Office of the Assistant Secretary for Public and Indian Housing; Indian HOME Program Streamlining

Federal RegisterJun 21, 1996

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SUMMARY: This interim rule moves the Indian HOME Program from 24 CFR

part 92 to 24 CFR part 954, and includes clarifications and

simplifications intended to facilitate the use of the rule by

interested parties, increase similarity with the Indian Community

Development Block Grant (ICDBG) program, and simplify administration of

Native American Tribal Programs.

DATES: Effective date: July 22, 1996.

Comments due date: August 20, 1996.

ADDRESSES: Interested persons are invited to submit comments regarding

this interim rule to the Rules Docket Clerk, Office of General Counsel,

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

Street, SW, Washington, DC 20410-0500. Communications should refer to

the above docket number and title. Facsimile (FAX) comments are not

acceptable. A copy of each communication submitted will be available

for public inspection and copying between 7:30 a.m. and 5:30 p.m.

weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: David Pass, Housing & Community

Development Division, Office of Native American Programs, Public and

Indian Housing, Room B-133, Department of Housing and Urban

Development, 451 Seventh Street, S.W., Washington, D.C. 20410,

telephone (202) 755-0102, ext. 119; Email: David__P[email protected] Hearing-

or speech-impaired persons may use a Telecommunications Device for the

Deaf (TTY) by contacting the Federal Information Relay Service on 1-

800-877-TDDY (1-800-877-8339)(a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Paperwork Burden

The information collection requirements contained in Secs. 954.106,

954.505, 954.506, 954.507 of this interim rule have been approved by

the Office of Management and Budget in accordance with the Paperwork

Reduction Act of 1995 (44 U.S.C. 3501-3520), and assigned OMB control

number 2577-0191. An agency may not conduct or sponsor, and a person is

not required to respond to, a collection of information unless the

collection displays a valid control number.

II. Background

The HOME Investment Partnerships Act (the HOME Act)(Title II of the

Cranston-Gonzalez National Affordable Housing Act) was signed into law

on November 28, 1990 (Pub. L. 101-625), and created the HOME Investment

Partnerships (or HOME) Program that provides funds to the Indian HOME

program to expand the supply of affordable housing for very low-income

and low-income persons. Interim regulations for the HOME Investment

Partnerships Program were published on December 16, 1991 (56 FR 65313)

and are codified at 24 CFR part 92. The requirements of 24 CFR part 92,

subpart A and subpart M (Secs. 92.600-92.652) apply specifically to the

Indian HOME program.

The HOME Act was amended October 28, 1992 by title II of the

Housing and Community Development Act of 1992 (HCDA 1992) (P.L. 102-

550, approved October 28, 1992). The Multifamily Housing Property

Disposition Reform Act of 1994 (MHPDRA) (Pub. L. 103-233, approved

April 11, 1994) included an additional number of amendments to the HOME

Act. Amendments to the HOME rule at 24 CFR part 92 were published on

December 11, 1992 (57 FR 58862); December 22, 1992 (57 FR 60960); June

23, 1993 (58 FR 34130); April 19, 1994 (59 FR 18626); August 26, 1994

(59 FR 44258); March 10, 1995 (60 FR 13348); July 12, 1995 (60 FR

36020); January 23, 1996 (61 FR 1824); and March 6, 1996 (61 FR 9036).

In accordance with section 217(a)(2) of the HOME Act, each Fiscal

Year (FY) HUD shall provide funds for the Indian HOME program totaling

one percent (or such other percentage or amount as authorized by

Congress) of the amount appropriated for the HOME program to expand the

supply of affordable housing.

The initial regulatory requirements for the Indian HOME program

were similar to the rule for the HOME program for State and local

governments. During the years since the publication of the December 16,

1991, interim rule in the Federal Register, there have been four

complete funding cycles (FY 92, FY 93, FY 94 and FY 95) of the Indian

HOME program. The Indian HOME program has gradually developed its own

particular characteristics to serve its constituency, and the Office of

Indian Housing has become the Office of Native American Programs

(ONAP), receiving Community Planning and Development field office staff

and administering both the Indian Community Development Block Grant

(ICDBG) program and the Indian HOME program.

This interim rule includes clarifications and simplifications

intended to eliminate confusion and facilitate the use of the rule by

interested parties, increases similarity with the Indian Community

Development Block Grant (ICDBG) program, and simplifies administration

of Native American Tribal Programs. In addition, the regulation is

relocated from part 92 to part 954 of title 24. The Department is

consolidating all of its Native American programs in the 950 series of

title 24.

III. Regulatory Reinvention

Consistent with Executive Order 12866 and President Clinton's

memorandum of March 4, 1995 to all Federal Departments and Agencies on

regulatory reinvention, HUD has reviewed all its regulations to

determine whether certain regulations can be eliminated, streamlined,

or consolidated with other regulations. The changes in the Indian HOME

Program are a part of this regulatory reinvention effort. The

Department is inviting comments on these changes and any other

provision in part 954. HUD intends to issue a final rule taking into

account comments on this interim rule and comments received by HUD on

part 92--the HOME program for State and local governments. The

following discussion of sections in the new 24 CFR part 954 describes

the changes made to the part 92 provisions as part of the move to part

954:

Subpart A--General Provisions

Section 954.1 Overview and Purpose

Section 954.1, based upon Sec. 92.1, is edited so that it applies

to only the Indian HOME program. References to participants in the HOME

program for State and local governments are deleted.

Section 954.2 Definitions

Section 954.2, based upon Sec. 92.2, is edited so that it applies

to only the Indian HOME program. Definitions for and references to

participants in the HOME program for State and local governments are

deleted.

Section 954.4 Other Federal Requirements

Indian preference

To increase similarity between tribal assistance programs,

Sec. 92.631 (now Sec. 954.4) is revised to conform with the

[[Page 32293]]

Indian preference as described in 24 CFR part 953. The language of this

section has been revised to: correct inaccuracies in certain referenced

definitions; include a definition of ``Indian'' as this word is defined

in the Indian Self-Determination and Education Assistance Act (25

U.S.C. 450e(b)); delete subsection (e), Additional Indian preference

requirements (this subsection is being deleted since its provisions

have never been used and, upon analysis, did not appear to be

meaningful); and, to add a subsection, Complaint procedures, in which

the specific process to be followed is clarified and in which the

grantee is identified as the final arbiter.

Environmental Review

Section 92.633 is relocated to Sec. 954.4. Displacement,

relocation, and acquisition.

Section 92.634, now included in Sec. 954.4, is revised to conform

to 24 CFR 953.602 for the ICDBG program.

Labor

Section 92.635, now in Sec. 954.4, is revised to conform to

Sec. 92.354, the regulation for the HOME program for State and local

governments which was revised in the April 19, 1994 and August 26, 1994

rules. Also, the regulation includes information about force account

and Davis-Bacon; the grantee is responsible for compliance rather than

requiring prior HUD approval.

Lead-based paint

ONAP considered replacing the text at Sec. 92.636 (now Sec. 954.4)

with the text from the CDBG program at Sec. 570.608. However, HUD is in

the process of revising the lead-based paint requirements for all HUD

programs in accordance with recent statutory amendments to the lead-

based paint statute, and no change is made here.

Debarment and Suspension

ONAP considered similar sections on debarment and suspension (HOME

Sec. 92.638; CDBG Sec. 570.609) for both the Indian HOME and ICDBG

programs. The HOME regulation refers to part 24, which prohibits awards

to ineligible entities. ICDBG, too, prohibits awards to ineligible

entities. Section 92.638 has not been revised in its move to

Sec. 954.4.

Subpart B--Applying for Assistance

Section 954.100 General

Section 92.600, now Sec. 954.100, is edited to reflect the

Department's change in nomenclature from Field Offices to Area Offices

of Native American Programs.

Section 954.101 Allocation of Funds

Section 92.601 (now Sec. 954.101), Regional allocation of funds,

was changed to Allocation of funds and amended in the process. No

formula for the distribution of funds to the regions is included. The

decision whether to hold a regional competition or a national

competition will be announced in NOFAs for the Indian HOME Program.

Section 954.102 Eligible Applicants

This section reflects Sec. 92.602, except that paragraph (e), which

dealt with administrative capacity, has been deleted because it is

already covered in Sec. 954.104(b) as a factor for selection.

Section 954.106 Announcement of Competition

Section 92.605 (now Sec. 954.106), Deadline and other information,

is changed to Announcement of competition. Section 92.606,

Certifications, is eliminated. This requirement will be in the NOFA.

Section 954.107 Project Amendment

Section 954.107 is added to provide for an amendment to a project.

Subpart C--Eligible Activities and Affordability

Section 954.300 Eligible Activities

Section 92.611, Eligible activities, is now Sec. 954.300, except

Sec. 92.611(c), Termination before completion, which is placed in

Sec. 954.500, Repayment of investment, and revised to clarify the

account to which repaid HOME funds are to be deposited. Sections

92.614(e), and 92.615(c), which both dealt with manufactured housing,

have also been moved to Sec. 954.300.

Section 954.303 Eligible Project Costs

Section 92.612 (now Sec. 954.303) is revised to expand eligible

costs to include the cost to provide a security deposit in tenant-based

rental assistance. The meaning of site improvements is clarified, as is

the pro-rata development cost of facilities.

Impact fees on housing are eligible under the HOME program for

State and local governments. See Sec. 92.206(c)(7). There is no reason

to treat grantees in the Native American program differently.

Therefore, the payment of reasonable impact fees that are charged to

all housing, not just HOME-assisted housing, is now eligible.

The clarification in Sec. 954.303(a)(4) states unexpended funds in

reserve must be reprogrammed or returned to HUD; previously,

Sec. 92.612(a)(4) only stated that the funds should be returned to the

grantee's local HOME account.

The clarification in Sec. 954.303(b) Acquisition costs expands the

previous Sec. 92.612(b) coverage from ``Costs of acquiring improved or

unimproved real property'' to ``Costs of acquiring improved or

unimproved real property, including acquisition by homebuyers.''

Section 954.304 Eligible Administrative Costs

A new Sec. 954.304 is added to clarify program administrative

costs, with reference to OMB Circular A-87.

Section 954.305 Tenant-based Rental Assistance

In Sec. 954.305 (formerly Sec. 92.613), the explanation of what a

community-wide exception rent is has been relocated from paragraph

(f)(3) (where it appeared in Sec. 92.613) to the definitions section

(Sec. 954.2). To facilitate flexibility, an alternative rent standard

has been added in paragraph (f)(3), which permits the grantee's rent

standard for a unit size to be based on local market conditions.

The provision in Sec. 92.613(g), Housing Quality Standards, that

allowed for variations has been dropped as not necessary. Grantees may

always propose and request HUD approval of justifiable variations

through waivers.

Section 954.307 Homeownership: Qualification as Affordable Housing

Section 954.307discusses affordability restrictions, recapture of

the HOME investment, and use of recaptured HOME funds.

Section 954.308 Prohibited Activities

Section 954.308 (formerly Sec. 92.616) includes a prohibition

related to the provision of assistance in connection with programs

authorized under part 950 (Indian Housing Programs) of title 24. The

HOME statute does not specifically prohibit the use of HOME funds for

Indian housing, mutual help housing, new construction of public housing

or related costs. However, the statutory affordability requirements of

HOME present problems of compatibility with these programs. The HOME

rent restrictions apply for the period of affordability specified in

the regulation. The HOME affordability period for new construction is

20 years. The Indian Housing Programs under part 950 are large and

separately funded; ONAP does not contemplate accepting applications for

assistance which combine HOME with these other programs.

Subpart E--Program Administration

This subpart has been reorganized. Previously in part 92, it

followed the Other Federal requirements section.

[[Page 32294]]

Section 954.500 Repayment of Investment

Section 954.500 (formerly Sec. 92.643) has been changed to clarify

existing terms.

Section 954.502 Applicability of Uniform Administrative Requirements

A new paragraph (c) has been added to Sec. 954.502 (formerly

Sec. 92.645) to provide for alternatives to bond requirements.

Section 954.504 Closeout

Section 954.504 has revised Sec. 92.647 to provide that--except for

the special case of closeouts subject to audit--grant closeout may not

occur until all the funds to be closed out have been audited, and, if

the U.S. Department of Interior (DOI) review results in significant

delays, the Area ONAP may request a signed copy of the audit prior to

DOI review.

Section 954.505 Recordkeeping

To streamline the rule, the detailed list of records is deleted. It

will appear in a program guide.

