, HUD shall conduct a compliance review of the issue and, if

appropriate, establish mitigating measures that the applicant shall

carry out for the property;

(ii) In performing its review, HUD may use previously issued

environmental reviews prepared by local, State, or other Federal

agencies for the proposed property;

(iii)(A) The application for the Youthbuild implementation grant

shall provide HUD with:

(1) Applicant documentation for environmental threshold review; and

(2) Any previously issued environmental reviews prepared by local,

State, or other Federal agencies for the proposed property.

(B) The applicant is encouraged to contact the local community

development agency to obtain any previously issued environmental

reviews for the proposed property as well as for other relevant

information that can be used in the applicant documentation for the

environmental threshold review. In using previous reviews by other

sources, HUD must, however, conduct the environmental analysis and

prepare the environmental review and be responsible for any required

environmental findings.

(2) HUD reserves the right to disqualify any application where one

or more environmental thresholds are exceeded if HUD determines that

the compliance review cannot be conducted and satisfactorily completed

within the HUD review period for applications.

(3) If Youthbuild funds are requested for acquisition,

rehabilitation, or construction, applicants are prohibited from

committing or expending State, local or other funds to undertake

property acquisition (including lease), rehabilitation or construction

under this program until notification of grant award.

(b) Environmental thresholds: HUD shall determine whether a NEPA

environmental assessment is required. Also, HUD shall determine whether

the proposed property triggers thresholds for the applicable Federal

environmental laws and authorities listed under 24 CFR 50.4 as follows:

(1) For minor rehabilitation of a building and any property

acquisition (including lease), Federal environmental laws and

authorities may apply when the property is:

(i) Located within designated coastal barrier resources;

(ii) Contaminated by toxic chemicals or radioactive materials;

(iii) Located within a floodplain;

(iv) A building for which flood insurance protection is required;

(v) Located within a runway clear zone at a civil airport or within

a clear zone or accident potential zone at a military airfield; or

(vi) Listed on, or eligible for listing on, the National Register

of Historic Places; located within, or adjacent to, an historic

district, or is a property whose area of potential effects includes a

historic district or property.

(2) For major rehabilitation of a building and also for substantial

improvement in floodplains, in addition to paragraphs (b)(1) (i)

through (vi) of this section, other Federal environmental laws and

authorities may apply when the property:

(i) Has significant impact to the human environment;

(ii) Is a project involving five or more dwelling units severely

noise-impacted; or

(iii) Affects coastal zone management.

(3) For new construction, conversion or increase in dwelling unit

density, in addition to paragraphs (b)(1) (i) through (vi) and

paragraphs (b)(2) (i) through (iii) of this section, other Federal

environmental laws and authorities may apply when the property:

(i) Is located near hazardous industrial operations handling fuels

or chemicals of an explosive or flammable nature;

(ii) Affects a sole source aquifer;

(iii) Affects endangered species; or

(iv) Is located within a designated wetland.

provided by applicants must be from qualified data sources. A qualified

data source means any Federal, State, or local agency with expertise or

experience in environmental protection (e.g., the local community

development agency; the local planning agency; the State environmental

protection agency; the State Historic Preservation Officer) or any

other source qualified to provide reliable information on the

particular property.

(d) Minor rehabilitation means proposed fixing and repairs:

(1) Whose estimated cost is less than 75 percent of the property

value after completion;

(2) That does not involve changes in land use from residential to

nonresidential, or from nonresidential to residential;

(3) That does not involve the demolition of one or more buildings,

or parts of a building, containing the primary use served by the

property; and

(4) That does not increase unit density more than 20 percent.

Sec. 585.308 Relocation assistance and real property acquisition.

The Youthbuild program is subject to the provisions of the Uniform

Relocation Assistance and Real Property Acquisition Policies Act of

1970, as amended (URA) and implementing regulations at 49 CFR part 24.

HUD Handbook 1378, Tenant Assistance, Relocation and Real Property

Acquisition, available from the Relocation and Real Estate Division at

the address listed in this section, describes these policies and

procedures. Any occupied property used in a Youthbuild program is

subject to the URA regardless of the source of the property or

construction funds. The URA requires recipients to provide relocation

assistance to persons (families, individuals, businesses, and nonprofit

organizations) that are displaced as a direct result of acquisition,

rehabilitation or demolition for an assisted project. Property

occupants who are not displaced also have certain rights. Therefore, if

a proposed Youthbuild implementation program involves occupied

property, before submitting the application the applicant should

consult with staff of the Relocation and Real Estate Division, Office

of Community Planning and Development, Department of Housing and Urban

Development, Room 7154, 451 Seventh Street, SW, Washington, DC 20410;

telephone: (202) 708-0336. TDD: (202) 708-1455. Fax: (202) 708-1744.

(These are not toll-free numbers.) [[Page 9743]]

Sec. 585.309 Project-related restrictions applicable to Youthbuild

residential rental housing.

Where the award of a Youthbuild implementation grant includes the

eligible activities of acquisition, architectural and engineering fees,

construction, rehabilitation, operating costs or replacement reserves

for residential rental units, and where the costs for these activities

are to be funded, in whole or in part, from the Youthbuild grant award,

the recipient shall be required to comply with the following Youthbuild

project-related restrictions for a period of not less than 10 years:

(a) Occupancy by low- and very low-income families. (1) For the 10

year period of the residential rental Youthbuild project, the recipient

or rightful owner will be required to maintain at least a 90 percent

level of occupancy for individuals and families with incomes less than

60 percent of the area median income, adjusted for family size--``the

90 percent category.'' The recipient or rightful owner must offer each

available rental unit to the 60 percent of area median income group for

an advertising period of not less than 90 days upon each vacancy

occurrence throughout the 10 year period. Community-wide advertisements

for tenants of this income group must be conducted.

(2) In order to maintain the financial stability of the project and

to provide flexibility in averting long-term vacancies in the 90

percent category, the rightful owner is permitted, under certain

circumstances described below, to execute temporary two year leases

with individuals and families with incomes between 60 and 80 percent of

the area median income. This temporary deviation is permitted when no

qualifying tenant (with an income of 60 percent or less of median)

leases the unit upon the end of the 90 day advertising period. The

owner may then advertise the unit to individuals and families with

incomes less than 80 percent of the area median income, adjusted for

family size, for another advertisement period of 90 days. Temporary

leases for tenants whose incomes are between 60 and 80 percent of the

area median income (exclusive of the 10 percent allowance) shall be

limited to two years. Temporary tenants are not covered by Youthbuild

tenant protections regarding termination of tenancy [paragraph (b)(2)

of this section], tenant selection plan [paragraph (b)(4) of this

section] and tenant participation plan [paragraph (d) of this section].

(3) The remaining 10 percent of the units must be made available to

and occupied by low-income families--``the 10 percent category.'' The

income test must be conducted for both the 90 percent and 10 percent

categories only at time of entry for each unit available for occupancy.

(b) Tenant protections. Upon submission of the implementation grant

application, the applicant or rightful owner of the residential rental

units covered under this paragraph shall certify to the following

tenant protections:

(1) Lease. As part of the Youthbuild implementation grant

application, the applicant or rightful owner of the property shall

provide a model lease containing terms and conditions acceptable to

HUD. The model lease shall become an addendum to the executed grant

agreement and shall remain in force for a period of 10 years. The lease

between a tenant and the owner of residential rental housing shall be

for a period of not less than one year, unless otherwise mutually

agreed to by the tenant and the owner, and shall contain such terms and

conditions as HUD determines to be appropriate. Any change to a lease

must be approved by HUD.

(2) Termination of tenancy. Upon submission of the implementation

grant application, the applicant or other rightful owner of the

property must certify that the following restrictions will be applied

to all lease terminations initiated by the owner. The restrictions must

state that an owner shall not terminate the tenancy or refuse to renew

the lease of a tenant occupying a Youthbuild residential rental housing

unit except for serious or repeated violations of the terms and

conditions of the lease, or for violation of applicable Federal, State,

or local laws, or for other good cause. Any termination or refusal to

renew the lease must be preceded by not less than 30 days by the

owner's service upon the tenant of a written notice specifying the

grounds for the action. With regard to leases for tenants in units

controlled by public housing authorities, 24 CFR part 966 shall take

precedence over this provision.

(3) Maintenance and replacements. Upon submission of the

implementation grant application, the applicant or rightful owner of

Youthbuild residential rental housing must certify that the premises

will be maintained in compliance with all applicable housing quality

standards and local code requirements for the 10 year period. HUD's

Section 8 housing quality standards apply when no other public

assistance is involved other than the Youthbuild grant. In other cases,

the applicable HUD or other Federal, State or local program guidelines

shall apply.