Section 954.506 Performance Reports

Section 954.506 (formerly Sec. 92.649) has been amended to add a

financial status report to the annual performance report requirement.

Section 954.507 Submission of Project Completion Reports

This new section provides for the submission of project completion

reports.

Subpart F--Performance Reviews and Sanctions

Section 954.601 Corrective and Remedial Actions

Section 954.601 (formerly Sec. 92.651) has been expanded to include

immediate temporary lockout of the grantee from the grant funds.

In addition, the treatment of the following sections in part 92 has

changed as discussed below:

Section 92.625 Elder cottage housing opportunity (ECHO) units--

This subject need not be dealt with separately in the regulation.

Section 92.632 Methods of procurement--This subject is generic

(see 24 CFR Part 85) and need not be repeated in this program

regulation.

Section 92.640 HOME account--Reference to a grantee local HOME

account has been dropped.

Section 92.641 HOME Investment Partnership--There is no discussion

of this concept in the regulation.

Section 92.642 Cash Management Information System: disbursement of

HOME funds--This system is no longer used.

IV. Other Matters

Regulatory Flexibility Act

The Secretary, in accordance with the Regulatory Flexibility Act (5

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

by approving it certifies that this interim rule does not have a

significant economic impact on a substantial number of small entities.

The interim rule provides revisions to the existing Indian HOME program

under which Indian tribes receive grant assistance from HUD to increase

the number of housing opportunities for low-income and very low-income

people. HUD does not anticipate a significant economic impact on small

entities since Indian tribes will continue to carry out their Indian

HOME program activities as they now do.

Executive Order 12606--Impact on the Family

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that this interim rule does not

have potential for significant impact on family formation, maintenance,

and general well-being, and, thus, is not subject to review under the

order. No significant change in existing HUD policies or programs will

result from promulgation of this interim rule, as those policies and

programs relate to family concerns. To the extent there is an impact on

families, it will be beneficial in that additional affordable housing

will be available. The interim rule does not have the potential for

significant impact on family formation, maintenance, or general well-

being, since its effect is limited to revising program procedures for

Indian tribes applying for Indian HOME program grants.

Executive Order 12612--Federalism

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

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

contained in this interim rule will not have substantial direct effects

on states or their political subdivisions, or the relationship between

the federal government and the states, or on the distribution of power

and responsibilities among the various levels of government. As a

result, the rule is not subject to review under the order. The rule is

limited to providing funds to Indian tribes in accordance with a

program to expand the supply of affordable housing.

Environmental Review

A Finding of No Significant Impact with respect to the environment

has been made in accordance with HUD regulations at 24 CFR part 50 that

implement section 102(2)(C) of the National Environmental Policy Act of

1969 (NEPA). 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 at the above address.

Justification for Interim Rulemaking

HUD generally publishes a rule for public comment before issuing a

rule for effect, in accordance with its own regulations on rulemaking

in 24 CFR part 10. However, part 10 provides for exceptions to the

general rule if the agency finds good cause to omit advance notice and

public participation. The good cause requirement is satisfied when

prior public procedure is ``impracticable, unnecessary, or contrary to

the public interest'' (24 CFR 10.1). HUD finds that good cause exists

to publish this interim rule for effect without first soliciting public

comment. This interim rule merely moves the Indian HOME rule to a new

part 954 in title 24, and removes unnecessary regulatory provisions but

does not establish or affect substantive policy. Therefore, prior

public comment is unnecessary.

The Catalog of Federal Domestic Assistance Number for the HOME

Program is 14.239.

List of Subjects

24 CFR Part 92

Administrative practice and procedure, Grant programs--housing and

community development, Grant programs--Indians, Indians, Low and

moderate income housing, Manufactured homes, Rent subsidies, Reporting

and recordkeeping requirements.

24 CFR Part 954

Administrative practice and procedure, Grant programs--housing and

community development, Grant programs--Indians, Indians, Low and

moderate income housing, Manufactured homes, Rent subsidies, Reporting

and recordkeeping requirements.

Accordingly, in title 24 of the Code of Federal Regulations, part

92 is amended and a new part 954 is added, as follows:

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

1. The authority citation for part 92 continues to read as follows:

[[Page 32295]]

Authority: 42 U.S.C. 3535(d) and 12701-12839.

Subpart M--[Removed and Reserved]

2. Subpart M, consisting of Secs. 92.600 through 92.652, is removed

and reserved.

3. A new part 954 is added to title 24, to read as follows:

PART 954--INDIAN HOME PROGRAM

Subpart A--General Provisions

Sec.

954.1 Overview.

954.2 Definitions.

954.3 Waivers.

954.4 Other Federal Requirements.

Subpart B--Applying for Assistance

954.100 General.

954.101 Allocation of funds.

954.102 Eligible applicants.

954.103 Housing strategy.

954.104 Performance thresholds.

954.105 Criteria for selection.

954.106 Announcement of competition.

954.107 Grant conditions.

954.108 Project amendment.

Subpart C--Eligible Activities and Affordability

954.300 Eligible activities.

954.301 Religious organizations.

954.302 Income determinations.

954.303 Eligible project costs.

954.304 Eligible administrative costs.

954.305 Tenant-based rental assistance.

954.306 Rental housing: qualification as affordable housing and

income targeting.

954.307 Homeownership: qualification as affordable housing.

954.308 Prohibited activities.

Subpart D--Project Requirements

954.400 Maximum per-unit subsidy amount.

954.401 Property standards.

954.402 Tenant and participant protections.

Subpart E--Program Administration

954.500 Repayment of investment.

954.501 Grantee responsibilities; written agreements; monitoring.

954.502 Applicability of uniform administrative requirements.

954.503 Audit.

954.504 Closeout.

954.505 Recordkeeping.

954.506 Performance reports.

954.507 Submission of project completion reports.

Subpart F--Performance Reviews and Sanctions

954.600 Performance reviews.

954.601 Corrective and remedial actions.

954.602 Notice and opportunity for hearing; sanctions.

Authority: 42 U.S.C. 3535(d) and 12701-12839.

Subpart A--General Provisions

Sec. 954.1 Overview.

This part implements the Indian HOME Investment Partnerships

Program. In general, under the Indian HOME Investment Partnerships

Program, HUD awards funds competitively to eligible applicants to

provide more affordable housing. Grantees may use HOME funds to carry

out projects through acquisition, rehabilitation, and new construction

of housing, and tenant-based rental assistance. Grantees are able to

provide assistance in a number of eligible forms, including loans,

advances, equity investments, interest subsidies and other forms of

investment that HUD approves.

Sec. 954.2 Definitions.

Adjusted income. See 24 CFR part 950.

Annual income. See 24 CFR part 950.

Area Office of Native American Programs (ONAP). See 24 CFR part

950.

Certification means a written assertion, based on supporting

evidence, which must be kept available for inspection by HUD, the

Inspector General and the public, which assertion is deemed to be

accurate for purposes of this part, unless HUD determines otherwise

after inspecting the evidence and providing due notice and opportunity

for comment.

Community-wide exception rents are maximum gross rents approved by

HUD for the Rental Certificate program under Sec. 882.106(a)(3) of this

title for a designated municipality, county, or similar locality, which

apply to the whole IHA jurisdiction.

Family. See 24 CFR part 950.

HOME funds means funds made available under this part through

grants, plus all repayments and interest or other return on the

investment of these funds.

Homeownership means ownership in fee simple title or a leasehold

interest of not less than 50 years (including 25 years, automatically

renewable for an additional term of 25 years) in a one-to-four unit

dwelling or in a condominium unit, ownership or membership in a

cooperative, or equivalent form of ownership approved by HUD. The

ownership interest may be subject only to the restrictions on resale

required under Sec. 954.307(a); mortgages, deeds of trust, or other

liens or instruments securing debt on the property as approved by the

tribe; or any other restrictions or encumbrances that do not impair the

good and marketable nature of title to the ownership interest.

Household means one or more persons occupying a housing unit.

Housing includes site constructed, modular, manufactured housing

and housing lots.

HUD. See 24 CFR part 950.

Indian housing authority (IHA). See 24 CFR part 950.

Low-income family See 24 CFR part 950.

Monthly adjusted income. See 24 CFR part 950.

Monthly income. See 24 CFR part 950.

NOFA means notice of funding availability.

Project means housing developed, acquired, or assisted with HOME

funds, and the improvement of this housing. It includes the site on

which the housing is located and all of the HOME-assisted activities

associated with the building and the site.

Project completion means that all necessary title transfer

requirements and construction work have been performed and the project

complies with the requirements of this part (including the property

standards adopted under Sec. 954.401); the final drawdown has been

disbursed for the project; a Project Completion Report has been

submitted and a final accounting of project expenses is provided by the

grantee as prescribed by HUD. For tenant-based rental assistance, it

also means the final drawdown has been disbursed for the project and

the final payment certification has been submitted and processed as

prescribed by HUD.

Secretary means the Secretary of Housing and Urban Development.

Single room occupancy (SRO) housing means housing consisting of

single room dwelling units that is the primary residence of its

occupant or occupants. The unit may contain either food preparation

facilities or sanitary facilities, or both. Alternatively, sanitary

facilities may be located outside the unit and be shared by tenants in

the project. SRO does not include facilities for students.

Subgrantee means a public agency or nonprofit organization retained

by the grantee under a written agreement to administer all or a portion

of the grantee's program for its HOME grant. A public agency or

nonprofit organization that receives HOME funds solely as a developer

or owner of housing is not a subgrantee. The grantee's selection of a

subgrantee is not subject to the procurement procedures and

requirements.

Tenant-based rental assistance is a form of rental assistance in

which the assisted tenant may move from a dwelling unit with a right to

continued assistance.

Transitional housing means housing that--

[[Page 32296]]

(1) Is designed to provide housing and supportive services to

persons, including (but not limited to) deinstitutionalized individuals

with disabilities, homeless individuals with disabilities, and homeless

families with children; and

(2) Has as its purpose facilitating the movement of individuals and

families to independent living within a time period that is set by the

grantee before occupancy.

Very low-income family. See 24 CFR part 950.

Sec. 954.3 Waivers.

Upon determination of good cause, HUD may waive any provision of

this part not required by statute. Each waiver must be in writing and

must be supported by documentation of the pertinent facts and grounds.

Sec. 954.4 Other Federal Requirements.

(a) Equal opportunity. (1) Section 282. Pursuant to the

requirements of Section 282 of the Cranston-Gonzales National

Affordable Housing Act (42 U.S.C. 12832), no person in the United

States shall on the grounds of race, color, national origin, religion,

or sex be excluded from participation in, be denied the benefits of, or

be subjected to discrimination under any program or activity funded in

whole or in part with HOME funds. In addition, HOME funds must be made

available in accordance with the prohibitions against discrimination on

the basis of age under the Age Discrimination Act of 1975 (42 U.S.C.

6101-6107) and implementing regulations at 24 CFR part 146, and the

prohibitions against discrimination against handicapped individuals

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

implementing regulations at 24 CFR part 8.

(2) Civil Rights Act. Title VI of the Civil Rights Act of 1964 (42

U.S.C. 2000d-2000d-4), which prohibits discrimination on the basis of

race, color or national origin in federally assisted programs, the Fair

Housing Act (42 U.S.C. 3601-3620), which prohibits discrimination based

on race, color, religion, sex, or national origin in the sale or rental

of housing, and Executive Order 11063 (27 FR 11527, 3 CFR 1959-1963

Comp., p. 652), which provides for equal opportunity in housing, do not

apply to grantees exercising recognized powers of self-government.

Indian tribes and tribal organizations applying on behalf of Indian

tribes that do not exercise recognized powers of self-government must

make HOME funds available in accordance with Title VI of the Civil

Rights Act of 1964, the Fair Housing Act, and Executive Order 11063.

(b) Indian Civil Rights Act. The Indian Civil Rights Act (title II

of the Civil Rights Act of 1968, 25 U.S.C. 1301-1303) provides, among

other things, that ``no Indian tribe in exercising powers of self-

government shall. . . deny to any person within its jurisdiction the

equal protection of its laws or deprive any person of liberty or

property without due process of law.'' The Indian Civil Rights Act

(ICRA) applies to any tribe, band, or other group of Indians subject to

the jurisdiction of the United States in the exercise of recognized

powers of self-government.

determined that grants under this part are subject to Section 7(b) of

the Indian Self-Determination and Education Assistance Act (25 U.S.C.

450e(b)). Section 7(b) provides that any contract, subcontract, grant

or subgrant pursuant to an act authorizing grants to Indian

organizations or for the benefit of Indians shall require that, to the

greatest extent feasible:

(i) Preference and opportunities for training and employment shall

be given to Indians; and

(ii) Preference in the award of contracts and subcontracts shall be

given to Indian organizations and Indian-owned economic enterprises as

defined in section 3 of the Indian Financing Act of 1974 (25 U.S.C.

1452).

(2) Definitions. (i) The Indian Self-Determination and Education

Assistance Act (25 U.S.C. 450e(b)) defines ``Indian'' to mean a person

who is a member of an Indian tribe and defines ``Indian tribe'' to mean

any Indian tribe, band, nation, or other organized group or community

including any Alaska native village or regional or village corporation

as defined or established pursuant to the Alaska Native Claims

Settlement Act, which is recognized as eligible for the special

programs and services provided by the United States to Indians because

of their status as Indians.

(ii) In section 3 of the Indian Financing Act of 1974 (25 U.S.C.

1452) ``economic enterprise'' is defined as any Indian-owned

commercial, industrial, or business activity established or organized

for the purpose of profit, except that Indian ownership must constitute

not less than 51 percent of the enterprise. This act defines ``Indian

organization'' to mean the governing body of any Indian tribe or entity

established or recognized by such governing body.

(3) Preference in administration of grant. To the greatest extent

feasible, preference and opportunities for training and employment in

connection with the administration of grants awarded under this part

shall be given to Indians.

(4) Preference in contracting. To the greatest extent feasible,

grantees shall give preference in the award of contracts for projects

funded under this part to Indian organizations and Indian-owned

economic enterprises.

(i) Each grantee shall:

(A) Advertise for bids or proposals limited to qualified Indian

organizations and Indian-owned enterprises; or

(B) Use a two-stage preference procedure, as follows:

(1) Stage 1. Invite or otherwise solicit Indian-owned economic

enterprises to submit a statement of intent to respond to a bid or

proposal announcement limited to Indian-owned firms.

(2) Stage 2. If responses are received from more than one Indian

enterprise found to be qualified, advertise for bids or proposals

limited to Indian organizations and Indian-owned economic enterprises;

own method of providing preference.

(ii) If the grantee selects a method of providing preference that

results in fewer than two responsible qualified organizations or

enterprises submitting a statement of intent, a bid or a proposal to

perform the contract at a reasonable cost, then the grantee shall:

(A) Re-bid the contract, using any of the methods described in

paragraph (d)(1) of this section; or

(B) Re-bid the contract without limiting the advertisement for bids

or proposals to Indian organizations and Indian-owned economic

enterprises; or

approval of the proposed contract and related procurement documents, in

accordance with 24 CFR 85.36, in order to award the contract to the

single bidder.

(iii) Procurements that are within the dollar limitations

established for small purchases under 24 CFR 85.36 need not follow the

formal bid procedures of paragraph (d) of this section, since these

procurements are governed by the small purchase procedures of 24 CFR

85.36. However, a grantee's small purchase procurement shall, to the

greatest extent feasible, provide Indian preference in the award of

contracts.

(iv) All preferences shall be publicly announced in the

advertisement and bidding or proposal solicitation and the bidding or

proposal documents.

(v) A grantee, at its discretion, may require information of

prospective contractors seeking to qualify as Indian

[[Page 32297]]

organizations or Indian-owned economic enterprises. Grantees may

require prospective contractors to include the following information

prior to submitting a bid or proposal, or at the time of submission:

(A) Evidence showing fully the extent of Indian ownership and

interest;

(B) Evidence of structure, management and financing affecting the

Indian character of the enterprise, including major subcontracts and

purchase agreements; materials or equipment supply arrangements; and

management salary or profit-sharing arrangements; and evidence showing

the effect of these on the extent of Indian ownership and interest; and

grantee that the prospective contractor has the technical,

administrative, and financial capability to perform contract work of

the size and type involved.

(vi) The grantee shall incorporate the following clause (referred

to as the Section 7(b) clause) in each contract awarded in connection

with a project funded under this part:

(A) The work to be performed under this contract is on a project

subject to Section 7(b) of the Indian Self-Determination and Education

Assistance Act (25 U.S.C. 450e(b)) (Indian Act). Section 7(b) requires

that to the greatest extent feasible preferences and opportunities for

training and employment shall be given to Indians, and preferences in

the award of contracts and subcontracts shall be given to Indian

organizations and Indian-owned economic enterprises.

(B) The parties to this contract shall comply with the provisions

of Section 7(b) of the Indian Act.

greatest extent feasible, give preference in the award of any

subcontracts to Indian organizations and Indian-owned economic

enterprises, and preferences and opportunities for training and

employment to Indians.

(D) The contractor shall include this Section 7(b) clause in every

subcontract in connection with the project, and shall, at the direction

of the grantee, take appropriate action pursuant to the subcontract

upon a finding by the grantee or HUD that the subcontractor has

violated the Section 7(b) clause of the Indian Act.

(5) Complaint procedures. The following complaint procedures are

applicable to complaints arising out of any of the methods of providing

for Indian preference contained in this part, including alternate

methods enacted and approved in a manner described in this section.

(i) Each complaint shall be in writing, signed, and filed with the

grantee.

(ii) A complaint must be filed with the grantee no later than 20

calendar days from the date of the action (or omission) upon which the

complaint is based.

(iii) Upon receipt of a complaint, the grantee shall promptly stamp

the date and time of receipt upon the complaint, and immediately

acknowledge its receipt.

(iv) Within 20 calendar days of receipt of a complaint, the grantee

shall either meet, or communicate by mail or telephone, with the

complainant in an effort to resolve the matter. The grantee shall make

a determination on a complaint and notify the complainant, in writing,

within 30 calendar days of the submittal of the complaint to the

grantee. The decision of the grantee shall constitute final

administrative action on the complaint.

(d) Environmental review. The Indian tribe must assume

responsibility for environmental review, decisionmaking, and action for

each activity that it carries out with HOME funds, in accordance with

the requirements imposed on a recipient under 24 CFR part 58. The

grantee shall also be responsible for compliance with flood insurance,

coastal barrier resource and airport clear zone requirements under 24

CFR 58.6.

(e) Displacement, relocation, and acquisition. (1) Minimizing

displacement. Consistent with the other goals and objectives of this

part, the grantee must ensure that it has taken all reasonable steps to

minimize the displacement of persons (families, individuals,

businesses, nonprofit organizations, and farms) as a result of a

project assisted with HOME funds. To the extent feasible, residential

tenants must be provided a reasonable opportunity to lease and occupy a

suitable, decent, safe, sanitary, and affordable dwelling unit in the

building/complex upon completion of the project.

(2) Temporary relocation. The following policies cover residential

tenants who will not be required to move permanently but who must

relocate temporarily for the project. Such tenants must be provided:

(i) Reimbursement for all reasonable out-of-pocket expenses

incurred in connection with the temporary relocation, including the

cost of moving to and from the temporarily occupied housing and any

increase in monthly rent/utility costs.

(ii) Appropriate advisory services, including reasonable advance

written notice of--

(A) The date and approximate duration of the temporary relocation;

(B) The location of the suitable, decent, safe, and sanitary

dwelling to be made available for the temporary period;

occupy a suitable, decent, safe, and sanitary dwelling in the building/

complex upon completion of the project; and

(D) The provisions of paragraph (e)(2)(i) of this section.

(3) Relocation assistance for displaced persons. (i) General. A

displaced person (defined in paragraph (e)(3)(ii) of this section) must

be provided relocation assistance at the levels described in, and in

accordance with the requirements of, the Uniform Relocation Assistance

and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C.

4201-4655) and 49 CFR part 24.

(ii) Displaced Person. (A) For purposes of paragraph (c) of this

section, the term displaced person means a person (family individual,

business, private nonprofit organization, or farm, including any

corporation, partnership or association) that moves from real property

or moves personal property from real property, permanently, as a direct

result of acquisition, rehabilitation, or demolition for a project

assisted with HOME funds. This includes any permanent, involuntary move

for an assisted project, including any permanent move from the real

property that is made:

(1) After notice by the owner to move permanently from the

property, if the move occurs on or after:

(i) The date of the submission of an application to the grantee or

HUD, if the applicant has site control and the application is later

approved; or

(ii) The date the grantee approves the applicable site, if the

applicant does not have site control at the time of the application; or

(2) Before the date described in paragraph (e)(3)(ii)(A)(1) of this

section, if the grantee or HUD determines that the displacement

resulted directly from acquisition, rehabilitation, or demolition for

the project; or

(3) By a tenant-occupant of a dwelling unit, if any one of the

following three situations occurs:

(i) The tenant moves after execution of the agreement covering the

acquisition, rehabilitation, or demolition and the move occurs before

the tenant is provided written notice offering the tenant the

opportunity to lease and occupy a suitable, decent,

[[Page 32298]]

safe, and sanitary dwelling in the same building/complex upon

completion of the project under reasonable terms and conditions. Such

reasonable terms and conditions must include a term of at least one

year at a monthly rent and estimated average monthly utility costs that

do not exceed the greater of: the tenant's monthly rent before such

agreement and estimated average monthly utility costs; or the total

tenant payment, as determined under 24 CFR part 5, if the tenant is

low-income, or 30 percent of gross household income, if the tenant is

not low-income; or

(ii) The tenant is required to relocate temporarily, does not

return to the building/complex, and either: the tenant is not offered

payment for all reasonable out-of-pocket expenses incurred in

connection with the temporary relocation; or other conditions of the

temporary relocation are not reasonable; or

(iii) The tenant is required to move to another dwelling unit in

the same building/complex but is not offered reimbursement for all

reasonable out-of-pocket expenses incurred in connection with the move,

or other conditions of the move are not reasonable.

(B) Notwithstanding paragraph (e)(3)(ii)(A) of this section, a

person does not qualify as a displaced person if:

(1) The person has been evicted for cause based upon a serious or

repeated violation of the terms and conditions of the lease or

occupancy agreement, violation of applicable Federal or tribal law (or

state law, which may apply if the grantee is not exercising recognized

powers of self-government), or other good cause, and the grantee

determines that the eviction was not undertaken for the purpose of

evading the obligation to provide relocation assistance. The effective

date of any termination or refusal to renew must be preceded by at

least 30 days advance written notice to the tenant specifying the

grounds for the action.

(2) The person moved into the property after the submission of the

application but, before signing a lease and commencing occupancy, was

provided written notice of the project, its possible impact on the

person (e.g., the person may be displaced, temporarily relocated, incur

a rent increase), and the fact that the person would not qualify as a

``displaced person'' (or for any assistance under this section) as a

result of the project;

(3) The person is ineligible under 49 CFR 24.2(g)(2); or

(4) HUD determines that the person was not displaced as a direct

result of acquisition, rehabilitation, or demolition for the project.

displacement is or would be covered by this part.

(iii) Initiation of negotiations. For purposes of determining the

formula for computing replacement housing assistance to be provided

under paragraph (e)(3) of this section to a tenant displaced from a

dwelling as a direct result of private-owner rehabilitation, demolition

or acquisition of the real property, the term initiation of

negotiations means the execution of the agreement covering the

acquisition, rehabilitation, or demolition.

(4) Optional relocation assistance. The grantee may provide

relocation payments and other relocation assistance to families,

individuals, businesses, nonprofit organizations, and farms displaced

by a project assisted with HOME funds where the displacement is not

subject to paragraph (e)(3) of this section. The grantee may also

provide relocation assistance to persons covered under paragraph (e)(3)

of this section beyond that required. For any such assistance that is

not required by tribal law (or state law, which may apply if the

grantee is not exercising recognized powers of self-government), the

grantee must adopt a written policy available to the public that

describes the optional relocation assistance that it has elected to

furnish and provides for equal relocation assistance within each class

of displaced persons.

(5) Real property acquisition requirements. The acquisition of real

property for a project is subject to the URA and the requirements of 49

CFR part 24, subpart B.

(6) Appeals. A person who disagrees with the grantee's

determination concerning whether the person qualifies as a displaced

person, or the amount of relocation assistance for which the person may

be eligible, may file a written appeal of that determination with the

grantee.

(7) Responsibility of grantee. (i) The grantee must certify that it

will comply with the URA, the regulations at 49 CFR part 24, and the

requirements of this section, and must ensure such compliance

notwithstanding any third party's contractual obligation to the grantee

to comply.

(ii) The cost of required relocation assistance is an eligible

project cost. This cost also may be paid from tribal funds, or funds

available from other sources.