(4) Tenant selection. The applicant or rightful owner of Youthbuild

residential rental housing must develop and adopt a tenant selection

plan containing selection policies and criteria that are consistent

with HUD requirements. The tenant selection plan shall remain in force

for the 10 year period. Upon submission of the implementation grant

application, the applicant or owner of the property must certify that

the plan complies with the following HUD requirements:

(i) The plan is consistent with the purpose of providing housing

for homeless and very low-income families and individuals;

(ii) The plan is reasonably related to program eligibility and the

applicant's or owner's ability to perform the obligations of the lease;

(iii) The plan gives reasonable consideration to the housing needs

of families that would qualify for a preference under section

6(c)(4)(A) of the United States Housing Act of 1937;

(iv) The plan provides for the selection of tenants from a written

waiting list in the chronological order of their application, to the

extent practicable, and for the prompt notification in writing of any

rejected applicant of the grounds for any rejection; and

(v) The plan acknowledges that a family holding tenant-based

assistance under section 8 of the United States Housing Act of 1937

will not be refused tenancy because of the status of the prospective

tenant as a holder of such assistance.

implementation grant application, the applicant or other rightful owner

of Youthbuild residential rental housing project involved in a

Youthbuild program shall certify that tenants in each rental unit shall

be not required to pay rent in excess of the amount provided under

section 3(a) of the United States Housing Act of 1937.

(d) Tenant participation plan. The Youthbuild program shall require

a tenant participation plan applicable to the rightful owner of

Youthbuild residential rental housing, provided such owner is a

nonprofit public or private organization. Upon submission of the

implementation grant application, the nonprofit owner shall certify

that the tenant participation plan is the plan to be adopted and

followed for tenant participation in management decisions for the 10

year period.

(e) Limitations on profit. Youthbuild residential rental housing

projects [[Page 9744]] meeting the requirements of this section shall

be restricted from producing profit in excess of the following

limitations:

(1) Monthly rental limitation. The aggregate monthly rental for

each eligible project may not exceed the operating costs of the project

(including debt service, management, adequate reserves, and other

operating costs) plus a 6 percent return on any equity investment of

the project owner.

(2) Profit limitations on partners. A nonprofit organization

receiving Youthbuild assistance for a residential rental housing

project shall agree to use any profit received from the operation,

sale, or other disposition of the project for the purposes of providing

housing for low- and moderate-income families. Profit-motivated

partners in a nonprofit partnership may receive:

(i) Not more than a 6 percent return on their equity investment

from project operations; and

(ii) Upon disposition of the project, not more than an amount equal

to their initial equity investment plus a return on that investment

equal to the increase in the Consumer Price Index for the geographic

location of the project since the time of the initial investment of

such partner in the project.

(f) Restrictions on conveyance. Conveyance restrictions apply to

Youthbuild residential rental housing project(s) meeting the

requirements of this section. Ownership of the property may not be

conveyed unless the instrument of conveyance requires a subsequent

owner to comply with the same restrictions imposed upon the original

owner for the balance of the 10 year period.

(g) Ten year restriction. The restrictions listed in paragraphs (a)

through (f) of this section shall remain in force for a period of not

less than 10 years after construction completion and issuance of an

occupancy permit for all Youthbuild residential rental housing projects

receiving Youthbuild assistance.

(Approved by the Office of Management and Budget under control

number 2506-0142)

Sec. 585.310 Project-related restrictions applicable to Youthbuild

transitional housing for the homeless.

Where the award of a Youthbuild implementation grant includes the

eligible activities of acquisition, architectural and engineering fees,

construction, rehabilitation, operating costs or replacement reserves

of transitional housing units, and where the costs for these activities

are funded, in whole or in part, with Youthbuild grant funds, the

housing project shall be required to comply with the following

Youthbuild project-related restrictions:

(a) Limitations on profit. (1) Youthbuild transitional housing

projects meeting the requirements of this section shall be restricted

from producing profit in excess of the following limitations:

(i) Monthly rental limitation. The aggregate monthly rental for

each Youthbuild project may not exceed the operating costs of the

project (including debt service, management, adequate reserves, and

other operating costs) plus a six (6) percent return on any equity

investment of the project owner.

(ii) Profit limitations on partners. A nonprofit organization

receiving Youthbuild assistance for a housing project shall agree to

use any profit received from the operation, sale, or other disposition

of the project for the purposes of providing housing for low- and

moderate-income families.

(2) Profit-motivated partners in a nonprofit partnership may

receive:

(i) Not more than a six (6) percent return on their equity

investment from project operations; and

(ii) Upon disposition of the project, not more than an amount equal

to their initial equity investment plus a return on that investment

equal to the increase in the Consumer Price Index for the geographic

location of the project since the time of the initial investment of

such partner in the project.

(b) Restrictions on conveyance. Conveyance restrictions apply to

Youthbuild transitional housing projects meeting the requirements of

this section. Ownership of the property may not be conveyed unless the

instrument of conveyance requires a subsequent owner to comply with the

same restrictions imposed upon the original owner for the balance of

the 10 year period.

transitional housing projects meeting the requirements of this section

shall adhere to the requirements regarding service delivery, housing

standards and rent limitations applicable to comparable housing

receiving assistance under the Transitional Housing component of the

Supportive Housing Program (title IV of the Stewart B. McKinney

Homeless Assistance Act).

(2) The Secretary may waive these requirements to permit the

conversion of a Youthbuild transitional housing project to a permanent

housing project only if such housing complies with the Youthbuild

project-related restrictions for residential rental housing projects

found in Sec. 585.309.

(d) Ten Year Restriction. The restrictions listed in paragraphs A

through C of this section shall remain in force for a period of not

less than 10 years after construction completion and issuance of an

occupancy permit for a Youthbuild transitional housing project

receiving Youthbuild assistance.

Sec. 585.311 Project-related restrictions applicable to Youthbuild

homeownership housing.

Where the award of a Youthbuild implementation grant includes the

eligible activities of acquisition, architectural and engineering fees,

construction, or rehabilitation of homeownership housing, and where the

costs for these activities are to be funded, in whole or in part, with

Youthbuild grant funds, the housing project shall be required to comply

with the following Youthbuild project-related restrictions:

(a) Program compliance. Each homeownership project meeting the

requirements of this section shall comply with the requirements of the

HOPE II or HOPE III programs authorized under subtitles B or C

respectively of title IV of the National Affordable Housing Act.

(b) Restrictions on conveyance. Conveyance restrictions apply to

Youthbuild homeownership housing projects meeting the requirements of

this part. Ownership of the property may not be conveyed unless the

instrument of conveyance requires a subsequent owner to comply with the

same restrictions imposed upon the original owner for the balance of

the 10 year period.

and (b) of this section shall remain in force for a period of not less

than 10 years after construction completion and issuance of an

occupancy permit for Youthbuild homeownership housing projects meeting

the requirements of this part.

Sec. 585.312 Wages, labor standards, and nondiscrimination.

Sections 142 (wages and benefits), 143 (labor standards), and 167

(nondiscrimination) of the Job Training Partnership Act shall apply to

Youthbuild programs as if the programs were conducted under the Job

Training Partnership Act. This provision may not be construed to

prevent Youthbuild recipients from using funds from non-Federal sources

to increase wages and benefits under such programs, if appropriate.

Sec. 585.313 Labor standards.

(a) Trainees. Davis-Bacon prevailing wage rate requirements are not

applicable to trainees on housing [[Page 9745]] projects or in training

programs assisted by Youthbuild grant funds, regardless of whether

other Federal assistance is involved. However, where the trainees'

performance of public and Indian housing work is subject to HUD-

determined prevailing wage rates under Section 12 of the United States

Housing Act of 1937, trainees must be paid HUD-determined wage rates;

as a matter of policy, the wage rates determined by HUD to apply to

Youthbuild trainees will be the trainee wage rates rather than

journeyperson rates.

(b) Laborers and mechanics other than Youthbuild Trainees. (1) All

laborers and mechanics (other than Youthbuild trainees) employed by

contractors or subcontractors in any construction, alteration or

repair, including painting and decorating, of housing that is assisted

by a Youthbuild grant shall be paid at rates not less than those

prevailing on similar construction in the locality, as determined by

the Secretary of Labor in accordance with the Davis-Bacon Act (40

U.S.C. 276a through 276a-5). The employment of such laborers and

mechanics on assisted housing shall be subject to the provisions of the

Contract Work Hours and Safety Standards Act (40 U.S.C. 327 through

333). Where these requirements are applicable, recipients, sponsors,

owners, contractors and subcontractors must comply with all related

Department of Labor and HUD rules, regulations and requirements.