(f) Labor. (1) General. (i) Every contract for the construction

(rehabilitation or new construction) of housing that includes 12 or

more units assisted with HOME funds must contain a provision requiring

the payment of not less than the wages prevailing in the locality, as

predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act

(40 U.S.C. 276a-276a-5), to all laborers and mechanics employed in the

development of any part of the housing. Such contracts must also be

subject to the overtime provisions, as applicable, of the Contract Work

Hours and Safety Standards Act (42 CFR 327-332).

(ii) The contract for construction must contain these wage

provisions if HOME funds are used for any project costs (as defined in

subpart C of this part), including construction or non-construction

costs, of housing with 12 or more HOME-assisted units. When HOME funds

are only used to assist homebuyers to acquire single-family housing,

and not for any other project costs, the wage provisions apply to the

construction of the housing if there is a written agreement with the

owner or developer of the housing that HOME funds will be used to

assist homebuyers to buy the housing and the construction contract

covers 12 or more housing units to be purchased with HOME assistance.

The wage provisions apply to any construction contract that includes a

total of 12 or more HOME-assisted units, whether one or more than one

project phase is covered by the construction contract. Once they are

determined to be applicable, the wage provisions must be contained in

the construction contract so as to cover all laborers and mechanics

employed in the development of the entire project, including portions

other than the assisted units. Arranging multiple construction

contracts within a single project for the purpose of avoiding the wage

provisions is not permitted.

(iii) Grantees, contractors, subcontractors, and other participants

must comply with regulations issued under these Acts and with other

Federal laws and regulations pertaining to labor standards and HUD

Handbook 1344.1 (Federal Labor Standards Compliance in Housing and

Community Development programs), as applicable. Grantees must require

certification as to compliance with the provisions of this section

before making any payment under such contract.

(2) Volunteers. The prevailing wage provisions of paragraph (f)(1)

of this section do not apply to an individual who receives no

compensation or is paid expenses, reasonable benefits, or a nominal fee

to perform the services for which the individual volunteered and who is

not otherwise employed at any

[[Page 32299]]

time in the construction work. See 24 CFR part 70.

(3) Sweat equity. The prevailing wage provisions of paragraph

(f)(1) of this section do not apply to members of an eligible family

who provide labor in exchange for acquisition of a property for

homeownership or provide labor in lieu of, or as a supplement to, rent

payments.

(4) Force account. (i) The grantee is responsible for compliance

with regulatory requirements in the use of grantee work forces for

construction or renovation activities performed as part of the

activities funded under this part. The grantee must provide for its

files the following:

(A) Documentation to indicate that it has carried out or can carry

out successfully a project of the size and scope of the proposal;

(B) Documentation to indicate that it has obtained or can obtain

adequate supervision for the workers to be used;

be, listed on the grantee payroll and are employed directly by the

grantee.

(ii) Any and all excess funds derived from the force account

construction or renovation activities shall accrue to the grantee and

shall be reprogrammed for other activities eligible under this part or

returned to HUD promptly.

(iii) Insurance coverage for force account workers and activities

shall, where applicable, include worker's compensation, public

liability, property damage, builder's risk, and vehicular liability.

(iv) The grantee shall specify and apply reasonable labor

performance, construction, or renovation standards to work performed

under the force account.

(v) The contracting and procurement standards set forth in 24 CFR

85.36 apply to material, equipment, and supply procurement from outside

vendors under this section.

(vi) In force account there is no contract. If the grantee which

has received the HOME grant to construct the housing units performs the

construction work using force account, i.e., with its own employees,

the work is not covered by Davis-Bacon and related Acts. If the grantee

contracts out the work or part of the work, that work is covered.

(g) Lead-based paint. Housing assisted with HOME funds constitutes

HUD-associated housing for the purpose of the Lead-Based Paint

Poisoning Prevention Act (42 U.S.C. 4821, et seq.) and is, therefore,

subject to 24 CFR part 35. Grantees are responsible for testing and

abatement activities.

(h) Conflict of interest. (1) Applicability. (i) The conflict of

interest provisions in 24 CFR part 84 and 24 CFR 85.36 apply to the

procurement of supplies, equipment, construction, and services by

grantees and their subgrantees.

(ii) The provisions of this section apply to all cases not governed

by 24 CFR part 84 and 24 CFR 85.36. These cases include the acquisition

and disposition of real property and the provision of assistance by the

grantee, by subgrantees, or to individuals, housing developers, and

other private entities under eligible activities which authorize such

assistance (e.g., rehabilitation of housing).

(2) Conflicts prohibited. The general rule is that no persons

described in paragraph (h)(3) of this section who have or had any

functions or responsibilities with respect to activities assisted under

this part, or who are in a position to participate in a decision, or

gain inside information about such activities, may obtain a financial

interest or benefit from these activities. Further, these persons may

not have an interest in any contract, subcontract, or agreement

concerning such activities; and these persons may not, during their

employment or tenure in office and for one year thereafter, have an

interest in the proceeds from these activities, either for themselves

or for those with whom they have family or business ties. This

paragraph does not apply to approved eligible administrative or

personnel costs.

(3) Persons covered. The conflict of interest provisions of

paragraph (h)(2) of this section apply to any person who is an

employee, agent, consultant, officer, or elected or appointed official

of the grantee or subgrantee receiving HOME funds.

(4) Exceptions requiring HUD approval. (i) Threshold requirements.

Upon the written request of a grantee, HUD may grant an exception to

the provisions of paragraph (h)(2) of this section on a case-by-case

basis, when it determines that such an exception will serve to further

the purposes of the HOME program and the effective and efficient

administration of the grantee's project. An exception may be considered

only after the grantee has provided the following:

(A) A disclosure of the nature of the possible conflict,

accompanied by an assurance that there has been public disclosure of

the conflict and a description of how the public disclosure was made;

and

(B) An opinion of the grantee's attorney that the interest for

which the exception is sought would not violate tribal laws on conflict

of interest (or State law on conflict of interest, which may apply if

the grantee is not exercising recognized powers of self-government).

(ii) Factors to be considered for exceptions. In determining

whether to grant a requested exception after the grantee has

satisfactorily met the requirements of paragraph (h)(4)(i) of this

section, HUD shall consider the cumulative effect of the following

factors, where applicable:

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

or essential expert knowledge to the project which would otherwise not

be available;

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

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

with reference to the specific assisted activity in question;

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

section;

(D) Whether undue hardship will result, either to the grantee or to

the person affected, when weighed against the public interest served by

avoiding the prohibited conflict; and

(E) Any other relevant considerations.

(5) Circumstances under which the conflict prohibition does not

apply. (i) In instances where a person who might otherwise be deemed to

be included under the conflict prohibition is a member of a group or

class of beneficiaries of the assisted activity and receives generally

the same interest or benefits as are being made available or provided

to the group or class, the prohibition does not apply, except that if,

by not applying the prohibition against conflict of interest, a

violation of tribal (or State) laws on conflict of interest would

result, the prohibition does apply.

(ii) A public disclosure of the nature of the grant assistance to

be provided and the specific basis for the selection of the proposed

beneficiaries must be made prior to the submission of an application to

HUD. Evidence of this disclosure must be provided as a component of the

application.

(i) Debarment and suspension. As required by 24 CFR part 24, each

grantee must require participants in lower tier covered transactions

(e.g., sub-contractors) to include the certification in appendix B of

24 CFR part 24 (that neither it nor its principals is presently

debarred, suspended, proposed for debarment, declared ineligible, or

voluntarily excluded from participation from the covered transaction)

in any proposal submitted in connection with

[[Page 32300]]

the lower tier transactions. A grantee may rely on the certification,

unless it knows the certification is erroneous.

Subpart B--Applying for Assistance

Sec. 954.100 General.

For each fiscal year, HUD will provide funds for the Indian HOME

program, totaling one percent (or such other percentage or amount as

authorized by Congress) of the amount appropriated for the HOME program

to expand the supply of affordable housing. The funds will be awarded

competitively and will be made available pursuant to a NOFA published

in the Federal Register, in accordance with the requirements of this

part.

Sec. 954.101 Allocation of funds.

Unless HUD determines for administrative convenience based on the

amount of HOME funds available to hold a nationwide competition, HOME

funds will be allocated to the HUD Area ONAPs responsible for the

Indian HOME program competition based upon relative need for housing as

measured by the most recent and reliable data available.

Sec. 954.102 Eligible applicants.

(a) Eligible applicants for HOME funds for Indian tribes are any

Indian Tribe, band, group, or nation, including Alaskan Indians,

Aleuts, and Eskimos, and any Alaska native village of the United States

which is considered an eligible recipient under Title I of the Indian

Self-Determination and Education Assistance Act (25 U.S.C. 450).

Eligible recipients under the Indian Self-Determination and Education

Assistance Act are determined by the Bureau of Indian Affairs.

(b) Tribal organizations which are eligible under Title I of the

Indian Self-Determination and Education Assistance Act may apply for

funds on behalf of any Indian Tribe, band, group, nation, or Alaska

native village eligible under that Act when one or more of these

entities have authorized the tribal organization to do so through

concurring resolutions. Such resolutions must accompany the application

for funding. Eligible tribal organizations under Title I of the Indian

Self-Determination and Education Assistance Act will be determined by

the Bureau of Indian Affairs or Indian Health Service, as appropriate.

eligible applicants may contract or otherwise agree with non-eligible

entities such as States, cities, counties, or other organizations to

assist in the preparation of applications and to help implement

assisted activities.

(d) To apply for funding in a given fiscal year, an applicant must

be eligible as an Indian Tribe or Alaska native village, as provided in

paragraph (a) of this section, or as a tribal organization, as provided

in paragraph (b) of this section, by the application submission date.

Sec. 954.103 Housing strategy.

Grantees are not required to submit a housing strategy to receive

HOME funds. However, the application must demonstrate how the proposed

project(s) will contribute to a comprehensive approach for expanding

the supply of affordable housing for members of the Indian tribe.

Sec. 954.104 Performance thresholds.

Applicants must have the administrative capacity to undertake the

project proposed, including systems of internal control necessary to

administer these projects effectively. In addition, an applicant that

has participated in the HOME program must have performed adequately. In

cases of previously documented deficient performance, the applicant

must have taken appropriate corrective action to improve its

performance prior to submitting a HOME application to HUD. The Area

ONAP will determine whether or not a grantee is eligible to participate

in a particular funding round. Examples of deficient performance may

include unresolved serious audit findings and failure to initiate a

previous grant.

Sec. 954.105 Criteria for selection.

There are four categories of projects that may be funded under the

HOME Indian program: housing rehabilitation; acquisition of housing;

new housing construction; and tenant-based rental assistance. Each

project must be evaluated using the following three criteria:

(a) Project need and design. The degree to which the proposed

project addresses the housing need(s) of the grantee as identified in

the application, and the degree to which the proposed project is

feasible while maximizing benefits to low-income families.

(b) Planning and implementation. The degree to which the financial,

administrative, and legal actions necessary to undertake the proposed

project have been considered and addressed in the application, and the

degree to which the grantee has the administrative staff to carry out

the project successfully.

including mortgage insurance, State funds, other Federal grants, and

private contributions, are used in conjunction with HOME funds to carry

out the proposed project.

Sec. 954.106 Announcement of competition.

A NOFA will describe the maximum points for each of the selection

criteria and any special factors to be evaluated in awarding points

under the selection factors. The NOFA will also state the deadline for

the submission of applications, the total funding available for the

competition and any maximum amount of individual awards.

[Approved by the Office of Management and Budget under OMB control

number 2577-0191]

Sec. 954.107 Grant conditions.

HUD may impose reasonable conditions on grant awards.

Sec. 954.108 Project amendment.

(a) Grantees shall request prior HUD approval for all project

amendments.

(b) HUD can approve an amendment to a project if:

(1) The amendment is due to factors beyond the control of the

grantee; and

(2) The request for approval for a project amendment which involves

$100,000 or more includes all application components required by the

NOFA published for the last application cycle (not necessarily the year

in which the project was rated and ranked) and the modified project

scores high enough to have been funded in the competition for the last

application cycle. A rating equal to or greater than the lowest rating

received by a funded project during the last rating cycle must be

attained by the modified project. The request for approval of an

amendment for a project which involves less than $100,000 does not have

to include the components which address the selection criteria. It does

require a description of and the reason for the modification.

(1) Demonstration by the grantee of the capacity to promptly

complete the modified or new project.

(2) The preparation of an amended or new environmental review in

accordance with Part 58 of this title, if there is a significant change

in the scope or location of approved project.