(2) The labor standards requirements in paragraph (b)(1) of this

section do not apply where a Youthbuild grant is provided solely for

classroom and/or on-the-job training and supportive services for

Youthbuild trainees, and the grant does not include costs for housing

project development involving acquisition (including lease),

rehabilitation or new construction of real properties; however, if

other Federal programs provide assistance to the housing project, labor

standards apply to laborers and mechanics other than Youthbuild

trainees to the extent required by the other Federal programs.

Applicants need to review applicable Federal regulations to determine

which relevant requirements apply to their individual situations.

Subpart E--Administration

Sec. 585.401 Recordkeeping by recipients.

(a) Each recipient of a planning or implementation Youthbuild grant

award must keep records that will facilitate an effective audit to

determine compliance with program requirements and that fully disclose:

(1) The amount and disposition by the recipient of the planning or

implementation Youthbuild grants received, including sufficient records

that document the reasonableness, accuracy and necessity of each

expenditure;

(2) The amount and disposition of proceeds, if any, from financing

obtained in connection with the Youthbuild program, e.g., housing sales

to eligible low-income families, property sales to other public or

private entities;

(3) The total cost from all sources of funding for the Youthbuild

program including all educational, training, counseling, placement, and

housing activities and services;

(4) The amount and nature of any other assistance, including cash,

property, services, materials, in-kind contributions or other items

contributed as a condition of receiving an implementation grant;

(5) Any other proceeds received for, or otherwise used in

connection with, the Youthbuild program.

(6) Participant information. The recipient must maintain records on

each Youthbuild participant, including such information as age, high

school drop out status, income level, gender, employment status, and

racial and ethnic characteristics.

(7) Housing information. If Youthbuild grant funds are used for

acquisition, architectural and engineering fees, construction,

rehabilitation, operating costs or replacement reserves for housing

used in a Youthbuild program, the recipient must maintain records on

family size, income, and racial and ethnic characteristics of families

renting or purchasing Youthbuild properties.

(8) Relocation Assistance and Real Property Acquisition. The

recipient shall maintain records sufficient to demonstrate compliance

with relocation assistance and real property acquisition requirements,

as described in Chapter 6 of HUD Handbook 1378, Tenant Assistance,

Relocation and Real Property Acquisition. See Sec. 585.308.

(b) Implementation grant recipients must submit reports pursuant to

Section 3 regulations at 24 CFR part 135.

audit, examination, monitoring, and evaluation, each recipient must

give HUD (including any duly authorized representatives and the

Inspector General) and the Comptroller General of the United States

(and any duly authorized representatives) access to any books,

documents, papers, and records of the recipient that are pertinent to

assistance received.

(Approved by the Office of Management and Budget under control

number 2506-0142)

Sec. 585.402 Grant agreement.

(a) General. The recipient will provide education and job training

in accordance with the requirements of this part as incorporated in a

grant agreement executed by HUD and the recipient.

(b) Enforcement. HUD will enforce the obligations in the grant

agreement through such actions as may be appropriate, including

repayment of funds that have already been disbursed to the recipient.

Sec. 585.403 Reporting requirements.

(a) Quarterly Progress Reports. Each recipient of a Youthbuild

grant must submit a report on a quarterly basis. The form and substance

of the quarterly progress report will be provided to recipients. The

Performance Evaluation Report noted in paragraph (b) of this section

will constitute the final Quarterly Report.

(b) Performance Evaluation Report. Each recipient of a Youthbuild

grant must submit a Performance Evaluation Report on activities

undertaken and completed in accordance with the grant agreement. The

form and substance of the Performance Evaluation Report shall be

provided to recipients.

(Approved by the Office of Management and Budget under control

number 2506-0142)

Sec. 585.404 Program changes.

(a) There are three basic types of changes that recipients may wish

to make to their programs:

(1) Grant Agreement amendments.

(2) Material changes, which include, but are not limited to changes

in housing sites, changes in significant participating parties, and

changes in approved activities. All material changes require HUD

approval.

(3) Self-implementing program changes, which may include changes in

recipient staffing and content of curriculum. All self-implementing

changes require documentation in the recipient's files.

(b) Approval for Grant Agreement Amendments and material changes is

contingent upon the application ranking remaining high enough after the

approved change to have been competitively selected for funding in the

year the application was selected.