(d) If a project amendment fails to be approved and the original

project is no longer feasible, the grant funds proposed for amendment

shall be deobligated by HUD and recaptured.

[[Page 32301]]

Subpart C--Eligible Activities and Affordability

Sec. 954.300 Eligible activities.

(a) Eligible activities. (1) General. HOME funds may be used by a

grantee to provide incentives to develop and support affordable rental

housing and homeownership affordability and to provide payment of

reasonable administrative and planning costs. The housing must be

permanent or transitional housing, and includes permanent housing for

disabled homeless persons, and single-room occupancy housing. The

specific eligible costs for these activities are set forth in

Sec. 954.303 and Sec. 954.304.

(2) Acquisition of vacant land or demolition must be undertaken

only as an integral part of a particular HOME new construction project.

(3) Manufactured housing. Purchase and/or rehabilitation of a

manufactured housing unit qualifies as affordable housing only if, at

the time of project completion, the unit:

(i) Is situated on a permanent foundation (except--for

rehabilitation not involving purchase--when assisting existing unit

owners who rent the lot on which their unit sits);

(ii) Is connected to permanent utility hook-ups;

(iii) Is located on land that is held in fee-simple title, land-

trust, or long-term ground lease with a term at least equal to that of

the appropriate affordability period;

(iv) Meets the construction standards established under 24 CFR part

3280 if produced after June 15, 1976. If the unit was produced prior to

June 16, 1976, it must comply with applicable tribal, State or local

codes; and

(v) In cases where the owner of a manufactured housing unit does

not hold fee-simple title to the land on which the unit is located, the

owner may be assisted in purchasing the land under provisions governing

rehabilitation not involving purchase.

(b) Forms of assistance. A grantee may invest HOME funds as equity

investments, interest-bearing loans or advances, noninterest-bearing

loans or advances, interest subsidies consistent with the purposes of

this part, deferred payment loans, grants, or other forms of assistance

that HUD determines to be consistent with the purposes of this part.

Each grantee has the right to establish the terms of assistance,

subject to the requirements of this part.

Sec. 954.301 Religious organizations.

HOME funds may not be provided to primarily religious

organizations, such as churches, for any activity including secular

activities. In addition, HOME funds may not be used to rehabilitate or

construct housing owned by primarily religious organizations or to

assist primarily religious organizations in acquiring housing. However,

HOME funds may be used by a secular entity to acquire housing from a

primarily religious organization, and a primarily religious entity may

transfer title to property to a wholly secular entity and the entity

may participate in the HOME program in accordance with the requirements

of this part. The entity may be an existing or newly established entity

(which may be an entity established, but not controlled, by the

religious organization). The completed housing project must be used

exclusively by the owner entity for secular purposes, available to all

persons regardless of religion. In particular, there must be no

religious or membership criteria for tenants of the property.

Sec. 954.302 Income determinations.

Whenever a grantee makes a determination under this part based on

family income or adjusted family income, it must use the definitions of

annual income, adjusted income, monthly income, and monthly adjusted

income, as those terms are defined in 24 CFR part 950, except when

determining the income of a homeowner for an owner-occupied

rehabilitation project, the equity in the homeowner's principal

residence is excluded from ``Net Family Assets.''

Sec. 954.303 Eligible project costs.

HOME funds may be used to pay the following eligible costs:

(a) Development hard costs. The actual cost of constructing or

rehabilitating housing. These costs include the following:

(1) For new construction, costs to meet the applicable new

construction standards of the grantee and the Model Energy Code

referred to in Sec. 954.401;

(2) For rehabilitation, costs:

(i) To meet the applicable rehabilitation standards of the grantee

or correcting substandard conditions (minimally, the housing quality

standards at Sec. 882.109 of this title), to make essential

improvements including energy-related repairs or improvements,

improvements necessary to permit the use by handicapped persons, and

the abatement of lead-based paint hazards, as required by Sec. 954.4,

and to repair or replace major housing systems in danger of failure;

and

(ii) To refinance existing debt secured by a single-family owner-

occupied unit when loaning HOME funds to rehabilitate the unit, if the

overall housing costs of the borrower will be reduced and made more

affordable.

(3) For both new construction and rehabilitation, costs to demolish

existing structures and for improvements to the project site that are

in keeping with improvements of surrounding, standard projects, and

costs to make utility connections. The ``site'' of the improvements may

include property adjacent to or near the immediate site of the housing

if this property and the housing are owned by the same entity (e.g.,

the housing is owned--at least until sold to homebuyers--by the grantee

and the housing and the improvements are located on a reservation). If

the site improvements will benefit other housing (existing or future)

in addition to housing assisted with the particular Indian HOME grant,

only a pro-rated share of the site improvements may be charged against

the HOME grant. Site improvements include roads, streets, sidewalks,

curbs, gutters, and connections to utilities, such as storm and

sanitary sewers, water supply, gas, and electricity, and the pro rata

development cost of facilities for water supply and sewerage collection

utilities.

(4) For new construction or substantial rehabilitation (an

expenditure of $25,000 or more per home) the cost of funding an initial

operating deficit reserve, which is a reserve to meet any shortfall in

project income during the period of project rent-up (not to exceed 18

months) and which may only be used to pay operating expenses, reserve

for replacement payments, and debt service. Any HOME funds placed in an

operating deficit reserve that remain unexpended when the reserve

terminates must be returned to the grantee's account and shall be

reprogrammed for other activities eligible under this part or returned

to HUD promptly.

(b) Acquisition costs. Costs of acquiring improved or unimproved

real property, including acquisition by homebuyers.

incurred by the owner and associated with the financing, or development

(or both) of new construction, rehabilitation or acquisition of housing

assisted with HOME funds. These costs include, but are not limited to:

(1) Architectural, engineering or related professional services

required to prepare plans, drawings, specifications, or work write-ups;

(2) Costs to process and settle the financing for a project, such

as private

[[Page 32302]]

lender origination fees, credit reports, fees for title evidence, fees

for recordation and filing of legal documents, building permits,

attorneys' fees, private appraisal fees and fees for an independent

cost estimate, builder and developer fees;

(3) Costs of a project audit that the grantee may require with

respect to the development of a specific project; and

(4) Costs to pay impact fees that are charged to all housing.

(d) Relocation costs. Costs of relocation payments and other

relocation assistance for permanently and temporarily relocated

individuals, families, businesses, private nonprofit organizations, and

farm operations where assistance is required under Sec. 954.4 or

determined by the grantee to be appropriate under Sec. 954.4.

(e) Costs related to tenant-based rental assistance. Eligible costs

are the rental assistance and security deposit payments made to provide

tenant-based rental assistance for a family.

Sec. 954.304 Eligible administrative costs.

Eligible administrative costs means reasonable and necessary costs,

as described in OMB Circular A-87, (available from the Executive Office

of the President, Publication Service, 725 17th Street, N.W., Suite G-

2200, Washington, DC 20503; Telephone, (202) 395-7332)) incurred by the

grantee and related to the planning and execution of HOME activities

assisted in whole or in part with funds provided under this part. The

grantee may use up to 15 percent of the HOME funds for the payment of

eligible administrative costs.

Sec. 954.305 Tenant-based rental assistance.

(a) General. A grantee may use HOME funds for tenant-based rental

assistance only if the grantee selects families in accordance with

written tenant selection policies and criteria that are consistent with

the purpose of providing housing to very low- and low-income families

and are reasonably related to preference rules established under

section 6(c)(4)(A) of the U.S. Housing Act of 1937 (42 U.S.C. 1437d).

The grantee may select eligible families currently residing in units

that are designated for rehabilitation or acquisition under the

grantee's HOME program without requiring that the family meet the

written tenant selection policies and written criteria. Families so

selected may use the tenant-based assistance in the rehabilitated or

acquired unit or in other qualified housing.

(b) Program operation. The grantee may operate the program, or may

contract with another entity with the capacity to operate a rental

assistance program. The tenant-based rental assistance may be provided

through an assistance contract to an owner that leases a unit to an

assisted family or directly to the family.

assistance contract providing assistance with HOME funds may not exceed

24 months, but may be renewed, subject to the availability of HOME

funds. The term of the rental assistance contract must begin on the

first day of the term of the lease. For a rental assistance contract

between a grantee and an owner, the term of the contract must terminate

on termination of the lease. For a rental assistance contract between a

grantee and a family, the term of the contract need not end on

termination of the lease, but no payments may be made after termination

of the lease until a family enters into a new lease.

(d) Rent reasonableness. The grantee must disapprove a lease if the

rent is not reasonable, based on rents that are charged for comparable

unassisted rental units.

(e) Lease requirements. The lease must comply with the requirements

in Sec. 954.402 of this part.

(f) Maximum subsidy. (1) The amount of the monthly assistance that

a grantee may pay to, or on behalf of, a family may not exceed the

difference between a rent standard for the unit size established by the

grantee and 30 percent of the family's monthly adjusted income.

(2) The grantee must establish a minimum dollar amount tenant

contribution to rent.

(3) The grantee's rent standard for a unit size may not be less

than 80 percent of the published section 8 existing housing fair market

rent (in effect when the payment standard amount is adopted) for the

unit size, nor more than the section 8 fair market rent or HUD-approved

community-wide exception rent (in effect when the grantee adopts its

rent standard amount) for the unit size. Alternatively, the grantee's

rent standard for a unit size may be based on local market conditions.

Further, a grantee may approve on a unit-by-unit basis a subsidy based

on a rent standard that exceeds the applicable section 8 fair market

rent by up to 10 percent for 20 percent of units assisted.

(g) Housing quality standards. Housing occupied by a family

receiving tenant-based assistance under this section must meet the

performance requirements and acceptability criteria set forth in

Sec. 882.109 of this title.

(h) Use of section 8 assistance. In any case where assistance under

section 8 of the United States Housing Act of 1937 becomes available to

a grantee, recipients of tenant-based rental assistance under this part

will qualify for tenant selection preferences to the same extent as

when they received the tenant-based rental assistance under this part.

(i) Security deposits. (1) A grantee may use HOME funds provided

for tenant-based rental assistance to provide loans or grants to very

low- and low-income families for security deposits for rental of

dwelling units whether or not the grantee provides any other tenant-

based rental assistance under this section.

(2) The relevant tribe, State or local definition of ``security

deposit'' in the jurisdiction where the unit is located is applicable

for the purposes of this part, except that the amount of HOME funds

that may be provided for a security deposit may not exceed the

equivalent of two month's rent for the unit.

(3) Only the prospective tenant may apply for HOME security deposit

assistance, although the grantee may pay the funds directly to the

tenant or to the landlord.

(4) The lease between a tenant and an owner of rental housing for

which HOME security deposit assistance is provided must comply with the

requirements of Sec. 954.402.

(5) HOME funds for security deposits may be provided as a grant or

a loan. If they are provided as a loan, the provisions at Sec. 954.501

for repayment of HOME investments apply.

Sec. 954.306 Rental housing: qualification as affordable housing and

income targeting.

(a) Rent limitation. A rental housing project (including the non-

owner-occupied units in housing purchased with HOME funds in accordance

with Sec. 954.306) qualifies as affordable housing under this part only

if the project:

(1) Bears rents not greater than the lesser of--

(i) The section 8 fair market rent for existing housing for

comparable units in the area as established by HUD under Sec. 888.111

of this title, less the monthly allowance for the utilities and

services (excluding telephone and cable TV) to be paid by the tenant;

(ii) A rent that does not exceed 30 percent of the adjusted income

of a family whose gross income equals 65 percent of the median income

for the area, as determined by HUD, with adjustment for number of

bedrooms in the unit, except that HUD may establish income ceilings

higher or lower than 65

[[Page 32303]]

percent of the median for the area on the basis of HUD's findings that

such variations are necessary because of prevailing levels of

construction costs or section 8 fair market rents, or unusually high or

low family incomes. In determining the maximum monthly rent that may be

charged for a unit that is subject to this limitation, the owner or

grantee must subtract a monthly allowance for any utilities and

services (excluding telephone and cable TV) to be paid by the tenant.

HUD will provide average occupancy costs per unit and adjusted income

assumptions to be used in calculating the maximum rent allowed under

this paragraph (a)(1)(ii) of this section;

(2) Has, in the case of projects with three or more rental units,

not less than 20 percent of the units--

(i) Occupied by very low-income families who pay as a contribution

toward rent (excluding any Federal, State, or tribal rental subsidy

provided on behalf of the family) not more than 30 percent of the

family's monthly adjusted income as determined by HUD. To obtain the

maximum monthly rent that may be charged for a unit that is subject to

this limitation, the owner or grantee multiplies the annual adjusted

income of the tenant family by 30 percent and divides by 12 and, if

applicable, subtracts a monthly allowance for the utilities and

services (excluding telephone and cable TV) to be paid by the tenant;

(ii) Occupied by very low-income families and bearing rents not

greater than 30 percent of the gross income of a family whose income

equals 50 percent of the median income for the area, as determined by

HUD, with adjustment for smaller and larger families, except that HUD

may establish income ceilings higher or lower than 50 percent of the

median for the area on the basis of HUD's findings that such variations

are necessary because of prevailing levels of construction costs or

section 8 fair market rents, or unusually high or low family incomes.

In determining the maximum monthly rent that may be charged for a unit

that is subject to this limitation, the owner or grantee must subtract

a monthly allowance for any utilities and services (excluding telephone

and cable TV) to be paid by the tenant. HUD will provide average

occupancy per unit assumptions to be used in calculating the maximum

rent allowed under paragraph (a)(2)(ii) of this section;

(3) Is occupied only by households that qualify as low-income

families;

(4) Is not refused for leasing to a holder of a certificate of

family participation under 24 CFR part 882 (rental certificate program)

or a rental voucher under 24 CFR part 887 (rental voucher program) or

to the holder of a comparable document evidencing participation in a

HOME tenant-based assistance program because of the status of the

prospective tenant as a holder of such certificate of family

participation, rental voucher, or comparable HOME tenant-based

assistance document; and

(5) Will remain affordable without regard to the term of any

mortgage or the transfer of ownership, pursuant to deed restrictions,

covenants running with the land, or other mechanisms approved by HUD,

for not less than the appropriate period, beginning after project

completion, as specified in the following table, except that the

affordability restrictions may terminate upon foreclosure or transfer

in lieu of foreclosure. The tribe may use purchase options, rights of

first refusal or other preemptive rights to purchase the housing before

foreclosure or deed in lieu of foreclosure to preserve affordability.

The affordability restrictions shall be revived according to the

original terms if, during the affordability period, the owner of record

before the foreclosure, or deed in lieu of foreclosure, or any entity

that includes the former owner or those with whom the former owner has

or had family of business ties, obtains an ownership interest in the

project or property.

------------------------------------------------------------------------

Minimum

period of

Activity affordability

in years

------------------------------------------------------------------------

Rehabilitation or acquisition of existing housing per

unit amount of HOME funds: Under $15,000................ 5

$15,000 to $40,000....................................... 10

Over $40,000............................................. 15

New construction or acquisition of newly constructed

housing................................................. 20

------------------------------------------------------------------------

(b) Rent schedule and utility allowances. The grantee must review

and approve rents proposed by the owner for units with ``flat rents,''

i.e., units subject to the maximum rent limitations in paragraphs

(a)(1)(i), (a)(1)(ii), or (a)(2)(ii) of this section, and, if

applicable, must review and approve, for all units subject to the

maximum rent limitations paragraph (a) of this section, the monthly

allowances, proposed by the owner, for utilities and services to be

paid by the tenant. The owner must reexamine the income of each tenant

household living in lower income units at least annually. The maximum

monthly rent must be recalculated by the owner and reviewed and

approved by the grantee annually, and may change as changes in the

applicable gross rent amounts, the income adjustments, or the monthly

allowance for utilities and services warrant. Any increase in rents for

low-income units is subject to the provisions of outstanding leases; in

any event, the owner must provide tenants of those units not less than

30 days prior written notice before implementing any increase in rents.

affordable housing despite a temporary noncompliance with paragraphs

(a)(2) or (a)(3) of this section, if the noncompliance is caused by

increases in the incomes of existing tenants and if actions

satisfactory to HUD are being taken to ensure that all vacancies are

filled in accordance with this section until the noncompliance is

corrected. Tenants who no longer qualify as low-income families must

pay as rent the lesser of the amount payable by the tenant under

tribal, State or local law or 30 percent of the family's adjusted

monthly income, as recertified annually. The preceding sentence shall

not apply with respect to funds made available under this part for

units that have been allocated a low-income housing tax credit by a

housing credit agency pursuant to section 42 of the Internal Revenue

Code 1986 (26 U.S.C. 7805).

(d) Adjustment of qualifying rent. HUD may adjust the qualifying

rent established for a project under paragraph (a)(1) of this section,

only if HUD finds that an adjustment is necessary to support the

continued financial viability of the project and only by an amount that

HUD determines is necessary to maintain continued financial viability

of the project. HUD expects that this authority will be used sparingly.

Adjustments in section 8 fair

[[Page 32304]]

market rents and in median income over time should help maintain the

financial viability of a project within the qualifying rent standard in

paragraph (a)(1) of this section. Regardless of changes in fair market

rents and in median income over time, the qualifying rents are not

required to be lower than the HOME rent for the project in effect at

the time of project commitment.

Sec. 954.307 Homeownership: qualification as affordable housing.

(a) Purchase with or without rehabilitation. Housing that is for

purchase by a family qualifies as affordable housing only if the

housing: (1)(i) Has an initial purchase price that does not exceed 95%

of the median purchase price for the type of single family housing (1-

to 4-family residence, condominium unit, cooperative unit, combination

manufactured home and lot, or manufactured home lot) for the area as

determined by HUD, and which may be appealed in accordance with 24 CFR

203.18b; and

(ii) Has an estimated appraised value at acquisition, if standard,

or after any repair needed to meet property standards in Sec. 954.401,

that does not exceed the limit described in paragraph (a)(1)(i) of this

section.

(2) Is the principal residence of an owner whose family qualifies

as a low-income family at the time of purchase; and

(3) Is subject--for minimum periods of: 5 years where the per unit

amount of HOME funds provided is less than $15,000; 10 years where the

per unit amount of HOME funds provided is $15,000 to $40,000; and 15

years where the per unit amount of HOME funds provided is greater than

$40,000--to resale restrictions, as described in paragraph (a)(3)(i) of

this section, or recapture provisions, as described in paragraph

(a)(3)(ii) of this section, that are established by the grantee and

determined by HUD to be appropriate.

(i) Resale restrictions must make the housing available for

subsequent purchase only to a low income family that will use the

property as its principal residence; and

(A) Provide the owner with a fair return on investment, including

any improvements; and

(B) Ensure that the housing will remain affordable, pursuant to

deed restrictions, covenants running with the land, or other similar

mechanisms to ensure affordability, to a reasonable range of low-income

homebuyers. The affordability restrictions must terminate upon

occurrence of any of the following termination events: foreclosure,

transfer in lieu of foreclosure or assignment of an FHA insured

mortgage to HUD. The grantee may use purchase options, rights of first

refusal or other preemptive rights to purchase the housing before

foreclosure to preserve affordability. The affordability restrictions

shall be revived according to the original terms if, during the

original affordability period, the owner of record before the

termination event reacquires title to the property.

(ii) A grantee's recapture provisions must provide for the

recapture of the full HOME investment out of net proceeds, except as

provided in paragraph (a)(3)(ii)(B) of this section.

(A) Net proceeds means the sales price minus loan repayment and

closing costs.

(B) If the net proceeds are not sufficient to recapture the full

HOME investment plus enable the homeowner to recover the amount of the

homeowner's downpayment, principal payments, and any capital

improvement investment, the grantee's recapture provisions may allow

the HOME investment amount that must be recaptured to be reduced. The

HOME investment amount may be reduced pro rata based on the time the

homeowner has owned and occupied the unit measured against the required

affordability period; except that the grantee's recapture provisions

may not allow the homeowner to recover more than the amount of the

homeowner's downpayment, principal payments, and any capital

improvement investment.

assistance that enabled the first homebuyer to buy the dwelling unit.

This includes any HOME assistance, whether a direct subsidy to the

homebuyer or a construction or development subsidy, that reduced the

purchase price from fair market value to an affordable price. The

recaptured funds must be used to carry out HOME-eligible activities. If

no HOME funds will be subject to recapture, the provisions at

Sec. 954.306(a)(3)(i) apply.

(D) Upon recapture of the HOME funds used in a single-family,

homebuyer project with two to four units, the affordability period on

rental units may be terminated at the discretion of the tribe.

(b) Rehabilitation not involving purchase. Housing that is

currently owned by a family qualifies as affordable housing only if--

(1) The value of the property, after rehabilitation, does not

exceed 95% of the median purchase price for the type of single family

housing (1- to 4-family residence, condominium unit, combination

manufactured home and lot, or manufactured home lot) for the area as

determined by HUD, and which may be appealed in accordance with 24 CFR

203.18b; and

(2) The housing is the principal residence of an owner whose family

qualifies as a low-income family at the time HOME funds are committed

to the housing.

Sec. 954.308 Prohibited activities.

(a) HOME funds may not be used to--

(1) Provide a project reserve account for replacements, a project

reserve account for unanticipated increases in operating costs, or

operating subsidies; except as authorized under Sec. 954.302; (2)

Provide nonfederal matching contributions required under any other

Federal program;

(3) Provide assistance in connection with programs authorized under

part 950 (Indian Housing Programs) of this title;

(4) Provide assistance to eligible low-income housing under part

248 (Prepayment of Low Income Housing Mortgages) of this title; or

(5) Provide assistance (other than tenant-based rental assistance

or assistance to a homebuyer to acquire housing previously assisted

with HOME funds) to a project previously assisted with HOME funds

during the period of affordability established by the grantee under

Sec. 954.306 or Sec. 954.307. However, additional HOME funds may be

committed to a project up to one year after project completion (see

Sec. 954.500), but the amount of HOME funds in the project may not

exceed the maximum per-unit subsidy amount established under

Sec. 954.400.

(b) Grantees may not charge monitoring, servicing and origination

fees in HOME-assisted projects. However, grantees may charge nominal

application fees (although these fees are not an eligible HOME cost) to

project owners to discourage frivolous applications.

Subpart D--Project Requirements

Sec. 954.400 Maximum per-unit subsidy amount.

The amount of HOME funds that a grantee may invest on a per-unit

basis in affordable housing may not exceed the total development cost

standard for the area, as issued by HUD under 24 CFR 950.220. These

total development cost standards are available from HUD Area ONAPs.

Sec. 954.401 Property standards.

(a) Housing that is assisted with HOME funds, at a minimum, must

meet the housing quality standards in Sec. 882.109 of this title. In

addition,

[[Page 32305]]

housing that is newly constructed or substantially rehabilitated with

HOME funds must meet all applicable local codes, rehabilitation

standards, ordinances, and zoning ordinances. The grantee must have

written standards for rehabilitation. Newly constructed housing must

meet the current edition of the Model Energy Code published by the

Council of American Building Officials.

(b) The following requirements apply to housing for homeownership

that is to be rehabilitated after transfer of the ownership interest:

(1) Before the transfer of the ownership interest, the grantee

must:

(i) Inspect the housing for any defects that pose a danger to

health; and

(ii) Notify the prospective purchaser of the work needed to cure

the defects and the time by which defects must be cured and applicable

property standards met.

(2) The housing must be free from all noted health and safety

defects before occupancy and not later than 6 months after the transfer

for completion of the transitional housing tenancy period.

(3) The housing must meet the applicable property standards (at a

minimum, the housing quality standards in Sec. 882.109 of this title)

not later than 2 years after transfer of the ownership interest.

Sec. 954.402 Tenant and participant protections.

(a) Lease. The lease between a tenant and an owner of rental

housing assisted with HOME funds must be for not less than one year,

unless by mutual agreement between the tenant and the owner.

(b) Prohibited lease terms. The lease may not contain any of the

following provisions:

(1) Agreement to be sued. Agreement by the tenant to be sued, to

admit guilt, or to a judgment in favor of the owner in a lawsuit

brought in connection with the lease;

(2) Treatment of property. Agreement by the tenant that the owner

may take, hold, or sell personal property of household members without

notice to the tenant and a court decision on the rights of the parties.