Sec. 585.405 Obligation and deobligation of funds.

(a) Obligation of funds. When HUD and the applicant execute a grant

[[Page 9746]] agreement, funds are obligated to carry out approved

activities consistent with Secs. 585.205 or 585.305 of this part and in

accordance with the grant agreement.

(b) Increases. After the initial obligation of funds, HUD will not

make revisions to increase the amount obligated.

the grant amounts are not expended within the term of the grant or if

there is a condition of default as defined in the grant agreement.

(2) HUD may award deobligated funds to applications previously

submitted in response to the most recently published NOFA, and in

accordance with subpart B of this part.

Sec. 585.406 Primarily religious organizations.

(a) Provision of assistance to primarily religious organizations.

(1) HUD will provide Youthbuild assistance to a recipient that is a

primarily religious organization if it agrees to provide housing,

educational and training activities or supportive services in a manner

that is free from religious influences and in accordance with the

following principles:

(i) It will not discriminate against any employee or applicant for

employment on the basis of religion and will not limit employment or

give employment preference to persons on the basis of religion;

(ii) It will not discriminate against any person applying for

Youthbuild activities, supportive services or housing on the basis of

religion and will not limit such activities or services or give

preference to persons on the basis of religion; and

(iii) It will provide no religious instruction or counseling,

conduct no religious worship or services, engage in no religious

proselytizing, and exert no other religious influence in the provision

of housing, education, training activities, or support services.

(2) HUD will provide Youthbuild assistance to a recipient that is a

primarily religious organization if the assistance will not be used to

construct or rehabilitate a property to be owned by the recipient,

except as described in paragraph (b) of this section.

(b) Rehabilitation and new construction of structures owned by a

primarily religious organization. Grant funds may be used to

rehabilitate or newly construct a structure owned by a primarily

religious organization if the following conditions are met:

(1) The structure (or portion of the structure) that is to be

rehabilitated or newly constructed with HUD assistance has been leased

to a recipient that is an existing or newly established wholly secular

organization which may be established by the primarily religious

organization under the provision of paragraph (c) of this section;

(2) The HUD assistance is provided to the wholly secular

organization (and not the primarily religious organization) to make the

improvements;

(3) The leased structure will be used exclusively for secular

purposes available to all persons regardless of religion;

(4) The lease payments paid to the primarily religious organization

do not exceed the fair market rent of the structure before any

rehabilitation was completed;

(5) The portion of the costs of any improvements that benefit any

unleased portion of the structure will be allocated to, and paid for

by, the primarily religious organization;

(6) The primarily religious organization agrees that, if the

recipient does not retain the use of the leased premises for wholly

secular purposes for the useful life of the improvements, the primarily

religious organization will pay an amount equal to the residual value

of the improvements to the secular organization, and the secular

organization will remit the amount to HUD.

established by a primarily religious organization.

(1) A primarily religious organization may establish a wholly

secular private nonprofit organization to serve as a recipient. The

wholly secular organization may be eligible to receive other forms of

assistance available under this part.

(i) The wholly secular organization must agree to provide housing

and support services in a manner that is free from religious influences

and in accordance with the principles set forth in paragraph (a) of

this section.

(ii) The wholly secular organization may enter into a contract with

the primarily religious organization to operate the housing or to

provide support services. In such a case, the primarily religious

organization must agree in the contract to carry out its contractual

responsibilities in a manner free from religious influences and in

accordance with the principles set forth in paragraph (a) of this

section.

(iii) The rehabilitation or new construction grants are subject to

the requirements of paragraph (a) of this section.

(2) HUD will not require the primarily religious organization to

establish the wholly secular organization before the selection of its

application. In such a case, the primarily religious organization may

apply on behalf of the wholly secular organization. The application

will be reviewed on the basis of the primarily religious organization's

financial responsibility and capacity, and its commitment to provide

appropriate resources to the wholly secular organization after

formation. Access to the housing site is demonstrated if the primarily

religious organization provides a commitment to transfer control of the

site to the wholly secular organization after its formation. If such an

application is selected for funding, the obligation of funds will be

conditioned upon the establishment of a wholly secular organization

that meets the definition of private nonprofit organization in

Sec. 585.4.

Subpart F--Applicability of Other Federal Requirements

Sec. 585.501 Application of OMB Circulars.