This prohibition, however, does not apply to an agreement by the tenant

concerning disposition of personal property remaining in the housing

unit after the tenant has moved out of the unit. The owner may dispose

of this personal property in accordance with tribal law (or State law,

which may apply if the Indian tribe is not exercising recognized powers

of self-government);

(3) Excusing owner from responsibility. Agreement by the tenant not

to hold the owner or the owner's agents legally responsible for any

action or failure to act, whether intentional or negligent;

(4) Waiver of notice. Agreement of the tenant that the owner may

institute a lawsuit without notice to the tenant;

(5) Waiver of legal proceedings. Agreement by the tenant that the

owner may evict the tenant or household members without instituting a

civil court proceeding in which the tenant has the opportunity to

present a defense, or before a court decision on the rights of the

parties;

(6) Waiver of a jury trial. Agreement by the tenant to waive any

right to a trial by jury;

(7) Waiver of right to appeal court decision. Agreement by the

tenant to waive the tenant's right to appeal, or to otherwise challenge

in court, a court decision in connection with the lease; and

(8) Tenant chargeable with cost of legal actions regardless of

outcome. Agreement by the tenant to pay attorney's fees or other legal

costs even if the tenant wins in a court proceeding by the owner

against the tenant. The tenant, however, may be obligated to pay costs

if the tenant loses.

or refuse to renew the lease of a tenant of rental housing assisted

with HOME funds except for serious or repeated violation of the terms

and conditions of the lease; for violation of applicable Federal, or

tribal law (or State law, which may apply if the grantee is not

exercising recognized powers of self-government); or for other good

cause. Any termination or refusal to renew 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.

(d) Maintenance and replacement. An owner of rental housing

assisted with HOME funds must maintain the premises in compliance with

all applicable housing quality standards and local code requirements.

(e) Tenant selection. An owner of rental housing assisted with HOME

funds must adopt written tenant selection policies and criteria that--

(1) Are consistent with the purpose of providing housing for very

low-income and low-income families;

(2) Are reasonably related to program eligibility and the

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

(3) Give reasonable consideration to the housing needs of families

that would have a preference under section 6(c)(4)(A) of the U.S.

Housing Act of 1937 (Federal selection preferences for admission to

public housing); and

(4) Provide for--

(i) The selection of tenants from a written waiting list in the

chronological order of their application, insofar as is practicable;

and

(ii) The prompt written notification to any rejected applicant of

the grounds for any rejection.

Subpart E--Program Administration

Sec. 954.500 Repayment of investment.

(a) HOME funds will be made available pursuant to a HOME Investment

Partnership Agreement. The agreement ensures that HOME funds invested

in affordable housing are repayable if the housing ceases to qualify as

affordable housing before the period of affordability expires. The

amount of HOME funds expended on housing assisted with HOME funds that

does not meet the affordability requirements for the period specified

in Sec. 954.306 or Sec. 954.307, as applicable, must be repaid in

accordance with paragraph (b) of this section.

(b) Any repayment of HOME funds (including repayment required if

the housing no longer qualifies as affordable housing), and any payment

of interest or other return on the investment of HOME funds, that is

made before grant close out must be deposited in the grantee's account

and used in accordance with the requirements of this part. A grantee

may retain repayments, interest, and other return on investment of HOME

funds that are made after grant closeout if the grantee agrees to use

the funds for eligible activities.

years after the last day of the month in which it obligated the funds.

(d) Termination before completion. If a project is terminated

before its completion, whether voluntarily by the grantee or otherwise,

an amount equal to the HOME funds disbursed for the project must be

paid by the grantee to its HOME account. If the HOME funds were

disbursed by HUD, the amount must be paid to HUD; if the HOME funds

were disbursed from the grantee's account, the amount must be paid to

the grantee's account. If the amount is not repaid, the grantee will be

subject to actions under Sec. 954.600 Performance reviews, Sec. 954.601

Corrective and remedial actions, and Sec. 954.602 Notice and

opportunity for hearing; sanctions.

Sec. 954.501 Grantee responsibilities; written agreements; monitoring.

(a) Responsibilities. The grantee is responsible for ensuring that

HOME

[[Page 32306]]

funds are used in accordance with all program requirements. The use of

subgrantees and contractors does not relieve the grantee of this

responsibility.

(b) Executing a written agreement. Before disbursing any HOME funds

to any entity (e.g., for-profit housing developer, nonprofit

organization, homeowner, or IHA) the grantee must enter into a written

agreement with the entity ensuring compliance with the requirements of

this part. A subgrantee and a contractor must also enter into a written

agreement before it disburses funds to any entity. The agreement

remains in effect during the period for affordability under

Sec. 954.306 or Sec. 954.307, as applicable, or if the entity is a

subgrantee, during any period that the entity has control over HOME

funds.

agreement must include applicable provisions concerning the following

items:

(1) Use of the HOME funds. The agreement must describe the use of

the HOME funds, including the tasks to be performed, a schedule for

completing the tasks, and a budget. These items must be in sufficient

detail to provide a sound basis for the grantee effectively to monitor

performance under the agreement.

(2) Affordability. The agreement must require housing assisted with

HOME funds to meet the affordability requirements of Sec. 954.306 or

Sec. 954.307, as applicable, and must require repayment of the funds if

the housing does not meet the affordability requirements for the

specified time period.

(3) Repayments. If the entity is a subgrantee, the agreement must

state if repayment, interest, and other return on the investment of

HOME funds are to be remitted to the grantee or are to be retained for

additional eligible activities by the entity.

(4) Uniform administrative requirements. If the entity is a

subgrantee, the agreement must require the entity to comply with

applicable uniform administrative requirements, as described in

Sec. 954.502.

(5) Project requirements. The agreement must require compliance

with project requirements in Sec. 954.400 through Sec. 954.402 of this

part, as applicable in accordance with the type of project assisted.

(6) Housing quality standard. The agreement must require owners of

rental housing assisted with HOME funds to maintain the housing in

compliance with applicable Housing Quality Standards and local housing

code requirements for the duration of the agreement.

(7) Other program requirements. The agreement must require the

entity to carry out each activity in compliance with all Federal laws

and regulations described in Sec. 954.4.

(8) Conditions for religious organizations. Where applicable, the

agreement must include the conditions prescribed in Sec. 954.301 for

the use of HOME funds by religious organizations.

(9) Requests for disbursements of funds. The agreement must specify

that the entity may not request disbursement of funds under the

agreement until the funds are needed for payment of eligible costs. The

amount of each request must be limited to the amount needed.

(10) Reversion of assets. If the entity is a subgrantee, the

agreement must specify that upon expiration of the agreement, the

entity must transfer to the grantee any HOME funds on hand at the time

of expiration and any accounts receivable attributable to the use of

HOME funds.

(11) Records and reports. The agreement must specify the particular

records that must be maintained and any information or reports that

must be submitted in order to assist the grantee in meeting its

recordkeeping and reporting requirements.

(12) Enforcement of the agreement. The agreement must provide for a

means of enforcement by the grantee or the intended beneficiaries. In

addition, the agreement must specify remedies for breach of the

provisions of the agreement. If the entity is a subgrantee, the

agreement must specify that, in accordance with 24 CFR 85.43,

suspension or termination may occur if the entity materially fails to

comply with any term of the agreement, and that the agreement may be

terminated for convenience in accordance with 24 CFR 85.44.

(13) Duration of the agreement. The agreement must specify that the

agreement is in effect for the period of affordability required by the

grantee under Sec. 954.306 or Sec. 954.307.

(d) Monitoring. The grantee is responsible for managing the day-to-

day operations of its HOME program, for monitoring the performance of

all entities receiving HOME funds from the grantee to assure compliance

with the requirements of this part, and for taking appropriate action

when performance problems arise.

(1) Not less than annually, the grantee must review the activities

of owners of rental housing assisted with HOME funds to assess

compliance with the requirement of this part, as set forth in the

written agreement under paragraphs (b) and (c) of this section. For

multifamily housing, each review must include on-site inspection to

determine compliance with housing codes and the requirements of this

part. For rental housing containing one- to four-dwelling units, an on-

site review must be made once within each two-year period. The results

of each review must be included in the grantee's performance report.

(2) Not less than annually, the grantee must review the performance

of each contractor and subgrantee.

Sec. 954.502 Applicability of uniform administrative requirements.

(a) Governmental entities. The requirements of OMB Circular No. A-

87 and the following requirements of 24 CFR part 85 apply to the

grantee and any governmental subgrantee receiving HOME funds:

Secs. 85.6, 85.12, 85.20, 85.21, 85.22, 85.26, 85.32, 85.33, 85.35,

85.36, 85.43, 85.44, 85.51, and 85.52.

(b) Non-profit organizations. The requirements of OMB Circular No.

A-122 (available from the Executive Office of the President,

Publication Service, 725 17th Street, N.W., Suite G-2200, Washington,

DC 20503; Telephone, (202) 395-7332)) and the following requirements of

24 CFR part 84 apply to subgrantees receiving HOME funds that are

private nonprofit organizations: Secs. 84.12, 84.22, 84.23, 84.25,

84.51, 84.52, and 84.71.

the amount for small purchase under 24 CFR 85.36, each contractor shall

be required to provide bid guarantees and adequate assurance of

performance and payment acceptable to HUD in accordance with 24 CFR

85.36(h). Performance and payment bonds for 100 percent of the total

contract price are acceptable to HUD. There may be circumstances under

which the bonding requirements of Sec. 85.36(h) are inconsistent with

other responsibilities and obligations of the grantee. Alternative

methods to provide performance and payment assurance may include:

(1) Deposit with the grantee of a cash escrow of not less than 20

percent of the total contract price, subject to reduction during the

warranty period, commensurate with potential risk;

(2) Letter of credit for 25 percent of the total contract price,

unconditionally payable upon demand of the grantee, subject to

reduction during the warranty period commensurate with potential risk.

Sec. 954.503 Audit.

Audits of the grantee and subgrantees must be conducted in

accordance with 24 CFR parts 44 and 45, as applicable.

[[Page 32307]]

Sec. 954.504 Closeout.

(a) A grant will be closed out when all the following criteria have

been met:

(1) All funds to be closed out have been drawn down and expended

for completed project costs, or funds not drawn down and expended have

been deobligated by HUD;

(2) Project Completion Reports for all projects using funds to be

closed out have been submitted. HUD will use data contained in the

project completion reports in the preparation of the Closeout Reports;

(3) The grantee has been reviewed and audited and HUD has

determined that all requirements, including affordability (for which

also see paragraph (b)(2) of this section), are met or all monitoring

and audit findings have been resolved.

(i) A signed copy of the grantee's most recent audit report--

covering all funds to be closed out--must be received by HUD. If the

audit review by the Department of Interior (DOI) results in significant

delays, the Area ONAP may request a signed copy of the audit prior to

DOI review and use it as the document needed prior to closeout. If the

audit does not cover all funds to be closed out, the closeout may

proceed, provided the grantee agrees in the Closeout Report that any

costs paid with the funds that were not audited must be subject to the

grantee's next single audit and that the grantee may be required to

repay to HUD any disallowed costs based on the results of the audit.

(ii) The on-site monitoring of the grantee by the Area ONAP must

include verification of data reflected in the Closeout Report and

reconciliation of any discrepancies which may exist between HUD data

and grantee records.

(b) The Closeout Report contains the final data on the funds and

must be signed by the grantee and HUD. In addition, the report must

contain:

(1) A provision regarding unaudited funds (``closeout subject to

audit''), required by paragraph (a)(3)(i) of this section; and

(2) A provision requiring the grantee to continue to meet the

requirements applicable to housing projects for the period of

affordability specified in Sec. 954.306 or Sec. 954.307, to keep

records demonstrating that the requirements have been met and to repay

the HOME funds, as required by Sec. 954.500, if the housing fails to

remain affordable for the required period.

Sec. 954.505 Recordkeeping.

(a) General. Each grantee must establish and maintain sufficient

records to enable HUD to determine whether the grantee has met the

requirements of this part. Records must be kept in a manner that

identifies the source and use of funds for each project.

(b) Period of record retention. (1) Except as provided in

paragraphs (b)(2), (b)(3), or (b)(4) of this section, records must be

retained for three years after closeout of the funds.

(2) If any litigation, claim, negotiation, audit, or other action

has been started before the expiration of the regular period specified

in paragraph (b)(1) of this section, the records must be retained until

completion of the action and resolution of all issues which arise from

it, or until the end of the regular period, whichever is later.

(3) Records regarding project requirements (Sec. 954.400 to

Sec. 954.402) and other federal requirements (Sec. 954.4) that apply

for the duration of the period of affordability, as well as the written

agreement and inspection and monitoring reports must be retained for

three years after the required period of affordability specified in

Sec. 954.306 or Sec. 954.307, as applicable.

(4) Records covering displacements and acquisition must be retained

for at least three years after the date by which all persons displaced

from the property and all persons whose property is acquired for the

project have received the final payment to which they are entitled in

accordance with Sec. 954.4(e).

public agencies, and other interested parties with reasonable access to

records, consistent with applicable tribal laws (or State law, which

may apply if the Indian tribe is not exercising recognized powers of

self-government) regarding privacy and obligations of confidentiality.