(a) The policies, guidelines and requirements of OMB Circular Nos.

A-87 (Cost Principles Applicable to Grants, Contracts and other

Agreements with State and Local Governments) and 24 CFR part 85

(Administrative Requirements for Grants and Cooperative Agreements to

State, Local and Federally Recognized Indian Tribal Governments) apply

to the award, acceptance and use of assistance under the program by

applicable entities, and to the remedies for non-compliance, except

where inconsistent with the provisions of NAHA, other Federal statutes

or this part. 24 CFR part 84 (Grants and Cooperative Agreements with

Institutions of Higher Education, Hospitals, and other Nonprofit

Organizations), OMB Circular A-122 (Cost Principles Applicable to

Grants, Contracts and other Agreements with Nonprofit Institutions),

and, as applicable, OMB Circular A-21 (Cost Principles for Educational

Institutions) apply to the acceptance and use of assistance by covered

organizations, except where inconsistent with the provisions of NAHA,

other Federal statutes or this part. Recipients are also subject to the

audit requirements of 24 CFR part 44 (Audit Requirements for State and

Local Governments) and 24 CFR part 45 (Audit Requirements for

Institutions of Higher Education and other Nonprofit Institutions), as

applicable. HUD may perform or require additional audits as it finds

necessary or appropriate.

(b) Copies of OMB Circulars may be obtained from E.O.P.

Publications, Room 2200, New Executive Office [[Page 9747]] Building,

Washington, DC 20503, telephone (202) 395-7332. (This is not a toll-

free number.) There is a limit of two free copies.

Sec. 585.502 Certifications.

In addition to the standard assurances of compliance with Federal

rules and OMB Circulars contained in applications for Federal grant

assistance, applicants must also make the following certifications:

(a) Consolidated Plan. (1) Applicants that are States or units of

general local government. The applicant must have a HUD-approved

Consolidated Plan in accordance with 24 CFR part 91 for the current

year and must submit a certification that the proposed activities are

consistent with the HUD-approved Consolidated Plan.

(2) Applicants that are not States or units of general local

government. The applicant must submit a certification by the

jurisdiction or jurisdictions in which the proposed program will be

located that the applicant's proposed activities are consistent with

the jurisdiction's current HUD-approved Consolidated Plan. A required

certification must be made by the unit of general local government if

it is required to have, or has, a Consolidated Plan. Otherwise the

certification may be made by the State.

(3) The Insular Areas of Guam, the Virgin Islands, American Samoa

and the Northern Mariana Islands are not required to have a

Consolidated Plan or to make a Consolidate Plan certification. An

application by an Indian tribe or other applicant for a Youthbuild

program that will be located on a reservation of an Indian tribe does

not require a certification by the tribe or State. However, where an

Indian tribe or an Indian Housing Authority (IHA) is the applicant for

a Youthbuild program that will not be located on a reservation, the

requirement for a certification by the jurisdiction or jurisdictions in

which the Youthbuild program will be located under the preceding

paragraph applies.

(b) Fair Housing and Equal Opportunity. A certification that the

applicant is in compliance and will continue to comply with the

requirements of the Fair Housing Act, title VI of the Civil Rights Act

of 1964, section 504 of the Rehabilitation Act of 1973, and the Age

Discrimination Act of 1975, and will affirmatively further fair

housing, or, in the case of a Youthbuild application from an Indian

tribe or an Indian Housing Authority (IHA), a certification that the

applicant will comply with the Indian Civil Rights Act (25 U.S.C. 1301

et seq.), section 504 of the Rehabilitation Act of 1973, and the Age

Discrimination Act of 1975.

comply with the requirements of the Drug-Free Workplace Act of 1988 (42

U.S.C. 701) and HUD's implementing regulations at 24 CFR part 24,

subpart F.

(d) Employment opportunities. A certification that the applicant

will comply with the requirements of section 3 of the Housing and Urban

Development Act of 1968 (12 U.S.C. 17017), as implemented by 24 CFR

part 135. Section 3 requires that employment and other economic

opportunities generated by HUD assisted housing and community

development programs shall, to the greatest extent feasible, be

directed toward section 3 residents and business concerns.

(e) Anti-lobbying. In accordance with the disclosure requirements

and prohibitions of section 319 of the Department of Interior and

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

1352) (The Byrd Amendment) and the implementing regulations at 24 CFR

part 87, applicants for and recipients 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. Applicants and

recipients must also disclose where nonappropriated funds have been

spent or committed for lobbying activities if those activities would be

prohibited if paid with appropriated funds. Substantial monetary

penalties may be imposed for failure to file the required certification

or disclosure.