(2) HUD and the Comptroller General of the United States, or any of

their representatives, have the right of access to any pertinent books,

documents, papers or other records of the grantees and subgrantees, in

order to make audits, examinations, excerpts, and transcripts.

[Approved by the Office of Management and Budget under OMB control

number 2577-0191]

Sec. 954.506 Performance reports.

(a) Management reports. Each grantee must submit management reports

on its HOME program in such format and at such time as HUD may

prescribe. Each grantee must submit a ``Financial Status Report,'' SF-

269A, short form, at the same time it submits the Semi-Annual

Performance Report, described below. A separate ``Financial Status

Report'' is to be submitted for each Indian HOME program grant that the

grantee has received.

(b) Semi-Annual performance report. (1) Submission. A grantee must

submit a semi-annual performance report on its HOME activities to the

responsible Area ONAP at such time as HUD may prescribe. Single copies

of the report must be provided to the public upon request at no charge.

(2) Elements of the semi-annual performance report. The report must

contain such information and be in such form as HUD may prescribe, and

must include at least the following:

(i) A report on the proposed use of HOME funds from the grant

application, consisting of the number of additional housing

opportunities to be created for low-income and very low-income

families, by project category (housing rehabilitation, acquisition of

housing, new housing construction, and tenant-based rental assistance);

(ii) A report on the actual use of HOME funds, consisting of the

number of additional housing opportunities created for low-income and

very low-income families, by project category (housing rehabilitation,

acquisition of housing, new housing construction, and tenant-based

rental assistance). This includes a report on project income and

includes data on the amount of repayments, interest, and other return

on investment of HOME funds and the use of the funds for projects,

including number of projects assisted, and characteristics of tenants

and owners;

(iii) An assessment of the effectiveness of the efforts in

providing the preferences and opportunities under section 7(b) of the

Indian Self-Determination and Education Assistance Act (25 U.S.C.

450e(b)); and

(iv) Data on the total number of households (families and

individuals) and business and nonprofit organizations displaced as a

result of investments of HOME funds, including the cost of relocation

payments (moving expenses and replacement housing), and the number and

cost of real property acquisitions.

[Approved by the Office of Management and Budget under OMB control

number 2577-0191]

Sec. 954.507 Submission of project completion reports.

A Project Completion Report must be submitted to HUD within 120

days of the final drawdown request for the project. If a satisfactory

Project Completion Report is not submitted by the due date, HUD will

suspend further HOME disbursements and grant approvals for the grantee.

Disbursements and grant approvals will remain suspended until a

satisfactory Project Completion Report is received.

[[Page 32308]]

[Approved by the Office of Management and Budget under OMB control

number 2577-0191]

Subpart F--Performance Reviews and Sanctions

Sec. 954.600 Performance reviews.

(a) General. HUD will review the performance of each grantee in

carrying out its responsibilities under this part whenever determined

necessary by HUD, but at least annually. In conducting performance

reviews, HUD will rely primarily on information obtained from the

grantee's records and reports, findings from on-site monitoring, audit

reports, and information generated from fund requisition systems. Where

applicable, HUD may also consider relevant information pertaining to a

grantee's performance gained from other sources, including citizen

comments, complaint determinations, and litigation. Reviews to

determine compliance with specific requirements of this part will be

conducted as necessary, with or without prior notice to the grantee.

Comprehensive performance reviews under the standards in paragraph (b)

of this section will be conducted after prior notice to the grantee.

(b) Standards for comprehensive performance review. A grantee's

performance will be comprehensively reviewed periodically, as

prescribed by HUD, to determine whether the grantee:

(1) Has committed the HOME funds in the HUD account as required and

expended the funds as required; and

(2) Has met the requirements of the grant agreement and this part,

particularly eligible activities and affordability.

Sec. 954.601 Corrective and remedial actions.

(a) General. HUD will use the procedures in this section in

conducting the performance review as provided in Sec. 954.600 and in

taking corrective and remedial actions. However, HUD may temporarily

suspend payments based upon HUD's preliminary determination that the

grantee has failed to comply with the requirements of the Act,

regulations, or grant agreement if suspension is necessary to preclude

the further expenditure of funds for activities affected by the failure

to comply.

(b) Performance review. (1) If HUD determines preliminarily that

the grantee has not met a requirement of this part, the grantee will be

given notice of this determination and an opportunity to demonstrate,

within the time prescribed by HUD (not to exceed 30 days) and on the

basis of substantial facts and data, that it has done so.

(2) If the grantee fails to demonstrate to HUD's satisfaction that

it has met the requirement, HUD will take corrective or remedial action

in accordance with this section or Sec. 954.602.

for a performance deficiency (failure to meet a provision of this part)

will be designed to prevent a continuation of the deficiency; mitigate,

to the extent possible, its adverse effects or consequences; and

prevent its recurrence.

(1) HUD may request the grantee to submit and comply with proposals

for action to correct, mitigate and prevent a performance deficiency,

including:

(i) Preparing and following a schedule of actions for carrying out

the affected activities, consisting of schedules, timetables, and

milestones necessary to implement the affected activities;

(ii) Establishing and following a management plan that assigns

responsibilities for carrying out the remedial actions;

(iii) Cancelling or revising activities likely to be affected by

the performance deficiency, before expending HOME funds for the

activities;

(iv) Reprogramming HOME funds in the HUD account that have not yet

been expended from affected activities to other eligible activities;

(v) Reimbursing the HUD account in any amount not used in

accordance with the requirements of this part; and

(vi) Suspending disbursement of funds in the HUD account for

affected activities.

(2) HUD may also--

(i) Change the method of payment from an advance to reimbursement

basis; and

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

Sec. 954.602 Notice and opportunity for hearing; sanctions.

(a) If HUD finds after reasonable notice and opportunity for

hearing that a grantee has failed to comply with any provision of this

part and until HUD is satisfied that there is no longer any such

failure to comply:

(1) HUD shall reduce the funds in the HUD account by the amount of

any expenditures that were not in accordance with the requirements of

this part; and

(2) HUD may--

(i) Prevent withdrawals from the HUD account for activities

affected by the failure to comply; or

(ii) Prohibit the grantee from competing for HOME funds under

Sec. 954.104; Provided, however, that HUD may on due notice suspend

payments from the HUD account at any time after the issuance of a

notice of opportunity for hearing pursuant to paragraph (b)(1) of this

section, pending such hearing and a final decision, to the extent HUD

determines such action necessary to preclude the further expenditure of

funds for activities affected by the failure to comply.

(b) Proceedings. When HUD proposes to take action pursuant to this

section, the respondent in the proceedings will be the grantee.

(1) Notice of opportunity for hearing. HUD shall notify the

respondent in writing of the proposed action and of the opportunity for

a hearing. The notice shall be sent by first class mail. The notice

shall specify:

(i) In a manner which is adequate to allow the respondent to

prepare its response, the basis upon which HUD determined that the

respondent failed to comply with a provision of this part;

(ii) That the hearing procedures are governed by these rules;

(iii) That the respondent has 14 days from receipt of the notice

within which to provide a written request for a hearing to the Chief

Docket Clerk, Office of Administrative Law Judges, and the address and

telephone number of the Chief Docket Clerk;

(iv) The action HUD proposes to take and that the authority for

this action is Sec. 954.602; and

(v) That if the respondent fails to request a hearing within the

time specified, HUD's determination that the respondent failed to

comply with a provision of this part shall be final and HUD may proceed

to take the proposed action.

(2) Initiation of hearing. The respondent shall be allowed 14 days

from receipt of the notice within which to notify the Chief Docket

Clerk, Office of Administrative Law Judges, of its request for a

hearing. If no request is received within the time specified, HUD's

determination that the respondent failed to comply with a provision of

this part shall be final and HUD may proceed to take the proposed

action.

(3) Administrative Law Judge. Proceedings conducted under these

rules shall be presided over by an Administrative Law Judge (ALJ),

appointed as provided by section 11 of the Administrative Procedures

Act (5 U.S.C. 3105). The case shall be referred to the ALJ at the time

a hearing is requested. The ALJ shall promptly notify the parties of

the time and place at which the hearing will be held. The ALJ shall

conduct a fair and impartial hearing and take all action necessary to

avoid delay in the disposition of

[[Page 32309]]

proceedings and to maintain order. The ALJ shall have all powers

necessary to those ends, including but not limited to the power to:

(i) Administer oaths and affirmations;

(ii) Issue subpoenas as authorized by law;

(iii) Rule upon offers of proof and receive relevant evidence;

(iv) Order or limit discovery before the hearing as the interests

of justice may require;

(v) Regulate the course of the hearing and the conduct of the

parties and their counsel;

(vi) Hold conferences for the settlement or simplification of the

issues by consent of the parties;

(vii) Consider and rule upon all procedural and other motions

appropriate in adjudicative proceedings; and

(viii) Make and file initial determinations.

(4) Ex parte communications. An ex parte communication is any

communication with an ALJ, direct or indirect, oral or written,

concerning the merits or procedures of any pending proceeding which is

made by a party in the absence of any other party. Ex parte

communications are prohibited except where the purpose and content of

the communication have been disclosed in advance or simultaneously to

all parties, or the communication is a request for information

concerning the status of the case. Any ALJ who receives an ex parte

communication which the ALJ knows or has reason to believe is

unauthorized shall promptly place the communication, or its substance,

in all files and shall furnish copies to all parties. Unauthorized ex

parte communications shall not be taken into consideration in deciding

any matter in issue.

(5) The hearing. All parties shall have the right to be represented

at the hearing by counsel. The ALJ shall conduct the proceedings in an

expeditious manner while allowing the parties to present all oral and

written evidence which tends to support their respective positions, but

the ALJ shall exclude irrelevant, immaterial or unduly repetitious

evidence. HUD has the burden of proof in showing by a preponderance of

the evidence that the respondent failed to comply with a provision of

this part. Each party shall be allowed to cross-examine adverse

witnesses and to rebut and comment upon evidence presented by the other

party. Hearings shall be open to the public. So far as the orderly

conduct of the hearing permits, interested persons other than the

parties may appear and participate in the hearing.

(6) Transcripts. Hearings shall be recorded and transcribed only by

a reporter under the supervision of the ALJ. The original transcript

shall be a part of the record and shall constitute the sole official

transcript. Respondents and the public, at their own expense, may

obtain copies of the transcript.

(7) The ALJ's decision. At the conclusion of the hearing, the ALJ

shall give the parties a reasonable opportunity to submit proposed

findings and conclusions and supporting reasons therefor. Generally

within 60 days after the conclusion of the hearing, the ALJ shall

prepare a written decision which includes a statement of findings and

conclusions, and the reasons or basis therefor, on all the material

issues of fact, law or discretion presented on the record and the

appropriate sanction or denial thereof. The decision shall be based on

consideration of the whole record or those parts thereof cited by a

party and supported by and in accordance with the reliable, probative,

and substantial evidence. A copy of the decision shall be furnished to

the parties immediately by first class mail and shall include a notice

that any requests for review by the Secretary must be made in writing

to the Secretary within 30 days of the receipt of the decision.

(8) The record. The transcript of testimony and exhibits, together

with the decision of the ALJ and all papers and requests filed in the

proceeding, constitutes the exclusive record for decision and, on

payment of its reasonable cost, shall be made available to the parties.

After reaching the initial decision, the ALJ shall certify to the

complete record and forward the record to the Secretary.

(9) Review by the Secretary. The decision by the ALJ shall

constitute the final decision of the Secretary unless, within 30 days

after the receipt of the decision, either the respondent or the

Assistant Secretary files an exception and request for review by the

Secretary. The excepting party must transmit simultaneously to the

Secretary and the other party the request for review and the basis of

the party's exceptions to the findings of the ALJ. The other party

shall be allowed 30 days from receipt of the exception to provide the

Secretary and the excepting party with a written reply. The Secretary

shall then review the record of the case, including the exceptions and

the reply. On the basis of such review, the Secretary shall issue a

written determination, including a statement of the rationale therefor,

affirming, modifying or revoking the decision of the ALJ. The

Secretary's decision shall be made and transmitted to the parties

within 60 days after the decision of the ALJ was furnished to the

parties.

Dated: May 10, 1996.

Michael B. Janis,

General Deputy Assistant Secretary for Public and Indian Housing.

[FR Doc. 96-15712 Filed 6-20-96; 8:45 am]

BILLING CODE 4210-33-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.