(f) Relocation Assistance and Real Property Acquisition. A

certification that the applicant will comply with the requirements of

the Uniform Relocation Assistance and Real Property Acquisition

Policies Act of 1970, as amended (URA), and implementing regulations at

49 CFR part 24 and HUD Handbook 1378, Tenant Assistance, Relocation and

Real Property Acquisition. See Sec. 585.308.

(g) Use of Housing. A certification that the housing to be

produced in conjunction with the Youthbuild program is to be provided

for the homeless and low- and very low-income families.

(h) Lead-Based Paint. A certification that the applicant will

comply with the requirements of the Lead-Based Paint Poisoning

Prevention Act and implementing regulations at 24 CFR part 35.

(i) State and Local Standards. A certification that all educational

programs and activities supported with funds provided under this

subtitle shall be consistent with applicable State and local

educational standards. Standards and procedures with respect to the

awarding of academic credit and certifying educational attainment in

such programs shall be consistent with applicable State and local

educational standards.

(j) Labor Standards. A certification that the applicant and related

parties will comply with the provisions of the Davis-Bacon Act, as

amended (40 U.S.C. 276a through 276a-5), the Contract Work Hours and

Safety Standards Act (40 U.S.C. 327 through 333), and HUD Handbook

1344.1, Revision 1, Federal Labor Standards in Housing and Community

Development Programs, as applicable, available from the Office of

Assistant to the Secretary for Labor Relations, room 7118, 451 Seventh

Street, SW., Washington, DC 20410; Telephone (202) 708-0370; FAX, (202)

619-8022; TDD, (202) 708-1455. (These are not toll-free numbers).

(Approved by the Office of Management and Budget under control

number 2506-0142)

Sec. 585.503 Conflict of interest.

(a) (1) In addition to the conflict of interest requirements in 24

CFR parts 84 and 85, no person who is an employee, agent, consultant,

officer, or elected or appointed official of the recipient or

cooperating entity named in the application and who exercises or has

exercised any functions or responsibilities with respect to assisted

activities, or who is in a position to participate in a decision-making

process or gain inside information with regard to such activities, may

obtain a financial interest or benefit from the activity, or have an

interest in any contract, subcontract, or agreement with respect

thereto, or the proceeds thereunder, either for himself 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, except that a resident of an

eligible property may acquire an ownership interest.

(2) Exception. HUD may grant an exception to the exclusion in

paragraph (a)(1) of this section on a case-by-case basis when it

determines that such an exception will serve to further the purposes of

the Youthbuild program. An exception may be considered only after the

applicant or recipient has provided a disclosure of the nature of the

conflict, accompanied by an assurance that there has been public

disclosure of the conflict, a description of how the public disclosure

was made, and an opinion of the applicant's or recipient's attorney

that the interest for which the exception is sought would not violate

State or local law. In determining whether to [[Page 9748]] grant a

requested exception, HUD will consider the cumulative effect of the

following factors, where applicable:

(i) Whether the exception would provide a significant cost benefit

or an essential degree of expertise to the Youthbuild program that

would otherwise not be available;

(ii) Whether an opportunity was provided for open competitive

bidding or negotiation;

(iii) Whether the person affected is a member of a group or class

intended to be the beneficiaries of the activity and the exception will

permit such person to receive generally the same interests or benefits

as are being made available or provided to the group or class;

(iv) Whether the affected person has withdrawn from his or her

functions or responsibilities, or the decision-making process, with

respect to the specific activity in question;

(v) Whether the interest or benefit was present before the affected

person was in a position as described in paragraph (a)(2) of this

section;

(vi) Whether undue hardship will result either to the applicant,

recipient, or the person affected when weighed against the public

interest served by avoiding the prohibited conflict; and

(vii) Any other relevant considerations.

(b) [Reserved]

Sec. 585.504 Use of debarred, suspended, or ineligible contractors.

The provisions of 24 CFR part 24 apply 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.

Dated: February 7, 1995.

Andrew Cuomo,

Assistant Secretary for Community Planning and Development.

[FR Doc. 95-4119 Filed 2-17-95; 8:45 am]

BILLING CODE 4210-29-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.